Exhibit 4.1
FIFTH SUPPLEMENTAL
INDENTURE
THIS FIFTH SUPPLEMENTAL INDENTURE
(this “ Fifth Supplemental Indenture ”) dated as
of March 13, 2009, among VELOCITY EXPRESS CORPORATION, a
Delaware corporation (the “ Company ”), and
WILMINGTON TRUST COMPANY, as successor to WELLS FARGO BANK, N.A.
(the “ Trustee ”), to the INDENTURE, dated as of
July 3, 2006, among the Company, the guarantors party thereto
and the Trustee, pursuant to which the Company has issued and there
remains outstanding $98,941,353.00 in aggregate principal amount of
12.0% Senior Secured Notes due 2010 (the “ Notes
”), as amended by the First Supplemental Indenture, dated as
of August 17, 2006, the Second Supplemental Indenture, dated
as of December 22, 2006, the Third Supplemental Indenture,
dated as of July 25, 2007 and the Fourth Supplemental
Indenture, dated as of May 19, 2008 as further amended as of
June 19, 2008 (as so amended by the First Supplemental
Indenture, the Second Supplemental Indenture, the Third
Supplemental Indenture, and the Fourth Supplemental Indenture, as
amended, the “ Indenture ”).
RECITALS
WHEREAS , the Company wishes to amend the Indenture to,
among other things,
(1) Waive certain defaults as more
particularly described in Section 2.3 hereof;
(2) Waive the Noteholders’
refinancing options set forth in Section 4.16A of the
Indenture;
(3) Permit the Company to enter into
a new twelve million dollar credit facility (“ Credit
Facility ”) with Burdale Capital Finance, Inc. as
administrative agent for itself and other lenders thereunder
(“ Agent ”);
(4) Permit the Company to amend and
restate (i) the definition of Scanner Amount in
Section 1.02 of the Indenture to provide for an amount not to
exceed $7.5 million, (ii) Section 6.01 (5) of the
Indenture to require a Payment Default to be in excess of $1.0
million, (iii) Section 4.09 (xii) of the Indenture
to increase the limit on Purchase Money Obligations and Capital
Lease Obligations to $2.75 million in the aggregate,
(iv) Section 4.12 of the Indenture to correct
inconsistencies resulting from prior supplemental indentures, and
provide the Noteholders who consent to this Fifth Supplemental
Indenture will receive, on a pro rata basis (based upon the
principal amount of the Notes held by the consenting Noteholders),
fifty percent of the first two million dollars ($2,000,000) of any
recovery (net of any and all outstanding legal fees, cost and
expenses owing to any law firm representing the Company in these
matters) from the Office Depot Litigation and the NICA Litigation,
and (v) to delete Section 3.07 of the Indenture since the
facts upon which it is based no longer exist;
(5) Permit the Company to add an
additional covenant in Section 4.27 requiring a
Sale;
(6) Permit the Company to amend and
restate the (i) minimum cash and accounts receivable and
(ii) minimum quarterly EBITDA financial covenants contained in
Section 4.21 of the Indenture; and
(7) Permit the Trustee to enter into
a new Intercreditor Agreement (the “ Intercreditor
Agreement ”) among Agent, the Trustee, on behalf of the
Noteholders, and the Company which provides, inter
alia , for (i) subordination of payment obligations
due under the Indenture and Notes (including the Asset Sale Offer
under Section 4.12(b) to the Indenture) to payment in full of
all amounts due to Agent and other lenders under the Credit
Facility and (ii) a prohibition for 150 days of the
Noteholders’ right to enforce the Indenture in the event of a
default.
WHEREAS , the Noteholders wish to amend the Indenture to
induce Agent and any other lenders under the Credit Facility to
provide credit to the Company, as the Noteholders believe the
Credit Facility to be in their best interests, including by reason
of providing the Company with additional financing and helping to
avoid potential defaults;
WHEREAS , with respect to the amendments and waivers
specified herein, Section 8.02(b) of the Indenture requires
the consent of two-thirds majority of the Noteholders of the then
outstanding balance of the Notes (the “ Requisite
Consents ”) for the Company and the Trustee to execute
this Fifth Supplemental Indenture;
WHEREAS , the Company has solicited consents from
Noteholders to approve the amendments to the Indenture and waivers
set forth herein (the “ Proposed Amendments ”)
and to approve the Intercreditor Agreement;
WHEREAS , the Company has received, in form acceptable
to the Trustee, and delivered to the Trustee, the Requisite
Consents to effect the Proposed Amendments under the Indenture and
to authorize the Trustee to execute, deliver and perform the
Intercreditor Agreement; and
WHEREAS , all things necessary to make this Fifth
Supplemental Indenture a valid agreement of the Company in
accordance with its terms have been done.
