UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
December 4, 1998
Date of Report (Date of earliest event reported)
CONSOLIDATED DELIVERY & LOGISTICS, INC.
(Exact name of Registrant as specified in its charter)
Delaware 0-26954 22-3350958
(State or other jurisdiction of (Commission File (IRS Employer
incorporation or organization) Number) Identification No.)
380 Allwood Road, Clifton, New Jersey 07012
(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code) (973) 471-1005
NOT APPLICABLE
(Former name or former address, if changed since last report.)
ITEM 5. Other Events
On December 4, 1998, Consolidated Delivery & Logistics, Inc. (the "Company")
announced that First Union Commercial Corporation ("First Union") and the
Company executed an amendment to their existing credit facility (the
"Modification Agreement"), increasing credit availability from $15 million to
$25 million, subject to borrowing base requirements. The Modification Agreement
became effective November 30, 1998 and amends the Loan and Security Agreement
executed with First Union in July 1997, as amended. The credit facility is
secured by all of the assets of the Company and its subsidiaries.
The Modification Agreement increased availability under the revolving credit
facility to $22.5 million and established a $2.5 million equipment term loan
line. Under the terms of the Modification Agreement, the Company is required to
maintain certain financial ratios and comply with other financial conditions.
The Modification Agreement expires November 15, 2001. The Company plans to use
the increased credit facility to finance acquisitions as they arise, to increase
the size of the Company's truck fleet and for general working capital purposes.
ITEM 7. Financial Statements and Exhibits
c. Exhibits
99.1 Press Release issued December 4, 1998.
99.2 Modification Agreement between First Union Commercial
Corporation and Consolidated Delivery & Logistics, Inc.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Dated: December 11, 1998 CONSOLIDATED DELIVERY & LOGISTICS, INC.
(Registrant)
By: /s/ Albert W. Van Ness, Jr.
Albert W. Van Ness, Jr.
Chairman of the Board, Chief Executive
Officer and Chief Financial Officer
Exhibit 99.1
FOR IMMEDIATE RELEASE,
CONTACT:
Drew Kronick, Vice President Lee Laino or Ken DiPaola
Consolidated Delivery & Logistics, Inc. The Dilenschneider Group
TEL (973) 471-1005 (212) 922-0900
CONSOLIDATED DELIVERY & LOGISTICS, INC.
INCREASES CREDIT FACILITY TO $25 MILLION
*Additional Funds Will be Used Primarily for New Acquisitions*
Clifton, NJ (December 4, 1998) - Consolidated Delivery & Logistics, Inc.
(NASDAQ: CDLI) today announced that First Union Commercial Corporation and the
company have executed an amendment to their existing credit facility, increasing
availability from $15 Million to $25 million. The majority of the increased
availability under the credit facility will be available for acquisitions and
working capital. The balance will be earmarked for equipment financing -
specifically, to increase the size of the Company's truck fleet as a result of
the Company's projected growth.
Commenting on the new facility, Albert W. Van Ness, Jr., chairman and chief
executive officer of CD&L, said, "After seven consecutive quarters of improved
earnings, CD&L is poised for an aggressive program of growth via acquisitions.
So far this year, we have made three acquisitions, which have increased
annualized revenues by about $14 million. It is anticipated that additional
strategic acquisitions will be concluded before year-end. Clearly, First Union
Commercial Corporation has played an integral part in CD&L's successes to date
and we look forward to our continued partnership as the Company implements its
acquisition strategy."
This press release contains certain forward-looking statements regarding future
events or the future financial performance of the Company. These forward-looking
statements include comments on the Company's future business development. These
forward-looking statements involve certain risks and uncertainties that may
cause the actual events or results to differ materially from those indicated by
such forward-looking statements. Potential risks and uncertainties include
without limitation the risk that the Company will lack satisfactory merger or
acquisition candidates and/or have an inability to conclude acquisitions or
mergers on satisfactory terms, will be unable to obtain acquisition financing on
satisfactory terms, or achieve cost savings or additional profits contemplated
by the Company's business management strategy or other risks specified in the
Company's SEC filing.
Consolidated Delivery & Logistics, Inc. headquartered in Clifton, New Jersey is
a full service, same day ground and air delivery and logistics company with 70
offices in 24 states and the District of Columbia. The Company has nearly 4,000
employees and utilizes contractors to provide time sensitive delivery services
to thousands of businesses.
Exhibit 99.2
THIS MODIFICATION AGREEMENT, dated
as of November 30, 1998 by and
between FIRST UNION COMMERCIAL
CORPORATION, with a place of
business at 1339 Chestnut Street,
Philadelphia, PA 19107-3579,
(hereinafter called "Lender") and
CONSOLIDATED DELIVERY & LOGISTICS,
INC., CLAYTON/NATIONAL COURIER
SYSTEMS, INC., NATIONAL EXPRESS
COMPANY, INC., CLICK MESSENGER
SERVICE, INC., CLICK MESSENGER
SERVICE OF N.Y., INC., OLYMPIC
COURIER SYSTEMS, INC., SECURITIES
COURIER CORPORATION, SILVER STAR
EXPRESS, INC., SUREWAY AIR TRAFFIC
CORPORATION, SUREWAY LOGISTICS
CORPORATION, and KBD SERVICES, INC.
(hereinafter sometimes individually
and collectively called "Borrower").
RECITALS
WHEREAS, Lender, American Courier, Inc. ("American"), Court Courier
Systems, Inc. ("Court"), and each of the Borrowers other than KBD Services,
Inc., entered into a Loan and Security Agreement dated July 14, 1997, as
modified by letter agreements dated as of September 30, 1997, as of April 30,
1998 and as of July 1, 1998, which, inter alia, sets forth the terms and
conditions of a revolving credit facility of up to $15,000,000.00; and
WHEREAS, KBD became a wholly owned subsidiary of Silver Star Express,
Inc. and pursuant to a Joinder Agreement dated as of August 27, 1998 between
Lender and Borrower , KBD Services, Inc. joined into the Loan Agreement and
other Loan Documents as one of the Borrowers so that the Borrower could obtain
Advances under the revolving credit facility provided for in the Loan Agreement
based upon, inter alia, the accounts receivable of each Borrower, including KBD
Services, Inc.; (the aforesaid Loan and Security Agreement as modified and as so
joinded into by the aforesaid Joinder Agreement the "Loan Agreement"); and
WHEREAS, American and Court merged into Click Messenger Service, Inc.,
and
WHEREAS, Borrower has applied to Lender (a) for an increase in the
maximum amount of the revolving credit facility to $22,500,000.00, (b) for an
extension of the term of the increased revolving credit facility, (c) for an
equipment acquisition term loan facility of up to $2,500,000.00, and (d) for
other modifications to the terms and conditions set forth in the Loan Agreement
and other Loan Documents; and
WHEREAS, Lender has approved the application of the Borrower on the
terms and condition set forth herein.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the parties hereto adopt the above recitals and agree as
follows:
1. Capitalized terms not defined herein but defined in the Loan Agreement shall
have the same meanings ascribed to such terms in the Loan Agreement.
