<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Quarterly Period Ended September 30, 1997
-----------------------------
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ________to ________
Commission file number 0-24576
AASCHE TRANSPORTATION SERVICES, INC.
----------------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
DELAWARE 36-3964954
- ------------------------------- --------------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
10214 North Mount Vernon Road
Shannon, Illinois 61078
(Address of Principal Executive Offices)
815-864-2421
(Registrant's telephone number, including area code)
N/A
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
--- ---
Indicate the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date 4,539,735 SHARES OF PAR
VALUE $.0001 COMMON STOCK
<PAGE> 2
PART I: FINANCIAL INFORMATION
Item 1. Financial Statements
AASCHE TRANSPORTATION SERVICES, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
<TABLE>
<CAPTION>
September 30, December 31,
1997 1996
------------------------------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 42 $ -
Trade receivables, less allowance for doubtful accounts of $71 5,572 6,682
Prepaid expenses and other current assets 3,386 2,033
---------- ----------
Total current assets 9,000 8,715
Property and equipment, at cost 36,034 43,901
Less accumulated depreciation and amortization (14,311) (14,349)
---------- ----------
Net property and equipment 21,723 29,552
---------- ----------
Excess of cost over net assets acquired, less accumulated
amortization of $659 and $448 7,411 7,622
Deferred income taxes 3,022 3,022
Other assets 378 415
---------- ----------
TOTAL ASSETS $ 41,534 $ 49,326
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Cash overdraft $ - $ 349
Accounts payable 962 2,299
Accrued liabilities 2,244 2,366
Guaranteed obligation of Employee Stock Ownership Plan 203 244
Line of credit 4,217 5,242
Current maturities of long-term debt with unrelated parties 2,888 4,922
Current maturities of long-term debt with related party 995 995
Current maturities of capital lease obligations with unrelated parties 2,417 2,596
Current maturities of capital lease obligations with related parties 1,149 1,303
---------- ----------
Total current liabilities 15,075 20,316
Long-term debt with unrelated parties, less current maturities 4,265 5,767
Long-term debt with related party, less current maturities 1,675 2,545
Capital lease obligations with unrelated parties, less current maturities 3,920 6,163
Capital lease obligations with related parties, less current maturities - 327
Deferred income taxes 3,677 3,677
---------- ----------
Total liabilities 28,612 38,795
Stockholders' equity:
Common stock, $.0001 par value, 10,000,000 shares authorized,
4,539,735 and 3,953,077 shares issued and outstanding - -
Additional paid-in capital 16,594 14,598
Guarantee of Employee Stock Ownership Plan obligation (203) (244)
Accumulated deficit (3,469) (3,823)
---------- ----------
Total stockholders' equity 12,922 10,531
---------- ----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 41,534 $ 49,326
========== ==========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
2
<PAGE> 3
AASCHE TRANSPORTATION SERVICES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share and share data)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------------- ---------------------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
NET REVENUES $ 15,658 $ 19,881 $ 49,769 $ 58,970
OPERATING EXPENSES:
Salaries, wages and benefits 5,775 6,400 17,643 19,638
Fuel 2,562 3,406 8,385 9,702
Purchased transportation 2,782 3,396 8,396 8,932
Supplies and maintenance 1,734 1,490 4,932 5,102
Depreciation and amortization 1,207 2,013 3,848 6,139
Taxes and licenses 391 704 1,273 1,536
Insurance 513 627 1,506 2,157
Communications and utilities 198 215 622 615
Gain on disposition of equipment (519) (124) (583) (56)
Litigation settlement - - - 150
Polar Express restructuring - - - 490
Severance - - - 42
Other 474 741 1,486 1,692
--------- ----------- ---------- ---------
Total operating expenses 15,117 18,868 47,508 56,139
--------- ----------- ---------- ---------
OPERATING INCOME 541 1,013 2,261 2,831
OTHER (EXPENSES) INCOME:
Interest expense (558) (830) (1,731) (2,666)
Other 25 48 41 106
--------- ----------- ---------- ---------
INCOME BEFORE INCOME TAX PROVISION 8 231 571 271
INCOME TAX PROVISION (3) (96) (217) (111)
--------- ----------- ---------- ---------
NET INCOME $ 5 $ 135 $ 354 $ 160
========= =========== ========== =========
NET INCOME PER COMMON SHARE $ 0.00 $ 0.03 $ 0.09 $ 0.04
========= =========== ========== =========
Weighted average common and
common equivalent shares outstanding 4,573,054 4,001,069 4,259,558 3,963,287
========= =========== ========== =========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
3
<PAGE> 4
AASCHE TRANSPORTATION SERVICES, INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(in thousands, except share data)
(Unaudited)
<TABLE>
<CAPTION>
Guarantee
Common Stock of Employee
------------------- Stock
$.0001 Par Value Additional Ownership
------------------- Paid-In Plan Accumulated
Shares Amount Capital Obligation Deficit
---------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1996 3,953,077 $ - $ 14,598 $ (244) $ (3,823)
Exercise of Series A warrants 41,100 - 100 - -
Common stock issued for options exercised 5,000 - 18 - -
Common stock issued in private placement 540,558 - 1,878 - -
Reduction in Guarantee of Employee
Stock Ownership Plan obligation - - - 41 -
Net income - - - - 354
---------------------------------------------------------------------
Balance at September 30, 1997 4,539,735 $ - $ 16,594 $ (203) $ (3,469)
=====================================================================
<CAPTION>
Total
Stockholders'
Equity
---------------
<S> <C>
Balance at December 31, 1996 $ 10,531
Exercise of Series A warrants 100
Common stock issued for options exercised 18
Common stock issued in private placement 1,878
Reduction in Guarantee of Employee
Stock Ownership Plan obligation 41
Net income 354
------------
Balance at September 30, 1997 $ 12,922
============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
4
<PAGE> 5
AASCHE TRANSPORTATION SERVICES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
---------------------------
1997 1996
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 354 $ 160
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization 3,848 6,139
Gain on disposition of equipment (583) (56)
Deferred income taxes - 153
Changes in other current operating items:
Trade receivables 1,110 (1,297)
Prepaid expenses and other assets (1,316) (463)
Accounts payable (1,337) 480
Accrued liabilities (122) (234)
--------- -------
Net cash provided by operating activities 1,954 4,882
--------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Property and equipment additions:
Revenue equipment (700) (322)
Building, office equipment and other (118) (628)
Proceeds from the sale of equipment 5,593 1,485
--------- -------
Net cash provided by investing activities 4,775 535
--------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net (repayments) borrowings on line of credit (1,025) 1,873
Borrowings on long-term debt and capital leases - 800
Principal payments on long-term debt with unrelated parties (3,536) (4,880)
Principal payments on long-term debt with related party (870) (747)
Principal payments on capital leases with unrelated parties (2,422) (2,418)
Principal payments on capital leases with related parties (481) (618)
Issuance of common stock 1,996 156
--------- -------
Net cash used in financing activities (6,338) (5,834)
--------- -------
INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS (CASH OVERDRAFT) 391 (417)
CASH AND CASH EQUIVALENTS (CASH OVERDRAFT):
Beginning of period (349) 503
--------- -------
End of period $ 42 $ 86
========= =======
SUPPLEMENTAL DISCLOSURE OF
CASH FLOW INFORMATION:
Interest paid $ 1,774 $ 2,661
========= =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
5
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AASCHE TRANSPORTATION SERVICES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1997
(in thousands, except per share and share data)
(Unaudited)
Note 1 - BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have
been prepared pursuant to the rules and regulations of the Securities and
Exchange Commission. Certain information and footnote disclosures normally
included in annual consolidated financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations, although management believes these
disclosures are adequate to make the information presented not misleading. In
the opinion of management, all adjustments necessary for fair presentation for
the periods presented have been reflected and are of a normal recurring nature.
These condensed consolidated financial statements should be read in
conjunction with the consolidated financial statements and the notes thereto
for the three years ended December 31, 1996, 1995, and 1994, as filed with the
Securities and Exchange Commission as part of the Company's Annual Report on
Form 10-K. Results of operations for the interim periods are not necessarily
indicative of the results to be expected for the year.
