<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 JUNE 30, 1998
[ ] 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 Identification No.)
Incorporation or Organization)
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
4,626,130 SHARES OF PAR VALUE $.0001 COMMON STOCK
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<PAGE> 2
PART I: FINANCIAL INFORMATION
Item 1. Financial Statements
AASCHE TRANSPORTATION SERVICES, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
----------- -------------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Trade receivables, net $ 13,130 $ 5,449
Prepaid expenses and other current assets 5,437 2,691
-------- --------
Total current assets 18,567 8,140
Property and equipment, at cost 56,789 32,931
Less accumulated depreciation and amortization (13,956) (13,755)
-------- --------
Net property and equipment 42,833 19,176
-------- --------
Excess of cost over net assets acquired, net 11,713 7,340
Debt issuance cost, net 1,048 --
Other assets 3,383 851
-------- --------
TOTAL ASSETS $ 77,544 $ 35,507
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Cash overdraft $ 448 $ 312
Accounts payable 2,572 788
Accrued liabilities 2,433 1,234
Guaranteed obligation of Employee Stock Ownership Plan 194 203
Line of credit -- 3,817
Current maturities of long-term debt with unrelated parties 3,805 2,752
Current maturities of long-term debt with related party 995 995
Current maturities of capital lease obligations with unrelated parties 3,322 2,696
Current maturities of capital lease obligations with related parties 437 669
-------- --------
Total current liabilities 14,206 13,466
Line of credit 9,632 --
Long-term debt with unrelated parties, less current maturities 17,415 3,745
Long-term debt with related party, less current maturities 1,053 1,550
Capital lease obligations with unrelated parties, less current maturities 6,374 2,787
Capital lease obligations with related parties, less current maturities 33 144
Minority interest 529 --
Subordinated debt 12,694 --
Deferred income taxes 1,006 1,006
Other 357 --
-------- --------
Total liabilities 63,299 22,698
Stockholders' equity:
Common stock, $.0001 par value, 10,000,000 shares authorized,
4,626,130 and 4,539,735 shares issued and outstanding -- --
Additional paid-in capital 17,758 16,565
Guarantee of Employee Stock Ownership Plan obligation (194) (203)
Accumulated deficit (3,319) (3,553)
-------- --------
Total stockholders' equity 14,245 12,809
-------- --------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 77,544 $ 35,507
======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
2
<PAGE> 3
AASCHE TRANSPORTATION SERVICES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share and share data)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
-------------------------- --------------------------
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
NET REVENUES $ 29,129 $ 16,799 $ 51,299 $ 34,111
OPERATING EXPENSES:
Salaries, wages and benefits 10,774 5,723 18,906 11,868
Fuel 3,516 2,724 6,416 5,823
Purchased transportation 6,338 2,789 10,558 5,614
Supplies and maintenance 3,315 1,710 5,166 3,198
Depreciation and amortization 1,852 1,245 3,509 2,641
Taxes and licenses 397 420 798 882
Insurance 697 482 1,375 993
Communications and utilities 327 202 622 424
Gain on disposition of equipment (22) (27) (48) (64)
Other 167 497 580 1,012
----------- ---------- ----------- ----------
Total operating expenses 27,361 15,765 47,882 32,391
----------- ---------- ----------- ----------
OPERATING INCOME 1,768 1,034 3,417 1,720
OTHER (EXPENSES) INCOME:
Interest expense (1,387) (586) (2,225) (1,173)
Warrant accretion expense (214) -- (357) --
Debt issuance cost (76) -- (127) --
Amortization of debt discount (72) -- (120) --
Minority interest expense (17) -- (29) --
Other 127 12 184 16
----------- ---------- ----------- ----------
INCOME BEFORE INCOME TAX PROVISION 129 460 743 563
INCOME TAX PROVISION (181) (299) (509) (366)
----------- ---------- ----------- ----------
NET (LOSS) INCOME $ (52) $ 161 $ 234 $ 197
=========== =========== =========== ===========
NET (LOSS) INCOME PER COMMON SHARE:
BASIC $ (0.01) $ 0.04 $ 0.05 $ 0.05
=========== =========== =========== ===========
DILUTED $ (0.01) $ 0.04 $ 0.05 $ 0.05
=========== =========== =========== ===========
Weighted average common shares outstanding 4,612,930 4,019,420 4,556,575 4,003,689
=========== =========== =========== ===========
</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
of Employee
Stock
Ownership
Common Stock Additional Plan Total
$.0001 Par Value Paid-In ("ESOP") Accumulated Stockholders'
Shares Amount Capital Obligation Deficit Equity
------ ------ ------- ---------- ------- ------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1997 4,539,735 $ -- $ 16,565 $ (203) $ (3,553) $ 12,809
Exercise of stock options and warrants 86,395 -- 392 -- -- 392
Warrants granted in connection
with STS acquisition -- -- 801 -- -- 801
Reduction in Guarantee of
ESOP obligation -- -- -- 9 -- 9
Net income -- -- -- -- 234 234
--------- -------- --------- ---------- --------- ---------
Balance at June 30, 1998 4,626,130 $ -- $ 17,758 $ (194) $ (3,319) $ 14,245
========= ======== ========= ========== ========= =========
</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>
Six Months Ended
June 30,
----------------------------
1998 1997
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 234 $ 197
Adjustments to reconcile net income
to net cash (used in) provided by operating activities:
Depreciation and amortization 3,509 2,641
Gain on disposition of equipment (48) (64)
Other 633 --
Changes in other current operating items:
Trade receivables (7,681) 847
Prepaid expenses and other assets (2,413) (548)
Accounts payable 1,784 (1,070)
Accrued liabilities 1,199 (45)
-------- --------
Net cash (used in) provided by operating activities (2,783) 1,958
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Property and equipment additions:
Revenue equipment (3,283) (629)
Building, office equipment and other (153) (62)
Proceeds from the sale of equipment 5,927 4,785
Purchase of Specialty Transportation Services, Inc. (31,564) --
-------- --------
Net cash (used in) provided by investing activities (29,073) 4,094
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings of debt with unrelated parties 18,042 --
Borrowings of subordinated debt 13,375 --
Minority interest 500 --
Debt issuance cost (1,175) --
Net borrowings (repayments) on lines of credit 5,815 (825)
Principal payments on long-term debt with unrelated parties (3,318) (2,943)
Principal payments on long-term debt with related party (498) (786)
Principal payments on capital leases with unrelated parties (1,046) (1,946)
Principal payments on capial leases with related parties (367) (352)
Issuance of common stock -- 1,306
Proceeds from exercise of options and warrants 392 --
-------- --------
Net cash provided by (used in) financing activities 31,720 (5,546)
-------- --------
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (136) 506
CASH AND CASH EQUIVALENTS (CASH OVERDRAFT):
Beginning of period (312) (349)
-------- --------
End of period $ (448) $ 157
======== ========
SUPPLEMENTAL DISCLOSURE OF
CASH FLOW INFORMATION:
Interest paid $ 2,257 $ 1,163
======== ========
======== ========
Income taxes paid $ 313 $ --
======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
5
<PAGE> 6
AASCHE TRANSPORTATION SERVICES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1998
(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, 1997, 1996, and 1995, 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 - ACQUISITION OF THE MUNICIPAL SOLID WASTE HAULING DIVISION OF JACK GRAY
TRANSPORT, INC.
On January 30, 1998, the Company purchased the net assets of the municipal solid
waste transport division of Jack Gray Tranport, Inc. (the "Waste Transport
Business") for $30,200 in cash. The Waste Transport Business is operated through
Specialty Transportation Services, Inc. ("STS"), a newly formed subsidiary of
the Company, headquartered in Portage, Indiana. The Company also issued 825,000
options to purchase the Company's common stock at prices ranging from $3.94 to
$4.88 to key employees of STS. In conjunction with the acquisition, the Company
recorded $4,575 in cost in excess of net assets acquired. The acquisition was
accounted for as a purchase and accordingly, the 1998 consolidated statement of
income includes the results of STS from the date of its acquisition.
The acquisition by STS was financed with an $18,000 senior bank credit facility,
$13,375 of subordinated debt, $2,125 of which was issued to related parties
(primarily directors), and $500 of common stock in exchange for a 10% ownership
interest in STS. In connection with the issuance of the subordinated debt,
947,500 warrants to acquire the Company's common stock at prices ranging from
$3.49 to $4.63 per share were issued to various investors, including related
parties (primarily directors), and warrants to acquire an additional 10% of STS
common stock were issued.
In addition, if the internal rate of return ("IRR") of an $8,000 subordinated
debt investment is less than 24%, STS is required to issue warrants to purchase
up to an additional 30% of STS common stock for a nominal cost. The Company has
the right to call all, but not less than all, of these warrants or the
underlying common stock, if previously converted, upon 30 days notice after all,
but not less than all, of the $8,000 of subordinated debt issued has been paid
in full by the Company for the greater of fair market value or a 24% IRR. The
Company has the right to call the warrants, or underlying common stock, if
previously converted, any time up to 5 years from the date of the acquisition.
Commencing February 1, 2003, the warrants or underlying common stock, if
previously converted, can be put to STS for cash, an increase in the
subordinated debt, or shares in the Company's common stock at the greater of
fair market value or a 24% IRR on its investment. The $500 common stock
investment in STS can be put to STS after February 1, 2003 for the fair market
value of the common stock. Upon certain events, both the subordinated debt
warrants and the common stock in STS can be put to STS for cash, an increase in
the subordinated debt, or shares in the Company's common stock at an earlier
date.
STS transports municipal solid and special waste under contracts ranging from
five to twenty years with municipalities and large national waste service
companies, including Waste Management, Browning-Ferris and Republic Waste
Industries. Under the exclusive waste transfer contracts, STS transports solid
and special waste
6
<PAGE> 7
from transfer stations to landfill sites owned by either the municipality or a
waste services company. Subsequent to the acquisition, STS has expanded its
operations to include the transportation of bulk commodities for the scrap
recycling, environmental, construction and manufacturing industries.
The former executive vice president of Jack Gray Transport, Inc. who organized
the waste transport division of Jack Gray Transport, Inc. in 1983, has entered
into a five year employment agreement to serve as the President of STS. This
former executive vice-president has served as a member of the Company's Board of
Directors since July 1996 and a vice president of the Company since January
1998.
STS operates as a stand-alone business unit separate from the Company's existing
temperature-controlled operations.
The following unaudited pro forma statements of operations data are based on
certain amounts derived from the unaudited statements of operations of the Waste
Transport Business for the six months ended June 30, 1998 and 1997, and assumes
in each case, that the acquisition of the net assets of the Waste Transport
Business occurred on January 1, 1997. The pro forma statements are not
necessarily indicative of the results of operations which would have occurred
had the acquisition taken place on January 1, 1997 or of future results of the
consolidated operations of STS and the Company.
<TABLE>
<CAPTION>
Six Months Ended June 30,
-------------------------
1998 1997
---- ----
<S> <C> <C>
Net revenues $ 54,733 $ 51,154
Net income (loss) 232 (94)
Net income (loss) per common share:
Basic 0.05 (0.02)
Diluted 0.05 (0.02)
</TABLE>
NOTE 3 - COMMON SHARE DATA
Basic income per share is computed using the weighted average number of shares
outstanding. On a diluted basis, the weighted average number of shares
outstanding is adjusted for the incremental shares attributed to outstanding
options and warrants, when the effect of such items are dilutive.
Effective December 15, 1997, the Company adopted SFAS No. 128, "Earnings per
Share". Accordingly, all references in these financial statements to earnings
per share, diluted earnings per share and related weighted average shares have
been restated to reflect this adoption. Diluted weighted average shares
outstanding for the three months ended June 30, 1998 and 1997 in connection with
options and warrants amount to 852,175 shares and 78,139 shares, respectively.
Diluted weighted average shares outstanding for the six months ended June 30,
1998 and 1997 in connection with options and warrants amount to 564,295 shares
and 91,686 shares, respectively.
NOTE 4 - RECENT ACCOUNTING STANDARDS
In June 1997, the FASB issued SFAS No. 131 "Disclosures about Segments of an
Enterprise and Related Information," which changes the way public companies
report information about operating segments. The Company will adopt SFAS No. 131
at the end of fiscal 1998. This statement, which is based on the management
approach to segment reporting, establishes requirements to report selected
segment information quarterly and to report entity-wide disclosures about
products and services, major customers and the major countries in which the
Company holds assets and reports revenues.
Management believes that the adoption of this new standard will not have a
material impact on the Company's financial position or results of operation.
7
<PAGE> 8
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.
On January 30, 1998, the Company purchased the net assets of the Waste Transport
Business ("STS Acquisition") for $30,200 in cash. The Waste Transport Business
is operated through STS, a newly formed subsidiary of the Company. The
acquisition was accounted for as a purchase and accordingly, the 1998
consolidated statement of income includes the results of STS from the date of
its acquisition. The results of operations discussed below are not necessarily
comparable between periods because the results from operations for the six
months ended June 30, 1997 do not include STS and the results from operations
for the six months ended June 30, 1998 only include STS since the date of its
acquisition.
RESULTS OF OPERATIONS
COMPARISON OF THE SIX MONTH PERIOD ENDED JUNE 30, 1998 WITH THE SIX MONTH PERIOD
ENDED JUNE 30, 1997.
Net revenues increased $17.2 million, or 50.4%, to $51.3 million in 1998, from
$34.1 million in 1997, largely due to the STS Acquisition. During the first half
of 1998, the Company increased its revenue producing power units by 353 units.
Without giving effect to the additional net revenues contributed by the STS
Acquisition, the Company's net revenues decreased by $2.8 million, or 8.2%, due
to having less tractors in service.
Total miles increased 9.1 million, or 29.9%, to 39.5 million in 1998 from 30.4
million in 1997, largely due to the STS Acquisition. Average miles per tractor
decreased 10.1% to 54,839 miles in 1998 from 61,000 miles in 1997. Average
revenue per tractor increased 2.7% to $71,179 in 1998 from $69,331 in 1997. The
decrease in average miles per tractor and the increase in average revenue per
tractor are attributable to the shorter length of haul in the Waste Transport
Business. Without giving effect to the STS Acquisition, the Company's total
miles decreased by 4.0 million, or 13.2%, due to having less tractors in
service. Competition for drivers is intense within the trucking industry and the
Company occasionally experiences difficulty in its temperature -controlled
operations attracting and retaining qualified drivers and owner-operators which
results in the temporary idling of revenue equipment.
The Company's operating ratio (operating expenses divided by operating revenues)
decreased 1.7%, to 93.3% in 1998 from 95.0% in 1997. The decrease in the
operating ratio is largely due to a lower operating ratio in the Waste Transport
Business. Without giving effect to the STS Acquisition, the Company's operating
ratio decreased 0.2%, to 94.8% in 1998 from 95.0% in 1997. Total operating
expenses increased $15.5 million, or 47.8%, to $47.9 million in 1998, compared
to $32.4 million in 1997, largely due to the STS Acquisition. Without giving
effect to the STS Acquisition, the Company's total operating expenses decreased
by $2.7 million, or 8.3%, due primarily to having less tractors in service and
decreased fuel prices.
Salaries, wages and benefits increased $7.0 million, or 59.3%, to $18.9 million
in 1998 compared to $11.9 million in 1997, due to the STS Acquisition and
increases in overall compensation of drivers that were needed to enhance
recruitment and retention. Without giving effect to the STS Acquisition, the
Company's salaries, wages and benefits decreased by $0.1 million, or 0.4%,
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 increased $0.6 million, or 10.2%, to $6.4 million in 1998 compared
to $5.8 million in 1997, largely due to the effect of the STS Acquisition, which
more than offset decreased fuel prices. Without giving effect to the STS
Acquisition, the Company's fuel expense decreased by $1.3 million or 22.8%,
largely due to the decrease in the number of tractors in service and decreased
fuel prices.
Purchased transportation expense increased $4.9 million, or 88.1%, to $10.6
million in 1998 compared to $5.6 million in 1997, largely due to the STS
Acquisition. Without giving effect to the STS Acquisition, the Company's
purchased transportation expense increased by $0.4 million, or 6.8%, due to an
increase in contractor operated units.
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<PAGE> 9
Supplies and maintenance expenses increased $2.0 million, or 61.5%, to $5.2
million in 1998 compared to $3.2 million in 1997, largely due to the STS
Acquisition. Without giving effect to the STS Acquisition, the Company's
supplies and maintenance expense decreased by $0.6 million, or 18.4%, due to a
decrease in company-owned units in service.
Depreciation and amortization expense increased $0.9 million, or 32.9%, to $3.5
million in 1998 compared to $2.6 million in 1997, largely due to the STS
Acquisition. Without giving effect to the STS Acquisition, the Company's
depreciation and amortization expense decreased by $0.4 million or 13.2%, due to
a decrease in company-owned units in service.
Insurance expense increased $0.4 million, or 38.5%, to $1.4 million in 1998
compared to $1.0 million in 1997, due to the STS Acquisition.
Interest expense increased $1.1 million, or 89.7%, to $2.2 million in 1998
compared to $1.2 million in 1997, due to the STS Acquisition. Without giving
effect to the STS Acquisition, the Company's interest expense decreased $0.5
million, due to lower levels of debt. Outstanding debt and capital lease
obligations aggregated $56.0 million at June 30, 1998 compared with $23.2
million at June 30, 1997.
Warrant accretion expense of $357 in 1998 represents the accretion of STS
warrants.
Debt issuance cost of $127 in 1998 represents the amortization of debt issuance
costs in connection with the STS Acquisition.
Amortization of debt discount of $120 in 1998 represents the amortization of
debt discount in connection with the STS Acquisition.
Minority interest expense of $29 in 1998 represents the increase in minority
interest in connection with the STS Acquisition.
The effective income tax rates of 68.5% and 65.0% in 1998 and 1997,
respectively, are higher than the federal statutory rate due primarily to the
non-deductibility of certain expenses.
COMPARISON OF THE THREE MONTH PERIOD ENDED JUNE 30, 1998 WITH THE THREE MONTH
PERIOD ENDED JUNE 30, 1997.
Net revenues increased $12.3 million, or 73.4%, to $29.1 million in 1998, from
$16.8 million in 1997, largely due to the STS Acquisition. During the first half
of 1998, the Company increased its revenue producing power units by 43 units.
Without giving effect to the additional net revenues contributed by the STS
Acquisition, the Company's net revenues decreased by $0.8 million, or 4.7%, due
to having less tractors in service.
Total miles increased 7.1 million, or 47.7%, to 22.0 million in 1998 from 14.9
million in 1997, largely due to the STS Acquisition. Average miles per tractor
decreased 7.1% to 28,069 miles in 1998 from 30,198 miles in 1997. Average
revenue per tractor increased 8.7% to $37,121 in 1998 from $34,144 in 1997. The
decrease in average miles per tractor and the increase in average revenue per
tractor are attributable to the shorter length of haul in the Waste Transport
Business. Without giving effect to the STS Acquisition, the Company's total
miles decreased by 1.4 million, or 9.4%, due to having less tractors in service.
Competition for drivers is intense within the trucking industry and the Company
occasionally experiences difficulty in its temperature-controlled operations
attracting and retaining qualified drivers and owner-operators which results in
the temporary idling of revenue equipment.
The Company's operating ratio (operating expenses divided by operating revenues)
increased 0.1%, to 93.9% in 1998 from 93.8% in 1997. Without giving effect to
the STS Acquisition, the Company's operating ratio increased 0.7%, to 94.5% in
1998 from 93.8% in 1997. Total operating expenses increased $11.6 million, or
73.6%, to $27.4 million in 1998, compared to $15.8 million in 1997, largely due
to the STS Acquisition. Without giving effect to the STS Acquisition, the
Company's total operating expenses decreased by $0.6 million, or 4.3%, due
primarily to having less tractors in service and decreased fuel prices.
Salaries, wages and benefits increased $5.1 million, or 88.3%, to $10.8 million
in 1998 compared to $5.7 million in 1997, due to the STS Acquisition and
increases in overall compensation of drivers that were needed to enhance
recruitment and retention. Without giving effect to the STS Acquisition, the
Company's salaries, wages and benefits
9
<PAGE> 10
increased by $0.4 million, or 7.2%, largely due to increases in overall
compensation of drivers that were needed to enhance driver recruitment and
retention, which more than offset having less personnel to service the fewer
tractors in service.
Fuel expenses increased $0.8 million, or 29.1%, to $3.5 million in 1998 compared
to $2.7 million in 1997, largely due to the effect of the STS Acquisition, which
more than offset decreased fuel prices. Without giving effect to the STS
Acquisition, the Company's fuel expense decreased by $0.4 million or 15.7%,
largely due to the decrease in the number of tractors in service and decreased
fuel prices.
Purchased transportation expense increased $3.5 million, or 127.2%, to $6.3
million in 1998 compared to $2.8 million in 1997, largely due to the STS
Acquisition. Without giving effect to the STS Acquisition, the Company's
purchased transportation expense increased by $0.3 million, or 10.9%, due to an
increase in contractor operated units.
Supplies and maintenance expenses increased $1.6 million, or 93.9%, to $3.3
million in 1998 compared to $1.7 million in 1997, largely due to the STS
Acquisition. Without giving effect to the STS Acquisition, the Company's
supplies and maintenance expense decreased by $0.3 million, or 19.1%, due to a
decrease in company-owned units in service.
Depreciation and amortization expense increased $0.6 million, or 48.8%, to $1.9
million in 1998 compared to $1.2 million in 1997, largely due to the STS
Acquisition. Without giving effect to the STS Acquisition, the Company's
depreciation and amortization expense decreased by $0.1 million or 9.4%, due to
a decrease in company-owned units in service.
Insurance expense increased $0.2 million, or 44.6%, to $0.7 million in 1998
compared to $0.5 million in 1997, due to the STS Acquisition.
Interest expense increased $0.8 million, or 136.7%, to $1.4 million in 1998
compared to $0.6 million in 1997, due to the STS Acquisition. Without giving
effect to the STS Acquisition, the Company's interest expense decreased $0.2
million, due to lower levels of debt. Outstanding debt and capital lease
obligations aggregated $56.0 million at June 30, 1998 compared with $23.2
million at June 30, 1997.
Warrant accretion expense of $214 in 1998 represents the accretion of STS
warrants.
Debt issuance cost of $76 in 1998 represents the amortization of debt issuance
costs in connection with the STS Acquisition.
Amortization of debt discount of $72 in 1998 represents the amortization of debt
discount in connection with the STS Acquisition.
Minority interest expense of $17 in 1998 represents the increase in minority
interest in connection with the STS Acquisition.
The effective income tax rates of 140.3% and 65.0% in 1998 and 1997,
respectively, are higher than the federal statutory rate due primarily to the
non-deductibility of certain expenses.
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 1998, the Company had net working capital of $4.4 million. 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 two revolving bank lines of credit with a total borrowing limit
of $12.0 million based on a percentage of eligible trade receivables, $9.6
million of which was borrowed against these lines of credit at June 30, 1998,
and approximately $1.1 million was available. In June 1998, the Company entered
into a new bank line of credit that extended the due date to April 30, 2000.
The Company's growth in prior years and the significant investment in its modern
fleet of tractors and 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
10
<PAGE> 11
$56.0 million and $23.2 million at June 30, 1998 and 1997, respectively. The
debt to equity ratio (calculated excluding payables and other liabilities) was
3.93:1 at June 30, 1998 and 1.90:1 at June 30, 1997. During 1998, the Company
increased its owned fleet size by 353 tractors and 494 trailers.
The Company believes that available cash, cash flow from future operations, and
borrowings available under its lines of credit will be sufficient to meet its
current working capital needs. As the Company continues to facilitate its
planned future growth in 1998, the Company's capital needs may require
additional borrowings or an equity infusion.
FORWARD LOOKING STATEMENTS
This Form 10-Q contains forward-looking statements relating to future financial
results or business expectations. Business plans may change as circumstances
warrant. Actual results may differ materially as a result of factors over which
the company has no control. Such factors include, but are not limited to:
general economic conditions, availability of drivers, labor costs, interest
rates, competition and governmental regulations. These risk factors and
additional information are included in the Company's reports on file with the
Securities and Exchange Commission.
SEASONALITY
The Company's results of operations show a seasonal pattern because certain of
the frozen food companies serviced by the Company generally reduce shipments
during the summer season. During the winter months, the Company has at times
experienced delays in meeting its pickup and delivery schedules as a result of
severe weather conditions. In addition, the Company's operating expenses have
historically been higher in the winter months due to decreased fuel efficiency
and increased maintenance costs in colder weather. Accordingly, such factors
cause fluctuations in results of operations. The Foliage Division of Asche
Transfer experiences seasonal fluctuations in volume during certain periods of
the year.
YEAR 2000
The Company has determined that it will need to modify or replace significant
portions of its software so that its computer systems will function properly
with respect to dates in the year 2000 and beyond. The Company also has
initiated discussions with its significant suppliers and large customers to
ensure that those parties have appropriate plans to remediate Year 2000 issues
where their systems interface with the Company's systems or otherwise impact its
operations. The Company is addressing the extent to which its operations are
vulnerable should those organizations fail to remediate properly their computer
systems.
The Company's comprehensive Year 2000 initiative is being managed by a team of
internal staff. The team's activities are designed to ensure that there is no
material adverse effect on the Company's core business operations and that
transactions with customers and suppliers are fully supported. The Company is
well under way with these efforts, which are scheduled to be completed in early
1999. While the Company believes its planning efforts are adequate to address
its Year 2000 concerns, there can be no guarantee that the systems of other
companies on which the Company's systems and operations rely will be converted
on a timely basis and will not have a material adverse effect on the Company.
The cost of the Year 2000 initiative is not expected to be material to the
Company's results of operations or financial position.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK SENSITIVE
INSTRUMENTS
The Company currently does not invest excess funds in derivative financial
instruments or other market rate sensitive instruments for the purpose of
managing its foreign currency exchange rate risk or for any other purpose.
11
<PAGE> 12
PART II
AASCHE TRANSPORTATION SERVICES, INC.
(A DELAWARE CORPORATION)
ITEM 1. LEGAL PROCEEDINGS.
Not applicable.
ITEM 2. CHANGES IN SECURITIES.
(a) Not applicable.
(b) Not applicable.
(c) Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
(a)(i) Date of Meeting.
On May 13, 1998, the Company held its Annual Meeting of
Stockholders.
(b)(i) Description of each matter voted on and number of votes cast.
The following actions were taken at the annual meeting:
1. To elect Larry L. Asche as a Class I director.
FOR AGAINST ABSTAIN
3,497,092 -- 44,292
2. To elect Leon M. Monachos as a Class I director.
FOR AGAINST ABSTAIN
3,495,892 -- 45,492
3. To elect Gary I. Goldberg as a Class I director.
FOR AGAINST ABSTAIN
3,495,892 -- 45,492
4. To elect Dennis D. Wilson as a Class I director.
FOR AGAINST ABSTAIN
3,497,092 -- 44,292
5. To adopt an Amendment to the Company's Stock Option Plan.
FOR AGAINST ABSTAIN
3,381,946 128,935 30,503
ITEM 5. OTHER INFORMATION.
Not applicable.
12
<PAGE> 13
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
10.1 Loan and Security Agreement between Asche Transfer, Inc.,
AG Carriers, Inc. and American National Bank and Trust
Company of Chicago dated June 23, 1998
10.2 Secured Guaranty by Aasche Transportation Services, Inc.
in favor of American National Bank and Trust Company of
Chicago dated June 23, 1998.
10.3 ESOP Loan and Security Agreement between Aasche
Transportation Services, Inc. Employees' Stock Ownership
Trust and American National Bank and Trust Company of
Chicago dated June 23, 1998.
10.4 Continuing Unconditional Guaranty by Aasche Transportation
Services, Inc. in favor of American National Bank and
Trust Company of Chicago dated June 23, 1998.
10.5 Continuing Unconditional Guaranty by Asche Transfer, Inc.
in favor of American National Bank and Trust Company of
Chicago dated June 23, 1998.
10.6 Continuing Unconditional Guaranty by AG Carriers, Inc. in
favor of American National Bank and Trust Company of
Chicago dated June 23,1998.
10.7 First Amendment to the Stock Option Plan.
27.0 Financial Data Schedule.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the calender quarter
ended June 30, 1998.
13
<PAGE> 14
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Aasche Transportation Services, Inc.
Date August 13, 1998 BY: s/Leon M. Monachos
-----------------------------------------
Leon M. Monachos, Chief Financial Officer
Date August 13, 1998 BY: s/Larry L. Asche
------------------------------------------
Larry L. Asche, Chairman and
Chief Executive Officer
14
<PAGE> 1
EXHIBIT 10.1
================================================================================
LOAN AND SECURITY AGREEMENT
BY AND AMONG
ASCHE TRANSFER, INC., AN ILLINOIS CORPORATION
AND
AG CARRIERS, INC., A FLORIDA CORPORATION
AS BORROWERS
AND
AMERICAN NATIONAL BANK
AND TRUST COMPANY OF CHICAGO,
AS BANK
DATED AS OF JUNE 23, 1998
================================================================================
<PAGE> 2
LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT (this "Agreement") is made as of the 23rd
day of June, 1998 by and among ASCHE TRANSFER, INC., an Illinois corporation
having its principal place of business located at 10124 North Mt. Vernon Road,
Shannon, Illinois 61078 and AG CARRIERS, INC., a Florida corporation having
its principal place of business located at 13349 Southridge Industrial Drive,
Tavares, Florida 32778 (individually and collectively "Borrower"), and
AMERICAN NATIONAL BANK AND TRUST COMPANY OF CHICAGO, a national banking
association ("Bank"), having its principal place of business located at 120
South LaSalle Street, Chicago, Illinois 60603.
W I T N E S S E T H:
WHEREAS, Borrower desires to borrow funds to provide the working capital
necessary for their operations.
WHEREAS, on the terms and subject to the conditions contained in this
Agreement, Bank is willing to provide such financing and financial
accommodations to Borrower on a secured basis; and
WHEREAS, Bank and Borrower are desirous of fully setting forth their
rights and obligations with respect to the loan to, and borrowing by, Borrower.
NOW, THEREFORE, in consideration of the premises, the mutual covenants and
agreements set forth herein, Borrower agrees to borrow from Bank, and Bank
agrees to lend to Borrower, subject to and upon the following terms and
conditions:
1. DEFINITIONS AND TERMS
1.1 Certain Definitions. The following words, terms and/or phrases
shall have the meanings set forth thereafter and such meanings shall be
applicable to the singular and plural form thereof, giving effect to the
numerical difference.
"Account Debtor" means any Person who is or who may become obligated to
the Borrower under, with respect to, or on account of any Account.