2. Paragraphs 1.4, 1.9, 1.23, 1.31, 1.47, 1.48, 1.60, 1.61, 1.65, 1.66, 1.68,
1.69, 1.76 and 1.79 of the Loan Agreement are hereby modified to read as
follows:
1.4 "ADVANCE DOLLAR LIMIT" means Twenty Two Million Five
Hundred Thousand and no/100 ($22,500,000.00) Dollars or such lesser
amount as the maximum amount of the revolving credit facility provided
for herein may be reduced in accordance with paragraph 7.10 hereof.
1.9 "BORROWING BASE" means the lesser of (A) Twenty Two
Million Five Hundred Thousand and no/100 ($22,500,000.00) Dollars, or
(B) the net of (i) the Eligible Loan Value of Eligible Accounts minus
(ii) the Debenture Reserve Amount.
1.23 "ELIGIBLE LOAN VALUE OF ELIGIBLE ACCOUNTS" means up to
eighty-five (85%) percent of the face amount of Eligible Accounts less
returns and discounts, offsets, contra balances, credits or all
allowances of any nature, at any time issued, owing, granted or
outstanding.
1.31 "FIXED CHARGE COVERAGE RATIO" means at any date the ratio
of (A)(i) the EBITDA minus (ii) all unfunded Capital Expenditures,
dividends, and taxes paid during the 12 months ending on said date
divided by (B) the sum of (i) the current portion of long-term debt
paid or scheduled to be paid during the twelve (12) months ending on
such date plus (ii) the interest expense for the twelve (12) months
ending on said date.
1.47 "LIBOR LOAN" means each Advance, or Term Loan Advance, as
applicable, on which interest thereon is in accordance with the terms
of this Agreement, based on Libor.
1.48 "LIBOR MARGIN" means a percentage set forth below
determined by reference to the Interest Rate and Fee Cash Flow Leverage
Ratio of the Borrower on a consolidated basis, with adjustments to be
made on the dates and as set forth in paragraph 2.2(D) hereof:
Interest Rate & Fee
Cash Flow Leverage Ratio Margin
greater than 3.65 to 1.0 2.00%
2.75 - 3.65 to 1.0 1.875%
less than 2.75 to 1.0 1.50%
1.60 "PERMITTED ENCUMBRANCES" means (A) Liens for taxes,
assessments or governmental charges or levies on property of Borrower
if the same shall not at the time be delinquent or thereafter can be
paid without penalty, or are being diligently contested in good faith
and by appropriate proceedings and against which Borrower has
established adequate reserves, (B) Liens imposed by law, such as
carriers, warehousemen and mechanics Liens, and Liens incurred in
connection with construction or other similar Liens arising in the
ordinary course of business provided same are not at the time due and
payable, (C) Liens arising out of pledge or deposits under workers
compensation law, unemployment insurance, old age pension or other
social security or retirement benefit or similar legislation, (D) Liens
arising from judgments or awards with respect to which Borrower shall
be diligently and in good faith prosecuting an appeal or proceedings
for review and shall have secured a stay of execution pending such
appeal or review, (E) Liens in favor of Lender or any Lender Affiliate,
(F) the existing and future purchase money security interests in items
of Equipment (G) the existing liens on specific assets of Borrower as
identified on Exhibit 1.60 annexed hereto and (H) the liens existing on
the date of consummation of an Acquisition on specific items of
Equipment of an Acquired Entity.
1.61 "PERMITTED INDEBTEDNESS" means (A) Indebtedness to Lender
or any Lender Affiliate, (B) Subordinated Debt consented to in writing
by Lender including the Indebtedness under the Subordinated Convertible
Debentures, (C) the Seller Indebtedness, (D) purchase money
Indebtedness incurred with respect to the purchase of items of
equipment or under Capital Leases of items of Equipment provided said
Indebtedness incurred in each year does not exceed the maximum per
annum Capital Expenditures permitted hereunder and (E) guarantees by a
Borrower of the obligations of another Borrower to third persons
provided that if the primary Indebtedness so guaranteed is Subordinated
Debt the guarantee Indebtedness shall be Subordinated Debt.
1.65 "PRIME RATE LOANS" means each Advance, or Term Loan
Advance, as applicable, on which interest thereon is in accordance with
the terms of this Agreement based on the Prime Rate.
1.66 "PRIME RATE MARGIN" means a percentage set forth below
determined by reference to the Interest Rate and Fee Cash Flow Leverage
Ratio of the Borrower on a consolidated basis, with adjustments to be
made on the dates and as set forth in paragraph 2.2(D) hereof:
Interest Rate & Fee
Cash Flow Leverage Ratio Margin
greater than 3.65 to 1.0 .25%
2.75 - 3.65 to 1.0 00%
less than 2.75 to 1.0 minus .25%
1.68 "SELLER INDEBTEDNESS" means (A) the Indebtedness of
Borrower identified on Exhibit 5.20 annexed hereto arising from the
purchase by Borrower of assets of third Persons and (B) all
Indebtedness owing on account of or with respect to an Acquisition of
the assets or stock of an Acquired Entity, including without limitation
all Indebtedness incurred on account of the Purchase Price of an
Acquisition.
1.69 "SUBORDINATED CONVERTIBLE DEBENTURES" means those certain
10 % Subordinated Convertible Debentures due August 21, 2000 of CD&L,
the holders thereof and the principal amount thereof being identified
in Exhibit 1.69 annexed hereto.
