AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 27, 2004
REGISTRATION NO. 333-118244
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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CD&L, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 22-3350958
(State or other jurisdiction of incorporation or organization) (IRS Employer Identification No.)
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80 WESLEY STREET
SOUTH HACKENSACK, NEW JERSEY 07606
(201) 487-7740
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
RUSSELL J. REARDON
VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
CD&L, INC.
80 WESLEY STREET
SOUTH HACKENSACK, NEW JERSEY 07606
(201) 487-7740
Name and address, including zip code, and telephone number
including area code, of agent for service)
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COPY TO:
ALAN WOVSANIKER
LOWENSTEIN SANDLER PC
65 LIVINGSTON AVENUE
ROSELAND, NEW JERSEY 07068
(973) 597-2500
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF SECURITIES TO THE
PUBLIC: As soon as practicable after the effective date of this Registration
Statement. If the only securities being registered on this Form are being
offered pursuant to dividend or interest reinvestment plans, please check the
following box. |_|
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. |X|
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. |_|
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. |_|
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. |_|
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CALCULATION OF REGISTRATION FEE
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AMOUNT PROPOSED MAXIMUM PROPOSED
TITLE OF EACH CLASS OF TO BE AGGREGATE OFFERING MAXIMUM AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED (1) REGISTERED PRICE PER SECURITY OFFERING PRICE REGISTRATION FEE
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Non-transferable Common Stock Subscription
Rights...................................... 2,784,578 rights (2) $ (3) $ (3) $ (3)
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Common Stock ($.001 par value) (4) ........... 2,784,578 shares (5) $1.016 $2,829,131(6) $358.45(7)
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(1) This registration statement relates to (a) non-transferable common stock
subscription rights to purchase shares of common stock of CD&L, Inc., or
CD&L, which subscription rights will be issued to holders of the common
stock, options to purchase common stock, and certain notes convertible into
promissory stock, (b) the shares of common stock issuable upon exercise of
the subscription rights, and (c) preferred stock purchase rights associated
with each such share of common stock.
(2) This amount is based upon the number of shares of common stock (i)
outstanding on August 26, 2004, (ii) issuable upon exercise of options
outstanding on August 26, 2004, and (iii) issuable upon conversion of
convertible notes outstanding on August 26, 2004.
(3) In accordance with Rule 457(g), no additional registration fee is required
in respect of the subscription rights because they are being registered in
the same registration statement as the common stock underlying the
subscription rights.
(4) Associated with the common stock are rights to purchase participating
preferred stock, that are not exercisable or evidenced separately from the
common stock prior to certain events.
(5) This amount is based upon the maximum number of shares of common stock
issuable pursuant to the subscription rights.
(6) Represents the gross proceeds from the assumed exercise of all subscription
rights issued.
(7) CD&L paid a registration fee in the amount of $358.18 with its initial
filing of this registration statement on August 13, 2004.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933, OR UNTIL THE REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE
COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
===============================================================================
SUBJECT TO COMPLETION, DATED AUGUST 27, 2004
UP TO 2,784,578 SHARES OF COMMON STOCK
(AND 2,784,578 SUBSCRIPTION RIGHTS TO ACQUIRE SUCH SHARES)
CD&L, INC.
If you held CD&L common stock, options to purchase CD&L common stock, or
certain notes convertible into CD&L common stock on ___________ __, 2004, the
record date, we are distributing to you, at no charge, subscription rights to
purchase additional shares of our common stock. You have been granted .25
subscription rights for every share of common stock that you held on the
record date or were entitled to receive upon exercise of the options or
conversion of the notes. This is your "basic subscription privilege." The
shares of common stock issuable upon exercise of the subscription rights have
attached preferred stock purchase rights issued under our stockholder
protection rights plan. Each whole subscription right entitles you to purchase
one share of common stock for $1.016 per share. We are distributing an
aggregate of 2,784,578 subscription rights exercisable for up to 2,784,578
shares of our common stock.
The subscription rights expire at 5:00 p.m., New York City time, on ______
__, 2004. We have the option of extending the expiration date.
You may not sell or transfer your subscription rights under any
circumstances.
If you fully exercise your rights and other stockholders do not fully
exercise their rights, you may elect to purchase additional shares on a pro
rata basis up to a maximum of one times your basic subscription privilege.
This is your "oversubscription privilege."
Shares of our common stock are traded on the American Stock Exchange under
the symbol CDV. On August 26, 2004, the closing sales price for our common
stock was $1.29 per share. We expect that the shares of common stock issued in
the rights offering will also be listed on the American Stock Exchange under
the same symbol.
THE EXERCISE OF YOUR SUBSCRIPTION RIGHTS FOR SHARES OF OUR COMMON STOCK
INVOLVES RISKS. YOU SHOULD CAREFULLY CONSIDER THE RISK FACTORS BEGINNING ON
PAGE 6 OF THIS PROSPECTUS BEFORE EXERCISING YOUR SUBSCRIPTION RIGHTS. ALL
EXERCISES OF SUBSCRIPTION RIGHTS ARE IRREVOCABLE.
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PER SHARE TOTAL
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Subscription price ................................... $1.016 $2,829,131
Underwriting discount ................................ N/A N/A
Proceeds, before expenses, to CD&L ................... $1.016 $2,829,131
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF
THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
The date of this prospectus is ______ __, 2004.
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an
offer to sell these securities and we are not soliciting an offer to buy these
YOU SHOULD RELY ONLY ON THE INFORMATION IN THIS PROSPECTUS AND THE
ADDITIONAL INFORMATION DESCRIBED UNDER THE HEADING "WHERE YOU CAN FIND MORE
INFORMATION." WE HAVE NOT AUTHORIZED ANY OTHER PERSON TO PROVIDE YOU WITH
DIFFERENT INFORMATION. IF ANYONE PROVIDES YOU WITH DIFFERENT OR INCONSISTENT
INFORMATION, YOU SHOULD NOT RELY ON IT. WE ARE NOT MAKING AN OFFER TO SELL
THESE SECURITIES IN ANY JURISDICTION WHERE THEIR OFFER OR SALE IS NOT
PERMITTED. YOU SHOULD ASSUME THAT THE INFORMATION IN THIS PROSPECTUS AND THE
ADDITIONAL INFORMATION DESCRIBED UNDER THE HEADING "WHERE YOU CAN FIND MORE
INFORMATION" WERE ACCURATE ON THE DATE ON THE FRONT COVER OF THE PROSPECTUS
ONLY. OUR BUSINESS, FINANCIAL CONDITION, RESULTS OF OPERATIONS AND PROSPECTS
MAY HAVE CHANGED SINCE THAT DATE.
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TABLE OF CONTENTS
PAGE
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QUESTIONS AND ANSWERS ABOUT THE RIGHTS OFFERING ......................... 1
RISK FACTORS ............................................................ 6
FORWARD-LOOKING STATEMENTS .............................................. 11
OUR COMPANY ............................................................. 12
USE OF PROCEEDS ......................................................... 15
CAPITALIZATION .......................................................... 16
THE RIGHTS OFFERING ..................................................... 17
MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES .................. 25
PRICE RANGE OF COMMON STOCK AND DIVIDEND POLICY ......................... 27
DESCRIPTION OF CAPITAL STOCK ............................................ 28
PLAN OF DISTRIBUTION .................................................... 36
VALIDITY OF COMMON STOCK ................................................ 36
EXPERTS ................................................................. 36
WHERE YOU CAN FIND MORE INFORMATION ..................................... 37
i
QUESTIONS AND ANSWERS ABOUT THE RIGHTS OFFERING
This section highlights information contained elsewhere or incorporated by
reference in this prospectus. This section does not contain all of the
important information that you should consider before exercising your
subscription rights and investing in our common stock. You should read this
entire prospectus carefully.
Q: WHY ARE WE ENGAGING IN A RIGHTS OFFERING?
A: On April 14, 2004, we completed the restructuring of our senior
subordinated promissory notes due January 2006 in the aggregate principal
amount of $11.0 million, the "senior notes," pursuant to a restructuring and
exchange agreement dated as of April 14, 2004, the "restructuring
agreement," among us, the holders of the senior notes, which include BNP
Paribas, Exeter Venture Lenders, L.P. and Exeter Capital Partners IV, L.P.,
and additional individual investors. We refer to the original holders of the
senior notes collectively as the "lenders" and the individual investors
collectively as the "investors."
As part of the restructuring, the lenders exchanged $4.0 million
aggregate principal amount of senior notes for an aggregate of 393,701
shares of our Series A convertible redeemable preferred stock, the "Series A
preferred stock", which are initially convertible into an aggregate of
3,937,010 shares of common stock. The lenders exchanged the remaining senior
notes for an aggregate of $3.0 million principal amount of our Series A
convertible notes, the "Series A notes," and $4.0 million principal amount
of our Series B convertible notes, the "Series B notes." The investors then
purchased all of the Series A notes from the lenders for $3.0 million and an
additional $1.0 million aggregate principal amount of Series A notes from us
for $1.0 million. The Series A notes are initially convertible into an
aggregate of 3,937,008 shares of common stock and the Series B notes are
initially convertible into an aggregate of 1,968,504 shares of common stock.
As a condition to the closing of the restructuring, we are making the
rights offering in order to give holders of our common stock, options to
purchase our common stock and notes convertible into our common stock, other
than the Series A notes and the Series B notes, the opportunity to purchase
additional shares of common stock at the same effective price per share as
holders of our Series A preferred stock may acquire shares of common stock
upon the conversion of such preferred stock and the Series A notes. We also
are making the rights offering to raise up to approximately $2.83 million in
new capital, before expenses, to be used as additional working capital for
our business.
See "The Rights Offering-Reasons for the Rights Offering" and "Description
of Capital Stock."
Q: WHAT IS THE RIGHTS OFFERING?
A: We are distributing to holders of our common stock, options to purchase
our common stock and notes convertible into our common stock, other than the
Series A notes and the Series B notes, at no charge, non-transferable
subscription rights to purchase shares of our common stock. The subscription
rights will be evidenced by rights certificates.
Q: WHAT IS A SUBSCRIPTION RIGHT?
A: Each whole subscription right that we have granted to you gives you the
right to purchase one share of common stock. You have been granted .25
subscription rights for every share of common stock that you held or were
entitled to receive upon exercise of options or the conversion of our
convertible notes, other than the Series A notes and Series B notes, at 5:00
p.m., New York City time, on ______ __, 2004. These shares of common stock
include participating preferred stock purchase rights attached to such
common stock under our stockholder protection rights plan.
Q: WHAT IS THE RECORD DATE?
A: The record date is 5:00 p.m., New York City time, on _____ __, 2004.
Only holders of our common stock, options to purchase our common stock, and
notes convertible into our common stock,
1
other than the Series A notes and the Series B notes, of record on the
record date will receive rights to subscribe for new shares of common stock.
Q: WHAT IS THE SUBSCRIPTION PRICE?
A: Each whole subscription right that you receive entitles you to purchase
one share of common stock for $1.016 per share. The subscription price per
share equals the conversion price of the Series A preferred stock and the
Series A notes. The conversion price represented the average of the closing
price per share of our common stock on the American Stock Exchange for each
of the last five trading days ending on and including the last trading day
immediately prior to April 14, 2004, the closing date of the restructuring
of the senior notes.
Our board of directors determined the subscription price solely by
reference to the conversion price for the Series A preferred stock and the
Series A notes.
See "The Rights Offering--Determination of Subscription Price."
Q: HOW MANY SHARES OF COMMON STOCK ARE WE OFFERING IN THE RIGHTS OFFERING?
A: We are offering 2,784,578 shares of common stock to be issued upon the
exercise of the subscription rights. The number of shares actually issued
will depend upon the number of subscription rights that are exercised.
Q: HAVE ANY STOCKHOLDERS INDICATED THEIR INTENTIONS WITH RESPECT TO THEIR
PARTICIPATION IN THE OFFERING?
A: No.
Q: ARE THERE ANY LIMITATIONS ON ANY STOCKHOLDERS' RIGHTS TO PARTICIPATE IN THE
OFFERING?
A: Under the restructuring agreement, the lenders and the investors have
agreed that to the extent they exercise their subscription rights, if at
all, they will only do so if the other holders of common stock do not agree
to purchase, whether by exercise of their basic subscription privilege or
oversubscription privilege, all of the shares of common stock offered by
this prospectus.
Q: WHERE WILL THE SHARES OF COMMON STOCK ISSUED IN THE RIGHTS OFFERING BE
LISTED?
A: Our common stock is traded on the American Stock Exchange under the
symbol CDV. We expect that the shares of common stock issued in the rights
offering will also be listed on the American Stock Exchange under the same
symbol. On August 26, 2004, the closing price of the common stock on the
American Stock Exchange was $1.29 per share. See "Price Range of Common
Stock and Dividend Policy."
Q: HOW LONG WILL THE RIGHTS OFFERING LAST?
A: You will be able to exercise your subscription rights only during a
limited period. If you do not exercise your subscription rights before 5:00
p.m., New York City time, on ______ __, 2004, your subscription rights will
expire. We may, in our sole discretion, decide to extend the rights offering
from time to time. See "The Rights Offering--Expiration Date and
Extensions."
Q: WILL I RECEIVE FRACTIONAL RIGHTS OR SHARES?
A: We are not issuing fractional rights or shares. If the number of shares
of common stock that you held of record on the record date would result in
your receipt of fractional rights, the number of rights
2
issued to you is being rounded up to the nearest whole right. If you were
the record holder of less than four shares of common stock, you are
receiving one whole right.
Q: HOW MUCH MONEY WILL WE RECEIVE FROM THE RIGHTS OFFERING?
A: Our gross proceeds from the rights offering depends on the number of
shares that are purchased. If we sell all of the shares that may be
purchased upon exercise of the rights offered by this prospectus, then we
will receive proceeds of approximately $2.83 million, before deducting
expenses payable by us, estimated to be $160,000.
Q: WHAT IS THE BASIC SUBSCRIPTION PRIVILEGE?
A: By exercising your basic subscription privilege, you may purchase 25
newly-issued shares of common stock for every 100 shares owned by you, or
issuable to you upon exercise or conversion, as applicable, of options to
purchase our common stock or notes convertible into our common stock, other
than the Series A notes and the Series B notes, on _____ __, 2004, at the
subscription price of $1.016 per share.
