AMENDMENT TO REVOLVING AND TERM LOAN AGREEMENT
Exhibit 99.2
AMENDMENT TO REVOLVING AND TERM LOAN AGREEMENT
THIS AMENDMENT (the “Amendment”) is effective as of March 31, 2010 and is made by and among
PNC Bank, National Association, successor to National City Bank (the “Bank”), EXPRESS-1 EXPEDITED
SOLUTIONS, INC., a Delaware corporation (“Borrower”), whose address is 000 Xxxx Xxxx, Xxxxxxxx,
Xxxxxxxx 00000, Express 1, Inc., a Michigan corporation, Concert Group Logistics, Inc., a Delaware
Corporation, Bounce Logistics, Inc., a Delaware Corporation, and LRG International, Inc., a
Delaware corporation, (the “Guarantors” or individually a “Guarantor”) whose address is 000 Xxxx
Xxxx, Xxxxxxxx, Xxxxxxxx 00000. This Amendment amends a certain Revolving and Term Loan Agreement
made as of January 31, 2008 among National City Bank, Borrower, Express-1 Dedicated, Inc. and all
of the Guarantors, except LRG International, Inc. (the “Agreement”). Subsequent to January 31,
2008, and prior to the date of this Amendment, Express-1 Dedicated, Inc. (“Dedicated”) was
dissolved and liquidated.
The purpose of this Amendment and of certain documents to be executed pursuant hereto is to
document certain changes to the loan arrangements originally established by the Agreement
including, but not limited to, a change in the amount available under the “Line of Credit Note”
from $11,000,000 to $10,000,000, a change in the “Borrowing Base” for the Line of Credit Note, an
increase in the “Term Note” to $5,000,000, a change in the interest rate and fees charged with
respect to the Line of Credit Note and Term Note, and a change in certain financial covenants.
The terms of the Agreement are amended as described in this Amendment. The terms of the
Agreement shall remain in full force in effect, except to the extent amended, eliminated or added
to by the terms of this Amendment.
In consideration of the foregoing and the terms and conditions set forth below, the Bank, the
Borrower and the Guarantors agree as follows:
DEFINITIONS
Capitalized Terms used in this Amendment will have the meanings set forth in the Agreement,
unless otherwise specified in this Amendment.
A. The term “Applicable Margin” as defined in the Agreement is amended in its entirety
to read as follows: The term “Applicable Margin” applies in determining the interest rate
to be paid pursuant to the Line of Credit Note, but does not apply in determining interest to be
paid pursuant to the Term Note. The term “Applicable Margin” means for the periods described
below: (i) 1.75% per annum if the ratio of Borrower’s Funded Debt to EBITDA determined at the end
of the applicable calendar quarter pursuant to Section 5.1A of this Agreement, as amended, is less
than or equal to 1.24 to 1.00; (ii) 2.00% per annum if the ratio of Borrower’s Funded Debt to
EBITDA determined at the end of the applicable calendar quarter pursuant to Section 5.1A of this
Agreement, as amended, is more than 1.24 to 1.00 but less than 2.00 to 1.00; and (iii) 2.25% per
annum if the ratio of Borrower’s Funded Debt to EBITDA determined at the end of the applicable
calendar quarter pursuant to Section 5.1A of this Agreement, as amended, is more than or equal to
2.00 to 1.00. The Applicable Margin shall, in
each case, be determined and adjusted quarterly as of the first day of the third month after
the end of each fiscal quarter of Borrower ending after March 31, 2010 (each, an “Interest
Determination Date”), provided, however, that if the quarterly financial statements
required by this Agreement are not delivered within fifteen business days after the date required
under this Agreement, the Applicable Margin shall increase to the maximum percentage amount set
forth above from the date such financial statements were required to be delivered to the Bank until
received by the Bank. The initial “Applicable Margin” shall be 2.00% and shall be effective from
the date of this Agreement until the first Interest Determination Date. Thereafter, the Applicable
Margin shall be effective from each Interest Determination Date until the next Interest
Determination Date (except for any increase occurring as a result of late delivery of financial
statements). The Bank shall determine the appropriate Applicable Margin promptly upon receipt of
the quarter end financial information and shall promptly notify the Borrower of any change to it.
Such determinations by the Bank shall be conclusive absent manifest error.
B. The term “Line of Credit Note” as defined in the Agreement shall be revised in its
entirety to read as follows: The term “Line of Credit Note” means the $10,000,000
Revolving Note of even date with the Amendment from Borrower to the Bank. References in the
Agreement to a Line of Credit of up to $11,000,000 or to the maximum amount of credit available
under the Line of Credit Note being $11,000,000 shall be deemed to mean $10,000,000.
C. The terms “Guarantor” and “Guarantors” shall have the meanings described in
the first paragraph of this Amendment.