"Accounts" means all accounts, contract rights, chattel paper, instruments
and documents, whether now owned or to be acquired by the Borrower, whether or
not constituting Eligible Accounts Receivable.
"Accounts Borrowing Base" means 85% of the Eligible Accounts Receivable
from time to time (which percentage may be revised upon Bank's field exam of
Borrower's books and records).
<PAGE> 3
"Accounting Changes" shall have the meaning assigned to such term in
Paragraph 1.2 hereof.
"Affiliate" means a corporation, partnership, limited liability company,
joint venture, association, business trust or similar entity (a) which
controls, is controlled by or is under common control with, directly or
indirectly, Borrower; or (b) a majority of the members of the Directing Body of
which are members of the Directing Body of Borrower. For the purposes of this
definition, control means with respect to: (a) a corporation having stock, the
ownership, directly or indirectly, of more than 50% of the securities (as
defined in Section 2(1) of the Securities Act of 1933, as amended) of any class
or classes the holders of which are ordinarily, in the absence of
contingencies, entitled to elect a majority of the directors of such
corporation; (b) a not-for-profit corporation not having stock, having the
power to elect or appoint, directly or indirectly, a majority of the members of
the Directing Body of such corporation; or (c) any other entity, the power to
direct the management of such entity through the ownership of at least a
majority of its voting securities or the right to designate or elect at least a
majority of the members of its Directing Body, by contract or otherwise. For
the purposes of this definition, "Directing Body" means with respect to: (a) a
corporation having stock, such corporation's board of directors and the owners,
directly or indirectly, of more than 50% of the securities (as defined in
Section 2(1) of the Securities Act of 1933, as amended) of any class or classes
the holders of which are ordinarily, in the absence of contingencies, entitled
to elect a majority of the corporation's directors (both of which groups shall
be considered a Directing Body); (b) a not-for-profit corporation not having
stock, such corporation's members if the members have complete discretion to
elect the corporation's directors, or the corporation's directors if the
corporation's members do not have such discretion; and (c) any other entity,
its governing board or body. For the purposes of this definition, all
references to directors and members shall be deemed to include all entities
performing the function of directors or members however denominated.
"A/R Accrual" means an Account which is otherwise an Eligible Accounts
Receivable where the invoice has not yet been forwarded to the Account Debtor
(but in any event is forwarded to the Account Debtor within ten (10) business
days of the date the service is rendered).
"Authorized Officer" means Larry Asche, Leon Monachos, Diane Asche, Kevin
Clark or Gary Goldberg (any one of them) or his/her successor.
"Bankruptcy Code" means Title 11 of the United States Code, as amended.
"Borrower's Liabilities" means the aggregate of all obligations and
liabilities of Borrower in the aggregate to Bank (including, without limitation,
all Debts, claims and indebtedness) whether primary, secondary, direct,
contingent, fixed or otherwise, heretofore, now and/or from time to time
hereafter owing, due or payable, however evidenced, created, incurred, acquired
or
<PAGE> 4
owing and however arising, whether under this Agreement, the other Loan
Documents, or by other document or instrument, or oral agreement or operation of
law or otherwise.
"Business Day" means any day on which Bank is open for the transaction of
commercial banking business in Chicago, Illinois other than a Saturday or
Sunday.
"Capital Expenditures" means the cost of acquiring any fixed assets, or
any improvements, replacements, substitutions, accessions or additions thereto
or therefor which have a useful life of more than one year, including without
limitation, the cost of direct or indirect acquisitions of such assets by way
of purchase, capital lease or otherwise.
"Charges" means, if applicable at any time, all national, federal, state,
county, city, municipal and/or other governmental (or any instrumentality,
division, agency, body or department thereof, including, without limitation,
the PBGC) taxes, levies, assessments, charges, liens, claims or encumbrances
upon and/or relating to Borrower's Liabilities, Borrower's business, Borrower's
ownership and/or use of the Collateral, income and/or gross receipts.
"Closing Date" means June 25, 1998.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collateral" shall have the meaning assigned to such term in Paragraph 6.1
hereof.
"Consolidated Entities" means Aasche Transportation Services, Inc. and all
of its wholly owned and partially owned subsidiaries, Asche Transfer, Inc., AG
Carriers, Inc. and Specialty Transportation Services, Inc.
"Credit Termination Date" means the earliest to occur of (i) the Maturity
Date or (ii) the Early Termination Date applicable hereto.
"Debt" means all of a Person's liabilities, obligations and indebtedness
to any Person of any and every kind and nature, whether primary, secondary,
direct, indirect, absolute, contingent, fixed or otherwise, heretofore, now
and/or from time to time hereafter owing, due or payable, however evidenced,
created, incurred, acquired or owing and however arising, whether under written
or oral agreement, by operation of law or otherwise. Without in any way
limiting the generality of the foregoing, Debt specifically includes (i)
indebtedness for borrowed money, (ii) obligations evidenced by bonds,
debentures, notes or other similar instruments, (iii) obligations to pay the
deferred purchase price of property or services, (iv) obligations as lessee
under leases which shall have been or should be, in accordance with generally
accepted accounting principles, recorded as capital leases, (v) obligations
under direct or indirect guaranties in respect of, and obligations (contingent
or otherwise) to purchase or otherwise acquire, or otherwise to assure a
creditor against loss in respect of, indebtedness or obligations of others of
the kinds referred to in clauses (i) through (iv) above, and (vi) liabilities
in respect of unfunded vested benefits under Plans and Multi-employer Plans
covered by Title IV of ERISA.
3
<PAGE> 5
"Default Rate" shall have the meaning assigned to such term in Paragraph
3.l(c) hereof.
"Early Termination Date" means the date, pursuant to Paragraph 8.3, upon
which, whether by notice or by right hereunder, Bank's obligation to extend
credit hereunder is terminated.
"Eligible Accounts" shall mean those Accounts of Borrower
that meet the following requirements:
(a) The individual Account is not evidenced by chattel paper or an
instrument of any kind;
(b) The Account Debtor obligated on such individual Account is not
insolvent or the subject of any bankruptcy or insolvency proceeding of any
kind and the Lender has not advised Borrower prior to the date of creation
of the Account, that the creditworthiness of the Account Debtor is not
acceptable to Bank;
(c) The individual Account is not owing from an Account Debtor
located outside the United States;
(d) The individual Account is a valid, legally enforceable obligation
of the relevant Account Debtor and such Account Debtor has not asserted any
offset, counterclaim or defense denying liability thereunder; provided,
however, that if such offset, counterclaim or defense has been asserted,
such Account shall be ineligible only to the extent of such asserted
offset, counterclaim or defense;
(e) The individual Account is subject to and covered by the Lender's
perfected security interest and is not subject to any other lien, claim,
encumbrance or security interest;
(f) The individual Account is evidenced by an invoice or other
documentation in form acceptable to the Lender to constitute an A/R
Accrual, is dated not later than ten (10) business days after performance
of the service and has a due date not later than thirty (30) days from the
date of the invoice and the invoice has been sent to the Account Debtor or
the Account is separately identified to Bank as an A/R Accrual;
(g) The individual Account has not remained unpaid for a period
exceeding ninety (90) days after the related invoice date;
(h) If more than twenty-five percent (25%) of all Accounts owing by a
particular Account Debtor have remain unpaid for a period exceeding ninety
(90) days after the related invoice date, no Accounts owing by such Account
Debtor are Eligible Accounts;
4
<PAGE> 6
(i) The individual Account is not owing from an employee, officer,
agent, director or stockholder of the Borrower or from any Affiliate;
(j) The Account is not owing from the United States of America or any
department, agency or instrumentality thereof, unless the Borrower assigned
its right to payment of such Account to the Lender in accordance with the
Assignment of Claims Act of 1940, as amended (41 U.S.C. Section 15 and 31
U.S.C. Section 3727), or any similar law or regulation; and
(k) Accounts owed by a single Account Debtor do not exceed twenty
percent (20%) of the total Eligible Accounts Receivable and Accounts owed
by any three Account Debtors do not exceed thirty five percent (35%) of the
total Eligible Accounts Receivable, unless expressly approved by Bank.
"Equipment" shall have the meaning ascribed to it in the Uniform Commercial
Code, as adopted in the State of Illinois.
"ERISA" means the Employee Retirement Income Security Act of 1974, as the
same may be amended from time to time and, unless the context otherwise
requires, the regulations promulgated thereunder and any successor statute.
"ERISA Affiliate" means each trade or business (whether or not
incorporated) which together with Borrower or an Affiliate would be deemed to be
a "single employer"within the meaning of Section 4001(b) of ERISA or, where
applicable, would be treated as a "single employer"under Section 412(c)(11) of
the Code.
"ERISA Termination Event" means (i) a "Reportable Event"described in
Section 4043 of ERISA (other than a "Reportable Event"not subject to the
provision for 30-day notice to the PBGC under such regulations), (ii) the
withdrawal of a Borrower or any Affiliate from a Plan during a plan year in
which it was a "substantial employer,"as defined in Section 4001(a) of ERISA,
including a cessation of operations that is treated as a withdrawal by a
"substantial employer"under Section 4062(e) of ERISA, (iii) the filing of a
notice of intent to terminate a Plan or the treatment of a Plan amendment as a
termination under Section 4041 of ERISA, (iv) the institution of proceedings to
terminate a Plan by the PBGC, (v) any other event or condition which in the
reasonable judgment of Borrower is likely to constitute grounds under Section
4042 of ERISA for the termination of, or the appointment of a trustee to or any
ERISA administrator for, any Plan, or (vi) the partial or complete withdrawal of
Borrower or any ERISA Affiliate from a Multi-employer Plan.
"Event of Default" shall have the meaning assigned to such term in
Paragraph 8.1 hereof.
"Excess Interest" shall have the meaning assigned to such term in Paragraph
3.3 hereof.
5
<PAGE> 7
"Facilities" means any and all real property (including, without
limitation, all buildings or other improvements located thereon) now, hereafter
or heretofore, owned, leased, operated or used by Borrower or any of its
successors and assigns.
"Financials" means those financial statements of Borrower heretofore or
concurrently herewith delivered by or on behalf of Borrower to Bank.
"Fiscal Year" means the fiscal year of each of the entities comprising the
Guarantor Group and Borrower, which in each case shall end on December 31 of
each year.
"GAAP" shall mean generally accepted accounting principles as in effect
from time to time.
"Governmental Authorization" means any permit, license, authorization,
plan, directive, consent order or consent decree of or from any federal, state
or local governmental authority, agency or court having jurisdiction over
Borrower or any Facility.
"Guaranty" means the Guaranty from Aasche Transportation Services, Inc., a
Delaware corporation, in favor of Bank and dated of even date herewith.
"Guarantor's Collateral" shall have the meaning set forth in the Guaranty.
"Guarantor Group" means Aasche Transportation Services, Inc., Asche
Transfer, Inc. and AG Carriers, Inc.
"Liabilities" means, as of any date, the aggregate amount of all
liabilities of Borrower, in accordance with GAAP.
"Lien" means, with respect to the Collateral or any asset of Borrower or
Guarantor as the case may be, any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind (including any agreement to give any of
the foregoing, any conditional sale or other title retention agreement, any
lease in the nature thereof and the filing of or agreement to give any financing
statement under the Uniform Commercial Code in effect in any jurisdiction).
"Loan" means the Revolving Loan made under the Revolving Credit Commitment,
unless the context in which such term is used shall otherwise require.
"Loan Documents" means this Loan Agreement and all other agreements,
instruments and documents, including, without limitation, guaranties, mortgages,
deeds of trust, pledges, powers of attorney, consents, assignments, contracts,
notices, security agreements, leases, financing statements and all other written
matter heretofore, now and/or from time to time
6
<PAGE> 8
hereafter executed by, on behalf of or for the benefit of Borrower and delivered
to Bank including, without limitation, the Revolving Note, and the Guaranty.
"Maturity Date" means April 30, 2000.
"Maximum Rate" shall have the meaning assigned to such term in Paragraph
3.3 hereof.
"Multi-employer Plan" means a plan defined as such in Section 4001(a)(3)
of ERISA to which contributions have been made by Borrower or an ERISA
Affiliate.
"Obligor" means any Person who is and/or may become obligated to Borrower
under or on account of Accounts.
"Organizational Documents" means (a) for a limited liability company, its
Articles of Organization and Operating Agreement, (b) for a corporation, its
Articles of Incorporation and By-Laws, (c)for a limited partnership, its
Limited Partnership Agreement and Certificate of Limited Partnership, (d) for a
general partnership, its Partnership Agreement, and (e) for any other type of
entity, those documents which are customarily used or required under applicable
state or federal law for the due organization of such entity.
"PBGC" means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.
"Permitted Debt" shall have the meaning assigned to such term in Paragraph
7.3(d) hereof.
"Permitted Liens" shall have the meaning assigned to such term in
Paragraph 7.3(a) hereof.
"Person" means and includes an individual, a partnership, a joint venture,
a corporation (whether or not for profit), a limited liability company, a
trust, an unincorporated organization, a government or any department or agency
thereof or any other entity or organization.
"Plan" means, at any time, any single-employer plan, as defined in Section
4001(a) and subject to Title IV of ERISA, which is maintained, or at any time
during the five calendar years preceding the time in question was maintained,
for employees of Borrower or an Affiliate.
"Prime Rate" means the rate of interest as defined in the Revolving Note.
"Revolving Credit Commitment" shall have the meaning ascribed to such term
in Paragraph 2.1.
7
<PAGE> 9
"Revolving Loan" means the revolving loan made pursuant to Paragraph 2.l,
the proceeds of which shall be utilized as working capital for the Borrower.
"Revolving Note" means that certain Secured Revolving Note of even date
herewith made payable by Borrower in favor of Bank in the original principal
amount of $6,000,000.00 or so much thereof as may have been advanced from time
to time as described in Paragraph 2.2 and any amendment, modification
replacement or substitution thereof.
1.2 Certain UCC and Accounting Terms. Except as otherwise defined in
this Agreement or the other Loan Documents, all words, terms and/or phrases used
herein and therein shall be defined by the applicable definition therefor (if
any) in the Uniform Commercial Code as adopted by the State of Illinois.
Notwithstanding the foregoing, any accounting terms used in this Agreement which
are not specifically defined herein shall have the meaning customarily given to
them in accordance with GAAP. All financial computations hereunder shall be
computed, unless otherwise specifically provided herein, in accordance with
GAAP, consistently applied. No Accounting Changes (as defined below) shall
affect financial covenants, standards or terms in this Agreement; provided, that
Borrower shall prepare footnotes to the financial statements required to be
delivered hereunder that show the differences between the financial statements
delivered (which reflect such Accounting Changes) and the basis for calculating
financial covenant compliance (without reflecting such Accounting Changes).
"Accounting Changes" means changes in accounting principles required by GAAP and
implemented by Borrower.
2. LOAN: BANK'S COMMITMENT; AND NOTE EVIDENCING LOAN
2.1 Revolving Credit Commitment/Limited Permitted Over-Advance. On
the terms and subject to the conditions set forth in this Agreement, Bank agrees
to make revolving credit available to the Borrower on the Closing Date, in the
form of extensions of credit and/or direct loans, in the aggregate original
principal amount of the lesser of: (i) SIX MILLION AND 00/100 DOLLARS
($6,000,000.00) or (ii) the Borrower's Accounts Borrowing Base (the "Revolving
Credit Commitment"). Extensions of credit shall require payment of fees,
execution of appropriate applications and other documentation as is customarily
required by Bank. Such extensions shall count dollar for dollar against the
foregoing Revolving Credit Commitment in the same manner as though a direct loan
had been made. Notwithstanding the foregoing, provided there is no default
under the terms of this Agreement (whether matured or unmatured), Bank shall
allow Borrower to have an aggregate credit extension/loan balance up to
$250,000.00 in excess of the Borrower's Accounts Borrowing Base (but in no event
in excess of $6,000,000.00) from January 1 through April 30 (the "Permitted
Over-Advance").
2.2 Revolving Note. The Revolving Loan made by Bank under the
Revolving Credit Commitment shall be evidenced by a secured promissory note (as
the same may be amended, modified or supplemented from time to time, and
together with any renewal thereof or exchanges or substitutions thereof, the
"Revolving Note"), dated the date hereof (or such other
8
<PAGE> 10
date prior thereto as shall be satisfactory to Bank), payable to the order of
Bank in a principal amount equal to the Revolving Credit Commitment,
substantially in the form set forth in Exhibit 2.2 hereto, with appropriate
insertions. The unpaid principal amount of the Revolving Loan shall bear
interest and be due and payable as provided in this Agreement and the Revolving
Note. Payments to be made by Borrower under the Revolving Note shall be made at
the times, in the amounts and upon the terms set forth herein and therein.
2.3 Recordation. The date, interest rate and amount of the Revolving
Loan made by Bank and the interest rate, date and amount of each repayment of
principal received by Bank shall be recorded by Bank in its records or, at its
option, on the schedule attached to the Revolving Note. The aggregate unpaid
principal amount so recorded shall be prima facie evidence of the principal
amount owing and unpaid on the Revolving Note. The failure to so record any such
amount or any error in so recording any such amount shall not limit or otherwise
affect the obligations of Borrower hereunder or under the Revolving Note to
repay the principal amount thereof together with all interest accrued thereon.
3. LOAN: INTEREST
3.1 Interest Rates; Applicable Borrowing Amounts.
(a) Except as otherwise noted in Paragraph 3.1(c) below,
Borrower's Liabilities arising under Article 2 hereof in respect of the
Revolving Loan shall bear interest at the rate equal to Lender's Prime Rate as
the same changes from time to time and if Borrower is entitled to and so selects
for a portion of Borrower's Liabilities, the LIBOR Based Rate (as defined in the
Revolving Note).
(b) During the period commencing on the Closing Date, accrued
interest only on the outstanding principal amount of the Revolving Loan shall be
payable monthly in arrears on the first Business Day of each calendar month
commencing with July 1, 1998, with a single final payment of the outstanding
balance of principal and interest due on the Credit Termination Date. After the
Credit Termination Date, accrued interest on the Revolving Loan shall be payable
on demand. Prior to the Maturity Date (and prior to successive anniversary
dates if renewed), Bank shall review and consider extending the Maturity Date.
(c) If any payment of principal on the Revolving Loan is not made
when due, the Revolving Loan shall bear interest from the date such payment was
due until paid in full, payable on demand, at a rate per annum equal to the
Prime Rate plus 3 % (the "Default Rate").
3.2 Computation of Interest. Interest on the Revolving Loan shall be
computed for the actual number of days elapsed on the basis of a 360-day year.
In computing interest on the Revolving Loan, (i) the date of funding shall be
included and (ii) the date of payment shall be excluded.
9
<PAGE> 11
3.3 Interest Laws. Notwithstanding any provision to the contrary
contained in this Agreement or the other Loan Documents, Borrower shall not be
required to pay, and Bank shall not be permitted to collect, any amount of
interest in excess of the maximum amount of interest permitted by law ("Excess
Interest"). If any Excess Interest is provided for or determined by a court of
competent jurisdiction to have been provided for in this Agreement or in any of
the other Loan Documents, then in such event: (a) the provisions of this
Paragraph shall govern and control; (b) Borrower shall not be obligated to pay
any Excess Interest; (c) any Excess Interest that Bank may have received
hereunder shall be, at Bank's option, (i) applied as a credit against the
outstanding principal balance of Borrower's Liabilities or accrued and unpaid
interest (not to exceed the maximum amount permitted by law), (ii) refunded to
the payor thereof, or (iii) any combination of the foregoing; (d) the interest
rate(s) provided for herein shall be automatically reduced to the maximum lawful
rate allowed from time to time under applicable law (the "Maximum Rate"), and
this Agreement and the other Loan Documents shall be deemed to have been and
shall be reformed and modified to reflect such reduction; and (e) Borrower shall
not have any action against Bank for any damages arising out of the payment or
collection of any Excess Interest. Notwithstanding the foregoing, if for any
period of time interest on Borrower' s Liabilities is calculated at the Maximum
Rate rather than the applicable rate under this Agreement, and thereafter such
applicable rate becomes less than the Maximum Rate, the rate of interest payable
on Borrower's Liabilities shall remain at the Maximum Rate until Bank shall have
received the amount of interest which Bank would have received during such
period on Borrower's Liabilities had the rate of interest not been limited to
the Maximum Rate during such period.
4. LOAN: GENERAL TERMS
4.1 Payments to Bank. That portion of Borrower's Liabilities
consisting of: (a) principal payable on account of the Revolving Loan made by
Bank to Borrower pursuant to this Agreement shall be payable by Borrower to Bank
as provided herein and in the Revolving Note; (b) costs, fees and expenses
payable pursuant to this Agreement shall be payable by Borrower to Bank, on
demand; (c) interest payable pursuant to this Agreement shall be payable by
Borrower to Bank as provided in Paragraph 3.1; and (d) the balance of Borrower's
Liabilities, if any, shall be payable by Borrower to Bank as and when provided
in this Agreement or the other Loan Documents. Except as provided in Paragraph
4.2 below, all of such payments to Bank shall be payable at the principal place
of business of the Bank specified at the beginning of this Agreement or at such
other place or places as Bank may designate in writing to an Authorized Officer.
4.2 Automatic Debit. In order to cause timely payment to be made to
Bank of all Borrower's Liabilities as and when due, Borrower hereby authorizes
and directs Bank, at Bank's option on or after 12:00 noon on the date due, to
debit the amount of Borrower's Liabilities to any ordinary deposit account of
Borrower. Bank shall attempt to notify Borrower
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before any such debit is made; provided, however, that any failure to provide
such notification shall in no way restrict or invalidate Bank's right to debit
Borrower's accounts.
4.3 Application of Payment. An Authorized Officer shall, at the time
of making each payment under this Agreement or the Revolving Note (whether by
account debit or otherwise), specify to Bank the Revolving Loan or other amounts
payable by Borrower hereunder to which such payment is to be applied (and in the
event that it fails to so specify, or if an Event of Default has occurred and is
continuing, Bank may apply such payment in such manner as it may determine in
its sole discretion to be appropriate).
4.4 Offset. Borrower agrees that, in addition to (and without
limitation of) any right of set-off, bankers' lien or counterclaim Bank may
otherwise have, Bank shall be entitled, at its option, to offset balances held
by it for account of Borrower at any of its offices, in United States Dollars or
in any other currency, against any principal of or interest on Bank's Revolving
Loan, or any other amount payable to Bank hereunder, which is not paid when due
(regardless of whether such balances are then due to Borrower).
4.5 Discretionary Disbursements. Bank, in its sole and absolute
discretion, may immediately upon notice to an Authorized Officer, disburse any
or all proceeds of the Revolving Loan made available to Borrower pursuant to the
Loan Documents to pay any fees, costs, expenses or other amounts required to be
paid by Borrower hereunder and not so paid. All monies so disbursed by Bank
shall be a part of Borrower's Liabilities, payable by Borrower on demand.
4.6 Credit Termination Date; Continuance of Obligations, Etc. This
Agreement, Bank's obligations to loan monies to Borrower, and Borrower's ability
to borrow monies from Bank shall be in effect until the Credit Termination Date.
Notwithstanding the foregoing and until such date when Borrower's Liabilities
shall be paid in full, Borrower's obligations under the Loan Documents shall
continue, interest shall continue to be paid in accordance with the foregoing,
Bank shall be entitled to retain its security interest in the Collateral and
Bank shall retain all of its rights and remedies under this Agreement.
4.7 Loan Evidence. The Revolving Loan made by Bank to Borrower
pursuant to this Agreement may or may not (at Bank's sole and absolute
discretion) be evidenced by notes or other instruments issued or made by
Borrower to Bank. Where such loan is not so evidenced, such loan shall be
evidenced solely by entries upon the ledgers, books, records and/or computer
records of Bank maintained for that purpose, which entries shall be rebuttable
presumptive evidence of such loan in the absence of manifest error.
4.8 Over-Advances. Except to the limited extent of the Permitted
Over-Advance expressly allowed pursuant to Section 2.1, if, at any time and for
any reason, the aggregate amount of Borrower's Liabilities outstanding hereunder
exceeds the limitations set forth herein (an "Over-Advance"), then Borrower,
upon Bank's election and demand, shall
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immediately pay to Bank, in cash, the amount of such Over-Advance. If such
Over-Advance remains outstanding for more than thirty (30) days after notice to
Borrower, until such Over-Advance is so repaid to Bank, the amount of such
Over-Advance shall bear interest at the applicable Default Rate.
4.9 Prepayment. The principal, accrued interest and all other amounts
of the Revolving Loan may be prepaid at any time by Borrower, in whole or in
part, subject to the application of yield maintenance as provided for in Section
1(f) of the Revolving Note and the LIBOR Breakage Fee as defined in Section
3(c)(iii) of the Revolving Note.
4.10 Lock Box Account. Aasche Transportation Services, Inc. and Asche
Transfer, Inc. will establish lock box account(s) with Bank pursuant to Bank's
customary lock box agreement in effect from time to time and such entities shall
direct all their account debtors to send all proceeds directly to the lock box
account(s).
5. LOAN: CONDITIONS TO LENDING
5.1 Conditions Precedent. Prior to or contemporaneously with the
making of the initial advance of funds, Bank's obligation to make the Revolving
Loan is subject to the satisfaction of the following conditions precedent:
(a) Fees and Expenses. Borrower shall have paid all fees owed to
Bank including, but not limited to, the closing fee of $5,000.00 and reimbursed
Bank for all expenses due and payable hereunder on or before the date hereof
including, but not limited to, reasonable counsel fees provided for in Paragraph
9.12.
(b) Documents. Bank shall have received the following documents,
each in form and substance satisfactory to Bank, and all of the transactions
contemplated by each such document shall have been consummated or each condition
contemplated by each such document shall have been satisfied:
(i) Related Documents. Copies of this Agreement and each
other Loan Document as required by Bank including, without limitation, one
copy of the Revolving Note payable to Bank conforming to the requirements
hereof duly executed by Borrower and the Guaranty duly executed and
delivered by Guarantor. The applicable Form UCC-1 and UCC-2 financing
statements related to the Collateral (as herein defined) shall have been
executed and delivered to Bank for filing in all jurisdictions that Bank
deems necessary or advisable (and shall have been prefiled by Bank's
counsel with evidence of filing available).
(ii) Legal Opinion. The legal opinion of counsel to
Borrower and Guarantor.
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(iii) CFO's Certificate. A certificate executed by the
chief financial officer of Borrower stating that (A) no default or Event of
Default has occurred and is continuing, (B) no material adverse change in
the financial condition or operations of the business of Borrower or
Consolidated Entities has occurred since the date of the Financials and (C)
each condition precedent to the consummation of the Revolving Loan
contemplated hereby has been met or satisfied.
(iv) Evidence of Insurance. Evidence of insurance from
Borrower's and Guarantor's insurance carriers evidencing that all insurance
policies and coverage required by Paragraph 7.2(f) below is in effect.
(v) Organizational Documents. A copy of Borrower's and
Guarantor's Organizational Documents and all amendments thereto, certified
by the Secretary of State of the applicable state of incorporation.
(vi) Good Standing Certificates. A Good Standing
Certificate (or applicable equivalent certificate) for Borrower and
Guarantor from the State of Illinois and each jurisdiction in which
Borrower and Guarantor is/are required to be qualified to transact business
as a foreign limited corporation.
(vii) Internal Approvals. Certified copies of resolutions
of Borrower and Guarantor approving the execution and delivery of and the
consummation of the transactions contemplated by the Loan Documents and all
other documents or instruments to be executed and delivered in conjunction
herewith and therewith by Borrower and/or Guarantor.
(viii) Incumbency Certificates. Certificates of the
secretary of Borrower and Guarantor certifying the name of the officer of
Borrower and Guarantor, as the case may be, who will sign the Loan
Documents, together with a sample of the true signature of such person.
(ix) Licenses and Permits. Copies of all applicable
licenses and permits required by Federal, state or local law or regulation
for Borrower and Guarantor to own and operate their business.
(x) Guaranty. A copy of the secured Guaranty duly
executed by Guarantor.
(xi) Accounts Receivables. A current, detailed Borrowing
Base Certificate in the form attached as Exhibit A and accounts receivable
aging, both certified by Borrower's chief financial officer.
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(xii) Other Documents. Such other documents as Bank may
reasonably request.
(c) Bank's Review. Bank's review of and satisfaction with the
organizational, operational and legal structure of Borrower and the Affiliates.
6. COLLATERAL: GENERAL TERMS
6.1 Grant of Security Interest. To secure the prompt payment of
Borrower's Liabilities and the prompt, full and faithful performance by Borrower
of all of the provisions to be kept, observed or performed by Borrower under
this Agreement and/or the other Loan Documents, and to secure the prompt payment
and performance of any other obligations owed by Borrower to Bank, including,
without limitation, pursuant to any guaranty, Borrower does hereby pledge,
assign, transfer and deliver to Bank, and grants to Bank, a security interest in
and to and a first lien on all of Borrower's property of any kind or
description, tangible or intangible, of whatever description (excluding tractors
and trailers) whether now existing and/or owned and hereafter arising and/or
acquired, wherever located, including, but not limited to, the following: (a)
all Accounts; (b) certificated and uncertificated securities; (c) moneys,
reserves, deposits, deposit accounts and interest or dividends thereon,
securities, cash, cash equivalents and other property now or at any time or
times hereafter in the possession or under the control of Bank or its bailee;
(d) liens, guarantees and other rights and privileges pertaining to any of the
foregoing; (e) all books, records and computer records in any way relating to
the foregoing; (f) all accessions, substitutions, renewals, improvements and
replacements of and additions to the foregoing; and (g) products and proceeds of
the foregoing including, without limitation, proceeds of insurance policies
insuring the same or other guaranty of the same; (all of the foregoing personal
property and real property is hereinafter sometimes individually and sometimes
collectively referred to as "Collateral"). Borrower shall make appropriate
entries upon its financial statements and books and records disclosing Bank's
security interest in the Collateral.
6.2 Perfection of Security Interests. The Borrower shall execute
and/or deliver to Bank, at any time and from time to time hereafter at the
request of Bank, all agreements, instruments, financing statements, continuation
statements, authorizations, documents and other written matter (sometimes
hereinafter individually and collectively referred to as "Supplemental
Documentation") that Bank reasonably may request, in form and substance
reasonably acceptable to Bank, to perfect and maintain perfected Bank's security
interest in the Collateral and to consummate the transactions contemplated in or
by this Agreement and the other Loan Documents. Upon the occurrence of any Event
of Default, each Borrower, irrevocably, hereby makes, constitutes and appoints
Bank (and all Persons designated by Bank for that purpose) as such Borrower's
true and lawful attorney and agent-in-fact to sign the name of such Borrower on
the Supplemental Documentation and to deliver the Supplemental Documentation to
such Persons as Bank may reasonably elect. Borrower agrees that a copy,
electronic image or other reproduction of this Agreement or of any financing
statement shall be sufficient as a financing statement.
