SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No. __)
Filed by the Registrant |X|
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
|X| Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
CD&L, INC.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
|X| No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11 (a) (2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1. Amount Previously Paid:
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2. Form, Schedule or Registration Statement No.:
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4. Date Filed:
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[CD&L Logo]
Dear Stockholder:
On behalf of the Board of Directors, you are cordially invited to
attend the Annual Meeting of Stockholders of CD&L, Inc. (the "Company") to be
held at the offices of Lowenstein Sandler PC, 1251 Avenue of the Americas, New
York, New York 10020 on Wednesday, June 7, 2006 at 10:00 a.m.
The enclosed Notice of Meeting and the accompanying Proxy Statement
describe the business to be conducted at the Meeting. Enclosed is a copy of the
Company's 2005 Annual Report on Form 10-K, which contains certain information
regarding the Company and its results for 2005.
It is important that your shares of Common Stock be represented and
voted at the Meeting. Accordingly, regardless of whether you plan to attend in
person, please complete, date, sign and return the enclosed proxy card in the
envelope provided, which requires no postage if mailed in the United States.
Even if you return a signed proxy card, you may still attend the Meeting and
vote your shares in person. Every stockholder's vote is important, whether you
own a few shares or many.
I look forward to seeing you at the Annual Meeting.
Sincerely,
/s/ Albert W. Van Ness, Jr.
Albert W. Van Ness, Jr.
Chairman of the Board
and Chief Executive Officer
April 30, 2006
South Hackensack, New Jersey
[CD&L Logo]
CD&L, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
JUNE 7, 2006
The Annual Meeting of Stockholders (the "Meeting") of CD&L, Inc. (the
"Company") will be held at the offices of Lowenstein Sandler PC, 1251 Avenue of
the Americas, New York, New York 10020 on Wednesday, June 7, 2006 at 10:00 a.m.,
to consider and act upon the following:
1. The election of four directors.
2. Approval of the adoption of an amendment to the CD&L, Inc. Year 2000
Stock Incentive Plan.
3. The transaction of such other business as may properly come before
the Meeting or any adjournments or postponements thereof.
Only holders of record of the Company's Common Stock, par value $.001
per share, at the close of business on April 28, 2006 will be entitled to vote
at the Meeting.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Mark T. Carlesimo
Mark T. Carlesimo
Secretary
April 30, 2006
South Hackensack, New Jersey
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, MANAGEMENT URGES YOU TO
DATE, SIGN AND MAIL THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN THE ENCLOSED
ENVELOPE. YOU MAY REVOKE THE PROXY AT ANY TIME PRIOR TO ITS EXERCISE.
[CD&L Logo]
CD&L, INC.
80 WESLEY STREET
SOUTH HACKENSACK, NEW JERSEY 07606
201.487.7740
ANNUAL MEETING OF STOCKHOLDERS
JUNE 7, 2006
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PROXY STATEMENT
The enclosed proxy is solicited by the Board of Directors of CD&L, Inc.
(the "Company") for use at the Annual Meeting of Stockholders to be held at the
offices of Lowenstein Sandler PC, 1251 Avenue of the Americas, New York, New
York 10020 on Wednesday, June 7, 2006 at 10:00 a.m., and at any adjournments or
postponements thereof (the "Meeting"). A stockholder who has voted by proxy has
the right to revoke it by giving written notice of such revocation to the
Secretary of the Company at any time before it is voted, by submitting to the
Company a duly executed, later-dated proxy or by voting the shares subject to
such proxy by written ballot at the Meeting. The presence at the Meeting of a
stockholder who has given a proxy does not revoke such proxy unless such
stockholder files a notice of revocation or votes by written ballot.
The proxy statement and the enclosed form of proxy are first being
mailed to stockholders on or about April 30, 2006. All shares represented by
valid proxies pursuant to this solicitation (and not revoked before they are
exercised) will be voted as specified in the proxy. If a proxy is signed but no
specification is given, the shares will be voted "FOR" the proposal to elect the
Board's nominees to the Board of Directors and "FOR" the proposal to approve an
amendment to the CD&L, Inc. Year 2000 Stock Incentive Plan (the "Amendment").
The entire cost of soliciting these proxies will be borne by the
Company. The solicitation of proxies may be made by directors, officers and
regular employees of the Company or any of its subsidiaries by mail, telephone,
facsimile or telegraph or in person without additional compensation payable with
respect thereto. Arrangements will be made with brokerage houses and other
custodians, nominees and fiduciaries to forward proxy soliciting material to the
beneficial owners of stock held of record by such persons, and the Company will
reimburse them for reasonable out-of-pocket expenses incurred by them in so
doing.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
At April 28, 2006 (the "Record Date"), the Company had outstanding
10,012,479 shares of common stock, par value $.001 per share ("Common Stock").
Each holder of Common Stock will have the right to one vote for each share
standing in such holder's name on the books of the Company as of the close of
business on the Record Date with respect to each of the matters considered at
the Meeting. There is no right to cumulate votes in the election of directors.
Holders of the Common Stock will not have any dissenters' rights of appraisal in
connection with any of the matters to be voted on at the Meeting.
The presence in person or by proxy of the holders of shares entitled to
cast a majority of the votes of all shares entitled to vote will constitute a
quorum for purposes of conducting business at the Meeting. Assuming that a
quorum is present, directors will be elected by a plurality vote and approval of
the adoption of the Amendment will require the affirmative vote of a majority of
the votes cast at the Meeting by the stockholders entitled to vote thereat.
Pursuant to Delaware corporate law, abstentions and broker non-votes will be
counted for the purpose of determining whether a quorum is present and do not
have an effect on the election of directors. Abstentions, but not broker
non-votes, are treated as shares present and entitled to vote, and will be
counted as a "no" vote. Broker non-votes are treated as not entitled to vote,
and so reduce the absolute number, but not the percentage, of votes needed for
approval of a matter.
Based upon information available to the Company, the following
stockholders beneficially owned more than 5% of the Common Stock as of April 11,
2006.
NAME AND ADDRESS OF NUMBER OF SHARES PERCENT OF
BENEFICIAL OWNER BENEFICIALLY OWNED CLASS (9)(10)
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BNP Paribas 4,443,258 (1) 30.7%
Exeter Venture Lenders L.P.
Exeter Capital Partners IV, L.P.
C/O BNP Paribas
787 Seventh Avenue
New York, NY 10019
Albert W. Van Ness, Jr. 1,764,692 (2) 15.2%
80 Wesley Street
South Hackensack, NJ 07606
Michael Brooks 1,507,506 (3) 13.4%
80 Wesley Street
South Hackensack, NJ 07606
William T. Brannan 1,425,129 (4) 12.6%
80 Wesley Street
South Hackensack, NJ 07606
Matthew J. Morahan 572,362 (5) 5.6%
80 Wesley Street
South Hackensack, NJ 7606
Russell J. Reardon 1,312,066 (6) 11.7%
80 Wesley Street
South Hackensack, NJ 07606
Vincent T. Brana 1,101,203 (7) 10.4%
80 Wesley Street
South Hackensack, NJ 07606
Julian Tymczyszyn 507,025 (8) 5.1%
11 King George Street
Greenwich, London SE10 8QJ
United Kingdom
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(1) Includes 506,250 shares of Common Stock issuable upon exercise of
outstanding warrants and 3,937,008 shares of Common Stock issuable upon
conversion of Series A Preferred Stock.
(2) Includes 1,037,981 shares of Common Stock issuable upon the exercise of
options pursuant to the Employee Stock Compensation Program which are
exercisable within 60 days of April 11, 2006 and 590,551 shares of
Common Stock issuable upon conversion of Series A Convertible Notes.
(3) Includes 665,000 shares of Common Stock issuable upon the exercise of
options pursuant to the Employee Stock Compensation Program which are
exercisable within 60 days of April 11, 2006 and 590,551 shares of
Common Stock issuable upon conversion of Series A Convertible Notes.
(4) Includes 720,782 shares of Common Stock issuable upon the exercise of
options pursuant to the Employee Stock Compensation Program which are
exercisable within 60 days of April 11, 2006 and 590,551 shares of
Common Stock issuable upon conversion of Series A Convertible Notes.
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(5) Includes 25,000 shares of Common Stock issuable upon the exercise of
options pursuant to the Employee Stock Compensation Program which are
exercisable within 60 days of April 11, 2006 and 196,850 shares of
Common Stock issuable upon conversion of Series A Convertible Notes.
(6) Includes 647,277 shares of Common Stock issuable upon the exercise of
options pursuant to the Employee Stock Compensation Program which are
exercisable within 60 days of April 11, 2006 and 590,551 shares of
Common Stock issuable upon conversion of Series A Convertible Notes.
(7) Includes 590,551 shares of Common Stock issuable upon conversion of
Series A Convertible Notes.
(8) Based on a Schedule 13G amendment filed with the Securities and
Exchange Commission on January 6, 2006.
(9) The holders of employee stock options, warrants, Series A Preferred
Stock, Series A Convertible Notes and Series B Convertible Notes do not
have voting rights as holders of Common Stock until their securities
are converted. The sum of individual beneficial ownership percentages
can exceed 100% due to the nature of the calculation which, in
accordance with SEC rules, assumes for each individual that the
denominator is equal to total outstanding shares and shares which would
be outstanding upon the exercise or conversion of all options and
convertible instruments for that individual stockholder without regard
to the exercise or conversion of similar instruments by any other
stockholder.
(10) Also see "Voting Agreements/2004 Financial Restructuring" below.
VOTING AGREEMENTS/2004 FINANCIAL RESTRUCTURING
On December 31, 2003, the Company was indebted to BNP Paribas, Exeter
Venture Lenders L.P. and Exeter Capital Partners IV, L.P. (collectively, the
"Lenders") in the sum of approximately $11 million pursuant to a senior
subordinated note bearing interest at 12% per annum and due January 2006. On
April 14, 2004, an agreement was reached among the Company, the Lenders and
certain members of the Company's management and others (the "Investors") as to
the financial restructuring of the senior notes. As a result of that
restructuring, (a) the Company received proceeds of $1 million, (b) the Lenders
were repaid $3 million and were issued Series A Preferred Stock with a
liquidation preference of $4 million (convertible into approximately 3,937,008
shares of Common Stock) and Series B Convertible Notes in the principal sum of
$4 million due 2011 (convertible into approximately 1,968,504 shares of Common
Stock), and (c) the Investors acquired in the aggregate Series A Convertible
Notes in the principal sum of $4 million due 2011 (convertible into
approximately 3,937,008 shares of Common Stock).
Subsequently, the Company elected to prepay the Series B Convertible
Notes. On October 31, 2005, Paribas received a principal payment of
$2,666,666.67 in satisfaction of its Series B Convertible Note. The Exeter
entities elected under the conversion provisions of the Series B Convertible
Notes to instead receive, for their aggregate $1,333,333.33 principal amount of
Series B Convertible Notes, Common Stock at the conversion price of $2.032 per
share, or an aggregate of 656,168 shares of Common Stock.