1.76 "TOTAL FUNDED DEBT" means all Indebtedness of the
Borrower, including without limitation the Obligations of Borrower to
Lender, the Indebtedness under the Subordinated Convertible Debentures,
all other Subordinated Debt, the Seller Indebtedness and under Capital
Leases.
1.79 "UNUSED COMMITMENT FEE RATE" means a percentage set forth
below determined by reference to the Interest Rate and Fee Cash Flow
Leverage Ratio of the Borrower on a consolidated basis, with
adjustments to be made on the dates and as set forth in paragraph
2.2(D) hereof:
Interest Rate & Fee Cash Flow Leverage Ratio Rate
-------------------------------------------- ----
greater than 3.65 to 1.0 .50%
2.75 to 3.65 to 1.0 .375%
less than 2.75 to 1.0 .25%
3. Article I of the Loan Agreement is hereby modified to add paragraphs
1.81 through 1.92 as follows:
1.81 "ACQUIRED ENTITY" means any Person whose assets or
capital stock was acquired by a Borrower pursuant to a Permitted
Acquisition or other Acquisition consented to in writing by Lender.
1.82 "ACQUISITION" means any transaction which results in the
acquisition of the capital stock or assets (other than the purchase of
materials, supplies, etc. in the ordinary course of business) of a
Person, including without limitation by a merger or exchange of stock.
1.83 "AGGREGATE ADVANCE DOLLAR LIMIT" means Twenty Five
Million and no/100 Dollars ($25,000,000.00).
1.84 "CD&L" means Consolidated Delivery & Logistics, Inc.
1.85 "EQUIPMENT LINE EXPIRATION DATE" means November 15,
2001.
1.86 "PERMITTED ACQUISITION" means the Acquisition by a
Borrower of the capital stock of or assets of a Person which meets
the conditions set forth on Exhibit 1.86 annexed hereto and
incorporated herein.
1.87 "PURCHASE PRICE" means the amounts paid or payable on
account of or with respect to an Acquisition including without
limitation (i) all sums payable (A) in cash, (B) under promissory notes
or similar Instruments issued to the seller, (C) under non-competition
and/or consulting Agreements entered into in connection with an
Acquisition, and (D) under all "Earn Out" or similar agreements entered
into in connection with an Acquisition that should be recorded on the
financial statements of Borrower in accordance with GAAP and (ii) the
value of any stock issued to the seller, such value to be equal to (x)
the value, if any, placed on said stock in the applicable agreement
under which the Acquisition is consummated or (y) if no value is placed
on said stock in the applicable agreement the "value" to be assigned on
the books and records of the Borrower in accordance with GAAP for the
issuance of said stock, (including the increase in common stock and the
increase in paid in capital) after consultation with and approval by
(prior to consummation of the Acquisition) the independent certified
public accountants of Borrower.
1.88 "SHAREHOLDER EQUITY" means the total shareholder equity
of Borrower on a consolidated basis as determined in accordance with
GAAP.
1.89 "TERM LOAN" means the Term Loan Advances converted to a
term loan under paragraph 2.10(B) hereof.
1.90 "TERM LOAN ADVANCE(S)" means all loans by Lender to
Borrower under the Term Loan facility provided for in paragraph 2.10 of
this Agreement.
1.91 "TERM LOAN LIBOR MARGIN" means the Libor Margin in effect
from time to time under this Agreement plus one half of one percent
(.5%).
1.92 "TERM LOAN PRIME RATE MARGIN" means the Prime Rate Margin
in effect from time to time under this Agreement plus one half of one
percent (.5%).
4. Paragraph 2.1 of the Loan Agreement is hereby modified to read as
follows:
2.1 REVOLVING CREDIT FACILITY
(A) Facility. So long as no Default nor Event of Default
exists, Lender shall, from time to time hereafter, through the
Expiration Date, lend to Borrower such amounts as the Borrower may from
time to time request, based upon the Eligible Loan Value of Eligible
Accounts Receivable as may exist from time to time, but not to exceed
the Borrowing Base, and as may be reported by Borrower to Lender on a
borrowing base report in the form of Exhibit 2.1 which is to be
submitted by Borrower to Lender by Thursday of each week and as of the
close of business of the preceding Sunday. Lender shall have the right,
from time to time, in the good faith exercise of its discretion, upon
at least five (5) days prior notice to Borrower, to alter the
percentages of the Eligible Loan Value of Eligible Accounts and/or to
establish reserves against Eligible Accounts. Each month Lender may
render to Borrower a statement of the status of the loans provided for
herein, which Borrower hereby agrees shall be deemed to be an account
stated and correct and acceptable to and binding on Borrower unless
Lender shall receive a corrected statement of exceptions from Borrower
within thirty (30) days after the monthly statements have been rendered
to Borrower. The revolving credit facility provided for herein shall
have a Term through November 15, 2001. All such loans shall be payable
on the Expiration Date or as otherwise set forth in this Agreement and
shall be evidenced by a promissory note in the form of Exhibit 2.1
annexed hereto. Notwithstanding the expiration of the Term, the rights
of Lender hereunder and the obligations of Borrower hereunder,
including any Obligations with respect to loans and other financial
accommodations made after the Expiration Date, further including but
not limited to the grant of security interests in and Liens on the
Collateral as set forth in Article III hereof, shall remain in full
force and effect until all of the Obligations of Borrower to Lender and
each Lender Affiliate are satisfied in full.
(B) Interest on Advances.
(i) The Borrower agrees to notify the Lender orally
or in writing, by 11:00 a.m. local time, at least two (2) Business Days
(with respect to Libor Loans) prior to each date it requests interest
on the Advances, or a portion thereof, to be based on Libor. Each such
notice shall be irrevocable and confirmed immediately by delivery to
the Lender of a Libor rate request. Each Libor rate request shall
specify:
(a) the date from which interest is
to accrue based on Libor, which shall be a London Business Day;
(b) the aggregate amount of Advances
on which interest is to be based on Libor; and
(c) the duration of the Interest period
applicable thereto.
(ii) No more than three (3) Interest Periods
with respect to Libor Loans shall be outstanding at any time.
(iii) All Libor Loans shall be in the principal
amount of One Million and 00/100 ($1,000,000.00) Dollars or an integral
multiple thereof.