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6.3 Inspection of Collateral. Bank (by any of its officers, employees
and/or agents) shall have the right, at reasonable times and intervals and upon
notice to an Authorized Officer prior to the occurrence of an Event of Default,
and after the occurrence and during the continuance of an Event of Default, at
any time or times, to inspect the Collateral and all related records (and the
premises upon which it is located) and to verify the amount and condition of or
any other matter relating to the Collateral. All reasonable costs, fees and
expenses incurred by Bank, or for which Bank has become obligated, in connection
with such inspection and/or verification shall constitute part of Borrower's
Liabilities, payable by Borrower to Bank on demand.
6.4 First Lien and Locations of Collateral. Borrower warrants and
represents to and covenants with Bank that: (a) as of the Closing Date, Bank's
security interest in the Collateral is now and at all times hereafter shall be
perfected and have a first priority; (b) the offices and/or locations where
Borrower keeps the Collateral consisting of personal property and books and
records concerning the Collateral are solely located at:
Asche Transfer, Inc.
10214 North Mt. Vernon Road
Shannon, Illinois 61078
AG Carriers, Inc.
13349 Southridge Industrial Drive
Tavares, Florida 32778
and Borrower shall not remove such books and records and/or the Collateral
therefrom and shall not keep any of such books and records and/or the Collateral
at any other office or location without the prior written consent of Bank; and
(c) as of the Closing Date, Borrower's principal places of business are:
Asche Transfer, Inc.
10214 North Mt. Vernon Road
Shannon, Illinois 61078
AG Carriers, Inc.
13349 Southridge Industrial Drive
Tavares, Florida 32778
An Authorized Officer, by written notice delivered to Bank at least thirty (30)
days prior thereto, shall advise Bank of Borrower's opening of any new office
or place of business or its closing of any existing office or place of business
and any new office or place of business shall be within the continental United
States of America. There are no Liens on the Collateral other than the Lien of
Bank pursuant hereto.
6.5 Constructive Trust. After the occurrence of an Event of Default,
Borrower shall receive, as the sole and exclusive property of Bank, and as
trustee for Bank, all monies,
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checks, notes, drafts and all other payment for and/or proceeds of Collateral
which come into the possession or under the control of Borrower (or any of its
partners, managers, shareholders, directors, officers, employees, agents or
those Persons acting for or in concert with Borrower) and immediately upon
receipt thereof, Borrower shall remit the same (or cause the same to be
remitted), in kind, to Bank at Bank's office listed in Paragraph 9.15 below.
6.6 Application of Proceeds of Collateral. After the occurrence of an
Event of Default, Bank, at any time or times in its sole and absolute
discretion, may take control of, in any manner, and may endorse any applicable
Borrower's name, as appropriate, to any of the items of payment or proceeds
described in Paragraph 6.5 above and, pursuant to the provisions of this
Agreement, Bank may, in its sole and absolute discretion, apply the same to and
on account of Borrower's Liabilities. For the purposes of this Paragraph, each
Borrower, irrevocably, hereby makes, constitutes and appoints Bank (and all
persons designated by Bank for that purpose) as such Borrower's true and lawful
attorney and agent-in-fact with power, without notice to such Borrower, to take
any such actions.
6.7 Third Party Collateral Claims. After the occurrence of an Event
of Default, Bank, in its sole and absolute discretion, without waiving or
releasing any Event of Default or obligation, liability, or duty of Borrower
under this Agreement or the other Loan Documents, may at any time or times
hereafter, but shall be under no obligation to, pay, acquire and/or accept an
assignment of any security interest, lien, encumbrance, or claim asserted by any
Person against the Collateral. All sums paid by Bank, in respect thereof and all
reasonable costs, fees and expenses, including reasonable attorney's fees, court
costs, expenses and other charges relating thereto that are incurred by Bank, on
account thereof shall be part of Borrower's Liabilities payable by Borrower to
Bank on demand.
6.8 Additional Collateral. After the occurrence of an Event of
Default, Bank may, in its sole and absolute discretion, retain as additional
Collateral or release to Borrower, from time to time, such portion of the
monies, reserves and/or proceeds received by Bank with respect to the Collateral
as Bank may determine. All such monies, reserves, proceeds and other property of
Borrower in the possession of Bank at any time or times hereafter are hereby
pledged by Borrower to Bank as additional Collateral hereunder and may be
applied by Bank on account of Borrower's Liabilities.
6.9 No Custom or Waiver. No authorization given by Bank pursuant to
this Agreement or the other Loan Documents to sell any specified portion of
Collateral or any items thereof and no waiver by Bank in connection therewith
shall establish a custom or constitute a waiver of the limitation contained in
this Agreement against such sales with respect to any portion of the Collateral
or any item thereof not covered by said authorization.
6.10 Verification of Accounts. Any of the Bank's officers, employees
or agents shall have the right, at any time or times, in the Bank's or the
Borrower's name or in the name of a firm of independent certified public
accountants acceptable to Bank, to verify the validity, amount or any other
matters relating to any Accounts by mail, telephone, telegraph or otherwise.
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6.11 Assignments, Records and Accounts Reports. The Borrower shall
keep accurate and complete records of its Accounts and as frequently as the Bank
shall require, but not less frequently than monthly, the Borrower shall deliver
to the Bank an accounts payable aging report, an accounts receivable aging
report (including line item detail separating A/R Accruals from other accounts
receivable) and formal written assignments of all Accounts, together with copies
of the invoices related thereto, if requested. The Borrower shall also deliver
to the Bank, upon demand, the original copy of all documents, including without
limitation, repayment histories, present status reports and shipment reports,
relating to the Accounts included in any accounts receivable aging report and
such other matters and information relating to the status of then existing
Accounts as the Bank shall reasonably request. The Borrower shall furnish a
Borrowing Base Certificate in the form attached as Exhibit A with each
disbursement request and in any event shall furnish such certificate no less
frequently than monthly.
6.12 Notice Regarding Disputed Accounts. The Borrower shall give the
Bank prompt notice of any Account in excess of One Hundred Thousand and 00/100
Dollars ($100,000.00) which is in dispute between any Account Debtor and the
Borrower. Each accounts receivable aging report shall identify all disputed
Accounts and disclose with respect thereto, in reasonable detail, the reason for
the dispute, all claims related thereto and the amount in controversy.
6.13 Sale or Encumbrance of Accounts. The Borrower shall not, without
the prior written consent of the Bank, sell, transfer, grant a security interest
in or otherwise dispose of or encumber any of its Accounts to any Person other
than the Bank.
7. REPRESENTATIONS AND WARRANTIES; COVENANTS
7.1 Representations and Warranties of Borrower. Borrower hereby
represents and warrants to Bank as of the date hereof and the date of
disbursement of each Loan or advance hereunder, as follows:
(a) Existence and Authority. Each entity comprising Borrower and
Guarantor is a corporation duly organized, validly existing and in good standing
under the laws of the State of its incorporation and is duly qualified to do
business and is in good standing under the laws of each jurisdiction in which
the ownership of its properties and the nature and extent of the activities
transacted by it makes such qualification necessary. Borrower and Guarantor
have all requisite company or other power and authority to conduct their
activities as presently conducted, to own their properties and to perform their
respective obligations under this Agreement and other Loan Documents, as the
case may be.
(b) Authorization; No Conflict. The execution, delivery and
performance of the Loan Documents by each entity comprising Borrower and
Guarantor which signed the respective document are within the company powers of
each entity comprising Borrower and Guarantor as the case may be, have been duly
authorized by all necessary company action and do not contravene (i) the
entity's Organizational Documents or (ii) any law or any contractual restriction
binding on or affecting Borrower, Guarantor or their properties, and do not
result in or require the creation of any Lien (except as may be created under
this Agreement or the other Loan Documents) upon or with respect to any of
Borrower's or Guarantor's properties.
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(c) No Approval. Except as otherwise provided herein, no
authorization or approval or other action by, and no notice to or filing with,
any governmental authority or regulatory body is required for the due execution,
delivery and performance by Borrower or Guarantor of this Agreement or any Other
Agreement.
(d) Validity and Binding Nature. This Agreement is, and the
other Loan Documents when delivered hereunder will be, legal, valid and binding
obligations of Borrower and Guarantor, enforceable against Borrower and
Guarantor, as the case may be, in accordance with its terms.
(e) Financial Condition. Neither Borrower nor Guarantor, on the
date hereof or on the date of any Loan or advance made by Bank hereunder, has
any material contingent obligations, long-term leases (except for commercially
reasonable leases of tractors, trailers and other equipment entered into in the
ordinary course of business) or material forward or long-term commitments.
(f) Litigation. Except as disclosed on Schedule 7.1(f), there is
no pending or, to the best knowledge of Borrower, threatened action, suit,
inquiry, investigation, or proceeding affecting, directly or indirectly,
Borrower or Guarantor before any court, governmental agency or arbitrator,
which, in any case, may (i) materially and adversely affect the financial
condition or operation of Borrower or Guarantor, (ii) which seeks to restrain or
would otherwise have a material adverse effect on the transactions contemplated
herein, or (iii) which would affect the validity or enforceability of the Loan
Documents.
(g) Securities Transaction. No proceeds of any Loan or advance
made by Bank to Borrower hereunder will be used to acquire any security in any
transaction which is subject to Section 13 or 14 of the Securities Exchange Act
of 1934, as amended.
(h) Regulation U. Borrower is not engaged in the business of
extending credit for the purpose of purchasing or carrying margin stock (within
the meaning of Regulation U issued by the Board of Governors of the Federal
Reserve System), and no proceeds of any Loan or advance made by Bank to Borrower
hereunder will be used to purchase or carry any margin stock or to extend credit
to others for the purpose of purchasing or carrying any margin stock.
(i) ERISA Termination Event and Funding. No ERISA Termination
Event has occurred nor is expected to occur with respect to any Plan and all
Plans, to the extent governed by ERISA, meet the minimum funding standards of
Section 302 of ERISA.
(j) Withdrawal Liability and Reportable Events. Neither Borrower
nor any ERISA Affiliate has incurred, or expects to incur, any withdrawal
liability under Section 4201 of ERISA to any Multiemployer Plan. No Reportable
Event (as defined in ERISA) has occurred with respect to any Plan.
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(k) Taxes. Consolidated Entities have filed all tax returns
(Federal, state and local) required to be filed and paid all taxes shown thereon
to be due, including interest and penalties, other than such taxes that
Consolidated Entities are contesting in good faith by appropriate legal
proceedings and proper reserves therefor have been established on the books of
the applicable entity.
(l) Liens. There are no Liens upon or with respect to any of the
properties of Borrower, Guarantor or Collateral or any right to receive revenues
of Borrower, or Guarantor or Collateral other than Permitted Liens.
(m) Conflicts. Neither Borrower nor any Affiliate is a party to
any indenture, loan or credit agreement or any lease or other agreement or
instrument (including company charters or other organizational documents) which
is likely to have a material adverse effect on the ability of Borrower or
Guarantor to perform its or their obligations under the Loan Documents or which
would restrict or otherwise limit the incurring of the Debt represented by the
Loan Documents.
(n) Investment Company Act. Neither Borrower nor any Affiliate
is an "investment company"or a company "controlled by an "investment
company,"within the meaning of the Investment Company Act of 1940, as amended.
(o) Compliance with Laws. Borrower and each Affiliate are in
material compliance with all laws, orders, regulations and ordinances of all
federal, foreign, state and local governmental authorities binding upon or
affecting the business, operation or assets of such Borrower and such Affiliate,
but only to the extent such failure to comply may have a material adverse effect
on Borrower's ability to satisfy its obligations hereunder.
(p) Loan Documents. Each Borrower makes each of the
representations and warranties contained in the Loan Documents to which such
Borrower is a party operative and applicable for the benefit of Bank as if the
same were set forth at length herein.
(q) True and Correct Nature of Other Representations and
Warranties. The representations and warranties of Borrower in the Loan
Documents are true and correct.
(r) Affiliates. Except as disclosed on Schedule 7.l (r),
Borrower has no Affiliates.
(s) Labor. Except as disclosed on Schedule 7.1 (s), none of the
employees of Borrower or Guarantor is subject to any collective bargaining
agreement, and there are no strikes, work stoppages, election or decertification
petitions or proceedings, unfair labor charges, equal employment opportunity
proceedings, wage payment or material unemployment compensation proceedings,
material workmen's compensation proceedings or other material labor or
employee-related controversies pending or threatened involving Borrower and any
of its employees.
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(t) Solvency. Each entity comprising Borrower and Guarantor has
capital sufficient to carry on its business and transactions and all businesses
and transactions in which it is about to engage and is solvent and able to pay
its debts as they mature and each entity comprising Borrower and Guarantor owns
property the fair saleable value of which is greater than the amount required to
pay the respective party's debt. No transfer of property is being made and no
Debt is being incurred in connection with the transactions contemplated by this
Agreement with the intent to hinder, delay or defraud either present or future
creditors of either Borrower or any Affiliate.
(u) Title; Assets. Borrower and Guarantor have good,
indefeasible and merchantable title to and ownership of the Collateral and
Guarantor's Collateral in the aggregate, free and clear of all Liens, claims,
security interests and other encumbrances except for Permitted Liens. Borrower
or Guarantor own, possess or otherwise have rights and assets necessary for the
conduct of their businesses.
(v) Names. Borrower has no assumed names and is not doing
business under any name other than its two company names.
(w) Options. No person, corporation, partnership, association or
other entity has any option to acquire ownership of the Collateral or
Guarantor's Collateral or any portion of either.
(x) Debt. As of the date of this Agreement, Guarantor Group has
no Debt except for the Permitted Debt set forth in Schedule 7.3(d) hereof.
There shall be no intercompany transactions between entities in the Consolidated
Entities except for transfers of tractors, trailers and other equipment and
ancillary support services to Specialty Transportation Services, Inc. in the
ordinary course of business which are promptly paid for. All debts presently
owed to lenders of Guarantor are unsecured obligations except for those secured
by liens identified in Schedule 7.3(a)(v).
(y) Insurance. Schedule 7.1(y) sets forth a complete and
accurate description of all policies of insurance that will be in effect as of
the Closing Date for Borrower and Guarantor. Borrower and Guarantor are
adequately insured under all policies of insurance, no notice of cancellation
has been received with respect to such policies and Borrower and Guarantor are
in material compliance with all conditions contained in such policies.
(z) Compliance with Laws; Licensure. Each member of the
Consolidated Entities has materially complied with all applicable requirements
of the United States of America, the State of Illinois and all other applicable
state and local governments, and of their agencies and instrumentalities, to
operate its business as they are being operated and is fully qualified by all
necessary permits, licenses, certifications, accreditations and qualifications
and is in material compliance with all annual filing requirements of all
regulatory authorities.
(aa) Accuracy of Information. All factual information heretofore
or contemporaneously furnished by or on behalf of Borrower to Bank for purposes
of or in connection with this Agreement or any transaction contemplated hereby
(excluding factual
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information superseded or replaced prior to the date hereof) is, and all other
factual information (taken as a whole) hereafter furnished by or on behalf of
Borrower to Bank will be, true and accurate in every material respect on the
date as of which such information is dated or certified, and Borrower has not
omitted and will not omit any material fact necessary to prevent such
information from being false or misleading. Borrower has disclosed to Bank, in
writing, all facts which Borrower believes might materially and adversely affect
the business, credit, operations, financial condition or prospects of Borrower
or any Affiliate or which Borrower believes might materially and adversely
affect any material portion of Borrower's or any Affiliate's properties, or
Borrower's ability to perform its obligations under the Loan Documents.
7.2 Affirmative Covenants. At all times prior to the Credit
Termination Date and thereafter for so long as any amounts are due or owing to
Bank hereunder, Borrower hereby covenants that it will, unless Bank otherwise
consents in writing:
(a) Existence. Do or cause to be done all things necessary to
preserve and keep in full force and effect the corporate existence of each
entity comprising Consolidated Entities in good standing.
(b) Compliance with Laws, etc. Comply, and cause each Affiliate
to comply, with all applicable present and future laws, rules, ordinances,
regulations and orders including, without limitation, laws, rules, ordinances,
regulations and orders regarding the operation, licensure and maintenance of the
businesses.
(c) Payment of Taxes and Other Claims. Pay or discharge or cause
to be paid or discharged, before the same shall become delinquent, (i) all
Charges levied or imposed upon Borrower or any Affiliate or upon the income,
profits or property of Borrower or any Affiliate, if any, and (ii) all lawful
claims for labor, materials and supplies which, if unpaid, might by law become a
Lien upon the property of Borrower or any Affiliate; provided, however, that
Borrower shall not be required to pay or discharge or cause to be paid or
discharged any such Charge or claim whose amount, applicability or validity is
being contested in good faith by appropriate proceedings to the extent adequate
reserves have been established on the books of the Borrower or such Affiliate,
as the case may be.
(d) Reporting Requirements. Keep true books of record and
account in which full, true and correct entries in accordance with GAAP
consistently applied will be made of all dealings or transactions in relation to
its business and activities, and an Authorized Officer shall furnish to Bank:
(i) as soon as possible and in any event within ten (10)
days after the occurrence of an Event of Default or any event which, with
the giving of notice, lapse of time, or both, would constitute an Event of
Default, the statement of an Authorized Officer setting forth details of
such Event of Default or event and the action which Borrower has taken or
proposes to take to cure the same;
(ii) as soon as available and in any event within forty five
(45) days after the end of each calendar month beginning with the month
ending March 31,
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1998, internally-prepared combined and combining (i.e., consolidated and
separate by each entity) financial statements of Borrower and the
Affiliates, including a Balance Sheet and the related Income Statement as
of the end of such month and for the portion of the Fiscal Year ended at
the end of such month, setting forth in each case in comparative form the
figures for the corresponding quarter and the corresponding portion of the
previous Fiscal Year, all in reasonable detail and certified (subject to
normal year-end adjustments) as to fairness of presentation, in accordance
with GAAP, by the chief financial officer of each entity of Borrower and
Affiliates, as applicable;
(iii) as soon as available and in any event within ninety
(90) days after the close of each Fiscal Year, a combined and combining
Balance Sheet and the related Income Statement and Statement of Cash Flows
as of the end of such Fiscal Year, fairly and accurately presenting the
financial condition of Borrower and the Affiliates as at such date and the
results of operations of Borrower and the Affiliates for such Fiscal Year
and setting forth in each case in comparative form the corresponding
figures for the corresponding period of the preceding Fiscal Year, all in
reasonable detail, prepared in accordance with GAAP consistently applied,
and audited, in each case, by an independent certified public accountant
acceptable to Bank (Ernst & Young, LLP shall be acceptable) and accompanied
by the CPA firm's unqualified opinion;
(iv) Together with each delivery of financial statements of
Borrower required by subparagraph (iii) above and with the financial
statements required to be delivered after the end of each calendar quarter,
an Authorized Officer shall deliver to Bank a certificate of the Authorized
Officer stating whether any Event of Default, or event which, with the
passage of time or giving of notice or both, would constitute, mature into
or become such an Event of Default, currently exists and is continuing and
what activities, if any, Borrower and Affiliates is taking or proposing to
take with respect thereto;
(v) as soon as available and in any event within ninety (90)
days of the commencement of each Fiscal Year, annual projections including
combined and combining income statements, balance sheet and statement of
Cash Flows expected for such Fiscal Year;
(vi) promptly upon receipt and, in any event, within thirty
(30) days after receipt thereof, copies of all interim and supplemental
financial reports submitted to Borrower or to any Affiliate by independent
certified public accountants in connection with any interim review of the
books and records of Borrower or of any Affiliate, as the case may be,
made by such accountants;
(vii) immediately after notice to Borrower or any Affiliate,
as applicable, of the commencement thereof, notice, in writing, of any
action, suit, arbitration or other proceeding instituted, commenced or
threatened against or affecting Borrower, or any Affiliate with an amount
in controversy in excess of $100,000;
(viii) if requested by Bank, Borrower's or any Affiliate's
federal, state and local tax returns, if and as applicable, as soon as said
returns are completed in
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the form said returns will be filed with the Internal Revenue Service and
any state or local department of revenue or taxing authority; and
(ix) such other information respecting the condition or
operations, financial or otherwise, of Borrower or any Affiliate as Bank
may from time to time reasonably request, including, without limitation,
monthly accounts receivable aging reports, cost reports, annual survey
reports and budget and cash flow projections.
(e) Visitation Rights. Subject to Paragraph 6.3 above, once a
quarter and at any time after a default by Borrower, permit Bank or any agents
or representatives thereof, to examine and make copies of and abstracts from the
records and books of account of and visit the properties of Borrower, all as
Bank shall reasonably request, and to discuss the affairs, finances and accounts
of Borrower with Borrower's senior management.
(f) Insurance.
(i) At its sole cost and expense, keep and maintain public
liability and property damage insurance and other appropriate insurance
relating to its business and properties and its ownership and use of the
Collateral. All such policies of insurance shall be in form and with
insurers recognized as adequate by prudent business persons and all such
policies shall be in amounts no less than such policies set forth on
Schedule 7.1(y) or as otherwise may be reasonably satisfactory to Bank. All
policies of insurance shall comply with the Bank's requirements. An
Authorized Officer shall deliver to Bank a certificate of insurance and
evidence of payment of all premiums for each such policy on or prior to the
date of this Agreement. Such policies shall: (A) contain a lender's loss
payable clause naming Bank, for the benefit of Bank, as loss payee and
additional insured as its interest may appear; and (B) provide that the
insurance companies will give Bank at least thirty (30) days written notice
before any such policy or policies of insurance shall be altered or
canceled.
(ii) In the event Borrower at any time or times hereafter
shall fail to obtain or maintain any of the policies of insurance required
above or to pay any premium in whole or in part relating thereto, then Bank
after giving five (5) days' prior notice to an Authorized Officer, without
waiving or releasing any obligation or Event of Default by Borrower
hereunder, may at any time or times thereafter (but shall be under no
obligation to) obtain and maintain such policies of insurance and pay such
premium and take any other action with respect thereto which Bank deems
advisable. All sums so disbursed by Bank, including reasonable attorneys
fees, court costs, expenses and other charges relating thereto, shall be
part of Borrower's Liabilities, payable by Borrower to Bank on demand.
(g) Year 2000 Software Compliance. The Borrower will take all
actions reasonably necessary to assure that the Year 2000 Issues will not have a
material adverse effect on the business, operations or financial condition of
the Borrower. Upon the Bank's request, the Borrower will provide the Bank with
a description of its plan to address Year 2000 issues, internally and with its
suppliers, vendors and customers, including updates and progress
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reports. The Borrower will advise the Bank of any reasonably anticipated
material adverse effect on the business, operations or financial condition of
the Borrower as a result of Year 2000 Issues.
For the purposes hereof, "YEAR 2000 ISSUES" means anticipated
costs, problems and uncertainties associated with the inability of certain
computer hardware and software to correctly calculate, determine, display, sort
and otherwise process all data including dates occurring on and after January 1,
2000, including proper addition of February 29 in leap years, as such inability
affects the business, operations, and financial condition of the Borrower and of
the Borrower's material customers, suppliers and vendors.
7.3 Negative Covenants. Prior to the Credit Termination Date and
thereafter for so long as any amount is due or owing to Bank hereunder, unless
Bank shall otherwise consent in writing, Borrower shall not, and shall not
permit Guarantor to:
(a) Liens, etc. Create or suffer to exist, any Lien, other
charge or encumbrance, or any other type of preferential arrangement, upon or
with respect to any of the Borrower's or Guarantor's properties, whether now
owned or hereafter acquired, or assign any right to receive income, in each case
to secure or provide for the payment of any Debt of any Person, except for the
following permitted Liens ("Permitted Liens"):
(i) Liens arising under this Agreement;
(ii) Liens for current taxes, assessments or other
governmental charges which are not delinquent or remain payable without any
penalty, or the validity of which are contested in good faith by
appropriate proceedings upon stay of execution of the enforcement thereof
and appropriate reserves are set aside therefor;
(iii) deposits or pledges to secure:
(A) statutory obligations;
(B) surety or appeal bonds;
(C) bonds for release of attachment, stay of execution
or injunction;
(D) performance of bids, tenders, contracts (other
than for the repayment of Debt) or leases, or for
purposes of like general nature in the ordinary
course of its business;
(iv) any Lien renewing, extending or refunding any Lien
existing on the date hereof or permitted by clauses (i) through (iii)
above, provided that the principal amount secured is not increased, and the
Lien is not extended to other property;
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(v) liens on tractors, trailers and other equipment
purchased or leased by Borrower or Guarantor, provided, that such liens are
created substantially simultaneously with the purchase or lease of such
tractors, trailers and other equipment in the ordinary course of business
and such liens are confined solely to the tractors, trailers and other
equipment so purchased or leased; or
(vi) such liens as are specifically identified on Schedule
7.3(a)(v).
(b) Maintain Existence, Merger, etc. (i) dissolve or liquidate
or amend or modify its Organizational Documents or (ii) except as specifically
permitted by this Agreement, convey, transfer, lease or otherwise dispose of
(whether in one transaction or in a series of transactions) any Collateral,
assets of Borrower or Guarantor or option to acquire assets (whether now owned
or hereafter acquired) to any Person; or (iii)together with one or more
Affiliates convey, transfer, lease or otherwise dispose of (whether in one
transaction or in a series of transactions) all or substantially all of the
assets of Borrower and such Affiliates (whether now owned or hereafter acquired)
to any Person; or (iv) purchase, lease or otherwise acquire all or substantially
all of the assets or properties of, or acquire any capital stock, equity
interests, debt or other securities of any Person, or enter into any joint
venture or become a partner in any partnership; or (v) engage in any transaction
out of the ordinary course of business; or (vi) merge or consolidate with any
Person.
(c) Sale and Lease-Back. Enter into any arrangement with any
Person or to which such Person is a party providing for the leasing by Borrower
or any Affiliate of any principal asset which has been or is to be sold or
transferred by Borrower or such Affiliate to such Person or to any other Person
to whom funds have been or are to be advanced by such Person on the security of
such property or rental obligations of Borrower or such Affiliate, other than
customary and commercially reasonable sales or transfers of rolling stock in
the ordinary course of business including sales of tractor, trailers and other
equipment to a financial company and leasing of such equipment by Specialty
Transportation Services, Inc. ("STS").
(d) Debt. Incur, create, assume, become or be liable in any
manner with respect to or permit to exist, any Debt, obligations or
indebtedness, except for (i) Debt classified as short term (in accordance with
GAAP) in an outstanding amount not to exceed $50,000 at any time, (ii) Debt
classified other than as short term (in accordance with GAAP) in an outstanding
amount not to exceed $100,000 at any time, (iii) the Permitted Debt set forth on
Schedule 7.3(d).
(e) Guaranty. Guaranty, endorse or otherwise in any way
directly, indirectly or contingently become liable for the obligations or
liabilities of any other Person, except endorsements of negotiable instruments
for collection in the ordinary course of business.
(f) Line of Business. Make any change in or engage in any line
of business materially different from that previously engaged in by Borrower.
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(g) Prepayment or Modification of Debt. Make any prepayments of
Debt (except as permitted hereunder) or enter into or modify any agreement
pursuant to which the terms of payment of any Debt are amended or modified.
(h) Financial Covenants. Allow, suffer or permit:
(i) Debt Service Coverage Ratio for the Guarantor Group to
be less than 1.25:1; or
(ii) Shareholder Equity for the Consolidated Entities to be
less than $12,000,000.00; or
(iii) Any dividend to be declared or paid or any other
distribution on the capital stock of the Guarantor Group to be made;
(iv) Any transfers of funds from the Guarantor Group to
Speciality Transportation Services, Inc. or any other Affiliate not in the
Guarantor Group; or
(v) The prepayment of any indebtedness owed to third
parties as secured by lien identified in Schedule 7.3(a)(v) item 1 or
identified in Schedule 7.3(d) items 9 or 10, without the prior written
consent of Bank.
Compliance with the financial covenants set forth in item (i) above shall
be measured on a year-to-date basis as of June 30 and December 31 of each year.
Compliance with the other financial covenants must be continuous and may be
verified at any time by Bank. In any event, compliance with all of the
foregoing items must be evidenced by financial statements and Authorized
Officer certificate furnished no later than forty five (45) days, in the case
of the certificate as of June 30, and no later than ninety (90) days, in the
case of the certificate as of December 31, after the end of the relevant period
as further provided for in subparagraph 7.2(d)(iv).
The following definitions shall be used:
"DEBT SERVICE COVERAGE RATIO" means the ratio of (i) the Guarantor Group's
earnings before interest, taxes, non-cash depreciation and amortization
expense, minus capital expenditures (net of increases in long term debt) and
plus net proceeds received (or minus net proceeds paid) from the sale of
tractors, trailers and other equipment, to (ii) all taxes and all principal and
interest payable in connection with all indebtedness of the Guarantor Group and
all payments due under capitalized leases for the Guarantor Group.
7.4 Maintenance of Accounts. Borrower agrees that Aasche
Transportation Services, Inc. and Asche Transfer, Inc. shall maintain their
primary operational accounts with Bank and shall maintain an average balance of
collected, available funds in one or more demand deposit account(s) with Bank
(the "Operating Account(s)") with minimum average daily balances at a level in
an amount at least equal to that amount which is required to compensate Bank for
its services rendered or Borrower shall be responsible for payment of service
charges. Borrower acknowledges that Bank will charge Borrower standard service
charges in effect from time to time for various services performed by Bank in
connection with any aspect of the relationship between Borrower and Bank, and
Borrower hereby agrees that if such service charges exceed the
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credit to Borrower arising from earnings attributable to funds on deposit with
Bank in the Operating Account(s), such service charge deficiency shall be
deducted by Bank from Borrower's Operating Account, monthly, in arrears, within
ten (10) days following the end of each month. Bank may cause interest and other
amounts payable on the obligations of Borrower to Bank hereunder to be paid by
making a direct charge to the applicable Operating Account in accordance with
the terms hereof.
Remittances for Aasche Transportation Services, Inc. and Asche Transfer,
Inc. shall be made directly to a lockbox as provided in Paragraph 4.10.
