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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. _______)*
Asche Transportation Services, Inc.
- --------------------------------------------------------------------------------
(Name of Issuer)
Common Stock, par value $0.0001 per share
- --------------------------------------------------------------------------------
(Title of Class of Securities)
04362T100
- --------------------------------------------------------------------------------
(CUSIP Number)
James A Jalovec, 7170 South Woelfel Road, Franklin, Wisconsin 53132.
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized to Receive Notices
and Communications)
July 9, 1999
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of ss.240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the
following box. [ ]
Note: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See ss.240.13d-7(b) for other
parties to whom copies are being sent.
* The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities and Exchange Act
of 1934 ("Act") or otherwise subject to the liabilities of that section of the
Act but shall be subject to all other provisions of the Act (however, see the
Notes).
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[ CUSIP No. 04362T100 ] [ Page 2 of 5 Pages ]
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1 Name of Reporting Person
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) N/A
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(See Instructions) (b) [ ]
N/A
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS (See Instructions) PF
- --------------------------------------------------------------------------------
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) OR 2(e) [ ]
N/A
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION UNITED STATES OF AMERICA
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER 1,491,250
NUMBER OF
SHARES -----------------------------------------------------------------
8 SHARED VOTING POWER N/A
BENEFICIALLY
OWNED BY EACH -----------------------------------------------------------------
9 SOLE DISPOSITIVE POWER 1,491,250
REPORTING
PERSON -----------------------------------------------------------------
10 SHARED DISPOSITIVE POWER N/A
WITH
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,491,250 SHARES
- --------------------------------------------------------------------------------
12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES (See Instructions) [ ]
N/A
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 24.65%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON (See Instructions) IN
- --------------------------------------------------------------------------------
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ITEM 1. SECURITY AND ISSUER
Common Stock, $0.0001 par value per share, of Asche Transportation
Services, Inc., 10214 N. Mt. Vernon Road, Shannon, IL 61078.
ITEM 2. IDENTITY AND BACKGROUND
(a) James A. Jalovec.
(b) 7170 South Woelfel Road, Franklin, Wisconsin 53132.
(c) private investor, J. A. J. Investments, Ltd., 7170 South Woelfel
Road, Franklin, Wisconsin 53132.
(d) The Reporting Person has not, during the last five years, been
convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors).
(e) The Reporting Person has not, during the last five years, been
party to a civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was or is subject to a
judgement, decree or final order enjoining future violations of, or prohibiting
or mandating activities subject to, federal or state securities laws or finding
any violation with respect to such laws.
(f) United States of America.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATIONS
Issuer issued 750,000 shares of its Common Stock ("Common Shares") to
the Reporting Person for $3,000,000 pursuant to the terms of a Securities
Purchase Agreement, dated as of July 9, 1999, between Issuer and Reporting
Person (the "Securities Purchase Agreement"). In connection with the issuance of
the Common Shares, Issuer agreed to (i) register the resale of the Common Shares
on Form S-3; (ii) permit Reporting Person to designate two members to the Board
of Directors of Issuer; and (iii) retain Reporting Person as an advisor to the
Board of Directors of Issuer at an annual fee of $30,000 until no later than
June 30, 2004. No part of the purchase price has been represented by funds or
other consideration borrowed or otherwise obtained for the purpose of acquiring,
holding, trading or voting the Common Shares.
ITEM 4. PURPOSE OF TRANSACTION
Issuer has agreed with Reporting Person to use the proceeds from the
sale of the Common Shares for the payment of indebtedness of Issuer or its
subsidiaries except any indebtedness payable to an affiliate of certain officers
and directors of Issuer. Issuer intends to
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increase the number of members of the Board of Directors to accommodate
Reporting Person's right to designate two members to Issuer's Board of
Directors.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
(a) 1,491,250 shares of Common Stock representing 24.65% of the issued
and outstanding Common Stock of the Issuer.
(b) 1,491,250 shares.
(c) The Reporting Person has not effected any transactions in shares of
Common Stock of the Issuer during the past 60 days.
(d) No other person is known by the Reporting Person to have the right
to receive or the power to direct the receipt of dividends from, or
the proceeds from the sale of, the securities reported on this
Schedule.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER
Under the Securities Purchase Agreement described in Item 3, Reporting
Person has been granted the right to designate one member of the Board of
Directors of Issuer. Pursuant to that certain Voting Agreement, dated as of July
9, 1999, between Issuer and Reporting Person, Reporting Person shall have the
right to designate, for as long as he is the beneficial owner of at least 50% of
the total number of shares beneficially owned upon the consummation of the
purchase of the Common Shares, two members of the Board of Directors, including
the director designated by Reporting Person pursuant to the Securities Purchase
Agreement.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
Exhibit 1 -- Securities Purchase Agreement, dated as of July 9, 1999,
between Issuer and Reporting Person, and exhibits thereto.
Exhibit 2 -- Voting Agreement, dated as of July 9, 1999, between Issuer
and Reporting Person, attached as Exhibit C to Exhibit 1, Securities Purchase
Agreement, and incorporated by reference herein.
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
/s/ James A. Jalovec
----------------------------------
James A. Jalovec
Attention: Intentional misstatements or omissions of fact constitute
Federal criminal violations (See U.S.C. 1041)
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SECURITIES PURCHASE AGREEMENT
This SECURITIES PURCHASE AGREEMENT ("Agreement") is entered into as of
July 9, 1999, by and between Asche Transportation Services, Inc., a Delaware
corporation (the "Company"), with headquarters located at 10214 N. Mt. Vernon
Road, Shannon, Illinois 61078, and the Purchaser (the "Purchaser") set forth on
the execution page hereof, with regard to the following:
RECITALS
A. The Company and Purchaser are executing and delivering this
Agreement in reliance upon the exemption from securities registration afforded
by the provisions of Regulation D ("Regulation D"), as promulgated by the United
States Securities and Exchange Commission (the "SEC") under the Securities Act
of 1933, as amended (the "Securities Act").
B. Purchaser desires to purchase, upon the terms and conditions stated
in this Agreement, 750,000 shares of the Company's Common Stock, par value
$.0001 per share (the "Common Stock"). The 750,000 shares of Common Stock being
purchased hereunder are referred to herein as the "Common Shares".
C. Contemporaneous with the execution and delivery of this Agreement,
the parties hereto are executing and delivering a Registration Rights Agreement
in the form attached hereto as Exhibit A (the "Registration Rights Agreement"),
pursuant to which the Company has agreed to provide certain registration rights
under the Securities Act, the rules and regulations promulgated thereunder and
applicable state securities laws.
AGREEMENTS
NOW, THEREFORE, in consideration of their respective promises contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Company and Purchaser hereby agree as
follows:
ARTICLE I
PURCHASE AND SALE OF COMMON SHARES
1.1 Purchase of Common Shares.Subject to the terms and conditions of
this Agreement, the Company shall issue and sell, and Purchaser shall purchase,
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the Common Shares as further contemplated hereby. The purchase price for each
Common Share shall be $4.00.
1.2 Form of Payment. Purchaser shall pay the aggregate Purchase Price
for the Common Shares being purchased by Purchaser by wire transfer to the
Company, in accordance with the Company's written wiring instructions, against
delivery of duly executed stock certificates for the Common Shares, and the
Company shall deliver such Common Shares against delivery of such aggregate
Purchase Price.
1.3 Closing Date. Subject to the satisfaction (or waiver) of the
conditions set forth in Articles VI and VII below, the closing (the "Closing")
of the issuance, sale and purchase of the Common Shares pursuant to this
Agreement shall occur at 10:00 a.m. on July 9, 1999 (the "Closing Date"), at
such place as the Company and Purchaser shall mutually agree.