(iv) On all Advances as to which Borrower has not, in
accordance with the foregoing, selected to have interest based on
Libor, interest shall be based on the Prime Rate as set forth in
subparagraph (C)(i) below.
(C). Interest Rate and Payment Dates
(i) Each Prime Rate Loan shall bear interest on the
daily outstanding principal amount thereof for each day such Prime Rate
Loan is outstanding at a rate per annum equal to the Prime Rate in
effect from time to time plus the Prime Rate Margin. Such interest
shall be payable in arrears on each Payment Date.
(ii) Each Libor Loan shall bear interest for each
Interest Period applicable thereto, on the daily outstanding principal
amount thereof, at a rate per annum equal to Libor plus the Libor
Margin. Interest shall be payable in arrears for each Interest Period
on each Payment Date.
(D) Conversion and Continuation Options.
(i) The Borrower may elect from time to time to
convert a Libor Loan to a Prime Rate Loan by giving the Lender at least
one (1) Business Day's prior irrevocable notice of such election,
provided that conversion of a Libor Loan to a Prime Rate Loan shall
only be made on the last day of an Interest Period with respect
thereto. The Borrower may elect from time to time to convert a Prime
Rate Loan to a Libor Loan, in each case by giving the Lender by 11:00
a.m. local time at least two (2) Business Days' prior irrevocable
notice of such election. Each notice to be given by the Borrower
pursuant to this paragraph, shall be confirmed by delivery to the
Lender of a written notice, which shall specify:
(a) the date on which such rate
conversion shall take effect;
(b) the aggregate amount of the
Advances to be converted on such date;
(c) whether the Advances to be
converted are Libor Loans, or Prime Rate Loans;
(d) whether the Advances, after
conversion, will be Libor Loans or Prime Rate Loans; and
(e) in the case of a Libor Loan, the
duration of the Interest Period applicable thereto.
All or any part of the outstanding principal of a Libor Loan,
or a Prime Rate Loan, may be converted as provided herein, provided
that partial conversions shall be in an aggregate principal amount of a
minimum of One Million ($1,000,000.00) Dollars or an integral multiple
thereof.
(ii) A Libor Loan may be continued as such upon the
expiration of an Interest Period with respect thereto by compliance by
the Borrower with the notice provisions contained in this paragraph,
provided that a Libor Loan may not be continued as such when any Event
of Default has occurred and is continuing, but shall be automatically
converted to a Prime Rate Loan on the last day of the subject Interest
Period.
(iii) If the Borrower shall fail to give notice to
convert or continue a Libor Loan in the manner required by paragraphs
(i) or (ii) above, the Borrower shall be deemed to have elected to
convert the Libor Loan to a Prime Rate Loan on the last day of the
Interest Period applicable thereto;
(E) Prepayment. Prime Rate Loans may be prepaid in whole or
in part, at any time without premium or penalty. Libor Loans may be
prepaid, in whole or in part, only on the last day of an Interest
Period; provided, however, that any partial prepayments shall be in a
principal amount of not less than $1,000,000.00, or multiples thereof.
Any prepayment shall include accrued and unpaid interest to the date of
prepayment on the principal amount prepaid and all other sums due and
payable hereunder. All payments received on the Advances may be applied
in such order as the Lender in its sole discretion shall determine.
(F) Indemnification. The Borrower shall indemnify the Lender
against the Lender's loss or expense in employing deposits as a
consequence of (i) the Borrower's failure to make any payment when due
under the Advances constituting a Libor Loan, or (ii) any prepayment of
a Libor Loan on a date other than the last day of the applicable
Interest Period ("Indemnified Loss or Expense").
(G) Additional Costs. If, at any time, a new, or a revision
in any existing law or interpretation or administration (including
reversals) thereof by any government authority, central bank or
comparable agency imposes, increases or modifies any reserve or similar
requirement against assets, deposits or credit extended by lenders
generally, or subjects lenders generally to any tax, duty or other
charge (except tax on the Lender's net income), and any of the
foregoing increases the cost to the Lender of maintaining its
commitment to provide Libor Loans or reduce the amount of any sum
received or receivable by the Lender under the Advances which are Libor
Loans, within 15 days after demand by the Lender, the Borrower agrees
to pay the Lender such additional amounts as will compensate the Lender
for such increased costs or reductions ("Additional Costs").
(H) Match Funding. The amount of such (i) Indemnified Loss or
Expense, or (ii) Additional Costs outlined above shall be determined,
in the Lender's sole discretion, based upon the assumption that the
Lender funded 100% of that portion of the Advances to which the
Libor-based rate applies in the applicable London interbank market.
(I) Unavailability of Interest Rate. If, at any time, (i) the
Lender shall determine that, by reason of circumstances affecting
foreign exchange and interbank markets generally, Libor deposits in the
applicable amounts are not being offered to the Lender or Bank; or (ii)
a new, or a revision in any existing law or interpretation or
administration (including reversals) thereof by any government
authority, central bank or comparable agency shall make it unlawful or
impossible for the Lender to honor its obligations under the Advances,
then (A) the Lender's obligation, if any, to make or maintain a Libor
Loan shall be suspended, and (B) at the Lender's discretion the
applicable Libor-based rate shall, for the remainder of the term of the
Loan, immediately be converted to the Prime Rate plus the Prime Rate
Margin, but if so converted the indemnification obligation of Borrower
under (F) above shall not apply.
5. Subparagraph 2.2(D) of the Loan Agreement is hereby modified to read as
follows:
(D) Adjustments.The Prime Rate Margin and the Libor Margin
and the Unused Commitment Fee Rate and the Term Loan Prime Rate
Margin and the Term Loan Libor Margin shall be calculated based upon
the quarterly financial statements of Borrower on a consolidated basis
to be furnished to Lender in accordance with the terms hereof and
shall be adjusted as of the first day of the month following the month
in which such financial statements and the required accompanying
compliance certificates are furnished by Borrower to Lender provided
there are at least five (5) Business Days between the date same are so
furnished to Lender and the first day of the following month. If there
is less than five (5) Business Days said margins and rate shall be
adjusted as of the sixth (6th) Business Day following the date said
financial statements are furnished to Lender. Subject to paragraph 9.7
hereof, if said quarterly financial statements and compliance
certificate are not furnished to Lender within the time period set
forth in paragraph 6.1 hereof, the margins and rate shall be the
highest such margin and rate until said financial statements and
certificate are furnished to Lender. Notwithstanding the foregoing,
for the purpose of determining the applicable margin with respect to
Advances and Term Loan Advances the Prime Rate Margin and Libor Margin
in effect on November 15, 1998 (minus .25% and plus 1.5% respectively)
shall remain in effect and shall not be readjusted until the Lender
receives the quarterly financial statements and compliance certificate
of Borrower for the quarter ending March 31, 1999, subject to the
preceding sentence.