8. DEFAULT
8.1 Events of Default. The occurrence of any one of the following
events shall constitute a default ("Event of Default") by Borrower under this
Agreement: (a) if Borrower or Guarantor fails or neglects to perform, keep or
observe any covenant or agreement contained in the Loan Documents which is
required to be performed, kept or observed by Borrower or Guarantor, as the case
may be, for a period of fifteen (15) days after written notice from Bank; (b)
any representation or warranty made by Borrower or Guarantor, as the case may
be, herein or in any of the other Loan Documents is breached or is false or
misleading in any material respect, or any exhibit, schedule, certificate,
financial statement, report, notice or other writing furnished by Borrower or
Guarantor, as the case may be, or any of its officers, employees, or agents to
Bank is false or misleading in any material respect on the date as of which the
facts therein set forth are stated or certified; (c) if Borrower fails to pay
Borrower's Liabilities when due and payable for a period of five (5) days after
written notice from Bank; (d) if any of the Collateral is attached, seized,
subjected to a writ or distress warrant or is levied upon, or comes within the
possession of any receiver, trustee, custodian or assignee for the benefit of
creditors and the same is not terminated or dismissed within sixty (60) days
thereafter; (e) if a petition under any section or chapter of Bankruptcy Code or
any similar law or regulation shall be filed by Borrower or Guarantor or if
Borrower or Guarantor shall make an assignment for the benefit of its creditors
or if any case or proceeding is filed by Borrower or Guarantor for its
dissolution or liquidation; (f) if Borrower and Guarantor is enjoined,
restrained or in any way prevented by court order from conducting all or any
material part of its business affairs or if a petition under any section or
chapter of Bankruptcy Code or any similar law or regulation is filed against
Borrower or Guarantor or if any case or proceeding is filed against Borrower or
Guarantor for its dissolution or liquidation and such injunction, restraint or
petition is not dismissed or stayed within sixty (60) days after the entry or
filing thereof; (g) if an application is made by Borrower or Guarantor for the
appointment of a receiver, trustee or custodian for any of Borrower's or
Guarantor's assets; (h) if an application is made by any Person other than a
Borrower for the appointment of a receiver, trustee or custodian for the
Collateral of Borrower and the same is not dismissed within sixty (60) days
after the application therefor; (i) if a notice of lien, levy, or assessment is
filed of record with respect to all or any of the Collateral by the United
States or any department, agency or instrumentality thereof or by any state,
county, municipal or other governmental agency, including without limitation the
PBGC, or if Borrower receives notice that any taxes or debts owing at any time
or times thereafter to any one of them becomes a lien or encumbrance upon any of
the Collateral and the same is not released, satisfied or bonded over within
sixty (60) days after the same becomes a lien or encumbrance; (j) if Borrower or
Guarantor becomes insolvent or
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is unable generally to pay its debts as they become due; (k) if Borrower or
Guarantor is in default (after the passage of any applicable cure periods) in
the payment of any indebtedness owed to any third party but only to the extent
such default materially affects Borrower's ability to satisfy Borrower's
Liabilities hereunder; (1) the appointment of a conservator for all or any
portion of the Collateral; (m) the occurrence of a breach, default or event of
default under the Guaranty (after the passage of any applicable cure periods);
(n) the occurrence of a material breach, a default or an event of default by
Borrower under any of the other Loan Documents after any cure period applicable
to any such default or event of default has expired; (o) the Guaranty shall be
terminated, curtailed or restricted in scope without Bank's consent; and (p) a
default and a failure to cure within any applicable notice or cure period of an
obligation owed to any financial institution (including without limitation
Mellon Bank) by Specialty Transportation Services, Inc.
8.2 Cumulative Remedies. All of Bank's rights and remedies under the
Loan Documents are cumulative and non-exclusive.
8.3 Acceleration and Termination of Loan. Upon the occurrence of an
Event of Default, (a) upon notice by Bank to an Authorized Officer, Borrower's
Liabilities shall be immediately due and payable, unless there shall have
occurred an Event of Default under subparagraphs 8.l (d), (e), (f), (g), (h),
(i), (j) or (1), in which case Borrower's Liabilities shall automatically become
due and payable without notice or demand (provided that Bank shall notify
Borrower after any such acceleration of Borrower's Liabilities). Upon the
occurrence of a default under the Loan Documents which, with the giving of
notice or lapse of time or both, will constitute an Event of Default, then
without notice by Bank to or demand by Bank of Borrower, Bank shall have no
further obligation to and may then forthwith cease advancing monies or extending
credit to or for the benefit of Borrower under the Loan Documents.
8.4 Rights of Secured Creditor. Upon an Event of Default, Bank, in
its sole and absolute discretion, may: (a) exercise any one or more of the
rights and remedies accruing to a secured party under the Uniform Commercial
Code of the relevant state or states and any other applicable law upon default
by a debtor; (b) enter, with or without process of law and without breach of the
peace, any premises where the Collateral or the books and records of Borrower
related thereto is or may be located, and without charge or liability to Bank
therefor seize and remove the Collateral (and copies of Borrower's books and
records in any way relating to the Collateral) from said premises and/or remain
upon said premises and use the same (together with said books and records) for
the purpose of collecting, preparing and disposing of the Collateral, and
Borrower hereby grants Bank a security interest in said books and records for
the purpose above stated; (c) sell or otherwise dispose of the Collateral at
public or private sale for cash or credit, provided, however, that Borrower
shall be credited with the net proceeds of such sale only when such proceeds are
actually received by Bank pursuant to Paragraph 9.1 hereof.
8.5 Assembly of Collateral; Injunctive Relief. Upon an Event of
Default, Borrower, immediately upon demand by Bank, shall assemble the
Collateral and make it available to Bank at a place or places to be designated
by Bank which is reasonably convenient to Bank and Borrower. Borrower recognizes
that in the event Borrower fails to perform, observe or discharge any of its
obligations or liabilities under the Loan Documents, no remedy of law will
provide adequate relief to Bank, and agrees that Bank shall be entitled to
temporary and
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permanent injunctive relief in any such case without the necessity of proving
actual damages or the posting of bond, surety or other security.
8.6 Notice of Collateral Disposition. Any notice required to be given
by Bank of a sale, lease or other disposition of the Collateral or any other
intended action by Bank, deposited in the United States mail, postage prepaid
and duly addressed to an Authorized Officer at its principal place of business
specified in Paragraph 9.15 of this Agreement not less than thirty (30) days
prior to such proposed action, shall constitute commercially reasonable and fair
notice to Borrower thereof.
8.7 Matters Regarding Sale of Collateral. Upon an Event of Default,
Borrower agrees that Bank may, if Bank deems it reasonable, postpone or adjourn
any such sale of the Collateral from time to time by an announcement at the time
and place of sale or by announcement at the time and place of such postponed or
adjourned sale, without being required to give a new notice of sale. Borrower
agrees that Bank has no obligation to preserve rights against prior parties to
the Collateral. Further, Borrower waives and releases any cause of action and
claim against Bank as a result of Bank's possession, collection or sale of the
Collateral, any liability or penalty for failure of Bank to comply with any
requirement imposed on Bank relating to notice of sale, holding of sale, or
reporting of sale of the Collateral, and any right of redemption from such sale;
provided, however, nothing in this Paragraph shall be deemed a waiver of any
cause of action or claim against Bank and as a result of Bank's failure to
dispose of the Collateral in a commercially reasonable manner.
8.8 Replevin. In the event Bank seeks possession of the Collateral
through replevin or other court process, Borrower hereby irrevocably waives: (a)
any bond, surety or security required as an incident to such possession, and (b)
any demand for possession of the Collateral prior to commencement of any suit or
action to recover possession thereof.
8.9 Application of Proceeds. Except as otherwise herein expressly
provided, the proceeds of any collection, sale or other realization of all or
any part of the Collateral pursuant hereto, and any other cash of Borrower at
the time held by Bank hereunder, shall be applied by Bank:
First, to the payment of the costs and expenses of such collection,
sale or other realization, including reasonable out-of-pocket costs and
expenses of Bank and the reasonable fees and expenses of its agents and
counsel, and all expenses incurred and advances made by Bank in connection
therewith;.
Next, to the payment in full of Borrower's Liabilities; and
Finally, to the payment to Borrower, or its successors or assigns, or
as a court of competent jurisdiction may direct, of any surplus then
remaining.
As used in this Paragraph, "proceeds" of Collateral shall mean cash,
securities and other property realized in respect of, and distributions in kind
of, Collateral, including any amount
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received under any reorganization, liquidation or adjustment of debt of Borrower
or any issuer of or obligor on any of the Collateral.
9. GENERAL
9.1 Payment Application Date. Any check, draft, or similar item of
payment by or for the account of Borrower delivered to Bank on account of
Borrower's Liabilities shall be applied by Bank on account of Borrower's
Liabilities on the date such funds are available in accordance with the regular
availability schedule of Bank.
9.2 Statement of Account. Each statement of account by Bank delivered
to an Authorized Officer relating to Borrower's Liabilities shall be presumed
correct and accurate, absent manifest error, and shall constitute an account
stated between Borrower and Bank unless, within ninety (90) days after an
Authorized Officer's receipt of said statement, an Authorized Officer delivers
to Bank, by registered or certified mail (or by any nationally recognized
overnight courier) addressed to Bank at its address specified in Paragraph 9.15,
written objection thereto specifying the error or errors, if any, contained in
any such statement.
9.3 Manner of Application; Set Off /Waiver of Set off Prohibition.
Borrower waives the right to direct the application of any and all payments at
any time or times hereafter received by Bank on account of Borrower's
Liabilities and Borrower agrees that Bank shall have the right, in its absolute
and sole discretion, to apply and re-apply any and all such payments in such
manner as Bank may deem advisable, notwithstanding any entry by Bank upon any of
its books and records. Borrower further waives any right under or benefit of any
law that would restrict or limit the right or ability of Bank to obtain payment
of Borrower's Liabilities, including any law that would restrict or limit Bank
in the exercise of its right to appropriate any indebtedness owing from Bank to
Borrower and any deposits or other property of Borrower in the possession or
control of Bank and apply the same toward or setoff the same against the payment
of Borrower's Liabilities.
9.4 Survival of Representations and Warranties. Borrower covenants,
warrants and represents to Bank that all representations and warranties of
Borrower contained in the Loan Documents shall be true at the time of Borrower's
execution of the Loan Documents and shall survive the execution, delivery and
acceptance thereof by the parties thereto and the closing of the transactions
described therein or related thereto.
9.5 Integration; Amendment; Assignment; Participation.
(a) The Loan Documents constitute the entire agreement and
understanding between the parties relating to the subject matter hereof and
supersede all prior agreements. The Loan Documents may not be modified, altered
or amended except by an agreement in writing signed by an Authorized Officer, on
behalf of Borrower, and Bank.
(b) Borrower shall not assign any of Borrower's obligations and
rights under this Agreement. Bank shall have the right to assign to one or more
banks or other financial institutions all or a portion of its rights and
obligations under this Agreement (including, without limitation, all or a
portion of the Revolving Credit Commitment, the Revolving Loan and the
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other Loan Documents). Upon any such assignment, (i) the assignee shall become a
party hereto and, to the extent of such assignment, have all rights and
obligations of Bank hereunder and under the Loan Documents and (ii) Bank shall,
to the extent of such assignment, relinquish its rights and be released from its
obligations under the Loan Documents. Borrower hereby agrees to execute and
deliver such documents, and to take such other actions, as Bank may reasonably
request to accomplish the foregoing.
(c) In addition to the assignments permitted in subparagraph (b)
of this Paragraph, Bank and any assignee pursuant to subparagraph (b) above
shall have the right to grant participations to one or more banks or other
financial institutions in or to any Loan hereunder (and the Loan Documents)
without notice to or consent from Borrower.
9.6 No Waiver. Bank's failure at any time or times hereafter to
require strict performance by Borrower of any provision of this Agreement shall
not waive, affect or diminish any right of Bank thereafter to demand strict
compliance and performance therewith. Any suspension or waiver by Bank of an
Event of Default by Borrower under the Loan Documents shall not suspend, waive
or affect any other Event of Default by Borrower under the Loan Documents,
whether the same is prior or subsequent thereto and whether of the same or of a
different type. None of the undertakings, agreements, warranties, covenants or
representations of Borrower contained in the Loan Documents and no Event of
Default by Borrower under the Loan Documents shall be deemed to have been
suspended or waived by Bank unless such suspension or waiver is by an instrument
in writing by Bank specifying such suspension or waiver and given pursuant to
the requirements of Paragraph 9.5 hereof.
9.7 Severability. If any provision of this Agreement or the other
Loan Documents or the application thereof to any Person or circumstance is held
invalid or unenforceable, the remainder of this Agreement and the other Loan
Documents and the application of such provision to other Persons or
circumstances will not be affected thereby and the provisions of this Agreement
and the other Loan Documents shall be severable in any such instance.
9.8 Successors and Assigns. This Agreement and the other Loan
Documents shall be binding upon and inure to the benefit of the respective
successors and assigns of Borrower and Bank. This provision, however, shall not
be deemed to modify Paragraph 9.5 hereof.
9.9 Conflict with Other Loan Documents. The provisions of the other
Loan Documents are incorporated in this Agreement by this reference thereto.
Except as otherwise provided in the other Loan Documents by specific reference
to the applicable provision of this Agreement, if any provision contained in
this Agreement is in conflict with, or inconsistent with, any provision in the
other Loan Documents, the provision contained in this Agreement shall govern and
control.
9.10 No Impairment by Termination. Except to the extent provided to
the contrary in the Loan Documents, no termination or cancellation (regardless
of cause or procedure) of the Loan Documents shall in any way affect or impair
the powers, obligations,
31
<PAGE> 33
duties, rights and liabilities of Borrower in any way or respect relating to (a)
any transaction or event occurring prior to such termination or cancellation,
(b) the Collateral and/or (c) any of the undertakings, agreements, covenants,
warranties and representations of Borrower contained in the Loan Documents. All
such undertakings, agreements, covenants, warranties and representations shall
survive such termination or cancellation.
9.11 Waivers. Except as otherwise specifically provided in this
Agreement, Borrower waives any and all notice or demand which Borrower might be
entitled to receive with respect to the Loan Documents by virtue of any
applicable statute or law and waives presentment, demand and protest and notice
of presentment, protest, default, dishonor, non-payment, maturity, release,
compromise, settlement, extension or renewal of any or all commercial paper,
accounts, contract rights, documents, instruments, chattel paper and guaranties
at any time held by Bank on which Borrower may in any way be liable and hereby
ratifies and confirms whatever Bank may do in this regard.
9.12 Costs, Fees and Expenses Related to Loan Documents. In accordance
with this Agreement on or prior to the date hereof and thereafter upon demand by
Bank therefor, Borrower shall pay or reimburse Bank for all reasonable costs,
fees and expenses incurred by Bank, or for which Bank becomes obligated, in
connection with the negotiation, preparation and consummation of the Loan
Documents, including but not limited to, reasonable attorneys' fees, search
fees, appraisal fees and other costs and expenses. That portion of Borrower's
Liabilities consisting of costs, expenses or advances to be reimbursed by
Borrower to Bank pursuant to the Loan Documents which are not paid on or prior
to the date hereof shall be payable by Borrower to Bank on demand.
9.13 Release. Borrower releases Bank from any and all causes of
action, claims or rights which Borrower may now or hereafter have for, or which
may arise from, any loss or damage caused by or resulting from: (a) any failure
of Bank to protect, enforce or collect in whole or in part any of the
Collateral; (b) Bank's notification to any Obligor of Bank's security interest
in the Accounts and the Collateral; (c) Bank's directing any Obligor to pay any
sums owing to Borrower directly to Bank in accordance with the terms thereof;
and (d) any other act or omission to act on the part of Bank, its officers,
agents or employees, except in each instance for willful misconduct and gross
negligence.
9.14 Governing Law. This Agreement and the other Loan Documents are
submitted by Borrower (for Bank's acceptance or rejection thereof). at Bank's
principal place of business as an offer by Borrower to borrow monies from Bank
now and from time to time hereafter and shall not be binding upon Bank or become
effective until and unless accepted by Bank, in writing, at Bank's place of
business. If so accepted by Bank, this Agreement and the other Loan Documents
shall be deemed to have been made at Bank's principal place of business. This
Agreement and the other Loan Documents shall be governed and controlled by the
laws of the State of Illinois without regard to principles of conflict of laws.
9.15 Notices. All notices, consents, requests, demands and other
communications hereunder shall be in writing and shall be deemed duly given to
any party or parties (a) upon delivery to the address of the party or parties as
specified below if delivered in
32
<PAGE> 34
person or by courier or if sent by certified or registered mail (return receipt
requested), or (b) upon dispatch if transmitted by telecopy or other means of
facsimile transmission with confirmation of sending, in each case addressed as
follows:
If to Borrower:
c/o Aasche Transportation Services, Inc.
10214 North Mt. Vernon Road
Shannon, Illinois 61078
Attn: Leon Monachos, Chief Financial Officer
Telephone: (815) 864-2421
Telecopier: (815) 864-2646
with a copy to:
Joel R. Schaider, Esq.
Sachnoff & Weaver, Ltd.
30 South Wacker Drive
Suite 2900
Chicago, Illinois 60606
Telephone: (312) 207-1000
Telecopier: (312) 207-6400
If to Bank:
American National Bank and Trust Company of Chicago
Rockford Division
6323 Riverside Boulevard
Rockford, Illinois 61114
Attn: Steven B. Towne
Telephone: (815) 282-7911
Telecopier: (815) 282-7925
with a copy to:
Hinshaw & Culbertson
222 North LaSalle Street, Suite 300
Chicago, Illinois 60601
Attn: Dean E. Parker
Telephone: (312) 704-3000
Telecopier: (312) 704-3001
The parties hereto may designate such other address or telecopy number by
written notice in the aforesaid manner.
33
<PAGE> 35
9.16 FORUM; AGENT; VENUE; JURY TRIAL WAIVER. TO INDUCE BANK TO ACCEPT
THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, BORROWER IRREVOCABLY AGREES THAT,
SUBJECT TO BANK'S SOLE AND ABSOLUTE ELECTION, ALL ACTIONS OR PROCEEDINGS IN ANY
WAY, MANNER, OR RESPECT ARISING OUT OF OR FROM OR RELATED TO THIS AGREEMENT OR
THE OTHER LOAN DOCUMENTS SHALL BE LITIGATED ONLY IN COURTS HAVING SITUS WITHIN
CHICAGO, ILLINOIS. BORROWER HEREBY CONSENTS AND SUBMITS TO THE JURISDICTION OF
ANY LOCAL, STATE, OR FEDERAL COURT LOCATED WITHIN SAID CITY AND STATE. BORROWER
HEREBY IRREVOCABLY APPOINTS AND DESIGNATES ANY AUTHORIZED OFFICER OR ANY OTHER
PERSON HAVING AND MAINTAINING A PLACE OF BUSINESS IN SUCH STATE, WHOM AN
AUTHORIZED OFFICER MAY FROM TIME TO TIME HEREAFTER DESIGNATE (HAVING GIVEN FIVE
(5) DAYS' WRITTEN NOTICE THEREOF TO BANK) AS BORROWER'S TRUE AND LAWFUL ATTORNEY
AND DULY AUTHORIZED AGENT FOR ACCEPTANCE OF SERVICE OF LEGAL PROCESS. BORROWER
AGREES THAT SERVICE OF SUCH PROCESS UPON SUCH PERSON SHALL CONSTITUTE PERSONAL
SERVICE OF SUCH PROCESS UPON BORROWER. BORROWER HEREBY WAIVES ANY RIGHT IT MAY
HAVE TO TRANSFER OR CHANGE THE VENUE OF ANY LITIGATION BROUGHT AGAINST BORROWER
BY BANK IN ACCORDANCE WITH THIS PARAGRAPH. BORROWER HEREBY IRREVOCABLY WAIVES
THE RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY ACTION IN WHICH BORROWER IS A
PARTY.
9.17 Other Costs, Fees and Expenses. If at any time or times hereafter
Bank: (a) employs counsel for advice or other representation (i) with respect to
the Loan Documents, (ii) to represent Bank in any litigation, contest, dispute,
suit or proceeding or to commence, defend, or intervene or to take any other
action in or with respect to any litigation, contest, dispute, suit, or
proceeding (whether instituted by Bank, Borrower, or any other Person) in any
way or respect relating to the Loan Documents or Borrower's affairs, or (iii) to
enforce any rights of Bank against Borrower or any other Person which may be
obligated to Bank by virtue of the Loan Documents; (b) takes any action to
protect, collect, sell, liquidate, or otherwise dispose of any of the
Collateral; and/or (c) attempts to or enforces any of Bank's rights or remedies
under the Loan Documents, the reasonable costs and expenses incurred by Bank in
any manner or way with respect to the foregoing, shall be part of Borrower's
Liabilities, payable by Borrower to Bank on demand. Without limiting the
generality of the foregoing, such expenses, costs, charges and fees include: (i)
attorneys' fees, costs and expenses; (ii) accountants' fees, costs and expenses;
(iii) court costs and expenses; (iv) court reporter fees, costs and expenses;
(v) long distance telephone charges; (vi) telegram charges; (vii) expenses for
travel, lodging and food; and (viii) costs and expenses incurred with respect to
exercise or enforcement of Bank's rights in or against Accounts and/or any
Obligor, including expenses incurred in fulfilling, in whole or in part, any
order of any Obligor from which an Account has arisen or will arise.
9.18 Revival. To the extent that Bank receives any payment on account
of Borrower's Liabilities or any proceeds of Collateral are applied on account
of Borrower's Liabilities and any such payment(s) and/or proceeds or any part
thereof are subsequently invalidated, declared
34
<PAGE> 36
to be fraudulent or preferential, set aside, subordinated and/or required to be
repaid to a trustee, receiver or any other party under any bankruptcy act, state
or federal law, common law or equitable cause, then, to the extent of such
payment(s) and/or proceeds received, Borrower's Liabilities or part thereof
intended to be satisfied shall be revived and continue in full force and effect,
as if such payment(s) and/or proceeds had not been received by Bank and applied
on account of Borrower's Liabilities.
9.19 Acknowledgments. Borrower acknowledges that (i) it has been
advised by counsel of its choice with respect to this Agreement and the
transactions contemplated hereby, (ii) each of the waivers set forth herein was
knowingly and voluntarily made; and (iii) the obligations of Bank hereunder,
including the obligation to advance and lend funds to Borrower in accordance
herewith, shall be strictly construed and shall be expressly subject to
Borrower's compliance in all respects with the terms and conditions herein set
forth.
9.20 Section Headings. Section and paragraph headings used in this
Agreement are for convenience only and shall not effect the construction or
interpretation of this Agreement.
9.21 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which taken
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, this Agreement has been duly executed as of the day
and year specified at the beginning hereof.
ASCHE TRANSFER, INC.,
an Illinois corporation
By: /s/ Leon Monachos
------------------------------------------
Name: Leon Monachos
-----------------------------------
Its: Vice President-Finance
-----------------------------------
AG CARRIERS, INC., a Florida corporation
By: /s/ Leon Monachos
------------------------------------------
Name: Leon Monachos
-----------------------------------
Its: Vice President-Finance
-----------------------------------
Accepted and agreed as of the
23rd day of June, 1998.
AMERICAN NATIONAL BANK AND TRUST
COMPANY OF CHICAGO, a national
banking association
By: /s/ Steven B. Towne
------------------------------------
Title: Vice President
----------------------------
35
<PAGE> 37
EXHIBIT A
BORROWING BASE CERTIFICATE
[See Attached Pages]
36
<PAGE> 38
AMERICAN NATIONAL BANK
AND TRUST COMPANY OF CHICAGO
<TABLE>
<CAPTION>
COLLATERAL REPORT
-----------------
Date _______________ Report # _________________________________ Period Covered _______________________
_____ to ____________________________
[ ACCOUNTS RECEIVABLE ] Client (Bank Client
Code _______________ Use Only) Tech ____________________
<S> <C> <C> <C>
1. Balance brought forward:
(Previous Report #_______ Date _________) $_________________
ADDITIONS
---------
2. New sales $_________________ (+)
3. Miscellaneous debits _________________ (+) $_________________ (+)
DEDUCTIONS
---------- --------------------------------------------------
4. Collections (net cash) (See next page, Collection $_________________ (-) Non-A/R Collections O.P.
Detail for Breakdown) 4A. __________________
--------------------------------------------------
5. Discounts allowed _________________ (-)
6. Credit memos _________________ (-)
7. Miscellaneous Credits _________________ (-) $_________________ (-)
8. Gross Balance this report _________________
INELIGIBLES
-----------
9. Over ______ days past invoice date $_________________ (-)
10. Cross-age (______%) _________________ (-)
11. Contras _________________ (-)
12. Others _______________________ _________________ (-) _________________ (-)
13. TOTAL ELIGIBLE RECEIVABLES $_________________
A. Portion of Total Eligible Receivables which is supported by Outstanding $_________________
Invoices
B. Portion of Total Eligible Receivables which are A/R Accruals (defined in $_________________
the Loan Agreement)
[ INVENTORY ]
14. BORROWING BASE VALUE (____% OF LINE 13) $_________________
Client Code ____________________________ (Bank Use Only)
(NOTE: MULTIPLE ADVANCE RATES USE ATTACHMENT I)
15. Balance brought forward: _________________
(Previous Report # ____________ Date_____________)
16. Additions _________________ (+)
17. Deductions _________________ (-)
18. Gross Balance this Report $_________________
INELIGIBLES
-----------
19. Slow-moving / obsolete items _________________ (-)
</TABLE>
37
<PAGE> 39
<TABLE>
<S> <C> <C> <C>
20. Consigned inventory _________________ (-)
21. In-transit _________________ (-)
22. Others _________________ (-) $_________________ (-)
23. TOTAL ELIGIBLE INVENTORY $_________________
24. BORROWING BASE VALUE (_____% OF LINE 23) OR (See Attachment I) $_________________
25. Inventory Limit _________________
26. Lesser of Lines 24 & 25 $_________________
- ---------------------------------------------------------------------------
OTHERS
- --------------------------------------------------------------------------- $_________________
27. BORROWING BASE VALUE (See Attachment I)
28. TOTAL BORROWING BASE (14 + 26 + 27) Not Exceeding Facility Limit $_____________________ (A) $_________________
==================================================================================================================================
</TABLE>
[ COLLECTION DETAIL ]
<TABLE>
<CAPTION>
Date Funds Deposit Type Date Mail
Deposited at (L = Lockbox, Total Deposit
American W = Wire, Non-A/R Amount Received
National M = Mail) A/R Collections Collections Deposited (Bank Use Only)
- -------------- --------- --------------- -------------- -------------- ----------------
<S> <C> <C> <C> <C> <C>
______________ ______________ ______________ ______________ ______________ ______________
______________ ______________ ______________ ______________ ______________ ______________
______________ ______________ ______________ ______________ ______________ ______________
______________ ______________ ______________ ______________ ______________ ______________
______________ ______________ ______________ ______________ ______________ ______________
______________ ______________ ______________ ______________ ______________ ______________
______________ ______________ ______________ ______________ ______________ ______________
______________ ______________ ______________ ______________ ______________ ______________
Total Funds Deposited at
American National 29.
============== ============== ============== Total Sales For
Transfer Total to Transfer Total to the Month Of:
From ________________ 19_____ Line 4 Line 4A ___________
To___________________ 19_____ $_____________
</TABLE>
Monthend Cut - Off Last Deposits included in Aging:
<TABLE>
<CAPTION>
Total A/R
Last Sales Collections
Lockbox # Amount Date Mail Deposit Date Report # For the Month of:
- --------- ------ ---- ------------ ---- -------- -----------------
<S> <C> <C> <C> <C> <C> <C>
____________ ____________ ____________ ____________ ____________ ___________ _____________
____________ ____________ ____________ ____________ ____________ ____________ $_____________
</TABLE>
Pursuant to and in accordance with the terms and provisions of that certain Loan
and Security Agreement ("Agreement") between AMERICAN NATIONAL BANK & TRUST
COMPANY OF CHICAGO ("Secured Party") and _________________________________
("Borrower"), Borrower is executing and delivering to Secured Party this
Collateral Report accompanied by supporting data (collectively referred to as
"Report").
38
<PAGE> 40
Borrower warrants and represents to Secured Party that this Report is true,
correct, and based on information contained in Borrower's own financial
accounting records. Borrower, by the execution of this Report hereby ratifies,
confirms and affirms all of the terms, conditions and provisions of the
Agreement, and further certifies on this _________ day of __________________,
19_____, that the Borrower is in compliance with said Agreement.
_____________________________________________ (Borrower)
By:__________________________________________
(Title)______________________
<PAGE> 41
SCHEDULE 7.l(f)
LITIGATION
On May 4, 1998, an accident occurred in Greensville, South Carolina
involving a tractor/trailer driven by an employee of Asche Transfer, Inc. and
another individual that resulted in the fatality of the other individual. No
suit is pending as of the date of this Agreement.
<PAGE> 42
SCHEDULE 7.1(r)
AFFILIATES
- Aasche Transportation Services, Inc., a Delaware corporation
("ATS") - 100% owner of Borrower
- Specialty Transportation Services, Inc. - 90% owned by ATS
- AGC Transportation Services, Inc. - 100% owed by ATS
Borrower represents and warrants this entity is and shall remain a
brokerage entity.
<PAGE> 43
SCHEDULE 7.1(s)
LABOR MATTERS
Not Applicable
<PAGE> 44
SCHEDULE 7.1(y)
INSURANCE
See attached pages
<PAGE> 45
SCHEDULE 7.3(a)(v)
PERMITTED LIENS
1. Pledge of 4,500,000 shares of the issued and outstanding Common Stock,
$0.01 par value of Speciality Transportation Services, Inc. pursuant to the
Pledge and Security Agreement dated as of January 30, 1998 by Aasche
Transportation Services, Inc. ("Aasche"), PNC Bank, National Association
("PNC") and solely in its capacity as Trustee under a certain Voting Trust
Agreement of even date herewith between Aasche and PNC in favor of American
Capital Strategies, Ltd.
2. Those liens identified on Schedules 7.3(a)(v) - 1 through 7.3(a)(v)-5.
<PAGE> 46
SCHEDULE 7.3(d)
PERMITTED DEBT
1. Indebtedness secured by Liens identified on Schedule 7.3(a)(v).
2. Indebtedness to Bank.
3. Guarantees by Aasche Transportation Services, Inc. of Double A
Development Mortgage.
4. Guarantees by Aasche Transportation Services, Inc. of Asche Transfer
debt.
5. Guarantees by Aasche Transportation Services, Inc. of Asche Transfer
capital leases.
6. Guarantees by Aasche Transportation Services, Inc. of AG Carriers
Inc. debt.
7. Guarantees by Aasche Transportation Services, Inc. of AG Carriers
capital leases.