Pursuant to a Stockholders Agreement, dated as of April 14, 2004,
executed in connection with the Company's 2004 restructuring, among the Company,
the Investors and the Lenders (the Investors and the Lenders referred to
collectively as the "Stockholders"), the Stockholders have agreed to vote all
shares of the voting capital stock of the Company owned by them in favor of the
following actions: (i) to fix and maintain the number of directors of the
Company at 11 if the Lenders, as holders of the Series A Preferred Stock,
exercise their rights to elect two directors to the Board of Directors (as of
the date of this proxy statement, the Lenders have not exercised that right) and
(ii) to cause and maintain the election to the Board of Directors of the Company
of three representatives designated by the Investors (initially Albert W. Van
Ness, Jr., William T. Brannan and Michael Brooks) and two representatives
designated by the Lenders as per their rights as holders of Series A Preferred
Stock should the Lenders determine in their discretion as holders of Series A
Preferred Stock to so designate directors. In addition, if (x) any principal
payment is made with respect to the Series A Convertible Notes held by the
Investors and the Series A Preferred Stock has not been converted or redeemed
prior to April 14, 2011, or (y) any specified actions are taken while the
requisite number of shares of Series A Preferred Stock are outstanding without
any
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required prior written consent of the holders of the majority of the outstanding
shares of Series A Preferred Stock, then the Investors shall nominate and vote
all of their shares of voting stock for three designees of the Lenders in lieu
of the three Investor directors should the Lenders choose to so designate.
In addition, the Stockholders Agreement provides that if any Investor
proposes to sell or otherwise dispose of any Series A Preferred Stock or
Convertible Notes (collectively, the "Securities"), such Investor must first
give written notice to each Lender and allow each Lender to participate in the
sale on the same terms and conditions as the Investor. The Stockholders
Agreement further provides that if any Stockholder desires to transfer any of
such Stockholder's Securities, the selling Stockholder shall first deliver
written notice to the other Stockholders and the other Stockholders shall have
an option to purchase such Securities from the selling Stockholder. The
Stockholders Agreement also provides for preemptive rights so that if the
Company proposes in the future to offer for cash any shares of its capital
stock, then the Company shall first make an offering of such shares of capital
stock to each Stockholder.
PROPOSAL 1
ELECTION OF DIRECTORS
In accordance with the Company's Second Restated Certificate of
Incorporation and By-laws, the number of directors of the Company has been set
at nine. The By-Laws of the Company divide the Board into three classes and
create staggered three-year terms for the members of each class to serve. At
each annual meeting, directors are elected to fill the directorship of the class
of directors whose terms have expired. Those directors shall hold office until
the third successive annual meeting after their election and until their
successors have been elected and qualified so that the term of office of one
class of directors expires at each annual meeting.
The current members of the Board of Directors of the Company are as
follows:
Class I (Term to expire in 2006) Albert W. Van Ness, Jr.,
Thomas E. Durkin III, and
John A. Simourian
Class II (Term to expire in 2008) Jon F. Hanson,
Michael Brooks, and
Matthew J. Morahan
Class III (Term to expire in 2007) Marilu Marshall,
William T. Brannan and
John S. Wehrle
Mr. Hanson, one of our Class II directors, has tendered his resignation
as a director effective as of the election of his successor at the Meeting. As a
result, we will be electing three Class I directors and one Class II director at
the Meeting.
All persons named herein as nominees for director, Albert W. Van Ness,
Jr., Thomas E. Durkin III, John A. Simourian and Peter Young, have consented to
serve, and it is not contemplated that any nominee will be unable to serve as a
director. However, if a nominee is unable to serve as a director, a substitute
will be selected by the Board of Directors and all proxies eligible to be voted
for the Board's nominees will be voted for such other person.
The following individuals are nominated at this Annual Meeting of
Stockholders to serve as Class I directors with a term to expire in 2009:
Albert W. Van Ness, Jr., Thomas E. Durkin III and John A. Simourian.
The following individual is nominated at this Annual Meeting of
Stockholders to serve as a Class II director with a term to expire in 2008:
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Peter Young.
Mr. Van Ness, the Company's Chief Executive Officer recommended Mr. Young to the
Company's Nominating Committee for nomination as a Director.
Set forth below for each nominee and for each director whose term
continues beyond this Meeting, is his or her name, age, the year in which he or
she became a director of the Company, his or her principal occupations during
the last five years and any additional directorships in publicly-held companies.
The information is as of April 20, 2006.
NOMINEES
CLASS I
Thomas E. Durkin III, 53, Director since 1999. Mr. Durkin was appointed
as Vice President of Corporate Development, General Counsel and Secretary of
Capital Environmental Resource, Inc. in October 2001. He is also a partner to
Durkin & Durkin, a New Jersey-based law firm, with whom Mr. Durkin practiced as
a partner from September 1978 until September 1997. Mr. Durkin served as a
consultant to Waste Management Inc., a multibillion dollar publicly held
international solid waste management company, from January 2000 to September
2001. From October 1997 through December 1999, Mr. Durkin served as area Vice
President of Business Development of Waste Management Inc. In addition, Mr.
Durkin has served as a partner of two privately held real estate brokerage
companies. Mr. Durkin graduated from Fordham University in 1975 and graduated
Cum Laude from Seton Hall University School of Law in 1978.
John A. Simourian, 71, Director since 1999. Mr. Simourian has served as
Chairman of the Board and Chief Executive Officer of Lily Transportation Corp.
("Lily"), a privately held truck leasing and dedicated logistics company, since
1958 when Mr. Simourian founded Lily. Lily currently employs approximately 750
employees and leases and or operates 4,000 vehicles out of 27 locations from New
England to North Carolina. Mr. Simourian attended Harvard University where he
received his undergraduate degree in 1957 and his graduate degree from the
Harvard Business School in 1961. In 1982 Mr. Simourian was elected to the
Harvard University Hall of Fame. Mr. Simourian also served in the United States
Navy from 1957 to 1959.
Albert W. Van Ness, Jr., 63, Director since 1995. Mr. Van Ness has
served as the Chairman of the Board, Chief Executive Officer and Director of
CD&L since January 1997. He was formerly the President and Chief Operating
Officer of Club Quarters, LLC, a privately held hotel management company and
remains a member partner. In the early nineties, Mr. Van Ness served as Director
of Managing People & Productivity, a senior management consulting firm. During
most of the eighties, Mr. Van Ness held various executive positions with Cunard
Line Limited, a passenger ship and luxury hotel company, including Executive
Vice President and Chief Operating Officer of the Cunard Leisure Division and
Managing Director and President of the Hotels and Resorts Division. Earlier in
his career, Mr. Van Ness served as the President of Seatrain Intermodal
Services, Inc., a cargo shipping company. Mr. Van Ness held various management
positions at the start of his professional life with Ford Motor Company,
Citibank and Hertz. Mr. Van Ness majored in Sociology and Economics and received
a B.A. and M.A. degree and completed his coursework towards his doctorate in
Economics. He attended Duke University, Northern State University, South Dakota
State University and Syracuse University.
CLASS II
Peter Young, 58. Mr. Young has served as the President of the
Automotive and Logistics Division of The Pasha Group, a family owned and managed
transportation and logistics company, since April 2003. From April 2002 until
April 2003, Mr. Young served as the Senior Vice President and Chief
Administrative Officer of The Pasha Group. Mr. Young was the Senior Vice
President of Transportation and Global Logistics Services for Qiva, a logistics,
supply chain and systems management company, from January 2001 until April 2002.
Earlier in his career, Mr. Young was the Chief Executive Officer of Unicon
International, a global provider of information-based inspection and fleet
management services. In addition, Mr. Young served as the Senior Vice President
of Logistics for the Williams-Sonoma Group. Mr. Young held various executive
positions with American President Lines, including Senior Vice President of
Marketing and Business Logistics Services, Senior Vice President- Asia, and
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Vice President of Marine Operation. Mr. Young graduated from the United States
Merchant Marine Academy in 1969, and received a Master's Degree in Management
from Rensselaer Polytechnic Institute in 1973.
CONTINUING DIRECTORS
William T. Brannan, 58, Director since 1994. Mr. Brannan has served as
the President and Chief Operating Officer of the Company since November 1994.
From January 1991 until October 1994, Mr. Brannan served as President, Americas
Region - US Operations, for TNT Express Worldwide, a major European-based
overnight express delivery company. Prior to that, Mr. Brannan spent 10 years
with United Parcel Service, where he served as Vice President and General
Manager of UPS Truck Leasing, a wholly-owned UPS subsidiary which was formed by
Mr. Brannan in 1981. Mr. Brannan has more than 25 years of experience in the
transportation and logistics industry.
Michael Brooks, 52, Director since 1995. Mr. Brooks has served as
Director of the Company since December 1995 and as Group Operations President
since December 2000. Mr. Brooks previously had been the President of Silver Star
Express, Inc., a subsidiary of the Company, since November 1995. Prior to the
merger of Silver Star Express, Inc. into the Company, Mr. Brooks was President
of Silver Star Express, Inc. since 1988. Mr. Brooks has 25 years of experience
in the same-day delivery and distribution industries. In addition, Mr. Brooks is
currently a member of the Express Carriers Association and various other
transportation associations.
Marilu Marshall, 61, Director since 1997. Ms. Marshall has served as
the Vice President Human Resources - North America for Estee Lauder Co. Inc.
since October 1998. From November 1987, until September 1998, Ms. Marshall
served as Senior Vice-President and General Counsel for Cunard Line Limited.
Prior thereto, from July 1984 to September 1987, Ms. Marshall served as the
Vice-President and General Counsel of GNOC, Corp., t/a Golden Nugget Hotel &
Casino.
Matthew J. Morahan, 56, Director since 2000. Mr. Morahan has been a
private investor since 1997. From 1994 until 1997, Mr. Morahan served as
Executive Vice President of the Macro Hedge Fund of Summit Capitol Advisors LLC.
Prior thereto, Mr. Morahan served as Managing Director of the High Yield
Department of Paine Webber Group from 1991 to 1994. From 1976 to 1990, he served
as Partner and Managing Director of Wertheim & Co. Mr. Morahan served as Vice
President of the Corporate Bond Department for Hornblower & Weeks, Hemphill,
Noyes & Co. from 1971 to 1976.
John S. Wehrle, 53, Director since 1997. Managing Partner of Gryphon
Holdings, L.P. and Gryphon Holdings II, L.P., venture capital and private equity
funds, since January 1999. From August 1997 to December 1998, Mr. Wehrle served
as President and CEO of Heartland Capital Partners, L.P. Prior thereto, Mr.
Wehrle served as Vice President and Head of Mergers & Acquisitions for A.G.
Edwards & Sons, Inc. from July 1994 to July 1997. From 1989 to 1994 Mr. Wehrle
served as Vice President-Financial Planning for The Dyson-Kissner-Moran
Corporation. He also served as Managing Director of Chase Manhattan Bank, N.A.
for three years from August 1986 to October 1989, where he was engaged in the
execution of leveraged acquisitions. From 1976 to 1986, Mr. Wehrle held various
positions with both Price Waterhouse and Touche Ross & Co. in both New York and
London.
Since the adoption of the Sarbanes-Oxley Act in July 2002, there has
been a growing public and regulatory focus on the independence of directors. The
American Stock Exchange adopted amendments to its definition of independence.
Additional requirements relating to independence are imposed by the
Sarbanes-Oxley Act with respect to members of the Audit Committee. The Board has
determined that the following members of the Board and nominee for director
satisfy the AMEX definition of independence: Ms. Marshall and Messrs. Hanson,
Morahan, Simourian, Wehrle and Young.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE NOMINEES FOR DIRECTOR
DESCRIBED ABOVE.