Q: WHAT IS THE OVERSUBSCRIPTION PRIVILEGE?
A: If you fully exercise your basic subscription privilege, the
oversubscription privilege entitles you to subscribe for additional shares
of our common stock, up to a maximum of one times your basic subscription
privilege, at the same subscription price of $1.016 per share that applies
to your basic subscription privilege. For example, if your basic
subscription privilege entitled you to purchase 100 shares of common stock,
you could subscribe for up to 100 additional shares of common stock under
your oversubscription privilege.
Q: WHAT ARE THE LIMITATIONS ON THE OVERSUBSCRIPTION PRIVILEGE?
A: We will be able to satisfy your exercise of the oversubscription
privilege only if our other stockholders do not elect to purchase all of the
shares of common stock offered under their basic subscription privilege. We
will honor oversubscription requests in full to the extent sufficient shares
are available following the exercise of rights under the basic subscription
privilege, provided that no stockholder will be entitled to purchase under
the oversubscription privilege more than one times his basic subscription
privilege. If oversubscription requests exceed shares available, we will
allocate the available shares pro rata based on the number of shares each
subscriber for additional shares has elected to purchase under the
oversubscription privilege.
Q: AM I REQUIRED TO SUBSCRIBE IN THE RIGHTS OFFERING?
A: No. You are not required to exercise any rights, purchase any new
shares, or otherwise take any action in response to this rights offering.
Q: WHAT HAPPENS IF I CHOOSE NOT TO EXERCISE MY SUBSCRIPTION RIGHTS?
A: You will retain the current number of shares of common stock, or options
to purchase common stock or notes convertible into common stock, other than
the Series A notes and the Series B notes held directly by you, even if you
do not exercise your subscription rights. However, if other holders exercise
their subscription rights, and you do not, the percentage of the common
stock held directly by you will, if any, decrease and your relative voting
rights will be diluted to the extent that other holders of subscription
rights exercise their rights. Because the prevailing market price of our
common stock may be greater than the subscription price during a portion of
the offering period, if you choose not to exercise your subscription rights
you could experience dilution of your economic interest.
3
Q: HOW DO I EXERCISE MY SUBSCRIPTION RIGHTS?
A: You must properly complete the attached subscription certificate and
deliver it, along with the subscription price for the shares for which you
are subscribing, to American Stock Transfer & Trust Company , the
subscription agent, before 5:00 p.m., New York City time, on _______ __,
2004. The address for the subscription agent is on page 20. See "The Rights
Offering--Delivery of Subscription Materials and Payment."
Q: WHAT SHOULD I DO IF I WANT TO PARTICIPATE IN THE RIGHTS OFFERING BUT MY
SHARES ARE HELD IN THE NAME OF MY BROKER, CUSTODIAN BANK OR OTHER NOMINEE?
A: If you hold shares of common stock through a broker, custodian bank or
other nominee, we will ask your broker, custodian bank or other nominee to
notify you of the rights offering. If you wish to exercise your subscription
rights, you will need to have your broker, custodian bank or other nominee
act for you. To indicate your decision, you should complete and return to
your broker, custodian bank or other nominee the form entitled "Beneficial
Owner Election Form." You should receive this form from your broker,
custodian bank or other nominee with the other rights offering materials.
You should contact your broker, custodian bank or other nominee if you
believe you are entitled to participate in the rights offering but you have
not received this form.
Q: WILL I BE CHARGED A SALES COMMISSION OR A FEE BY CD&L IF I EXERCISE MY
SUBSCRIPTION RIGHTS?
A: No. We will not charge you a brokerage commission or a fee for
exercising your subscription rights.
Q: ARE THERE RISKS IN EXERCISING MY SUBSCRIPTION RIGHTS?
A: Yes. The exercise of your subscription rights involves risks. Exercising
your subscription rights means buying additional shares of our common stock
and should be considered as carefully as you would consider any other equity
investment. Among other things, you should carefully consider the risks
described under the heading "Risk Factors," beginning on page 6.
Q: MAY I TRANSFER MY SUBSCRIPTION RIGHTS IF I DO NOT WANT TO PURCHASE ANY
SHARES?
A: No. Should you choose not to exercise your subscription rights, you may
not sell, give away or otherwise transfer your subscription rights.
Q: AFTER I EXERCISE MY SUBSCRIPTION RIGHTS, CAN I CHANGE MY MIND AND CANCEL MY
PURCHASE?
A: No. Once you send in your subscription certificate and payment, you
cannot revoke the exercise of your subscription rights, even if you later
learn information about CD&L that you consider to be unfavorable and even if
the market price of our common stock is below the subscription price. You
should not exercise your subscription rights unless you are certain that you
wish to purchase additional shares of our common stock at the subscription
price. See "The Rights Offering--No Revocation."
Q: CAN WE WITHDRAW THE RIGHTS OFFERING?
A: Yes. The board of directors may decide to withdraw the rights offering
at any time for any reason. If we withdraw the rights offering, any money
received from subscribing stockholders will be refunded promptly, without
interest. See "The Rights Offering--Withdrawal and Amendment."
4
Q: IF THE RIGHTS OFFERING IS NOT COMPLETED, WILL MY SUBSCRIPTION PAYMENT BE
REFUNDED TO ME?
A: Yes. The subscription agent will hold all funds it receives in a
segregated bank account until completion of the rights offering. If the
rights offering is not completed, the subscription agent will return
promptly, without interest, all subscription payments.
Q: WHAT IS THE BOARD OF DIRECTORS' RECOMMENDATION REGARDING THE RIGHTS
OFFERING?
A: Our board of directors is not making any recommendation as to whether
you should exercise your subscription rights. You are urged to make your
decision based on your own assessment of the rights offering and CD&L.
Q: WHAT ARE THE UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF EXERCISING MY
SUBSCRIPTION RIGHTS AS A HOLDER OF COMMON STOCK?
A: You generally should not recognize income or loss for federal income tax
purposes upon the receipt or exercise of subscription rights in the rights
offering. We urge you to consult your own tax advisor with respect to the
particular tax consequences of the rights offering or the related share
issuance to you. See "Material United States Federal Income Tax
Consequences."
Q: WHEN WILL I RECEIVE CERTIFICATES FOR THE SHARES PURCHASED IN THE RIGHTS
OFFERING?
A: We will issue certificates representing shares purchased in the rights
offering to you or to the Depository Trust Company on your behalf, as the
case may be, as soon as practicable after the expiration of the rights
offering.
Q: WHAT SHOULD I DO IF I HAVE OTHER QUESTIONS OR NEED ASSISTANCE?
A: If you have other questions, need additional copies of the offering
documents or otherwise need assistance, please contact:
Russell J. Reardon
Vice President and Chief Financial Officer
CD&L, Inc.
80 Wesley Street
South Hackensack, New Jersey 07606
Phone: 201-487-7740
For a more complete description of the rights offering, see "The Rights
Offering."
5
RISK FACTORS
The exercise of your subscription rights for shares of our common stock
involves a high degree of risk. Prior to making an investment decision, you
should carefully consider all of the information in this prospectus and
evaluate the following risk factors.
Unless the context otherwise requires, references to "CD&L," "we," and "us"
refer to CD&L, Inc. and its subsidiaries.
RISKS RELATING TO THIS RIGHTS OFFERING:
IF YOU EXERCISE YOUR SUBSCRIPTION RIGHTS, YOU MAY BE UNABLE TO SELL ANY SHARES
YOU PURCHASE AT A PROFIT, AND YOUR ABILITY TO SELL MAY BE DELAYED BY THE TIME
REQUIRED TO DELIVER THE STOCK CERTIFICATES.
The public trading price of our common stock may decline after you elect to
exercise your subscription rights. If that occurs, you will have committed to
buy shares of common stock at a price above the prevailing market price and
you will have an immediate unrealized loss. We cannot assure you that, after
the exercise of subscription rights, you will be able to sell your shares of
common stock at a price equal to or greater than the subscription price. Until
the shares that you purchase in the rights offering are delivered to you after
the expiration of the rights offering, you may be unable to sell the shares.
Certificates representing shares of our common stock purchased will be
delivered as soon as practicable after the expiration of the rights offering.
We will not pay you interest on any funds that you deliver to the subscription
agent for the exercise of subscription rights.
IF YOU DO NOT EXERCISE YOUR RIGHTS, YOUR RELATIVE OWNERSHIP INTEREST MAY BE
DILUTED.
If you choose not to exercise your subscription rights and you hold shares
of common stock, your relative ownership and voting interests may be diluted
depending on the number of shares subscribed by other stockholders. In
addition, because the prevailing market price of our common stock may be
greater than the subscription price for part of the offering period, if you
choose not to exercise your subscription rights you could experience dilution
of your economic interest.
THE SUBSCRIPTION PRICE PER SHARE IS NOT AN INDICATION OF THE VALUE OF CD&L.
Our board of directors set the subscription price by reference to the
conversion price of our Series A preferred stock and the Series A notes. The
subscription price does not necessarily bear any relationship to the book
value of our assets, past operations, cash flows, losses, financial condition
or any other established criteria for value. We have neither sought nor
obtained a valuation opinion from an outside financial consultant or
investment banker. We cannot assure you that you will be able to sell shares
purchased in this offering at a price equal to or greater than the
subscription price.
THE RIGHTS OFFERING MAY CAUSE THE PRICE OF OUR COMMON STOCK TO DECREASE
IMMEDIATELY, AND THIS DECREASE MAY CONTINUE.
The subscription price is fixed at $1.016 per share. Depending on the
trading price of the common stock during the rights offering, the subscription
price, together with the number of shares that we propose to issue and
ultimately will issue if the rights offering is completed, may result in an
immediate decrease in the market value of the common stock. This decrease may
continue after the completion of the rights offering.
THE SUBSCRIPTION RIGHTS ARE NON-TRANSFERABLE, AND THERE IS NO MARKET FOR THE
SUBSCRIPTION RIGHTS.
You may not sell, give away or otherwise transfer your subscription rights.
Because the subscription rights are non-transferable, there is no market or
other means for you to directly realize any value associated
6
with the subscription rights. You must exercise the subscription rights and
acquire additional shares of our common stock to realize any value.
YOU MAY NOT REVOKE YOUR EXERCISE OF SUBSCRIPTION RIGHTS AND WE MAY CANCEL THE
RIGHTS OFFERING.
Once you exercise your subscription rights, you may not revoke the exercise.
We may close the rights offering even if less than all of the shares that we
are offering are actually purchased. We may unilaterally withdraw or terminate
this rights offering in our discretion until the time the share certificates
are actually distributed. If we elect to withdraw or terminate the rights
offering, neither we nor the subscription agent will have any obligation with
respect to the subscription rights except to return, without interest or
penalty, your subscription payments.
UNITED STATES FEDERAL INCOME TAX CONSEQUENCES ARE UNCERTAIN.
In general, holders of common stock, warrants, stock options and convertible
promissory notes should not recognize income or loss for federal income tax
purposes in connection with the receipt or exercise of subscription rights in
the rights offering. Because these issues are subject to some uncertainty and
because we have not sought, and will not seek, an opinion of counsel or a
ruling from the Internal Revenue Service regarding any tax consequences of the
rights offering or the related share issuances under foreign, federal, state
or local tax laws, we urge you to consult your own tax advisor with respect to
the particular tax consequences of the rights offering or the related share
issuances to you.
YOUR SUBSCRIPTION MAY BE REJECTED IF YOU DO NOT ACT PROMPTLY AND FOLLOW
SUBSCRIPTION INSTRUCTIONS.
If you desire to purchase shares in this rights offering, you must act
promptly to ensure that all required forms and payments are actually received
by the subscription agent prior to ____ __, 2004, the expiration date. If you
fail to complete and sign the required subscription forms, send an incorrect
subscription payment amount, or otherwise fail to follow the subscription
procedures that apply to your desired transaction, we may, depending on the
circumstances, reject your subscription or accept it to the extent of the
payment received. If your exercise is rejected, your payment of the exercise
price will be promptly returned. Neither we nor the subscription agent
undertakes to contact you concerning, or attempt to correct, an incomplete or
incorrect subscription form or payment. We have the sole discretion to
determine whether a subscription exercise properly follows the subscription
procedures and to decide all questions as to the validity, form and
eligibility, including times of receipt and beneficial ownership. We will not
accept alternative, conditional or contingent subscriptions. We reserve the
absolute right to reject any subscriptions not properly submitted. We may
reject any subscription if the acceptance of the subscription would be
unlawful. We also may waive any irregularities, or conditions, in the
subscription. If you are given notice of a defect in your subscription, you
will have five business days after the notice is sent to correct it. You will
not, however, be allowed to cure any defect after 5:00 p.m., New York City
time, on ______ __, 2004. We are not obligated to notify you of defects in
your subscription. We will not consider an exercise to be made until all
defects have been cured or waived.
YOU MAY BE UNABLE TO PURSUE CLAIMS AGAINST ARTHUR ANDERSEN LLP, OUR FORMER
INDEPENDENT AUDITORS.
Arthur Andersen LLP, or Andersen, has not consented to the use of its audit
report in, or participated in the preparation of, this prospectus.
Accordingly, your ability to seek damages from Andersen in connection with
this offering will be limited. Your recovery of any damages that may be
obtained will be limited as a result of Andersen's cessation of operations and
other matters relating to the various civil and criminal lawsuits involving
Andersen.
7
RISKS RELATED TO OUR BUSINESS
WE HAVE LIMITED CAPITAL RESOURCES.
We have an accumulated deficit of approximately ($6,969,000) as of June 30,
2004. Although we were in compliance with our senior notes debt covenants at
December 31, 2003, we were anticipating non-compliance with certain covenants
in 2004 and beyond. Subsequently, on April 14, 2004, we restructured our
senior debt and related covenants. The restructuring includes an agreement
among us, our lenders and certain members of CD&L management and others which
improves our short-term liquidity and reduces interest expense. There can be
no assurances that our lenders will agree to waive any future covenant
violations, if any, continue to renegotiate and modify the terms of our loans,
or further extend the maturity date, should it become necessary to do so.