ARTICLE II
PURCHASER'S REPRESENTATIONS AND WARRANTIES
Purchaser represents and warrants, solely with respect to itself and
its purchase hereunder. Purchaser makes no other representations or warranties,
express or implied, in connection with the transactions contemplated hereby and
any and all prior representations and warranties, if any, which may have been
made by Purchaser to the Company shall be deemed to have been merged in this
Agreement and any such prior representations and warranties, if any, shall not
survive the execution and delivery of this Agreement.
2.1 Power and Authority. Purchaser has all requisite power and
authority to execute and deliver this Agreement, the Registration Rights
Agreement and the Board Advisory Agreement (as herein defined) and to perform
his obligations hereunder and thereunder. Purchaser has duly and validly
executed and delivered this Agreement and the Registration Rights Agreement and
the Board Advisory Agreement (collectively, the "Related Documents"), and each
such agreement constitutes Purchaser's valid and legally binding obligation,
enforceable in accordance with its terms except as may be limited by (i)
applicable bankruptcy, insolvency, reorganization or other laws of general
application relating to or affecting the enforcement of creditor's rights
generally and (ii) the effect of rules of law governing the availability of
equitable remedies.
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2.2 Investment Purpose. Purchaser is purchasing the Common Shares for
Purchaser's own account for investment only and not with a present view toward
or in connection with the public sale or distribution thereof. Purchaser will
not resell the Common Shares except pursuant to an effective registration
statement filed under the Securities Act or sales that are exempt from the
registration requirements of the Securities Act and/or sales registered under
the Securities Act. Purchaser understands that Purchaser must bear the economic
risk of this investment indefinitely, unless the Common Shares are registered
pursuant to the Securities Act and any applicable state securities laws or an
exemption from such Securities Act other than as contemplated by the
Registration Rights Agreement. By making the representations in this Section
2.2, the Purchaser does not agree to hold the Common Shares for any minimum or
other specific term and reserves the right to dispose of the Common Shares at
any time in accordance with the provisions of this Agreement or pursuant to a
registration statement or an exemption from registration under the Securities
Act or applicable state securities laws.
2.3 Accredited Investor Status. Purchaser is an "accredited investor"
as that term is defined in Rule 501(a) of Regulation D.
2.4 Disclosure of Information.Purchaser has received or has had full
access to all the information it considers necessary or appropriate to make an
informed investment decision with respect to the Common Shares to be purchased
by Purchaser under this Agreement. Purchaser further has had an opportunity to
ask questions and receive answers from the Company regarding the terms and
conditions of the offering of the Common Shares and to obtain additional
information (to the extent the Company possessed such information or could
acquire it without unreasonable effort or expense) necessary to verify any
information furnished to Purchaser or to which Purchaser had access.
2.5 Investment Experience. Purchaser understands that the purchase of
the Common Shares involves substantial risk. Purchaser is able to bear the
economic risk of Purchaser's investment in the Common Shares and has such
knowledge and experience in financial or business matters such that Purchaser is
capable of evaluating the merits and risks of this investment in the Common
Shares and protecting its own interest in connection with this investment.
2.6 Reliance on Exemptions. Purchaser understands that the Common
Shares are being offered and sold to the Purchaser in reliance upon
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specific exemptions from the registration requirements of the United States
federal and state securities laws.
2.7 Governmental Review. Purchaser understands that no United States
federal or state agency or any other government agency has passed upon or made
any recommendation or endorsement of the Common Shares or an investment therein.
2.8 Transfer or Resale. Purchaser understands that (i) except as
provided in the Registration Rights Agreement, the Common Shares have not been
and are not being registered under the Securities Act or any state securities
laws, and may not be transferred unless subsequently registered thereunder, an
exemption from such registration is available or such Common Shares are sold or
transferred to an "affiliate" (as defined in Rule 144 under the Securities Act
(or a successor rule) ("Rule 144")) and in all cases, subject to the provisions
of Section 5.3; (ii) any sale of such Common Shares made in reliance on Rule 144
may be made only in accordance with the terms of said Rule and further, if said
Rule is not applicable, any resale of such Common Shares without registration
under the Securities Act under circumstances in which the seller may be deemed
to be an underwriter (as that term is defined in the Securities Act) may require
compliance with some other exemption under the Securities Act or the rules and
regulations of the SEC thereunder; and (iii) neither the Company nor any other
person is under any obligation to register such Common Shares under the
Securities Act or any state securities laws or to comply with the terms and
conditions of any exemption thereunder (in each case, other than pursuant to
this Agreement or the Registration Rights Agreement).
2.9 Legends. Purchaser understands that, subject to Article V hereof,
the certificates for the Common Shares, and until such time as the Common Shares
have been registered under the Securities Act and sold as contemplated by the
Registration Rights Agreement or otherwise or sold by Purchaser pursuant to Rule
144, the certificates for the Common Shares will bear a restrictive legend (the
"Legend") in the following form:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND
ARE "RESTRICTED" SECURITIES WITHIN THE MEANING OF RULE
144 OF THE SECURITIES AND EXCHANGE COMMISSION. TRANSFER
OF THE
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SHARES REPRESENTED BY THIS CERTIFICATE MAY ONLY BE MADE
PURSUANT TO AN EFECTIVE REGISTRATION STATEMENT FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION OR PURSUANT
TO AN EXEMPTION FROM REGISTRATION. THE SHARES ARE
FURTHER SUBJECT TO THE TERMS AND CONDITIONS OF SECTION
5.3 OF A CERTAIN SECURITIES PURCHASE AGREEMENT DATED AS
OF JULY 9, 1999 BETWEEN THE COMPANY AND JAMES A.
JALOVEC. A COPY OF THE AGREEMENT IS ON FILE IN THE
OFFICE OF THE SECRETARY OF THE COMPANY. THE AGREEMENT
PROVIDES, AMONG OTHER THINGS, FOR RESTRICTIONS UPON THE
HOLDER'S RIGHT TO TRANSFER THE SHARES REPRESENTED
HEREBY, AND FOR CERTAIN PRIOR RIGHTS TO PURCHASE AND
CERTAIN OBLIGATIONS TO SELL THE SHARES EVIDENCED BY
THIS CERTIFICATE AT A DESIGNATED PURCHASE PRICE
DETERMINED IN ACCORDANCE WITH CERTAIN PROCEDURES. ASCHE
TRANSPORTATION SERVICES, INC. HAS DIRECTED ITS TRANSFER
AGENT THAT THESE SHARES MAY NOT BE SOLD OR TRANSFERRED
WITHOUT THE SUBMISSION OF AN OPINION OF ATTORNEY
ACCEPTABLE TO ASCHE TRANSPORTATION SERVICES, INC. ANY
SALE OR TRANSFER CONTRARY TO SUCH RESTRICTIONS IS VOID.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Purchaser that:
3.1 Organization and Qualification. The Company and each of its
subsidiaries is a corporation duly organized, validity existing and in good
standing under the laws of the jurisdiction in which it is incorporated, and has
the requisite corporate power and authority to own its properties and to carry
on its business as
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now being conducted. The Company and each of its subsidiaries is duly qualified
as a foreign corporation to do business and is in good standing in every
jurisdiction where the failure to so qualify would have a Material Adverse
Effect. "Material Adverse Effect" means any material adverse effect on either
(i) the business, operations, properties, financial condition, operating results
or prospects of the Company and its subsidiaries, taken as a whole on a
consolidated basis or (ii) the transactions contemplated hereby.