Note 2 - PROPOSED ACQUISITION OF THE MUNICIPAL SOLID WASTE HAULING DIVISION OF
JACK GRAY TRANSPORT, INC.
On October 15, 1997, the Company obtained an assignment of an asset purchase
agreement between Gary I. Goldberg a director of the Company, and Jack Gray
Transport, Inc. ("JGT") pursuant to which assignment the Company has the right
to purchase certain assets relating to the municipal solid waste business of
JGT. The agreement is subject to certain closing conditions including the
Company's obligation to satisfy JGT that it has obtained the necessary
financing by November 30, 1997. The Company is presently in discussions with
various sources, however, no financing commitment has been obtained by the
Company as of the date of this prospectus.
Note 3 - PURCHASE OF AG TRANSPORTATION SERVICE, INC. AND AG. CARRIERS, INC.
On May 16, 1995, the Company purchased all of the outstanding common stock of
AG Transportation Service, Inc. and the net assets of AG. Carriers, Inc.
(collectively, AG Carriers) in exchange for $11,250 consisting of $5,275 cash,
$1,000 in the Company's common stock (115,075 shares) and two notes payable in
the amount of $4,975.
In accordance with the original purchase agreement, as amended, the
Company guaranteed the total value of the Company's common stock issued in the
purchase. Under the terms of the agreement, as amended, if during the period
from May 16, 1998 through September 12, 1998, the closing price per share of
the Company's common stock has not reached at least $8.69 per share, then on
the 30th day following September 12, 1998, the Company shall issue sufficient
additional shares of the Company's common stock such that all of the shares
issued have a total value of $1,120. In the event the additional shares are
required to be issued, management believes this will not have a material
adverse impact on the financial position or operations of the Company.
AG Carriers is a Florida-based carrier specializing in transporting
temperature-controlled foodstuffs and juice concentrates.
Note 4 - MERGER WITH POLAR EXPRESS CORPORATION
On December 22, 1995, the Company completed a merger, pursuant to which Polar
Express Corporation ("Polar") became a wholly owned subsidiary of the Company.
Under the terms of the merger agreement, 1,401,355 shares of the Company's
common stock were issued in exchange for all of the outstanding common shares
and unit purchase
6
<PAGE> 7
options of Polar. Approximately 5% of these shares were held in an escrow
account to cover liability and litigation costs related to the litigation
described in Note 7. In addition, the Company issued 1,006,905 warrants to
purchase the Company's common stock in exchange for all the outstanding
warrants of Polar. In January 1997, 41,100 of these warrants were exercised.
The merger was accounted for as a pooling of interests.
In April 1997, Polar was merged into Asche Transfer, Inc., a wholly-owned
subsidiary of the Company, and renamed Asche Transfer Inc.'s Southwest
Division. The merger was accounted for similar to a pooling of interests.
Note 5 - PROPERTY AND EQUIPMENT
In December 1996, the Company entered into various agreements for the
sale and leaseback of certain Polar motor carrier equipment which reduced
expenses $149 and increased net income per common share $0.03 in the third
quarter of 1997 and reduced expenses $480 and increased net income per common
share $0.11 for the nine months ended September 30, 1997. The leases are
classified as operating leases in accordance with SFAS No. 13, Accounting for
Leases.
In February 1997, the Company entered into a purchase agreement to sell 68
Polar tractors and 141 Polar trailers for $4,592. The transaction generated
$1,373 in net cash proceeds to the Company with no significant earnings effect
in 1997. The transaction was completed in March 1997.
Note 6 - NET INCOME PER SHARE
Net income per share is computed by dividing net income by the weighted average
number of common and common equivalent shares outstanding.
Note 7 - LITIGATION SETTLEMENT
In May 1996, the Company settled all outstanding litigation related to
Polar's acquisition of Polar Express, Inc. ("PEI") for $150 or $0.02 net income
per common share. This amount, which was provided for during the quarter ended
March 31,1996, did not include the Company's legal costs incurred related to
its defense of this matter, which had been expensed as incurred and had not
been included in the settlement amount.
In conjunction with the Polar merger, 5% of the Company's common stock issued
in the merger (69,941 shares) were held in an escrow account pending final
determination of the litigation. Upon reaching a final settlement, 34,030 of
the common shares held in the escrow account were retired by the Company.
Note 8 - STOCKHOLDERS' EQUITY
On July 3, 1997, the Company completed a private placement offering of 540,558
shares of restricted common stock at a price of $3.70 per share and warrants to
purchase 54,070 shares of common stock at an exercise price of $4.625 per
share. The warrants are exercisable at any time within three years after June
24, 1997. The offering was made solely to accredited investors. The net
proceeds of approximately $1,878 was used to reduce outstanding indebtedness
and for general corporate purposes.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following management's discussion and analysis of financial condition and
results of operations contain forward-looking statements which involve risks
and uncertainties. The Company's actual results could differ materially from
those anticipated in these forward-looking statements as a result of certain
factors.
Beginning in 1992, the Company commenced a program to increase its size and
operational efficiency. This program changed the Company's strategic direction
by implementing a shift to company-owned revenue equipment and equipping
tractors with the QUALCOMM(TM) two-way satellite-based tracking and
communication system and advanced computer software systems. The Company also
implemented a strategy of pursuing strategic
7
<PAGE> 8
acquisitions. Since its initial public offering, the Company acquired all of
the assets of AG Carriers (the "AG Acquisition") and merged with Polar (the
"Polar Merger"). In accordance with the Company's strategic plan, the Company
sold 68 Polar tractors and 141 Polar trailers in February 1997.
RESULTS OF OPERATIONS
COMPARISON OF THE NINE MONTH PERIOD ENDED SEPTEMBER 30, 1997 WITH THE NINE
MONTH PERIOD ENDED SEPTEMBER 30, 1996.
Net revenues decreased $9.2 million, or 15.6%, to $49.8 million in 1997, from
$59.0 million in 1996, largely due to having less tractors in service. During
the nine month period ended September 30, 1997, the Company decreased its
tractor fleet by 83 units. Average revenue per tractor decreased 3.0% to
$97,970 in 1997 from $100,967 in 1996, largely due to having less revenue
producing tractors in service due to a shortage of drivers. Competition for
drivers is intense within the trucking industry and the Company occasionally
experiences difficulty attracting and retaining qualified drivers and
owner-operators which results in the temporary idling of revenue equipment.
Total miles decreased 8.6 million, or 16.3%, to 44.2 million in 1997 from 52.8
million in 1996, largely due to having less tractors in service. Average miles
per tractor decreased 3.6% to 87,058 miles in 1997 from 90,339 miles in 1996,
largely due to having less revenue producing tractors in service due to a
shortage of drivers.
The Company's operating ratio (operating expenses divided by operating
revenues) increased 0.3%, to 95.5% in 1997 from 95.2% in 1996, largely due to
having less revenue producing tractors in service due to a shortage of drivers.
Total operating expenses decreased $8.6 million, or 15.4%, to $47.5 million in
1997, compared to $56.1 million in 1996, largely due to having less tractors in
service.
Salaries, wages, and benefits decreased $2.0 million, or 10.2%, to $17.6
million in 1997 compared to $19.6 million in 1996, largely due to having less
personnel to service the fewer tractors in service, which more than offset
increases in overall compensation of drivers that were needed to enhance driver
recruitment and retention.
Fuel expenses decreased $1.3 million, or 13.6% to $8.4 million in 1997 compared
to $9.7 million in 1996, largely due to the decrease in the number of tractors
in service, which more than offset increased fuel prices.
Depreciation and amortization expense decreased $2.3 million, or 37.3%, to $3.8
million in 1997 compared to $6.1 million in 1996, largely due to having less
tractors in service, in accordance with the Company's strategic plan of selling
68 Polar tractors.
Insurance expense decreased $0.7 million, or 30.2% to $1.5 million in 1997
compared to $2.2 million in 1996, largely due to the decrease in the number of
tractors in service.
Litigation settlement expense in 1996 represents the provision for final
settlement of all outstanding litigation related to Polar's acquisition of PEI.
Polar Express restructuring expense in 1996 represents severance payments to
terminated employees of Polar.