BOARD ORGANIZATION AND MEETINGS
During the year ended December 31, 2005, the Board of Directors held 5
meetings. During 2005, all members of the Board of Directors attended at least
75% of all meetings of the Board of Directors and committees of the Board of
Directors of which such director was a member. The Company has standing Audit,
Compensation and Nominating Committees of the Board of Directors. Each of the
Committees is described below.
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Audit Committee. During 2005, the Audit Committee met 4 times. The
Audit Committee is comprised of Mr. Wehrle, Chairman, Mr. Hanson and Mr.
Morahan. If elected, it is expected that Mr. Young would be appointed to the
Audit Committee. The Audit Committee makes recommendations to the Board of
Directors with respect to the selection of the independent auditors of the
Company's financial statements, reviews the scope of the annual audit and meets
periodically with the Company's independent auditors to review their findings
and recommendations, reviews quarterly financial information and earnings
releases prior to public dissemination, and periodically reviews the Company's
adequacy of internal accounting controls.
Compensation Committee. During 2005, the Compensation Committee met 3
times. The Compensation Committee is comprised of Ms. Marshall, Chairperson, Mr.
Morahan and Mr. Wehrle. The Compensation Committee periodically reviews and
determines the amount and form of compensation and benefits payable to the
Company's principal executive officers and certain other management personnel.
The Compensation Committee also administers the Company's stock option plans and
certain of the Company's other employee benefit plans.
Nominating Committee. During 2005, the Nominating Committee met 2
times. The Nominating Committee is comprised of Messrs. Hanson, Chairman,
Morahan, Simourian and Ms. Marshall. The Nominating Committee recommends
nominations for directors, considers candidates for director vacancies and other
such management matters presented to it by the Board of Directors.
Nominating Committee Charter. The Board has adopted a Nominating
Committee charter to govern its Nominating Committee. A copy of the Nominating
Committee's charter was attached as Appendix A to the Company's 2004 proxy
statement.
Independence of Nominating Committee Members. All members of the
Nominating Committee of the Board of Directors have been determined to be
"independent directors" pursuant to the definition contained in Section 121A of
the American Stock Exchange Company Guide.
Procedures for Considering Nominations Made by Stockholders. The
Nominating Committee's charter permits the Committee to adopt procedures for
nominations to be submitted by stockholders and other third parties, other than
candidates who have previously served on the Board or who are recommended by the
Board. The charter provides that a nomination must be delivered to the Secretary
of the Company at the principal executive offices of the Company not later than
the close of business on the 90th day nor earlier than the close of business on
the 120th day prior to the first anniversary of the preceding year's annual
meeting; provided, however, that if the date of the annual meeting is more than
30 days before or more than 60 days after such anniversary date, notice to be
timely must be so delivered not earlier than the close of business on the 120th
day prior to such annual meeting and not later than the close of business on the
later of the 90th day prior to such annual meeting or the close of business on
the 10th day following the day on which public announcement of the date of such
meeting is first made by the Company. The public announcement of an adjournment
or postponement of an annual meeting will not commence a new time period (or
extend any time period) for the giving of a notice as described above. The
charter requires a nomination notice to set forth as to each person whom the
proponent proposes to nominate for election as a director: (a) all information
relating to such person that is required to be disclosed in solicitations of
proxies for election of directors in an election contest, or is otherwise
required, in each case pursuant to Regulation 14A under the Securities Exchange
Act of 1934, as amended (including such person's written consent to being named
in the proxy statement as a nominee and to serving as a director if elected),
and (b) information that will enable the Nominating Committee to determine
whether the candidate or candidates satisfy the criteria established pursuant to
the charter for director candidates.
Qualifications. The charter describes the minimum qualifications for
nominees and the qualities or skills that are necessary for
directors to possess. Each nominee:
o must satisfy any legal requirements applicable to members of
the Board;
o must have business or professional experience that will enable
such nominee to provide useful input to the Board in its
deliberations;
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o must have a reputation for honesty and ethical conduct;
o must have a working knowledge of the types of responsibilities
expected of members of the board of directors of a public
company; and
o must have experience, either as a member of the board of
directors of another public or private company or in another
capacity, that demonstrates the nominee's capacity to serve in
a fiduciary position.
Identification and Evaluation of Candidates for the Board. Candidates
to serve on the Board will be identified from all available sources, including
recommendations made by stockholders. The Nominating Committee's charter
provides that there will be no differences in the manner in which the Nominating
Committee evaluates nominees recommended by stockholders and nominees
recommended by the Committee or management, except that no specific process
shall be mandated with respect to the nomination of any individuals who have
previously served on the Board. The evaluation process for individuals other
than existing Board members will include:
o a review of the information provided to the Nominating
Committee by the proponent;
o a review of reference letters from at least two sources
determined to be reputable by the Nominating Committee; and
o a personal interview of the candidate,
together with a review of such other information as the Nominating Committee
shall determine to be relevant.
Third-Party Recommendations. In connection with the 2006 Annual
Meeting, the Nominating Committee did not receive any nominations from any
stockholder or group of stockholders which owned more than 5% of the Company's
Common Stock for at least one year.
COMPENSATION OF DIRECTORS
Directors who are employees of the Company do not receive additional
compensation for serving as directors. In 2005, each director who is not an
employee of the Company received an annual retainer of $24,000 ($36,500 and
$31,500 for the Audit and Compensation Committee chairperson, respectively). The
total directors fees earned by non-employee directors in 2005 was $164,000.
Directors of the Company are reimbursed for out-of-pocket expenses incurred in
their capacity as directors of the Company. Non-employee directors also receive
stock options under the Company's 2002 Stock Option Plan for Independent
Directors (the "Director Plan"). The Company granted options of 8,000 shares at
fair market value to each of the non-employee directors on July 1, 2005.
The Company has entered into a consulting agreement with Thomas E.
Durkin III, one of our directors, pursuant to which Mr. Durkin provides
consulting services to us with respect to business and financial matters. His
focus is on merger and acquisition activities, including, developing strategies,
evaluating, structuring and negotiating potential transactions and otherwise
assisting our chief executive officer with respect to such matters. In
consideration for his services, the Company pays Mr. Durkin an hourly fee, and
if the Company's Chief Executive Officer requests Mr. Durkin to work on a
particular transaction, the Company must pay him a fee of at least $300,000 upon
consummation of such transaction, plus such other amounts, if any, as the Chief
Executive Officer may authorize.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company's Compensation Committee is comprised currently of Ms.
Marilu Marshall, Chair, Mr. Matthew J. Morahan and Mr. John S. Wehrle. These
persons also served as members of the Compensation Committee during 2005. None
of these persons has been an officer or employee of the Company. During 2005, no
executive officer of the Company and no member of its Compensation Committee is
a director or
8
compensation committee member of any other business entity which has an
executive officer that sits on the Company's Board of Directors or Compensation
Committee.
CODE OF ETHICS
The Company has adopted a code of ethics for senior financial officers
of the Company. A copy of this code of ethics was filed as Exhibit 14.1 to the
Company's Annual Report on Form 10-K for the year ended December 31, 2003.
AUDIT COMMITTEE FINANCIAL EXPERT
The Company has determined that John S. Wehrle, the audit committee
chairperson, is an independent audit committee financial expert as defined by
the SEC's regulations.
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth information as of April 11, 2006 with
respect to beneficial ownership of the Common Stock by (i) each director and
nominee, (ii) each executive named in the Summary Compensation Table (the "Named
Executives") and (iii) all executive officers and directors as a group. Unless
otherwise indicated, the address of each such person is c/o CD&L, Inc., 80
Wesley Street, South Hackensack, New Jersey 07606. All persons listed have sole
voting and investment power with respect to their shares unless otherwise
indicated.
AMOUNT OF BENEFICIAL OWNERSHIP (1)
SHARES ISSUABLE SHARES ISSUABLE
UPON EXERCISE UPON CONVERSION OF
OF STOCK CONVERTIBLE NOTES TOTAL PERCENTAGE
SHARES OPTIONS(1) (2) SHARES OWNED (4)
------ ---------- ------------------ --------- ---------
Albert W. Van Ness, Jr. (5) 136,160 1,037,981 590,551 1,764,692 15.2%
William T. Brannan (5) 113,796 720,782 590,551 1,425,129 12.6%
Michael Brooks (5) 251,955 665,000 590,551 1,507,506 13.4%
Thomas E. Durkin III - 30,000 - 30,000 *
Jon F. Hanson 73,688(3) 38,750 - 112,438 1.1%
Marilu Marshall - 38,750 - 38,750 *
Matthew J. Morahan (5) 350,512 25,000 196,850 572,362 5.6%
John A. Simourian - 30,000 - 30,000 *
John S. Wehrle - 37,500 - 37,500 *
Peter Young - - - - *
Russell J. Reardon (5) 74,238 647,277 590,551 1,312,066 11.7%
Mark T. Carlesimo (5) - 511,250 98,425 609,675 5.7%
All executive officers and 1,000,349 3,782,290 2,657,479 7,440,118 45.2%
directors as a group (11 persons)
- --------------
* Less than 1%
(1) Includes options granted pursuant to the Employee Stock Compensation
Program and the Director Plan, which are exercisable within 60 days of
April 22, 2006.
(2) Represents conversion of the Series A Convertible Notes issued in the
2004 financial restructuring with Paribas and Exeter.
(3) Includes 64,000 shares held by Ledgewood Employees Retirement Plan, of
which Mr. Hanson is a beneficiary.
9
(4) The sum of individual beneficial ownership percentages can exceed 100%
due to the nature of the calculation which in accordance with SEC rules
assumes for each individual that the denominator is equal to total
outstanding shares and shares which would be outstanding upon the
exercise of all options and convertible instruments owned by that
individual stockholder without regard to exercise of similar
instruments by any other stockholder.
(5) See also "Voting Agreements/2004 Financial Restructuring" above.
EXECUTIVE COMPENSATION
The following table summarizes certain information relating to
compensation for services rendered during the years ended December 31, 2003,
2004 and 2005 to each person serving as the Chief Executive Officer of the
Company and each of the Company's four other most highly paid executive officers
whose compensation exceeded $100,000 (the "Named Executives").
LONG-TERM COMPENSATION
ANNUAL COMPENSATION AWARDS(1)
------------------- ----------------------
SECURITIES
OTHER ANNUAL UNDERLYING
NAME AND PRINCIPAL COMPENSATION OPTIONS/ ALL OTHER
POSITION YEAR SALARY ($) BONUS ($) ($) (2) SARS (#) (3) COMPENSATION
-------- ---- ---------- --------- ------------- ------------ ------------
Albert W. Van Ness, Jr. 2005 289,255 108,144 - 100,000 -
Chairman and Chief 2004 259,605 68,308 - 300,000 -
Executive Officer 2003 252,875 - - - -
William T. Brannan 2005 298,835 122,823 - 225,000 -
President and Chief 2004 311,526 80,597 - 250,000 -
Operating Officer 2003 299,988 - - - -
Michael Brooks 2005 299,988 122,823 - 225,000 -
Group Operations 2004 282,494 94,097 - 250,000 -
President 2003 240,923 - - - -
Russell J. Reardon 2005 299,988 122,823 - 219,777 -
Chief Financial Officer 2004 280,956 90,597 - 250,000 -
2003 201,144 - - - -
Mark T. Carlesimo 2005 202,750 46,707 - 225,000 -
General Counsel and 2004 188,654 33,336 - 250,000 -
Secretary 2003 166,933 - - - -
- --------------
(1) The Company did not grant any restricted stock awards or stock
appreciation rights or make any long-term incentive plan pay-outs
during the years ended December 31, 2003, 2004 and 2005.