3.2 Authorization: Enforcement. (a) The Company has the requisite
corporate power and authority to enter into and perform this Agreement and the
Related Documents, and to issue and sell, perform its obligations with respect
to, the Common Shares in accordance with the terms hereof; (b) the execution,
delivery and performance of this Agreement and the Related Documents by the
Company and the consummation by it of the transactions contemplated hereby and
thereby (including without limitation the issuance of the Common Shares) have
been duly authorized by all necessary corporate action and no further consent or
authorization of the Company, its board of directors, or its stockholders or any
other person, body or agency is required with respect to any of the transactions
contemplated hereby or thereby (whether under rules of NASDAQ National Market
System ("NASDAQ"), the National Association of Securities Dealers or otherwise)
except for the necessary stockholder approval to amend the By-Laws to increase
the number of directors so that Purchaser may designate one member to the Board
(in addition to Purchaser's right to designate one director pursuant to Section
4.7); (c) this Agreement and the Related Documents and the Common Shares have
been duly executed and delivered by the Company; and (d) this Agreement and the
Related Documents and the Common Shares constitute legal, valid and binding
obligations of the Company enforceable against the Company in accordance with
their terms, except as may be limited by (i) applicable bankruptcy, insolvency,
reorganization or other laws of general application relating to or affecting the
enforcement of creditors' rights generally and (ii) the effect of rules of law
governing the availability of equitable remedies.
3.3 Capitalization. The capitalization of the Company as of the date
hereof, including the authorized capital stock, the number of shares issued and
outstanding, the number of shares reserved for issuance pursuant to the
Company's stock option plans and the number of shares reserved for issuance
pursuant to securities exercisable for, or convertible into or exchangeable for
any shares of Common Stock are as set forth on Schedule 3.3 attached hereto. All
of such outstanding shares of capital stock have been, or upon issuance will be,
validly issued, fully paid and nonassessable. No shares of capital stock of the
Company
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(including the Common Shares) are subject to preemptive rights or any other
similar rights of the stockholders of the Company or any liens or encumbrances.
Except as disclosed in Schedule 3.3, as of the date of this Agreement, (i) there
are no outstanding options, warrants, scrip, rights to subscribe for, calls or
commitments of any character whatsoever relating to, or securities or rights
convertible into or exercisable or exchangeable for, any shares of capital stock
of the Company or any of its subsidiaries or contracts, commitments,
understandings or arrangements by which the Company or any of its subsidiaries
is or may become bound to issue additional shares of capital stock of the
Company or any of its subsidiaries, (ii) there are no agreements or arrangements
under which the Company or any of its subsidiaries is obligated to register the
sale of any of its or their securities under the Securities Act (except the
Registration Rights Agreement), and (iii) there are no anti-dilutive or price
adjustment provisions contained in any security issued by the Company (or any
agreement providing rights to security holders) that will be triggered by the
issuance of the Common Shares. The Company has furnished to Purchaser true and
correct copies of the Company's Certificate of Incorporation as currently in
effect ("Certificate of Incorporation"), and the Company's By-laws as currently
in effect (the "By-laws"). The Company has set forth on Schedule 3.3 all
instruments and agreements (other than the Certificate of Incorporation and
By-laws) governing securities convertible into or exercisable for Common Stock
of the Company (and the Company shall provide to Purchaser copies thereof upon
the request of Purchaser).
3.4 Issuance of Shares. The Common Shares are duly authorized and
reserved for issuance, and, upon consummation of the purchase contemplated
hereby, will be validly issued, fully paid and non-assessable, and free from all
taxes, liens, claims and encumbrances and will not be subject to the preemptive
rights or other similar rights of stockholders of the Company. The Common Shares
are duly authorized and reserved for issuance, and are validly issued, fully
paid and nonassessable, and free from all taxes, liens claims and encumbrances
and are not and will not be subject to preemptive rights or other similar rights
of stockholders of the Company. Accordingly, no further corporate authorization
or approval is required under the rules of the NASDAQ with respect to the
transaction contemplated by this Agreement except as otherwise set forth in
Section 3.2. The Company understands and acknowledges the potentially dilutive
effect to the Common Stock upon the issuance of the Common Shares. The Company
further acknowledges that its obligation to issue the Common Shares in
accordance with this Agreement is absolute and unconditional regardless of the
dilutive effect that such issuance may have on the ownership interests of other
stockholders of the Company.
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3.5 No Conflicts. The execution, delivery and performance of this
Agreement and the Related Documents by the Company, and the consummation by the
Company of transactions contemplated hereby and thereby (including, without
limitation, the issuance of the Common Shares) will not (a) result in a
violation of the Certificate of Incorporation or By-laws, (b) violate or
conflict with, or constitute a default (or an event which with notice or lapse
of time or both would become a default) under, or give to others any rights of
termination, amendment, acceleration, or cancellation of, any agreement,
indenture or instrument to which the Company or any of its subsidiaries is a
party (except for such conflicts, defaults, terminations, amendments,
accelerations, and cancellations as would not, individually or in the aggregate,
have a Material Adverse Effect), or (c) result in a violation of any law, rule,
regulation, order, judgment or decree to the Company or any of its subsidiaries,
or by which any property or asset of the Company or any of its subsidiaries, is
bound or affected. Neither the Company nor any of its subsidiaries is in
violation of its Certificate of Incorporation, By-laws or other organizational
documents, and neither the Company nor any of its subsidiaries is in default
(and no event has occurred which, with notice or lapse of time or both, would
put the Company or any of its subsidiaries in default) under, nor has there
occurred any event giving others (with notice or lapse of time or both) any
rights of termination, amendment, acceleration or cancellation of, any
agreement, indenture or instrument to which the Company or any of its
subsidiaries is a party, except for possible defaults or rights as would not,
individually or in the aggregate, have a Material Adverse Effect or otherwise as
set forth in Schedule 3.5. The business of the Company and its subsidiaries are
not being conducted, and shall not be conducted so long as Purchaser owns any of
the Common Shares, in violation of any law, ordinance, rule, regulation, order,
judgment or decree of any governmental entity, court or arbitration tribunal
except for possible violations the sanctions for which either singly or in the
aggregate would not have a Material Adverse Effect. Except as set forth on
Schedule 3.5, the Company is not required to obtain any consent, authorization
or order of, or make any filing or registration with, any court or governmental
agency or any regulatory or self-regulatory agency in order for it to execute,
deliver or perform any of its obligations under this Agreement or the
Registration Rights Agreement or to perform its obligations in accordance with
the terms hereof or thereof. The Company is not in violation of the listing
requirements of NASDAQ. Except as set forth on Schedule 3.5 the Company and its
subsidiaries are unaware of any facts which might give rise to any of the
foregoing.
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3.6 Registration and SEC Documents. The Common Stock is registered
under Section 12 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"). Except as disclosed in Schedule 3.6, since January 1, 1995, the
Company has timely filed all reports, schedules, forms, statements and other
documents required to be filed by it with the SEC pursuant to the reporting
requirements of the Exchange Act (all of the foregoing filed after December 31,
1994 and all exhibits included therein and financial statements and schedules
thereto and documents incorporated by reference therein, being referred to
herein as the "SEC Documents"). The Company has made available to Purchaser true
and complete copies of the SEC Documents, except for exhibits, schedules and
incorporated documents (the SEC documents filed prior to the date hereof being
the "Filed SEC Documents"). As of their respective dates, the SEC Documents
complied in all material respects with the requirements of the Exchange Act and
the rules and regulations of the SEC promulgated thereunder applicable to the
SEC Documents, and none of the SEC Documents, at the time they were filed with
the SEC, contained any untrue statements of a material fact or omitted to state
a material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. None of the statements made in any such SEC Documents is
required to be updated or amended under applicable law. The financial statements
of the Company included in the SEC Documents have been prepared in accordance
with U.S. generally accepted accounting principles, consistently applied, and
the rules and regulations of the SEC during the periods involved (except (i) as
may be otherwise indicated in such financial statements or the notes thereto, or
(ii) in the case of unaudited interim statements, to the extent they do not
include footnotes or are condensed or summary statements) and present fairly the
consolidated financial position of the Company and its consolidated subsidiaries
as of the dates thereof and the consolidated results of their operations and
cash flows for the periods then ended (subject, in the case of unaudited
statements, to normal, immaterial year-end audit adjustments). Except as set
forth in the financial statements of the Company included in the Filed SEC
Documents, the Company has no liabilities, contingent or otherwise, other than
(i) liabilities incurred subsequent to the date of such financial statements in
the ordinary course of business consistent with the past practice and (ii)
obligations under contracts and commitments incurred in the ordinary course of
business and not required under generally accepted accounting principles to be
reflected in such financial statements, in each case of clause (i) and (ii) next
above which, individually and in the aggregate, are not material to the
financial condition, business, operations, properties, operating results or
prospects of the Company and its subsidiaries taken on a whole. The Filed SEC
Documents contain a complete and accurate list of all material undischarged
written or oral
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contracts, agreements, leases or other instruments to which the Company or any
subsidiary is a party or by which the company or any subsidiary is bound or to
which any of the properties or assets of the Company or any subsidiary is
subject (each a "Contract"). Except as disclosed on Schedule 3.6, none of the
Company, its subsidiaries or, to the best knowledge of the Company, any of the
other parties thereto, is in breach or violation of any Contract, which breach
or violation would have a Material Adverse Effect. No event, occurrence or
condition exists which, with the lapse of time, the giving of notice, or both,
or the happening of any further event or condition, would become a breach or
default by the Company or its subsidiaries or, to the Company's knowledge, by
any other party under any Contract which breach or default would have a Material
Adverse Effect.