Further, there can be no assurances that we will be able to meet our revenue,
cost or income projections, upon which the debt covenants are based.
PRICE COMPETITION COULD REDUCE THE DEMAND FOR OUR SERVICE.
The market for our services has been extremely competitive and is expected
to be so for the foreseeable future. Price competition is often intense,
particularly in the market for basic delivery services where barriers to entry
are low.
CLAIMS ABOVE OUR INSURANCE LIMITS, OR SIGNIFICANT INCREASES IN OUR INSURANCE
PREMIUMS, MAY REDUCE OUR PROFITABILITY.
As of June 30, 2004, we employed 155 full-time and 15 part-time employee
drivers. From time to time some of those drivers are involved in automobile
accidents. We currently carry liability insurance of $1,000,000 for each
employee driver subject to applicable deductibles and carry umbrella coverage
up to $5,000,000 in the aggregate. However, claims against us may exceed the
amounts of available insurance coverage. We also contract with approximately
2,700 independent contractor drivers. In accordance with our policy, all
independent contractor drivers are required to maintain liability coverage as
well as workers' compensation or occupational accident insurance. If we were
to experience a material increase in the frequency or severity of accidents,
liability claims or workers' compensation claims, or unfavorable resolutions
of claims, our operating results could be materially affected. With regards to
independent contractors, we carry umbrella coverage of $5,000,000 ($2,000,000
before March 1, 2004) in the aggregate.
AS A SAME-DAY DELIVERY COMPANY, OUR ABILITY TO SERVICE OUR CLIENTS EFFECTIVELY
IS OFTEN DEPENDENT UPON FACTORS BEYOND OUR CONTROL.
Our revenues and earnings are especially sensitive to events that are beyond
our control that affect the same-day delivery services industry, including:
o extreme weather conditions;
o economic factors affecting our significant customers;
o mergers and consolidations of existing customers;
o U.S. business activity; and
o the levels of unemployment.
OUR REPUTATION WILL BE HARMED, AND WE COULD LOSE CUSTOMERS, IF THE INFORMATION
AND TELECOMMUNICATIONS TECHNOLOGIES ON WHICH WE RELY FAIL TO ADEQUATELY
PERFORM.
Our business depends upon a number of different information and
telecommunication technologies as well as the ability to develop and implement
new technology enabling us to manage and process a high volume of transactions
accurately and timely. Any impairment of our ability to process transactions
in this way could result in the loss of customers and diminish our reputation.
8
GOVERNMENTAL REGULATION OF THE TRANSPORTATION INDUSTRY, PARTICULARLY WITH
RESPECT TO OUR INDEPENDENT CONTRACTORS, MAY SUBSTANTIALLY INCREASE OUR
OPERATING EXPENSES.
From time to time, federal and state authorities have sought to assert that
independent contractors in the transportation industry, including those
utilized by us, are employees rather than independent contractors. We believe
that the independent contractors that we utilize are not employees under
existing interpretations of federal and state laws. However, federal and state
authorities have and may continue to challenge this position. Further, laws
and regulations, including tax laws, and the interpretations of those laws and
regulations, may change. If, as a result of changes in laws, regulations,
interpretations or enforcement by federal or state authorities, we become
required to pay for and administer added benefits to independent contractors,
our operating costs could substantially increase.
SHAREHOLDERS WILL EXPERIENCE DILUTION WHEN WE ISSUE THE ADDITIONAL SHARES OF
COMMON STOCK THAT WE ARE PERMITTED OR REQUIRED TO ISSUE UNDER CONVERTIBLE
NOTES, OPTIONS AND WARRANTS.
We are permitted, and in some cases obligated, to issue shares of common
stock in addition to the common stock that is currently outstanding. If and
when we issue these shares, the percentage of the common stock currently
issued and outstanding will be diluted. The following is a summary of
additional shares of common stock that we have currently reserved for issuance
at July 1, 2004:
o 506,250 shares are issuable upon the exercise of outstanding warrants at
an exercise price of $.001 per share.
o 4,000,000 shares are issuable upon the exercise of options or other
benefits under our employee stock option plan, consisting of:
-- outstanding options to purchase 3,059,697 shares at a weighted
average exercise price of $2.18 per share, of which options
covering 2,189,700 shares were exercisable as of July 1, 2004;
and
-- 940,303 shares available for future awards after July 1, 2004.
o 202,500 shares are issuable upon the exercise of options or other
benefits under our independent director stock option plan, consisting of:
-- outstanding options to purchase 202,500 shares at a weighted
average exercise price of $1.55 per share, of which options
covering 150,000 shares were exercisable as of July 1, 2004.
and
o 213,453 shares are issuable upon the exercise of outstanding convertible
notes at a weighted average exercise price of $6.16 per share.
Subsequent to the financial restructuring on April 14, 2004 of our senior
notes:
o 3,937,008 shares are issuable upon the conversion of the Series A notes
at an exercise price of $1.016 per share.
o 1,968,504 shares are issuable upon the conversion of the Series B notes
at an exercise price of $2.032 per share.
o 3,937,010 shares are issuable upon the conversion of the Series A
preferred stock at an exercise price of $1.016 per share.
OUR SUCCESS IS DEPENDENT ON THE CONTINUED SERVICE OF OUR KEY MANAGEMENT
PERSONNEL.
Our future success depends, in part, on the continued service of our key
management personnel. If certain employees were unable or unwilling to
continue in their present positions, our business, financial condition,
operating results and future prospects could be materially adversely affected.
9
IF WE FAIL TO MAINTAIN OUR GOVERNMENTAL PERMITS AND LICENSES, WE MAY BE
SUBJECT TO SUBSTANTIAL FINES AND POSSIBLE REVOCATION OF OUR AUTHORITY TO
OPERATE OUR BUSINESS IN CERTAIN JURISDICTIONS.
Our delivery operations are subject to various state, local and federal
regulations that in many instances require permits and licenses. If we fail to
maintain required permits or licenses, or to comply with applicable
regulations, we could be subject to substantial fines or our authority to
operate our business in certain jurisdictions could be revoked.
OUR CERTIFICATE OF INCORPORATION, BY-LAWS, STOCKHOLDER RIGHTS PLAN AND
DELAWARE LAW CONTAIN PROVISIONS THAT COULD DISCOURAGE A TAKEOVER THAT CURRENT
SHAREHOLDERS MAY CONSIDER FAVORABLE.
Provisions of our certificate of incorporation, by-laws and our stockholder
protection rights plan, as well as Delaware law, may discourage, delay or
prevent a merger or acquisition that you may consider favorable. These
provisions of our certificate of incorporation and by-laws:
o establish a classified board of directors in which only a portion of the
total number of directors will be elected at each annual meeting;
o authorize the board of directors to issue preferred stock;
o prohibit cumulative voting in the election of directors;
o limit the persons who may call special meetings of stockholders;
o prohibit stockholder action by written consent; and
o establish advance notice requirements for nominations for the election of
the board of directors or for proposing matters that can be acted on by
stockholders at stockholder meetings.
We have adopted a stockholder protection rights plan in order to protect
against offers to acquire us that our board of directors believes to be
inadequate or not otherwise in our best interests. There are, however,
possible disadvantages to having the plan in place, which might adversely
impact us. The existence of the plan may limit our flexibility in dealing with
potential acquirers in certain circumstances and may deter potential acquirers
from approaching us. Further, as a result of the April 14, 2004, restructuring
of the senior notes, our executive officers and directors as of July 1, 2004,
own 44.6% of our common stock on a fully diluted basis (excluding out-of-the-
money stock options) and Paribas and Exeter collectively own 45.6% of our
common stock on a fully diluted basis (excluding out-of-the-money stock
options). (Note: The sum of individual beneficial ownership percentages can
exceed 100% due to the nature of the calculation which assumes total
outstanding shares and the exercise of all convertible instruments for any
individual shareholder without regard to exercise of similar instruments by
any other shareholder.) Such concentration of ownership may also deter
potential acquirers from approaching us.
10
FORWARD-LOOKING STATEMENTS
This prospectus and the other documents incorporated into this prospectus by
reference, including our annual report on Form 10-K for the year ended
December 31, 2003, include statements that may be deemed to be "forward-
looking statements" within the meaning of Section 27A of the Securities Act of
1933 and Section 21E of the Exchange Act. These forward-looking statements
include, but are not limited to, statements about our plans, objectives,
expectations and intentions and other statements contained in this report that
are not historical facts. When used in this report, the words "expects,"
"anticipates," "intends," "plans," "believes," "seeks" and "estimates" and
similar expressions are generally intended to identify forward-looking
statements. These statements are based on certain assumptions and analyses
made by us in light of our experience and perception of historical trends,
current conditions, expected future developments and other factors that we
believe are appropriate in the circumstances. Such statements are subject to a
number of assumptions, risks and uncertainties, including the risks described
under "Risk Factors" in this prospectus, general economic and business
conditions, the business opportunities, or lack thereof, that may be presented
to and pursued by us, changes in law or regulations and other factors, many of
which are beyond our control. You should not rely on these forward looking
statements, which apply only as of the date of this prospectus. All subsequent
written or oral forward-looking statements attributable to us or persons
acting on our behalf are expressly qualified by these factors.
11
OUR COMPANY
GENERAL
We are one of the leading national full-service providers of customized,
same-day, time-critical, delivery services to a wide range of commercial,
industrial and retail customers. We provide our services throughout the United
States.
We offer the following delivery services:
o rush delivery service, typically consisting of delivering time-sensitive
packages, such as critical parts, emergency medical devices and legal and
financial documents from point-to-point on an as-needed basis;
o routed services, providing, on a recurring and often daily basis,
deliveries from pharmaceutical suppliers to pharmacies, from
manufacturers to retailers, and the inter-branch distribution of
financial documents in a commingled system;
o facilities management, including providing and supervising mailroom
personnel, mail and package sorting, internal delivery and outside local
messenger services; and
o dedicated contract logistics, providing a comprehensive solution to major
corporations that want the control, flexibility and image of an in-house
fleet with the economic benefits of outsourcing.
Our principal offices are located at 80 Wesley Street, South Hackensack, New
Jersey 07606, and our telephone number is (201) 487-7740. We do not intend for
information contained on our website, www.cdl.net, to constitute part of this
prospectus. We were incorporated in the State of Delaware in June 1994.
RECENT DEVELOPMENTS
On April 14, 2004, we completed the restructuring of our senior notes in the
aggregate principal amount of $11.0 million, pursuant to a restructuring and
exchange agreement dated as of April 14, 2004, among us, the lenders and the
investors.
As part of the restructuring, the lenders exchanged $4.0 million aggregate
principal amount of senior notes for an aggregate of 393,701 shares of our
Series A preferred stock. The lenders exchanged the remaining $7.0 million
aggregate principal amount of senior notes for an aggregate of $3.0 million
principal amount of Series A notes and $4.0 million principal amount of Series
B notes. The investors then purchased all of the Series A notes from the
lenders for $3.0 million and an additional $1.0 million aggregate principal
amount of Series A notes from us for $1.0 million.
Concurrent with the closing of the restructuring, we entered into a
stockholders agreement and a registration rights agreement with the lenders
and the investors. Under the stockholders agreement, neither we nor any of our
subsidiaries will take any of the following actions without the written
consent of the holders of a majority of the Series A preferred stock:
o enter into any agreement to sell or sell all or substantially all of our
assets;
o enter into any agreement or take any action to effect a capital
reorganization of CD&L or any consolidation or merger involving us and
another entity;
o enter into any agreement or take any action to liquidate or wind up the
business or affairs of CD&L;
o amend, alter or repeal any provision of, or add any provision to, our
certificate of incorporation, any certificate of designations of our
preferred stock or our bylaws if such action would adversely alter or
change in any material respect the rights, preferences or privileges of
the Series A preferred stock;
o incur any additional indebtedness exceeding $5,000,000 in aggregate
principal amount that is senior to the Series A notes or the Series B
notes other than indebtedness existing as of the date of the stockholders
agreement or replacement financing or refinancing of such existing debt;
12
o enter into any agreement or take any action to make an acquisition,
investment or divestiture exceeding $2,500,000;
o enter into any agreement to issue or issue any additional shares of
common stock, or securities convertible into or exercisable for shares of
common stock, excluding shares issuable upon conversion of the Series A
preferred stock or the Series A notes or the Series B notes, to any
affiliate of CD&L without consideration or for a consideration per share
less than the fair market value, as defined in the stockholders
agreement, per share of the common stock; except that this restriction
shall not apply to grants or issuances to our officers or directors
pursuant to our existing or subsequently adopted stock option or other
employee benefit plans; or
o enter into any other transaction with any of our affiliates which is not
on terms which would result from an arm's length transaction, except that
this provision shall not apply to any employment-related or other
compensatory arrangement between us and any of our affiliates in their
capacities as our officers, directors, or employees.
We also granted to each of the lenders and the investors a right of first
offer with respect to future sales for cash by us of shares of, or securities
convertible into or exercisable for any shares of, any class of our capital
stock to any person or entity other than one of our directly or indirectly,
wholly-owned subsidiaries.
Under the stockholders agreement we agreed to increase the number of members
of our board of directors to 11 if the lenders as holders of the Series A
preferred stock exercise their rights to elect two directors. The lenders and
the investors agreed, whenever directors are to be elected, to vote all of the
shares of our capital stock that then own in favor of the three
representatives designated by the investors, who initially are Albert W. Van
Ness, Jr., William T. Brannan, and Michael Brooks, and in favor of two
representatives designated by the lenders, should the lenders make such
designation. The individuals so designated by the investors are referred to as
the "investor directors," and the individuals so designated by the lenders are
referred to as the "lender directors."
If:
o we repay any portion of the principal amount of the Series A notes held
by the investors and if the Series A preferred stock has not been
converted or redeemed by April 14, 2011; or
o if we take any of the actions described above without obtaining the
requisite approval of the holders of the Series A preferred stock,
then upon the occurrence of any of such actions or at the later of the date of
the principal payment to the investors or April 14, 2011, the investors have
agreed, in lieu of voting for the investor directors, to nominate and vote all
of their shares of our capital stock in favor of the election of three
additional individuals designated by the lenders as members of our board of
directors.