(2) Excludes certain personal benefits, the total value of which was less
than the lesser of either $50,000 or 10% of the total annual salary and
bonus for each of the executives.
(3) Comprised solely of incentive or non-qualified stock options. See
"Stock Option Plans - Employee Stock Compensation Program and Year 2000
Stock Incentive Plan."
EMPLOYMENT AGREEMENTS; COVENANTS NOT TO COMPETE
Effective as of April 14, 2004, the Company entered into amended
employment agreements with each of Albert W. Van Ness, Jr., its Chairman, Chief
Executive Officer and Director, William T. Brannan, its President and
10
Chief Operating Officer, Michael Brooks, our Group President, Ground Operations,
Russell Reardon, our Vice President and Chief Financial Officer, and Mark T.
Carlesimo, our Vice President, General Counsel and Secretary. Under the
agreements, each of Messrs. Brannan, Brooks, Reardon and Van Ness currently is
entitled to an annual salary of $300,000, and Mr. Carlesimo is entitled to an
annual salary of $225,000. Each agreement contains identical terms and
conditions (other than salary) including change in control provisions. If the
executive's employment is terminated for any reason other than for cause, death
or disability, the executive will receive liquidated damages in the amount of
his base salary for the remainder of the agreement term, which expires December
31, 2008, plus any bonuses he would have received, as well as all benefits and
perquisites. If the executive's employment is terminated by either party for any
reason within 180 days of a change in control, the executive shall receive a
lump sum of two times the executive's base salary plus the highest annual bonus
earned by the executive, plus benefits and perquisites until the end of the term
of the agreement. Each agreement also contains noncompetition covenants that
will continue for two years following termination of employment unless the
Company terminates the agreement without cause or the employee terminates the
agreement as a result of the Company's breach of the agreement, in which event
the covenants against competition will cease upon the termination of employment.
STOCK OPTION PLANS
EMPLOYEE STOCK COMPENSATION PROGRAM AND YEAR 2000 STOCK INCENTIVE PLAN
In 1995 and 2000, the Board of Directors adopted, and the stockholders
of the Company approved, the Employee Stock Compensation Program and the Year
2000 Stock Incentive Plan, respectively (together, the "Stock Option Plans"), in
order to attract and retain qualified officers and employees of the Company, to
facilitate performance-based compensation for key employees and to provide
incentives for the participants in the Stock Option Plans to enhance the value
of the Common Stock. The Stock Option Plans are administered by the Compensation
Committee and authorize the granting of incentive stock options, non-qualified
supplementary options, stock appreciation rights, performance shares and stock
bonus awards to key employees of the Company including those employees serving
as officers or directors of the Company. The Company has reserved 1,900,000
shares of Common Stock for issuance in connection with the Employee Stock
Compensation Program and 2,100,000 shares of Common Stock for issuance in
connection with the 2000 Plan, of which no shares remain available for grant.
Options granted under the Stock Option Plans have an exercise price equal to the
fair market value of the underlying Common Stock at the date of grant and vest
over a four-year period unless otherwise agreed by the Compensation Committee of
the Board of Directors at the time of grant.
For a detailed description of the Year 2000 Stock Incentive Plan, see
Proposal 2.
STOCK OPTION PLAN FOR INDEPENDENT DIRECTORS
Outside directors receive options under the Company's Amended and
Restated 2002 Stock Option Plan for Independent Directors (the "Director Plan"),
under which an aggregate of 500,000 shares of Common Stock have been authorized
for issuance, of which 251,000 shares remain available for issuance. The purpose
of the Director Plan is to help the Company attract and retain the most
qualified available individuals to serve as independent directors of the Company
and to encourage the highest level of participation by those persons in the
Company's achievement of its strategic goals. Under the Director Plan, an
independent director is granted an option to purchase 8,000 shares of Common
Stock on the first day on which the Common Stock is traded on the American Stock
Exchange in third quarter of each year. The purchase price per share of Common
Stock covered by each option is the fair market value of a shares of Common
Stock on the date the option is granted.
An option granted to an independent director under the Director Plan
becomes fully exercisable as to 100% of the shares of Common Stock covered
thereby one year after the date of grant and may be exercised as to any or all
full shares of Common Stock as to which such option is then exercisable. The
term of each option is ten years from the date of grant. In order to be eligible
to participate in the Director Plan on any Quarter Date, a director must not be
an employee as of such Quarter Date.
11
GRANTS
The following table contains information regarding the grant of stock
options to the Named Executives during the year ended December 31, 2005.
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
-----------------
PERCENT OF
TOTAL OPTIONS
NUMBER OF COMMON GRANTED TO GRANT DATE
SHARES UNDERLYING EMPLOYEES EXERCISE PRESENT
OPTIONS IN FISCAL PRICE PER EXPIRATION VALUE
NAME GRANTED (#) 2005 SHARE DATE ($)(1)
- ---- ----------------- -------------- --------- ---------- ----------
Albert W. Van Ness, Jr. 100,000 8.3% $1.85 2/23/2015 $82,623
William T. Brannan 100,000 8.3% $1.86 5/11/2015 $87,920
125,000 10.3% $1.93 11/23/2015 $119,212
Michael Brooks 100,000 8.3% $1.86 5/11/2015 $87,920
125,000 10.3% $1.93 11/23/2015 $119,212
Russell J. Reardon 100,000 8.3% $1.86 5/11/2015 $87,920
119,777 9.9% $1.93 11/23/2015 $114,222
Mark T. Carlesimo 100,000 8.3% $1.86 5/11/2015 $87,920
125,000 10.3% $1.93 11/23/2015 $119,212
- --------------
(1) The present value of the options granted was determined using the
Black-Scholes pricing model and based on the following assumptions: the
risk free interest rate was 4.16%, the expected term of the option was
6.4 years, the volatility factor was 47% and the dividend yield was
zero.
None of the Named Executives exercised any stock options in 2005. The
following table provides data regarding the number of shares of the Company's
Common Stock covered by both exercisable and non-exercisable stock options held
by the Named Executives at December 31, 2005. Also reported are the values for
"in-the-money" options, which represent the positive spread between the exercise
prices of existing options and $2.60, the closing sale price of the Company's
Common Stock on December 30, 2005, the last trading day of 2005.
12
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES (1)
NUMBER OF SHARES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
SHARES VALUE AT FISCAL YEAR END (#) AT FISCAL YEAR END ($)
ACQUIRED ON REALIZED ---------------------- ----------------------
NAME EXERCISE (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ------------ --- ----------- ------------- ----------- -------------
Albert W. Van Ness, Jr. -- -- 904,648 166,666 $1,017,689 $433,332
William T. Brannan -- -- 637,449 83,333 1,465,534 216,666
Michael Brooks -- -- 581,667 83,333 1,434,334 216,666
Russell J. Reardon -- -- 563,944 83,333 1,394,754 216,666
Mark T. Carlesimo -- -- 427,917 83,333 1,099,584 216,666
- --------------
(1) No stock appreciation rights have been granted by the Company.
EQUITY COMPENSATION PLAN INFORMATION
The following table gives information about the Company's Common Stock
that may be issued upon the exercise of options and rights under the Company's
1995 and Amended and Restated 2002 Independent Directors Stock Option Plans,
1995 Employee Stock Compensation Program and Year 2000 Stock Incentive Plan as
of December 31, 2005. These plans were the Company's only equity compensation
plans in existence as of December 31, 2005.
(c)
NUMBER OF SECURITIES
(a) REMAINING AVAILABLE FOR
NUMBER OF (b) FUTURE ISSUANCE UNDER
SECURITIES TO BE WEIGHTED-AVERAGE EXERCISE EQUITY COMPENSATION PLANS
ISSUED UPON EXERCISE OF PRICE OF OUTSTANDING (EXCLUDING SECURITIES
OUTSTANDING OPTIONS, OPTIONS, WARRANTS AND REFLECTED IN COLUMN)
PLAN CATEGORY WARRANTS AND RIGHTS RIGHTS (a)
------------- ----------------------- ------------------------- -------------------------
Equity Compensation Plans 4,755,250 $1.76 2,251,000 (1)
approved by Stockholders
Equity Compensation Plans Not -- -- --
Approved by Stockholders
Total 4,755,250 $1.76 2,251,000
========= ===== =========
- --------------
1) Of this total, 2,000,000 options available for future issuance are subject to
ratification at the June 2006 annual stockholder meeting.
SECTION 16(a) BENEFICIAL OWNERSHIP
REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's directors,
certain officers and persons beneficially owning more than 10% of a registered
class of the Company's equity securities to file with the Securities and
Exchange Commission and to provide the Company with initial reports of
ownership, reports of changes in ownership and annual reports of ownership of
Common Stock and other equity securities of the
13
Company. Based solely upon a review of such reports furnished to the Company by
its directors, executive officers and 10% beneficial owners the Company believes
that all Section 16(a) reporting requirements were timely fulfilled during 2005,
except that each of Messrs., Brannan, Brooks, Carlesimo and Reardon
inadvertently filed a late Form 4 on December 8, 2005, regarding the grant of
stock options on November 16, 2005.
REPORT OF COMPENSATION COMMITTEE
ON EXECUTIVE COMPENSATION
OVERVIEW
All executive officers of the Company are subject to long-term
(generally four-year) employment agreements which fix their salaries and
benefits (including stock options) and are scheduled to expire in 2008. In 2004,
as discussed above, the Company was party to a material financial restructuring
which included a substantial financial investment in the Company's Series A
Convertible Notes by a number of individuals, including Mr. Van Ness and the
other Named Executives. Such individuals also waived change of control
provisions in their existing employment agreements as part of the transaction.
Mr. Van Ness and the Named Executives requested an extension of the employment
agreements as part of the transaction as they believed their efforts were
important to the success of their investment in the Company. The Compensation
Committee agreed that an extension of the agreements to December 31, 2008, as
requested, was appropriate. Accordingly, the Company entered into new employment
agreements with Mr. Van Ness, the Chief Executive Officer, and the other Named
Executives in 2004.
In approaching new employment agreements for Mr. Van Ness and the other
Named Executives, the Compensation Committee continued to view compensation of
executives as having three distinct parts, a current compensation program, a set
of standard benefits and a long-term benefit program. The current compensation
element focuses upon the executive officer's salary and is designed to provide
competitive reimbursement for services rendered. The Company's standard benefit
package consists primarily of health insurance benefits and eligibility for
annual bonuses based upon performance. The long-term benefit element is
reflected in the grants of stock options.
BASE SALARY
Base salaries for the Named Executives for 2005 ranged from
approximately $205,000 to $300,000. Under the employment agreements, base pay
was established at levels that were considered appropriate to retain the
Company's experienced management team and to be at competitive levels. While
base pay is important, the Company's compensation package also attempts to place
significant emphasis on other areas of compensation. Executive officers
understand that significant opportunities for substantial compensation lies in
annual bonus compensation and appreciation in the value of stock options.