3.7 Absence of Certain Changes. Since December 31, 1998, there has
been no change and no development in the business, properties, operations,
financial condition, results of operations or prospects of the Company which
would have had a Material Adverse Effect, except as disclosed in Schedule 3.7 or
as disclosed in the SEC Documents.
3.8 Absence of Litigation. Except as disclosed in Schedule 3.8, there
is no action, suit, proceeding, inquiry or investigation before or by any court,
public board, governmental agency or authority, or self-regulatory organization
or body pending or, to the knowledge of the Company or any of its subsidiaries,
threatened against or affecting the Company, any of its subsidiaries, or any of
their respective directors or officers in their capacities as such, wherein an
unfavorable decision, ruling or finding would have a Material Adverse Effect or
would adversely affect the transactions contemplated by this Agreement or any of
the documents contemplated hereby or which would adversely affect the validity
or enforceability of, or the authority or ability of the Company to perform its
obligations under, this Agreement or any of such other documents. To the
knowledge of the Company, there are no facts which, if known by a potential
claimant or governmental agency or authority, could give rise to a claim or
proceeding which, if asserted or conducted with results unfavorable to the
Company or any of its subsidiaries, could have a Material Adverse Effect.
3.9 Disclosure. No information relating to or concerning the Company
set forth in this Agreement or provided to Purchaser in connection with the
transactions contemplated hereby contains an untrue statement of a material fact
or omits to state a material fact necessary in order to make the statements made
herein or therein, in light of the circumstances under which they were made, not
misleading. Except for the execution and performance of this Agreement, no
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material fact (within the meaning of the federal securities laws of the United
States) exists with respect to the Company or any of its subsidiaries which has
not been publicly disclosed.
3.10 Acknowledgment Regarding Purchaser's Purchase of the Securities.
The Company acknowledges and agrees that Purchaser is not acting as a financial
advisor or fiduciary of the Company (or in any similar capacity) with respect to
this Agreement or the transactions contemplated hereby, that this Agreement and
the transaction contemplated hereby, and the relationship between Purchaser and
the Company, are "arms-length", and that any statement made by Purchaser, or any
of its representatives or agents, in connection with the Agreement or the
transactions contemplated hereby is not advice or a recommendation, is merely
incidental to Purchaser's purchase of the Securities and has not been relied
upon in any way by the Company, its officers, directors or other
representatives. The Company further represents to Purchaser that the Company's
decision to enter into this Agreement and the transactions contemplated hereby
has been based solely on an independent evaluation by the Company and its
representatives.
3.11 Current Public Information. The Company currently meets the
"Registrant eligibility requirements" set forth in the general instructions to
Form S-3 under the Securities Act.
3.12 No General Solicitation. Neither the Company nor any person
acting on behalf of the Company has conducted any "general solicitation," as
described in Rule 502(c) under Regulation D, with respect to any of the
Securities being offered hereby.
3.13 No Integrated Offering. Neither the Company, nor any if its
affiliates, nor any person acting on its or their behalf, has directly or
indirectly made any offers or sales of any security or solicited any offers to
buy any security under circumstances that would prevent the parties hereto from
consummating the transactions contemplated hereby pursuant to an exemption from
registration under the Securities Act pursuant to the provisions of Regulation
D. The transactions contemplated hereby are exempt from the registration
requirements of the Securities Act, assuming the accuracy of the representations
and warranties herein contained of Purchaser to the extend relevant for such
determination. The issuance of the Securities to the Purchaser will not be
integrated with any other issuance of the Company's Securities (past, present,
or future) which requires stockholder approval under the rules of the NASDAQ
stock market.
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3.14 No Brokers. Except for Madison Securities, Inc. ("Madison"), the
Company has taken no action which would give rise to any claim by any person for
brokerage commissions, finder's fees or similar payments to Purchaser relating
to this Agreement or the transactions contemplated hereby. Notwithstanding the
foregoing, Madison has agreed with the Company that it shall not be entitled to
any fee or commission in connection with this Agreement or the transactions
contemplated hereby.
3.15 Acknowledgment of Terms and Nature of Securities. The Company's
executive officers and directors have studied and fully understand the terms and
nature of the securities being sold hereunder. The board of directors of the
Company has concluded in its good faith business judgment that such issuance is
in the best interests of the Company.
3.16 Intellectual Property. Each of the Company and its subsidiaries
owns or possesses adequate and enforceable rights to use all patents, patent
applications, trademarks, trademark applications, trade names, service marks,
copyrights, copyright applications, licenses, know-how (including trade secrets
and other unpatented and/or unpatentable proprietary or confidential
information, systems or procedures) and other similar rights and proprietary
knowledge (collectively, "Intangibles") used or necessary for the conduct of its
business as now being conducted and as previously described in the Company's
Annual Report on Form 10-K for its most recently ended fiscal year. Neither the
Company nor any subsidiary of the Company infringes on or is in conflict with
any right or any other person with respect to any Intangibles nor is there any
claim or infringement made by a third party against or involving the Company or
any of its subsidiaries, which infringement, conflict or claim, individually or
in the aggregate, if the subject of an unfavorable decision, ruling or finding,
would have a Material Adverse Effect.
3.17 Key Employees. Each Key Employee (as defined below) is currently
serving the Company in the capacity disclosed in Schedule 3.17. No Key Employee,
to the best of the knowledge of the Company and its subsidiaries, is, or is now
expected to be, in violation of any material term of any employment contract,
confidentiality, disclosure or proprietary information agreement,
non-competition agreement, or any other contract or agreement or any restrictive
covenant, and the continued employment of each Key Employee does not subject the
Company or any of its subsidiaries to any liability with respect to any of the
foregoing matters. No Key Employee has, to the best of the knowledge of the
Company and its subsidiaries, any intention to terminate or limit his employment
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<PAGE> 13
with, or services to, the Company or any of its subsidiaries, nor is any such
Key Employee subject to any constraints (e.g., limitation) which would cause
such employee to be unable to devote his full time and attention to such
employment or services. "Key Employee" means each of individuals listed on
Schedule 3.17.
3.18 Certain Transactions. Except as set forth on Schedule 3.18 or as
disclosed in the SEC Documents and except for arm's length transactions pursuant
to which the Company or any of its subsidiaries makes payments in the ordinary
course of business upon terms no less favorable than the Company or any of its
subsidiaries could obtain from third parties and other than the grant of stock
options disclosed on Schedule 3.3, none of the officers, directors, or employees
of the Company is presently a party to any transaction with the Company or any
of its subsidiaries (other than for services as employees, officers and
directors), including any contract, agreement or other arrangement providing for
the furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from any officer,
director or such employee or, to the knowledge of the Company, any corporation,
partnership, trust or other entity in which any officer, director, or any such
employee has a substantial interest or is an officer, director, trustee or
partner.