NOW, THEREFORE
, in consideration of the premises,
it is mutually covenanted and agreed, for the equal and
proportionate benefit of all Noteholders, as follows:
ARTICLE I
AUTHORIZATIONS
1.1 Effectiveness and
Effect
(a) This Fifth Supplemental
Indenture shall become binding upon execution and effective upon
the (i) satisfaction of each of the conditions set forth in
Article IV herein, (ii) receipt and delivery of the Requisite
Consents to the Company and the Trustee, (iii) execution of
this Fifth Supplemental Indenture by the Company and the Trustee
and the Intercreditor Agreement in substantially the form attached
hereto as Exhibit D by the Company, Agent and the Trustee,
and (iv) except with the consent of holders of a majority in
aggregate principal amount of the Notes, the accuracy and
completeness of all statements, representations and warranties made
in connection with this Fifth Supplemental Indenture or in any
document delivered in connection herewith. Upon execution and
delivery of this Fifth Supplemental Indenture, the Indenture shall
be modified, amended and supplemented in accordance with this Fifth
Supplemental Indenture, and all the terms and conditions of both
shall be read together as though they constitute one instrument,
except that, in the case of conflict, the provisions of this
Fifth
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Supplemental Indenture will control. In the case
of a conflict between the terms and conditions contained in the
Notes and those contained in the Indenture, as modified, amended
and supplemented by this Fifth Supplemental Indenture, the
provisions of the Indenture, as modified, amended and supplemented
by this Fifth Supplemental Indenture, shall control. Each of the
Indenture, as modified, amended and supplemented by this Fifth
Supplemental Indenture, and the Notes are hereby ratified and
confirmed, in all respects, and shall remain in full force and
effect and shall bind every Noteholder.
(b) The Section headings in the
Fifth Supplemental Indenture have been inserted for convenience and
reference only, are not to be considered a part hereof or thereof
and shall in no way modify or restrict any of the terms or
provisions hereof or thereof.
(c) On and after the date hereof,
all references to the Indenture in the Indenture or in any
agreement, document or instrument delivered in connection therewith
or pursuant thereto shall be deemed to refer to the Indenture as
modified, amended and supplemented by this Fifth Supplemental
Indenture.
ARTICLE II
WAIVER AND CONSENT
2.1 The Noteholders consent to the financing to be
provided by the Agent and lenders under the Credit Facility to the
Company and certain of its Affiliates, substantially in the form of
the Loan and Security Agreement, a copy of which has been received
by each Noteholder and is attached hereto as Exhibit A
.
2.2 Section 4.16A of the Indenture, as amended
by Section 3.20 of this Fifth Supplemental Indenture, requires
the Company, in the event the Company desires to refinance the
Senior Facility Obligations in a manner other than an Acceptable
Refinancing, to notify the Noteholders, by delivery of a
Refinancing Notice to the Trustee and provide the Noteholders with
a Right of First Refusal. The Company has notified the Trustee and
the Noteholders of the material terms and conditions for the
proposed Credit Facility and the Noteholders hereby waive their
right to receive the Refinancing Notice and their Right of First
Refusal solely in respect to the refinancing under the Burdale
Credit Facility.
2.3 Section 4.09 (xii) of the Indenture
restricts the Company from incurring Purchase Money Obligations and
Capital Lease Obligations in an aggregate principal amount in
excess of $1 million. The Company has notified the Noteholders that
during the fourth quarter of 2008, the Company failed to maintain
this covenant. Section 4.21(A) of the Indenture, as amended by
Section 3.7 and Exhibit B, Subsection A of the Fourth
Supplemental Indenture, requires the Company and the Subsidiary
Guarantors to maintain minimum cash and Cash Equivalents of not
less than Three Million Dollars ($3,000,000) which are subject to a
perfected Lien created in favor of the Trustee for the benefit of
the Noteholders. The Company has notified the Noteholders that it
did not meet this covenant as of its last business day of October
and November 2008 and January 2009. Section 4.21(B) of the
Indenture, as amended by Section 3.7 and Exhibit B, Subsection
B of the Fourth Supplemental Indenture requires the Company and the
Subsidiary Guarantors to maintain minimum cash, Cash Equivalents,
and Qualified Accounts Receivable of not less than Twenty-Six
Million Dollars ($26,000,000), which are subject to a
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perfected Lien created in favor of the Trustee
for the benefit of the Noteholders. The Company has notified the
Noteholders that as of its last business day of October, November
and December 2008, and January 2009 it did not meet this covenant.