ANNUAL INCENTIVE PLAN
The incentive plan is designed to provide current compensation to
selected key employees who contribute in a substantial degree to the success of
the Company. Pursuant to the plan, executives selected by the Compensation
Committee (with the advice of the Chief Executive Officer) are entitled to cash
bonuses in the event that the Company achieves certain performance targets based
upon revenues and EBITDA (earnings before interest, tax, depreciation and
amortization). In addition, the Chief Executive Officer is entitled under his
employment contract to a bonus based on performance goals set with the
Compensation Committee. Bonuses were paid to the Chief Executive Officer and the
other Named Executives in 2005 based on their contributions to the Company's
meeting such targets.
LONG-TERM INCENTIVE PLAN
A stockholder-approved long-term incentive plan consisting of the grant
of stock options to key employees under the Company's 1995 Employee Stock
Compensation Program and the Year 2000 Stock Incentive Plan (the "Program") is
designed to focus executive efforts on the long-term goals of the Company and to
maximize total returns to stockholders. Stock options align the interest of
employees and stockholders by providing value to the executive through stock
price appreciation only. During 2005, the Chief Executive Officer was granted
options to
14
purchase 100,000 shares of Common Stock and each of the other Named Executives
was granted options to purchase 225,000 shares of Common Stock, except that Mr.
Reardon was granted options to purchase 219,777 shares of Common Stock. These
options were granted by the Compensation Committee based upon the fact that the
named individuals from senior management had made significant long term
contributions to the Company's continued success.
All of the named officers have change in control provisions as part of
their employment agreements, which generally provide for two times base salary
plus the highest annual bonus as a payment on a change in control, which contain
identical terms. The Compensation Committee thought it was important for the
Company to enter into these arrangements in order to provide security to these
officers in the event of a change in control (as defined), to promote their
continued affiliation with the Company and to protect both the Company and the
stockholders by assuring continuity during a transition period related to any
change in control.
2005 CHIEF EXECUTIVE OFFICER PAY
As part of the 2004 financial restructuring of the Company, Mr. Van
Ness entered into a new long term Employment Agreement with the Company (the
"2004 Agreement"). The 2004 Agreement is scheduled to expire on December 31,
2008. Under that agreement, Mr. Van Ness receives an annual salary of $300,000
with the right to receive an annual bonus equal to up to 100% of Mr. Van Ness'
then-current base salary based upon the Company attaining certain targets. Mr.
Van Ness has continued to serve as the Company's Chairman of the Board and Chief
Executive Officer. See "Executive Compensation- Employment Agreements; Covenants
Not to Compete."
As described above, Mr. Van Ness was awarded a bonus and granted stock
options for his leadership in guiding the Company through its financial
restructuring and helping the Company to improve its financial performance and
meet the performance targets set for him.
This report shall not be deemed incorporated by reference by any
general statement incorporating this Proxy Statement by reference to any filing
under the Securities Act of 1933, as amended, or under the Securities Exchange
Act of 1934, as amended, and shall not be deemed filed under either of such acts
except to the extent that the Company specifically incorporates this information
by reference.
This report is furnished by the Compensation Committee of the Board of
Directors.
Marilu Marshall, Chair
Matthew J. Morahan
John S. Wehrle
AUDIT COMMITTEE MATTERS
AUDIT COMMITTEE CHARTER. The Board has adopted an amended Audit
Committee Charter to respond to new requirements under the Sarbanes-Oxley Act.
The Charter is attached as Appendix A to this proxy statement.
INDEPENDENCE OF AUDIT COMMITTEE MEMBERS. The Common Stock is listed on
the American Stock Exchange and the Company is governed by the listing standards
applicable thereto. All members of the Audit Committee of the Board of Directors
have been determined to be "independent directors" pursuant to the definition
contained in of the American Stock Exchange listing standards ss.121(A).
AUDIT COMMITTEE REPORT. In connection with the preparation and filing
of the Company's Annual Report on Form 10-K for the year ended December 31,
2005:
(1) the Audit Committee reviewed and discussed the audited financial
statements with the Company's management;
15
(2) the Audit Committee discussed with the Company's independent
auditors the matters required to be discussed by SAS 61;
(3) the Audit Committee received and reviewed the written disclosures
and the letter from the Company's independent auditors required by the
Independence Standards Board Standard No. 1 (Independence Discussions with Audit
Committees) and discussed with the Company's independent auditors any
relationships that may impact their objectivity and independence and satisfied
itself as to the auditor's independence; and
(4) based on the review and discussions referred to above, the Audit
Committee recommended to the Board that the audited financial statements be
included in the 2005 Annual Report on Form 10-K.
This report shall not be deemed incorporated by reference by any
general statement incorporating this Proxy Statement by reference to any filing
under the Securities Act of 1933, as amended, or under the Securities Exchange
Act of 1934, as amended, and shall not be deemed filed under either of such acts
except to the extent that the Company specifically incorporates this information
by reference.
This report is furnished by the Audit Committee of the Board of
Directors.
John S. Wehrle, Chairman
Jon F. Hanson
Matthew J. Morahan
APPOINTMENT OF INDEPENDENT AUDITORS
J.H. Cohn LLP ("Cohn") served as the Company's independent auditors for
the fiscal year ended December 31, 2005.
Representatives of Cohn will be present at the Meeting to answer
questions. They will also have an opportunity to make a statement if they desire
and will be available to respond to appropriate questions of the stockholders.
Deloitte and Touche LLP ("Deloitte") served as the Company's
independent auditors for the fiscal year ended December 31, 2004. On November 5,
2004, upon recommendation and authorization from the Audit Committee of the
Board of Directors, the Company dismissed Deloitte as the its independent
registered public accounting firm for its fiscal year ended December 31, 2004
and engaged Cohn. Deloitte had served as the Company's auditors since 2002.
Deloitte's reports on the financial statements for the two most recent
fiscal years they audited did not contain an adverse opinion or disclaimer of
opinion and were not qualified or modified as to uncertainty, audit scope or
accounting principles.
In connection with their audits for 2003 and 2002 and through the date
of this proxy statement, there have been no disagreements with Deloitte on any
matter of accounting principles or practices, financial statement disclosures,
or auditing scope or procedure which disagreement if not resolved to their
satisfaction would have caused them to make reference to the subject matter of
the disagreement in connection with their report on the Company's financial
statements for such years; and there were no reportable events as defined in
Item 304(a)(1)(v) of the SEC's Regulation S-K.
During the years ended December 31, 2003 and 2002 and through the date
of the Company's Current Report on Form 8-K disclosing the dismissal of Deloitte
and the engagement of Cohn, the Company did not consult Cohn with respect to the
application of accounting principles as to a specified transaction, either
completed or proposed, or the type of audit opinion that might be rendered on
the Company's financial statements, or any other matters or reportable events as
set forth in Items 304(a)(3)(i) and (ii) of Regulation S-K.
16
ACCOUNTING FEES AND OTHER ACCOUNTING MATTERS
The Company has been billed the following fees for services rendered by
its principal accountant during 2005 and 2004 (in thousands):
2005 2004
------------ --------------
Audit Fees $205 $225
Audit-Related Fees 3 20
Tax Fees 40 168
All Other Fees 43 15
------------ --------------
Total $291 $428
============ ==============
Audit-related fees consist of professional services rendered in
conjunction with the Company's various responses to an SEC comment letter. Tax
fees primarily relate to the preparation of Federal and state tax returns and
tax advice associated with those filings. All other fees include administrative
and out-of-pocket expenses incurred by the principal accountant.
The principal accountant is engaged each year by the Company's audit
committee and as such, all fees are pre-approved by the audit committee at the
beginning of each year.
OTHER MATTERS.
The Audit Committee of the Board of Directors has considered whether
the provision of information technology services and other non-audit services is
compatible with maintaining the independence of the Company's principal
accountant.
Of the time expended by the Company's principal accountant to audit the
Company's financial statements for the year ended December 31, 2005, less than
50% of such time involved work performed by persons other than the principal
accountant's full-time, permanent employees.
17
PERFORMANCE GRAPH
The following chart compares the cumulative total stockholder return on
the Company's Common Stock to the cumulative total return of the Standard &
Poor's 500 Stock Index and the Dow Jones Transportation Index for 2001, 2002,
2003, 2004 and 2005, assuming the investment of $100 on December 31, 2000 and
the reinvestment of all dividends since that date to December 31, 2005.
COMPARE 5-YEAR CUMULATIVE TOTAL RETURN
AMONG CD&L INCORPORATED,
S&P COMPOSITE AND PEER GROUP INDEX
[PERFORMANCE CHART]
2000 2001 2002 2003 2004 2005
---- ---- ---- ---- ---- ----
CD&L INCORPORATED 100.00 80.00 137.14 169.14 397.71 594.29
PEER GROUP INDEX 100.00 98.44 91.72 113.60 143.08 166.41
S&P COMPOSITE INDEX 100.00 88.12 68.64 88.33 97.94 102.75
ASSUMES $100 INVESTED ON JAN. 1, 2001
ASSUMES DIVIDEND REINVESTED
FISCAL YEAR ENDING DEC. 31, 2005
COMPARISON OF CUMULATIVE TOTAL RETURN OF ONE OR MORE
COMPANIES, PEER GROUPS, INDUSTRY INDEXES AND/OR BROAD MARKETS
12/31/2000 12/31/2001 12/31/2002 12/31/2003 12/31/2004 12/31/2005
---------- ---------- ---------- ---------- ---------- ----------
CD&L 100.00 80.00 137.14 169.14 397.71 594.29
DOW JONES 100.00 98.44 91.72 113.60 143.08 166.41
TRANSPORTATION
S&P 500 100.00 88.12 68.64 88.33 97.94 102.75
The performance of the Company's Common Stock reflected above is not
necessarily indicative of the future performance of the Common Stock. The total
return on investment (change in the year-end stock price plus reinvested
dividends) for the period shown for the Company, the S&P 500 Index and the Dow
Jones Transportation Index is based on the stock price or composite index at
December 31, 2000.
The performance chart which appears above shall not be deemed to be
incorporated by reference by any general statement incorporating this Annual
Report by reference into any filing under the Securities Act of 1933, as
amended, or under the Exchange Act of 1934, as amended, and shall not be deemed
filed under either of such Acts except to the extent that the Company
specifically incorporates this information by reference.
18
CERTAIN TRANSACTIONS
Mr. Brooks and members of his immediate family own various real estate
partnerships which lease properties to Silver Star, a subsidiary of the Company,
for use as terminals in Valdosta, Georgia. In 2005, Silver Star paid
approximately $20,000 in rent for this property. As of January 1, 2005, the
Company is not obligated to pay any further rentals for the Valdosta, Georgia
property, but has continued the lease on a month-to-month basis.
Mr. Simourian, a member of the Company's board of directors, is the
Chief Executive Officer of Lily Transportation Corp. ("Lily"), a privately held
truck leasing and dedicated logistics company. In 2005, Click Messenger
Services, a subsidiary of the Company, paid approximately $75,000 to Lily for
vehicle rentals.
On or about July 1, 2005, the Company entered into a consulting
agreement with one of its directors, Thomas E. Durkin III, pursuant to which Mr.
Durkin will provide consulting services to the Company with respect to business
and financial matters. He will focus on merger and acquisition activities,
including developing strategies, evaluating, structuring and negotiating
potential transactions and otherwise assisting the Chief Executive Officer with
respect to such matters. In consideration for his services, the Company paid Mr.
Durkin a fee of $75,000 on or about July 1, 2005 and agreed to pay him $125 per
hour for his services under the agreement. In addition, if the Chief Executive
Officer requests Mr. Durkin to work on a particular transaction, Mr. Durkin will
become entitled to receive, upon consummation of such a transaction, a success
fee of at least $300,000 plus such other amount, if any, as may be authorized by
the Chief Executive Officer and the Board of Directors or an appropriate
committee thereof. The consulting agreement is terminable by either party on 30
days written notice.