3.19 Internal Accounting Controls. The Company and each of its
subsidiaries maintain a system of internal accounting controls sufficient, in
the judgment of the Company's board of directors, to provide reasonable
assurance that (i) transactions are executed in accordance with management's
general or specific authorizations, (ii) transactions are recorded as necessary
to permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain asset accountability, (iii)
access to assets is permitted only in accordance with management's general or
specific authorization and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences.
ARTICLE IV
COVENANTS
4.1 Best Efforts. The Company shall use its best efforts timely to
satisfy each of the conditions described in Article VII of this Agreement.
4.2 Securities Laws. The Company agrees to file a Form D with respect
to the Securities with the SEC as required under Regulation D and to provide a
copy thereof to Purchaser within five (5) business days following the Date of
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<PAGE> 14
Closing. The Company agrees to file a Form 8-K disclosing this Agreement and the
transactions contemplated hereby with the SEC within ten business (10) days
following the date of Closing. Such Form 8-K shall include this Agreement and
the related transaction documents as exhibits thereto. The Company shall, on or
prior to the date of Closing, take such action as is necessary to sell the
Common Shares to Purchaser in accordance with applicable securities laws of
states of the United States, and shall provide evidence of any such action so
taken to Purchaser on or prior to the date of Closing. Without limiting any of
the Company's obligations under this Agreement or Registration Rights Agreement,
from and after the date of Closing, neither the Company nor any person acting on
its behalf shall take any action which would adversely affect any exemptions
from registration under the Securities Act with respect to the transactions
contemplated hereby.
4.3 Reporting Status. For so long as the Purchaser owns any of the
Common Shares or three (3) years from the Closing Date, whichever is sooner, the
Company shall timely file all reports required to be filed with the SEC pursuant
to the Exchange Act, and the Company shall not terminate its status as an issuer
required to file reports under the Exchange Act even if the Exchange Act or the
rules and regulations thereunder would permit such termination. The Company will
take all action necessary to continue to meet the registrant eligibility
requirements set forth in the general instructions to Form S-3 as such
requirements are in effect as of the date of this Agreement.
4.4 Use of Proceeds. The Company shall use the proceeds from the sale
of the Common Shares (i) first for payment of indebtedness of the Company or its
subsidiaries except any indebtedness payable to any party to the Voting
Agreement (as hereinafter defined) or any affiliates of any such parties (other
than as disclosed on Schedule 4.4) and (ii) then for general working capital
needs.
4.5 Information. For so long as the Purchaser owns any of the
Securities or three (3) years from the Closing Date, whichever is sooner, the
Company agrees to send the following reports to Purchaser until Purchaser
transfers, assigns or sells all of its Securities: (a) within three (3) days
after the filing with SEC, a copy of its Annual Report on Form 10-K, its
Quarterly Reports on Form 10-Q, any proxy statements and any Current Reports on
Form 8-K; and (b) within one (1) day after release, copies of all press releases
issued by the Company or any if its subsidiaries. The Company further agrees to
promptly provide to Purchaser or assignee thereof (a "Holder") any information
with respect to the Company, its properties, or its business or Holder's
investment as such Holder may reasonably request; provided, however, that the
Company shall not be
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required to give any Holder any material nonpublic information as determined by
the Company in its sole discretion. If any information requested by a Holder
from the Company contains material nonpublic information, the Company shall
inform the Holder in writing that the information requested contains material
nonpublic information and shall in no event provide such information to Holder
without the express prior written consent of such Holder after being so
informed.
4.6 Churchill Financing. The Company has provided Purchaser a copy of
a non-binding letter of intent dated June 21, 1999, which describes a proposed
transaction pursuant to which Churchill Capital, Inc. ("Churchill") would invest
a minimum of $10 million and a maximum of $15 million of the Common Stock (the
"Letter"). Upon consummation of this transaction, the Company shall provide to
Purchaser a copy of all documentation executed by the parties evidencing the
investment. Purchaser agrees to vote all of his shares of Common Stock
(including the Common Shares purchased hereunder) in favor of all proposals
relating to the investment by Churchill, the amendment to the Certificate of
Incorporation to increase the authorized number of shares of Common Stock of the
Company in order to accommodate the Churchill investment and the amendment to
the By-Laws to increase the number of directors sufficient to accommodate the
Churchill investment and the Voting Agreement, all as shall be set forth in a
proxy statement to be sent to all stockholders of the Company in August, 1999.
4.7 Board Representation. Immediately after the Closing, the Company
shall convene a meeting of its Board of Directors and shall elect a designee of
Purchaser to serve as a member of the Board of Directors for a term expiring at
the 2002 Annual Meeting of the stockholders of the Company. In the event
Purchaser has not been afforded the right to designate a second director (as
contemplated by the Voting Agreement) by October 31, 1999, the Company shall
convene a meeting of its Board of Directors and shall take such steps as shall
be necessary to elect a second designee of Purchaser to serve as a member of the
Board of Directors.
4.8 Listing. The Company shall use reasonable efforts to secure and
maintain listing and trading of the Common Shares on the NASDAQ National Market
System and any other national securities exchange or quotation system on which
the Common Stock is then listed or quoted and for so long as Purchaser owns any
of the Securities or three (3) years from the Closing Date, whichever is sooner,
and comply in all respects with the Company's reporting, filing and other
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obligations under the by-laws or rules of the NASDAQ and any other national
securities exchange or quotation system on which the Common Stock is then
listed.
4.9 Prospectus Delivery Requirement. Purchaser understands that the
Securities Act may require delivery of a prospectus relating to the Common Stock
in connection with any sale thereof pursuant to a registration statement under
the Securities Act covering the resale by Purchaser of the Common Stock being
sold, and Purchaser shall comply with the applicable prospectus delivery
requirements of the Securities Act, if any, in connection with any such sale.
4.10 Intentional Acts or Omissions. The Company shall not
intentionally perform any act which if performed, or intentionally omit to
perform any act which, if omitted to be performed, would prevent or excuse the
performance of this Agreement or any of the transactions contemplated hereby.
4.11 Corporate Existence. So long as Purchaser beneficially owns any
Securities or for three (3) years from the Closing Date, whichever is sooner,
the Company shall maintain its corporate existence and shall not sell all or
substantially all of the Company's assets without the written consent of
Purchaser not to be unreasonably withheld, except in the event of a merger or
consolidation or sale of all or substantially all of the Company's assets, where
the surviving or successor entity in such transaction (i) assumes the Company's
obligations hereunder and under the agreements and instruments entered into in
connection herewith and (ii) is a publicly traded corporation whose Common Stock
is listed for trading on NASDAQ, NASDAQ SmallCap, NYSE, or AMEX.
4.12 Hedging Transactions. The Company hereby expressly agrees that
Purchaser shall not in any way be prohibited or restricted from any purchases or
sales of any securities or other instruments of, or related to, the Company or
any of its securities, including, without limitation, puts, call, futures
contracts, short sales and hedging and arbitrage transactions as long as
Purchaser complies with applicable law.
4.13 Dilution. Commencing on the date hereof and continuing until the
end of the period in which Purchaser has the right to designate one additional
member of the Board of Directors of the Company in accordance with the
provisions of the Voting Agreement of even date herewith entered into by and
among the Purchaser and certain stockholders of the Company (the "Voting
Agreement"), in the event the Company shall issue any additional shares of
Common Stock at a price per share less than $4.00 (as adjusted for stock splits
or
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stock dividends), the Company shall issue New Shares ("New Shares") to Purchaser
based on the formula described below ("New Price"). The New Price, when
multiplied by the sum of the New Shares and the 750,000 shares of Common Stock
purchased from the Company under this Agreement, shall equal the Purchase Price
under this Agreement.
New Price = (P1 x Q1) + (P2 x Q2)
---------------------
(Q1 + Q2)
where:
P1 = the Purchase Price of the Common Shares under this Agreement;
Q1 = the aggregate number of shares of Common Stock outstanding
immediately prior to such issuance of additional shares of Common Stock;
P2 = the average price per share received by the Company for the
additional shares of Common Stock issued; and
Q2 = the number of additional shares of Common Stock issued.