8. Guarantees of ESOP Loan.
9. Guarantees of obligations of AG Carriers Note to Dick Baugh.
10. Indebtedness of Guarantor, representative copies of all notes executed
in connection therewith have been delivered to Bank, in an amount
equal to $5,375,000.
<PAGE> 1
EXHIBIT 10.2
AMERICAN NATIONAL BANK
AND TRUST COMPANY OF CHICAGO
SECURED GUARANTY
WHEREAS, ASCHE TRANSFER, INC., is an Illinois corporation having its
principal office located at 10124 Mount Vernon Road, Shannon, Illinois 61087
("Asche"), and AG CARRIERS, INC. is a Florida corporation, having its principal
office located at 13349 Southridge Industrial Drive, Tavares, Florida 32778
("AG") (Asche and AG are hereafter referred to, individually and collectively,
as the "Borrower"); and
WHEREAS, the Borrower desires or may desire at some time and/or from time
to time to obtain financial accommodation from AMERICAN NATIONAL BANK AND TRUST
COMPANY OF CHICAGO (hereafter referred to as the "Bank") with principal offices
at 120 South LaSalle Street, Chicago, Illinois 60603; and
WHEREAS, the undersigned guarantor is either a corporation or company,
desiring to induce the Bank, at its option, at any time, or from time to time,
to extend financial accommodation to the Borrower, and represents to the Bank
that it is organized under the laws of the state of Delaware, and that the
Borrower (a) is engaged in business as a corporate parent, affiliate or
subsidiary of the undersigned, and/or (b) expects to derive advantage by
assisting the Borrower in procuring financial assistance from the Bank; or the
undersigned is a(n) individual(s) or partnership desiring to induce the Bank at
its option, at any time, or from time to time, to extend financial
accommodation to the Borrower (said undersigned corporation, company,
individual(s) or partnership, as the case may be, is severally hereinafter
referred to as the "undersigned").
1. NOW THEREFORE, FOR VALUE RECEIVED, and in consideration of advances, credit
or other financial accommodation heretofore, now or hereafter at any time
extended to the Borrower by the Bank, the undersigned (jointly and severally if
there is more than one guarantor) hereby unconditionally guarantee(s) the full
and prompt payment to the Bank at maturity, whether by acceleration or
otherwise, and at all times thereafter of any and all "Indebtedness".
"Indebtedness" shall mean obligations and liabilities of every kind and nature
of the Borrower to the Bank (including all indebtedness, obligations and
liabilities of partnerships, created or arising while the Borrower is or was a
member thereof), including principal and interest, however evidenced, whether
now existing or hereafter created or arising, directly or indirectly, primary
or secondary, absolute or contingent, due or to become due, or joint or
several, and however owned, held or acquired, whether through discount,
overdraft, returned checks, purchase, direct loan or as collateral, or
otherwise, including without limitation all obligations and liabilities of the
Borrower to the Bank under that certain Loan and Security Agreement among and
between the Borrower and the Bank, of even date herewith (the "Loan
Agreement"). Capitalized terms used in this guaranty and not otherwise defined
herein shall have the meanings given to them in the Loan Agreement.
The undersigned further unconditionally guarantees the prompt, full and
faithful performance and discharge by the Borrower of all of the terms,
conditions, agreements, representations and warranties on the part of the
Borrower contained in any agreement, or in any modification or addenda thereto
or substitution thereof in connection with any advance, credit or financial
accommodation afforded by the Bank to the Borrower.
The undersigned further agree(s) to pay all expenses, including, without
limitation, reasonable legal fees and court costs paid or incurred by the Bank
in endeavoring to collect the Indebtedness, or any part thereof, in enforcing
this guaranty, arising out of any post-judgment proceedings, or in defending
any suit based on any act or omission of the Bank with respect to the
Indebtedness, collateral, or this guaranty or in connection with any Recovery
Claim hereinbelow defined (hereafter, collectively referred to as "Expenses").
<PAGE> 2
2. The term "Guaranteed Debt," as used herein, shall be deemed to mean an
amount equal to all the Indebtedness plus Expenses, and the amount of the
Guaranteed Debt shall be unlimited.
3. In case of the death, incompetence, dissolution, liquidation or insolvency
(however evidenced) of the Borrower, a principal of the Borrower, or any
guarantor of the Indebtedness or in case any bankruptcy, reorganization, debt
arrangement or other proceeding under any bankruptcy or insolvency law, or any
dissolution, liquidation or receivership proceeding, is instituted by or
against the Borrower, or any of the undersigned or any other guarantor of the
Indebtedness or the inability of the Borrower or any of the undersigned to pay
debts as they mature, or in case of the assignment by the Borrower or any of
the undersigned for the benefit of creditors, then upon the occurrence of any
such event, all Guaranteed Debt then existing shall at the option of the Bank,
without notice to anyone, immediately become due or accrued and be payable from
the undersigned (or any thereof if more than one guarantor).
4. All payments received from whatever source shall be applied toward the
payment of the Indebtedness in such order of application as the Bank may in its
sole discretion, from time to time elect, and this determination shall be
conclusive upon the undersigned.
5. This guaranty shall in all respects be a continuing, absolute and
unconditional guaranty, and shall remain in full force and effect with respect
to each guarantor until written notice shall have been actually received by the
Bank by first class or certified mail, of its discontinuance as to such
guarantor, or of the death or dissolution of such guarantor, and also until all
Guaranteed Debt created or existing before receipt of such notice shall have
been fully paid. In case of any such discontinuance, or death or dissolution
of any guarantor or guarantors and notice thereof to the Bank, this guaranty
shall nevertheless continue and remain in force against the other guarantor or
guarantors until discontinued as to such other guarantor or guarantors as
herein provided. No compromise, settlement, release or discharge of, or
indulgence with respect to, or failure, negligence or omission to enforce or
exercise any right against, any one or more guarantors or the fact that at any
time or from time to time, all the Guaranteed Debt may have been paid in full,
shall release or discharge the undersigned. In the event of the death of the
undersigned, this guaranty shall continue as to all Indebtedness theretofore
incurred by the Borrower even though said Indebtedness is renewed or the time
of maturity of Indebtedness is extended without the consent of the executors or
administrators of the undersigned. This guaranty shall be valid, irrespective
of the validity, regularity or enforceability of any instrument, writing or
agreement relating to any Indebtedness, whether or not such Indebtedness is due
or to become due before or after any bankruptcy or insolvency proceeding
involving the Borrower.
6. The liability hereunder shall in no way be affected or impaired by any of
the following, any or all of which may be done or omitted by the Bank in its
sole discretion without notice to anyone and irrespective of whether the
Guaranteed Debt shall be increased or decreased thereby (and the Bank is hereby
expressly authorized in its sole discretion to make from time to time, without
notice to anyone): any sale, pledge, surrender, compromise, settlement,
exchange, release, renewal, extension, modification, election with respect to
any collateral under Section 1111 or any other provision or section of
bankruptcy Code now existing or hereinafter amended; or other disposition of or
with respect to any of said Guaranteed Debt or any security or collateral
therefor, whether or not such disposition is commercially reasonable or
accomplished in a commercially reasonable manner; and such liability shall in
no way be affected or impaired by any acceptance by the Bank of any security
for, or other guarantors or obligors of, any of the Guaranteed Debt, or by any
forbearance or indulgence by the Bank in the collection of, or any failure,
negligence or omission on its part to realize upon any thereof, or to enforce
any claims against any person or persons primarily or secondarily liable
thereon, or upon any collateral or security therefor or to enforce any lien
upon or right of appropriation of any moneys, credits or property of the
Borrower in the possession and control of the Bank, or by an application of any
payments or credits on the Guaranteed Debt. Any act or omission of any kind or
at any time upon the part of the Bank with respect to any matter whatsoever
shall not in any manner affect or impair this guaranty nor the liability
thereunder. The undersigned hereby consents to all acts and omissions of the
Bank set forth herein.
2
<PAGE> 3
7. In order to hold the undersigned liable hereunder and to enforce this
guaranty, there shall be no obligation on the part of the Bank at any time to
resort for payment to the Borrower, or to any other guarantor, or any person,
firm or corporation liable for the Guaranteed Debt, or to any collateral,
security, property, liens or other rights or remedies of the Bank in respect to
the Guaranteed Debt or any part thereof, all of which is hereby expressly
waived by the undersigned.
8. All diligence in collection, and any presentment for payment, demand,
protest and/or notice, as to any and everyone, of protest, dishonor, default or
nonpayment, and notice of the creation and existence of any and all of the
Guaranteed Debt, and of any security therefor, and of the acceptance of this
guaranty, or extensions of credit or indulgences hereunder or of any other
matters or things whatsoever relating hereto are expressly waived.
9. The granting of additional credit from time to time by the Bank to the
Borrower in excess of the amount to which the right of recovery under this
guaranty is limited or in excess of the amount extended to the Borrower at the
time this guaranty is executed by the undersigned, without notice to the
undersigned, is hereby expressly authorized and shall in no way affect or
impair this guaranty.
10. (a) To secure payment of the Guaranteed Debt, the undersigned does hereby
pledge, assign, transfer and deliver to the Bank, and grants to the Bank, a
security interest in and to and a first lien on all of property of the
undersigned of any kind or description, tangible or intangible, of whatever
description (excluding tractors and trailers) whether now existing and/or owned
and hereafter arising and/or acquired, wherever located, including, but not
limited to, the following: (1) all Accounts; (2) certificated and
uncertificated securities; (3) moneys, reserves, deposits, deposit accounts and
interest or dividends thereon, securities, cash, cash equivalents and other
property now or at any time or times hereafter in the possession or under the
control of the Bank or its bailee; (4) liens, guarantees and other rights and
privileges pertaining to any of the foregoing; (5) all books, records and
computer records in any way relating to the foregoing; (6) all accessions,
substitutions, renewals, improvements and replacements of and additions to the
foregoing; and (7) products and proceeds of the foregoing including, without
limitation, proceeds of insurance policies insuring the same or other guaranty
of the same (all of the foregoing personal property and real property is
hereinafter sometimes individually and sometimes collectively referred to as
"Collateral"). The undersigned shall make appropriate entries upon its
financial statements and books and records disclosing the Bank's security
interest in the Collateral.
(b) The undersigned shall execute and/or deliver to the Bank, at any
time and from time to time hereafter at the request of the Bank, all agreements,
instruments, financing statements, continuation statements, authorizations,
documents and other written matter (sometimes hereinafter individually and
collectively referred to as "Supplemental Documentation") that the Bank
reasonably may request, in form and substance reasonably acceptable to the
Bank, to perfect and maintain perfected the Bank's security interest in the
Collateral and to consummate the transactions contemplated in or by this
guaranty. Upon the occurrence of any Event of Default, the undersigned
irrevocably, hereby makes, constitutes and appoints the Bank (and all Persons
designated by the Bank for that purpose) as the undersigned's true and lawful
attorney and agent-in-fact to sign the name of the undersigned on the
Supplemental Documentation and to deliver the Supplemental Documentation to
such Persons as the Bank may reasonably elect. The undersigned agrees that a
copy, electronic image or other reproduction of this Agreement or of any
financing statement shall be sufficient as a financing statement.
(c) The Bank (by any of its officers, employees and/or agents) shall have
the right, at reasonable times and intervals and upon notice to the undersigned
to inspect the Collateral and all related records (and the premises upon which
it is located) and to verify the amount and condition of or any other matter
relating to the Collateral. All reasonable costs, fees and expenses incurred by
the Bank, or for which the Bank has become obligated, in connection with such
inspection and/or verification shall constitute part of the Guaranteed Debt,
payable by the undersigned to the Bank on demand.
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<PAGE> 4
(d) The undersigned warrants and represents to and covenants with the Bank
that: (1) as of the Closing Date, the Bank's security interest in the
Collateral is now and at all times hereafter shall be perfected and have a
first priority; (2) the offices and/or locations where the undersigned keeps
the Collateral consisting of personal property and books and records concerning
the Collateral are solely located at the address indicated on the signature
page of this guaranty, and the undersigned shall not remove such books and
records and/or the Collateral therefrom and shall not keep any of such books
and records and/or the Collateral at any other office or location without the
prior written consent of the Bank; and (3) as of the Closing Date, the
undersigned's sole office and place of business is located at the address
indicated on the signature page of this guaranty. The undersigned, by written
notice delivered to the Bank at least thirty (30) days prior thereto, shall
advise the Bank of the opening by the undersigned of any new office or place of
business or its closing of any existing office or place of business and any new
office or place of business shall be within the continental United States of
America. There are no Liens on the Collateral other than the Lien of the Bank
pursuant hereto.
(e) After the occurrence of an Event of Default, the undersigned shall
receive, as the sole and exclusive property of the Bank, and as trustee for the
Bank, all monies, checks, notes, drafts and all other payment for and/or
proceeds of Collateral which come into the possession or under the control of
the undersigned (or any of its partners, managers, shareholders, directors,
officers, employees, agents or those Persons acting for or in concert with the
undersigned) and immediately upon receipt thereof, the undersigned shall remit
the same (or cause the same to be remitted), in kind, to the Bank at the Bank's
office listed in the preamble of this guaranty.
(f) After the occurrence of an Event of Default, the Bank, at any time or
times in its sole and absolute discretion, may take control of, in any manner,
and may endorse the undersigned's name, as appropriate, to any of the items of
payment or proceeds described in Paragraph 10(e) above and, pursuant to the
provisions of this guaranty, the Bank may, in its sole and absolute discretion,
apply the same to and on account of the Guaranteed Debt. For the purposes of
this Paragraph, the undersigned hereby irrevocably makes, constitutes and
appoints the Bank (and all persons designated by the Bank for that purpose) as
the true and lawful attorney and agent-in-fact of the undersigned, with power,
without notice to the undersigned, to take any such actions.
(g) After the occurrence of an Event of Default, the Bank, in its sole and
absolute discretion, without waiving or releasing any Event of Default or
obligation, liability, or duty of the undersigned under this guaranty, may at
any time or times hereafter, but shall be under no obligation to, pay, acquire
and/or accept an assignment of any security interest, lien, encumbrance, or
claim asserted by any Person against the Collateral. All sums paid by the Bank,
in respect thereof and all reasonable costs, fees and expenses, including
reasonable attorney's fees, court costs, expenses and other charges relating
thereto that are incurred by the Bank, on account thereof shall be part of the
Guaranteed Debt payable by the undersigned to the Bank on demand.
(h) After the occurrence of an Event of Default, the Bank may, in its
sole and absolute discretion, retain as additional Collateral or release to the
undersigned, from time to time, such portion of the monies, reserves and/or
proceeds received by the Bank with respect to the Collateral as the Bank may
determine. All such monies, reserves, proceeds and other property of the
undersigned in the possession of the Bank at any time or times hereafter are
hereby pledged by the undersigned to the Bank as additional Collateral
hereunder and may be applied by the Bank on account of the Guaranteed Debt.
(i) No authorization given by the Bank pursuant to this guaranty to sell
any specified portion of Collateral or any items thereof and no waiver by the
Bank in connection therewith shall establish a custom or constitute a waiver of
the limitation contained in this Agreement against such sales with respect to
any portion of the Collateral or any item thereof not covered by said
authorization.
(j) Any of the Bank's officers, employees or agents shall have the right,
at any time or times, in name of the Bank or the undersigned, as the case may
be, or in the name of a firm of independent certified
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<PAGE> 5
public accountants acceptable to the Bank, to verify the validity,
amount or any other matters relating to any Accounts by mail, telephone,
telegraph or otherwise.
(k) The undersigned shall keep accurate and complete records of its
Accounts and as frequently as the Bank shall require, but not less frequently
than monthly, the undersigned shall deliver to the Bank an accounts payable
aging report, an accounts receivable aging report and formal written
assignments of all Accounts, together with copies of the invoices related
thereto, if requested. The undersigned shall also deliver to the Bank, upon
demand, the original copy of all documents, including without limitation,
repayment histories, present status reports and shipment reports, relating to
the Accounts included in any accounts receivable aging report and such other
matters and information relating to the status of then existing Accounts as the
Bank shall reasonably request.
(l) The undersigned shall give the Bank prompt notice of any Account
in excess of Ten Thousand Dollars ($10,000) which is in dispute between any
Account Debtor and the undersigned. The undersigned shall provide such
additional reports concerning the Accounts (including, without limitation
Accounts Receivable Aging Reports) as the Bank shall reasonably request.
(m) The undersigned shall not, without the prior written consent of
the Bank, sell, transfer, grant a security interest in or otherwise dispose of
or encumber any of its Accounts to any Person other than the Bank.
(n) The undersigned agrees that the Bank shall have the rights and
remedies of a secured party under the Uniform Commercial Code of Illinois with
respect to all of the aforesaid property, including, without limitation
thereof, the right to sell or otherwise dispose of any or all of such property.
THE UNDERSIGNED WAIVES EVERY DEFENSE, COUNTERCLAIM OR SETOFF WHICH THE
UNDERSIGNED MAY NOW HAVE OR HEREAFTER MAY HAVE TO ANY ACTION BY THE BANK IN
ENFORCING THIS GUARANTY, INCLUDING, WITHOUT LIMITATION, EVERY DEFENSE,
COUNTERCLAIM OR SETOFF WHICH THE UNDERSIGNED MAY NOW HAVE, OR HEREAFTER MAY
HAVE, AGAINST THE BORROWER OR ANY OTHER PARTY LIABLE TO THE BANK IN ANY MANNER.
As further security, any and all debts and liabilities now or hereafter
arising and owing to any of the undersigned by the Borrower, or any other party
liable to the Bank are hereby subordinated to the Bank's claims and are hereby
assigned to the Bank. The undersigned ratifies and confirms whatever the Bank
may do pursuant to the terms hereof and with respect to any collateral for the
Guaranteed Debt, and agrees that the Bank shall not be liable for any error of
judgment or mistakes of fact or law. The Bank may, without notice to anyone,
apply or set off any balances, credits, deposits, accounts, moneys or other
indebtedness at any time credited by or due from the Bank to any of the
undersigned against the Guaranteed Debt. Any notification of intended
disposition of any property required by law shall be deemed reasonable and
properly given if given at least five (5) calendar days before such
disposition.
11. Should a claim ("Recovery Claim") be made upon the Bank at any time for
recovery of any amount received by the Bank in payment of the Guaranteed Debt
(whether received from the Borrower, the undersigned pursuant hereto, or
otherwise) and should the Bank repay all or part of said amount by reason of
(i) any judgment, decree, or order of any court or administrative body having
jurisdiction over the Bank or any of its property; or (ii) any settlement or
compromise of any such Recovery Claim effected by the Bank with the claimant
(including the Borrower), the undersigned shall remain jointly and severally
liable to the Bank for the amount so repaid to the same extent as if such
amount had never originally been received by the Bank, notwithstanding any
termination hereof or the return of this document to any of the undersigned or
the cancellation of any note, this guaranty or other instrument evidencing any
of the Indebtedness.
12. In the event the Bank shall sell, assign or transfer the Indebtedness or
Guaranteed Debt, or any part thereof, or grant participations therein, each and
every immediate or remote successive assignee, transferee, holder of or
participant therein, of all or any part of the Indebtedness or Guaranteed Debt
shall have the right to enforce this guaranty by suit or otherwise for the
benefit of such assignee, transferee, holder or participant, as fully as if
such assigned transferee, holder or participant were herein by name
specifically given such rights,
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<PAGE> 6
powers and benefits; but the Bank shall have an unimpaired, prior and superior
right to enforce this guaranty for its benefit as to so much of the
Indebtedness or Guaranteed Debt as it has not been sold, assigned or
transferred.
13. No release or discharge of any one or more of the undersigned (if there is
more than one guarantor), or of any other person, whether primarily or
secondarily liable for and obligated with respect to the Guaranteed Debt, or
the institution of bankruptcy, receivership, insolvency, reorganization,
dissolution or liquidation proceedings by or against any such guarantor or
person, or the entry of any restraining or other order in any such proceeding,
shall release or discharge the undersigned or any other guarantor of the
Guaranteed Debt, or any other person, firm or corporation liable to the Bank
for the Guaranteed Debt, unless and until all of the Guaranteed Debt shall have
been fully paid and this guaranty stamped "Canceled" and returned to the
undersigned.
14. No delay on the part of the Bank in the exercise of any right or remedy
shall operate as a waiver thereof, and no single or partial exercise by the
Bank of any right or remedy shall preclude any other or further exercise
thereof, or the exercise of any other right or remedy. No action of the Bank
permitted hereunder shall in any way affect or impair the rights of the Bank
and the obligation of the undersigned under this guaranty.
15. To the extent that the Borrower or any of the undersigned is a corporation,
limited liability company or partnership, all references herein to the Borrower
and to the undersigned, respectively, shall be deemed to include any successor
or successors, whether immediate or remote, to such corporation, limited
liability company or partnership.
16. This guaranty has been delivered at Chicago, Illinois, and shall be
construed according to the laws of the State of Illinois, in which state it
shall be performed by the undersigned. All actions arising directly or
indirectly as a result or in consequence of this guaranty shall, in the sole
and absolute discretion of the Bank, be instituted and litigated only in courts
having situs in the City of Chicago, Illinois, and the undersigned hereby
consents to the jurisdiction of any State or Federal Court located and having
its situs in said city and waives any right to transfer or change the venue of
any litigation.
17. Wherever possible, each provision of this guaranty shall be interpreted in
such manner as to be effective and valid under applicable law, but if any
provision of this guaranty shall be prohibited by or invalid under such law,
such provision shall be ineffective to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or the
remaining provisions of this guaranty.
18. It is agreed that the undersigned's liability hereunder is several and is
independent of any other guaranties at any time in effect with respect to all
or any part of the Indebtedness and that the undersigned's liability hereunder
may be enforced regardless of the existence of any such other guaranties.
19. This guaranty, and each and every part hereof, shall be binding upon the
undersigned (jointly and severally, if there is more than one guarantor) and
upon the heirs, legal representatives, successors and assigns of the
undersigned, and shall inure to the benefit of the Bank, its successors and
assigns.
20. If the undersigned guarantor is a corporation, then and in such event, the
undersigned guarantor expressly represents and warrants unto the Bank that the
execution and delivery of this guaranty has been duly authorized by resolutions
heretofore duly adopted by its Board of Directors in accordance with law and
its by-laws, that said resolutions have not been amended nor rescinded, are in
full force and effect, that the officers of the undersigned executing and
delivering this guaranty, for and on behalf of the undersigned, are duly
authorized and empowered so to act. The Bank in accepting this guaranty is
expressly relying upon the aforesaid representations and warranties.
21. This guaranty constitutes the entire agreement between the parties relating
to the subject matter hereof and is the final and complete expression of their
intent. No prior or contemporaneous negotiations, promises, agreements,
covenants or representations of any kind or nature, whether made orally or in
writing, have been
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<PAGE> 7
made by the parties, or any of them, in negotiations leading to this guaranty
or relating to the subject matter hereof, which are not expressly contained
herein, or which have not become merged and finally integrated into this
guaranty; it being the intention of the parties hereto that in the event of any
subsequent litigation, controversy or dispute concerning the terms and
provisions of this guaranty, no party shall be permitted to offer to introduce
oral or extrinsic evidence concerning the terms and conditions hereof that are
not included or referred to herein and not reflected in writing. This guaranty
can only be changed, modified, waived or discharged if consented to in a
writing duly signed and delivered on behalf of the Bank. No conditions exist
to the legal effectiveness of this guaranty.
22. THE UNDERSIGNED HEREBY IRREVOCABLY WAIVES ANY RIGHT TO TRIAL BY JURY IN ANY
ACTION OR PROCEEDING (i) TO ENFORCE OR DEFEND ANY RIGHTS UNDER OR IN CONNECTION
WITH THIS GUARANTY OR AN AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED
IN CONNECTION HEREWITH, OR (ii) ARISING FROM ANY DISPUTE OR CONTROVERSY IN
CONNECTION WITH OR RELATED TO THIS GUARANTY, AND AGREES THAT ANY SUCH ACTION OR
PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.
IN WITNESS WHEREOF, THIS GUARANTY IS SIGNED AND SEALED by the undersigned
at Shannon, Illinois, effective this 23rd day of June, 1998.
ADDRESS: CORPORATION, PARTNERSHIP OR LIMITED
LIABILITY CO.:
10124 North Mt. Vernon Road AASCHE TRANSPORTATION SERVICES, INC.,
Shannon, Illinois 61078 a Delaware corporation
By: /s/ Leon Monachos
---------------------------------
Its: Chief Financial Officer
-----------------------------
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<PAGE> 1
EXHIBIT 10.3
ESOP LOAN AND SECURITY AGREEMENT
American National Bank and Trust Company of Chicago
120 South LaSalle Street
Chicago, Illinois 60603
Ladies and Gentlemen:
The undersigned, Dennis D. Wilson and James A. Jalovec, not individually
but solely as trustees under that certain AASCHE TRANSPORTATION SERVICES, INC.
EMPLOYEES' STOCK OWNERSHIP TRUST (the "Borrower"), apply to you (the "Bank")
for your commitment, subject to all of the terms and conditions hereof and on
the basis of the representations and warranties hereafter set forth, to make a
term loan available to the Borrower as hereinafter set forth.
SECTION 1
THE TERM LOAN
SECTION 1.1 AMOUNT AND TERMS. By its acceptance hereof the Bank agrees,
subject to all of the terms and conditions hereof and on the basis of the
representations and warranties hereinafter set forth, to make a term loan (the
"Loan") of up to ONE HUNDRED NINETY-ONE THOUSAND SIX HUNDRED NINETY AND 47/100
DOLLARS ($191,690.47) to the Borrower, the proceeds of such Loan to be used by
the Borrower solely to repay existing indebtedness of the Borrower resulting
from loan facilities provided to the Borrower by LaSalle National Bank. There
shall be only one borrowing under the Loan and any portion of the Loan amount
noted above not requested by the Borrower on the occasion of such borrowing
shall thereupon automatically expire.
SECTION 1.2 THE NOTE. The Loan made pursuant to Section 1.1 hereof shall
be made against and evidenced by a promissory note of the Borrower in the form
(with appropriate insertions) attached hereto as Exhibit A (the "Note"), such
Note shall be dated the date of issuance thereof, be payable to the order of
the Bank in the face principal amount of ONE HUNDRED NINETY-ONE THOUSAND SIX
HUNDRED NINETY AND 47/100 DOLLARS ($191,690.47) and be expressed to mature on
April 30, 2000, the final maturity thereof. The principal amount of the Loan
from time to time remaining unpaid hereon shall bear interest as provided in
Section 2 hereof.
Without regard to the principal amount of the Note stated on its face, the
actual principal amount at any time outstanding and owing by the Borrower on
account of the Note shall be the amount of the Loan disbursed under Section 1.1
hereof less all payments of principal actually
<PAGE> 2
received by the Bank. The Bank shall record on its books and records or, at
its option, on a schedule to the Note the amount of the Loan disbursed by the
Bank under Section 1.1 hereof, any repayments of principal thereof and the
principal balance from time to time outstanding, provided that prior to any
transfer of the Note all such amounts shall be recorded on a schedule to the
Note. The Borrower agrees that the record thereof, whether shown on such books
and records or on a schedule to the Note, shall be prima facie evidence in any
action or proceeding instituted to collect or enforce collection of the Note of
the principal amount remaining unpaid thereon; provided, however, that the
failure of the Bank to record any of the foregoing shall not limit or otherwise
affect the obligation of the Borrower to repay the principal amount of the Loan
together with accrued interest thereon.
SECTION 2
INTEREST
SECTION 2.1 INTEREST RATE. The principal amount of the Loan from time to
time remaining unpaid shall bear interest (which the Borrower hereby promises
to pay) prior to maturity (whether by lapse of time, acceleration or otherwise)
at a rate per annum equal at all times to the Prime Rate as from time to time
in effect and any principal amount of the Loan from time to time remaining
unpaid after its maturity (whether by lapse of time, acceleration or otherwise)
shall bear interest (which the Borrower hereby promises to pay), whether before
or after judgment, until paid in full at a rate per annum determined by adding
3% to the interest rate which would otherwise be applicable thereto from time
to time. Any change in the interest rate on the Note resulting from a change
in the Prime Rate shall be effective on the date of the relevant change in the
Prime Rate.
SECTION 2.2 BASIS AND PAYMENT DATES. All interest accruing on the
principal amount of the Loan prior to maturity shall be due and payable monthly
on the fifteenth day of each and every month (commencing July 15, 1998) and at
maturity (unless prepaid in whole prior to such date, then on the date of such
prepayment in whole). Interest accruing on any principal amount of the Loan
from time to time remaining unpaid after its maturity shall be due and payable
upon demand. All interest on the Loan shall be computed on the basis of a year
of 360 days for the actual number of days elapsed.
SECTION 3
COLLATERAL
SECTION 3.1 GRANT OF SECURITY INTEREST-PLEDGED SHARES. The Borrower
hereby grants to the Bank a continuing security interest in Thirty-four
Thousand Six Hundred Forty-seven (34,647) shares of the issued and outstanding
common stock of Aasche Transportation Services, Inc., a Delaware corporation
(the "Parent Company") which are owned by the Borrower (the "Pledged Shares")
together with all rights and remedies incident thereto and all dividends,
distributions and income at any time receivable in respect thereof (whether in
cash or additional shares or other property) and all other rights and remedies
incident thereto and all proceeds thereof (the Pledged Shares and all such
other dividends, distributions, income and proceeds
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<PAGE> 3
being hereinafter referred to collectively as the "Collateral"). The security
interest herein granted and provided for is made and given to secure and shall
secure the prompt payment of principal of and interest on the Note as and when
the same becomes due and payable and the payment, observance and performance of
any and all obligations and liabilities arising under or provided for in this
Agreement or the Note or any of them, in each instance as the same may be
amended, modified or restated from time to time, and whether now existing or
hereafter arising.
SECTION 3.2 FURTHER ASSURANCES. Upon the request of the Bank, the
Borrower shall deliver, or cause to be delivered, the Pledged Shares, it being
agreed that the Bank is not requiring the delivery of the Pledged Shares as of
the date of this Agreement. The Borrower covenants and agrees that it will at
any time and from time to time as requested by the Bank execute and deliver
such further instruments and do and perform such other acts as the Bank may
deem necessary or desirable to provide for or perfect or protect the lien and
security interest of the Bank in the Collateral hereunder.
SECTION 3.3 VOTING. The Bank shall have the right at any time and from
time to time to transfer the Collateral or any part thereof into its name or
into the name of its nominee. The Bank shall not be entitled to vote the
Pledged Shares unless and until an Event of Default has occurred.