Interest expense decreased $0.9 million, or 35.1%, to $1.7 million in 1997
compared to $2.7 million in 1996, due to lower debt levels and a lower overall
interest rate.
8
<PAGE> 9
COMPARISON OF THE THREE MONTH PERIOD ENDED SEPTEMBER 30, 1997 WITH THE THREE
MONTH PERIOD ENDED SEPTEMBER 30, 1996.
Net revenues decreased $4.2 million, or 21.2%, to $15.7 million in
1997, from $19.9 million in 1996, largely due to having less tractors in
service. Average revenue per tractor decreased 5.8% to $31,890 in 1997 from
$33,869 in 1996, largely due to having less revenue-producing tractors in
service due to a shortage of drivers. Competition for drivers is intense
within the trucking industry and the Company occasionally experiences
difficulty attracting and retaining qualified drivers and owner-operators which
results in the temporary idling of revenue equipment.
Total miles decreased 4.3 million, or 23.8%, to 13.8 million in 1997 from 18.1
million in 1996, largely due to having less tractors in service. Average miles
per tractor decreased 8.3% to 28,203 miles in 1997 from 30,759 miles in 1996,
largely due to having less revenue-producing tractors in service due to a
shortage of drivers.
The Company's operating ratio (operating expenses divided by operating
revenues) increased 1.6%, to 96.5% in 1997 from 94.9% in 1996, largely due to
having less revenue producing tractors in service due to a shortage of drivers.
Total operating expenses decreased $3.8 million, or 19.9%, to $15.1 million in
1997, compared to $18.9 million in 1996, largely due to having less tractors in
service.
Salaries, wages, and benefits decreased $0.6 million, or 9.8%, to $5.8 million
in 1997 compared to $6.4 million in 1996, largely due to having less personnel
to service the fewer tractors in service, which more than offset increases in
overall compensation of drivers that were needed to enhance driver recruitment
and retention.
Fuel expenses decreased $0.8 million, or 24.8% to $2.6 million in 1997 compared
to $3.4 million in 1996, largely due to the decrease in the number of tractors
in service.
Depreciation and amortization expense decreased $0.8 million, or 40.0%, to $1.2
million in 1997 compared to $2.0 million in 1996, largely due to having less
tractors in service, in accordance with the Company's strategic plan of selling
68 Polar tractors.
Interest expense decreased $0.3 million, or 32.8%, to $0.6 million in 1997
compared to $0.8 million in 1996, due to lower debt levels and a lower overall
interest rate.
LIQUIDITY AND CAPITAL RESOURCES
At September 30, 1997, the Company had a net working capital deficit of
$6.1 million, primarily as a result of the financing of revenue equipment
purchases (noncurrent assets) through borrowings, a portion of which is
reflected in current liabilities. The Company historically has funded its
working capital requirements through a combination of operating profits, short
turnover in trade receivables, effective cash management practices and
borrowing under its revolving bank line of credit. The Company has a revolving
bank line of credit with a $6.0 million borrowing limit based on a percentage
of eligible trade receivables, $4.2 million of which was borrowed against this
line of credit at September 30, 1997, and approximately $0.1 million was
available.
The Company's growth in prior years and the significant investment in its
modern fleet of tractors and temperature-controlled trailers have been financed
substantially through long-term debt and capital lease obligations
collateralized by the equipment. The Company's outstanding debt and capital
lease obligations, including current maturities, aggregated $21.7 million and
$30.1 million at September 30, 1997 and December 31, 1996, respectively.
9
<PAGE> 10
In October 1994, the Company completed an initial public offering of its common
stock that raised net proceeds to the Company of $6.4 million. To date, the
Company has utilized proceeds to repay outstanding indebtedness under its
revolving bank line of credit and certain long-term debt obligations, to
purchase trailers, and for the AG Acquisition and the Polar Merger. The debt
to equity ratio (calculated excluding payables and other liabilities) was
1.68:1 at September 30, 1997, and 2.86:1 at December 31, 1996.
In January 1997, the Company borrowed $1 million against the appraised
value of approximately $1.5 million of a terminal and maintenance facility, and
used the proceeds to pay down current liabilities. In February 1997, the
Company entered into a purchase agreement to sell certain Polar motor carrier
equipment for $4.6 million. The transaction was completed in March 1997 and
generated $1.4 million in net cash proceeds to the Company. In July 1997, the
Company completed a private placement offering of restricted common stock that
raised net proceeds to the Company of $1.9 million.
The Company believes that available cash, cash flow from future operations, and
borrowings available under its line of credit will be sufficient to meet its
current working capital needs. On October 15, 1997, the Company obtained an
assignment of an asset purchase agreement between Gary I. Goldberg a director
of the Company, and JGT pursuant to which assignment, the Company has the right
to purchase certain assets relating to the municipal solid waste business of
JGT. The agreement is subject to certain closing conditions including the
Company's obligation to satisfy JGT that it has obtained the necessary
financing by November 30, 1997. The Company is presently in discussions with
various sources, however, no financing commitment has been obtained by the
Company as of the date of this prospectus. As the Company continues to
facilitate its planned future growth, the Company's capital needs may require
additional borrowings or an equity infusion.
10
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PART II: OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 2. Changes in Securities
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits - None.
(b) Reports on Form 8-K for the quarter ended September 30,
1997.
On July 3, 1997, the Company filed a Current Report on
Form 8-K to report the completion of a private offering
of its securities.
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SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant
has caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
Aasche Transportation Services, Inc.
Date November 12, 1997 BY: s/Leon M. Monachos
-----------------------------------------
Leon M. Monachos, Chief Financial Officer
Date November 12, 1997 BY: s/Larry L. Asche
-----------------------------------------
Larry L. Asche, Chairman and
Chief Executive Officer
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Exhibits
10.1 Asset Purchase Agreement dated September 24, 1997 between Gary I. Goldberg
and Jack Gray Transport, Inc.
10.2 Assignment of Asset Purchase Agreement dated September 29, 1997 between
Gary I. Goldberg and Aasche Transportation Services, Inc.
<PAGE> 1
EXHIBIT 10.1
ASSET PURCHASE AGREEMENT
BETWEEN
GARY I. GOLDBERG
AND
JACK GRAY TRANSPORT, INC.
AN INDIANA CORPORATION
DATED AS OF SEPTEMBER 24, 1997
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page Number
-----------
<S> <C>
1. PURCHASE OF ASSETS...................................................... 1
1.1. AGREEMENT TO SELL AND PURCHASE ASSETS........................... 1
1.2. NO PURCHASE OF BUSINESS......................................... 2
1.3. EXCLUDED ASSETS................................................. 2
1.4. EXCLUDED LIABILITIES............................................ 3
2. PURCHASE PRICE.......................................................... 3
2.1. CONSIDERATION FOR THE PURCHASED ASSETS.......................... 3
2.2. PAYMENT OF CONSIDERATION........................................ 3
2.3. PURCHASE PRICE ADJUSTMENTS...................................... 3
3. REPRESENTATIONS AND WARRANTIES OF SELLER................................ 4
3.1. ORGANIZATION AND CORPORATE POWER................................ 4
3.2. AUTHORIZATION OF TRANSACTION.................................... 5
3.3. NONCONTRAVENTION................................................ 5
3.4. OWNED TERMINALS................................................. 5
3.5. LEASED TERMINALS................................................ 6
3.6. EQUIPMENT....................................................... 6
3.7. BROKERS' FEES................................................... 7
4. REPRESENTATIONS AND WARRANTIES OF BUYER................................. 7
4.1. AUTHORIZATION OF TRANSACTION.................................... 7
4.2. NONCONTRAVENTION................................................ 7
4.3. BROKERS' FEES................................................... 8
4.4. DISCLOSURES..................................................... 8
5. CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS............................. 8
5.1. REPRESENTATIONS AND WARRANTIES.................................. 8
6. CONDITION PRECEDENT TO THE OBLIGATIONS OF SELLER........................ 8
6.1. REPRESENTATIONS AND WARRANTIES.................................. 8
7. OTHER AGREEMENTS OF THE PARTIES......................................... 9
7.1. BUSINESS REVIEW................................................. 9
7.2. EXCLUSIVITY..................................................... 9
7.3. CONDUCT OF BUSINESS............................................. 9
7.4. OTHER AGREEMENTS................................................ 10
8. CLOSING................................................................. 12
8.1. TIME AND PLACE.................................................. 12
8.2. CLOSING TRANSACTIONS............................................ 12
8.3. DELIVERIES BY SELLER TO BUYER................................... 12
8.4. DELIVERIES BY BUYER TO SELLER................................... 13
9. POST-CLOSING OBLIGATIONS OF THE PARTIES................................. 13
9.1. GENERAL......................................................... 13
</TABLE>
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<TABLE>
<S> <C>
9.2. COOPERATION..................................................... 14
10. GENERAL................................................................ 14
10.1. SUCCESSORS AND ASSIGNS......................................... 14
10.2. ENTIRE AGREEMENT............................................... 14
10.3. COUNTERPARTS................................................... 14
10.4. NOTICES........................................................ 14
10.5. GOVERNING LAW.................................................. 15
10.6. AMENDMENTS AND WAIVERS......................................... 15
10.7. SEVERABILITY................................................... 15
10.8. EXPENSES....................................................... 16
10.9. CONSTRUCTION................................................... 16
10.10. INCORPORATION OF EXHIBITS AND SCHEDULES....................... 16
10.11. SPECIFIC PERFORMANCE.......................................... 16
10.12. REMEDIES CUMULATIVE........................................... 17
11. TERMINATION............................................................ 17
11.1. TERMINATION OF AGREEMENT....................................... 17
</TABLE>
ii
<PAGE> 4
SCHEDULES
<TABLE>
<S> <C>
Schedule 1.1(a) Owned Terminals
Schedule 1.1(b) Leased Terminals
Schedule 1.1(c) Waste Contracts
Schedule 1.1(d) Equipment
Schedule 1.1(f) Inventory, etc.
