Exhibit 99.2
SECOND AMENDMENT TO CREDIT AGREEMENT
THIS SECOND AMENDMENT TO CREDIT AGREEMENT ("Amendment") is entered into as
of March 30, 2000, by and among DISPATCH MANAGEMENT SERVICES CORP., a Delaware
corporation (the "Borrower"), each of the Borrower's Material Subsidiaries
(individually a "Guarantor" and collectively the "Guarantors"), the Lenders
party to the Credit Agreement defined below (the "Lenders") and BANK OF AMERICA,
N.A., formerly NationsBank, N.A., as Administrative Agent (the "Administrative
Agent") for the Lenders. Capitalized terms used herein and not otherwise defined
herein shall have the respective meanings given to them in the Credit Agreement.
RECITALS
WHEREAS, the Borrower, the Guarantors, the Administrative Agent, and the
Lenders are parties to that certain Amended and Restated Credit Agreement dated
as of April 8, 1999, as amended by a First Amendment to Credit Agreement and
Waiver Agreement dated August 31, 1999 (as amended, modified, supplemented,
extended or restated from time to time, the "Credit Agreement");
WHEREAS, Banc of America Securities LLC has acted as Sole Lead Arranger
and Sole Book Manager with respect to the Credit Agreement;
WHEREAS, the Credit Parties have requested that the Lenders agree to amend
certain terms of the Credit Agreement; and
WHEREAS, the Administrative Agent and Lenders have agreed to such
amendments, subject to the conditions and as more fully set forth below.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Banc of America Securities LLC shall act as Sole Lead Arranger and Sole
Book Manager with respect to the Credit Agreement, as amended by this Amendment.
2. The pricing grid set forth in the definition of "Applicable Percentage"
set forth in Section 1.1 of the Credit Agreement is amended and restated to read
as follows:
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Applicable Applicable
Percentage For Applicable Percentage For
Pricing Leverage Eurocurrency Percentage For Letter of Credit
Level Ratio Loans Base Rate Loans Fees
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I <= 2.0 to 1.0 1.75% 0% 1.75%
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II <= 2.75 to 1.0 but
>2.0 to 1.0 2.25% 0% 2.25%
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III <= 3.25 to 1.0 but
>2.75 to 1.0 3.00% .50% 2.50%
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IV <= 3.75 to 1.0 but
>3.25 to 1.0 3.375% 1.00% 2.50%
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V <= 4.00 to 1.0 but
>3.75 to 1.0 3.50% 1.25% 2.50%
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VI > 4.00 to 1.0 3.75% 1.50% 2.50%
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3. The definition of "Capital Market Event" is hereby added to Section 1.1
of the Credit Agreement to read as follows:
"Capital Market Event" means any merger or acquisition involving a
Credit Party or any private or public placement of debt or equity by any
Credit Party in which the total value of such event exceeds $15,000,000.
4. The definition of "Interest Coverage Ratio" set forth in Section 1.1 of
the Credit Agreement is amended and restated in its entirety to read as follows:
"Interest Coverage Ratio" means, as of any date of determination,
the ratio of (a) EBITDA for the twelve month period ending on such date to
(b) Interest Expense for the twelve month period ending on such date.
5. The definition of "Leverage Ratio" set forth in Section 1.1 of the
Credit Agreement is amended and restated in its entirety to read as follows:
"Leverage Ratio" means, as of any date of determination, the ratio
of (a) total Funded Debt on such date plus Seller Obligations consisting
of cash obligations outstanding on such date minus Indebtedness incurred
in connection with a Capital Market Event which is subordinated to the
Credit Party Obligations on terms reasonably satisfactory to the
Administrative Agent and is outstanding on such date to (b) EBITDA for the
twelve month period ending on such date.
6. The definition of "Maturity Date" set forth in Section 1.1 of the
Credit Agreement is amended and restated in its entirety to read as follows:
"Maturity Date" means May 31, 2001.