SECTION 3.4 DIVIDENDS AND DISTRIBUTIONS. Unless and until a Default or
Event of Default shall have occurred hereunder, all cash dividends on the
Pledged Shares (other than dividends issued in connection with the complete or
partial liquidation of the Parent Company) shall be paid to and may be retained
by the Borrower and any and all other dividends, payments or other
distributions (including cash liquidating dividends, stock dividends, shares
resulting from any split-up or other reclassification, dividends in kind and
shares issued pursuant to reorganization or merger involving the Parent
Company) which shall be paid or distributed upon or in respect of the Pledged
Shares, shall, upon the request of the Bank, be paid and/or delivered to the
Bank and held by the Bank as additional collateral security hereunder and, if
received by the Borrower, shall forthwith upon their receipt, upon the request
of the Bank, be delivered to the Bank. The Borrower agrees that it will from
time to time deliver to the Bank appropriate stock powers duly executed in
blank with all signatures guaranteed and otherwise in transferable form
covering any and all certificates evidencing any additional shares resulting
from any stock dividend on or split-up of the Pledged Shares or issued in
respect of the Pledged Shares in connection with a reorganization or merger
involving the Parent Company.
SECTION 3.5 PARTIAL RELEASES. The Bank agrees, provided always that no
Default or Event of Default shall have occurred and be continuing, as promptly
as is practicable after the last day of each calendar month and upon the
written request of the Borrower, to release that number of Pledged Shares then
being held by the Bank to secure the Loan and the other obligations secured
hereunder which is equal to the number of such Pledged Shares held as of the
last day of such month multiplied by a fraction, the numerator of which is the
aggregate amount of all principal payments made on the Loan during such month
and the denominator of which is the sum of the numerator plus the unpaid
principal balance of the Loan as of the last day of such month.
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<PAGE> 4
SECTION 3.6 GUARANTY. The Note and the other obligations hereunder shall
be guaranteed by the Parent Company, Asche Transfer, Inc., an Illinois
corporation, and AG Carriers, Inc., a Florida corporation (collectively, the
"Guarantors"), pursuant to a Continuing Unconditional Guaranty dated of even
date herewith in form and substance satisfactory to the Bank (the "Guaranty"),
and the Guarantors' obligations thereunder shall at all times be secured by
that certain Loan and Security Agreement dated as of the date of this Loan and
Security Agreement, by and among the Guarantors and the Bank, as amended (the
"Guarantor Security Agreement").
SECTION 4
PAYMENTS AND APPLICATION
SECTION 4.1 PLACE AND APPLICATION. All payments of principal and interest
and all other amounts payable hereunder shall be made to the Bank at the
principal office of the Bank at 33 North LaSalle Street, Chicago, Illinois (or
at such other place for the account of the Bank as the Bank may from time to
time specify in writing to the Borrower) on the date any such payment is due
and payable. All such payments shall be made in lawful money of the United
States of America, in immediately available funds at the place of payment.
Payments received by the Bank after 11:00 a.m. (Chicago time) shall be deemed
received as of the opening of business on the next Business Day. All such
payments shall be made without set-off or counterclaim and without reduction
for, and free from, any and all present and future taxes, levies, imposts,
duties, fees, charges, deductions, withholdings, restrictions or conditions of
any nature imposed by any government or any political subdivision or taxing
authority thereof.
SECTION 4.2 PREPAYMENTS. The Borrower shall have the privilege of
prepaying, in whole or in part, the Loan at any time upon giving three (3)
Business Days' prior notice to the Bank, each such prepayment to be made by the
payment of the principal amount to be prepaid and accrued interest thereon to
the date fixed for prepayment. All such prepayments shall be made without
premium or penalty. No amount prepaid may be reborrowed and partial
prepayments shall be applied to the several installments of the note in the
inverse order of maturity.
SECTION 5
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Bank as follows:
SECTION 5.1 The Aasche Transportation Services, Inc. Employees' Stock
Ownership Trust (the "Trust") is a duly organized, validly existing employee
stock ownership trust exempt from tax under Section 501(a) of the Code. The
Borrower has submitted to the Bank a true and correct copy of The Restated
Aasche Transportation Services, Inc. Employees' Stock Ownership Trust dated
effective as of September 22, 1994 between the Parent Company and the Borrower
and all amendments thereto (the "Trust Agreement") and of The Amended and
Restated Aasche Transportation Services, Inc. Employees' Stock Ownership Plan
and all amendments thereto (the
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<PAGE> 5
"Plan"). The Borrower has submitted to the Bank a true and correct copy of the
most recent determination letter from the Internal Revenue Service to the
effect that the Plan and the Trust, taken together, qualify as an employee
stock ownership plan for purposes of Section 4975(e)(7) of the Code. The Plan
is qualified under Section 401(a) of the Code. The Plan and the Trust, taken
together, constitute a valid employee stock ownership plan for purposes of
Section 4975(e)(7) of the Code and is entitled to all the benefits afforded to
employee stock ownership plans thereunder. The Plan and the Trust are in
compliance in all material respects with ERISA and the Code, and the Borrower
has received no notice to the contrary. The Plan has, at all times during its
existence, been administered in compliance with applicable law and with the
terms of the Plan.
SECTION 5.2 Concurrently herewith the Borrower shall apply the proceeds of
the Loan in their entirety to the repayment of loan obligations of the Borrower
to LaSalle National Bank (which loan was obtained by the Borrower to refinance
a loan which, in turn, funded the Borrower's purchase of the Pledged Shares).
The Pledged Shares purchased with the proceeds of the funds borrowed from
LaSalle National Bank were acquired for no more than adequate consideration
within the meaning of Section 3(18) of ERISA and in accordance with the other
requirements of Section 408(e) of ERISA. The acquisition of the Pledged Shares
did not, and consummation of the transactions provided for in this Agreement
and performance and observance by the Borrower with the provisions hereof and
of the Note shall not, constitute a prohibited transaction for purposes of
Section 406 of ERISA or Section 4975 of the Code. The Pledged Shares are
qualifying employer securities for purposed of ERISA and the Code.
SECTION 5.3 The Borrower has full right, power and authority to enter into
this Agreement, to make the borrowings hereunder provided for, to issue its
Note in evidence thereof, to grant to the Bank the security interest described
herein, and to perform each and all of the matters and things herein and
therein provided for. This Agreement and the Note do not, nor will the
performance or observance by the Borrower of any of the matters or things
herein or therein provided for, contravene or constitute a default under any
provision of law or any judgment, injunction, order or decree binding upon the
Borrower, the Plan or the Trust or any provision of the Plan or the Trust
Agreement or any other covenant, indenture or agreement of or affecting the
Borrower or any of its assets. The Pledged Shares have been validly issued
and, upon acquiring the Pledged Shares with the proceeds of the Loan, the
Pledged Shares will be fully paid and non-assessable owned by the Borrower free
and clear of all liens, charges, encumbrances and restrictions whatsoever,
except for the security interest of the Bank provided for herein. There are no
outstanding options or rights of any person, firm, corporation or other entity
to purchase, or of the Borrower to sell, any of the Pledged Shares.
SECTION 5.4 There is no litigation or governmental proceeding pending, nor
to the knowledge of the Borrower threatened, against the Borrower or any of its
assets.
SECTION 5.5 The Borrower has no material liabilities, whether absolute or
contingent, except for those heretofore disclosed to the Bank.
SECTION 6
5
<PAGE> 6
CONDITIONS PRECEDENT
The obligation of the Bank to make the Loan shall be subject to
satisfaction of the following conditions precedent:
a. the Bank shall have received a certified copy of the Plan and
Trust Agreement and all amendments thereto, and the same shall be
satisfactory to the Bank;
b. the Bank shall have received executed originals of this Agreement
and the Note duly signed and properly completed;
c. the Bank shall have received the Guaranty and the Guarantor
Security Agreement properly executed and delivered by the Guarantors,
together with all financing statements required by the Bank in connection
therewith;
d. the Bank shall have received copies (executed or certified, as
may be appropriate) of all legal documents or proceedings taken in
connection with the execution and delivery of this Agreement, the Note,
the Guaranty and the Guarantor Security Agreement to the extent the Bank
or its counsel may reasonably request;
e. legal matters incident to this Agreement, the Note, the Guaranty
and the Guarantor Security Agreement and to the transactions contemplated
hereby shall be acceptable to the Bank and its counsel; and the Bank
shall have received the favorable written opinion of counsel for the
Borrower and for the Guarantors, in form and substance satisfactory to
the Bank and its counsel;
f. the Bank shall have received for each Guarantor a good standing
certificate (dated as of the date no earlier than 30 days prior to the
date hereof) from the office of the Secretary of State of the state of
its corporation and each state in which it is qualified to do business as
a foreign corporation;
g. each and all of the representations and warranties contained in
Section 5 hereof and in the Guarantor Security Agreement shall be and
remain true and correct as of the date of the making of the Loan;
h. the Borrower and the Guarantors shall be in full compliance with
all of the terms and conditions hereof, the Note, the Guaranty and the
Guarantor Security Agreement, and no Default or Event of Default shall
have occurred or be continuing; and
i. the Bank shall have received such valuations and certifications
as it may require in order to satisfy itself as to the value of the
Pledged Shares, the financial condition of the Borrower and the
Guarantors, and the lack of material contingent liabilities of the
Borrower and the Guarantors.
SECTION 7
COVENANTS
6
<PAGE> 7
The Borrower covenants and agrees that so long as any amount remains
unpaid on the Note or the Commitment is outstanding, except to the extent
compliance in any case or cases is waived in writing by the Bank:
SECTION 7.1 COMPLIANCE. The Plan's status as a qualified employee stock
ownership plan under the Code will continuously be maintained. The Borrower
will comply in all material respects with all requirements of the Code, ERISA
and any other law, rule or regulation applicable to it.
SECTION 7.2 AMENDMENTS OF THE PLAN AND THE TRUST AGREEMENT. Except as may
be required under the Code for purposes of maintaining the Plan's status as a
qualified employee stock ownership plan, the Plan and the Trust Agreement will
not be amended in any respect which under any circumstances adversely affects
the rights of the Bank hereunder or under the Note. The Borrower shall give
the Bank prior notice of any proposed amendment to the Plan or the Trust
Agreement (and will furnish copies of such proposed amendment to the Bank
concurrently with such notice), and shall deliver to the Bank certified copies
of any such amendment within 10 days of the adoption thereof.
SECTION 7.3 FINANCIAL REPORTS. The Borrower will maintain a system of
accounting for the Plan and the Trust in accord with sound accounting practice
and will furnish to the Bank and its duly authorized representatives such
information and data with respect to the financial condition of the Plan and
the Trust as the Bank may reasonably request; and without any request, will
furnish to the Bank:
a. as soon as available, but in any event within 120 days after the
close of each annual accounting period of the Plan and the Trust, a
statement of assets available for plan benefits and a statement of
changes in assets available for plan benefits, all as certified as true
and correct by the Borrower; and
b. promptly after knowledge thereof shall have come to the attention
of the Borrower, written notice of the occurrence of any Default or Event
of Default hereunder or of any threatened or pending litigation or
governmental proceeding against the Borrower or the Plan or the Trust or
against the assets of the Trust.
SECTION 7.4 INDEBTEDNESS. The Borrower will not issue, incur, assume,
create or have outstanding any indebtedness for borrowed money (including as
such any indebtedness representing the deferred purchase price of property, and
any indebtedness, whether or not assumed, secured by liens on property acquired
by the Borrower at the time of the acquisition thereof); provided, however,
that the foregoing provisions shall not restrict nor operate to prevent (i) the
indebtedness of the Borrower on the Note, (ii) other indebtedness of the
Borrower to the Bank, and (iii) obligations of the Borrower to participants in
the Plan created pursuant to the Plan as now in effect, or as hereinafter
amended in accordance with Section 7.2 hereof.
SECTION 7.5 LIENS. The Borrower will not pledge, mortgage or otherwise
encumber, or subject to or permit to exist upon or be subjected to any lien,
security interest or charge upon, any
7
<PAGE> 8
assets or property of any kind or character at any time owned by the Trust or
the Borrower as trustees; provided, however, that nothing contained in this
Section 7.5 shall operate to prevent (i) the lien and security interest created
for the benefit of the Bank hereby and (ii) any other liens in favor of the
Bank.
SECTION 7.6 GUARANTIES. The Borrower will not be or become, nor will it
permit the Trust assets to be or become, liable as endorser, guarantor, surety
or otherwise for any debt, obligation or undertaking of any other person, firm,
corporation or entity or otherwise agree to provide funds for payment of the
obligations of another, or supply funds thereto or invest therein or otherwise
assure a creditor of another against loss, or subordinate any claim or demand
it may have to the claim or demand of any other person, firm, corporation or
entity.
SECTION 7.7 DETERMINATION LETTERS. The Borrower shall obtain and furnish
to the Bank, as soon as available and in any event within ninety (90) calendar
days after the date of this Agreement a copy of favorable determination letter
received from the Internal Revenue Service on account of the Plan and the
Trust, confirming that the Plan and the Trust, taken together, qualify as an
employee stock ownership plan for purposes of Section 4975(e)(7) of the Code.
The Borrower shall also furnish to the Bank, as soon as available and in any
event within ten (10) days after receipt thereof, a copy of each determination
letter or other communications from the Internal Revenue Service concerning the
qualification of the Plan and the Trust, taken together, as an employee stock
ownership plan for purposes of the Code.
SECTION 8
EVENTS OF DEFAULT AND REMEDIES
SECTION 8.1 Any one or more of the following shall constitute an "Event of
Default" hereunder:
a. default in the payment when due of any part of the principal of
or interest on the Note or of any other amounts payable under this
Agreement;
b. the Borrower shall default in the observance or performance by it
of any other provision hereof or in any other instrument or document
securing the Note or setting forth terms and conditions applicable to any
of the indebtedness evidenced thereby and such default shall continue
unremedied for a period of thirty (30) days after notice to the Borrower
by the Bank or any other holder of the Note;
c. any representation, warranty or statement made by the Borrower
herein or in connection with the making of the Loan proves to be
incorrect in any material respect as of the date of the issuance or
making thereof or (with respect to the representations contained in
Sections 5.1 and 5.2 above) as of any subsequent date during the term of
this Agreement;
d. default shall occur under any evidence of indebtedness issued,
assumed or guaranteed by the Borrower or any Guarantor or under any
indenture, agreement or other
8
<PAGE> 9
instrument under which the same may be issued, and such default shall continue
for a period of time sufficient to permit the acceleration of the maturity of
any such indebtedness, or any such indebtedness shall not be paid when due
(whether by lapse of time, acceleration or otherwise);
e. any judgment or judgments, writ or writs, or warrant or warrants
of attachment, or any similar process or processes in an aggregate amount
in excess of $100,000 shall be entered or filed against the Borrower or
any Guarantor or against any of their respective properties or assets and
which remains unvacated, unbonded, unstayed or unsatisfied for a period
of thirty (30) days;
f. any indebtedness, obligation or liability of any Guarantor at any
time owing to the Bank shall not be paid when due (whether by demand,
lapse of time, acceleration, or otherwise), or any event occurs or
condition exists which is specified as an event of default under the
Guarantor Security Agreement, or any Guarantor shall purport to
terminate, repudiate, revoke or disavow its Guaranty or the Guarantor
Security Agreement or any of its obligations thereunder, or the Guaranty
or the Guarantor Security Agreement (or any part thereof) shall for any
reason not be or shall cease to be in full force and effect or is
declared to be null and void;
g. dissolution or termination of the existence of any Guarantor or
the Borrower;
h. the Borrower or any Guarantor shall (i) have entered
involuntarily against it an order for relief under the United States
Bankruptcy Code, as amended, (ii) not pay, or admit in writing its
inability to pay, its debts generally as they become due, (iii) make an
assignment for the benefit of creditors, (iv) apply for, seek, consent
to, or acquiesce in, the appointment of a receiver, custodian, trustee,
examiner, liquidator or similar official for it or any substantial part
of its property, (v) institute any proceeding seeking to have entered
against it an order for relief under the United States Bankruptcy Code,
as amended, to adjudicate it insolvent, or seeking dissolution, winding
up, liquidation, reorganization, arrangement, adjustment or composition
of it or its debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors or fail to file an answer or other
pleading denying the material allegations of any such proceeding filed
against it, or (vi) fail to contest in good faith any appointment,
proceeding described in Section 8.1(i) hereof; or
i. a custodian, receiver, trustee, examiner, liquidator or similar
official shall be appointed for the Borrower or any Guarantor or any
substantial part of any of their properties or assets, or a proceeding
described in Section 8.1(j)(v) shall be instituted against the Borrower
or such Guarantor, and such appointment continues undischarged or such
proceeding continues undismissed or unstayed for a period of thirty (30)
days.
SECTION 8.2 When any Event of Default described in clauses (a) through
(g), both inclusive, of Section 8.1 has occurred and is continuing, the Bank or
the holder of the Note may, by notice to the Borrower, declare the principal of
and the accrued interest on the Note to be
9
<PAGE> 10
forthwith due and payable and thereupon the Note, including both principal and
interest and all other sums payable under this Agreement, shall be and become
due and payable without further demand, presentment, protest or notice of any
kind.
SECTION 8.3 When any Event of Default described in clauses (h) or (i) of
Section 8.1 hereof has occurred and is continuing, then the entire principal
balance of the Note and all interest thereon and all other amounts payable
under this Agreement shall immediately become due and payable without
presentment, demand, protest or notice of any kind.
SECTION 8.4 When any Event of Default has occurred and is continuing, the
Bank may, in addition to such other rights or remedies as it may have, then or
at any time or times thereafter exercise with respect to the Collateral any and
all of the rights, options and remedies of a secured party under the Uniform
Commercial Code of Illinois (the "UCC") including, without limitation, the sale
of all or any part of the Collateral at any brokers' board or any public or
private sale, provided that prior to such exercise the Bank shall release from
the Collateral so much thereof as it would have been required to release under
Section 3.5 hereof if no Event of Default had occurred. The net proceeds of
any such sale, after deducting all costs and expenses incurred in the
collection, protection, sale and delivery of the Collateral (which expenses
Borrower hereby promises to pay) shall be applied first to the payment of any
costs and expenses incurred by the Bank in selling or otherwise disposing of
the Collateral, second, to the payment of the principal of and the interest on
the Note, and, third, ratably as among any other items of the indebtedness
hereby secured. Any surplus remaining after the full payment and satisfaction
of the foregoing shall be returned to the Borrower or to whomsoever the Bank
reasonably determines to be entitled thereto. Any requirement of said UCC as
to reasonable notice shall be met by the Bank personally delivering or mailing
notice (by certified or registered mail - return receipt requested) to the
Borrower at its address as provided in Section 10.7 hereof at least ten (10)
days prior to the event giving rise to the requirement of such notice. In
connection with any offer, solicitation or sale of the Collateral, the Bank may
restrict bidders and otherwise proceed in whatever manner it reasonably
believes appropriate in order to comply or assure compliance with applicable
legal requirements pertaining to the offer and sale of securities of the same
type as the Collateral (the Borrower agreeing that such restrictions may
include restrictions appropriate to assure that the offering and sale of the
Collateral does not require registration under applicable state and federal
laws and regulations and that Bank shall not be required to conduct a public
offering of the Collateral) and to the change of control of corporations such
as the Parent Company, and the Borrower acknowledges and agrees that the
foregoing shall not affect the commercial reasonableness of any sale of the
Collateral.
SECTION 9
DEFINITIONS
"BUSINESS DAY" means any day on which the Bank is generally open for
business in Chicago, Illinois other than a Saturday or Sunday.
"CODE" means the Internal Revenue Code of 1986, as amended, and the rules
and regulations thereunder.
10
<PAGE> 11
"PRIME RATE" means for any day the rate of interest per annum announced
from time to time by the Bank as its prime announced or basic rate of interest,
which the Borrower expressly acknowledges is not intended to be an expression
of a set rate of interest upon which credit is available to commercial
borrowers or the public but is merely a reference rate used by the Bank; it
being understood and agreed that such rate may not be the Bank's lowest or most
favorable rate of interest. A certificate of the Bank as to its Prime Rate in
effect on any day shall be conclusive (in the absence of manifest error) for
purposes hereof, as to the Prime Rate in effect on such day.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the rules and regulations thereunder.
"EVENT OF DEFAULT" means any event or condition specified as such in
Section 8.1 hereof and the term "Default" means any event or condition the
occurrence of which, with the lapse of time or the giving of notice, or both,
would constitute an Event of Default.
Capitalized terms defined elsewhere in this Agreement shall have the
meanings as defined in all provisions hereof.
SECTION 10
MISCELLANEOUS
SECTION 10.1 HOLIDAYS. If any payment of principal or interest on the
Note shall fall due on a day which is not a Business Day, principal together
with interest at the rate the Note bears for the period prior to maturity shall
continue to accrue from the stated due date thereof to and including the next
succeeding Business Day, on which the same is payable.
SECTION 10.2 NO WAIVER, CUMULATIVE REMEDIES. No delay or failure on the
part of the Bank or on the part of the holder of the Note in the exercise of
any power or right shall operate as a waiver thereof or as an acquiescence in
any default, nor shall any single or partial exercise of any power or right
preclude any other or further exercise thereof or the exercise of any other
power or right. The rights and remedies hereunder of the Bank and of the
holder of the Note are cumulative to, and not exclusive of, any rights or
remedies which any of them would otherwise have.
SECTION 10.3 AMENDMENTS, ETC. No amendment, modification, termination or
waiver of any provision of this Agreement or of the Note, nor consent to any
departure by the Borrower therefrom, shall in any event be effective unless the
same shall be in writing and signed by the Bank, and then such consent,
modification or waiver shall be effective only in the specific instance and for
the specific purpose for which given. No notice to or demand on the Borrower
in any case shall entitle the Borrower to any other or further notice or demand
in similar or other circumstances.
11
<PAGE> 12
SECTION 10.4 COSTS AND EXPENSES. The Borrower agrees to pay on demand the
costs and expenses of the Bank in connection with the negotiation, preparation,
execution and delivery of this Agreement, the Note, the Guaranty, the Guarantor
Security Agreement and the other instruments and documents to be delivered
hereunder or thereunder and in connection with the transactions contemplated
hereby or thereby and in connection with any consents hereunder or waivers or
amendments hereto or thereto, including the fees and expenses of counsel to the
Bank, with respect to all of the foregoing (whether or not the transactions
contemplated hereby are consummated), and all costs and expenses (including
attorneys' fees), if any, incurred by the Bank or any other holder of the Note
in connection with the enforcement of this Agreement, the Note or the Guaranty
or any other instrument or document to be delivered hereunder and in connection
with any action, suit or proceeding brought against the Bank by any person
which in any way arises out of the transactions contemplated or financed hereby
or out of any action or inaction by the Bank hereunder or thereunder except for
such thereof arising solely from the Bank's gross negligence or willful
misconduct.
SECTION 10.5 DOCUMENTARY TAXES. The Borrower agrees to pay on demand any
documentary, stamp or similar taxes payable in respect of this Agreement or the
Note, including interest and penalties, in the event any such taxes are
assessed, irrespective of when such assessment is made and whether or not any
credit is then in use or available hereunder.
SECTION 10.6 SURVIVAL OF REPRESENTATIONS. All representations and
warranties made herein or in certificates given in connection with the Loan
shall survive the execution and delivery of this Agreement and of the Note, and
shall continue in full force and effect with respect to the date as of which
they were made as long as any credit is in use or available hereunder.
SECTION 10.7 NOTICES. Except as otherwise specified herein, all notices
hereunder shall be in writing (including cable, telecopy or telex) and shall be
given to the relevant party at its address, telecopier number or telex number
set forth below, or such other address, telecopier number or telex number as
such party may hereafter specify by notice to the other given by United States
certified or registered mail, by telecopy or by other telecommunication device
capable of creating a written record of such notice and its receipt. Notices
hereunder shall be addressed:
to the Borrower: James A. Jalovec, Trustee
Dennis D. Wilson, Trustee
Aasche Transportation Services, Inc.
Employee Stock Ownership Trust
c/o Aasche Transportation Services, Inc.
10214 North Mount Vernon Road
Shannon, Illinois 61078
800/775-3034 Telephone
815/864-2646 Telecopy
to the Bank: American National Bank and Trust Company of Chicago
Rockford Division
12
<PAGE> 13
6323 Riverside Boulevard
Rockford, Illinois 61114
Attention: Steven B. Towne
815/282-7911 Telephone
815/282-7925 Telecopy
Each such notice, request or other communication shall be effective (i) if
given by telecopier, when such telecopy is transmitted to the telecopier number
specified in this Section 10.7 and a confirmation of such telecopy has been
received by the sender, (ii) if given by telex, when such telex is transmitted
to the telex number specified in this Section 10.7 and the answer back is
received by sender, (iii) if given by mail, five (5) days after such
communication is deposited in the mail, certified or registered with return
receipt requested, addressed as aforesaid or (iv) if given by any other means,
when delivered at the address specified in this Section 10.7.
SECTION 10.8 HEADINGS. Section headings used in this Agreement are for
convenience of reference only and are not a part of this Agreement for any
other purpose.
SECTION 10.9 SEVERABILITY OF PROVISIONS. Any provision of this Agreement
which is unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such unenforceability without invalidating the
remaining provisions hereof or affecting the validity or enforceability of such
provision in any other jurisdiction.
SECTION 10.10 COUNTERPARTS. This Agreement may be executed in any number
of counterparts, and by different parties hereto on separate counterpart
signature pages, and all such counterparts taken together shall be deemed to
constitute one and the same instrument.
SECTION 10.11 BINDING NATURE, GOVERNING LAW, ETC. This Agreement shall be
binding upon the Borrower and its successors and assigns, and shall inure to
the benefit of the Bank and the benefit of its successors and assigns,
including any subsequent holder of the Note. This Agreement and the rights and
duties of the parties hereto shall be construed and determined in accordance
with the laws of the State of Illinois without regard to principles of
conflicts of laws. This Agreement constitutes the entire understanding of the
parties with respect to the subject matter hereof and any prior agreements,
whether written or oral, with respect thereto are superseded hereby.
SECTION 10.12 CONCERNING THE BORROWER. The term "Borrower" as used herein
shall mean and include the undersigned as trustees of the Trust and their
successors in trust not individually but solely as Trustees under that certain
Aasche Transportation Services, Inc. Employees' Stock Ownership Trust dated
effective as of September 22, 1994, between the undersigned and the Parent
Company, and this Agreement shall be binding upon the undersigned and their
successors and assigns and upon the trust estate. Subject to Section 10.13
hereof, the undersigned assume no personal liability or responsibility for
payment of the indebtedness evidenced by the Note or for observance or
performance of the covenants and agreements herein contained or for the
truthfulness of the representations and warranties herein contained, the
undersigned having executed this Agreement and the Note solely in their
capacity as trustees as aforesaid to bind the undersigned, their successors in
trust and the trust estate.
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<PAGE> 14
SECTION 10.13 LIMITED LIABILITY. Anything contained herein or in the Note
to the contrary notwithstanding, the sole and only recourse of the Bank and any
other holder of the Note as against the Borrower for the payment of the
obligations hereunder and under the Note shall be to (i) the Collateral, (ii)
contributions made to the Plan and the Trust by sponsoring employers to enable
the Borrower to meet its obligations hereunder and under the Note, and (iii)
earnings attributable to the Collateral and to the investment of sponsoring
employer contributions as aforesaid. The foregoing limitations shall not
affect the rights of the Bank, which are unconditional and absolute, to declare
the indebtedness evidenced by the Note to be immediately due and payable upon
the occurrence of any Event of Default or to proceed against any Guarantor or
the Collateral.
Upon your acceptance hereof in the manner hereinafter set forth, this
Agreement shall constitute a contract between us for the uses and purposes
hereinabove set forth.
Dated as of this 23 day of June, 1998.
--------------
Dennis D. Wilson and James A.
Jalovec and their successors in
trust, not individually but solely
as trustees under that certain
Aasche Transportation Services, Inc.
Employees' Stock Ownership Trust
dated effective as of September 22,
1994 between the undersigned and
Aasche Transportation Services, Inc.
/s/ Dennis D. Wilson
-----------------------------------------
Dennis D. Wilson, as Trustee as aforesaid
/s/ James A. Jalovec
-----------------------------------------
James A. Jalovec, as Trustee as aforesaid
Accepted and Agreed to at Chicago, Illinois
as of the date last above written.
AMERICAN NATIONAL BANK
AND TRUST COMPANY OF CHICAGO
By: /s/ Steven B. Towne
---------------------------
Its: Vice President
14
<PAGE> 15
EXHIBIT A
PROMISSORY NOTE
Chicago, Illinois
$191,690.47 June [____], 1998
FOR VALUE RECEIVED, the undersigned, Dennis D. Wilson and James A.
Jalovec, not individually but solely as trustees under that certain AASCHE
TRANSPORTATION SERVICES, INC. EMPLOYEES' STOCK OWNERSHIP TRUST (the "Borrower")
promises to pay to the order of AMERICAN NATIONAL BANK AND TRUST COMPANY OF
CHICAGO (the "Bank") at its office at 33 North LaSalle Street, Chicago,
Illinois, the principal sum of ONE HUNDRED NINETY-ONE THOUSAND SIX HUNDRED
NINETY AND 47/100 DOLLARS ($191,690.47) or, if less, the aggregate principal
amount of the Loan made to the Borrower under Section 1.1 of the Loan and
Security Agreement hereinafter referred to on April 30, 2000, the final
maturity hereof.
The Borrower promises to pay interest (computed on the basis of a year of
360 days for the actual number of days elapsed) at said office on the balance
of principal from time to time remaining outstanding and unpaid hereon at the
times and rates and in the manner specified in the Loan and Security Agreement
referred to below.
The Bank shall record on its books and records or, at its option, on a
schedule to the Note, the principal amount of the Loan disbursed by the Bank,
any payment of principal and the principal balance from time to time
outstanding, provided that prior to the transfer of this Note all such amounts
shall be recorded on a schedule to this Note. The record thereof, whether
shown on such books and records or on a schedule to this Note, shall be prima
facie evidence in any action or proceeding instituted to collect or enforce
collection of this Note of the principal amount remaining unpaid hereon.
This Note is issued under the terms and provisions of that certain Loan
and Security Agreement dated as of the date of this Note, between the Borrower
and the Bank (the "Loan and Security Agreement"), and this Note and the holder
hereof are entitled to all the benefits and security provided for thereby or
referred to therein to which Loan and Security Agreement reference is hereby
made for a statement thereof.
This Note may be declared due prior to its express maturity and voluntary
prepayments may be made hereon and the interest rates applicable to this Note
may be automatically changed and adjusted, all in the events, on the terms, and
in the manner as provided in the Loan and Security Agreement.