Section 4.21(C) of the Indenture, as amended by
Section 3.7 and Exhibit B, Subsection C of the Fourth
Supplemental Indenture requires the Company and the Subsidiary
Guarantors to achieve a LTM EBITDA of not less than $3,257,000 for
the quarter ending December 2008. The Company has notified the
Noteholders that as of its last business day of December 2008 it
did not meet this covenant. The Noteholders hereby waive any
default under the Indenture that arises from (i) the failure
of the Company and the Subsidiary Guarantors to maintain cash and
Cash Equivalents of not less than Three Million Dollars
($3,000,000) as of its last business day of October and November
2008 or at any other relevant point during January 2009,
(ii) the Company’s failure to maintain cash, Cash
Equivalents Qualified Accounts Receivable of not less than
Twenty-Six Million Dollars ($26,000,000) as of its last business
day of October, November and December 2008 respectively or at any
other relevant time up to the time of approval of this Fifth
Supplemental Indenture, (iii) the failure of the Company and
the Subsidiary Guarantors to achieve a LTM EBITDA of not less than
$3,257,000 as of its last business day of December 2008, and
(iv) the incurrence by the Company of Purchase Money
Obligations and Capital Lease Obligations during the fourth quarter
of 2008 in excess of $1 million.
ARTICLE III
AMENDMENTS TO
INDENTURE
3.1 Definitions
. Section 1.01 of the Indenture
(“ Definitions ”) is amended to include the
following additional definitions in alphabetical order:
“ Agent ” has the
meaning set forth in the Recitals to the Fifth Supplemental
Indenture.
“ Burdale Credit
Facility ” means the credit facility evidenced by the
Senior Facility Agreement.
“ Capital Lease ”
means any lease of any property (whether real, personal or mixed)
that, in conformity with GAAP, should be accounted for as a capital
lease.
“ Consenting
Noteholders ” means the Noteholders who consent to this
Fifth Supplemental Indenture.
“ Effective Date
” has the meaning set forth in Section 4.12(e) of the
Indenture.
“ Fifth Supplemental
Indenture ” means this Fifth Supplemental Indenture dated
as of March 13, 2009 among the Company, the Subsidiary
Guarantors named herein and the Trustee.
“ Global Alliance
Expenses” means any reasonable and necessary third party
expenses incurred by the Company in connection with the potential
Global Alliance Transaction, up to an aggregate amount of $575,000
incurred on or prior to December 31, 2009.
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“ Global Alliance
Transaction ” means a partnership with European, Asian
and/or other international delivery company or companies for the
purpose of creating a global delivery service.
“ Non-Recurring Fees and
Expenses ” means occupancy expense for the
Company’s redundant facility in Minneapolis, MN incurred on
or prior to December 31, 2008 and settlement expense for the
Company’s redundant facility in Bridgeport, NJ incurred on or
prior to November 30, 2008, up to an aggregate amount of
$189,000.
“ NICA Litigation
” means that certain litigation between Clayton/National
Courier and COLL UNICA, Inc. filed on December 23, 2005 in the
U.S. District Court for the District of New Jersey, Docket
No. 2105 CV 05950-JUL-MF.
“ Sale ” has the
meaning set forth in Section 4.27 of the Indenture.