7. The definition of "Revolving Committed Amount" set forth in Section 1.1
of the Credit Agreement is amended and restated in its entirety to read as
follows:
"Revolving Committed Amount" means SEVENTY-SIX MILLION EIGHT HUNDRED
EIGHTY-NINE THOUSAND FIVE HUNDRED THIRTY-THREE DOLLARS
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AND 98/100 ($76,889,533.98) or such lesser amount as the Revolving
Committed Amount may be reduced pursuant to Section 2.1(d).
8. Section 2.1(d)(i) and (ii) of the Credit Agreement are amended and
restated in their entirety to read as follows:
2.1 Revolving Loans.
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(d) Reduction of Revolving Committed Amount.
(i) Independent of any other reduction of the Revolving
Committed Amount, the Revolving Committed Amount shall be reduced by
$150,000 on the last day of each month from the period beginning
April 30, 2000 through November 30, 2000 and by $300,000 on the last
day of each month beginning December 31, 2000 and for each month
thereafter. The outstanding Revolving Loans shall be prepaid, if
necessary, in the amount necessary to give effect to such reduction
in the Revolving Committed Amount and such prepayment shall be
applied in accordance with the terms of Section 3.3(c). No reduction
of the Revolving Committed Amount shall be required on February 29,
2000 or March 31, 2000.
(ii) Independent of any other reduction of the Revolving
Committed Amount, with respect to the sale of any business or assets
of a Credit Party or its Subsidiaries permitted pursuant to the
terms of Section 8.5(f), the Revolving Committed Amount shall be
reduced by the amount of the net proceeds from such sale that the
Credit Parties are not entitled to retain pursuant to the terms of
the second paragraph of Section 8.5.
9. Section 7.1(c) of the Credit Agreement is amended and restated in its
entirety to read as follows:
7.1 Information Covenants.
The Credit Parties will furnish, or cause to be furnished, to the
Administrative Agent and each of the Lenders:
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(c) Monthly and Weekly Reports. As soon as available, and in any
event (i) within 30 days after the end of each calendar month, (A) a
summary of aged accounts receivable as of the end of such month; (B) a
monthly operating statement and balance sheet including comparisons to the
budget of the Credit Parties; and (C) such other monthly reports as
reasonably requested by the Administrative Agent or the Lenders and (ii)
within 7 days after the end of each week, such weekly reports as
reasonably requested by the Administrative Agent or the Lenders.
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**********
10. Section 7.2 of the Credit Agreement is amended by amending and
restating subsections (b), (c) and (d) in their entirety and by adding new
subsection (e) to read as follows:
7.2 Financial Covenants.
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(b) Collateral Coverage Ratio. The Collateral Coverage Ratio, as of
the last day of each calendar month, shall be greater than or equal to
35%.
(c) Interest Coverage Ratio. The Interest Coverage Ratio, as of the
last day of each fiscal quarter of the Borrower, shall be greater than or
equal to 2.25:1.
(d) Minimum Net Income. Net Income of the Borrower and its
Subsidiaries on a consolidated basis (before taxes and excluding the
effects of any extraordinary or other non-recurring gains - including any
gain from the sale of property - or one-time non-cash losses), for the two
month period ending as of the last day of each calendar month, shall be
greater than zero.
(e) Leverage Ratio. The Leverage Ratio, as of the last day of each
fiscal quarter of the Borrower, shall be less than or equal to the ratio
shown below for the period corresponding thereto:
March 31, 2000 through September 29, 2000 4.50:1
September 30, 2000 through December 30, 2000 4.25:1
December 31, 2000 through the Maturity Date 4.00:1
11. A new Section 7.17 is hereby added to the Credit Agreement to read as
follows:
7.17 Capital Market Event.
On or before June 30, 2000, the Borrower shall engage an investment
bank reasonably acceptable to the Required Lenders to pursue a Capital
Market Event. The Borrower will cause such investment bank or other party
reasonably acceptable to the Required Lenders to provide to the Required
Lenders, on or before October 15, 2000, a term sheet pertaining to a
Capital Market Event. A Capital Market Event shall take place no later
than December 31, 2000. If the Credit Party Obligations are not paid in
full with the proceeds received by the Credit Parties from such Capital
Market Event (and this Credit Agreement is not terminated in connection
therewith), concurrently with such Capital Market Event the Borrower shall
provide to the Lenders a recapitalization plan satisfactory in form and
scope to the Required Lenders in their sole discretion.