Recourse for the payment of this Note has been limited by the provisions
of the Loan and Security Agreement and this Note is expressly made subject to
such provisions. This Note shall be governed by and construed in accordance
with the laws of the State of Illinois without regard
A-1
<PAGE> 16
to principles of conflicts of laws. The Borrower hereby waives presentment for
payment and demand.
Dennis D. Wilson and James A.
Jalovec and their successors in
trust, not individually but solely
as trustees under that certain
Aasche Transportation Services, Inc.
Employees' Stock Ownership Trust
dated effective as of September 22,
1994 between the undersigned and
Aasche Transportation Services, Inc.
-----------------------------------------
Dennis D. Wilson, as Trustee as aforesaid
-----------------------------------------
James A. Jalovec, as Trustee as aforesaid
A-2
<PAGE> 1
EXHIBIT 10.4
CONTINUING UNCONDITIONAL GUARANTY
This CONTINUING UNCONDITIONAL GUARANTY is executed as of June 23, 1998
(the "Guaranty"), by AASCHE TRANSPORTATION SERVICES, INC. (the "Guarantor"),
whose address is c/o 10214 Mt. Vernon Road, Shannon, Illinois 61078, to and for
the benefit of AMERICAN NATIONAL BANK AND TRUST COMPANY OF CHICAGO, a national
banking association (together with any of its affiliate or subsidiary
corporations, or their successors or assigns, being collectively referred to
herein as the "Bank"), whose address is 120 South LaSalle Street, Chicago,
Illinois 60603.
WHEREAS, Dennis D. Wilson, James A. Jalovec and their successors in trust,
not individually but solely, as trustees under that certain Aasche
Transportation Services, Inc. Employees' Stock Ownership Trust, desires or may
desire at some time and/or from time to time to obtain financial accommodations
from the Bank; and
WHEREAS, the Guarantor desires the Bank to extend or continue the
extension of credit to the Borrower and the Bank has required that Guarantor
execute and deliver this Guaranty to the Bank as a condition to the extension
and continuation of credit by the Bank; and
WHEREAS, the extension or continued extension of credit, as aforesaid, by
the Bank is necessary and desirable to the conduct and operation of the
business of the Borrower and will inure to the financial benefit of the
Guarantor;
NOW, THEREFORE, FOR VALUE RECEIVED, it is agreed that the preceding
provisions and preambles are an integral part hereof and that this Guaranty
shall be construed in light thereof, and in consideration of advances, credit
or other financial accommodation heretofore afforded, concurrently herewith
being afforded or hereafter to be afforded to the Borrower by the Bank, the
Guarantor hereby unconditionally and absolutely guarantees to the Bank,
irrespective of the validity, regularity or enforceability of any instrument,
writing, arrangement or credit agreement relating to or the subject of any such
financial accommodation, the full and prompt payment in full to the Bank at
maturity, whether by acceleration or otherwise, and at all times thereafter, up
to the principal amount of One Hundred Ninety-One Thousand Six Hundred Ninety
and 47/100 Dollars ($191,690.47) of the Guaranteed Debt as hereafter defined,
plus all interest due and to become due thereon from the Borrower to the Bank
and all expenses incurred by the Bank in connection with the collection of the
Guaranteed Debt or the enforcement of this Guaranty. As used herein,
"Guaranteed Debt" shall mean any and all indebtedness, obligations and
liabilities of every kind and nature of the Borrower to the Bank (including all
indebtedness, obligations and liabilities of partnerships created or arising
while the Borrower may have been or may be a member thereof), howsoever
evidenced, whether now existing or hereafter created or arising, direct or
indirect, primary or secondary, absolute or contingent, due or to become due,
or joint or several, and howsoever owned, held or acquired, whether through
discount, overdraft, purchase, direct loan or as collateral, or otherwise, and
the prompt, full and faithful performance and discharge by the Borrower of each
of the terms,
<PAGE> 2
conditions, agreements, representations and warranties on the part of the
Borrower contained in any agreement, or in any modification or addenda thereto
or substitution thereof in connection with any of the Guaranteed Debt.
The Guarantor agrees to pay all reasonable costs, legal expenses and
attorneys' and paralegals' fees of every kind (including those costs, expenses
and fees of attorneys and paralegals who may be employees of the Bank or its
indirect parent), paid or incurred by the Bank in endeavoring to collect the
Guaranteed Debt (hereinafter defined) or any part thereof, or in enforcing its
rights in connection with any collateral, or in enforcing this Guaranty, any
collateral, or in connection with any Repayment Claim (as hereinafter defined)
hereinbelow described, promptly on demand of the Bank or other person paying or
incurring the same.
It is hereby agreed that while the liability of the Guarantor under this
Guaranty is limited in amount as set forth above the Guaranteed Debt is no way
limited as to dollar amount.
In the case of any bankruptcy, reorganization, debt arrangement or other
proceeding under any bankruptcy or insolvency law, or any dissolution,
liquidation or receivership proceeding is instituted by or against either the
Borrower or the Guarantor, all of the Guaranteed Debt then existing shall,
without notice to anyone, immediately become due or accrued and all amounts due
hereunder shall be payable, jointly and severally, from the Guarantor. The
Guarantor hereby expressly and irrevocably: (a) waives, to the fullest extent
possible, on behalf of itself and its successors and assigns (including any
surety) and any other person, any and all rights at law or in equity to
subrogation, reimbursement, exoneration, contribution, indemnification, set off
or to any other rights that could accrue to a surety against a principal, a
guarantor against a maker or obligor, an accommodation party against the party
accommodated, a holder or transferee against a maker, or to the holder of a
claim against any person, and which the Guarantor may have or hereafter acquire
against any person in connection with or as a result of the Guarantor's
execution, delivery and/or performance of this Guaranty, or any other documents
to which the Guarantor is a party or otherwise; (b) waives any "claim" (as such
term is defined in the United States Bankruptcy Code) of any kind against the
Borrower until indefeasible payable in full of the Guaranteed Debt, and further
agrees that it shall not have or assert any such rights against any person
(including any surety), either directly or as an attempted set off to any
action commenced against the Guarantor by the Bank or any other person; and (c)
acknowledges and agrees (i) that foregoing waivers are intended to benefit the
Bank and shall not limit or otherwise affect the Guarantor's liability
hereunder or the enforceability of this Guaranty, and (ii) the agreements set
forth in this paragraph and the Bank's rights under this paragraph shall
survive payment in full of the Guaranteed Debt.
All dividends or other payments received by the Bank on account of the
Guaranteed Debt, from whatever source derived, shall be taken and applied by
the Bank toward the payment of the Guaranteed Debt and in such order of
application as the Bank may, in its sole discretion, from time to time elect,
and this Guaranty shall apply to and secure any ultimate balance that shall
remain owing to the Bank. The Bank shall have the exclusive right to determine
how, when and what application of payments and credits, if any, whether derived
from the Borrower or any other source, shall be made on the Guaranteed Debt and
such determination shall be conclusive upon the Guarantor.
2
<PAGE> 3
This Guaranty shall in all respects be continuing, absolute and
unconditional, and shall remain in full force and effect with respect to the
Guarantor until: (i) written notice from the Bank to the Guarantor by United
States certified mail of its discontinuance as to the Guarantor; (ii) written
notice of the dissolution of the Guarantor shall have been actually received by
the Bank; or (iii) until all Guaranteed Debt created or existing before receipt
of either such notice shall have been fully paid. In case of any such
discontinuance or dissolution of the Guarantor and notice thereof to the Bank,
this Guaranty shall nevertheless continue and remain in force against any other
guarantor until discontinued as to such other guarantor as provided herein. In
the event of the dissolution of the Guarantor, this Guaranty shall continue as
to all of the Guaranteed Debt theretofore incurred by the Borrower even though
the Guaranteed Debt is renewed or the time of maturity of the Borrower's
obligations is extended without the consent of the successors or assigns of the
Guarantor.
No compromise, settlement, release or discharge of, or indulgence with
respect to, or failure, neglect or omission to enforce or exercise any right
against any other guarantor shall release or discharge the Guarantor.
The Guarantor's liability under this Guaranty shall in no way be modified,
affected, impaired, reduced, released or discharged by any of the following
(any or all of which may be done or omitted by the Bank in its sole discretion,
without notice to anyone and irrespective of whether the Guaranteed Debt shall
be increased or decreased thereby): (a) any acceptance by the Bank of any new
or renewal note or notes of the Borrower, or of any security or collateral for,
or other guarantors or obligors upon, any of the Guaranteed Debt; (b) any
compromise, settlement, surrender, release, discharge, renewals, refinancing,
extension, alteration, exchange, sale, pledge or election with respect to the
Guaranteed Debt, or any note by the Borrower, or with respect to any collateral
under Section 1111 or take any action under Section 364, or any other section
of the United States Bankruptcy Code, now existing or hereafter amended, or
other disposition of, or substitution for, or indulgence with respect to, or
failure, neglect or omission to realize upon, or to enforce or exercise any
liens or rights of appropriation or other rights with respect to, any
Guaranteed Debt or any security or collateral therefor or any claims against
any person or persons primarily or secondarily liable thereon; (c) any failure,
neglect or omission to perfect, protect, secure or insure any of the foregoing
security interests, liens, or encumbrances of the properties or interests in
properties subject thereto; (d) any change in the Borrower's name or the merger
of the Borrower into another corporation; (e) any act of commission or omission
of any kind or at any time upon the part of the Bank with respect to any matter
whatsoever, other than the execution and delivery by the Bank to the Guarantor
of an express written release or cancellation of this Guaranty. The Guarantor
hereby consents to all acts of commission or omission of the Bank set forth
above.
In order to hold the Guarantor liable hereunder, there shall be no
obligation on the part of the Bank, at any time, to resort for payment to the
Borrower or to anyone else, or to any collateral, security, property, liens or
other rights and remedies whatsoever, all of which are hereby expressly waived
by the Guarantor.
3
<PAGE> 4
The Guarantor hereby expressly waives diligence in collection or
protection, presentment, demand or protest or in giving notice to anyone of the
protest, dishonor, default, or nonpayment or of the creation or existence of
any of the Guaranteed Debt or of any security or collateral therefor or of the
acceptance of this Guaranty or of extension of credit or indulgences hereunder
or of any other matters or things whatsoever relating hereto.
The Guarantor waives any and all defenses, claims and discharges of the
Borrower, or any other obligor, pertaining to the Guaranteed Debt, except the
defense of discharge by payment in full. Without limiting the generality of
the foregoing, the Guarantor will not assert, plead or enforce against the Bank
any defense of waiver, release, discharge in bankruptcy, statute of
limitations, res judicata, statute of frauds, anti-deficiency statute, fraud,
incapacity, minority, usury, illegality or unenforceability which may be
available to the Borrower or any other person liable in respect of any of the
Guaranteed Debt, or any set off available against the Bank to the Borrower or
any such other person, whether or not on account of a related transaction. The
Guarantor expressly agrees that the Guarantor shall be and remain liable for
any deficiency remaining after foreclosure of any mortgage or security interest
securing the Guaranteed Debt, whether or not the liability of the Borrower or
any other obligor for such deficiency is discharged pursuant to statute or
judicial decision.
To secure payment of the Guaranteed Debt, the Guarantor grants to the Bank
a security interest in all property of the Guarantor delivered concurrently
herewith or which is now, or at any time hereafter in transit to, or in the
possession, custody, or control of the Bank, and all proceeds of all such
property. The Guarantor agrees that the Bank shall have the rights and
remedies of a secured party under the Uniform Commercial Code in effect in
Illinois from time to time, with respect to all of the aforesaid property,
including, without limitation thereof, the right to sell or otherwise dispose
of any such property. The Bank may, without demand or notice of any kind to
anyone, apply or set off any balances, credits, deposits, accounts, moneys or
other indebtedness at any time credited by or due from the Bank to the
Guarantor against the amounts due hereunder and in such order of application as
the Bank may from time to time elect. Any notification of intended disposition
of any property required by law shall be deemed reasonably and properly given
if given in the manner provided by the applicable statute. The Guarantor
hereby assigns and transfers to the Bank any and all cash, negotiable
instruments, documents of titled, chattel paper, securities, certificates of
deposit, deposit accounts other cash equivalents and other assets of the
Guarantor in the possession or control of the Bank for any purpose.
THE GUARANTOR WAIVES EVERY DEFENSE, CAUSE OF ACTION, COUNTERCLAIM OR SET
OFF WHICH THE GUARANTOR MAY NOW HAVE TO ANY ACTION BY THE BANK IN ENFORCING
THIS GUARANTY. AS FURTHER SECURITY, ANY AND ALL DEBTS AND LIABILITIES NOW
ARISING AND OWING TO THE GUARANTOR BY THE BORROWER, OR TO ANY OTHER PARTY
LIABLE TO THE BANK, ARE HEREBY SUBORDINATED TO THE BANK'S CLAIMS AND ARE HEREBY
ASSIGNED TO THE BANK. THE GUARANTOR HEREBY AGREES THAT THE GUARANTOR MAY BE
JOINED AS A PARTY DEFENDANT IN ANY LEGAL PROCEEDING (INCLUDING, BUT NOT LIMITED
TO, A FORECLOSURE PROCEEDING) INSTITUTED BY THE BANK AGAINST THE BORROWER. THE
GUARANTOR AND THE BANK IRREVOCABLY WAIVE THE RIGHT TO TRIAL BY JURY WITH
RESPECT
4
<PAGE> 5
TO ANY SUCH LEGAL PROCEEDING IN WHICH THE GUARANTOR AND THE BANK ARE ADVERSE
PARTIES. THIS PROVISION IS A MATERIAL INDUCEMENT TO THE BANK GRANTING ANY
FINANCIAL ACCOMMODATION TO THE BORROWER AND ACCEPTING THIS GUARANTY.
Should a claim (a "Repayment Claim") be made upon the Bank at any time for
repayment of any amount received by the Bank in payment of the Guaranteed Debt,
or any part thereof, whether received from the Borrower, the Guarantor pursuant
hereto, or received by the Bank as the proceeds of collateral, by reason of:
(1) any judgment, decree or order of any court or administrative body having
jurisdiction over the Bank or any of its property; or (2) any settlement or
compromise of any such Repayment Claim effected by the Bank, in its sole
discretion, with the claimant (including the Borrower), the Guarantor shall
remain jointly and severally liable to the Bank for the amount so repaid to the
same extent as if such amount had never originally been received by the Bank,
notwithstanding any termination hereof or the cancellation of any note or other
instrument evidencing any of the Guaranteed Debt.
The Bank may, without notice to anyone, sell or assign the Guaranteed
Debt, or any part thereof, or grant participations therein, and in any such
event each and every immediate or remote assignee or holder of, or participant
in, all or any of the Guaranteed Debt shall have the right to enforce this
Guaranty, by suit or otherwise for the benefit of such assignee, holder or
participant, as fully as if herein by name specifically given such right
herein, but the Bank shall have an unimpaired right, prior and superior to that
of any such assignee, holder or participant, to enforce this Guaranty for the
benefit of the Bank, as to any part of the Guaranteed Debt retained by the
Bank.
Unless and until all of the Guaranteed Debt has been paid in full, no
release or discharge of the Guarantor, or of any other person, whether
primarily or secondarily liable for and obligated with respect to the
Guaranteed Debt, or the institution of bankruptcy, receivership, insolvency,
reorganization, dissolution or liquidation proceedings by or against the
Guarantor or person, or the entry of any restraining or other order in any such
proceedings, shall release or discharge the Guarantor, or any other guarantor
of the indebtedness, or any other person, firm or corporation liable to the
Bank for the Guaranteed Debt.
All references herein to the Borrower and to the Guarantor, respectively,
shall be deemed to include any successors or assigns, whether immediate or
remote to such corporations or any successors in trust to such trust.
If this Guaranty contains any blanks when executed by the Guarantor, the
Bank is hereby authorized, without notice to the Guarantor, to complete any
such blanks according to the terms upon which this Guaranty is executed by the
Guarantor and is accepted by the Bank.
This Guaranty has been delivered to the Bank at its offices in Chicago,
Illinois, and the rights, remedies and liabilities of the parties shall be
construed and determined in accordance with the laws of the State of Illinois,
in which State it shall be performed by the Guarantor.
TO INDUCE THE BANK TO GRANT FINANCIAL ACCOMMODATIONS TO THE BORROWER, THE
GUARANTOR IRREVOCABLY AGREES THAT ALL ACTIONS
5
<PAGE> 6
ARISING DIRECTLY OR INDIRECTLY AS A RESULT OR IN CONSEQUENCE OF THIS GUARANTY
SHALL BE INSTITUTED AND LITIGATED ONLY IN COURTS HAVING SITUS IN THE CITY OF
CHICAGO, ILLINOIS. THE GUARANTOR HEREBY CONSENTS TO THE EXCLUSIVE JURISDICTION
AND VENUE OF ANY STATE OR FEDERAL COURT LOCATED AND HAVING ITS SITUS IN
CHICAGO, ILLINOIS, AND WAIVES ANY OBJECTION BASED ON FORUM NON CONVENIENS. THE
GUARANTOR HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS, AND TO THE
SERVICE OF PROCESS BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED, DIRECTED TO THE
GUARANTOR AT THE ADDRESS INDICATED IN THE BANK'S RECORDS IN THE MANNER PROVIDED
BY APPLICABLE STATUTE, LAW, RULE OF COURT OR OTHERWISE. FURTHERMORE, THE
GUARANTOR WAIVES ALL NOTICES AND DEMANDS IN CONNECTION WITH THE ENFORCEMENT OF
THE BANK'S RIGHTS HEREUNDER, AND HEREBY CONSENTS TO, AND WAIVES NOTICE OF THE
RELEASE, WITH OR WITHOUT CONSIDERATION, OF THE BORROWER OR ANY OTHER PERSON
RESPONSIBLE FOR PAYMENT OF THE GUARANTEED DEBT, OR OF ANY COLLATERAL THEREFOR.
Wherever possible, each provision of this Guaranty shall be interpreted in
such manner as to be effective and valid under applicable law, but if any
provision of this Guaranty shall be prohibited by or invalid under such law,
such provision shall be ineffective to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Guaranty.
It is agreed that the Guarantor's liability is independent of any other
guaranties at any time in effect with respect to all or any part of the
Borrower's indebtedness to the Bank, and that the Guarantor's liability
hereunder may be enforced regardless of the existence of any such other
guaranties.
No delay on the part of the Bank in the exercise of any right or remedy
shall operate as a waiver thereof, and no single or partial exercise by the
Bank of any right or remedy shall preclude other or further exercise thereof,
or the exercise of any other right or remedy. No modification, termination,
discharge or waiver of any of the provisions hereof shall be binding upon the
Bank, except as expressly set forth in a writing duly signed and delivered on
behalf of the Bank.
The Guarantor represents and warrants to the Bank that the execution and
delivery of this Guaranty has been duly authorized by resolutions heretofore
adopted by the Board of Directors and/or Shareholders of the Guarantor in
accordance with law and its bylaws, that said resolutions have not been amended
or rescinded, are in full force and effect and that the officer or officers
executing and delivering this Guarantor for and on behalf of the Guarantor,
is/are duly authorized so to act. The Bank, in extending financial
accommodations to the Borrower, is expressly acting and relying upon the
aforesaid representations and warranties.
This Guaranty: (i) is valid, binding and enforceable in accordance with
its provisions, and no conditions exist to the legal effectiveness of this
Guaranty as to the Guarantor; (ii) contains the entire agreement between the
Guarantor and the Bank; (iii) is the final expression of
6
<PAGE> 7
their intentions; and (iv) supersedes all negotiations, representations,
warranties, commitments, offers, contracts (of any kind or nature, whether
oral or written) prior to or contemporaneous with the execution hereof. No
prior or contemporaneous representations, warranties, understandings, offers or
agreements of
7
<PAGE> 8
any kind or nature, whether oral or written, have been made by
the Bank or relied upon by the Guarantor in connection with the execution
hereof.
The provisions hereof shall be binding upon the Guarantor and upon its
executors, administrators, successors and assigns and shall inure to the
benefit of the Bank and its successors and assigns.
SIGNED AND DELIVERED by the Guarantor as of the date set forth above.
AASCHE TRANSPORTATION
SERVICES, INC.
By: /s/ Leon Monachos
------------------------
Its: CFO
-----------------------
<PAGE> 1
EXHIBIT 10.5
CONTINUING UNCONDITIONAL GUARANTY
This CONTINUING UNCONDITIONAL GUARANTY is executed as of June 23, 1998
(the "Guaranty"), by ASCHE TRANSFER, INC. (the "Guarantor"), whose address is
c/o 10214 Mt. Vernon Road, Shannon, Illinois 61078, to and for the benefit of
AMERICAN NATIONAL BANK AND TRUST COMPANY OF CHICAGO, a national banking
association (together with any of its affiliate or subsidiary corporations, or
their successors or assigns, being collectively referred to herein as the
"Bank"), whose address is 120 South LaSalle Street, Chicago, Illinois 60603.
WHEREAS, Dennis D. Wilson, James A. Jalovec and their successors in trust,
not individually but solely, as trustees under that certain Aasche
Transportation Services, Inc. Employees' Stock Ownership Trust, desires or may
desire at some time and/or from time to time to obtain financial accommodations
from the Bank; and
WHEREAS, the Guarantor desires the Bank to extend or continue the
extension of credit to the Borrower and the Bank has required that Guarantor
execute and deliver this Guaranty to the Bank as a condition to the extension
and continuation of credit by the Bank; and
WHEREAS, the extension or continued extension of credit, as aforesaid, by
the Bank is necessary and desirable to the conduct and operation of the
business of the Borrower and will inure to the financial benefit of the
Guarantor;
NOW, THEREFORE, FOR VALUE RECEIVED, it is agreed that the preceding
provisions and preambles are an integral part hereof and that this Guaranty
shall be construed in light thereof, and in consideration of advances, credit
or other financial accommodation heretofore afforded, concurrently herewith
being afforded or hereafter to be afforded to the Borrower by the Bank, the
Guarantor hereby unconditionally and absolutely guarantees to the Bank,
irrespective of the validity, regularity or enforceability of any instrument,
writing, arrangement or credit agreement relating to or the subject of any such
financial accommodation, the full and prompt payment in full to the Bank at
maturity, whether by acceleration or otherwise, and at all times thereafter, up
to the principal amount of One Hundred Ninety-One Thousand Six Hundred Ninety
and 47/100 Dollars ($191,690.47) of the Guaranteed Debt as hereafter defined,
plus all interest due and to become due thereon from the Borrower to the Bank
and all expenses incurred by the Bank in connection with the collection of the
Guaranteed Debt or the enforcement of this Guaranty. As used herein,
"Guaranteed Debt" shall mean any and all indebtedness, obligations and
liabilities of every kind and nature of the Borrower to the Bank (including all
indebtedness, obligations and liabilities of partnerships created or arising
while the Borrower may have been or may be a member thereof), howsoever
evidenced, whether now existing or hereafter created or arising, direct or
indirect, primary or secondary, absolute or contingent, due or to become due,
or joint or several, and howsoever owned, held or acquired, whether through
discount, overdraft, purchase, direct loan or as collateral, or otherwise, and
the prompt, full and faithful performance and discharge by the Borrower of each
of the terms, conditions, agreements, representations and warranties on the
part of the Borrower contained in any
<PAGE> 2
conditions, agreements, representations and warranties on the part of the
Borrower contained in any agreement, or in any modification or addenda thereto
or substitution thereof in connection with any of the Guaranteed Debt.
The Guarantor agrees to pay all reasonable costs, legal expenses and
attorneys' and paralegals' fees of every kind (including those costs, expenses
and fees of attorneys and paralegals who may be employees of the Bank or its
indirect parent), paid or incurred by the Bank in endeavoring to collect the
Guaranteed Debt (hereinafter defined) or any part thereof, or in enforcing its
rights in connection with any collateral, or in enforcing this Guaranty, any
collateral, or in connection with any Repayment Claim (as hereinafter defined)
hereinbelow described, promptly on demand of the Bank or other person paying or
incurring the same.
It is hereby agreed that while the liability of the Guarantor under this
Guaranty is limited in amount as set forth above the Guaranteed Debt is no way
limited as to dollar amount.
In the case of any bankruptcy, reorganization, debt arrangement or other
proceeding under any bankruptcy or insolvency law, or any dissolution,
liquidation or receivership proceeding is instituted by or against either the
Borrower or the Guarantor, all of the Guaranteed Debt then existing shall,
without notice to anyone, immediately become due or accrued and all amounts due
hereunder shall be payable, jointly and severally, from the Guarantor. The
Guarantor hereby expressly and irrevocably: (a) waives, to the fullest extent
possible, on behalf of itself and its successors and assigns (including any
surety) and any other person, any and all rights at law or in equity to
subrogation, reimbursement, exoneration, contribution, indemnification, set off
or to any other rights that could accrue to a surety against a principal, a
guarantor against a maker or obligor, an accommodation party against the party
accommodated, a holder or transferee against a maker, or to the holder of a
claim against any person, and which the Guarantor may have or hereafter acquire
against any person in connection with or as a result of the Guarantor's
execution, delivery and/or performance of this Guaranty, or any other documents
to which the Guarantor is a party or otherwise; (b) waives any "claim" (as such
term is defined in the United States Bankruptcy Code) of any kind against the
Borrower until indefeasible payable in full of the Guaranteed Debt, and further
agrees that it shall not have or assert any such rights against any person
(including any surety), either directly or as an attempted set off to any
action commenced against the Guarantor by the Bank or any other person; and (c)
acknowledges and agrees (i) that foregoing waivers are intended to benefit the
Bank and shall not limit or otherwise affect the Guarantor's liability
hereunder or the enforceability of this Guaranty, and (ii) the agreements set
forth in this paragraph and the Bank's rights under this paragraph shall
survive payment in full of the Guaranteed Debt.
All dividends or other payments received by the Bank on account of the
Guaranteed Debt, from whatever source derived, shall be taken and applied by
the Bank toward the payment of the Guaranteed Debt and in such order of
application as the Bank may, in its sole discretion, from time to time elect,
and this Guaranty shall apply to and secure any ultimate balance that shall
remain owing to the Bank. The Bank shall have the exclusive right to determine
how, when and what application of payments and credits, if any, whether derived
from the Borrower or any other source, shall be made on the Guaranteed Debt and
such determination shall be conclusive upon the Guarantor.
2
<PAGE> 3
This Guaranty shall in all respects be continuing, absolute and
unconditional, and shall remain in full force and effect with respect to the
Guarantor until: (i) written notice from the Bank to the Guarantor by United
States certified mail of its discontinuance as to the Guarantor; (ii) written
notice of the dissolution of the Guarantor shall have been actually received by
the Bank; or (iii) until all Guaranteed Debt created or existing before receipt
of either such notice shall have been fully paid. In case of any such
discontinuance or dissolution of the Guarantor and notice thereof to the Bank,
this Guaranty shall nevertheless continue and remain in force against any other
guarantor until discontinued as to such other guarantor as provided herein. In
the event of the dissolution of the Guarantor, this Guaranty shall continue as
to all of the Guaranteed Debt theretofore incurred by the Borrower even though
the Guaranteed Debt is renewed or the time of maturity of the Borrower's
obligations is extended without the consent of the successors or assigns of the
Guarantor.
No compromise, settlement, release or discharge of, or indulgence with
respect to, or failure, neglect or omission to enforce or exercise any right
against any other guarantor shall release or discharge the Guarantor.
The Guarantor's liability under this Guaranty shall in no way be modified,
affected, impaired, reduced, released or discharged by any of the following
(any or all of which may be done or omitted by the Bank in its sole discretion,
without notice to anyone and irrespective of whether the Guaranteed Debt shall
be increased or decreased thereby): (a) any acceptance by the Bank of any new
or renewal note or notes of the Borrower, or of any security or collateral for,
or other guarantors or obligors upon, any of the Guaranteed Debt; (b) any
compromise, settlement, surrender, release, discharge, renewals, refinancing,
extension, alteration, exchange, sale, pledge or election with respect to the
Guaranteed Debt, or any note by the Borrower, or with respect to any collateral
under Section 1111 or take any action under Section 364, or any other section
of the United States Bankruptcy Code, now existing or hereafter amended, or
other disposition of, or substitution for, or indulgence with respect to, or
failure, neglect or omission to realize upon, or to enforce or exercise any
liens or rights of appropriation or other rights with respect to, any
Guaranteed Debt or any security or collateral therefor or any claims against
any person or persons primarily or secondarily liable thereon; (c) any failure,
neglect or omission to perfect, protect, secure or insure any of the foregoing
security interests, liens, or encumbrances of the properties or interests in
properties subject thereto; (d) any change in the Borrower's name or the merger
of the Borrower into another corporation; (e) any act of commission or omission
of any kind or at any time upon the part of the Bank with respect to any matter
whatsoever, other than the execution and delivery by the Bank to the Guarantor
of an express written release or cancellation of this Guaranty. The Guarantor
hereby consents to all acts of commission or omission of the Bank set forth
above.
In order to hold the Guarantor liable hereunder, there shall be no
obligation on the part of the Bank, at any time, to resort for payment to the
Borrower or to anyone else, or to any collateral, security, property, liens or
other rights and remedies whatsoever, all of which are hereby expressly waived
by the Guarantor.
3
<PAGE> 4
The Guarantor hereby expressly waives diligence in collection or
protection, presentment, demand or protest or in giving notice to anyone of the
protest, dishonor, default, or nonpayment or of the creation or existence of
any of the Guaranteed Debt or of any security or collateral therefor or of the
acceptance of this Guaranty or of extension of credit or indulgences hereunder
or of any other matters or things whatsoever relating hereto.
The Guarantor waives any and all defenses, claims and discharges of the
Borrower, or any other obligor, pertaining to the Guaranteed Debt, except the
defense of discharge by payment in full. Without limiting the generality of
the foregoing, the Guarantor will not assert, plead or enforce against the Bank
any defense of waiver, release, discharge in bankruptcy, statute of
limitations, res judicata, statute of frauds, anti-deficiency statute, fraud,
incapacity, minority, usury, illegality or unenforceability which may be
available to the Borrower or any other person liable in respect of any of the
Guaranteed Debt, or any set off available against the Bank to the Borrower or
any such other person, whether or not on account of a related transaction. The
Guarantor expressly agrees that the Guarantor shall be and remain liable for
any deficiency remaining after foreclosure of any mortgage or security interest
securing the Guaranteed Debt, whether or not the liability of the Borrower or
any other obligor for such deficiency is discharged pursuant to statute or
judicial decision.