Schedule 1.4(a) Assumed Liabilities
Schedule 3.3 Seller's Noncontravention
Schedule 4.2 Buyer's Noncontravention
</TABLE>
EXHIBITS
<TABLE>
<S> <C> <C>
Exhibit A - Form of Bills of Sale and Other Transfer Documentation
Exhibit B - Opinion of Seller's Counsel
Exhibit C - Opinion of Buyer's Counsel
</TABLE>
iii
<PAGE> 5
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "AGREEMENT") is made as of the 24th
day of September 1997, by and among GARY I. GOLDBERG or his assigns ("BUYER")
and JACK GRAY TRANSPORT, INC. an Indiana corporation ("SELLER").
RECITALS
A. Seller, among other things, is engaged in the business of providing
transportation services related to municipal solid waste from certain owned or
leased terminals more fully described below (the "BUSINESS").
B. Seller desires to sell and assign to Buyer, and Buyer desires to purchase
from Seller, substantially all of the assets utilized primarily or exclusively
in connection with the Business from certain owned and leased terminals as more
fully described herein on the terms and subject to the conditions set forth in
this Agreement.
NOW, THEREFORE, in consideration of the foregoing recitals, which are
hereby incorporated herein, and the mutual premises herein contained, and for
other good and valuable consideration, the receipt and adequacy of which is
hereby acknowledged, the parties hereby agree as follows:
ARTICLE
1
PURCHASE OF ASSETS
1.1 AGREEMENT TO SELL AND PURCHASE ASSETS. Buyer will purchase and acquire
from Seller, and Seller will sell, transfer, assign and convey to Buyer, on the
Closing Date (as defined herein) substantially all of the assets utilized
primarily or exclusively in connection with the Business operated from the
owned and leased terminals described in Section 1.1(a) and 1.1(b) below (the
"PURCHASED TERMINALS"), which assets shall include, without limitation, all
tangible and intangible property currently owned by Seller and necessary to
conduct the Business as currently conducted and the following assets
(collectively the "PURCHASED ASSETS"):
(a) The following terminals owned by Seller, the legal descriptions
of which are contained on Schedule 1.1(a) hereof (the "OWNED TERMINALS"):
(i) Nashville, Tennessee; (ii) Phoenix, Arizona (buildings); (iii)
Spartanburg, South Carolina; and (iv) Long Island, New York.
(b) The following terminals leased by Seller pursuant to lease
agreements described on Schedule 1.1(b) hereof (the "LEASED TERMINALS"):
(i) Arlington, Oregon
<PAGE> 6
(including a vacant parcel in Arlington, Oregon as specified on Schedule
1.1(b) hereof); (ii) Greensboro, North Carolina; and (iii) Lancaster,
California.
(c) Certain waste transport services contracts as described on
Schedule 1.1(c) hereof (the "WASTE CONTRACTS").
(d) Certain equipment and rolling stock as described on Schedule
1.1(d) (the "EQUIPMENT")
(e) Retainage deposit of $2.5 million as described in the Waste
Transport Services Contract dated March 23, 1989 between Metropolitan
Service District and Seller.
(f) Inventory, parts, supplies, company-owned automobiles (including
the automobile presently used by Buyer, computer equipment and software
at the Owned Terminals and Leased Terminals, a list of which property is
attached hereto as Schedule 1.1(f).
(g) All other executory contracts entered into by Seller in
connection with the Business, except that (A) Buyer shall not assume any
of Seller's obligations under the Contract dated November 1, 1993 between
Seller and H.H.H., Inc. and (B) Buyer shall assume the obligations of
Seller under the Contract dated April 7, 1993 ("APRIL 1993 CONTRACT"),
provided that on or before the Closing Date, Seller and/or Buyer and
H.H.H., Inc. enter into an amendment of the April 1993 Contract that
provides for the following:
(i) Paragraph 3 of the April 1993 Contract shall be deleted;
and
(ii) The second sentence of Paragraph 4 of the April 1993
Contract shall be deleted.
1.2 NO PURCHASE OF BUSINESS. It is hereby acknowledged and agreed to by
Seller that Buyer is not buying the business known as Jack Gray Transport, Inc.
and that the Buyer is not the successor, administrator, executor or assign of
Seller.
1.3 EXCLUDED ASSETS. Notwithstanding anything contained in Section 1.1
above, the following assets are expressly excluded and shall not be included in
the term Purchased Assets:
(a) Accounts receivable.
(b) Cash/bank accounts/money market accounts.
(c) Seller's corporate documentation, books and records.
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<PAGE> 7
(d) Any asset utilized in Seller's other operations other than
Seller's solid waste operations operated from the Purchased Terminals.
1.4 EXCLUDED LIABILITIES. Buyer shall assume none of the Seller's
liabilities, indebtedness and obligations of any nature whatsoever, whether
reflected on a balance sheet or otherwise, except as follows (the "ASSUMED
LIABILITIES"):
(a) Liabilities incurred after the Closing Date under leases or
executory contracts specifically assumed by Buyer as described on
Schedule 1.4(a).
(b) Liabilities and obligations under Seller's 401(k) plan
("SELLER'S 401(K) PLAN") in respect to employees of the Business. Within
thirty days after the Closing Date, Seller shall cause the assets
contained in Seller's 401(k) Plan attributable to employees of the
Business to be rolled over into a 401(k) plan instituted by Buyer or
Buyer's assignee or an affiliate of such assignees ("BUYER'S 401(K)
PLAN"). Contributions accrued prior to the Closing Date in respect to
Seller's 401(k) Plan for employees of the Business will be made by
Seller. Contributions accrued after the Closing Date in respect to
Buyer's 401(k) Plan shall be made by Buyer.
(c) Expenses or liabilities of the Business arising as of or after
the Closing Date. Expenses or liabilities of the Business arising prior
to the Closing Date shall be borne by Seller.
ARTICLE
2
PURCHASE PRICE
2.1 CONSIDERATION FOR THE PURCHASED ASSETS. In consideration for its
purchase of the Purchased Assets, on the Closing Date, Buyer shall pay to
Seller Thirty Million Dollars ($30,000,000) subject to the adjustments set
forth in Section 2.3 ("PURCHASE PRICE").
2.2 PAYMENT OF CONSIDERATION. On the Closing Date, Buyer shall deliver to
Seller the Purchase Price by federal wire transfer of immediately available
funds to a bank designated by Seller.