6. Subparagraph 2. 4(C) of the Loan Agreement is hereby modified to read
as follows:
(C) Early Termination Fee. If the revolving credit
facility is terminated by Lender upon the occurrence of an Event of
Default, or is terminated by Borrower prior to the Expiration Date or
if Borrower prepays said facility prior to said Expiration Date, in
view of the impracticability and extreme difficulty of ascertaining
actual damages and by mutual agreement of the parties as to a
reasonable calculation of Lender's lost profits as a result thereof,
Borrower shall pay Lender upon the effective date of such termination
or prepayment a fee in an amount equal to: (a) one percent (1.0%) of
the Aggregate Advance Dollar Limit if such termination occurs on or
prior to November 15, 1999; or (b) one half of one percent (.5%) of
the Aggregate Advance Dollar Limit if such termination occurs after
November 15, 1999 but on or prior to November 15, 2000. Such fee shall
be presumed to be the amount of damages sustained by Lender as the
result of an early termination and Borrower acknowledges that it is
reasonable under the circumstances currently existing. The fee
provided for in this Section shall be deemed included in the
Obligations.
7. Paragraph 2.5 of the Loan Agreement is hereby modified to read as
follows:
2.5 PROCEDURES FOR ADVANCES On each Business Day Prime Rate Loans
under the revolving credit facility provided for herein shall be
advanced by the Lender to the Borrower pursuant to the terms and
conditions of the Cash Management Services. Subject to paragraph 2.1(B)
hereof with respect to Libor Loans, Borrower shall provide Lender with
at least one (1) Business Day's oral notice of the requested Advance,
specifying the date (the "Loan Date") and amount, which oral notice
shall be promptly confirmed in writing by Borrower. Lender shall, on or
after 1:00 P.M. (New York time) of the Loan Date, make the amount of
the requested Advance available to Borrower, provided all conditions
precedent to such loan have been met or satisfied. Each requested
Advance hereunder which is to be a Libor Loan shall be in the minimum
amount of $1,000,000.00 and multiples of $1,000,000.00 in excess
thereof.
8. Article II of the Loan Agreement is hereby modified to add paragraph
2.10 as follows
2.10 "EQUIPMENT TERM LOAN LINE" (A) Lender shall from time to time
hereafter through the Equipment Line Expiration Date make loans to
Borrower up to the aggregate principal sum of Two Million Five Hundred
Thousand and no/100 ($2,500,000.00) Dollars. The proceeds of the loans
shall be used by Borrower solely to purchase items of new Equipment
acceptable to Lender. As a condition precedent to each loan, each of
the following shall exist:
(i) No Default nor Event of Default shall exist;
(ii) Each representation and warranty of Borrower herein shall
be true and accurate as of the date of each loan and other
financial accommodation;
(iii) Borrower shall deliver to Lender such
documents, certificates, bills of sale or
title evidencing that the Equipment has
been delivered to, and accepted by
Borrower, that such Equipment is owned by
Borrower free and clear of any Liens,
claims and encumbrances, and establishing
the purchase price thereof and the
location thereof;
(iv) Each loan shall not exceed the lesser of
(i) eighty (80%) percent of the purchase
price of the Equipment for which the loan
is requested or such other percentage
thereof as Lender in good faith deems
appropriate taking into consideration the
nature of the specific item of Equipment,
or (iv) the appraised value of the items
of Equipment for what the loan is
requested;
(v) Borrower shall deliver to Lender such
documents and instruments as Lender and
its counsel may deem necessary to perfect
Lender's interest in the Collateral,
including, but not limited to, UCC-1
financing statements;
(vi) Lender shall be in receipt of such UCC and
other search results, information and
documents as are necessary, in its
opinion, to ensure that its interest in
the item of Equipment will be a first
priority and exclusive security interest;
(vii) Borrower shall execute and deliver to
Lender a duly completed loan request form
and Promissory Note in the form of
Exhibits 2.10 and 2.10(A), respectively;
and
(viii) Borrower pays to Lender a fee of one half
of one percent (but not less than $500.00)
of the principal amount of the requested
Term Loan Advance.
Absent conversion to a Term Loan as set forth below, the outstanding principal
balance of all such Term Loan Advances and all accrued and unpaid interest shall
be due and payable on the Equipment Line Expiration date.
(B) Provided no Default nor Event of Default exists, the outstanding
balance of all Term Loan Advances under Paragraph 2.10(A) which have
not previously been converted to a Term Loan shall be consolidated and
converted to a Term Loan on the earlier of (i) the date(s) the Term
Loan Advances not previously converted to a Term Loan equals or exceeds
Five Hundred Thousand and no/100 Dollars ($500,000.00) and (ii) on each
May 15th and November 15th hereafter. The principal sum of each
converted Term Loan shall be payable in equal consecutive monthly
installments of principal, each equal to not more than 1/36th of the
sum of the amount so consolidated and converted to a Term Loan except
for the final installment which shall be the unpaid principal balance.
The first such installment shall be payable on the first day of the
first month following the dates(s) said Term Loan Advances are
converted to a Term Loan, and said installments shall continue on the
same date of each month thereafter until paid in full. Upon such
conversion to a Term Loan the Borrower shall execute and deliver to
Lender a duly completed term loan note in the form annexed hereto as
exhibit 2.10(B).
(C) Interest on Term Loan Advances.
(i) All Term Loan Advances not yet converted to a Term Loan
shall be Prime Rate Loans and interest shall be based on the Prime Rate as set
forth in subparagraph (D)(i) below.