D. The term “Guarantys” means the Continuing Guarantys dated January 31, 2008,
executed by Express 1, Inc., Concert Group Logistics, Inc. and Bounce Logistics, Inc. in favor of
the Bank and the Continuing Guaranty with an effective date of March 31, 2010 executed by LRG
International, Inc., a Delaware corporation, in favor of the Bank.
E. The term “Maturity Date” as defined in the Agreement shall be revised in its
entirety to read as follows: The term “Maturity Date” means March 31, 2012.
F. The term “Term Note” as defined in the Agreement shall be revised in its entirety
to read as follows: The term “Term Note” means the $5,000,000 Term Note of even date with
the Amendment from Borrower to the Bank.
G. The term “EBITDA” as defined in the Agreement shall be expanded to include the
addition of the non cash charges under FAS123R incurred in connection with non cash stock option
expenses.
ARTICLE I
REVOLVING LOAN
A. Line of Credit and Availability Fee. Section 1.1 of the Agreement shall be revised
in its entirety as follows: The Bank is willing to provide to Borrower a line of credit of up to
$10,000,000 (the “Line of Credit”). The Bank will make Loans to Borrower under the Line
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of Credit from time to time during the period from the date of the Amendment through the
business day immediately prior to the Maturity Date in aggregate amounts not to exceed the dollar
amounts described in Section 1.2 of the Agreement, as amended, provided that each advance is made
in compliance with all of the terms and conditions described in Section 1.2 of the Agreement, as
amended. In addition to all other sums due to the Bank under the Line of Credit Note, the
Agreement, this Amendment and the Loan Documents, Borrower shall pay to the Bank on a quarterly
basis an availability fee equal to 0.15% per annum of the maximum amount available under the Line
of Credit Note less the average advances outstanding under the Line of Credit Note and less the
aggregate maximum available amount which may be drawn under all Letters of Credit as described in
Section 1.7 of the Agreement (the “Availability Fee”). Borrower shall pay the Availability Fee for
each calendar quarter no later than the month following the end of the calendar quarter.
Accordingly, the first quarterly installment of the Availability Fee shall be due and payable on or
before July 31, 2010 and subsequent quarterly installments of the Availability Fee shall be due on
or before the end of each third month thereafter.
B. Change to Borrowing Base Formula. The first sentence of Section 1.2 of the
Agreement, including clauses (a) and (b) which describe the Borrowing Base shall be revised in its
entirety as follows: From time to time prior to the Maturity Date, the Bank agrees to lend and
relend to Borrower such amounts as Borrower may request under the Line of Credit, provided that the
aggregate outstanding principal amount of all borrowings made by Borrower shall not at any time
exceed an amount (the “Borrowing Base”) equal to the lesser of: the amounts described in the
following clauses (a) and (b), less an amount equal to 50% of the outstanding principal balance
owed on the Term Note: (a) $10,000,000; or (b) 80% of the then net book value (after deducting any
discount or other incentive for early payment but without deducting any bad debt reserve) of all
Combined Eligible Receivables, all as determined in good faith by the Bank on the Bank’s receipt of
each month-end Borrowing Base Report and at such other times as the Bank in its sole discretion
shall deem advisable, on the basis, in the Bank’s sole discretion, of the then most recent
Borrowing Base Report received by Bank, or the then most recent field audit (if any) made by the
Bank (or one or more Persons selected by Bank) or any other information obtained by the Bank.
C. Term Loan. Section 1.8 of the Agreement shall be revised in its entirety to read
as follows: The Bank agrees, subject to the terms and conditions of this Agreement, as amended, to
make available to the Borrower a secured term loan in the amount of $5,000,000 (the “Term Loan”),
which shall be evidenced by the Term Note. Principal of and interest on the Term Loan shall be due
and payable in the manner set forth in the Term Note.
ARTICLE II
CONDITIONS OF BORROWING
A. Conditions Continue to Apply. The conditions described in Article II of the
Agreement continue to apply to the credit arrangements described in the Agreement as amended by
this Amendment, provided however that: (a) the Bank has not required that an opinion of counsel, as
described in Section 2.3 of the Agreement be provided in connection with the credit facilities
described in the Amendment; (b) the Guarantors as described in Section 2.5 of the
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Agreement shall include LRG International, Inc., a Delaware corporation, and shall not include
Express-1 Dedicated, Inc. which has been dissolved and liquidated; and (c) the obligation of the
Borrower and the Guarantors to reimburse the Bank for out-of-pocket costs as described in Section
2.10 of the Agreement shall apply to costs incurred with respect to this Amendment and the
restructured financing arrangements described herein, but shall not be limited to $8,000 as
provided in the Agreement.