2.3 PURCHASE PRICE ADJUSTMENTS. The Purchase Price shall be subject to
adjustment in the following events:
(a) In the event that between the date hereof and the Closing Date
Seller, with the consent of Buyer, purchases any trailers, tractors or
other equipment to be included within the Purchased Assets, the Purchase
Price shall be increased by Seller's cost of such trailers, tractors or
other equipment.
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<PAGE> 8
(b) Buyer and Seller agree that as of the date hereof, Seller needs
to replace five tractors for the Arlington, Oregon terminal and five
tractors for the Phoenix, Arizona terminal. Any such replacement tractor
shall be a "class 8 tractor", unless otherwise mutually agreed to by
Seller and Buyer. If such tractors are delivered prior to the Closing
Date, the Purchase Price shall be increased by Seller's cost (net of any
trade-ins if the equipment so traded-in is listed on Schedule 1.1(d)) of
such delivered tractors. If such tractors are delivered after the
Closing Date, it shall be Buyer's responsibility to pay for such tractors
and the Purchase Price shall not be increased by Seller's cost of such
undelivered tractors.
(c) In the event, Seller sells, upon the mutual agreement of Buyer
and Seller, any of the Equipment or any of the Equipment is damaged or
taken by condemnation, the Purchase Price shall be reduced by the sale
proceeds in the case of a sale, the insurance proceeds plus any
applicable deductible, in case of any casualty or the condemnation
proceeds, in the case of any taking.
(d) The Purchase Price shall be increased by the amount of any
supplies purchased by Seller exclusively for the Business prior to the
Closing Date in excess of normal requirements.
(e) The Purchase Price shall be increased by any expense that Seller
pays which expense pursuant to Section 1.4(c) is Buyer's responsibility.
The Purchase Price shall be decreased by any expense that Buyer pays
which expense pursuant to Section 1.4(c) is Seller's responsibility.
ARTICLE
3
REPRESENTATIONS AND WARRANTIES OF SELLER
As a material inducement to Buyer to enter into this Agreement and
consummate the transactions contemplated hereby, Seller hereby represents and
warrants the following to Buyer on and as of the date of this Agreement:
3.1 ORGANIZATION AND CORPORATE POWER. Seller is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Indiana. Seller has all requisite corporate power and authority to carry on
the business in which it is engaged and to own and use the properties owned and
used by it. True and correct copies of Seller's Articles of Incorporation and
By-Laws, as amended to date, have been delivered to Buyer.
3.2 AUTHORIZATION OF TRANSACTION. Seller has all requisite corporate
power and authority to execute and deliver this Agreement and to perform its
obligations hereunder. Without limiting the generality of the foregoing, the
Board of Directors and the sole stockholder of Seller
4
<PAGE> 9
have taken all necessary actions to authorize the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby. This Agreement constitutes the valid and legally binding
obligation of Seller enforceable against it in accordance with its terms,
except as the same may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws relating to or affecting the
enforcement of creditors' rights generally, now or hereafter in effect and
subject to the application of equitable principles and the availability of
equitable remedies.
3.3 NONCONTRAVENTION. Except as set forth in Schedule 3.3, neither the
execution and the delivery of this Agreement, nor the consummation of the
transactions contemplated hereby will (i) violate or conflict in any way with
any statute, regulation, law, rule or common law doctrine, (ii) violate or
conflict in any way with any judgment, order, decree, stipulation, injunction,
charge or other restriction of any government, governmental agency or court to
which Seller is subject or any provision of the Articles of Incorporation or
By-Laws of Seller, or (iii) conflict with, result in a breach of, constitute a
default under (with or without notice or lapse of time, or both), result in the
acceleration of, create in any party the right to accelerate, terminate, modify
or cancel, or require any notice under, any contract, agreement, lease,
sublease, license, sublicense, franchise, permit, indenture, agreement for
borrowed money, instrument of indebtedness, security interest or other
arrangement to which Seller is a party or by which it is bound or to which any
of its assets are subject. Seller is not required to give any notice to, make
any filing with, or obtain any authorization, consent, or approval of any
government, governmental agency, court or any other person in order for the
parties to consummate the transactions contemplated by this Agreement except
for those notices, filings, authorizations, consents and approvals listed on
Schedule 3.3.
3.4 OWNED TERMINALS. With respect to each Owned Terminal except as set
forth on Schedule 1.1(a),
(a) Seller has good and marketable title to the Owned Terminal, free
and clear of any security interest, mortgage, pledge, charge, lien or
other encumbrance or right of any third party (collectively, "SECURITY
INTERESTS"), servitudes, prior claim, encroachment, easement, covenant,
or other restriction, except for installments of special assessments not
yet delinquent, recorded easements, covenants, and other restrictions,
and utility easements, building restrictions, servitudes for public
utilities, zoning restrictions, and other servitudes, easements and
restrictions existing generally with respect to properties of a similar
character which do not affect materially and adversely the current use or
the marketability of title, of the property subject thereto.
(b) There are no pending, threatened, condemnation proceedings,
lawsuits, or administrative actions relating to the property or other
matters affecting materially and adversely the current use, occupancy, or
value thereof.
5
<PAGE> 10
(c) There are no leases, subleases, licenses, concessions, or other
agreements, written or oral, granting to any party or parties the right
of use or occupancy of any portion of the parcel of real or immovable
property.
(d) There are no outstanding options or rights of first refusal to
purchase the parcel of real or immovable property, or any portion thereof
or interest therein.
(e) There are no parties (other than Seller) in possession of the
Owned Terminals.
3.5 LEASED TERMINALS. With respect to each Leased Terminal, except as set
forth on Schedule 1.1(b):
(a) To the best of Seller's knowledge, each of the lease agreements
between Seller and the lessors listed on Schedule 1.1(b) ("TERMINAL LEASE
AGREEMENTS") is in full force and effect and Seller holds a valid and
existing leasehold or other possessory interest under the lease.
(b) Seller has delivered to Buyer a complete and accurate copy of
the Terminal Lease Agreements which has not been modified in any respect.
To the best of Seller's knowledge, Seller is not in material default,
and no circumstances exist which would result in such default (including
upon the giving of notice or the passage of time, or both), under the
Terminal Lease Agreements, and no party thereto has the right to
terminate, accelerate performance under or otherwise modify such lease.
To the best of Seller's knowledge, no lessor under such lease is in
default under such lease in its duties to Seller. To the best of
Seller's knowledge, there are no pending or threatened condemnation
proceedings, lawsuits, or administrative actions relating to the Leased
Terminals. To the best of Seller's knowledge, other than the Terminal
Lease Agreements, there are no other leases, subleases, licenses,
concessions or other agreements, written or oral, granting to any party
or parties the right of use or occupancy of any portion of the Leased
Terminals. To the best of Seller's knowledge, there are no parties other
than Seller in possession of the Leased Terminals.
3.6 EQUIPMENT. Except as set forth on Schedule 1.1(d), Seller owns good
and marketable title to all of the Equipment, free and clear of all Security
Interests, pledges, charges, liens, leases, rights of first refusal or other
encumbrances or right of any third party. All other warranties, including,
without limitation, warranties of fitness for a particular purpose, will be
excluded.
3.7 BROKERS' FEES. Seller has no liability or obligation to pay any fees
or commissions to any broker, finder, or agent with respect to the transactions
contemplated by this Agreement for which Buyer could become liable or otherwise
obligated.
6
<PAGE> 11
ARTICLE
4
REPRESENTATIONS AND WARRANTIES OF BUYER
As a material inducement to Seller to enter into this Agreement and
consummate the transactions contemplated hereby, Buyer hereby represents and
warrants the following to Seller and as of the date of this Agreement and on
and as of the Closing Date, except as set forth in the Schedules and in the
Exhibits:
4.1 AUTHORIZATION OF TRANSACTION. Buyer has all power and authority to
execute and deliver this Agreement and to perform his obligations hereunder.
Without limiting the generality of the foregoing, this Agreement constitutes
the valid and legally binding obligation of Buyer enforceable against him in
accordance with its terms, except as the same may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other laws relating to or
affecting the enforcement of creditors' rights generally, now or hereafter in
effect and subject to the application of equitable principles and the
availability of equitable remedies.