3.2 The definition of “ Consolidated
Adjusted EBITDA ”, in Section 1.01 of the Indenture
is hereby amended and restated in its entirety as
follows:
“ Consolidated Adjusted
EBITDA ” means for any period, without duplication, the
total of the following for the Company and its Subsidiary
Guarantors on a consolidated basis, each calculated for such
period: (a) Net Income; plus (without duplication), to
the extent included in the calculation of Net Income, (b) the
sum of (i) income and franchise taxes paid or accrued;
(ii) Interest Expense, net of interest income, paid or
accrued; (iii) amortization and depreciation; (iv) Global
Alliance Expenses; (v) attorney’s fees incurred in
connection with the Office Depot Litigation up to an aggregate
amount of $975,000 incurred on or prior to December 31, 2009;
(vi) transaction or consulting expenses incurred in connection
with the Fourth Supplemental Indenture and Fifth Supplemental
Indenture and all fees and liquidated damages (including, without
limitation, waiver or amendment fees) charged, paid to or required
by Wells Fargo Foothill, Inc. in connection with or arising out of
any waiver or amendment of any of the Company’s existing
credit facility, to the extent such fees are not required to be
capitalized in accordance with GAAP, in an aggregate amount up to
$850,000; (vii) non-cash expenses incurred in connection with
the issuance of Capital Stock or options therefor of the Company to
members of management of the Company and the Subsidiary Guarantors
pursuant to a stock option plan or similar management compensation
plan to the extent such non-cash expenses are not reasonably likely
to result in a cash expenditure in a future period and
(viii) Non-Recurring Fees and Expenses; less (without
duplication), to the extent included in the calculation of Net
Income, (c) the sum of (i) the income of any Person
(other than wholly-owned Subsidiary Guarantors of the Company) in
which the Company or any wholly owned Subsidiary Guarantors of the
Company has an ownership interest except to the extent such income
is received by the Company or any such wholly-owned Subsidiary
Guarantors in a cash distribution during such period;
(ii) gains or losses from sales or other dispositions of
assets; and (iii) the greater of (A) $0 and (B) the
sum of extraordinary or non-recurring gains less
extraordinary or non-recurring “cash”
losses.
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3.3 The definition of “ Capital Stock
”, in Section 1.01 of the Indenture is hereby amended
and restated in its entirety as follows:
“ Capital Stock ”
shall mean, with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated)
of such Person’s capital stock or partnership, limited
liability company or other equity interests at any time
outstanding, and any and all rights, warrants or options
exchangeable for or convertible into such capital stock or other
interests (but excluding any debt security that is exchangeable for
or convertible into such capital stock or other equity
interests).
3.4 The definition of “ Interest
Expense ”, in Section 1.01 of the Indenture is
hereby amended and restated in its entirety as follows:
“ Interest Expense
” means, for any period, as to any Person, as determined in
accordance with GAAP, the total interest expense of such Person,
whether paid or accrued during such period but without duplication
(including the interest component of Capital Leases for such
period), including, without limitation, discounts in connection
with the sale of any Accounts that are sold for purposes other than
collection.
3.5 The definition of “ Net Income
”, in Section 1.01 of the Indenture is hereby amended
and restated in its entirety as follows:
“ Net Income ”
means, with respect to any Person, the net income (or loss) of such
Person determined in accordance with GAAP.
3.6 The definition of “ Permitted Liens
”, in Section 1.01 of the Indenture is hereby amended to
add a new clause 22 as follows:
(22) all Liens created under the
Burdale Credit Facility in favor of Senior Facility
Agent;
3.7 The definition of “ Scanner Amount
”, in Section 1.01 of the Indenture is hereby amended
and restated in its entirety as follows:
“ Scanner Amount
” means an amount of money which a majority of the Board of
Directors determines is necessary or desirable for the Company to
use to support its program to lease or acquire scanners;
provided that such amount shall not exceed $7.5 million and
is permitted to be incurred (and is incurred) pursuant to
Section 4.09(i).
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3.8 The Definition of “ Security
Documents ” in Section 1.01 of the Indenture is
hereby amended and restated in its entirety as follows:
“ Security Documents
” means the Security Agreement, the Control Agreement (as
defined in the Security Agreement), the Intercreditor Agreement (as
and when required to be entered into as of the effective date of
the Fifth Supplemental Indenture) and the various other security
agreements, mortgages, pledge agreements, collateral assignments
and/or other instruments evidencing or creating any security
interests or Liens in favor of the Noteholders or the Trustee
acting for and on behalf of the Noteholders, in each case as
amended, replaced, modified, or restated from time to time in
accordance with its terms and the terms of this
Indenture.
3.9 The definition of “ Senior Facility
Agent ” in Section 1.01 of the Indenture is hereby
amended and restated in its entirety as follows:
“ Senior Facility Agent
” means Burdale Capital Finance, Inc., a Delaware
corporation, as “Agent” under the Senior Facility
Agreement, together with any replacement thereof or successor
thereto duly appointed to act in such capacity and any subsequent
agent or administrative agent appointed under any subsequent Senior
Facility Agreement entered into in accordance with this
Indenture.