B. Use of Proceeds. Section 2.11 of the Agreement shall be revised in its entirety to
read as follows: The proceeds of the Line of Credit shall be used exclusively by Borrower for
working capital purposes. The proceeds of the Term Loan shall be used as follows unless otherwise
agreed in writing by the Bank: (a) $1,100,000 to pay off the balance of the Term Loan which was
made January 31, 2008 pursuant to Section 1.8 of the Agreement; (b) $1,900,000 to reduce the
balance owed on the Line of Credit initially established on January 31, 2008, pursuant to the
Agreement (the term of which has been extended and the maximum amount of which has been reduced
pursuant to this Amendment), and (c) $2,000,000 to reimburse Borrower for funds previously utilized
by Borrower to acquire the assets of LRG International, Inc., a Florida corporation, on October 1,
2009.
C. LRG International, Inc. Acquisition. Borrower and Guarantors represent and warrant
to the Bank that: (i) the acquisition of the assets of LRG International, Inc., a Florida
corporation, by LRG International, Inc., a Delaware corporation (“LRG-Delaware”) was consummated on
October 1, 2009 and that all assets so acquired are owned by LRG-Delaware free and clear of liens
or encumbrances, except as permitted by the Agreement and this Amendment; and (ii) Concert Group
Logistics, Inc. owns all of the issued and outstanding capital stock of LRG-Delaware.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
A. Certain Governing Documents. Borrower and Guarantors represent and warrant to the
Bank that their Articles of Incorporation and Bylaws which were provided to the Bank in connection
with the closing of the financing arrangements described in the January 31, 2008 Agreement were
complete, correct and accurate and that there have been no changes, additions or deletions with
respect to any such documents, except as follows: [IF APPLICABLE, DESCRIBE ANY CHANGES, ADDITIONS
OR DELETIONS, THE DOCUMENTS CONTAINING SUCH CHANGES, ADDITIONS OR DELETIONS, IF ANY, AND STATE THAT
COMPLETE COPIES OF SUCH DOCUMENTS HAVE BEEN PROVIDED TO THE BANK]. Borrower and Guarantors further
represent and warrant to the Bank that the Articles of Incorporation and Bylaws which have been
provided to the Bank in connection with this Amendment as of March 31, 2010 are complete, correct
and accurate.
B. Guarantees. Borrower and Guarantors represent and warrant to the Bank that the
Continuing Guaranty Agreements executed and delivered by them in connection with the financing
arrangements described in the Agreement which were effective on January 31, 2008, or in connection
with this Amendment, remain in full force and effect and are valid and binding obligations of each
of the Guarantors, as applicable, which are legally enforceable in accordance
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with their terms, except as enforceability may be limited by bankruptcy laws, insolvency laws
or other laws effecting creditors rights generally. Borrower and Guarantors further represent and
warrant to the Bank that the Certified Resolutions of the Board of Directors pertaining to
guarantee for each of the Guarantors which were provided to the Bank in connection with the closing
of the financing arrangements described in the Agreement which were effective on January 31, 2008,
remain in full force and effect and have not been amended or modified except that Xxxx X. Xxxxxxxxx
is no longer the Chief Financial Officer of Express 1, Inc. and is no longer the Secretary of
Concert Group Logistics, Inc. or Bounce Logistics, Inc. and is no longer employed by any of the
Guarantors.
C. Reaffirmation of Representations and Warranties. The representations and
warranties set forth in the Agreement (whether in Article II, Article III or elsewhere in the
Agreement) shall apply to this Amendment and the financing arrangements described in this Amendment
except as otherwise specifically provided in this Amendment. All representations, warranties and
facts set forth in the Security Agreements, the Loan Documents and all other documents executed and
delivered to the Bank in connection with the Agreement and this Amendment, including but not
limited to any “Related Writing:” as defined in the Notes remain true and correct as of the date of
this Amendment except to the extent specifically amended by this Amendment and/or the Loan
Documents executed and delivered pursuant hereto.
D. Ownership of LRG-Delaware. Clause (i) of Section 3.13 of the Agreement shall be
revised in its entirety to read as follows: (i) Borrower owns, both beneficially and of record, all
of the outstanding capital stock of each Guarantor except “LRG-Delaware,” as defined in Article II,
Section C. of this Amendment, and Concert Group Logistics, Inc. owns, both beneficially and of
record, all of the issued and outstanding capital stock of LRG-Delaware.
E. Express-1 Dedicated, Inc. Express-1 Dedicated, Inc. has been dissolved and
liquidated. Its business has been discontinued and its assets have been distributed to and are
owned by the Borrower and/or one or more of the Guarantors. Borrower and Guarantors represent and
warrant to the Bank that the assets of Dedicated have been retained by Borrower and/or the
Guarantors and are subject to the security interests granted by the “Security Agreements” as
defined in the Agreement. Dedicated shall, as of the date of this Amendment, no longer be
considered a Guarantor.