4.2 NONCONTRAVENTION. Except as set forth in Schedule 4.2, neither the
execution and the delivery of this Agreement, nor the consummation of the
transactions contemplated hereby will (i) violate or conflict in any way with
any statute, regulation, law, rule or common law doctrine, (ii) violate or
conflict in any way with any judgment, order, decree, stipulation, injunction,
charge or other restriction of any government, governmental agency or court to
which Buyer is subject, or (iii) conflict with, result in a breach of,
constitute a default under (with or without notice or lapse of time, or both),
result in the acceleration of, create in any party the right to accelerate,
terminate, modify or cancel, or require any notice under, any contract,
agreement, lease, sublease, license, sublicense, franchise, permit, indenture,
agreement for borrowed money, instrument of indebtedness, security interest or
other arrangement to which Buyer is a party or by which he is bound or to which
any of his assets are subject, except where such violations, conflicts,
breaches, defaults or other events would not, individually or in the aggregate,
result in a material adverse effect. Buyer is not required to give any notice
to, make any filing with, or obtain any authorization, consent, or approval of
any government, governmental agency, court or any other person in order for the
parties to consummate the transactions contemplated by this Agreement, except
for those notices, filings, authorizations, consents and approvals listed on
Schedule 4.2.
4.3 BROKERS' FEES. Buyer has no liability or obligation to pay any fees
or commissions to any broker, finder, or agent with respect to the transactions
contemplated by this Agreement for which Seller is or could become liable or
obligated.
4.4 DISCLOSURES. Buyer has provided to Seller all written disclosure with
respect to all executory contracts, long term purchase commitments or other
agreements to purchase services or capital assets, of which Buyer has
knowledge, not cancelable on less than 31 days' notice affecting the Business.
7
<PAGE> 12
ARTICLE
5
CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS
The obligations of Buyer to consummate the transactions contemplated by
this Agreement are subject, at Buyer's option, to the fulfillment of the
following condition precedent on or prior to the Closing Date:
5.1 REPRESENTATIONS AND WARRANTIES. All representations and warranties of
Seller contained in this Agreement shall be true and correct in all material
respects as of the date when made and on the Closing Date as if made on and
with respect to the Closing Date.
The foregoing condition specified in this Article 5 may be waived only in
writing by Buyer.
ARTICLE
6
CONDITION PRECEDENT TO THE OBLIGATIONS OF SELLER
The obligations of Seller to consummate the transactions contemplated by
this Agreement are subject, at Seller's option, to the satisfaction on or prior
to the Closing Date, of the following condition precedent:
6.1 REPRESENTATIONS AND WARRANTIES. All representations and warranties of
Buyer contained in this Agreement shall be true and correct in all material
respects as of the date when made and on the Closing Date as if made again on
and with respect to the Closing Date.
The foregoing condition specified in this Article 6 may be waived on
behalf of Seller in writing by Seller.
ARTICLE
7
OTHER AGREEMENTS OF THE PARTIES
7.1 BUSINESS REVIEW. During the period commencing from the date of this
Agreement and ending with the earlier to occur of the Closing or termination of
this Agreement in accordance with its terms, Buyer, the assignees of Buyer
hereunder and their respective counsels, accountants, consultants, investors,
lenders and representatives (collectively "BUYER'S REPRESENTATIVES") will be
permitted to conduct a full and complete review and investigation, including
legal and financial audits, of the Business and Purchased Assets and to obtain
such information as may be necessary or desirable to permit Buyer or his
assignees to fully investigate
8
<PAGE> 13
the Purchased Assets, the Business and its relationships with its suppliers,
independent contractors, customers and employees. Seller agrees to give Buyer
and Buyer's Representatives full access during normal business hours to all of
the Business premises and all of the files, records, contracts and other
documents and properties as Buyer or Buyer's Representatives may reasonably
request. Buyer and his assignees shall conduct such business review in such a
manner as to minimize any disruption of the day to day operations of the
Business. Prior to such review by any of Buyer's Representatives, Buyer shall
disclose to Seller the identity of any such Buyer's Representatives.
7.2 EXCLUSIVITY. Neither Seller nor any agent, officer, director,
stockholder or any representative of either of them will, during the period
commencing from the date of this Agreement and ending with the earlier to occur
of (A) November 30, 1997 if Buyer has not demonstrated to Seller, to Seller's
reasonable satisfaction by such date that Buyer has the financial resources to
effect the transactions contemplated hereby, (B) the Closing or (C) termination
of this Agreement in accordance with its terms, directly or indirectly: (i)
solicit, initiate or encourage the submission of any proposals or offers from
any person relating to, (ii) participate in any discussions or negotiations
pertaining to, or (iii) furnish any information to any person other than Buyer
or Buyer's Representatives relating to, any acquisition or purchase of any of
the Purchased Assets and Business of, or equity interest in, Seller or a
merger, consolidation or business combination involving Seller and Seller shall
immediately notify Buyer if any person makes any proposal, offer, inquiry or
contact with respect to any of the foregoing.
7.3 CONDUCT OF BUSINESS. Buyer and Seller acknowledge that Buyer, as an
employee of Seller, has managed the Business for the past thirteen years and
will continue to manage the Business through the Closing Date. During the
period from the date of this Agreement through the Closing Date:
(a) Buyer will use his best efforts to cause the Business to be
conducted in accordance with all applicable laws and regulations and in
the ordinary course in a manner consistent with past custom and practice.
(b) Buyer will use his best efforts to maintain the Business and
Seller's employees, customers, licenses, permits, assets and operations
as an ongoing business in accordance with past custom and practice.
(c) Buyer will not, without Seller's prior written consent, cause or
permit the Business to (i) enter into any transaction, contract or
commitment other than contracts in the ordinary course of business; (ii)
alter, amend or terminate any material contract or agreement; (iii) sell
or dispose of any of the assets in the ordinary course of business; (iv)
purchase any supplies in excess of amounts or quantities required in the
ordinary course of business; or (v) purchase or enter into a contract to
purchase any capital asset, including, without limitation, tractors or
trailers.
9
<PAGE> 14
(d) Buyer shall be responsible for making the Equipment described on
Schedule 1.1(d) available to Buyer on the Closing Date.
(e) Buyer shall be responsible for obtaining the consent to the
purchase and sale contemplated hereby from the other party(ies) to the
Waste Contracts listed on Schedule 1.1(c) or any other executory contract
of the Business.
Seller agrees not to take any act that would prevent Buyer from fulfilling
its obligations under this Section 7.3. Seller further agrees that during the
period from the date of acceptance hereof until the earlier of the date of
Closing or the date on which this Agreement is terminated, Buyer shall continue
to be paid a salary at his current level and shall continue to be reimbursed
for all expenses incurred by Buyer in his capacity as employee of Seller and in
performing the services described in Sections 7.3(a) - 7.3(e) above in
accordance with current practice. Finally, Seller also covenants to Buyer that
it shall permit the Business to purchase all inventory and supplies necessary
or appropriate for its current day-to-day operations in accordance with past
practice.
7.4 OTHER AGREEMENTS.
(a) In the event the Closing occurs, (i) Buyer shall be entitled to
receive at the Closing the amount owing to him under a certain
Non-Qualified Contingent Deferred Compensation Agreement dated as of
December 30, 1988 ("COMPENSATION AGREEMENT") between Buyer and Seller
provided that the outstanding balances of principal and interest, due
under that certain note dated October 1, 1996 ("NOTE") shall be set off
against amounts due Buyer under the Compensation Agreement and the Note
shall be canceled at the Closing and (ii) Buyer and Seller shall be
released from any obligations applicable to him under the Compensation
Agreement.
(b) In the event that the Transaction fails to close on or prior to
the Closing Date and such failure is the fault of Buyer, then Seller may
terminate the Compensation Agreement without any payment to Buyer. In
the event of such termination by Seller, (i) the Note shall be canceled
without any further payment by Buyer and (ii) Buyer shall be released
from any obligations applicable to him under the Compensation Agreement.