12. Section 8.1 of the Credit Agreement is hereby amended by adding a new
subsection (j) and by making the appropriate punctuation changes to read as
follows:
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8.1 Indebtedness.
(f) Indebtedness arising from the settlement of any claims or other
litigation between the Internal Revenue Service and any Credit Party;
provided that, after giving effect to the incurrence of such Indebtedness
on a pro forma basis, (i) no Default or Event of Default shall exist and
(ii) the Credit Parties shall be in compliance with the financial
covenants set forth in Section 7.2.
13. Section 8.4 of the Credit Agreement is hereby amended by adding new
subsections (f) and (g) and by making the appropriate punctuation changes to
read as follows:
8.4 Consolidation and Merger.
No Credit Party will, nor will it permit any Subsidiary to, enter
into any transaction of merger or consolidation or liquidate, wind up or
dissolve itself; provided that a Credit Party or a Subsidiary of a Credit
Party may merge or consolidate with or into anther Person if the following
conditions are satisfied:
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(f) the merger or consolidation shall have been approved in writing
by the Required Lenders; and
(g) without the consent of the Required Lenders, the Credit Parties
shall not have expended more than $250,000 in pursuing and negotiating the
merger or consolidation.
14. Section 8.5 of the Credit Agreement is amended by adding a new
paragraph, after the first paragraph and before the second paragraph, to read as
follows:
8.5 Sale or Lease of Assets.
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In the event any of the business or assets of a Credit Party or its
Subsidiaries are sold pursuant to Section 8.5(f), the Credit Parties shall
be entitled to retain fifty percent (50%) of the net proceeds of such
sales, up to a maximum of $3,500,000 in the aggregate for all sales
permitted pursuant to Section 8.5(f), for reinvestment in the ordinary
course of business, so long as the Borrower delivers an officer's
certificate to the Administrative Agent (i) certifying as to the proposed
use of such proceeds and (ii) demonstrating calculations of the financial
covenants set forth in Section 7.2 after giving effect to such sale on a
pro forma basis and that such sale is accretive to the Credit Parties'
compliance with such financial covenants, such officer's certificate to be
in form and substance satisfactory to the Required Lenders in their sole
discretion.
**********
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15. Section 9.1 of the Credit Agreement is hereby amended by adding new
sections (l) and (m) to read as follows:
9.1 Events of Default.
An Event of Default shall exist upon the occurrence of any of the
following specified events (each an "Event of Default"):
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(l) Change of Key Officers. Either (i) H. Xxxxx Xxxxx shall cease to
be Chief Executive Officer of the Borrower or (ii) Marko Bogoievski shall
cease to be Chief Financial Officer of the Borrower and a replacement
Chief Executive Officer or Chief Financial Officer, as applicable,
satisfactory to the Required Lenders in their sole discretion is not
appointed within ninety (90) days after the date either Xx. Xxxxx or Mr.
Bogoievski ceases to hold his respective office.
(m) Material Adverse Effect. A Material Adverse Effect shall have
occurred.
16. Schedule 6.30 of the Credit Agreement is hereby amended and replaced
by the Schedule 6.30 attached hereto.
17. Conditions Precedent.
The effectiveness of this Amendment is subject to the satisfaction of each
of the following conditions:
(a) The Administrative Agent shall have received copies of this
Amendment duly executed by the Credit Parties and the Lenders.
(b) The Administrative Agent shall have received copies of
resolutions of the Board of Directors of each Credit Party approving and
adopting this Amendment, the transactions contemplated herein and
authorizing execution and delivery hereof, certified by a secretary or
assistant secretary of such Credit Party to be true and correct and in
full force and effect as of the date hereof.