For purposes of this Section 4.13, if a part or all of the
consideration received by the Company in connection with the issuance of shares
of Common Stock consists of property other than cash, such consideration shall
be deemed to have a value equal to its fair market value as determined in good
faith by the Board of Directors of the Company.
Notwithstanding the foregoing or any other provision hereof, the
Company shall not issue any New Shares as a result of (i) securities of the
Company issued in connection with any stock split, stock dividend or
recapitalization of the Company, (ii) shares of Common Stock issued from time to
time and shares of Common Stock granted from time to time upon the exercise of
options, in each case granted or to be granted in the discretion of the Board to
the Company's employees, directors or consultants as compensation for services
rendered to the Company; (iii) shares of Common Stock issued from time to time
in exercise of warrants granted or to be granted to investors, placement agents
or underwriters or (iv) shares of Common Stock issued to Churchill pursuant to
an agreement on the same or substantially similar terms as those described in
the Letter.
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4.14 Purchaser's Reporting Obligations. Purchaser agrees to prepare,
execute and file in a timely manner Form 4 and Schedule 13 D or 13G with respect
to the purchase of the Common Shares.
ARTICLE V
LEGEND REMOVAL, TRANSFER, AND CERTAIN SALES
5.1 Removal of Legend. The Legend shall be removed and the Company
shall issue a certificate without any legend to the holder of any Common Shares
upon which such Legend is stamped, and a certificate for a security shall be
originally issued without any legend, if, unless otherwise required by
applicable state securities laws, (a) upon the sale of such Common Shares
registered under the Securities Act pursuant to an effective registration
statement covering such shares, (b) upon the sale or transfer without
registration under the Securities Act and Purchaser provides the Company with an
opinion of counsel, in form, substance and scope customary for opinions of
counsel in comparable transactions (the reasonable cost of which shall be borne
by the Company), to the effect that a public sale or transfer of such Common
Shares may be made without registration under the Securities Act or (c) upon the
sale of such Common Shares pursuant to Rule 144. Purchaser agrees to sell all
Common Shares, including those represented by a certificate(s) from which the
Legend has been removed, or which were originally issued without the Legend,
pursuant to an effective registration statement and, if required, to deliver a
prospectus in connection with such sale or in compliance with an exemption from
the registration requirements of the Securities Act. In the event the Legend is
removed from any Common Shares or any Common Shares is issued without the Legend
and thereafter the effectiveness of a registration statement covering the resale
of such Common Shares is suspended or the Company determines that a supplement
or amendment thereto is required by applicable securities laws, then upon
reasonable advance notice to Purchaser holding such Common Shares, the Company
may require that the Legend be placed on any such Common Shares that cannot then
be sold pursuant to an effective registration statement or Rule 144 or with
respect to which the opinion referred to in clause (b) next above has not been
rendered, which Legend shall be removed when such Common Shares may be sold
pursuant to an effective registration statement or Rule 144 or such holder
provides the opinion with respect thereto described in clause (b) next above.
5.2 Transfer Agent Instructions. Subject to the provisions of this
Agreement, the Company shall irrevocably instruct its transfer agent to issue
certificates, registered in the name of Purchaser or its nominee, for the Common
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Shares in such amounts as specified from time to time by Purchaser to the
Company. Such certificates shall bear a legend only in the form of the Legend
and only to the extent permitted by Section 5.1 above. The Company warrants that
no instruction other than such instructions referred to in this Article V, and
no stop transfer instructions other than stop transfer instructions to give
effect to Section 2.9 hereof in the case of the Common Shares prior to
registration thereof under the Securities Act, will be given by the Company to
its transfer agent and that the Common Shares shall otherwise be freely
transferable on the books and records of the Company to the extent provided in
this Agreement and the Registration Rights Agreement. Nothing in this Section
shall affect in any way (i) Purchaser's obligations and agreement set forth in
Section 5.1 hereof to resell the Common Shares pursuant to an effective
registration statement and to deliver a prospectus in connection with such sale
or in compliance with an exemption from the registration requirements of
applicable securities laws or (ii) the Right of First Refusal (as hereinafter
defined). Without limiting the foregoing, if (a) Purchaser provides the Company
with an opinion of counsel, which opinion of counsel shall be in form, substance
and scope customary for opinions of counsel in comparable transactions (the
reasonable cost of which shall be borne by the Company), to the effect that the
Common Shares to be sold or transferred may be sold or transferred pursuant to
an exemption from registration or (b) Purchaser transfers Common Shares pursuant
to Rule 144, the Company shall permit the transfer, and, in the case of the
Common Shares, promptly instruct its transfer agent to issue one or more
certificates in such name and in such denomination as specified by Purchaser in
order to effect such a transfer or sale. The Company acknowledges that a breach
by it of its obligations hereunder will cause irreparable harm to Purchaser by
vitiating the intent and purpose of the transaction contemplated hereby.
Accordingly, the Company acknowledges that the remedy at law for a breach of its
obligations under this Article V will be inadequate and agrees, in the event of
a breach of threatened breach by the Company of the provisions of this Article
V, that Purchaser shall be entitled, in addition to all other available
remedies, to an injunction restraining any breach and requiring immediate
issuance and transfer, without the necessity of showing economic loss and
without any bond or other security being required.
5.3 Agreement between Purchaser and the Company; Right of First
Refusal.
(a) Notice of Transfer. In the event that Purchaser proposes either
voluntarily or involuntarily (including transfers by operation of
law) to sell, assign, pledge, encumber, transfer or otherwise
dispose of
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("Transfer") any of the Common Shares (including any Transfer via
the NASDAQ or other exchange, with or without a broker or
dealer), Purchaser shall give the Company written notice of
Purchaser's intention ("Transfer Notice"), describing the offered
shares ("Offered Shares"), the identity of the prospective
transferee, the consideration and the material terms and
conditions upon which the proposed Transfer is to be made. The
Transfer Notice shall certify that Purchaser has received a firm
offer from the prospective transferee and in good faith believes
a binding agreement for Transfer is obtainable on substantially
the terms set forth, and shall also include a copy of any written
proposal or letter of intent or other agreement relating to the
proposed Transfer.
(b) Right of First Refusal. With respect to any proposed Transfer,
the Company shall have an option to purchase all of the Offered
Shares (the "Right of First Refusal") or shall have the option to
assign to a transferee or assignee the Company's Right of First
Refusal provided the Company gives written notice to the
Purchaser at the time of or within a reasonable time after said
transfer, which notice shall state the name and address of said
transferee or assignee. Upon notice of the Company's option to
assign its Right of First Refusal to a transferee or assignee,
this Section 5.3 shall inure to the benefit of, and be binding
upon, the transferee or assignee. To exercise the Right of First
Refusal, the Company must notify the Purchaser in writing before
the expiration of the ten (10) day period following the delivery
of the Transfer Notice to the Company. If the Company elects to
purchase the Offered Shares, it shall pay the same consideration
for the Offered Shares on the same terms and conditions as
described in the Transfer Notice.
(c) Closing Procedures; Subsequent Transfers. If the Company
exercises the Right of First Refusal, the Company and Purchaser
shall consummate the sale of the Offered Shares on the terms set
forth in the Transfer Notice by the date thirty (30) days after
the delivery of the Transfer Notice; provided, however, in the
event the Transfer Notice provides for the payment for the
Offered Shares other than in cash, the Company shall have the
option of paying for the Offered Shares by the cash equivalent of
the consideration described in the Transfer Notice as reasonably
determined by the Company and Purchaser. If the Company fails to
exercise in full the Right of First
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Refusal on a timely basis, then Purchaser may, not later than
sixty (60) days following delivery to the Company of the Transfer
Notice, conclude the Transfer subject to the Transfer Notice on
the terms and conditions described in such notice. Any proposed
transfer on terms and conditions different from the those
described in the Transfer Notice, as well as any subsequent
proposed transfer by Purchaser, shall again be subject to the
Company's Right of First Refusal and shall require Purchaser to
deliver a new Transfer Notice to the Company and to comply with
the procedures described in this Section 5.3 with respect to such
different or new Transfer.