ARTICLE V
AFFIRMATIVE COVENANTS
A. Funded Debt to EBITDA. Subsection 5.1.A. of the Agreement shall be revised in its
entirety to read as follows: Cause, at the end of each “Funded Debt to EBITDA Measurement Period”,
the ratio of the Reporting Group’s Funded Debt, as of the end of such period, to the aggregate of
the Reporting Group’s Net Income for that period, plus the Reporting Group’s interest expense for
that period, plus the Reporting Group’s federal, state, and local income tax expense, if any, for
that period, plus the Reporting Group’s depreciation and amortization charges for that period, not
to exceed: 2.50 to 1.0. Each “Funded Debt to EBITDA Measurement Period” shall be a period of four
(4) consecutive quarter-annual fiscal periods of Borrower
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ending on the last day of the fourth such period. The first such Funded Debt to EBITDA
Measurement Period shall end on June 30, 2010.
B. Fixed Charge Coverage. Subsection 5.1.B. of the Agreement shall be revised in its
entirety to read as follows: Cause, at the end of each Fixed Charge Coverage Measurement Period,
the ratio of the aggregate of the Reporting Group’s Net Income for that period, plus the Reporting
Group’s interest expense for that period, plus the Reporting Group’s federal, state, and local
income tax expenses, if any, for that period, plus the Reporting Group’s depreciation and
amortization charges for that period, plus the Reporting Group’s FAS123R charges for that period,
to the aggregate of, the Reporting Group’s interest expense for the period in question, plus the
Reporting Group’s federal, state and local income tax payments, if any, for that period, plus the
Reporting Group’s current maturities of Long Term Debt as of the end of that period, plus all
Dividends paid by members of the Reporting Group during that period, plus the Reporting Group’s
aggregate investments (net after trade-ins, sales or liquidations, if any) in fixed or capital
assets and leasehold improvements during that period which were not financed to be not less than
1.25 to 1.00. Each “Fixed Charge Coverage Measurement Period” shall be a period of four (4)
consecutive quarter-annual fiscal periods of Borrower ending on the last day of the fourth such
period. The first such Funded Charge Coverage Measurement Period shall end on June 30, 2010.
C. Guarantor’s Stock. Section 5.8 of the Agreement shall be revised in its entirety
to read as follows: Cause Borrower to own all of the issued and outstanding capital stock of each
Guarantor, except LRG-Delaware and cause Concert Group Logistics, Inc. to own all of the issued and
outstanding capital stock of LRG-Delaware.
ARTICLE VIII
MISCELLANEOUS
A. Bank Includes Predecessors. The following shall be added to Section 8.2 of the
Agreement: National City Bank was merged with and into PNC Bank, National Association at the close
of Business on November 6, 2009. The term “Bank” as used in the Agreement, as amended by this
Amendment, and as used in all other Loan Documents on and after the date of this Amendment shall
include all entities which were merged into, or whose name was changed to “PNC Bank, National
Association.” PNC Bank, National Association is the successor to National City Bank and may do
business from time to time under the name National City Bank.
B. Entire Agreement. This Amendment, and the Agreement, collectively the “Amended
Agreement”, including all Agreements referred to or incorporated into the Amended Agreement and the
background of the Agreement and this Amendment, (which background is incorporated as covenants of
the parties) constitute the entire agreement among the parties relating to the subject matter of
the Amended Agreement. The Amended Agreement supersedes all prior Agreements, commitments and
understandings among the parties relating to the subject matter of the Agreement and the Amendment
and cannot be changed or terminated orally and shall be deemed effective as of the date noted
above. No modification or amendment of the Loan Documents or waiver of any provision thereof shall
be effective without the Bank’s prior written consent.
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Signatures are on the following page.
Signature page of Amendment to Revolving and Term Loan Agreement effective as of March 31,
2010, among the parties listed below.
| Bank: | PNC Bank, National Association |
|||
| By: | ||||
| Xxxx X. Xxxxxx | ||||
| Its: Senior Vice President | ||||
| Borrower: | EXPRESS-1 EXPEDITED SOLUTIONS, INC. |
|||
| By: | ||||
| Xxxxx X. Xxxxx | ||||
| Its: Chief Financial Officer | ||||
| Guarantors: | Express 1, Inc. |
|||
| By: | ||||
| Xxxxxxx X. Xxxxx | ||||
| Its: Chief Executive Officer | ||||
| Concert Group Logistics, Inc. |
||||
| By: | ||||
| Xxxxxxx X. Xxxxx | ||||
| Its: Chief Executive Officer | ||||
| Bounce Logistics, Inc. |
||||
| By: | ||||
| Xxxxxxx X. Xxxxx | ||||
| Its: Chief Executive Officer | ||||
| LRG International, Inc. |
||||
| By: | ||||
| Xxxxx Post | ||||
| Its: President | ||||
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