Under the registration rights agreement, if the holders of either:
o a majority of the shares of common stock issued or issuable upon
conversion of the Series A preferred stock, or
o a majority of the shares of common stock issued or issuable upon
conversion of the Series A notes and the Series B notes,
request that we register such shares of common stock, we will use our best
efforts to effect, at our expense, the registration for resale of all of the
registrable securities that any holders of the Series A preferred stock, the
Series A notes and the Series B notes request be registered. We will file the
registration statement within 60 days after such request. We are not required
to effect more than one such demand registration in any 12-month period. We
will use our best efforts to maintain the effectiveness of the registration
statement until the earlier of:
o the first date that there are no registrable securities; and
o the date as of which the registration statement has been effective for
180 days.
13
When we use the term "registrable securities," we are referring to the shares
of common stock issuable or issued upon conversion of the Series A preferred
stock, the Series A notes and the Series B notes or upon exercise of the
warrants to purchase common stock held by the lenders, and any shares of
common stock issued or issuable with respect to such shares of common stock
referred to above by way of stock dividends or stock splits or in connection
with a combination of shares, recapitalization, merger, consolidation, or
other reorganization or otherwise. As to any registrable securities, once
issued, such securities will cease to be registrable securities when they have
been distributed to the public pursuant to an offering registered under the
Securities Act of 1933, or the Securities Act, sold to the public through a
broker, dealer or market maker in compliance with Rule 144 under the
Securities Act or any successor rule or cease to be outstanding.
If, while a demand registration request is pending, our legal counsel
advises us that the filing of a registration statement would require
disclosure of a material financing or investment transaction, which disclosure
we reasonably determine in good faith would have a material adverse effect on
us, we are not required to effect the demand registration until the earlier
of:
o the date upon which such material financing or investment transaction is
otherwise disclosed to the public or ceases to be material; and
o 90 days after we make such good faith determination.
We may not exercise this right of delay more than once in any 12-month period.
We also granted the lenders and the investors unlimited piggyback
registration rights to include their registrable securities in any
registration statement that we propose filing to register, whether for our own
account or otherwise, any of our equity securities under the Securities Act,
other than this rights offering or a transaction described in Rule 145 under
the Securities Act or on Form S-4 or S-8.
14
USE OF PROCEEDS
If the rights offering is fully subscribed, the maximum net proceeds to us
from the sale of common stock in the rights offering are estimated to be
approximately $2.67 million after deducting estimated offering expenses of
$160,000.
The principal purposes of the rights offering are to give holders of our
common stock the opportunity to purchase additional shares of common stock at
the same effective price per share as holders of our Series A preferred stock
may acquire shares of common stock upon the conversion of the Series A
preferred stock.
We have no specific plans for the use of the net proceeds of the rights
offering. We intend to use the net proceeds primarily for general corporate
purposes, including working capital. Until we use the net proceeds of this
offering, we intend to pay down short term debt or invest the net proceeds in
interest-bearing, investment-grade securities.
15
CAPITALIZATION
The following table sets forth our capitalization as of June 30, 2004, on an
actual basis and as adjusted basis. The actual column reflects our
capitalization as of June 30, 2004, on a historical basis, without any
adjustments to reflect subsequent events.
The as adjusted data assumes gross proceeds of approximately $2.83 million
from the rights offering, prior to reduction for $160,000 in estimated
offering expenses, and the issuance of 2,784,578 shares of common stock
issuable in the rights offering.
JUNE 30, 2004
---------------------
ACTUAL AS ADJUSTED
------- -----------
(IN THOUSANDS)
Cash .................................................. $ 2,298 $ 2,298
TOTAL DEBT (INCLUDING CURRENT PORTION)
Revolving credit facility ............................ 5,220 2,551
Seller notes/other debt .............................. 2,541 2,541
Series A debentures .................................. 4,000 4,000
Series B debentures .................................. 4,000 4,000
------- -------
Total debt.......................................... 15,761 13,092
------- -------
STOCKHOLDERS' EQUITY
Preferred stock ...................................... 4,000 4,000
Common stock ......................................... 8 11
Paid in capital/treasury stock ....................... 12,566 15,232
Accumulated deficit .................................. (6,969) (6,969)
------- -------
Total Stockholders' equity.......................... 9,605 12,274
------- -------
Total Capitalization (a)............................ $23,068 $23,068
======= =======
---------------
Notes:
(a) Equity plus Debt, less cash on hand.
16
THE RIGHTS OFFERING
Before exercising any subscription rights, you should read carefully the
information set forth under "Risk Factors" beginning on page 6 of this
prospectus.
SUBSCRIPTION RIGHTS
As soon as practicable after the date of this prospectus, we are
distributing to the holders of record of our common stock, options to purchase
our common stock and notes convertible into our common stock, other than the
Series A notes and the Series B notes, as of 5:00 p.m., New York City time, on
_______ __, 2004, at no charge, .25 subscription rights for each share of our
common stock they own or are entitled to receive upon exercise or conversion
of such options and notes. The subscription rights will be evidenced by rights
certificates. Each whole subscription right that you receive entitles you to
purchase one share of our common stock at the subscription price. You are not
required to exercise any or all of your subscription rights.
We will not issue fractional subscription rights. If the number of shares of
common stock you held or were entitled to receive upon the exercise of options
or the conversion of convertible notes on the record date would have resulted
in your receipt of fractional subscription rights, the number of subscription
rights issued to you will be rounded up to the nearest whole right.
SUBSCRIPTION PRICE
Each whole subscription right that you receive entitles you to purchase one
share of our common stock at the subscription price of $1.016 per share. The
subscription price per share equals the conversion price of the Series A
preferred stock and the Series A notes. The conversion price represented the
average of the closing price per share of our common stock on the American
Stock Exchange for each of the last five trading days ending on and including
the last trading day immediately prior to April 14, 2004, the closing date of
the restructuring of the senior notes. The subscription price applies to the
exercise of the basic subscription privilege and the oversubscription
privilege.
DETERMINATION OF SUBSCRIPTION PRICE
Our board of directors determined the subscription price solely be reference
to the conversion price for the Series A preferred stock.
The subscription price does not necessarily bear any relationship to our
past or expected future results of operations, cash flows, current financial
condition, or any other established criteria for value. No change will be made
to the cash subscription price because of fluctuations in the trading price of
our common stock prior to the closing of the rights offering.
We did not seek or obtain the opinion of any independent financial advisor
or investment bank in establishing the subscription price for the offering.
You should not consider the subscription price as being indicative of the
value of CD&L or our common stock. On August 26, 2004, the closing sale price
of our common stock was $1.29 per share.
BASIC AND OVERSUBSCRIPTION PRIVILEGES
Basic Subscription Privilege. You are entitled to purchase one share of
common stock at the subscription price for every whole right that you receive,
or effectively 25 shares of common stock for every 100 shares of common stock
that you owned or were entitled to receive upon the exercise of options to
purchase common stock or the conversion of our convertible notes, other than
the Series A notes and the Series B notes, on the record date.
Oversubscription Privilege. If you exercise your basic subscription
privilege in full, you may also subscribe for additional shares that other
stockholders have not purchased under their basic subscription privilege, up
to a maximum of one times your basic subscription privilege. For example, if
your basic subscription privilege entitled you to purchase 100 shares of
common stock, you could subscribe for up to
17
100 additional shares of common stock under your oversubscription privilege.
If there are not enough shares available to fill all such subscriptions for
additional shares, the available shares will be allocated pro rata based on
the number of shares each subscriber for additional shares has elected to
purchase under the oversubscription privilege. We will not allocate to you
more than the number of shares that you have actually subscribed and paid for
and no stockholder will be entitled to purchase under his oversubscription
privilege more than one times his basic subscription privilege.
You are not entitled to exercise the oversubscription privilege unless you
elect to exercise your basic subscription privilege in full. For this
oversubscription purpose, you would only count the shares you own in your own
name, and not other shares that might, for example, be jointly held with a
spouse, held as a custodian for someone else, or held in an individual
retirement account.
You can elect to exercise the oversubscription privilege only at the same
time you exercise your basic subscription privilege in full. In exercising the
oversubscription privilege, you must pay the full subscription price for all
the shares you are electing to purchase. If we do not allocate to you all of
the shares that you have subscribed for under the oversubscription privilege,
we will refund by mail to you any payment you have made for shares which are
not available to issue to you, as soon as practicable after completion of this
rights offering. Interest will not be payable on amounts refunded.
Banks, brokers and other nominees who exercise the oversubscription
privilege on behalf of beneficial owners of shares must report certain
information to American Stock Transfer & Trust Company and us and report
certain other information received from each beneficial owner exercising
rights. Generally, banks, brokers and other nominees must report:
o the number of shares that they held on the record date on behalf of each
beneficial owner,
o the number of rights as to which they have exercised the basic
subscription privilege on behalf of each beneficial owner,
o whether each beneficial owner's basic subscription privilege held in the
same capacity has been exercised in full, and
o the number of shares that they are subscribing for under the
oversubscription privilege for each beneficial owner.
If you complete the portion of the subscription certificate to exercise the
oversubscription privilege, you will be representing and certifying that you
have fully exercised your basic subscription privilege as described above. You
must exercise your oversubscription privilege at the same time that you
exercise your basic subscription privilege.
REASONS FOR THE RIGHTS OFFERING
As a condition to the closing of the restructuring, we are making the rights
offering in order to give holders of our common stock the opportunity to
purchase additional shares of common stock at the same effective price per
share as holders of our Series A preferred stock and Series A notes may
acquire shares of common stock upon the conversion of those securities. We
also are making the rights offering to raise up to approximately $2.83 million
in new capital, before expenses, to be used as additional working capital for
our business.
NO BOARD RECOMMENDATION
Our board of directors is not making any recommendation to you as to whether
you should exercise any of your subscription rights. In making the decision
whether to exercise your subscription rights, you must consider your own best
interests.
EXPIRATION DATE AND EXTENSIONS
You may exercise your subscription right at any time before 5:00 p.m., New
York City time, on _____ __, 2004, the expiration date for the rights
offering. However, we may extend the period for exercising your
18
subscription rights from time to time in our sole discretion. If you do not
exercise your subscription rights before the expiration date, your unexercised
subscription rights will be void. We will not be obligated to honor your
exercise of subscription rights if the subscription agent receives the
documents relating to your exercise after the rights offering expires,
regardless of when you transmitted the documents, except when you have timely
transmitted the documents under the guaranteed delivery procedures described
below.
We may extend the expiration date by giving oral or written notice to the
subscription agent on or before the scheduled expiration date. If we elect to
extend the expiration of the rights offering, we will issue a press release
announcing the extension no later than 9:00 a.m., New York City time, on the
next business day after the most recently announced expiration date.
WITHDRAWAL AND AMENDMENT
We reserve the right to withdraw or terminate the rights offering for any
reason at any time before shares certificates are actually distributed. If the
offering is withdrawn or terminated, all funds received from subscriptions by
stockholders will be returned. Interest will not be payable on any returned
funds.
We reserve the right to amend the terms of this rights offering. If we make
an amendment that we consider significant, we will:
o mail notice of the amendment to all stockholders of record as of the
record date;
o extend the expiration date by at least 10 days; and
o offer all subscribers no less than 10 days to revoke any subscription
already submitted.
The extension of the expiration date will not, in and of itself, be treated
as a significant amendment for these purposes.
NON-TRANSFERABILITY OF THE SUBSCRIPTION RIGHTS
Only you may exercise your subscription rights. You may not sell, give away
or otherwise transfer your subscription rights under any circumstances.
PROCEDURES TO EXERCISE SUBSCRIPTION RIGHTS
To exercise your subscription rights, you must deliver the following to the
subscription agent, at or prior to 5:00 p.m., New York City time, on ____ ___,
2004, the date on which the subscription rights expire:
o your properly completed and executed rights certificate with any required
signature guarantees or other supplemental documentation; and
o your full subscription price payment for each share subscribed for under
your basic subscription privilege and oversubscription privilege.
If you want to exercise your subscription rights, you should send your
rights certificate(s) with your subscription price payment to the subscription
agent. Do not send your rights certificate(s) or subscription price payment to
us.
You are responsible for the method of delivery of your rights certificate(s)
with your subscription price payment to the subscription agent. If you send
your rights certificate(s) and subscription price payment by mail, we
recommend that you send them by registered mail, properly insured, with return
receipt requested. You should allow a sufficient number of days to ensure
delivery to the subscription agent prior to the expiration date.
SIGNATURE GUARANTEE MAY BE REQUIRED
Your signature on each rights certificate must be guaranteed by an eligible
institution such as a member firm of a registered national securities exchange
or a member of the National Association of Securities Dealers, Inc., or from a
commercial bank or trust company having an office or correspondent in the
United States, subject to standards and procedures adopted by the subscription
agent, unless:
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o your rights certificate provides that shares are to be delivered to you
as the record holder of those subscription rights, or
o you are an eligible institution.
METHOD OF PAYMENT
If you exercise any subscription rights, you must deliver full payment in
the form of:
o a personal check or certified check, cashier's check or bank draft drawn
upon a United States bank or a money order payable to American Stock
Transfer & Trust Company, as Subscription Agent."
o a wire transfer of immediately available funds to the account maintained
by the subscription agent at:
JPMorgan Chase Bank
ABA #021-000021
Account No. 323-062520
FBO: CD&L, Inc.
Attention: American Stock Transfer & Trust Company,
as Subscription Agent for CD&L, Inc.
Any wire transfer of funds should clearly indicate the identity of the
subscriber who is paying the subscription price by the wire transfer.
For you to timely exercise your subscription rights, the subscription agent
must actually receive full payment of the subscription price for all shares
that you are purchasing pursuant to your basic subscription privilege and
oversubscription privilege before the expiration date. Payment will be deemed
to have been received by the subscription agent only upon:
o receipt by the subscription agent and clearance of any uncertified check,
o receipt by the subscription agent of any certified check, cashier's check
or bank draft drawn upon a United States bank or a U.S. postal money
order, or
o receipt of good funds in the subscription agent's account designated
above.
Please note that funds paid by uncertified personal check may take at least
five business days to clear. Accordingly, if you pay the subscription price by
means of an uncertified personal check, you should make the payment
sufficiently in advance of the expiration date of the rights offering to
ensure that your check actually clears and the subscription agent receives the
funds before that date. We are not responsible for any delay in payment by you
and suggest that you consider payment by means of a certified or cashier's
check, money order or wire transfer of funds.