PROPOSAL 2
APPROVAL OF THE ADOPTION OF THE AMENDMENT TO THE
CD&L, INC. YEAR 2000 STOCK INCENTIVE PLAN
In 2000, the Board of Directors and the stockholders of the Company
approved the Company's Year 2000 Stock Incentive Plan (the "Incentive Plan").
The Incentive Plan supplemented the Company's existing Employee Stock
Compensation Program (the "1995 Plan"), in facilitating performance based
compensation for key employees, providing incentives for participants in the
1995 Plan to enhance the value of the stock, and attracting and retaining
qualified officers, employees and consultants of the Company. The Incentive
Plan, as amended in June 2001 and October 2002, reserved an aggregate of
2,100,000 shares of Common Stock for issuance thereunder pursuant to stock
options and other incentives. As of November 23, 2005, no shares remained
available for issuance under the Incentive Plan. On March 16, 2006, the Board of
Directors approved, subject to stockholder approval, an increase in the number
of authorized shares under the Incentive Plan from 2,100,000 to 4,100,000 (the
"Amendment"). Approval of the Amendment is intended to ensure that the Company
can continue to provide stock options and other performance incentives at levels
determined appropriate by the Board of Directors. No change to the Incentive
Plan other than the number of shares available for grant is being proposed. The
following is a brief description of the Incentive Plan.
PURPOSE
The purpose of the Incentive Plan is to provide long-term incentives to
select employees, officers and consultants of the Company and its subsidiaries
to encourage them to devote their abilities and industry to the success of the
Company.
SHARES AND INCENTIVES AVAILABLE UNDER THE INCENTIVE PLAN
The Incentive Plan provides for grants of stock options, restricted
stock and performance awards. An aggregate of 2,100,000 shares of Common Stock
presently are authorized for issuance under the Incentive Plan, which amount
will be proportionately adjusted in the event of certain changes in the
Company's capitalization, a merger, or a similar transaction. Upon the approval
of the proposed Amendment by the stockholders, an additional 2,000,000 shares
will be authorized for issuance under the Incentive Plan, for an aggregate of
4,100,000 shares.
19
Such shares may be treasury shares or newly issued shares or a combination
thereof. The closing sale price of the Common Stock was $2.06 per share at April
24, 2006.
ADMINISTRATION
The Director Plan is administered by a committee appointed by the Board
of Directors (the "Plan Committee"); no non-employee director may be a member of
the Plan Committee. The Plan Committee is authorized to interpret the Director
Plan, to prescribe, amend and rescind rules and regulations relating to the
Director Plan and to make all other determinations it may deem necessary or
advisable for the administration of the Director Plan.
ELIGIBILITY
The persons eligible to receive awards under the Incentive Plan are
those persons who are, or who have agreed to become, officers or employees of,
or consultants or advisers to, the Company or any of its subsidiaries. The
Company estimates that, as of April 30, 2006, there were approximately 1,500
individuals eligible to participate in the Incentive Plan. As discretion for the
grant of options and awards is vested in the Plan Committee, the Company is
unable to determine the identity or number of officers, consultants, advisors
and other employees who may be granted options or awards under the Incentive
Plan in the future.
DETERMINATION OF ELIGIBILITY; ADMINISTRATION OF THE INCENTIVE PLAN.
The Incentive Plan is administered by a committee (the "Plan
Committee") appointed by the Board of Directors. The Plan Committee must consist
of at least two outside directors of the Company. The Incentive Plan provides
that the Plan Committee has full discretion and authority to (i) select eligible
persons to receive awards, (ii) determine the type, number, and terms and
conditions of awards to be granted and the number of shares of Common Stock to
which awards will relate, (iii) specify times at which awards may be exercised
or settled (including associated performance conditions), set other terms and
conditions of awards, and prescribe forms of award agreements, (iv) construe,
interpret and specify rules and regulations relating to the Incentive Plan and
(v) make all other determinations that may be necessary or advisable for the
administration of the Incentive Plan.
Any action of the Plan Committee is final, conclusive and binding on
all parties, including the Company, its stockholders and its employees. The
Incentive Plan provides that members of the Plan Committee will not be liable
for any act or determination taken or made in good faith in their capacities as
such members and will be fully indemnified by the Company with respect to such
acts and determinations.
TYPES OF AWARDS
Stock Options. The Plan Committee is authorized to grant stock options
to employees of the Company or any of its Subsidiaries or to consultants and
advisors of the Company or any of its Subsidiaries who receive cash compensation
from the Company. The Plan Committee may grant incentive stock options ("ISOs"),
as defined under Section 422 of the Internal Revenue Code (the "Code"), which
can result in potentially favorable tax treatment, only to employees, and
non-qualified stock options.
The terms and conditions of grants of stock options granted under the
Incentive Plan are set forth in a written agreement (the "Option Agreement").
The purchase price per share subject to an ISO is not to be less than
the fair market value of a share of Common Stock on the date of grant, except
that it must be at least 110% of the fair market value on the date of grant with
respect to ISO grants to a 10% stockholder. The purchase price per share subject
to a non-qualified stock option may be less than the fair market value of a
share of Common Stock on the date of grant. If options are granted with exercise
prices below fair market value, however, deductions for compensation
attributable to the exercise of such options could be limited by Code Section
162(m). See "--Federal Income Tax Consequences." The term "fair market value" on
any date means the closing sales price per share on such date on the American
Stock Exchange. Unless otherwise provided in the applicable Option Agreement, if
the purchase price of an option is paid with previously owned shares, a new
option exercisable for the number of those shares will be granted with an
20
exercise price equal to the fair market value of a share of Common Stock on the
date of exercise of the first option, exercisable six months after the date of
grant, and terminating on the same date as the original option. The aggregate
fair market value, determined at the time of grant, of the shares of Common
Stock with respect to which ISOs are exercisable for the first time by an
optionee during any calendar year may not exceed $100,000.
The maximum term of each option, the times at which each option will be
exercisable, and the vesting schedule, if any, associated with a stock option
grant generally are fixed by the Committee, except that no option may have a
term exceeding ten years, or five years in the case of an ISO granted to a 10%
stockholder. Unless otherwise provided in the Option Agreement or accelerated as
a result of a "change in control" (see "-- Acceleration of Vesting; Change in
Control"), options will become fully vested and exercisable with respect to 25%
of the underlying shares of Common Stock on each anniversary of the date of
grant, provided that the optionee continues to be employed by or is otherwise in
the service of the Company on such anniversary date.
Options may be exercised by providing written notice to the Secretary
of the Company, specifying the number of shares to be purchased and accompanied
by payment for such shares, and otherwise in accordance with the applicable
Option Agreement. Payment may be made, in the discretion of the Plan Committee,
in cash, other shares of Common Stock or through cashless exercise procedures
approved by the Plan Committee.
Restricted Stock. The Plan Committee is authorized to grant awards of
restricted stock to employees and consultants. A restricted stock award is a
grant of shares of Common Stock which may not be sold or disposed of, and which
may be forfeited in the event of certain terminations of employment, until the
restrictions specified by the Plan Committee lapse. An individual granted
restricted stock generally has all of the rights of a stockholder of the Company
unless the Plan Committee determines otherwise. The Plan Committee may modify
outstanding awards of restricted stock provided that the modification does not
adversely alter or impair the holder's rights or obligations under the award
without his or her consent. The Plan Committee also has the discretion to
determine how dividends related to shares of restricted stock will be paid. When
the restrictions imposed on an award lapse, the Plan Committee will deliver a
stock certificate for the shares, free of any restrictions, to the individual.
Performance Awards, Including Performance Unit and Performance Shares
Awards. The Plan Committee may also grant a performance award of shares of
Common Stock or units, subject to the satisfaction of performance conditions
(including subjective individual goals) established by the Committee. These
performance conditions may be expressed in terms of (i) earnings per share, (ii)
target price per share of Common Stock, (iii) pre-tax profits, (iv) net
earnings, (v) return on equity or assets, (vi) revenues, (vii) earnings before
income taxes, interest, depreciation or amortization, (viii) market share or
market penetration or (ix) any combination of these conditions. These awards
will entitle the holder who satisfies the performance conditions to receive
payment, either in shares of Common Stock or in cash, of the fair market value
of a share of Common Stock at the time specified in the award.
The Plan Committee determines the terms and conditions of performance
awards, including the required levels of performance with respect to specified
business criteria, the corresponding amounts payable upon achievement of the
specified levels of performance, any termination and forfeiture provisions and
the form of payment, including the treatment of dividends. An individual granted
shares of Common Stock through a performance award generally has all of the
rights of a stockholder of the Company unless the Committee determines
otherwise. When restrictions imposed upon shares of Common Stock subject to a
performance award lapse, the Plan Committee will deliver a stock certificate for
such shares, free of any restrictions, to the individual.
TRANSFERABILITY OF AWARDS
Grants of stock options and other awards are generally not transferable
except by will or by the laws of descent and distribution, or to a designated
beneficiary upon the participant's death, except that the Committee may, in its
discretion, permit transfers for estate planning or other purposes subject to
any applicable restrictions under federal securities laws.
21
AWARD LIMITATIONS
The maximum number of shares of Common Stock that an individual may
receive may not exceed 300,000 shares. The maximum amount of cash that any
individual may receive in respect of performance units denominated in dollars
may not exceed $1,000,000.
ACCELERATION OF VESTING; CHANGE IN CONTROL
The Committee may, in its discretion, accelerate the exercisability,
the lapsing of restrictions, or the expiration of deferral or vesting periods of
any award or grant. Vesting will occur automatically in the case of a "change in
control" of the Company, as defined briefly below, with respect to all
outstanding options on the date of a change in control. In addition, the Plan
Committee may provide in an Option Agreement that an optionee may surrender an
option and receive a cash payment in an amount equal to the excess, if any, of
the fair market value of the shares of Common Stock subject to the option over
its exercise price. If, following a change in control, the service of an
employee terminates, each option that was exercisable on the date of termination
will remain exercisable until the expiration of the option's term or the first
anniversary of termination, whichever comes first. In addition, unless the Plan
Committee has otherwise provided, any restrictions applicable to awards of
restricted stock and shares of Common Stock related to performance awards, will
lapse upon a change in control. In the discretion of the Committee, awards of
performance units may also contain provisions which accelerate vesting in the
event of a change in control.
A change in control includes the acquisition by a "person" within the
meaning of Sections 13(d) or 14(d) of the Securities Exchange Act of 1934, as
amended, of beneficial ownership of at least 30% of the outstanding Common Stock
or the combined voting power of the Company's then outstanding voting
securities. A change in control also occurs when the current members of the
Board of Directors cease for any reason to constitute a majority of the members
of the Board of Directors (subject to certain exceptions). The consummation of
(i) a merger, consolidation or reorganization with or into the Company or in
which the securities of the Company are issued, which merger, consolidation or
reorganization does not constitute a "Non-Control Transaction" (as defined in
the Incentive Plan); (ii) a complete liquidation or dissolution of the Company
or (iii) the sale or other disposition of all or substantially all of the assets
of the Company each constitute a change in control.