(ii) The Borrower agrees to notify the Lender orally or in
writing, by 11:00 a.m. local time, at least two (2) Business Days (with respect
to Libor Loans) prior to each date it requests interest on a Term Loan, to be
based on Libor, and such selection shall apply to the entire principal balance
of such Term Loan. Each such notice shall be irrevocable and confirmed
immediately by delivery to the Lender of a Libor rate request. Each Libor rate
request shall specify:
(a) the date from which interest is to accrue
based on Libor, which shall be a London Business Day;
(b) the specific Term Loan on which interest is to be
based on Libor; and
(c) the duration of the Interest period applicable
thereto.
(iii) No more than three (3) Interest Periods with respect to
Libor Loans shall be outstanding at any time.
(iv) All Term Loans which are Libor Loans shall be in the
original principal amount of Five Hundred and 00/100 ($500,000.00) Dollars.
(v) On all Term Loans as to which Borrower has not, in
accordance with the foregoing, selected to have interest based on Libor,
interest shall be based on the Prime Rate as set forth in subparagraph (D)(i)
below.
(vi) Notwithstanding the foregoing, the Lender and Borrower
may agree, in writing, that interest on a Term Loan may be a fixed rate of
interest for the entire term of the Term Loan or calculated in some other
manner, and any prepayment premium or indemnity provisions relating thereto, the
terms of which may be set forth in a promissory note, accepted by Lender,
evidencing such Term Loan, and/or any other writing between Lender and Borrower.
(D). Interest Rate and Payment Dates
(i) Each Prime Rate Loan which is a Term Loan Advance shall
bear interest on the daily outstanding principal amount thereof for each day
such Prime Rate Loan is outstanding at a rate per annum equal to the Prime Rate
in effect from time to time plus the Term Loan Prime Rate Margin. Such interest
shall be payable in arrears on each Payment Date.
(ii) Each Libor Loan which is a Term Loan shall bear interest
for each Interest Period applicable thereto, on the daily outstanding principal
amount thereof, at a rate per annum equal to Libor plus the Term Loan Libor
Margin. Interest shall be payable monthly in arrears on the first Business Day
of each month.
(E) Conversion and Continuation Options.
(i) The Borrower may elect from time to time to convert a
Libor Loan which is a Term Loan to a Prime Rate Loan by giving the Lender at
least one (1) Business Day's prior irrevocable notice of such election, provided
that conversion of a Libor Loan to a Prime Rate Loan shall only be made on the
last day of an Interest Period with respect thereto. The Borrower may elect from
time to time to convert a Prime Rate Loan which is a Term Loan to a Libor Loan,
in each case by giving the Lender by 11:00 a.m. local time at least two (2)
Business Days' prior irrevocable notice of such election. Each notice to be
given by the Borrower pursuant to this paragraph, shall be confirmed by delivery
to the Lender of a written notice, which shall specify:
(a) the date on which such rate conversion shall
take effect;
(b) the specific Term Loan to be converted on
such date;
(c) whether the Term Loan Advances to be converted
are Libor Loans, or Prime Rate Loans;
(d) whether the subject Term Loan, after
conversion, will be Libor Loans or Prime Rate Loans; and
(e) in the case of a Libor Loan, the duration
of the Interest Period applicable thereto.
(ii) A Libor Loan may be continued as such upon the
expiration of an Interest Period with respect thereto by compliance by the
Borrower with the notice provisions contained in this paragraph, provided that a
Libor Loan may not be continued as such when any Event of Default has occurred
and is continuing, but shall be automatically converted to a Prime Rate Loan on
the last day of the subject Interest Period.
(iii) If the Borrower shall fail to give notice to convert or
continue a Libor Loan in the manner required by paragraphs (i) or (ii) above,
the Borrower shall be deemed to have elected to convert the Libor Loan to a
Prime Rate Loan on the last day of the Interest Period applicable thereto;
(F) Prepayment. Prime Rate Loans may be prepaid in whole or in part,
at any time without premium or penalty. Libor Loans may be prepaid, in whole or
in part, only on the last day of an Interest Period; provided, however, that any
partial prepayments shall be in a principal amount of not less than $250,000.00,
or multiples thereof. Any prepayment shall include accrued and unpaid interest
to the date of prepayment on the principal amount prepaid and all other sums due
and payable hereunder. All payments received on the Term Loan Advances may be
applied in such order as the Lender in its sole discretion shall determine.
(G) Indemnification. The Borrower shall indemnify the Lender against
the Lender's loss or expense in employing deposits as a consequence of (i) the
Borrower's failure to make any payment when due under a Term Loan constituting a
Libor Loan, or (ii) any prepayment of a Libor Loan on a date other than the last
day of the applicable Interest Period ("Indemnified Loss or Expense").
(H) Additional Costs. If, at any time, a new, or a revision in any
existing law or interpretation or administration (including reversals) thereof
by any government authority, central bank or comparable agency imposes,
increases or modifies any reserve or similar requirement against assets,
deposits or credit extended by lenders generally, or subjects lenders generally
to any tax, duty or other charge (except tax on the Lender's net income), and
any of the foregoing increases the cost to the Lender of maintaining its
commitment to provide Libor Loans or reduce the amount of any sum received or
receivable by the Lender under the Term Loan Advances which are Libor Loans,
within 15 days after demand by the Lender, the Borrower agrees to pay the Lender
such additional amounts as will compensate the Lender for such increased costs
or reductions ("Additional Costs").
(I) Match Funding. The amount of such (i) Indemnified Loss or Expense,
or (ii) Additional Costs outlined above shall be determined, in the Lender's
sole discretion, based upon the assumption that the Lender funded 100% of that
portion of the Term Loan Advances to which the Libor-based rate applies in the
applicable London interbank market.
(J) Unavailability of Interest Rate. If, at any time, (i) the Lender
shall determine that, by reason of circumstances affecting foreign exchange and
interbank markets generally, Libor deposits in the applicable amounts are not
being offered to the Lender or Bank; or (ii) a new, or a revision in any
existing law or interpretation or administration (including reversals) thereof
by any government authority, central bank or comparable agency shall make it
unlawful or impossible for the Lender to honor its obligations under the Term
Loan Advances, then (A) the Lender's obligation, if any, to make or maintain a
Libor Loan shall be suspended, and (B) at the Lender's discretion the applicable
Libor-based rate shall, for the remainder of the term of the Loan, immediately
be converted to the Prime Rate plus the Term Loan Prime Rate Margin, but if so
converted the indemnification obligation of Borrower under (G) above shall not
apply.