(d) Limitation on Right. Notwithstanding the provisions of this
Section 5.3, the Right of First Refusal set forth in this Section
5.3 shall apply only to a sale or transfer of Common Shares
representing not less than 5% of the then issued and outstanding
shares of the Common Stock of the Company in a single transaction
or in a series of integrated transactions.
ARTICLE VI
CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL
6.1 Conditions to the Company's Obligation to Sell. The obligation of
the Company hereunder to issue and sell the Common Shares to Purchaser at the
Closing is subject to the satisfaction, as of the date of the Closing and with
respect to Purchaser, of each of the following conditions thereto, provided that
these conditions are for the Company's sole benefit and may be waived by the
Company at any time in its sole discretion:
(a) Purchaser shall have executed this Agreement and the other
Documents and delivered the same to the Company.
(b) Purchaser shall deliver the Purchase Price by wire transfer in
immediately available funds for the Common Shares purchased at
the Closing.
(c) The representations and warranties of Purchaser shall be true and
correct as of the date when made and as of the Closing as though
made at that time, and Purchaser shall have performed, satisfied
and complied in all material respects with the covenants and
agreements required by this Agreement to be performed or complied
with by
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Purchaser at or prior to the Closing. The Company shall have
received a certificate executed by Purchaser, dated as of the
Closing to the foregoing effect and as to such other matters as
may be reasonably requested by the Company.
(d) No statute, rule, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered, promulgated, or
endorsed by any court or governmental authority of competent
jurisdiction or any self-regulatory organization having authority
over the matters contemplated hereby which restricts or prohibits
the consummation of any of the transactions contemplated by this
Agreement.
(e) The Company shall have received an opinion of Purchaser's counsel
dated as of the Closing, in form reasonably acceptable to the
Company and its counsel.
ARTICLE VII
CONDITIONS TO PURCHASER'S OBLIGATION TO PURCHASE
The obligation of Purchaser hereunder to purchase the Common Shares to
be purchased by it on the date of the Closing is subject to the satisfaction of
each of the following conditions, provided that these conditions are for
Purchaser's sole benefit and may be waived by Purchaser (with respect to it) at
any time in Purchaser's sole discretion:
(a) The Company shall have executed this Agreement and other
Documents and delivered the same to Purchaser.
(b) The Company shall have delivered certificates for the Common
Shares (in such denominations as Purchaser shall request) being
so purchased by Purchaser at the Closing.
(c) The Common Stock shall be listed on the NASDAQ and trading in the
Common Stock shall not have been suspended.
(d) The representations and warranties of the Company shall be true
and correct as of the date when made and as of the Closing as
though made at that time and the Company shall have performed,
satisfied and complied with the covenants and agreements required
by this Agreement to be performed or complied with by the Company
at or
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prior to the Closing. Purchaser shall have received a
certificate, executed by the Chief Executive Officer of the
Company, dated as of the Closing to the foregoing effect and as
to such other matters as may be reasonably requested by
Purchaser.
(e) No statute, rule, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered, promulgated or
endorsed by any court or governmental authority of competent
jurisdiction or any self-regulatory organization having authority
over the matters contemplated hereby which prohibits the
consummation of any of the transactions contemplated by this
Agreement.
(f) Purchaser shall have received the officer's certificate described
in Section 3.3 as of the Closing.
(g) Purchaser shall have received an opinion of the Company's
counsel, dated as of the Closing, in form reasonably acceptable
to Purchaser and his counsel.
(h) The Company's transfer agent has agreed to act in accordance with
appropriate irrevocable instructions.
(i) The Company shall have entered into a Board Advisory Agreement
with Purchaser in the form attached hereto as Exhibit B.
(j) The key management shareholders of the Company shall enter into a
Voting Agreement with Purchaser in the form attached hereto as
Exhibit C.
ARTICLE VIII
GOVERNING LAW: MISCELLANEOUS
8.1 Governing Law: Jurisdiction. This Agreement shall be governed by
and construed in accordance with the laws of the State of Delaware applicable to
contracts made and to be performed in the State of Delaware. The parties hereto
irrevocably consent to the jurisdiction of the United States federal courts
located in the State of Delaware and the state courts located in the County of
New Castle in the State of Delaware in any suit or proceeding based on or
arising under this Agreement or the transactions contemplated hereby and
irrevocably agree that all claims in respect of such suit or proceeding may be
determined in such courts. The
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Company irrevocably waives the defense of an inconvenient forum to the
maintenance of such suit or proceeding. The parties hereto agree that a final
non-appealable judgment in any such suit or proceeding shall be conclusive and
may be enforced in other jurisdictions by suit on such judgment or in any other
lawful manner.
8.2 Counterparts. This Agreement may be executed in counterparts,
including, without limitation, by facsimile transmission, all of which
counterparts shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each party and delivered to the
other party. In the event any signature page is delivered by facsimile
transmission, the party using such means of delivery shall cause additional
original executed signature pages to be delivered to the other parties.
8.3 Headings. The headings of this Agreement are for convenience of
reference and shall not form part of, or affect the interpretation of, this
Agreement.
8.4 Severability. If any provision of this Agreement shall be invalid
or unenforceable in any jurisdiction, such invalidity or unenforceability shall
not affect the validity or enforceability of the remainder of this Agreement or
the validity or enforceability of this Agreement in any other jurisdiction.
8.5 Entire Agreement: Amendments. This Agreement and the instruments
referenced herein contain the entire understanding of the parties with respect
to the matters covered herein and therein and, except as specifically set forth
herein or therein, neither the Company nor Purchaser makes any representation,
warranty, covenant or undertaking with respect to such matters. No provision of
this Agreement may be waived other than by an instrument in writing signed by
the party to be charged with enforcement and no provision of this Agreement may
be amended other than by an instrument in writing signed by the Company and
Purchaser.
8.6 Notice. Any notice herein required or permitted to be given shall
be in writing and may be personally served or delivered by courier or by
facsimile-machine confirmed telecopy, and shall be deemed delivered at the time
and date of receipt (which shall include telephone line facsimile transmission).
The addresses for such communications shall be:
If to the Company:
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Asche Transportation Services, Inc.
10214 N. Mt. Vernon Road
Shannon, Illinois 61078
Attention: Leon M. Monachos, Chief Financial Officer
Facsimile No.: (815) 864-2646
with a copy to:
Sachnoff & Weaver, Ltd.
30 South Wacker Drive
Suite 2900
Chicago, Illinois 60606
Attn: Joel R. Schaider, Esquire
Facsimile No.: (312) 207-6400
If to Purchaser:
James A. Jalovec
c/o J. A. J. Investments, Ltd.
7170 South Woelfel Road
Franklin, Wisconsin 53132
Facsimile No.: (414) 525-9716
with a copy to:
James E. Baker, Jr., Esquire
Baxter, Baker, Sidle & Conn, P.A.
120 E. Baltimore Street, Suite 2100
Baltimore, Maryland 21201
Facsimile No.: (410) 230-3801
Each party shall provide notice to the other parties of any change in
address.
8.7 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties and their successors and assigns. Neither
the Company nor Purchaser shall assign this Agreement or any rights or
obligations hereunder without any prior written consent of the other except as
otherwise provided in Section 5.3.
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8.8 Third Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective permitted successors and
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other person.
8.9 Survival. The representations and warranties of the Company and
the agreements and covenants set forth in Articles III, IV, V and VIII shall
survive the closing hereunder notwithstanding any due diligence investigation
conducted by or on behalf of Purchaser. For a period of one (1) year from the
date of the occurrence of the applicable breach, the Company agrees to indemnify
and hold harmless Purchaser and each of Purchaser's agents and affiliates for
loss or damage arising as a result of or related to any breach by the Company of
any of its representations or covenants set forth herein, including advancement
of expenses as they are incurred.