The Incentive Plan also provides that if an employee or consultant is
terminated without cause before a change in control but the termination was
either at the request of a party interested in acquiring the Company or arose in
connection with or in anticipation of a change in control, the vesting rules
described above will apply to that individual. For this purpose, "cause"
generally means, unless otherwise provided in the agreement evidencing an award
or option, intentional failure to perform assigned duties, dishonesty or willful
misconduct, involvement in a transaction for personal profit which is adverse to
the interests of the Company or any of its subsidiaries, or willful violation of
laws and regulations.
EFFECT OF TERMINATION OF EMPLOYMENT
Except as otherwise provided in the agreement evidencing an award or
option, (a) in the event that a participant's employment or service with the
Company is terminated for "cause" (as defined above), any outstanding options
and awards of such participant will immediately be forfeited; (b) in the event
that a participant's employment or service with the Company terminates due to
death or disability, all options of such participant will lapse unless
exercised, to the extent exercisable at the date of termination, within one year
following such date of termination, and all performance awards for which all
performance objectives and conditions have been achieved and satisfied (other
than conditions based solely on the passage of time) shall be paid in full (any
remaining awards of such participant will be forfeited); and (c) in the event
that a participant's employment or service with the Company terminates for any
other reason, all options of such participant will lapse unless exercised, to
the extent exercisable at the date of termination, within the earlier of ninety
days following such date of termination or the expiration date of such options,
and all performance awards for which all performance objectives and conditions
have been achieved and satisfied shall be paid in full (any remaining awards of
such participant will be forfeited).
22
AMENDMENT, SUSPENSION OR TERMINATION OF THE INCENTIVE PLAN
The Incentive Plan will terminate on the day preceding the tenth
anniversary of its adoption. Prior to that date, the Board of Directors may
amend, modify, suspend or terminate the Plan, subject to stockholder approval
when required by law. No amendment, modification, suspension or termination may
adversely affect the rights of participants, without their consent, under any
outstanding awards or grants of options.
FEDERAL INCOME TAX CONSEQUENCES OF OPTIONS AND AWARDS
The following is a brief description of the federal income tax
consequences generally arising with respect to the grant of Options and Awards
pursuant to the Incentive Plan. This summary is based on the Code, regulations,
rulings and decisions now in effect, all of which are subject to change by
legislation, administrative action or judicial decision. This discussion is
intended for the information of stockholders considering how to vote at the
Annual Meeting and not as tax guidance to individuals who participate in the
Incentive Plan.
ISOs. In general, an optionee granted an ISO will not recognize taxable
income upon the grant or the exercise of the ISO. The excess of the fair market
value of shares of Common Stock received upon exercise of the ISO over the
exercise price is, however, a tax preference item which can result in imposition
of the alternative minimum tax. The optionee's "tax basis" in the shares of
Common Stock acquired upon exercise of the ISO generally will be equal to the
exercise price paid by the optionee, except in the case in which the optionee
pays the exercise price by delivery of the shares of Common Stock otherwise
owned by the optionee (as discussed below).
If the shares acquired upon the exercise of an ISO are held by the
optionee for the "ISO holding period" of at least two years after the date of
grant and one year after the date of exercise, the optionee will recognize
long-term capital gain or loss upon the sale of the ISO Shares equal to the
amount realized upon such sale minus the optionee's tax basis in the shares, and
such optionee will not recognize any taxable ordinary income with respect to the
ISO. As a general rule, if an optionee disposes of the shares acquired upon
exercise of an ISO before satisfying both holding period requirements (a
"disqualifying disposition"), the gain recognized on the disposition will be
taxed as ordinary income equal to the lesser of (i) the fair market value of the
shares at the date of exercise of the ISO minus the optionee's tax basis in the
shares, or (ii) the amount realized upon the disposition minus the optionee's
tax basis in the shares. Any gain in excess of the amount realized as ordinary
income is capital gain. Certain transactions are not considered disqualifying
dispositions including certain exchanges, transfers resulting from the
optionee's death, and pledges and hypothecations of ISO Shares.
Non-qualified stock options. In general, an optionee granted a
non-qualified stock option will not recognize taxable income upon the grant of
the non-qualified stock option. Upon the exercise of the non-qualified stock
option (including an option intended to be an ISO but which has not continued to
so qualify at the time of exercise), the optionee generally will recognize
taxable ordinary income in an amount equal to the fair market value of the
shares at the time of exercise minus the exercise price, and the optionee will
have a tax basis in the shares equal to the fair market value of the shares at
the time of exercise. A subsequent sale of the shares by the optionee generally
will result in short-term or long-term capital gain or loss equal to the sale
price of such shares minus the optionee's tax basis in such shares.
In the event that an optionee forfeits an unexercised ISO or a
non-qualified stock option (or portion of such option), the optionee will not
recognize a loss for federal income tax purposes.
Restricted stock. Because restricted stock will be restricted as to
transferability and subject to a substantial risk of forfeiture for a period of
time after awarded, a participant generally will not be subject to taxation at
the time of such award. The participant generally must recognize ordinary income
equal to the fair market value of the shares at the first time the restricted
stock becomes transferable or not subject to a substantial risk of forfeiture. A
participant may, however, elect to be taxed at the time of award of restricted
stock rather than upon lapse of the restriction on transferability or
substantial risk of forfeiture. If a participant makes such an election but
subsequently forfeits the restricted stock, he or she would not be entitled to
any tax deduction, including a capital loss, for the value of the shares on
which he or she previously paid tax.
23
Performance Awards. In general, participants will not realize taxable
income at the time of the grant of such an Award. Participants will be subject
to tax at ordinary income rates on the value of such Awards when payment is
received. If, however, an Award is structured to permit a participant to
postpone payment, the participant becomes taxable at ordinary income rates when
payment is made available or the Award is no longer subject to a substantial
risk of forfeiture. If the Award is paid in shares, taxable income will be the
fair market value of the shares either at the time the Award is made available
or at the time any restrictions (including restrictions under Section 16b of the
Exchange Act) subsequently lapse.
Compensation Deduction Limitation. Code Section 162(m) generally
disallows a public company's tax deduction for compensation paid to the Chief
Executive Officer, or to the other four most highly compensated officers, in
excess of $1,000,000 in any tax year. Compensation that qualifies as
"performance-based compensation" is excluded from the $1,000,000 deductibility
cap, if various requirements are satisfied. The Company intends that options
(other than non-qualified stock options with respect to which the exercise price
is less than the fair market value of the shares subject to such options on the
date of grant) and certain other Awards granted to employees whom the Committee
expects to be covered employees at the time a deduction arises in connection
with such Awards, qualify as "performance-based compensation," so that such
Awards will not be subject to the deductibility cap.
Withholding. The Company has the right to deduct from all Awards paid
in cash or from other wages paid to an employee of the Company, any federal,
state, or local taxes required by law to be withheld with respect to Awards, and
the employee or other person receiving shares under the Incentive Plan will be
required to pay to the Company the amount of any such taxes which the Company is
required to withhold with respect to such shares.
PERSONS SUBJECT TO LIABILITY UNDER SECTION 16(B) OF THE EXCHANGE ACT
Special rules apply under the Code which may delay the timing and alter
the amount of income recognized with respect to awards granted to persons
subject to liability under Section 16(b) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"). Such persons include directors, officers for
purposes of Section 16 of the Exchange Act and beneficial owners of more than
10% of the outstanding Common Stock.
TAX WITHHOLDING
The Company, as and when appropriate, shall have the right to require
each optionee purchasing shares of Common Stock to pay any federal, state or
local taxes required by law to be withheld.
OTHER
The Incentive Plan is not subject to any provisions of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") and is not
qualified under Section 401 of the Code.
The affirmative vote of a majority of the votes cast at the Meeting by
stockholders entitled to vote thereat is required to adopt this proposal.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE
AMENDMENT TO THE CD&L, INC. YEAR 2000 STOCK INCENTIVE PLAN.
STOCKHOLDER PROPOSALS
Any proposal intended to be presented by a stockholder at the 2007
Annual Meeting of Stockholders must be received by the Company at the address
specified below no later than the close of business on December 30, 2006 to be
considered for inclusion in the Proxy Statement for the 2007 Annual Meeting and
by March 15, 2007in order for the proposal to be considered timely for
consideration at next year's Annual Meeting (but not included in the Proxy
Statement for such meeting)]. Any proposal should be addressed to Mark T.
Carlesimo, Secretary, CD&L, Inc., 80 Wesley Street, South Hackensack, New Jersey
07606 and should be sent by certified mail, return receipt requested.
24
COMMUNICATIONS WITH STOCKHOLDERS
The Board of Directors has established a procedure that enables
stockholders to communicate in writing with members of the Board. Any such
communication should be addressed to the Company's General Counsel and should be
sent to such individual c/o the Company. Any such communication must state, in a
conspicuous manner, that it is intended for distribution to the entire Board of
Directors. Under the procedures established by the Board, upon the General
Counsel's receipt of such a communication, the Company's Secretary will send a
copy of such communication to each member of the Board, identifying it as a
communication received from a stockholder. Absent unusual circumstances, at the
next regularly scheduled meeting of the Board held more than two days after such
communication has been distributed, the Board will consider the substance of any
such communication.
Board members are encouraged, but not required by any specific Board
policy, to attend the Company's annual meeting of stockholders. All of the 9
Board members attended the Company's 2005 annual meeting of stockholders.
OTHER MATTERS
The Board of Directors does not know of any matters, other than those
referred to in the accompanying Notice for the Meeting, to be presented at the
Meeting for action by the stockholders. However, if any other matters are
properly brought before the Meeting or any adjournments thereof, it is intended
that votes will be cast with respect to such matters, pursuant to the proxies,
in accordance with the best judgment of the person acting under the proxies.
By Order of the Board of Directors
/s/ Mark T. Carlesimo
Mark T. Carlesimo
Secretary
April 30, 2006
A COPY OF THE COMPANY'S ANNUAL REPORT FOR THE YEAR ENDED DECEMBER 31,
2005 ACCOMPANIES THIS PROXY STATEMENT. THE ANNUAL REPORT IS NOT TO BE REGARDED
AS PROXY SOLICITING MATERIAL NOR AS A COMMUNICATION BY MEANS OF WHICH ANY
SOLICITATION IS TO BE MADE.
THE COMPANY WILL PROVIDE WITHOUT CHARGE TO EACH PERSON BEING SOLICITED
BY THIS PROXY STATEMENT, ON THE WRITTEN REQUEST OF ANY SUCH PERSON, A COPY OF
THE ANNUAL REPORT OF THE COMPANY ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER
31, 2005 (AS FILED WITH THE SEC), INCLUDING THE FINANCIAL STATEMENTS THERETO.
ALL SUCH REQUESTS SHOULD BE DIRECTED TO MARK T. CARLESIMO, SECRETARY, CD&L,
INC., 80 WESLEY STREET, SOUTH HACKENSACK, NEW JERSEY 07606.
25
APPENDIX A
CD&L, INC.