To secure payment of the Guaranteed Debt, the Guarantor grants to the Bank
a security interest in all property of the Guarantor delivered concurrently
herewith or which is now, or at any time hereafter in transit to, or in the
possession, custody, or control of the Bank, and all proceeds of all such
property. The Guarantor agrees that the Bank shall have the rights and
remedies of a secured party under the Uniform Commercial Code in effect in
Illinois from time to time, with respect to all of the aforesaid property,
including, without limitation thereof, the right to sell or otherwise dispose
of any such property. The Bank may, without demand or notice of any kind to
anyone, apply or set off any balances, credits, deposits, accounts, moneys or
other indebtedness at any time credited by or due from the Bank to the
Guarantor against the amounts due hereunder and in such order of application as
the Bank may from time to time elect. Any notification of intended disposition
of any property required by law shall be deemed reasonably and properly given
if given in the manner provided by the applicable statute. The Guarantor
hereby assigns and transfers to the Bank any and all cash, negotiable
instruments, documents of titled, chattel paper, securities, certificates of
deposit, deposit accounts other cash equivalents and other assets of the
Guarantor in the possession or control of the Bank for any purpose.
THE GUARANTOR WAIVES EVERY DEFENSE, CAUSE OF ACTION, COUNTERCLAIM OR SET
OFF WHICH THE GUARANTOR MAY NOW HAVE TO ANY ACTION BY THE BANK IN ENFORCING
THIS GUARANTY. AS FURTHER SECURITY, ANY AND ALL DEBTS AND LIABILITIES NOW
ARISING AND OWING TO THE GUARANTOR BY THE BORROWER, OR TO ANY OTHER PARTY
LIABLE TO THE BANK, ARE HEREBY SUBORDINATED TO THE BANK'S CLAIMS AND ARE HEREBY
ASSIGNED TO THE BANK. THE GUARANTOR HEREBY AGREES THAT THE GUARANTOR MAY BE
JOINED AS A PARTY DEFENDANT IN ANY LEGAL PROCEEDING (INCLUDING, BUT NOT LIMITED
TO, A FORECLOSURE PROCEEDING) INSTITUTED BY THE BANK AGAINST THE BORROWER. THE
GUARANTOR AND THE BANK IRREVOCABLY WAIVE THE RIGHT TO TRIAL BY JURY WITH
RESPECT
4
<PAGE> 5
TO ANY SUCH LEGAL PROCEEDING IN WHICH THE GUARANTOR AND THE BANK ARE ADVERSE
PARTIES. THIS PROVISION IS A MATERIAL INDUCEMENT TO THE BANK GRANTING ANY
FINANCIAL ACCOMMODATION TO THE BORROWER AND ACCEPTING THIS GUARANTY.
Should a claim (a "Repayment Claim") be made upon the Bank at any time for
repayment of any amount received by the Bank in payment of the Guaranteed Debt,
or any part thereof, whether received from the Borrower, the Guarantor pursuant
hereto, or received by the Bank as the proceeds of collateral, by reason of:
(1) any judgment, decree or order of any court or administrative body having
jurisdiction over the Bank or any of its property; or (2) any settlement or
compromise of any such Repayment Claim effected by the Bank, in its sole
discretion, with the claimant (including the Borrower), the Guarantor shall
remain jointly and severally liable to the Bank for the amount so repaid to the
same extent as if such amount had never originally been received by the Bank,
notwithstanding any termination hereof or the cancellation of any note or other
instrument evidencing any of the Guaranteed Debt.
The Bank may, without notice to anyone, sell or assign the Guaranteed
Debt, or any part thereof, or grant participations therein, and in any such
event each and every immediate or remote assignee or holder of, or participant
in, all or any of the Guaranteed Debt shall have the right to enforce this
Guaranty, by suit or otherwise for the benefit of such assignee, holder or
participant, as fully as if herein by name specifically given such right
herein, but the Bank shall have an unimpaired right, prior and superior to that
of any such assignee, holder or participant, to enforce this Guaranty for the
benefit of the Bank, as to any part of the Guaranteed Debt retained by the
Bank.
Unless and until all of the Guaranteed Debt has been paid in full, no
release or discharge of the Guarantor, or of any other person, whether
primarily or secondarily liable for and obligated with respect to the
Guaranteed Debt, or the institution of bankruptcy, receivership, insolvency,
reorganization, dissolution or liquidation proceedings by or against the
Guarantor or person, or the entry of any restraining or other order in any such
proceedings, shall release or discharge the Guarantor, or any other guarantor
of the indebtedness, or any other person, firm or corporation liable to the
Bank for the Guaranteed Debt.
All references herein to the Borrower and to the Guarantor, respectively,
shall be deemed to include any successors or assigns, whether immediate or
remote to such corporations or any successors in trust to such trust.
If this Guaranty contains any blanks when executed by the Guarantor, the
Bank is hereby authorized, without notice to the Guarantor, to complete any
such blanks according to the terms upon which this Guaranty is executed by the
Guarantor and is accepted by the Bank.
This Guaranty has been delivered to the Bank at its offices in Chicago,
Illinois, and the rights, remedies and liabilities of the parties shall be
construed and determined in accordance with the laws of the State of Illinois,
in which State it shall be performed by the Guarantor.
TO INDUCE THE BANK TO GRANT FINANCIAL ACCOMMODATIONS TO THE BORROWER, THE
GUARANTOR IRREVOCABLY AGREES THAT ALL ACTIONS
5
<PAGE> 6
ARISING DIRECTLY OR INDIRECTLY AS A RESULT OR IN CONSEQUENCE OF THIS GUARANTY
SHALL BE INSTITUTED AND LITIGATED ONLY IN COURTS HAVING SITUS IN THE CITY OF
CHICAGO, ILLINOIS. THE GUARANTOR HEREBY CONSENTS TO THE EXCLUSIVE JURISDICTION
AND VENUE OF ANY STATE OR FEDERAL COURT LOCATED AND HAVING ITS SITUS IN
CHICAGO, ILLINOIS, AND WAIVES ANY OBJECTION BASED ON FORUM NON CONVENIENS. THE
GUARANTOR HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS, AND TO THE
SERVICE OF PROCESS BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED, DIRECTED TO THE
GUARANTOR AT THE ADDRESS INDICATED IN THE BANK'S RECORDS IN THE MANNER PROVIDED
BY APPLICABLE STATUTE, LAW, RULE OF COURT OR OTHERWISE. FURTHERMORE, THE
GUARANTOR WAIVES ALL NOTICES AND DEMANDS IN CONNECTION WITH THE ENFORCEMENT OF
THE BANK'S RIGHTS HEREUNDER, AND HEREBY CONSENTS TO, AND WAIVES NOTICE OF THE
RELEASE, WITH OR WITHOUT CONSIDERATION, OF THE BORROWER OR ANY OTHER PERSON
RESPONSIBLE FOR PAYMENT OF THE GUARANTEED DEBT, OR OF ANY COLLATERAL THEREFOR.
Wherever possible, each provision of this Guaranty shall be interpreted in
such manner as to be effective and valid under applicable law, but if any
provision of this Guaranty shall be prohibited by or invalid under such law,
such provision shall be ineffective to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Guaranty.
It is agreed that the Guarantor's liability is independent of any other
guaranties at any time in effect with respect to all or any part of the
Borrower's indebtedness to the Bank, and that the Guarantor's liability
hereunder may be enforced regardless of the existence of any such other
guaranties.
No delay on the part of the Bank in the exercise of any right or remedy
shall operate as a waiver thereof, and no single or partial exercise by the
Bank of any right or remedy shall preclude other or further exercise thereof,
or the exercise of any other right or remedy. No modification, termination,
discharge or waiver of any of the provisions hereof shall be binding upon the
Bank, except as expressly set forth in a writing duly signed and delivered on
behalf of the Bank.
The Guarantor represents and warrants to the Bank that the execution and
delivery of this Guaranty has been duly authorized by resolutions heretofore
adopted by the Board of Directors and/or Shareholders of the Guarantor in
accordance with law and its bylaws, that said resolutions have not been amended
or rescinded, are in full force and effect and that the officer or officers
executing and delivering this Guarantor for and on behalf of the Guarantor,
is/are duly authorized so to act. The Bank, in extending financial
accommodations to the Borrower, is expressly acting and relying upon the
aforesaid representations and warranties.
This Guaranty: (i) is valid, binding and enforceable in accordance with
its provisions, and no conditions exist to the legal effectiveness of this
Guaranty as to the Guarantor; (ii) contains the entire agreement between the
Guarantor and the Bank; (iii) is the final expression of
6
<PAGE> 7
their intentions; and (iv) supersedes all negotiations, representations,
warranties, commitments, offers, contracts (of any kind or nature, whether oral
or written) prior to or contemporaneous with the execution hereof. No prior or
contemporaneous representations, warranties, understandings, offers or
agreements of any kind or nature, whether oral or written, have been made by the
Bank or relied upon by the Guarantor in connection with the execution hereof.
The provisions hereof shall be binding upon the Guarantor and upon its
executors, administrators, successors and assigns and shall inure to the
benefit of the Bank and its successors and assigns.
SIGNED AND DELIVERED by the Guarantor as of the date set forth above.
ASCHE TRANSFER, INC.
By: /s/ Leon Monachos
------------------------
Its: Vice President-Finance
-----------------------
7
<PAGE> 1
EXHIBIT 10.6
CONTINUING UNCONDITIONAL GUARANTY
This CONTINUING UNCONDITIONAL GUARANTY is executed as of June 23, 1998
(the "Guaranty"), by AG CARRIERS, INC. (the "Guarantor"), whose address is c/o
10214 Mt. Vernon Road, Shannon, Illinois 61078, to and for the benefit of
AMERICAN NATIONAL BANK AND TRUST COMPANY OF CHICAGO, a national banking
association (together with any of its affiliate or subsidiary corporations, or
their successors or assigns, being collectively referred to herein as the
"Bank"), whose address is 120 South LaSalle Street, Chicago, Illinois 60603.
WHEREAS, Dennis D. Wilson, James A. Jalovec and their successors in trust,
not individually but solely, as trustees under that certain Aasche
Transportation Services, Inc. Employees' Stock Ownership Trust, desires or may
desire at some time and/or from time to time to obtain financial accommodations
from the Bank; and
WHEREAS, the Guarantor desires the Bank to extend or continue the
extension of credit to the Borrower and the Bank has required that Guarantor
execute and deliver this Guaranty to the Bank as a condition to the extension
and continuation of credit by the Bank; and
WHEREAS, the extension or continued extension of credit, as aforesaid, by
the Bank is necessary and desirable to the conduct and operation of the
business of the Borrower and will inure to the financial benefit of the
Guarantor;
NOW, THEREFORE, FOR VALUE RECEIVED, it is agreed that the preceding
provisions and preambles are an integral part hereof and that this Guaranty
shall be construed in light thereof, and in consideration of advances, credit
or other financial accommodation heretofore afforded, concurrently herewith
being afforded or hereafter to be afforded to the Borrower by the Bank, the
Guarantor hereby unconditionally and absolutely guarantees to the Bank,
irrespective of the validity, regularity or enforceability of any instrument,
writing, arrangement or credit agreement relating to or the subject of any such
financial accommodation, the full and prompt payment in full to the Bank at
maturity, whether by acceleration or otherwise, and at all times thereafter, up
to the principal amount of One Hundred Ninety-One Thousand Six Hundred Ninety
and 47/100 Dollars ($191,690.47) of the Guaranteed Debt as hereafter defined,
plus all interest due and to become due thereon from the Borrower to the Bank
and all expenses incurred by the Bank in connection with the collection of the
Guaranteed Debt or the enforcement of this Guaranty. As used herein,
"Guaranteed Debt" shall mean any and all indebtedness, obligations and
liabilities of every kind and nature of the Borrower to the Bank (including all
indebtedness, obligations and liabilities of partnerships created or arising
while the Borrower may have been or may be a member thereof), howsoever
evidenced, whether now existing or hereafter created or arising, direct or
indirect, primary or secondary, absolute or contingent, due or to become due,
or joint or several, and howsoever owned, held or acquired, whether through
discount, overdraft, purchase, direct loan or as collateral, or otherwise, and
the prompt, full and faithful performance and discharge by the Borrower of each
of the terms, conditions, agreements, representations and warranties on the
part of the Borrower contained in any
<PAGE> 2
conditions, agreements, representations and warranties on the part of the
Borrower contained in any agreement, or in any modification or addenda thereto
or substitution thereof in connection with any of the Guaranteed Debt.
The Guarantor agrees to pay all reasonable costs, legal expenses and
attorneys' and paralegals' fees of every kind (including those costs, expenses
and fees of attorneys and paralegals who may be employees of the Bank or its
indirect parent), paid or incurred by the Bank in endeavoring to collect the
Guaranteed Debt (hereinafter defined) or any part thereof, or in enforcing its
rights in connection with any collateral, or in enforcing this Guaranty, any
collateral, or in connection with any Repayment Claim (as hereinafter defined)
hereinbelow described, promptly on demand of the Bank or other person paying or
incurring the same.
It is hereby agreed that while the liability of the Guarantor under this
Guaranty is limited in amount as set forth above the Guaranteed Debt is no way
limited as to dollar amount.
In the case of any bankruptcy, reorganization, debt arrangement or other
proceeding under any bankruptcy or insolvency law, or any dissolution,
liquidation or receivership proceeding is instituted by or against either the
Borrower or the Guarantor, all of the Guaranteed Debt then existing shall,
without notice to anyone, immediately become due or accrued and all amounts due
hereunder shall be payable, jointly and severally, from the Guarantor. The
Guarantor hereby expressly and irrevocably: (a) waives, to the fullest extent
possible, on behalf of itself and its successors and assigns (including any
surety) and any other person, any and all rights at law or in equity to
subrogation, reimbursement, exoneration, contribution, indemnification, set off
or to any other rights that could accrue to a surety against a principal, a
guarantor against a maker or obligor, an accommodation party against the party
accommodated, a holder or transferee against a maker, or to the holder of a
claim against any person, and which the Guarantor may have or hereafter acquire
against any person in connection with or as a result of the Guarantor's
execution, delivery and/or performance of this Guaranty, or any other documents
to which the Guarantor is a party or otherwise; (b) waives any "claim" (as such
term is defined in the United States Bankruptcy Code) of any kind against the
Borrower until indefeasible payable in full of the Guaranteed Debt, and further
agrees that it shall not have or assert any such rights against any person
(including any surety), either directly or as an attempted set off to any
action commenced against the Guarantor by the Bank or any other person; and (c)
acknowledges and agrees (i) that foregoing waivers are intended to benefit the
Bank and shall not limit or otherwise affect the Guarantor's liability
hereunder or the enforceability of this Guaranty, and (ii) the agreements set
forth in this paragraph and the Bank's rights under this paragraph shall
survive payment in full of the Guaranteed Debt.
All dividends or other payments received by the Bank on account of the
Guaranteed Debt, from whatever source derived, shall be taken and applied by
the Bank toward the payment of the Guaranteed Debt and in such order of
application as the Bank may, in its sole discretion, from time to time elect,
and this Guaranty shall apply to and secure any ultimate balance that shall
remain owing to the Bank. The Bank shall have the exclusive right to determine
how, when and what application of payments and credits, if any, whether derived
from the Borrower or any other source, shall be made on the Guaranteed Debt and
such determination shall be conclusive upon the Guarantor.
2
<PAGE> 3
This Guaranty shall in all respects be continuing, absolute and
unconditional, and shall remain in full force and effect with respect to the
Guarantor until: (i) written notice from the Bank to the Guarantor by United
States certified mail of its discontinuance as to the Guarantor; (ii) written
notice of the dissolution of the Guarantor shall have been actually received by
the Bank; or (iii) until all Guaranteed Debt created or existing before receipt
of either such notice shall have been fully paid. In case of any such
discontinuance or dissolution of the Guarantor and notice thereof to the Bank,
this Guaranty shall nevertheless continue and remain in force against any other
guarantor until discontinued as to such other guarantor as provided herein. In
the event of the dissolution of the Guarantor, this Guaranty shall continue as
to all of the Guaranteed Debt theretofore incurred by the Borrower even though
the Guaranteed Debt is renewed or the time of maturity of the Borrower's
obligations is extended without the consent of the successors or assigns of the
Guarantor.
No compromise, settlement, release or discharge of, or indulgence with
respect to, or failure, neglect or omission to enforce or exercise any right
against any other guarantor shall release or discharge the Guarantor.
The Guarantor's liability under this Guaranty shall in no way be modified,
affected, impaired, reduced, released or discharged by any of the following
(any or all of which may be done or omitted by the Bank in its sole discretion,
without notice to anyone and irrespective of whether the Guaranteed Debt shall
be increased or decreased thereby): (a) any acceptance by the Bank of any new
or renewal note or notes of the Borrower, or of any security or collateral for,
or other guarantors or obligors upon, any of the Guaranteed Debt; (b) any
compromise, settlement, surrender, release, discharge, renewals, refinancing,
extension, alteration, exchange, sale, pledge or election with respect to the
Guaranteed Debt, or any note by the Borrower, or with respect to any collateral
under Section 1111 or take any action under Section 364, or any other section
of the United States Bankruptcy Code, now existing or hereafter amended, or
other disposition of, or substitution for, or indulgence with respect to, or
failure, neglect or omission to realize upon, or to enforce or exercise any
liens or rights of appropriation or other rights with respect to, any
Guaranteed Debt or any security or collateral therefor or any claims against
any person or persons primarily or secondarily liable thereon; (c) any failure,
neglect or omission to perfect, protect, secure or insure any of the foregoing
security interests, liens, or encumbrances of the properties or interests in
properties subject thereto; (d) any change in the Borrower's name or the merger
of the Borrower into another corporation; (e) any act of commission or omission
of any kind or at any time upon the part of the Bank with respect to any matter
whatsoever, other than the execution and delivery by the Bank to the Guarantor
of an express written release or cancellation of this Guaranty. The Guarantor
hereby consents to all acts of commission or omission of the Bank set forth
above.
In order to hold the Guarantor liable hereunder, there shall be no
obligation on the part of the Bank, at any time, to resort for payment to the
Borrower or to anyone else, or to any collateral, security, property, liens or
other rights and remedies whatsoever, all of which are hereby expressly waived
by the Guarantor.
3
<PAGE> 4
The Guarantor hereby expressly waives diligence in collection or
protection, presentment, demand or protest or in giving notice to anyone of the
protest, dishonor, default, or nonpayment or of the creation or existence of
any of the Guaranteed Debt or of any security or collateral therefor or of the
acceptance of this Guaranty or of extension of credit or indulgences hereunder
or of any other matters or things whatsoever relating hereto.
The Guarantor waives any and all defenses, claims and discharges of the
Borrower, or any other obligor, pertaining to the Guaranteed Debt, except the
defense of discharge by payment in full. Without limiting the generality of
the foregoing, the Guarantor will not assert, plead or enforce against the Bank
any defense of waiver, release, discharge in bankruptcy, statute of
limitations, res judicata, statute of frauds, anti-deficiency statute, fraud,
incapacity, minority, usury, illegality or unenforceability which may be
available to the Borrower or any other person liable in respect of any of the
Guaranteed Debt, or any set off available against the Bank to the Borrower or
any such other person, whether or not on account of a related transaction. The
Guarantor expressly agrees that the Guarantor shall be and remain liable for
any deficiency remaining after foreclosure of any mortgage or security interest
securing the Guaranteed Debt, whether or not the liability of the Borrower or
any other obligor for such deficiency is discharged pursuant to statute or
judicial decision.
To secure payment of the Guaranteed Debt, the Guarantor grants to the Bank
a security interest in all property of the Guarantor delivered concurrently
herewith or which is now, or at any time hereafter in transit to, or in the
possession, custody, or control of the Bank, and all proceeds of all such
property. The Guarantor agrees that the Bank shall have the rights and
remedies of a secured party under the Uniform Commercial Code in effect in
Illinois from time to time, with respect to all of the aforesaid property,
including, without limitation thereof, the right to sell or otherwise dispose
of any such property. The Bank may, without demand or notice of any kind to
anyone, apply or set off any balances, credits, deposits, accounts, moneys or
other indebtedness at any time credited by or due from the Bank to the
Guarantor against the amounts due hereunder and in such order of application as
the Bank may from time to time elect. Any notification of intended disposition
of any property required by law shall be deemed reasonably and properly given
if given in the manner provided by the applicable statute. The Guarantor
hereby assigns and transfers to the Bank any and all cash, negotiable
instruments, documents of titled, chattel paper, securities, certificates of
deposit, deposit accounts other cash equivalents and other assets of the
Guarantor in the possession or control of the Bank for any purpose.
THE GUARANTOR WAIVES EVERY DEFENSE, CAUSE OF ACTION, COUNTERCLAIM OR SET
OFF WHICH THE GUARANTOR MAY NOW HAVE TO ANY ACTION BY THE BANK IN ENFORCING
THIS GUARANTY. AS FURTHER SECURITY, ANY AND ALL DEBTS AND LIABILITIES NOW
ARISING AND OWING TO THE GUARANTOR BY THE BORROWER, OR TO ANY OTHER PARTY
LIABLE TO THE BANK, ARE HEREBY SUBORDINATED TO THE BANK'S CLAIMS AND ARE HEREBY
ASSIGNED TO THE BANK. THE GUARANTOR HEREBY AGREES THAT THE GUARANTOR MAY BE
JOINED AS A PARTY DEFENDANT IN ANY LEGAL PROCEEDING (INCLUDING, BUT NOT LIMITED
TO, A FORECLOSURE PROCEEDING) INSTITUTED BY THE BANK AGAINST THE BORROWER. THE
GUARANTOR AND THE BANK IRREVOCABLY WAIVE THE RIGHT TO TRIAL BY JURY WITH
RESPECT
4
<PAGE> 5
TO ANY SUCH LEGAL PROCEEDING IN WHICH THE GUARANTOR AND THE BANK ARE ADVERSE
PARTIES. THIS PROVISION IS A MATERIAL INDUCEMENT TO THE BANK GRANTING ANY
FINANCIAL ACCOMMODATION TO THE BORROWER AND ACCEPTING THIS GUARANTY.
Should a claim (a "Repayment Claim") be made upon the Bank at any time for
repayment of any amount received by the Bank in payment of the Guaranteed Debt,
or any part thereof, whether received from the Borrower, the Guarantor pursuant
hereto, or received by the Bank as the proceeds of collateral, by reason of:
(1) any judgment, decree or order of any court or administrative body having
jurisdiction over the Bank or any of its property; or (2) any settlement or
compromise of any such Repayment Claim effected by the Bank, in its sole
discretion, with the claimant (including the Borrower), the Guarantor shall
remain jointly and severally liable to the Bank for the amount so repaid to the
same extent as if such amount had never originally been received by the Bank,
notwithstanding any termination hereof or the cancellation of any note or other
instrument evidencing any of the Guaranteed Debt.
The Bank may, without notice to anyone, sell or assign the Guaranteed
Debt, or any part thereof, or grant participations therein, and in any such
event each and every immediate or remote assignee or holder of, or participant
in, all or any of the Guaranteed Debt shall have the right to enforce this
Guaranty, by suit or otherwise for the benefit of such assignee, holder or
participant, as fully as if herein by name specifically given such right
herein, but the Bank shall have an unimpaired right, prior and superior to that
of any such assignee, holder or participant, to enforce this Guaranty for the
benefit of the Bank, as to any part of the Guaranteed Debt retained by the
Bank.
Unless and until all of the Guaranteed Debt has been paid in full, no
release or discharge of the Guarantor, or of any other person, whether
primarily or secondarily liable for and obligated with respect to the
Guaranteed Debt, or the institution of bankruptcy, receivership, insolvency,
reorganization, dissolution or liquidation proceedings by or against the
Guarantor or person, or the entry of any restraining or other order in any such
proceedings, shall release or discharge the Guarantor, or any other guarantor
of the indebtedness, or any other person, firm or corporation liable to the
Bank for the Guaranteed Debt.
All references herein to the Borrower and to the Guarantor, respectively,
shall be deemed to include any successors or assigns, whether immediate or
remote to such corporations or any successors in trust to such trust.
If this Guaranty contains any blanks when executed by the Guarantor, the
Bank is hereby authorized, without notice to the Guarantor, to complete any
such blanks according to the terms upon which this Guaranty is executed by the
Guarantor and is accepted by the Bank.
This Guaranty has been delivered to the Bank at its offices in Chicago,
Illinois, and the rights, remedies and liabilities of the parties shall be
construed and determined in accordance with the laws of the State of Illinois,
in which State it shall be performed by the Guarantor.
TO INDUCE THE BANK TO GRANT FINANCIAL ACCOMMODATIONS TO THE BORROWER, THE
GUARANTOR IRREVOCABLY AGREES THAT ALL ACTIONS
5
<PAGE> 6
ARISING DIRECTLY OR INDIRECTLY AS A RESULT OR IN CONSEQUENCE OF THIS GUARANTY
SHALL BE INSTITUTED AND LITIGATED ONLY IN COURTS HAVING SITUS IN THE CITY OF
CHICAGO, ILLINOIS. THE GUARANTOR HEREBY CONSENTS TO THE EXCLUSIVE JURISDICTION
AND VENUE OF ANY STATE OR FEDERAL COURT LOCATED AND HAVING ITS SITUS IN
CHICAGO, ILLINOIS, AND WAIVES ANY OBJECTION BASED ON FORUM NON CONVENIENS. THE
GUARANTOR HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS, AND TO THE
SERVICE OF PROCESS BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED, DIRECTED TO THE
GUARANTOR AT THE ADDRESS INDICATED IN THE BANK'S RECORDS IN THE MANNER PROVIDED
BY APPLICABLE STATUTE, LAW, RULE OF COURT OR OTHERWISE. FURTHERMORE, THE
GUARANTOR WAIVES ALL NOTICES AND DEMANDS IN CONNECTION WITH THE ENFORCEMENT OF
THE BANK'S RIGHTS HEREUNDER, AND HEREBY CONSENTS TO, AND WAIVES NOTICE OF THE
RELEASE, WITH OR WITHOUT CONSIDERATION, OF THE BORROWER OR ANY OTHER PERSON
RESPONSIBLE FOR PAYMENT OF THE GUARANTEED DEBT, OR OF ANY COLLATERAL THEREFOR.
Wherever possible, each provision of this Guaranty shall be interpreted in
such manner as to be effective and valid under applicable law, but if any
provision of this Guaranty shall be prohibited by or invalid under such law,
such provision shall be ineffective to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Guaranty.
It is agreed that the Guarantor's liability is independent of any other
guaranties at any time in effect with respect to all or any part of the
Borrower's indebtedness to the Bank, and that the Guarantor's liability
hereunder may be enforced regardless of the existence of any such other
guaranties.
No delay on the part of the Bank in the exercise of any right or remedy
shall operate as a waiver thereof, and no single or partial exercise by the
Bank of any right or remedy shall preclude other or further exercise thereof,
or the exercise of any other right or remedy. No modification, termination,
discharge or waiver of any of the provisions hereof shall be binding upon the
Bank, except as expressly set forth in a writing duly signed and delivered on
behalf of the Bank.
The Guarantor represents and warrants to the Bank that the execution and
delivery of this Guaranty has been duly authorized by resolutions heretofore
adopted by the Board of Directors and/or Shareholders of the Guarantor in
accordance with law and its bylaws, that said resolutions have not been amended
or rescinded, are in full force and effect and that the officer or officers
executing and delivering this Guarantor for and on behalf of the Guarantor,
is/are duly authorized so to act. The Bank, in extending financial
accommodations to the Borrower, is expressly acting and relying upon the
aforesaid representations and warranties.
This Guaranty: (i) is valid, binding and enforceable in accordance with
its provisions, and no conditions exist to the legal effectiveness of this
Guaranty as to the Guarantor; (ii) contains the entire agreement between the
Guarantor and the Bank; (iii) is the final expression of
6
<PAGE> 7
their intentions; and (iv) supersedes all negotiations, representations,
warranties, commitments, offers, contracts (of any kind or nature, whether oral
or written) prior to or contemporaneous with the execution hereof. No prior or
contemporaneous representations, warranties, understandings, offers or
agreements of any kind or nature, whether oral or written, have been made by the
Bank or relied upon by the Guarantor in connection with the execution hereof.
The provisions hereof shall be binding upon the Guarantor and upon its
executors, administrators, successors and assigns and shall inure to the
benefit of the Bank and its successors and assigns.
SIGNED AND DELIVERED by the Guarantor as of the date set forth above.
AG CARRIERS, INC.
By: /s/ Leon Monachos
------------------------
Its: Vice President-Finance
-----------------------
7
<PAGE> 1
EXHIBIT 10.7
APPENDIX A
TEXT OF AMENDMENT TO THE STOCK OPTION PLAN
FIRST AMENDMENT TO THE
AASCHE TRANSPORTATION SERVICES, INC.
STOCK OPTION PLAN
The Aasche Transportation Services, Inc. Stock Option Plan (the "PLAN") is
hereby amended, effective March 24, 1998, as follows:
1. The aggregate number of Shares as to which Options may be granted
pursuant to Article II of the Plan shall be increased from 683,500 to 908,500.
2. The definition of Key Employee as set forth under Article I of the Plan
shall be amended to read as follows:
KEY EMPLOYEE means an employee of the Company or an Affiliate
(including, without limitation, an employee who also is serving as
an officer or director of the Company or of an Affiliate),
designated by the Board or the Committee as being eligible to be
granted one or more Options under the Plan.
IN WITNESS WHEREOF, Aasche Transportation Services, Inc. has caused this
Amendment to be executed by its officer hereto duly authorized this 24th day of
March, 1998.
AASCHE TRANSPORTATION SERVICES, INC.
By: /s/ Larry L. Asche
--------------------------------------
Its: Chairman and Chief Executive Officer
-------------------------------------
15
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<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> 0
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-1-1998
<PERIOD-END> JUN-30-1998
<EXCHANGE-RATE> 1,000
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 13,130
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 18,567
<PP&E> 56,789
<DEPRECIATION> 13,956
<TOTAL-ASSETS> 77,544
<CURRENT-LIABILITIES> 14,206
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 14,245
<TOTAL-LIABILITY-AND-EQUITY> 77,544
<SALES> 0
<TOTAL-REVENUES> 51,299
<CGS> 0
<TOTAL-COSTS> 47,882
<OTHER-EXPENSES> 2,674
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,345
<INCOME-PRETAX> 743
<INCOME-TAX> 509
<INCOME-CONTINUING> 234
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 234
<EPS-PRIMARY> 0.05
<EPS-DILUTED> 0.05
</TABLE>