(c) In the event that the Transaction fails to close on or prior to
the Closing Date and such failure is the fault of Seller, (i) Buyer shall
be entitled to receive the amount owing to him by Seller under the
Compensation Agreement which exceeds the outstanding obligation by Buyer
to Seller under the Note and (ii) Buyer shall be released from any
obligations applicable to him under the Compensation Agreement.
(d) The parties acknowledge a certain Right of First Refusal and
First Offer Agreement ("OFFER AGREEMENT") dated as of May 31, 1996
between Seller, John S. Gray and Buyer. The parties hereby agree that,
except as provided below, this Agreement and the
10
<PAGE> 15
transactions contemplated hereby supersede and are in lieu of the Offer
Agreement. In the event the Closing occurs or fails to occur as a result
of the fault of Buyer, the Offer Agreement shall be canceled. Upon
cancellation of the Offer Agreement, Buyer acknowledges that he shall
have no further rights of first refusal or similar rights to acquire the
Business. In the event the Closing fails to occur as a result of the
fault of Seller, the Offer Agreement shall remain in full force and
effect.
7.5 Buyer will not, nor will it permit any of Buyer's Representatives to
use for any purpose (other than evaluation of the transactions contemplated
hereby) or disclose to any third parties, any "PROPRIETARY INFORMATION."
Proprietary Information shall consist of information obtained directly or
indirectly from Seller in the course of Buyer's or his assignee's review and
investigation hereunder, but shall not include: (a) any information that
already had become or later becomes publicly available through no fault of
Buyer or Buyer's Representatives; (b) the use of such information as necessary
or appropriate in making any filing or obtaining any consent or approval
required for the consummation of the proposed acquisition; or (c) the
furnishing or use of such information as required by or necessary or
appropriate in connection with legal proceedings (subject to notice to Seller
and an opportunity to object). If this Agreement is terminated or the purchase
is not consummated for any other reason, Buyer and his assignees agree to
return or destroy all documents (including documents stored in electronic
media) containing or reflecting Proprietary Information. Each of the parties
agrees to maintain the strict confidentiality of the terms and conditions of
this Agreement, except for disclosure as required by law or to Buyer's
Representatives, in the case of Buyer or his assignees and to Seller's
attorneys, accountants and financial advisors, in the case of Seller.
ARTICLE
8
CLOSING
8.1 TIME AND PLACE. The consummation of the purchase and sale of the
Purchased Assets ("CLOSING") shall take place at 10:00 a.m., local time on
January 2, 1998, unless otherwise mutually agreed, provided all of the
conditions set forth in Articles 5 and 6 shall have been satisfied or duly
waived, at the offices of Buyer's counsel, or at such other time or place as
Seller and Buyer shall mutually agree ("CLOSING DATE"). The Closing shall be
deemed effective as of the opening of business on January 1, 1998 or such other
time as Seller and Buyer shall mutually agree.
8.2 CLOSING TRANSACTIONS. All documents and other instruments required to
be delivered at the Closing shall be regarded as having been delivered
simultaneously, and no document or other instrument shall be regarded as having
been delivered until all have been delivered.
8.3 DELIVERIES BY SELLER TO BUYER. At the Closing, Seller shall deliver
or cause to be delivered to Buyer the following documents:
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<PAGE> 16
(a) warranty bills of sale in the form of EXHIBIT A attached,
original titles to all motor vehicles and trailers and other instruments
of conveyance, assignment and transfer as shall be effective to vest in
Buyer all of Seller's title and interest in the Purchased Assets;
(b) a certified copy of Seller's Articles of Incorporation, a copy
of Seller's By-Laws certified by Seller's Secretary and a good standing
certificate issued by the jurisdiction of its incorporation as of no more
than ten (10) days prior to the Closing Date;
(c) resolutions duly adopted by the Board of Directors of Seller
authorizing the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby, duly certified as
true, correct and in full force and effect as of the Closing Date by the
Secretary of Seller;
(d) a certificate executed by the President of Seller dated as of
the Closing Date, certifying that all representations and warranties of
Seller herein contained, including the Schedules are true and correct on
and as of the Closing Date;
(e) the opinion of Vedder, Price, Kaufman and Kammholz, as counsel
to Seller, in the form of EXHIBIT B attached hereto, addressed to Buyer
and dated as of the Closing Date;
(f) a bank draft or certified check or confirmation of the wire
transfer of funds in the amount owing Buyer under Section 7.4(a);
(g) the original Note marked "canceled;"
(h) a release of the obligations under the Compensation Agreement;
(i) an agreement executed by Seller canceling the Offer Agreement;
and
(j) all files and other materials exclusively or substantially
relating to the Business whether in written form or in the form of
computer media.
8.4 DELIVERIES BY BUYER TO SELLER. At the Closing, Buyer shall deliver or
cause to be delivered to Seller:
(a) confirmation of the wire transfer of funds in the amount of the
Purchase Price;
(b) the opinion of counsel of Buyer's assignee, if this Agreement is
assigned, or Craig D. Stepnicka, Esq., if this Agreement is not assigned,
in the form of EXHIBIT C, attached hereto, addressed to Seller and dated
as of the Closing Date;
12
<PAGE> 17
(c) a certificate executed by Buyer, dated as of the Closing Date,
certifying that all representations and warranties of Buyer herein
contained are true and correct on and as of the Closing Date;
(d) an agreement executed by Buyer canceling the Offer Agreement;
and
(e) if this Agreement is assigned, resolutions duly adopted by the
Board of Directors of Buyer's assignee authorizing the execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby, duty certified as true and correct and in full force
and effect as of the Closing Date by the Secretary of Buyer's assignee.
ARTICLE
9
POST-CLOSING OBLIGATIONS OF THE PARTIES
9.1 GENERAL. In case at any time after the Closing Date any further
action is necessary or desirable to carry out the purposes of this Agreement,
each of the parties will take such further action (including the execution and
delivery of such further instruments and documents) as any other party
reasonably may request, at the sole cost and expense of the requesting party.
9.2 COOPERATION. Seller hereby agrees to cooperate with Buyer in
connection with the obligations of Buyer's assignee to conduct audits with
respect to the Purchased Assets and Business including access to books and
records of Seller relating to the Purchased Assets and making employees of
Seller reasonably available to Buyer's assignee, for reasonable periods of
time, without charge, to facilitate the completion of such audits.
ARTICLE
10
GENERAL
10.1 SUCCESSORS AND ASSIGNS. Buyer shall be permitted to assign this
Agreement and Buyer's rights, interests and obligations hereunder to a funding
source with the prior written approval of Seller, which approval shall not be
reasonably withheld. The foregoing notwithstanding, prior to Closing, Buyer
shall not be permitted to assign all of his rights hereunder to any third party
Buyer or to enter into any contract for the sale of the Business if the
economic effect of any such assignment or contract for sale is that Buyer is
reselling the Business for more than the Purchase Price. Seller shall not be
permitted to assign this Agreement or Seller's rights, interests and
obligations hereunder without the prior written approval of Buyer, which
approval shall not be unreasonably withheld. Subject to the foregoing, this
Agreement shall be binding upon
13
<PAGE> 18
and shall inure to the benefit of the parties hereto and their permitted
successors, assigns, heirs and legal representatives.
10.2 ENTIRE AGREEMENT. This Agreement (including the schedules, exhibits
and annexes attached hereto) and the documents delivered pursuant hereto
constitute the entire agreement and understanding among Seller and Buyer and
supersedes any prior agreements and understandings relating to the subject
matter of this Agreement.
10.3 COUNTERPARTS. This Agreement may be executed simultaneously in one
or more counterparts, each of which shall be deemed an original and all of
which together shall constitute but one and the same instrument.
10.4 NOTICES. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly given (i) when
delivered, if hand delivered, (ii) one business day after pre-paid deposit for
overnight delivery, if sent by nationally recognized overnight courier, (iii)
when receipt is electronically confirmed, if sent by fax (with hard copy via
first class mail) or (iv) three (3) business days after it is sent by
registered or certified mail, return receipt requested, postage prepaid, and in
each case addressed to the intended recipient as set forth below:
If to Seller: Jack Gray Transport, Inc.