(c) The Administrative Agent shall have received an opinion of
counsel to the Credit Parties in form and substance satisfactory to the
Administrative Agent.
(d) The Administrative Agent shall have received such other
documents and information as it reasonably deems necessary.
18. Miscellaneous.
(a) The term "Credit Agreement" as used in each of the Credit
Documents shall hereafter mean the Credit Agreement as amended by this
Amendment. Except as herein specifically agreed, the Credit Agreement, and
the obligations of the Credit Parties thereunder and under the other
Credit Documents, are hereby ratified and confirmed and
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shall remain in full force and effect according to their terms, including,
without limitation, (i) the liens and security interests granted under the
Credit Documents and (ii) the obligations of the Guarantors under the
Credit Documents. Without limiting the foregoing, the Guarantors hereby
reaffirm their obligations under the Credit Documents and agree that their
obligations thereunder are not amended, modified or reduced by the terms
of this Amendment.
(b) Each of the Credit Parties represents and warrants as follows:
(i) It has taken all necessary action to authorize the
execution, delivery and performance of this Amendment.
(ii) This Amendment has been duly executed and delivered by
such Credit Party and constitutes such Credit Party's legal, valid
and binding obligations, enforceable in accordance with its terms,
except as such enforceability may be subject to (A) bankruptcy,
insolvency, reorganization, fraudulent conveyance or transfer,
moratorium or similar laws affecting creditors' rights generally and
(B) general principles of equity (regardless of whether such
enforceability is considered in a proceeding at law or in equity).
(iii) No consent, approval, authorization or order of, or
filing, registration or qualification with, any court or
Governmental Authority or third party is required in connection with
the execution, delivery or performance by such Credit Party of this
Amendment.
(iv) The representations and warranties of such Credit Party
set forth in Section 6 of the Credit Agreement are true and correct
as of the date hereof.
(v) No event has occurred and is continuing which constitutes
a Default or an Event of Default.
The Credit Parties acknowledge that if any of the foregoing
representations and warranties shall prove to be untrue in any material
respect as of the date hereof, an Event of Default under Section 9.1(b) of
the Credit Agreement shall exist.
(c) In consideration of the Lenders entering into this Amendment,
the Borrower agrees to pay to the Administrative Agent, for the pro rata
benefit of each Lender (based on each Lender's Revolving Loan Commitment
percentage of the Revolving Committed Amount (as amended by this
Amendment)), a one time fee of 0.75% of the Revolving Committed Amount
(the "Amendment Fee"). The Amendment Fee shall be due and payable on the
earlier of (i) December 15, 2000 or (ii) the occurrence of a Capital
Market Event.
(d) In consideration of the Administrative Agent and the Lenders
entering this Amendment, each of the Credit Parties hereby releases the
Administrative Agent, the Lenders, and the Administrative Agent's and the
Lenders' respective officers, employees, representatives, agents, counsel
and directors from any and all actions, causes of action, claims, demands,
damages and liabilities of whatever kind or nature, in law or in equity,
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now known or unknown, suspected or unsuspected to the extent that any of
the foregoing arises from any action or failure to act on or prior to the
date hereof.
(e) The Borrower agrees to pay Bank of America, N.A. all fees that
it is obligated to pay pursuant to the terms of that certain Fee Letter,
dated as of March 20, 2000, between the Borrower and Bank of America, N.A.
on the dates such fees are due and payable.
(f) This Amendment is a Credit Document executed pursuant to the
Credit Agreement and shall be construed, administered and applied in
accordance with the terms and provisions of the Credit Agreement.
(g) This Amendment may be executed in any number of counterparts,
each of which when so executed and delivered shall be an original, but all
of which shall constitute one and the same instrument. Delivery of an
executed counterpart of this Amendment by telecopy shall be effective as
an original and shall constitute a representation that an executed
original shall be delivered.
(h) This Amendment shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns.
(i) THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NORTH CAROLINA.
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