DELIVERY OF SUBSCRIPTION MATERIALS AND PAYMENT
You should deliver your rights certificate and payment of the subscription
price or, if applicable, notices of guaranteed delivery and nominee holder
certifications, to the subscription agent by mail, hand delivery or overnight
courier to:
American Stock Transfer & Trust Company
Attention: Subscription Agent
59 Maiden Lane, Plaza Level
New York, New York 10038
Phone: (800) 937-5449
Eligible institutions may also deliver documents by facsimile transmission.
The subscription agent's facsimile number is (718) 234-5001. You should
confirm receipt of all facsimile transmissions by calling (800) 937-5449.
Your delivery to an address other than the address set forth above will not
constitute valid delivery.
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GUARANTEED DELIVERY PROCEDURES
If you wish to exercise your subscription rights, but you do not have
sufficient time to deliver the rights certificate evidencing your subscription
rights to the subscription agent on or before the expiration date, you may
alternatively exercise your subscription rights by causing all of the
following to occur within the time prescribed:
o Full payment must be received by the subscription agent prior to the
expiration date for all shares you desire to purchase pursuant to the
basic subscription privilege and the oversubscription privilege;
o A properly executed Notice of Guaranteed Delivery, substantially in the
form distributed to you by us with your rights certificate, must be
received by the subscription agent at or prior to the expiration date;
o The properly completed rights certificate evidencing your subscription
rights being exercised, with any required signatures guaranteed, to the
subscription agent within three American Stock Exchange trading days
following the date of your Notice of Guaranteed Delivery; and
o If you are a nominee holder of subscription rights, the Nominee Holder
Certification must also accompany the Notice of Guaranteed Delivery.
Your Notice of Guaranteed Delivery must be executed by both you and one of
the following:
o a member firm of a registered national securities exchange;
o a member of the National Association of Securities Dealers, Inc.;
o a commercial bank or trust company having an office or correspondent in
the United States; or
o other eligible guarantor institution qualified under a guarantee program
acceptable to the subscription agent.
The co-signing institution must guarantee in your Notice of Guaranteed
Delivery that you will deliver to the subscription agent the rights
certificates evidencing the subscription rights you are exercising within
three American Stock Exchange trading days after the date of the form. You
must also provide in that form other relevant details concerning the intended
exercise of subscription rights.
You may deliver your Notice of Guaranteed Delivery to the subscription agent
in the same manner as your rights certificates at the address set forth above
under "-Delivery of Subscription Materials and Payment." You may alternatively
transmit your Notice of Guaranteed Delivery to the subscription agent by
facsimile transmission (Facsimile No.: (718) 234-5001). To confirm facsimile
deliveries, you may call (800) 937-5449.
Additional copies of the form of Notice of Guaranteed Delivery are available
upon request from the subscription agent, whose address and telephone numbers
are set forth above.
NO REVOCATION
You are not allowed to revoke or change your exercise of rights after you
send in your subscription forms and payment.
INCOMPLETE FORMS; INSUFFICIENT PAYMENT
If you do not indicate the number of subscription rights being exercised, or
do not forward full payment of the total subscription price for the number of
subscription rights that you indicate are being exercised, then you will be
deemed to have exercised your subscription right with respect to the maximum
number of subscription rights that may be exercised based on the actual
payment delivered. We will make this determination as follows:
o you will be deemed to have exercised your basic subscription privilege to
the full extent of the payment received, and
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o if any funds remain, you will be deemed to have exercised your
oversubscription privilege to the extent of the remaining funds.
If we do not apply your full subscription price payment to your purchase of
shares of common stock, we will return the excess amount to you by mail
without interest or deduction as soon as practicable after the expiration date
of the rights offering.
ISSUANCE OF STOCK CERTIFICATES
Stock certificates for shares purchased in this rights offering will be
issued as soon as practicable after the expiration date. Unless you instruct
otherwise in your rights certificate form, shares purchased by the exercise of
subscription rights will be registered in the name of the person exercising
the rights.
YOUR FUNDS WILL BE HELD BY THE SUBSCRIPTION AGENT UNTIL SHARES OF COMMON STOCK
ARE ISSUED
The Subscription Agent will hold your payment of the subscription price
payment in a segregated account with JPMorgan Chase Bank with other payments
received from other rights holders until the rights offering is consummated
and we issue your shares to you. If the rights offering is not completed, the
subscription agent will return promptly, without interest or deduction, all
subscription payments.
INSTRUCTIONS TO NOMINEE HOLDERS
If you are a broker, a trustee or a depositary for securities or other
nominee holder of common stock for beneficial owners of the common stock at
the close of business on ______ __, 2004, the record date for the rights
offering, you should notify the beneficial owners of the common stock of the
rights offering as soon as possible to find out their intentions with respect
to exercising their subscription rights. You should obtain instructions from
the beneficial owners with respect to the subscription rights as described in
the suggested form of letter of instructions from nominee holders to
beneficial owners that we have provided to you for your distribution to the
beneficial owners.
If the beneficial owners so instruct, you should complete the appropriate
rights certificates and submit them to the subscription agent with the proper
payment. If you hold shares of common stock for the account(s) of more than
one beneficial owner, you may exercise the number of subscription rights to
which all such beneficial owners in the aggregate otherwise would have been
entitled had they been direct record holders of our common stock on the record
date for the rights offering, provided that, you, as a nominee record holder,
make a proper showing to the subscription agent by submitting the Nominee
Holder Certification form accompanying this prospectus which we will provide
to you with your rights offering materials.
INSTRUCTIONS TO BENEFICIAL OWNERS
If you are a beneficial owner of shares of common stock or will receive your
subscription rights through a broker, custodian bank or other nominee, we will
ask your broker, custodian bank or other nominee to notify you of this rights
offering. If you wish to exercise your subscription rights, you will need to
have your broker, custodian bank or other nominee act for you. If you hold
certificates of our common stock directly and would prefer to have your
broker, custodian bank or other nominee exercise your subscription rights, you
should contact your nominee and request it to effect the transaction for you.
To indicate your decision with respect to your subscription rights, you should
complete and return to your broker, custodian bank or other nominee the
Beneficial Owners Election Form. You should receive this form from your
broker, custodian bank or other nominee with the other rights offering
materials. If you wish to obtain a separate rights certificate, you should
contact the nominee as soon as possible and request that a separate rights
certificate be issued to you.
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PROCEDURES FOR DTC PARTICIPANTS
We expect that your exercise of your basic subscription privilege and your
oversubscription privilege may be made through the facilities of the
Depository Trust Company, or DTC. If you held of record through DTC, you may
exercise your basic subscription privilege by instructing DTC to transfer your
subscription rights from your account to the account of the subscription
agent, together with certification as to the aggregate number of subscription
rights you are exercising and the number of shares of our common stock you are
subscribing for, and your subscription price payment for each share you
subscribed for pursuant to your subscription rights.
If you exercise the basic subscription privilege through DTC, in full with
respect to shares of common stock that you hold for your own account or for
the account of a beneficial owner, you may exercise the oversubscription
privilege with respect to such shares of common stock at the time you exercise
the basic subscription privilege by making payment of the appropriate
subscription price for the number of shares of common stock for which the
oversubscription privilege is to be exercised.
HOW PROCEDURAL AND OTHER QUESTIONS ARE RESOLVED
We will decide all questions concerning the timeliness, validity, form and
eligibility of your exercise of your subscription rights, and our
determinations will be final and binding. We, in our sole discretion, may
waive any defect or irregularity, or permit a defect or irregularity to be
corrected within such time as we may determine. We may reject the exercise of
any of your subscription rights because of any defect or irregularity. We will
not receive or accept any subscription until all irregularities have been
waived by us or cured by you within such time as we decide, in our sole
discretion.
Neither we nor the subscription agent have any duty to notify you of any
defect or irregularity in connection with your submission of rights
certificates or other required documents, and we will not be liable for
failure to notify you of any defect or irregularity. We reserve the right to
reject your exercise of subscription rights if your exercise is not in
accordance with the terms of the rights offering or in proper form. We will
also not accept your exercise of subscription rights if our issuance of shares
of common stock to you could be deemed unlawful under applicable law or is
materially burdensome to us.
If you are given notice of a defect in your subscription, you generally will
have five business days after the giving of notice to correct it. You will
not, however, be allowed to cure any defect later than 5:00 p.m., New York
City time, on ______ ___, 2004. We will not consider an exercise to be made
until all defects have been cured or waived.
RIGHT TO BLOCK EXERCISE DUE TO REGULATORY ISSUES
We will not be required to issue to you shares of common stock pursuant to
the rights offering if, in our opinion, you would be required to obtain prior
clearance or approval from any state, federal or foreign regulatory
authorities for the exercise of subscription rights or ownership of additional
shares and if, at the expiration date, you have not obtained the required
clearance or approval. We will not pay any expenses that you incur in seeking
clearance or approval.
We are not offering or selling, or soliciting any purchase of, shares in any
state or other jurisdiction in which the rights offering is not permitted. We
may delay the commencement of the rights offering in any state or other
jurisdiction if necessary to comply with local laws. We may elect not to offer
rights to residents of any state or other jurisdiction whose law would require
a change in the terms and conditions of the rights offering to permit us to
conduct the rights offering in such state or jurisdiction.
FOREIGN OR OTHER STOCKHOLDERS LOCATED OUTSIDE THE UNITED STATES
Rights certificates will not be mailed to rights holders whose addresses are
outside the United States or who have an Army Post Office or Fleet Post Office
address. In those cases, the rights certificates will be held by the
subscription agent for those stockholders. To exercise their subscription
rights, these stockholders must notify the subscription agent prior to 5:00
p.m., New York City Time, on the third business day prior to the
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expiration date. If the procedures set forth in the preceding sentence are not
followed prior to the expiration date, your subscription rights will expire.
SHARES OF COMMON STOCK OUTSTANDING AFTER THE RIGHTS OFFERING
Assuming we issue all of the shares of common stock offered in the rights
offering, 2,784,578 additional shares of common stock will be issued and
outstanding. This would represent an approximate 36.3% increase in the number
of our shares of common stock outstanding at July 1, 2004, and an approximate
13.0% increase in the number of our shares of common stock outstanding at July
1, 2004, assuming the exercise or conversion, as applicable, of all of our
then outstanding options, warrants and convertible securities.
FEES AND EXPENSES
We will pay all fees charged by the subscription agent. Neither CD&L nor the
subscription agent is charging you any fees to exercise your subscription
rights, other than the payment of the subscription price. You are responsible
for paying any third-party commissions, fees, taxes or other expenses that you
incur in exercising your subscription rights. Neither CD&L nor the
subscription agent will pay any of your expenses.
SUBSCRIPTION AGENT
We have appointed American Stock Transfer & Trust Company as the
subscription agent for the rights offering. We will pay the fees and certain
expenses of the subscription agent, which we estimate will total $7,500. We
may indemnify the subscription agent from liabilities that may arise in
connection with the rights offering.
IF YOU HAVE QUESTIONS
You should direct any questions, requests for assistance concerning the
subscription rights or requests for additional copies of this prospectus,
forms of instructions or the Notice of Guaranteed Delivery to:
Russell J. Reardon
Vice President and Chief Financial Officer
CD&L, Inc.
80 Wesley Street
South Hackensack, New Jersey 07606
Phone: 201-487-7740
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MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
The following summary describes the material United States federal income
tax consequences of the rights offering to holders of our common stock,
warrants, stock options, or convertible promissory notes who hold any such
assets as capital assets for United States federal income tax purposes. The
following discussion is based upon the provisions of the United States
Internal Revenue Code of 1986, as amended, and related United States Treasury
Regulations, administrative rulings, and judicial decisions now in effect, any
of which may change at any time. Any such change may be applied retroactively
in a manner that could cause the tax consequences to vary substantially from
the consequences described in this summary, possibly with adverse effects to
some or all of the holders.
This discussion applies only to holders who or that are United States
persons. For this purpose, a "United States person" means a person who or that
is, for United States federal income tax purposes:
o an individual citizen or resident of the United States or an individual
treated as a United States citizen or resident for United States federal
income tax purposes;
o a corporation, or other entity taxable as a corporation for United States
federal income tax purposes, created or organized in or under the laws of
the United States or any political subdivision thereof;
o an estate the income of which is subject to United States federal income
taxation regardless of its source; and
o a trust if a court within the United States is able to exercise primary
supervision over the administration of the trust and one or more United
States persons have the authority to control all substantial decisions of
the trust, or if such trust validly elects to be treated as a United
States person for United States federal income tax purposes.
This discussion does not describe all the tax consequences that may be
relevant to holders of our common stock, warrants, stock options, and
convertible promissory notes in light of their particular circumstances or to
holders subject to special rules under United States federal income tax law,
such as (1) holders of options granted in connection with the performance of
services, (2) dealers in securities or currencies, (3) financial institutions,
(4) investors in pass-through entities, (5) tax-exempt entities, (6) insurance
companies, (7) persons holding common stock as a hedge or as part of a
straddle, constructive sale, conversion transaction, or other risk management
transaction, (8) holders whose "functional currency" is not the United States
dollar, and (9) holders who acquired stock pursuant to the exercise of
compensatory stock options or warrants or otherwise as compensation. We have
not sought, and will not seek, an opinion of counsel or a ruling from the
Internal Revenue Service regarding the federal income tax consequences of the
rights offering or the related share issuance. Moreover, this discussion does
not address alternative minimum taxes, other federal taxes, or any state,
local, or foreign tax laws. Accordingly, you should consult your own tax
advisor with respect to the particular tax consequences to you of the rights
offering or the related share issuance.
RECEIPT OF THE SUBSCRIPTION RIGHTS
Holders of common stock, warrants, and stock options should not recognize
taxable income for federal income tax purposes upon the distribution and
receipt of the subscription rights.
While there is no direct authority on the treatment to holders of
convertible promissory notes, we believe that such holders should not
recognize taxable income for federal income tax purposes upon the distribution
and receipt of subscription rights; instead, we believe that the receipt of
the rights by the holders should be treated as a return of an allocable
portion of the basis in their notes (the basis in the notes being allocated
between the notes and the distributed rights in proportion to their relative
fair market values). We cannot assure you, however, that the Internal Revenue
Service will not take a different position.