4600 East 15th Avenue
Gary, Indiana 46403
Attn: Jack Gray, President
Fax: (219) 938-0127
With a copy to: Vedder, Price, Kaufman &
Kammholz
222 North LaSalle Street
Suite 2600
Chicago, Illinois 60601
Fax: (312) 609-5005
Attn: John T. McEnroe, Esq.
If to Buyer: Gary I. Goldberg
7418 Oak Avenue
Gary, Indiana 46403
Fax: (219) 938-8235
14
<PAGE> 19
With a copy to: Craig D. Stepnicka, Esq.
2311 W. 22nd Street, Suite 207
Oak Brook, Illinois 60523
Fax: (630) 571-3821
Any Party may change the address to which notices, requests, demands,
claims, and other communications hereunder are to be delivered by giving the
other Parties notice in the manner herein set forth.
10.5 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of Illinois, without giving
effect to any choice of law or conflict of law provision or rule.
10.6 AMENDMENTS AND WAIVERS. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by
Buyer and Seller. No waiver by any party of any default, misrepresentation or
breach of warranty or covenant hereunder, whether intentional or not, shall be
deemed to extend to any prior or subsequent default, misrepresentation or
breach of warranty or covenant hereunder or affect in any way any rights
arising by virtue of any prior or subsequent occurrence of such kind.
10.7 SEVERABILITY. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the invalid or unenforceable term or
provision in any other situation or in any other jurisdiction. If a final
judgment of a court of competent jurisdiction declares that any term or
provision hereof is invalid or unenforceable, the parties agree that the court
making the determination of invalidity or unenforceability shall have the power
to reduce the scope, duration, or area of the term or provision, to delete
specific words or phrases, or to replace any invalid or unenforceable term or
provision with a term or provision that is valid and enforceable and that comes
closest to expressing the intention of the invalid or unenforceable term or
provision, and this Agreement shall be enforceable as so modified after the
expiration of the time within which the judgment may be appealed.
10.8 EXPENSES. Seller and Buyer will each pay their respective expenses
(including fees and expenses of legal counsel, accountants, brokers or other
representatives or consultants) incurred in connection with the transactions
contemplated hereby (whether consummated or not). Seller will pay all state,
county or municipal transfer, sales, use and similar taxes, fees and charges of
whatever nature due any governmental authority as a result of the sale of the
Purchased Assets.
10.9 CONSTRUCTION. The parties have jointly participated in the
negotiation and drafting of this Agreement. In the event of an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties and no presumptions or burdens of proof
shall arise favoring any party by virtue of the authorship of any of the
provisions of this Agreement. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also
15
<PAGE> 20
to refer to all rules and regulations promulgated thereunder, unless the
context requires otherwise. The parties intend that each representation,
warranty and covenant contained herein shall have independent significance. If
any party has breached any representation, warranty or covenant contained
herein in any respect, the fact that there exists another representation,
warranty or covenant relating to the same subject matter (regardless of the
relative levels of specificity) which the party has not breached shall not
detract from or mitigate the fact that the party is in breach of the first
representation, warranty, or covenant. Each defined term used in this
Agreement has a comparable meaning when used in its plural or singular form.
Each gender-specific term used herein has a comparable meaning whether used in
a masculine, feminine or gender-neutral form. The term "include" and its
derivatives shall have the same construction as the phrase "include, without
limitation," and its derivatives. The section headings contained in this
Agreement are inserted for convenience or reference only and shall not affect
in any way the meaning or interpretation of this Agreement.
10.10 INCORPORATION OF EXHIBITS AND SCHEDULES. The Exhibits and Schedules
identified in this Agreement are incorporated herein by reference and made a
part hereof.
10.11 SPECIFIC PERFORMANCE. Each of the parties hereto acknowledges that
the rights of each other party to consummate the transactions contemplated by
this Agreement are special, unique and of extraordinary character and that, in
the event that a party violates or fails and refuses to perform any covenant or
agreement made by it in this Agreement, then each other party may be without an
adequate remedy at law. Each party agrees, therefore, that in the event it
violates or fails and refuses to perform any covenant or agreement made by it
in this Agreement, each other party may, in addition to any remedies hereunder
for damages or other relief, institute and prosecute an action in any court of
competent jurisdiction to enforce specific performance of such covenant or
agreement or seek any other equitable relief.
10.12 REMEDIES CUMULATIVE. Except as otherwise provided herein, no remedy
or election hereunder shall be deemed exclusive but shall, wherever possible,
be cumulative with all other remedies at law or in equity.
ARTICLE
11
TERMINATION
11.1 TERMINATION OF AGREEMENT. This Agreement and the transactions
contemplated hereby may be terminated at any time prior to the Closing, as
follows:
(a) By mutual consent of the parties hereto.
(b) By Buyer on the one hand or by Seller on the other hand by
reason of the breach by the other in any material respect of any of its
or their representations, warranties, covenants or agreements contained
in this Agreement.
16
<PAGE> 21
(c) By either party if, through no fault of the terminating party,
the Closing does not occur by January 2, 1998.
(d) By Seller, if Buyer has not demonstrated to Seller's reasonable
satisfaction on or prior to November 30, 1997, that Buyer has the
financial resources to effect the transactions contemplated hereby and
Seller has entered, or will enter simultaneous with the termination of
this Agreement, into a written agreement with respect to the sale of all
of the Purchased Assets after November 30, 1997 and before January 2,
1998.
* * * *
IN WITNESS WHEREOF, the parties hereto have executed this Asset Purchase
Agreement as of the date first above written.
JACK GRAY TRANSPORT, INC.
/s/ Gary I. Goldberg By: s/s John S. Gray
- --------------------------- --------------------------
Gary I. Goldberg John S. Gray, President
17
<PAGE> 1
EXHIBIT 10.2
ASSIGNMENT OF
ASSET PURCHASE AGREEMENT
THIS ASSIGNMENT is made this 29th day of September 1997 between Gary I.
Goldberg ("GOLDBERG") and Aasche Transportation Services, Inc., a Delaware
corporation ("AASCHE").
A. Goldberg has entered into an Asset Purchase Agreement dated September 24,
1997 between Goldberg, as Buyer and Jack Gray Transport, Inc. as Seller., and
as such agreement may be amended (the "AGREEMENT"), a copy of which is
attached hereto as Exhibit A.
B. Goldberg desires to assign to Aasche certain provisions of the Agreement and
Aasche desires to accept an assignment of the Agreement.
NOW, THEREFORE, in consideration of the foregoing recitals, which are
hereby incorporated herein, and the mutual premises herein contained, and for
other good and valuable consideration, the receipt and adequacy of which is
hereby acknowledged, the parties hereby agree as follows:
1. Goldberg hereby assigns to Aasche all of his rights and interests in and
to the Agreement, except for the following Sections 7.3, 7.4, 8.3(f), 8.3(g),
8.3(h) and 8.3(i).
2. Aasche hereby accepts the assignment by Goldberg of all of his rights
and interests in and to the Agreement, except as set forth in Section 1 and
except as set forth in Section, hereby assumes all of Goldberg's obligations
under the Agreement.
3. Goldberg agrees that he will promptly and duly execute and deliver any
and all further instruments and documents as Aasche may reasonably require in
obtaining the full benefits of this Assignment and the rights and powers herein
granted.
4. This Assignment shall be binding upon and shall inure to the benefit of
the parties hereto and their permitted successors, assigns, heirs and legal
representatives.
IN WITNESS WHEREOF, the parties hereto have executed this Assignment as of
the date first above written.
/s/ Gary I. Goldberg
-------------------------------
Gary I. Goldberg
AASCHE TRANSPORTATION SERVICES, INC.
By: /s/ Larry L. Asche
----------------------------
Larry L. Asche, Chairman and Chief
Executive Officer
<PAGE> 2
CONSENT
The undersigned hereby consents to the foregoing Assignment.
Dated: 10/15/97 JACK GRAY TRANSPORT, INC.
------------------------
By: /s/ John S. Gray
-------------------------------------
John S. Gray, President
2
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<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
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<RECEIVABLES> 5,572
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0
0
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<OTHER-SE> 12,922
<TOTAL-LIABILITY-AND-EQUITY> 41,534
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