AUDIT COMMITTEE CHARTER
I. STATEMENT OF POLICY
The Audit Committee shall assist the Board of Directors (the "Board")
of CD&L, Inc. ("CD&L") in fulfilling its oversight responsibility by reviewing
the accounting and financial reporting processes of CD&L and its subsidiaries
(collectively, the "Company"), the Company's system of internal controls
regarding finance, accounting, legal compliance and ethics, and the audits of
the Company's financial statements. In so doing, it is the responsibility of the
Audit Committee to maintain free and open means of communications among the
Company's Board of Directors, outside auditors and senior management. The Audit
Committee's primary responsibilities and duties are:
o Serve as an independent and objective party to monitor the
Company's financial reporting process, internal control system
and disclosure control system.
o Review and appraise the audit efforts of the Company's
independent accountants.
o Assume direct responsibility for the appointment,
compensation, retention and oversight of the work of the
outside auditors and for the resolution of disputes between
the outside auditors and the Company's management regarding
financial reporting issues.
o Provide an open avenue of communication among the independent
accountants, financial and senior management and the Board.
The Audit Committee will primarily fulfill these responsibilities by
carrying out the activities identified in Section IV of this Charter.
The Company shall be responsible for the providing the Audit Committee
with appropriate funding, as determined by the Audit Committee, in order to
compensate the outside auditors and advisors engaged by or employed by the Audit
Committee.
II. COMPOSITION OF THE AUDIT COMMITTEE
The Audit Committee shall consist of at least three "independent"
Directors of CD&L and shall serve at the pleasure of the Board. An "independent"
Director is defined as an individual who (a) is not an officer or salaried
employee or an affiliate of the Company, (b) does not have any relationship
that, in the opinion of the Board, would interfere with his or her exercise of
independent judgment as an Audit Committee member, (c) meets the independence
requirements of the Securities and Exchange Commission (the "SEC") and the
American Stock Exchange or such other securities exchange or market on which
CD&L's securities are traded and (d) except as permitted by the SEC and the
American Stock Exchange or such other securities exchange or market on which
CD&L's securities are traded, does not accept any consulting, advisory or other
compensatory fee from the Company.
CD&L shall use its best efforts to ensure that at least one member of
the Audit Committee shall be a "financial expert" as defined by the SEC and the
American Stock Exchange or such other securities exchange or market on which
CD&L's securities are traded. Each Audit Committee member must be able to read
and understand financial statements, including a balance sheet, income
statement, and cash flow statement.
The members of the Audit Committee shall be designated by the full
Board from time to time. The Board shall designate one member of the Audit
Committee to serve as chairperson of the committee.
A-1
III. MEETINGS AND MINUTES
The Audit Committee shall meet at least quarterly, with additional
meetings if circumstances require, for the purpose of satisfying its
responsibilities. The Audit Committee shall maintain minutes of each meeting of
the Audit Committee and shall report the actions of the Audit Committee to the
Board, with such recommendations as the Audit Committee deems appropriate.
IV. RESPONSIBILITIES AND DUTIES OF THE AUDIT COMMITTEE
The Audit Committee shall oversee and monitor the Company's accounting
and financial reporting process, internal control system and disclosure control
system, review the audits of the Company's financial statements and review and
evaluate the performance of the Company's outside auditors. In fulfilling these
duties and responsibilities, the Audit Committee shall take the following
actions, in addition to performing such functions as may be assigned by law, the
Company's certificate of incorporation, the Company's bylaws or the Board.
1. The Audit Committee shall assume direct responsibility for the
appointment, retention and oversight of the work of the outside
auditors and, when appropriate, the replacement of the outside
auditors. As part of the audit process, the Audit Committee shall meet
with the outside auditors to discuss and decide the audit's scope. The
Audit Committee shall determine that the outside audit team engaged to
perform the external audit consists of competent, experienced, auditing
professionals. The Audit Committee shall also review and approve the
compensation to be paid to the outside auditors and shall be authorized
to compensate the outside auditors.
2. The Audit Committee shall take, or recommend that the full Board take,
appropriate action to ensure the independence of the outside auditors.
The Audit Committee shall require the outside auditors to advise the
Company of any fact or circumstances that might adversely affect the
outside auditors' independence or judgment with respect to the Company
under applicable auditing standards. The Audit Committee shall require
the outside auditors to submit, on an annual basis, a formal written
statement setting forth all relationships between the outside auditors
and the Company that may affect the objectivity and independence of the
outside auditors. Such statement shall confirm that the outside
auditors are not aware of any conflict of interest prohibited by
Section 10A(l) of the Securities Exchange Act of 1934 (the "Exchange
Act"). The Audit Committee shall actively engage in a dialogue with the
outside auditors with respect to any disclosed relationships or
services that may impact the objectivity and independence of the
outside auditors.
3. The Audit Committee shall require the outside auditors to advise the
Audit Committee in advance in the event that the outside auditors
intend to provide any professional services to the Company other than
services provided in connection with an audit or a review of the
Company's financial statements ("non-audit services"); provided that
such non-audit services are not listed in Section 10A(g) of the
Exchange Act ("prohibited services"). The Audit Committee shall
approve, in advance, any non-audit services to be provided to the
Company by the Company's outside auditing firm.
4. The Audit Committee shall obtain confirmations from time to time from
the Company's outside auditing firm that such firm is not providing to
the Company (i) any prohibited services, or (ii) any other non-audit
service or any auditing service that has not been approved in advance
by the Audit Committee. The Audit Committee shall have the authority to
approve the provision of non-audit services that have not been
pre-approved by the Audit Committee, but only to the extent that such
non-audit services qualify under the de minimus exception set forth in
Section 10A(i)(1)(B) of the Exchange Act. The Audit Committee shall
record in its minutes and report to the Board all approvals of
non-audit services granted by the Audit Committee.
5. The Audit Committee shall meet with the outside auditors, with no
management in attendance, to openly discuss the quality of the
Company's accounting principles as applied in its financial reporting,
including issues such as (a) the appropriateness, not just the
acceptability, of the accounting principles and financial disclosure
practices used or proposed to be used by the Company, (b) the clarity
of the Company's financial disclosures and (c) the degree of
aggressiveness or conservatism that exists in the
A-2
Company's accounting principles and underlying estimates and other
significant decisions made by the Company's management in preparing the
Company's financial disclosures. The Audit Committee shall then meet,
without operating management or the outside auditors being present, to
discuss the information presented to it.
6. The Audit Committee shall meet with the outside auditors and management
to review the Company's quarterly reports on Form 10-Q and annual
report on Form 10-K and discuss any significant adjustments, management
judgments and accounting estimates and any significant new accounting
policies before such forms are filed with the SEC. The Audit Committee
shall require the outside auditors to report to the Audit Committee all
critical accounting policies and practices to be used, all alternative
treatments of financial information within generally accepted
accounting principles that have been discussed with the Company's
management, ramifications of the use of such alternative disclosures
and treatments, the treatments preferred by the outside auditors and
other material written communications between the outside auditors and
the Company's management, including management's letters and schedules
of unadjusted differences.
7. Upon the completion of the annual audit, the Audit Committee shall
review the audit findings reported to it by the outside auditors,
including any comments or recommendations of the outside auditors, with
the entire Board.
8. The Audit Committee shall review all reports received from the federal
and state regulatory authorities and assure that the Board is aware of
the findings and results. In addition, it will meet with the
appropriate members of senior management designated by the Audit
Committee to review the responses to the respective regulatory reports.
9. The Audit Committee shall consider and review with management: (a)
significant findings during the year and management's responses
thereto, including the status of previous audit recommendations and (b)
any difficulties encountered in the course of their audits, including
any restrictions on the scope of activities or access to required
information.
10. The Audit Committee shall consider and approve, if appropriate, changes
to the Company's auditing and accounting principles and practices, as
suggested by the outside auditors or management, and the Audit
Committee shall review with the outside auditors and management the
extent to which such changes have been implemented (to be done at an
appropriate amount of time prior to the implementation of such changes
as decided by the Audit Committee).
11. The Audit Committee shall prepare a letter for inclusion in the
Company's proxy statement describing the discharge of the Audit
Committee's responsibilities.
12. The Audit Committee will review and update this Charter periodically,
at least annually, and as conditions may dictate. The Audit Committee
Charter shall be presented to the full Board for its approval of any
changes.
13. Commencing on such date as Section 102(a) of the Sarbanes-Oxley Act of
2002 (the "Act") becomes effective, the Audit Committee shall obtain
confirmation from the outside auditors at the commencement of each
audit that such firm is a "registered public accounting firm" as such
term is defined under the Act.
14. The Audit Committee shall have the authority to engage independent
counsel and other advisers as it determines necessary to perform its
duties.
15. The Audit Committee shall establish procedures for (i) the receipt,
retention and treatment of complaints received by the Company regarding
accounting, internal accounting controls or auditing matters and (ii)
the confidential, anonymous submission by employees of the Company of
concerns regarding questionable accounting or auditing matters.
A-3
16. The Audit Committee shall investigate or consider such other matters
within the scope of its responsibilities and duties as the Audit
Committee may, in its discretion, determine to be advisable.
A-4
CD&L, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS
JUNE 7, 2006
The undersigned hereby appoints Russell Reardon and Mark T. Carlesimo, and each
of them, attorneys and proxies with power of substitution, to vote for and on
behalf of the undersigned at the CD&L, Inc. Annual Meeting of Stockholders to be
held on June 7, 2006 and at any adjournments or postponements thereof (the
"Meeting"), upon the following matters and upon any other business that may
properly come before the Meeting, as set forth in the related Notice of Meeting
and Proxy Statement, both of which have been received by the undersigned. This
proxy, when properly executed, will be voted in the manner directed by the
undersigned stockholder. If this proxy is executed but no direction is made,
this proxy will be voted FOR the board's nominees for director and FOR Proposal
2.
(CONTINUED AND TO BE SIGNED ON THE OTHER SIDE)
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
"FOR" THE ELECTION OF DIRECTORS AND "FOR" PROPOSAL 2
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
PLEAE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE. |X|
1. Election of 4 Directors
| | FOR ALL NOMINEES NOMINEES:
| | Albert W. Van Ness, Jr. Class I
| | Thomas E. Durkin III Class I
| | WITHHOLD AUTHORITY | | John A. Simourian Class I
FOR ALL NOMINEES | | Peter Young Class II
| | FOR ALL EXCEPT
(See instructions below)
INSTRUCTION: To withhold authority to vote for any individual nominee(s), mark
"FOR ALL EXCEPT" and fill in the circle next to each nominee you wish to
withhold, as shown here: |X|
To change the address on your account, please check the box at right and
indicate your new address in the address space above. Please note that changes
to the registered name(s) on the account may not be submitted via this method.
- ----------------------------------------------
2. Adoption of the Amendment to the FOR AGAINST ABSTAIN
Year 2000 Stock Incentive Plan. | | | | | |
3. In their discretion, the above named proxies are authorized to vote upon such
other business as may properly come before the meeting or any adjournment
thereof and upon matters incident to the conduct of the meeting
UNLESS OTHERWISE SPECIFIED IN THE SQUARES OR SPACE PROVIDED IN THIS PROXY, THIS
PROXY WILL BE VOTED "FOR" EACH OF THE BOARD'S NOMINEES FOR DIRECTOR AND "FOR"
PROPOSAL 2.
Please sign this proxy and return it promptly whether or not you expect to
attend the meeting. You may neverthless vote in person if you attend.
Signature of Stockholder _______________________ Date ______________________
Signature of Stockholder _______________________ Date ______________________
NOTE: Please sign exactly as your name appears on this Proxy. When shares are
held jointly, each holder should sign. When signing as executor, administrator,
attorney, trustee or guardian, please give full title as such. If the signer is
a corporation, please sign full corporate name by duly authorized officer,
giving title as such. If signer is a partnership, please sign in the partnership
name by authorized person.