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TAX BASIS AND HOLDING PERIOD OF THE RIGHTS
Generally, the tax basis of the subscription rights received by holders of
common stock, warrants, and stock options should be zero. However, the basis
in the subscription rights may be different if (1) the fair market value of a
subscription right on the date of the distribution is equal to or greater than
15% of the fair market value of one share of common stock, or (2) the holder
makes a special irrevocable election. If either of these two exceptions
applies, then the holder's basis in the subscription rights will be determined
by allocating the adjusted basis in the shares with respect to which the
subscription rights are issued between such shares and the subscription rights
in proportion to their relative fair market values on the date that the
subscription rights are distributed. This allocation, however, will be
effective only if the holder exercises the subscription rights.
The holding period of subscription rights received as a distribution with
respect to common stock, warrants, or stock options should include that
holder's holding period for the common stock, warrants, or stock options prior
to the distribution of the rights.
The basis of the subscription rights received by holders of convertible
promissory notes will equal the allocated basis described above. While the
matter is not free from doubt, it is likely that the holding period of the
subscription rights received by holders of convertible promissory notes will
begin on the day following the day that the subscription rights are received.
LAPSE OF THE RIGHTS
Holders of common stock, warrants, and stock options who allow the
subscription rights to lapse should not recognize any gain or loss, and no
adjustment should be made to the basis of the common stock, warrants, or stock
options.
The treatment to holders of convertible promissory notes who allow the
subscription rights to lapse is unclear. Such holders may recognize a capital
loss in an amount equal to the basis in the subscription rights.
Alternatively, such holders may be treated in the same manner as holders of
common stock, warrants, and stock options who allow subscription rights to
lapse, as described above.
EXERCISE OF THE RIGHTS
Holders of common stock, warrants, stock options not granted in connection
with the performance of services, and convertible promissory notes will not
recognize gain or loss upon exercise of the subscription rights.
TAX BASIS AND HOLDING PERIOD OF COMMON STOCK RECEIVED ON EXERCISE OF THE RIGHTS
The basis of the common stock received on exercise of the subscription
rights by holders of common stock, warrants, stock options not granted in
connection with the performance of services, and convertible promissory notes
will be equal to the sum of the exercise price and the holder's basis in the
rights, if any. The holding period to these holders for the common stock
acquired through exercise of the rights will begin on the date that the rights
are exercised.
SALE OF COMMON STOCK RECEIVED ON EXERCISE OF THE RIGHTS
The sale of any shares of common stock received on exercise of the
subscription rights will result in the recognition of gain or loss to the
holder in an amount equal to the difference between the amount realized and
the holder's basis in the shares. The gain or loss will be long-term capital
gain or loss if the holding period of the stock is more than one year.
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PRICE RANGE OF COMMON STOCK AND DIVIDEND POLICY
PRICE RANGE OF COMMON STOCK
Our common stock has been trading on the American Stock Exchange under the
symbol "CDV" since February 23, 1999. On August 12, 2004, the last trading day
prior to our filing of the registration statement of which this prospectus is
a part, the closing price of our common stock on the American Stock Exchange
was $1.35 per share. On ________ __, 2004, the record date for the rights
offering, the closing price of our common stock on the American Stock Exchange
was $___ per share.
The following table sets forth the high and low closing sales prices for the
common stock for 2002, 2003 and 2004 to date.
PRICES
--------------------------
YEAR QUARTER ENDED HIGH LOW
----------- ----------------------------------------------- ----------- -----------
2002 March 31. .................................................................. $ 0.61 $ 0.38
June 30 .................................................................... 0.70 0.44
September 30. .............................................................. 0.58 0.40
December 31 ................................................................ 0.62 0.46
2003 March 31. .................................................................. $ 0.59 $ 0.48
June 30 .................................................................... 0.55 0.34
September 30. .............................................................. 0.94 0.44
December 31 ................................................................ 1.06 0.65
2004 March 31. .................................................................. $ 1.61 $ 0.78
June 30 .................................................................... 2.15 0.93
September 30 (through August 26, 2004). .................................... 2.17 1.15
DIVIDENDS
We have not declared or paid any dividends on our common stock. We intend to
retain earnings to support our growth strategy and do not anticipate paying
dividends in the foreseeable future. Payment of future dividends, if any, will
be at the discretion of our board of directors after taking into account
various factors, including our financial condition, results of operations,
current and anticipated cash needs and plans for expansion. Our ability to pay
cash dividends on the common stock is also limited by the terms of our
revolving credit facility.
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DESCRIPTION OF CAPITAL STOCK
GENERAL
Our authorized capital stock consists of 30,000,000 shares of common stock,
par value $.001 per share, and 2,000,000 shares of preferred stock, par value
$.001 per share, of which 393,701 shares of preferred stock are designated as
Series A preferred stock. At July 1, 2004, 7,688,027 shares of common stock
were issued, of which 7,658,660 shares of common stock were outstanding and
29,367 shares were held in treasury. At July 1, 2004, 393,701 shares of Series
A preferred stock were issued and outstanding.
COMMON STOCK
Holders of common stock are entitled to one vote per share on all matters to
be voted upon by the stockholders, including the election of directors.
Subject to the rights of any then outstanding shares of preferred stock, the
holders of the common stock are entitled to such dividends as our board of
directors may declare in its discretion out of funds legally available for
that purpose. Holders of common stock are entitled to share ratably in our net
assets upon liquidation after payment or provision for all of our liabilities
and any preferential liquidation rights of any preferred stock then
outstanding. The common stock has no preemptive rights to purchase shares of
our capital stock. Shares of common stock are not subject to redemption and
are not convertible into or exchangeable for any other securities. All
outstanding shares of common stock are, and the shares of common stock that we
may issue pursuant to this prospectus will be upon their issuance, fully paid
and nonassessable.
SERIES A PREFERRED STOCK
On April 13, 2004, the board of directors approved the authorization and
issuance of 393,701 shares of Series A preferred stock.
The Series A preferred stock ranks senior to all of our other capital stock
with respect to the payment of dividends. We may not declare or pay any
dividend on the common stock, other than a dividend payable solely in shares
of common stock, or any other capital stock unless we also pay a dividend on
each share of Series A preferred stock equal to the product of the per share
dividend to be paid on the junior securities multiplied by the number of
shares of common stock into which such Series A preferred stock is convertible
immediately prior to the dividend record date.
In the event of a change in control of CD&L, each share of Series A
Preferred Stock will be entitled to be paid, prior to any payment in respect
of any of our other equity securities, an amount equal to $10.16 plus any
accrued but unpaid dividends on the Series A preferred stock, subject to
adjustment in the event of a stock dividend, stock split, combination,
reorganization, recapitalization, reclassification, or other similar event
affecting the Series A preferred stock. After we have made full payment to the
holders of the Series A preferred stock, any remaining assets available for
distribution will be paid to the holders of the common stock. For purposes of
this section, a "change in control" means the occurrence of any of the
following events:
o the consummation of any consolidation or merger of CD&L in which we are
not the surviving corporation or pursuant to which the common stock would
be converted into cash, securities or other property, other than a merger
in which the holders of the common stock immediately prior to the merger
have the same proportionate ownership of common stock of the surviving
corporation immediately after the merger;
o the consummation of any sale, lease, exchange or other transfer, in one
or more related transactions, of all, or substantially all, of our
assets, other than to one of our subsidiaries or affiliates;
o approval by the stockholders of any plan or proposal for our liquidation
or dissolution;
o any action pursuant to which any person, corporation or other entity,
other than the lenders and any person who owned more than 10% of the of
the outstanding shares of common stock on April 14, 2004, us or any
benefit plan sponsored by us or our subsidiaries, shall become the
"beneficial owner,"
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as defined in Rule 13d-3 under the Securities Exchange Act of 1934,
directly or indirectly, of shares of capital stock entitled to vote
generally for the election of directors representing 51% or more of the
combined voting power of all of our then outstanding voting securities,
calculated as provided in Rule 13d-3(d) in the case of rights to acquire
any such securities, unless, prior to such person so becoming such a
beneficial owner, our board of directors determines that such person so
becoming such beneficial owner does not constitute a change in control;
or
o the individuals:
-- who, at April 14, 2004, including the nominees of the holders
of the Series A preferred stock, constitute the board of
directors, which we refer to as the "original directors;"
-- who after April 14, 2004, are elected to the board of directors
and whose election, or nomination for election, to the board
was approved by a vote of at least two thirds of the original
directors then still in office, which subsequently elected
directors we refer to as the "additional original directors;"
and
-- who after April 14, 2004, are elected to the board of directors
and whose election or nomination for election to the board was
approved by a vote of at least two thirds of the original
directors and additional original directors then still in
office,
cease for any reason to constitute a majority of the members of the
board of directors.
Each share of Series A preferred stock is convertible at any time at the
option of the holder into the number of shares of common stock derived by
dividing the issue price of $10.16 by the conversion price then in effect,
with fractional shares being rounded to the nearest full share. The initial
conversion price is $1.016, subject to adjustment in the event of any
subdivision, by stock split, stock dividend or otherwise, of the common stock
or any combination of the common stock. Upon conversion, we will pay in cash
to the holder of the Series A preferred stock being converted an amount equal
to all accrued but unpaid dividends upon such Series A preferred stock, if
any, to the date of conversion, without interest. If we issue to holders of
common stock shares of capital stock, other than common stock, then provision
must be made so that each holder of Series A preferred stock shall, upon
conversion, have the right to receive an equal amount of capital stock as if
the Series A preferred stock had been converted at the time the capital stock
was issued.
The Series A preferred stock does not have any voting rights except:
o as otherwise required by law;
o as set forth in any agreement between us and the holders of the Series A
preferred stock;
o as provided in the certificate of designations for the Series A preferred
stock;
o or so long as at least 196,851 shares of Series A preferred stock are
outstanding, subject to adjustment in the event of any stock dividend,
stock split, combination or similar recapitalization affecting the
shares, the holders of Series A Preferred Stock, voting as a class, have
the right to elect two members of the board of directors.
Each holder of Series A preferred stock is entitled to one vote for each share
of Series A preferred stock on matters on which the holders of Series A
preferred stock are entitled to vote.
Concurrent with the closing of the restructuring, we entered into a
stockholders agreement and a registration rights agreement with the lenders
and the investors. Under the stockholders agreement, neither we nor any of our
subsidiaries will take any of the following actions without the written
consent of the holders of a majority of the Series A preferred stock:
o enter into any agreement to sell or sell all or substantially all of our
assets;
o enter into any agreement or take any action to effect a capital
reorganization of CD&L or any consolidation or merger involving us and
another entity;
o enter into any agreement or take any action to liquidate or wind up the
business or affairs of CD&L;
29
o amend, alter or repeal any provision of, or add any provision to, our
certificate of incorporation, any certificate of designations of our
preferred stock or our bylaws if such action would adversely alter or
change in any material respect the rights, preferences or privileges of
the Series A preferred stock;
o incur any additional indebtedness exceeding $5,000,000 in aggregate
principal amount that is senior to the Series A notes or the Series B
notes other than indebtedness existing as of the date of the stockholders
agreement or replacement financing or refinancing of such existing debt;
o enter into any agreement or take any action to make an acquisition,
investment or divestiture exceeding $2,500,000;
o enter into any agreement to issue or issue any additional shares of
common stock, or securities convertible into or exercisable for shares of
common stock, excluding shares issuable upon conversion of the Series A
preferred stock or the Series A notes or the Series B notes, to any
affiliate of CD&L without consideration or for a consideration per share
less than the fair market value, as defined in the stockholders
agreement, per share of the common stock; except that this restriction
shall not apply to grants or issuances to our officers or directors
pursuant to our existing or subsequently adopted stock option or other
employee benefit plans; or
o enter into any other transaction with any of its affiliates which is not
on terms which would result from an arm's length transaction, except that
this provision shall not apply to any employment-related or other
compensatory arrangement between us and any of our affiliates in their
capacities as our officers, directors, or employees.
Subject to our ability to effect a redemption under Delaware law, we have
the right, upon not less than 30 days' notice, to redeem all or any portion of
the outstanding Series A preferred stock at the redemption price of $10.16 per
share.
UNDESIGNATED PREFERRED STOCK
The board of directors has the authority, without action by the
stockholders, to designate and issue the remaining shares of preferred stock
in one or more series and to designate the rights, preferences and privileges
of each series, any or all of which may be greater than the rights of the
common stock. It is not possible to state the actual effect of the issuance of
any of the remaining shares of preferred stock upon the rights of the holders
of the common stock until the board of directors determines the specific
rights of the holders of such shares. However, the effects might include
restricting dividends on the common stock, diluting the voting power of the
common stock, impairing the liquidation rights of the common stock and
hindering or preventing a change of our control without further action by the
stockholders, thereby protecting management.
SERIES A NOTES
In April 2004, we issued an aggregate of $4.0 million principal amount of
Series A notes, all of which is outstanding. The Series A notes mature on
April 14, 2011, and bear interest at the rate of:
o 9% per year from April 14, 2004, the issue date, until April 14, 2006;
o 10.5% per year from April 14, 2006, until April 14, 2008; and
o 12% per year from April 14, 2008, until maturity.
Payments on the Series A notes are due quarterly. The Series A notes are
subordinated in right of payment to our indebtedness under our revolving
credit facility.
The holders of the Series A notes may convert the Series A notes, in whole
or in part, into shares of common stock at anytime prior to maturity. The
number of shares of common stock into which the Series A notes are convertible
shall equal the number determined by dividing the sum of the outstanding
principal amount of the Series A notes to be converted plus the accrued but
unpaid interest on such Series A notes by the conversion price. The initial
conversion price for the Series A notes is $1.016, subject to adjustment in
the event of a dividend on the common stock in shares of common stock or other
securities immediately
30
convertible into common stock, a stock split or a combination of shares of the
common stock. The holders of the Series A notes shall have the right to
convert the Series A notes into common stock upon a change in control. For
purposes of the Series A notes the term "change in control" has the same
meaning as it does for purposes of the Series A preferred stock.