9. Paragraph 3.3 of the Loan Agreement is hereby modified to read as
follows:
3.3 EQUIPMENT Borrower hereby creates in favor of Lender and
hereby grants to Lender a security interest in all of Borrower's
Equipment, as such term is defined herein, whether presently owned by
Borrower or hereafter acquired, and wherever located excepting only
items of motor vehicle rolling stock subject to purchase money security
interests in favor of third Persons and unencumbered motor vehicles
more than five (5) years old, but specifically including all items of
Equipment financed with the proceeds of Term Loan Advances under
paragraph 2.10 hereof.
10. Paragraph 5.14 of the Loan Agreement is hereby modified to read as
follows:
5.14 PROCEEDS OF LOAN Borrower is not engaged principally, or
as one of its important activities, in the business of extending credit
for the purpose of purchasing or carrying any margin stock within the
meaning of Regulation U of the Board of Governors of the Federal
Reserve System, as amended. No part of the proceeds of the loans will
be used, directly or indirectly, for a purpose which violates any law,
rule or regulation of any Governmental Body, including without
limitation the provisions of Regulations G, T, U or X of the Board of
Governors of the Federal Reserve System, as amended. Borrower
represents that the proceeds of the Advances provided for herein shall
be used to finance Accounts Receivable, for working capital and to
finance Permitted Acquisitions and other Acquisitions consented to in
writing by Lender, and the proceeds of the Term Loan Advances shall be
used to finance the acquisition of items of Equipment for which said
Term Loan Advances are requested. No proceeds of any loan or other
financial accommodations hereunder shall be used to purchase or carry
any margin stock (within the meaning of Regulation U issued by the
Board of Governors of the Federal Reserve System) or to extend credit
to others for the purpose of purchasing or carrying any margin stock.
11. Article VI of the Loan Agreement is hereby modified to add paragraph
6.17 as follows:
6.17 CONSUMMATION OF ACQUISITONS.
(A)Borrower shall furnish to Lender a copy
of any letter of intent or similar document with respect to any
proposed Acquisition promptly following the execution thereof but no
later than three weeks after such execution. At least one (1) week
prior to the anticipated date of consummation of an Acquisition,
Borrower shall furnish to Lender the documents and other materials set
forth on exhibit 6.17(A) annexed hereto with respect to the proposed
Acquisition, provided, however, that if Borrower anticipates the
Acquisition will not be a Permitted Acquisition, but rather an
Acquisition that requires the consent of the Lender, said documents
and materials shall be furnished to Lender at least three (3) weeks
prior to the anticipated date of consummation of the Acquisition and
the Borrower shall specify those aspects of the proposed Acquisition
which it believes makes it not a Permitted Acquisition.
(B) Not earlier than one (1) day prior to,
but not later than the day of and prior to the date of consummation of
any Acquisition, Borrower shall furnish to Lender an availability
certificate in the form of exhibit 6.17 (B) annexed hereto, including
details of any adjustment in the Purchase Price from the anticipated
Purchase Price previously reported to Lender.
(C) Within thirty (30) days after
consummation of an Acquisition Borrower shall furnish to Lender
the documents and materials set forth on exhibit 6.17(C) annexed
hereto.
(D) If Lender consents to an Acquisition
which is not a Permitted Acquisition, said Acquisition shall
conform to all of the terms and conditions of a Permitted
Acquisition, as set forth on exhibit 1.86 annexed hereto, and
Borrower shall comply with the requirements set forth on said exhibit
1.86, excepting only those terms and conditions the Lender agrees, in
writing, do not apply to said Acquisition.
12. Paragraphs 7.2, 7.8 and 7.13 of the Loan Agreement are
hereby modified to read as follows:
7.2 FINANCIAL COVENANTS
(A) Shareholders Equity. Borrower, on a consolidated
basis, will not allow its Shareholder Equity to be less than an amount
equal to seventy-five percent (75%) of it's Shareholders Equity as of
September 30, 1998 plus sixty-five percent (65%) of all Net Income
earned after September 30, 1998 plus one hundred percent (100%) of all
net proceeds received after September 30, 1998 from the sale or
issuance of any capital stock or similar equity instrument.
(B) Cash Flow Leverage Ratio. Borrower, on a
consolidated basis, will not allow its Cash Flow Leverage Ratio,
calculated at the end of each fiscal quarter, to be more than
(i) 4.6 to 1.0 through December 31, 1998;
(ii) 4.0 to 1.0 from January 1, 1999 through
November 30, 1999;
(iii) 3.75 to 1.0 from December 1, 1999
through November 30, 2000; and
(iv) 3.50 to 1.0 from December 1, 2000 on.
(C) Capital Expenditures. Borrower, on a consolidated
basis, will not in any fiscal year make Capital Expenditures in excess
of Three Million Two Hundred Thousand Dollars ($3,200,000.00) in the
aggregate per annum.
(D) Fixed Charge Coverage Ratio. Borrower, on
a consolidated basis, will not allow its Fixed Charge Coverage Ratio,
calculated at the end of each fiscal quarter, to be
less than
(i) 1.0 to 1.0 through November 30, 1999;
(ii) 1.15 to 1.0 from December 1, 1999
through November 30, 2000; and
(iii) 1.25 to 1.0 from December 1, 2000 on.
Compliance with the foregoing covenants, shall be
calculated on the financial statements of Borrower as of the end of
each fiscal quarter and of the Borrower on a consolidated basis. If
during any fiscal quarter, commencing with the quarter ending September
30, 1998, Borrower consummated any Acquisition, for the purposes of
calculating the foregoing covenants, the financial results for the
subject period of the Acquired Entity shall be included in the
consolidated financial statements of the Borrower as if the Acquisition
occurred on the first day of the period for which said covenants are
calculated.
7.8 PREPAYMENTS OF INDEBTEDNESS Borrower will not prepay or
obligate itself to prepay in whole or in part, or redeem the
Subordinated Convertible Debentures, any other Subordinated Debt or any
Capital Leases, except that provided no Event of Default exists
Borrower may prepay its obligations under Capital Leases in conjunction
with and from the proceeds of a refinancing of said Capital Leases
which refinancing is on financial and other terms more favorable to
Borrower than the Capital Leases being so refinanced. Borrower shall
notify Lender in writing of any such refinancing.