3.10 The definition of “ Senior Facility
Agreement ” in Section 1.01 of the Indenture is
hereby amended and restated in its entirety as follows:
“ Senior Facility
Agreement ” means the Loan and Security Agreement, dated
as of February , 2009, by and among Senior
Facility Agent, the Company, each of the other Subsidiaries of the
Company that are identified on the signature pages thereto as
“Borrowers” thereunder, and each of its Subsidiaries
that are identified on the signature pages thereto as
“Guarantors” thereunder, the “Lenders” that
from time to time are a party thereto, as such agreement may be
amended, modified, amended and restated, supplemented, renewed or
extended; and as such agreement may be replaced or, subject to
Section 4.16A, refinanced, from time to time, in each case, in
accordance with the Intercreditor Agreement.
3.11 The definition of “ Senior Facility
Creditors ” in Section 1.01 of the Indenture is
hereby amended and restated in its entirety as follows:
“ Senior Facility
Creditors ” means each lender party to (specifically
including, without limitation, each issuer of or with respect to
Senior LOC Obligations arising or outstanding pursuant to) the
Senior Facility Agreement, along with each other Person holding or
beneficiary to any assignment of, participation in or accession to
the rights of a lender, noteholder, issuer, creditor, secured party
or other obligee with respect to Senior Facility Obligations
evidenced by or arising under the Senior Facility Documents, and
shall also mean and include the Senior Facility Agent.
3.12 The definition of “ Senior Facility
Documents ” in Section 1.01 of the Indenture is
hereby amended and restated in its entirety as follows:
“ Senior Facility
Documents ” shall have the meaning as set forth in the
Intercreditor Agreement.
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3.13 The definition of “ Senior Facility
Obligations ” in Section 1.01 of the Indenture is
hereby amended and restated in its entirety as follows:
“ Senior Facility
Obligations ” means “Senior Indebtedness” as
such term is defined in the Intercreditor Agreement.
3.14 The definition of “ Senior Lien
” in Section 1.01 of the Indenture is hereby amended and
restated in its entirety as follows:
“ Senior Lien ”
has the meaning assigned to such term in the Intercreditor
Agreement.
3.15 The definition of “ Senior LOC
Obligations ” in Section 1.01 of the Indenture is
hereby amended and restated in its entirety as follows:
“ Senior LOC
Obligations ” means Indebtedness of the Company and/or
applicable Subsidiary Guarantor(s) to or in favor of one or more
Senior Facility Creditors as of any date represented by the sum of
the aggregate undrawn amount of, plus the aggregate amount of all
reimbursement obligations in respect of, letters of credit issued
in accordance with the terms and conditions of the Senior Facility
Agreement.
3.16 The definition of “ Intercreditor
Agreement ” in Section 1.01 of the Indenture is
hereby amended and restated in its entirety as follows:
“ Intercreditor
Agreement ” means (a) the Intercreditor Agreement,
dated as of March 13, 2009, by and between the Senior Facility
Agent and the Trustee (in the form annexed as Exhibit E
hereto); as such agreement may be amended, modified, amended and
restated, supplemented, renewed, extended or replaced from time to
time in accordance with its terms and (b) without limiting the
foregoing clause (a) in connection with any Permitted
Refinancing Indebtedness incurred in exchange for or as a
refinancing, renewal, replacement, defeasance or refunding of the
Senior Facility Obligations, any intercreditor agreement that has
been approved by the Required Noteholders and the
Trustee.
3.17 Redemption
. Section 3.07 of the Indenture
(“Special Mandatory Redemption; Notices to Trustee”) is
hereby deleted.
3.18 Senior
Obligations .
Section 4.09(i) of the Indenture (the “Limitation on
Increase of Additional Indebtedness and Issuance of Preferred
Stock”) is amended and restated in its entirety as
follows:
“any Senior Facility
Obligations subject only to the terms and conditions of the
Intercreditor Agreement;”
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3.19 Purchase Money
Obligations and Capital Lease Obligations
. Section 4.09 (xii) of
the Indenture (“Limitation on Increase of Additional
Indebtedness and Issuance of Preferred Stock”) is amended and
re