SERIES B NOTES
In April 2004, we issued an aggregate of $4.0 million principal amount of
Series B notes, all of which is outstanding. The terms of the Series A notes
are identical to those of the Series A notes except that the initial
conversion price of the Series B notes is $2.032.
STOCKHOLDER PROTECTION RIGHTS PLAN
On December 27, 1999, the board of directors announced the declaration of a
dividend payable January 7, 2000, of one right for each outstanding share of
common stock held of record at the close of business on January 6, 2000, the
record time, or issued after that date and prior to the separation time and
after that date under options and convertible securities outstanding at the
separation time. The rights were issued pursuant to a stockholder protection
rights agreement, dated as of December 27, 1999, between us and American Stock
Transfer & Trust Company, as rights agent. Each right entitles its registered
holder to purchase from us after the separation time, one one-hundredth of a
share of participating preferred stock, par value $0.01 per share, for $27.00,
subject to adjustment.
The rights will be evidenced by the common stock certificates until the
close of business on the earlier of (either, the "separation time"):
o the tenth business day, or such later date as the board of directors may
from time to time fix by resolution adopted prior to the separation time
that would otherwise have occurred, after the date on which any person
commences a tender or exchange offer which, if consummated, would result
in the person's becoming an acquiring person; and
o the first date or such later date as the board of directors may from time
to time fix, the "flip-in date," of public announcement by us or any
person that the person has become an acquiring Person, which date of
public announcement we refer to as the "stock acquisition date;"
provided that if the foregoing results in the separation time being prior to
the record time, the separation time shall be the record time; and provided
further that if a tender or exchange offer referred to above is canceled,
terminated or otherwise withdrawn prior to the separation time without the
purchase of any shares of stock pursuant to the offer, the offer will deemed
not to have been made. For purposes of the rights agreement, an "acquiring
person" is any person having beneficial ownership of 15% or more of the
outstanding shares of common stock, which term shall not include:
o us, any of our wholly-owned subsidiaries or any of our employee stock
ownership or other employee benefit plans;
o any person who is the beneficial owner of 15% or more of the outstanding
common stock on December 27, 1999, or who becomes the beneficial owner of
15% or more of the outstanding common stock solely as a result of our
acquisition of common stock, until the time that the person acquires
additional common stock, other than through a dividend or stock split;
o any person who becomes the beneficial owner of 15% or more of the
outstanding common stock without any plan or intent to seek or affect
control of us if the person promptly divests sufficient securities such
that such 15% or greater beneficial ownership ceases, or
o any person who beneficially owns shares of common stock consisting solely
of:
-- shares acquired pursuant to the grant or exercise of an option
granted by us in connection with an agreement to merge with, or
acquire, us entered into prior to a flip-in date;
-- shares owned by such person and its affiliates and associates
at the time of such grant; and
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-- shares, amounting to less than 1% of the outstanding common
stock, acquired by affiliates and associates of such person
after the time of such grant.
The rights agreement provides that, until the separation time, the rights will
be transferred only with the common stock. Common stock certificates issued
after the record time, but prior to the separation time, shall evidence one
right for each share of common stock represented by the certificates and shall
contain a legend incorporating by reference the terms of the rights agreement,
as amended from time to time. Notwithstanding the absence of the legend, a
certificate evidencing shares of common stock outstanding at the record time
shall also evidence one right for each share of common stock evidenced by the
certificate. Promptly following the separation time, separate certificates
evidencing the rights, the rights certificates, will be mailed to holders of
record of common stock at the separation time.
For purposes of the rights agreement, a person generally will be deemed the
"beneficial owner," and to have "beneficial ownership" of, and to
"beneficially own," any securities as to which the person or any of the
person's affiliates or associates is or may be deemed to be the beneficial
owner of under Rule 13d-3 and 13d-5 under the Exchange Act, as in effect on
December 27, 1999, as well as any securities as to which the person or any of
the person's affiliates or associates has the right to become the beneficial
owner of, whether the right is exercisable immediately or only after the
passage of time or the occurrence of conditions, under any agreement,
arrangement or understanding, or upon the exercise of conversion rights,
exchange rights, rights, other than the rights to purchase the participating
preferred stock, warrants or options, or otherwise.
The rights will not be exercisable until the business day following the
separation time. The rights will expire on the earliest of:
o the exchange time;
o the close of business on January 7, 2010;
o the date on which the rights are redeemed as described below; and
o upon the merger of us into another corporation pursuant to an agreement
entered into prior to a stock acquisition date,
in any such case, the expiration time.
The exercise price and the number of rights outstanding, or in certain
circumstances the securities purchasable upon exercise of the rights, are
subject to adjustment from time to time to prevent dilution in the event of a
common stock dividend on, or a subdivision or a combination into a smaller
number of shares of, common stock, or the issuance or distribution of any
securities or assets in respect of, in lieu of or in exchange for common
stock.
In the event that prior to the expiration time a flip-in date occurs, we
will take such action as shall be necessary to ensure and provide that each
right, other than rights beneficially owned by the acquiring person or any
affiliate or associate thereof, which rights shall become void, shall
constitute the right to purchase from us, upon the exercise thereof in
accordance with the terms of the rights agreement, that number of shares of
common stock having an aggregate market price, on the stock acquisition date
that gave rise to the flip-in date, equal to twice the exercise price for an
amount in cash equal to the then current exercise price. The board of
directors may, at its option, at any time after a flip-in date and prior to
the time that an acquiring person becomes the beneficial owner of more than
50% of the outstanding shares of common stock, elect to exchange all, but not
less than all, of the then outstanding rights, other than rights beneficially
owned by the acquiring person or any affiliate or associate thereof, which
rights become void, for shares of common stock at an exchange ratio of one
share of common stock per right, appropriately adjusted to reflect any stock
split, stock dividend or similar transaction occurring after the date of the
separation time. Immediately upon such action by the board of directors, the
exchange time, the right to exercise the rights will terminate and each right
will then represent only the right to receive a number of shares of common
stock equal to the exchange ratio.
32
For purposes of the rights agreement, the "market price" per share of any
securities on any date generally means the average of the daily closing prices
per share of such securities on each of the 20 consecutive trading days
through and including the trading day immediately preceding the date.
Whenever we become obligated, as described in the preceding paragraph, to
issue shares of common stock upon exercise of or in exchange for rights, we,
at our option, may substitute for the shares of common stock shares of
participating preferred stock, at a ratio of one one-hundredth of a share of
participating preferred stock for each share of common stock so issuable.
In the event that prior to the expiration time we enter into, consummate or
permit to occur a transaction or series of transactions after the time an
acquiring person has become such in which, directly or indirectly:
o we shall consolidate or merge or participate in a binding share exchange
with any other person if, at the time of the consolidation, merger or
share exchange or at the time we enter into an agreement with respect to
the consolidation, merger or share exchange, the acquiring person
controls the board of directors and:
-- any term of or arrangement concerning the treatment of shares
of capital stock in the merger, consolidation or share exchange
relating to the acquiring person is not identical to the terms
and arrangements relating to other holders of common stock; or
-- the person with whom such transaction or series of transactions
occurs is the acquiring person or an affiliate or associate
thereof, or
o we shall sell or otherwise transfer, or one or more of our subsidiaries
shall sell or otherwise transfer, assets:
-- aggregating more than 50% of the assets (measured by either
book value or fair market value); or
-- generating more than 50% of our operating income or cash flow,
of us and our subsidiaries, taken as a whole,
to any other person, other than us or one or more of our wholly
owned subsidiaries, or to two or more such persons which are
affiliated or otherwise acting in concert, if, at the time of the
sale or transfer of assets or at the time we, or any of our
subsidiaries, enter into an agreement with respect to the sale or
transfer, the acquiring person controls the board of directors, a
"flip-over transaction or event,"
we shall take such action as shall be necessary to ensure, and shall not
enter into, consummate or permit to occur such flip-over transaction or
event until it shall have entered into a supplemental agreement with the
person engaging in the flip-over transaction or event or the parent
corporation thereof, the "flip-over entity", for the benefit of the
holders of the rights, providing, that upon consummation or occurrence of
the flip-over transaction or event:
o each right shall thereafter constitute the right to purchase from the
flip-over entity, upon exercise thereof in accordance with the terms of
the rights agreement, that number of shares of common stock of the flip-
over entity having an aggregate market price on the date of consummation
or occurrence of such flip-over transaction or event equal to twice the
exercise price for an amount in cash equal to the then current exercise
price; and
o the flip-over entity shall thereafter be liable for, and shall assume, by
virtue of such flip-over transaction or event and such supplemental
agreement, all of our obligations and duties under the rights agreement.
For purposes of the foregoing description, the term "acquiring person" shall
include any acquiring person and its affiliates and associates counted
together as a single person.
On April 14, 2004, in connection with the restructuring of our senior notes,
the board of directors amended the definition of "acquiring person" for
purposes of the rights agreement to provide that none of BNP Paribas, Exeter
Venture Lenders, L.P. and Exeter Capital Partners IV, L.P., collectively, the
"lenders,"
33
and the individual investors, including members of our management, who
purchased the Series A notes as part of the restructuring nor any affiliate of
any of the lenders or the investors, shall be deemed to be an acquiring person
within the meaning of the rights agreement:
o on account of CD&L and any of the lenders or investors, or any affiliate
of any of the lenders or investors, entering into any of the documents
relating to the restructuring of the senior notes or exercising any
subscription rights,
o as a result of the consummation of any of the transactions contemplated
under the documents relating to the restructuring of the senior notes or
the conversion, exercise or exchange of any of our securities:
-- held by any lender or investor as of April 14, 2004, or
-- issued to the lenders or investors pursuant to the documents
relating to the restructuring and,
in the case of any such conversion, exercise or exchange, in
accordance with the terms of such securities, or
o as a result of any additional acquisition of our securities by any of the
lenders or investors provided that no such additional acquisition by any
of the lenders or investors shall result in such lender or investor being
the beneficial owner of 30% or more of the outstanding shares of common
stock.
The amendment also provided generally that, neither a "stock acquisition
date," "flip-in date," nor "flip-over transaction or event," as defined in the
rights agreement, shall occur upon:
o the execution of any of the documents relating to the restructuring by
the parties thereto,
o the commencement of this rights offering,
o the exercise of subscription rights by any of the lenders or investors,
o the consummation of any of the transactions contemplated under the
documents relating to the restructuring, including any conversion,
exercise or exchange by any of the lenders or investors of any of the
securities issued to such lender or investor pursuant to such documents,
which conversion, exercise or exchange is in accordance with the terms of
such security,
o any conversion, exercise or exchange by any of the lenders or investors
of any of our securities held by such lender or investor as of April 14,
2004, in accordance with the terms of such security, or
o any additional acquisition of our securities by any of the lenders or
investors provided that no such additional acquisition by any of the
lenders or investors shall result in such lender or investor being the
beneficial owner of 30% or more of the outstanding shares of common
stock.
The board of directors may, at its option, at any time prior to the flip-in
date, redeem all, but not less than all, of the then outstanding rights at a
price of $.01 per right, the redemption price, as provided in the rights
agreement. Immediately upon the board of directors' election to redeem the
rights, without any further action or notice, the rights will no longer be
exercisable, and each right will represent only the right to receive the
redemption price in cash.
The holders of rights will, solely by reason of their ownership of rights,
have no rights as stockholders, including, without limitation, the right to
vote or receive dividends.
The rights do not prevent a takeover of us. However, the rights may cause
substantial dilution to a person or group that acquires 15% or more of the
common stock unless the rights are first redeemed by the board of directors.
Nevertheless, the rights should not interfere with a transaction that is in
our best interests and those of our stockholders because the rights can be
redeemed on or prior to the flip-in date, before the consummation of the
transaction.
As long as the rights are attached to the common stock, we will issue one
right with each new share of common stock so that all such shares will have
rights attached.
34
DELAWARE ANTI-TAKEOVER LAW AND PROVISIONS OF OUR CERTIFICATE OF INCORPORATION,
BYLAWS AND STOCKHOLDER AGREEMENTS
Delaware law and our certificate of incorporation, bylaws and agreements
with our stockholders could make it more difficult for another person to
acquire us and to remove incumbent directors and officers. Some of these
provisions are intended to discourage coercive takeover practices and
inadequate takeover bids and to encourage persons seeking to acquire control
of us to first negotiate with us. We believe that protecting our ability to
negotiate with the proponent of an unfriendly or unsolicited takeover proposal
outweighs the disadvantages of discouraging a takeover proposal because
negotiation of a proposal could result in an improvement of its terms.
Section 203 of the Delaware General Corporation Law. We are subject to
Section 203 of the Delaware General Corporation Law, an anti-takeover law. In
general, Section 203 prohibits a publicly held Delaware corporation from
engaging in a business combination with an interested stockholder for a for a
period of three years following the date the person became an interested
stockholder. Section 203 generally does not apply if the business combination
or the transaction in which the person became an interested stockholder is
approved in advance. Generally, a business combination includes a merger,
asset or stock sale, or other transaction resulting in a financial benefit to
the interested stockholder. Generally, an interested stockholder is a person
who, with affiliates and associates, owns or, within three years before the
determination of interested stockholder status, did own 15% or more of a
corporation's voting stock. Section 203 may delay or prevent a change in
control of us without further action by the stockholders.
On April 13, 2004, the board of directors approved the lenders and the
investors' acquisition of our securities as part of the restructuring of our
senior notes, their acquisition of our securities in this rights offering, as
well as the acquisition by any of them of any other of our securities,
provided that such acquisition of additional securities does not result in
such lender or investor owning more than 30% of our then outstanding voting
stock. As a result, these completed and potential future acquisitions of
securities did not and will not trigger the prohibitions of Section 203.
Certificate of Incorporation and Bylaws. Our certificate of incorporation
and bylaws:
o establish a classified board of directors in which only a portion of the
total number of directors will be elected at each annual meeting of
stockholders;
o authorize the board of directors to issue preferred stock without
stockholder approval;
o prohibit cumulative voting in the election of directors;
o limit the persons who may call special meetings of the stockholders;
o prohibit stockholder action by written consent; and
o establish advance notice requirements for nominations for the election of
directors and for proposing matters that can be acted on by stockholders
at stockholder meetings.