7.13 MAINTAIN CORPORATE EXISTENCE AND NATURE OF BUSINESS (A)
Borrower will not allow its corporate existence to be other than in
good standing and will not, without the prior written consent of
Lender, dissolve or liquidate, or merge or consolidate with or acquire
or affiliate with any other business entity including any acquisition
of the assets of any other Person or form any Subsidiary other than a
Permitted Acquisition, provided that upon not less than ten (10) days
prior written notice to Lender (i) any Borrower may be merged into any
other Borrower, and (ii) any Borrower may be dissolved if the business
of such Borrower is to be continued by any other Borrower.
(B) Borrower will not change its name without
furnishing to Lender at least ten (10) days prior written notice
thereof.
(C) Borrower will not utilize any trade name not set
forth on Exhibit "A" without furnishing to Lender at least ten (10)
days prior written notice thereof.
(D) Borrower will not change the nature of its
business.
13. Article VIII of the Loan Agreement is hereby modified to add paragraph
8.17 as follows:
8.17 CHANGE IN CONTROL If after the date hereof any event or other
transaction occurs, without the written consent of Lender, as a
result of which there is a change in ownership or control of the voting
capital stock of CD&L so that any Person owns or controls more than 25%
of said voting stock.
14. Borrower represents that:
(a) each and every representation heretofore made by Borrower in the
Loan Agreement and the other Loan Documents is true and correct as of the date
of this Modification Agreement, except that the representations as to the
financial condition of the Borrower are deemed to be updated to reflect the
financial condition of Borrower as of the date of the most recent financial
statements furnished to Lender and the attached schedules are deemed to replace
the corresponding schedules in the Loan Agreement,
(b) no consent or approval of, or exemption by any Person is required
to authorize, or is otherwise required in connection with the execution and
delivery of this Modification Agreement and the other Loan Documents provided
for herein, which has not been obtained and which remains in full force and
effect,
(c) Borrower has the power to execute, deliver and carry out this
Modification Agreement and all documents executed in connection herewith, and
this Modification Agreement and such other documents are valid, binding and
enforceable as against Borrower in accordance with their terms,
(d) no material adverse change in the financial condition of Borrower
has occurred since the date of the most recent financial statements of Borrower
submitted to Lender, and the information contained in said statements and
reports is true and correctly reflects the financial condition of Borrower and
such Obligors as of the dates of the statements and reports, and such statements
and reports have been prepared in accordance with GAAP and do not contain any
material misstatement of fact or omit to state any facts necessary to make the
statements contained therein not misleading, and
(e) No Default or Event of Default exists under the Loan
Agreement.
15. Each Borrower hereby confirms the security interests and liens granted by
Borrower to Lender in and to the Collateral in accordance with the Loan
Agreement and other Loan Documents as security for its Obligations to Lender.
16. Borrower agrees to pay any and all expenses, including reasonable counsel
fees and disbursements, incurred by Lender in connection with the preparation,
negotiation and execution of this Modification Agreement and all other Loan
Documents provided for herein.
17. In consideration of Lender entering into this Modification Agreement,
Borrower shall pay to Lender, contemporaneous with the execution hereof, an
$18,750.00 Facility Fee.
18. This Modification Agreement is intended to supplement and modify the Loan
and Security Agreement dated as of July 14, 1997 as modified between Lender and
Borrower and the rights and obligations of the parties under said Loan and
Security Agreement shall not in any way be vacated, modified or terminated
except as herein provided. All terms and conditions contained in each and every
agreement or promissory note or other evidence of indebtedness of Borrower to
Lender are incorporated herein by reference. If there is a conflict between any
of the provisions heretofore entered into and the provisions of this
Modification Agreement, then the provisions of this Modification Agreement shall
govern.
19. This Modification Agreement shall be construed in accordance with the
substantive laws of the State of New Jersey without regard to conflict of laws.
20. This Modification Agreement may be executed by one or more of the parties on
any number of separate counterparts and all of said counterparts taken together
shall be deemed to constitute one and the same document.
IN WITNESS WHEREOF, the parties hereto have caused this Modification
Agreement to be executed and delivered by their duly authorized officers as of
the day and year first above written.
CONSOLIDATED DELIVERY & LOGISTICS, INC.,
BY: /s/ Albert W. Van Ness
NAME: Albert W. VanNess, Jr.
TITLE: Chairman and C.E.O.
CLAYTON/NATIONAL COURIER SYSTEMS, INC.
BY: /s/ Mark Carlesimo
NAME: Mark Carlesimo
TITLE: Vice President
NATIONAL EXPRESS COMPANY, INC.,
BY: /s/ Mark Carlesimo
NAME: Mark Carlesimo
TITLE: Vice President
CLICK MESSENGER SERVICE, INC.,
BY: /s/ Mark Carlesimo
NAME: Mark Carlesimo
TITLE: Vice President
CLICK MESSENGER SERVICE OF N.Y., INC.,
BY: /s/ Mark Carlesimo
NAME: Mark Carlesimo
TITLE: Vice President
OLYMPIC COURIER SYSTEMS, INC.,
BY: /s/ Mark Carlesimo
NAME: Mark Carlesimo
TITLE: Vice President
SECURITIES COURIER CORPORATION
BY: /s/ Mark Carlesimo
NAME: Mark Carlesimo
TITLE: Vice President
SILVER STAR EXPRESS, INC.
BY: /s/ Mark Carlesimo
NAME: Mark Carlesimo
TITLE: Vice President
SUREWAY AIR TRAFFIC CORPORATION
BY: /s/ Mark Carlesimo
NAME: Mark Carlesimo
TITLE: Vice President
SUREWAY LOGISTICS CORPORATION
BY: /s/ Mark Carlesimo
NAME: Mark Carlesimo
TITLE: Vice President
KBD SERVICES, INC.
BY: /s/ Mark Carlesimo
NAME: Mark Carlesimo
TITLE: Vice President
FIRST UNION COMMERCIAL CORPORATION
By: /s/ Georgios C. Kyvernitis
Name: Georgios C. Kyvernitis
Title: Vice President