These provisions may discourage or delay a hostile takeover of us or changes
in our control or management.
Stockholders Agreement. In connection with the restructuring of our senior
notes, we entered into a stockholders agreement with the lenders and the
investors. As noted above, under "--Series A Preferred Stock," we agreed not
to enter into a number of significant transactions without first obtaining the
written consent of the holders of a majority of the Series A preferred stock.
Without such consent, a potential acquisition of us, including one which our
board of directors or the other stockholders otherwise were in favor of, could
be prevented from occurring.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the common stock is American Stock
Transfer & Trust Company, and its address is 59 Maiden Lane, Plaza Level, New
York, New York 10038.
35
PLAN OF DISTRIBUTION
We are offering shares of our common stock directly to you pursuant to this
rights offering. We have not employed any brokers, dealers or underwriters in
connection with the solicitation or exercise of subscription rights in this
rights offering and no commissions, fees or discounts will be paid in
connection with it. Certain of our officers and other employees may solicit
responses from you, but such officers and other employees will not receive any
commissions or compensation for these services other than their normal
employment compensation.
We will pay American Stock Transfer & Trust Company, the subscription agent,
a fee of $7,500 plus expenses, for their services in connection with this
rights offering. We have agreed to indemnify the subscription agent from any
liability it may incur in connection with the rights offering.
On or about __________ __, 2004, we will distribute the subscription rights
and copies of this prospectus to holders of our common stock, options to
purchase our common stock and our convertible notes, other than the Series A
notes and Series B notes, on the record date. If you wish to exercise your
rights and subscribe for new shares of common stock, you should follow the
procedures described under "The Rights Offering--Procedures to Exercise
Subscription Rights." The subscription rights generally are non-transferable;
there are substantial restrictions on the transfer of subscription rights, as
described under "The Rights Offering--Non-transferability of the Subscription
Rights."
We expect that shares of our common stock received through the exercise of
subscription rights will be traded on the American Stock Exchange under the
symbol "CDV," the same symbol under which our currently outstanding shares of
common stock now trade.
VALIDITY OF COMMON STOCK
The legality of the common stock offered hereby will be passed upon by the
law firm of Lowenstein Sandler PC, Roseland, New Jersey.
EXPERTS
The consolidated financial statements as of December 31, 2003 and 2002, and
for the years then ended and the related financial statement schedule
incorporated in this prospectus by reference from the Company's Annual Report
on Form 10-K for the year ended December 31, 2003 have been audited by
Deloitte & Touche LLP, an independent registered public accounting firm, as
stated in their report which is incorporated herein by reference (which report
expresses an unqualified opinion and includes explanatory paragraphs relating
to (i) the change in fiscal 2002 in method of accounting for goodwill and
other intangible assets to conform with Statement of Financial Accounting
Standards No. 142 and (ii) the application of procedures relating to the
restatement discussed in Note 19 and the transitional disclosures described in
Notes 2 and 7 related to the 2001 consolidated financial statements that were
audited by other auditors who have ceased operations and for which we have
expressed no opinion or other form of assurance other than with respect to
such restatement and transitional disclosures), and has been so incorporated
in reliance upon the report of such firm given upon their authority as experts
in accounting and auditing.
The consolidated financial statements of CD&L, Inc., for the year ended
December 31, 2001, incorporated in this prospectus by reference from such
Annual Report have been audited by Arthur Andersen LLP, independent public
accountants, as stated in their report, which is incorporated in this
prospectus by reference, and have been so incorporated in reliance upon the
report of such firm given upon their authority as experts in accounting and
auditing. Arthur Andersen LLP issued the report as of the dates indicated on
the report and such report has not been reissued. See "Risk Factors--You may
be unable to pursue claims against Arthur Andersen, our former independent
auditors." On August 5, 2002, we dismissed Arthur Andersen LLP as our
independent auditors and retained Deloitte & Touche LLP as our independent
auditors.
36
WHERE YOU CAN FIND MORE INFORMATION
We file reports, proxy statements, and other information with the Securities
and Exchange Commission, or SEC, as required by the Securities Exchange Act of
1934. You may read and copy the reports, proxy statements and other
information that we have filed at the SEC's public reference room at 450 Fifth
Street, N.W., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330
for further information on operation of the public reference room. The SEC
maintains an Internet site at http://www.sec.gov that contains reports, proxy
and information statements and other information regarding issuers that file
information electronically with the SEC, including CD&L. Our common stock is
listed on the American Stock Exchange. These reports, proxy statements and
other information can also be read and copied at the offices of the American
Stock Exchange at 86 Trinity Place, New York, New York 10006.
The SEC allows us to incorporate by reference into this prospectus
information that we have filed with the SEC. This means that we can disclose
important information by referring you to those documents. The information
incorporated by reference is considered to be a part of this prospectus.
Information that we file later with the SEC will automatically update and
supersede previously filed information. We incorporate by reference the
documents listed below and any future filings made by us with the SEC under
Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934
until our offering is complete:
o our annual report on Form 10-K for the year ended December 31, 2003,
filed on April 14, 2004,
o our quarterly reports on Form 10-Q for the quarter ended March 31, 2004,
and the quarter ended June 30, 2004, filed on May 19, 2004, and August 16,
2004, respectively,
o our current report on Form 8-K filed on March 16, 2004, both of our
current reports on Form 8-K filed on April 19, 2004, our current report
on Form 8-K filed on May 24, 2004, and our current report on Form 8-K
filed August 19, 2004,
o the description of our common stock contained in our registration
statement on Form 8-A, filed on February 9, 1999, including all
amendments and reports filed for the purpose of updating such
description, and
o all of our filings pursuant to the Securities Exchange Act of 1934 made
after the date of the original filing of the registration statement of
which this prospectus is a part and prior to the effectiveness of the
registration statement.
This prospectus is part of a registration statement filed with the SEC. This
prospectus does not contain all the information contained in the registration
statement. The full registration statement can be obtained from the SEC. This
prospectus contains a general description of our company and the securities
being offered for sale. You should read this prospectus together with the
additional information incorporated by reference.
You can request a copy of any document incorporated by reference into this
prospectus, at no cost, by writing or telephoning us at the following address:
CD&L, INC.
Investor Relations
80 Wesley Street
South Hackensack, New Jersey 07606
Telephone: (201) 487-7740
37
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The expenses in connection with the registration of the shares of common
stock covered by the prospectus are set forth in the following table. All
amounts except the registration fee are estimated:
Securities and Exchange Commission registration fee ................. $ 358
American Stock Exchange listing fee ................................. 6,429
Printing and engraving expenses ..................................... 30,000
Accounting fees and expenses ........................................ 15,000
Legal fees and expenses ............................................. 100,000
Subscription agent fees and expenses ................................ 7,500
Miscellaneous ....................................................... 713
--------
Total .............................................................. $160,000
========
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Under Section 145 of the Delaware General Corporation Law, or DGCL, a
Delaware corporation may indemnify its directors, officers, employees and
agents against expenses (including attorneys' fees), judgments, fines and
settlements in nonderivative suits, actually and reasonably incurred by them
in connection with the defense of any action, suit or proceeding in which they
or any of them were or are made parties or are threatened to be made parties
by reason of their serving or having served in such capacity. The DGCL,
however, provides that such person must have acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best interests of
the corporation, and in the case of a criminal action, such person must have
had no reasonable cause to believe that his or her conduct was unlawful.
Section 145 further provides that in connection with the defense or settlement
of any action by or in the right of the corporation, a Delaware corporation
may indemnify its directors and officers against expenses actually and
reasonably incurred by them if, in connection with the matters in issue, they
acted in good faith, in a manner they reasonably believed to be in or not
opposed to the best interests of the corporation, except that no
indemnification may be made with respect to any claim, issue or matter as to
which such person has been adjudged liable to the corporation unless the Court
of Chancery or the court in which such action or suit is brought approves such
indemnification. Section 145 further permits a Delaware corporation to grant
its directors and officers additional rights of indemnification and
advancement of expenses through bylaw provisions and otherwise, and to
purchase indemnity insurance on behalf of its directors, officers, employees
and agents. Indemnification of directors and officers is mandatory to the
extent a claim, issue or matter has been successfully defended on the merits
or otherwise.
Article Seventh of our Second Restated Certificate of Incorporation provides
that we shall, to the fullest extent permitted by law, indemnify each person
(including the heirs, executors, administrators and other personal
representatives of such person) against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement, actually and reasonably
incurred by such person in connection with any threatened, pending or actual
suit, action or proceeding (whether civil, criminal, administrative or
investigative in nature or otherwise) in which such person may be involved by
reason of the fact that such person is or was one of our directors or officers
or is serving any other incorporated or unincorporated enterprise in any of
such capacities at our request.
Article Eighth of our Second Restated Certificate of Incorporation also
contains a provision limiting the personal liability of our directors to us
and our stockholders the fullest extent permitted or authorized by the DGCL.
Under the DGCL, such provision would not limit liability of a director for (i)
breach of the director's duty of loyalty (i.e., a director's duty to refrain
from self-dealing in relation to the Company), (ii) acts or omissions not in
good faith or involving intentional misconduct or knowing violation of law,
(iii) payment of dividends or repurchases or redemptions of stock other than
from lawfully available funds, or (iv) any
II-1
transactions from which the director derives an improper benefit. This
provision may have no effect on liability for violations of the federal
securities laws.
ITEM 16. EXHIBITS.
EXHIBIT
NUMBER DESCRIPTION
4.1* Form of Rights Certificate.
5.1* Opinion of Lowenstein Sandler PC.
23.1 Consent of Deloitte & Touche LLP.
23.2* Consent of Lowenstein Sandler PC (included in Exhibit 5.1).
24.1* Powers of Attorney (see page II-6 of the initial filing of this
registration statement).
99.1 Form of Instructions as to Use of Rights Certificates.
99.2* Form of Notice of Guaranteed Delivery for Rights Certificate.
99.3 Form of Letter to Security Holders Who Are Record Holders.
99.4 Form of Letter to Securities Dealers, Commercial Banks, Trust
Companies and Other Nominees.
99.5 Form of Letter to Clients of Security Holders Who Are
Beneficial Holders.
99.6* Form of Nominee Holder Certification Form.
99.7* Substitute Form W-9 for Use with the Rights Offering.
99.8* Form of Beneficial Owner Election Form.
99.9* Form of Subscription Agency Agreement between CD&L, Inc. and
American Stock Transfer & Trust Company.
---------------
* Previously filed.
ITEM 17. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration
statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or
the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or
high end of the estimated maximum offering range may be
reflected in the form of prospectus filed with the SEC
pursuant to Rule 424(b) if, in the aggregate, the changes
in volume and price represent no more than a 20% change in
the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective
registration statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement;
provided, however, that paragraphs a(1)(i) and a(1)(ii) above
do not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in
periodic reports filed with or furnished to the SEC by the
registrant pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in the
registration statement.
II-2
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment
shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each
filing of the registrant's annual report pursuant to Section 13(a)
or 15(d) of the Securities Exchange Act of 1934 (and, where
applicable, each filing of an employee benefit plan's annual report
pursuant to Section 15(d) of the Securities Exchange Act of 1934)
that is incorporated by reference in the Registration Statement
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering
thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing
provisions, or otherwise, the registrant has been advised that, in
the opinion of the SEC, such indemnification is against public
policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of
expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit
to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of
such issue.
(d) The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities
Act of 1933, the information omitted from the form of
prospectus filed as part of this registration statement in
reliance upon Rule 430A and contained in a form of prospectus
filed by the registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of
this registration statement as of the time it was declared
effective.
(2) For the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that
contains a form of prospectus shall be deemed to be a new
registration statement relating to the securities offered
therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
II-3
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Amendment No. 1
to registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of South Hackensack, State of New
Jersey, on August 27, 2004.
CD&L, INC.
By: /s/ Albert W. Van Ness, Jr.
-------------------------------
Albert W. Van Ness, Jr.,
Chairman of the Board and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to registration statement has been signed below by the following persons
in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ Albert W. Van Ness, Jr. Chairman of the Board, August 27, 2004
--------------------------------------- Chief Executive Officer and
Albert W. Van Ness Jr. Director (Principal Executive Officer)
* President, Chief Operating Officer and August 27, 2004
--------------------------------------- Director
William T. Brannan
/s/ Russell J. Reardon Vice President, Chief Financial Officer August 27, 2004
--------------------------------------- (Principal Financial and Accounting
Russell J. Reardon Officer)
* Group Operations President and Director August 27, 2004
---------------------------------------
Michael Brooks
* Director August 27, 2004
---------------------------------------
Thomas E. Durkin, III
* Director August 27, 2004
---------------------------------------
Jon F. Hanson
* Director August 27, 2004
---------------------------------------
Marilu Marshall
* Director August 27, 2004
---------------------------------------
Matthew Morahan
* Director August 27, 2004
---------------------------------------
John A. Simourian
* Director August 27, 2004
---------------------------------------
John S. Wehrle
* By: /s/ Albert W. Van Ness, Jr.
-------------------------------
Albert W. Van Ness, Jr.
Attorney-in-Fact
II-4
INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
------ -----------
4.1* Form of Rights Certificate.
5.1* Opinion of Lowenstein Sandler PC.
23.1 Consent of Deloitte & Touche LLP.
23.2* Consent of Lowenstein Sandler PC (included in Exhibit 5.1).
24.1* Powers of Attorney (see page II-6 of the initial filing of this
registration statement).
99.1 Form of Instructions as to Use of Rights Certificates.
99.2* Form of Notice of Guaranteed Delivery for Rights Certificate.
99.3 Form of Letter to Security Holders Who Are Record Holders.
99.4 Form of Letter to Securities Dealers, Commercial Banks, Trust
Companies and Other Nominees.
99.5 Form of Letter to Clients of Security Holders Who Are
Beneficial Holders.
99.6* Form of Nominee Holder Certification Form.
99.7* Substitute Form W-9 for Use with the Rights Offering.
99.8* Form of Beneficial Owner Election Form.
99.9* Form of Subscription Agency Agreement between CD&L, Inc. and
American Stock Transfer & Trust Company.
---------------
* Previously filed.