8.10 Public Filings. Immediately following execution of this
Agreement, the Company shall issue a press release with respect to the
transactions contemplated hereby. The Company and Purchaser shall have the right
to approve before issuance of the foregoing press release, SEC or other filings,
or any other public statements, with respect to the purchase of the Common
Shares; provided, however, that the Company shall be entitled, without the prior
approval of Purchaser, to make any press release or SEC, NASDAQ, NASD or
exchange filings with respect to such transactions as is required by applicable
law and regulations (although Purchaser shall (to the extent time permits) be
consulted by the Company in connection with any such press release prior to its
release and shall be provided with a copy thereof.
8.11 Further Assurances. Each party shall do and perform, or cause to
be done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
the other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
8.12 Remedies. No provision of this Agreement providing for any remedy
to Purchaser shall limit any remedy which would otherwise be available to
Purchaser at law or in equity. Nothing in this Agreement shall limit any rights
Purchaser may have with any applicable federal or state securities laws with
respect to the investment contemplated hereby.
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8.13 No Strict Construction. The language used in this Agreement will
be deemed to be the language chosen by the parties to express their mutual
intent, and no rules of strict construction will be applied against any party.
IN WITNESS WHEREOF, the undersigned Purchaser and the Company have caused this
Agreement to be duly executed under seal as of the date first above written.
/s/ James A. Jalovec (SEAL)
- ------------------------------------
James A. Jalovec
ADDRESS: c/o J. A. J. Investments, Ltd.
7170 South Woelfel Road
Franklin, Wisconsin 53132
AGGREGATE NUMBER OF COMMON SHARES: 750,000
COMPANY:
ASCHE TRANSPORTATION SERVICES, INC.
By: /s/ Leon M. Monachos (SEAL)
--------------------------------------------------
Leon M. Monachos, Chief Financial Officer
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EXHIBIT A
to Securities Purchase Agreement
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement"), is made as of
July 9, 1999, by and between Asche Transportation Services, Inc., a Delaware
corporation (the "Company"), with headquarters located at 10214 N. Mt. Vernon
Road, Shannon, Illinois 61078, and the undersigned (the "Purchaser").
RECITALS
A. In connection with the Securities Purchase Agreement of even date
herewith by and between the Company and Purchaser (the "Securities Purchase
Agreement"), the Company has agreed, upon the terms and subject to the
conditions contained therein, to issue and sell to Purchaser 750,000 shares of
the Company's Common Stock, par value $.0001 per share (the "Common Stock"). The
shares of Common Stock being purchased under the Securities Purchase Agreement
are referred to herein as the "Common Shares".
B. To induce Purchaser to execute and deliver the Securities Purchase
Agreement, the Company has agreed to provide certain registration rights under
the Securities Act of 1933, as amended, and the rules and regulations
thereunder, or any similar successor statute (collectively, the "Securities
Act"), and applicable state securities laws.
AGREEMENTS
NOW THEREFORE, in consideration of the premises and the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company and
Purchaser hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. As used in this Agreement, the following terms
shall have the following meanings:
(a) "Purchaser" means Purchaser and, subject to the provisions of
Section 5.3 of the Securities Purchase Agreement, any
transferees or assignees
<PAGE> 29
who agree to become bound by the provisions of this Agreement
in accordance with Article IX hereof.
(b) "register," "registered," and "registration" refer to a
registration effected by preparing and filing a Registration
Statement or Statements in compliance with the Securities Act
and pursuant to Rule 415 under the Securities Act or any
successor rule providing for offering securities on a
continuous basis ("Rule 415"), and the declaration or ordering
of effectiveness of such Registration Statement by the United
States Securities and Exchange Commission (the "SEC").
(c) "Registrable Securities" means the Common Shares and any
shares of capital stock issued as a dividend or other
distribution with respect to, or in exchange for or in
replacement of, the Common Shares.
(d) "Registration Statement" means a registration statement of the
Company under the Securities Act.
1.2 Capitalized Terms. Capitalized terms used herein and not
otherwise defined herein shall have the respective meanings set forth in the
Securities Purchase Agreement.
ARTICLE II
REGISTRATION
2.1 Mandatory Registration. The Company shall prepare, and, on or prior
to thirty (30) days after the date of the Closing (the "Filing Date"), file with
the SEC a Registration Statement on Form S-3 (or, if Form S-3 is not then
available, on such form of Registration Statement as is then available to effect
a registration of all of the Registrable Securities, subject to the consent of
Purchaser) covering the resale of all of the Registrable Securities. The
Registration Statement (and each amendment or supplement thereto, and each
request for acceleration of effectiveness thereof) shall be provided to (and
subject to the approval of (which approval shall not be unreasonably withheld or
denied)) Purchaser and his counsel prior to its filing or other submission.
2.2 Payments by the Company. The Company shall use its best efforts to
cause the Registration Statement to become effective as soon as practicable, but
in
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no event later than the ninetieth (90th) day following the date of the Closing
(the "Registration Deadline").
2.3 Piggy-Back Registrations. If at any time prior to the expiration of
the Registration Period (as hereinafter defined) the Company shall file with the
SEC a Registration Statement relating to an offering for its own account or the
account of others under the Securities Act of any of its equity securities
(other than on Form S-4 or Form S-8 or their then equivalents relating to equity
securities to be issued solely in connection with any acquisition of any entity
or business or equity securities issuable in connection with stock option or
other employee benefit plans), then if the Registrable Securities have not been
registered pursuant to Section 2.1, the Company shall send to Purchaser, who has
a right to have Registrable Securities covered by a Registration Statement
pursuant to this Agreement written notice of such determination and, if within
fifteen (15) days after the date of such notice, Purchaser shall so request in
writing, the Company shall include in such Registration Statement all or any
part of the Registrable Securities Purchaser requests to be registered, except
that if, in connection with any underwritten public offering for the account of
the Company the managing underwriters thereof shall impose a limitation on the
number of shares of Common Stock which may be included in the Registration
Statement because, in such underwriter(s)' judgment, marketing or other factors
dictate such limitation is necessary to facilitate public distribution, then the
Company shall be obligated to include in such Registration Statement only such
limited portion of the Registrable Securities with respect to which Purchaser
has requested inclusion hereunder as the underwriter shall permit. No right to
registration of Registrable Securities under this Section 2.3 shall be construed
to limit any registration required under Section 2.1 or 3.2 hereof.
2.4 Eligibility for Form S-3. The Company represents and warrants that
it meets the requirements for the use of Form S-3 for registration of the
re-sale by Purchaser of the Registrable Securities. The Company covenants and
agrees that throughout the Registration Period (as herein defined), the Company
shall continue to be eligible to use Form S-3 for registration of such re-sale
and the Company shall file all reports required to be filed by the Company with
the SEC in a timely manner so as to maintain such eligibility for the use of
Form S-3.
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ARTICLE III
OBLIGATIONS OF THE COMPANY
In connection with the registration of the Registrable Securities, the
Company shall have the following obligations:
3.1 The Company shall prepare promptly and file with the SEC not later
than the Filing Date the Registration Statement required by Section 2.1, and
shall use its best efforts to cause such Registration Statement relating to
Registrable Securities to become effective as soon as practicable after such
filing, and keep the Registration Statement effective pursuant to Rule 415 at
all times until such date as is the earlier of (i) the date on which all of the
Registrable Securities have been sold (and no further Registrable Securities may
be issued in the future) and (ii) the date on which all of the Registrable
Securities (in the reasonable opinion of counsel to Purchaser) may be
immediately sold to the public without registration and without restriction as
to the number with Registrable Securities to be sold, whether pursuant to Rule
144 or otherwise (the "Registration Period"). The Registration Statement
(including any amendments or supplements thereto and prospectuses contained
therein and all documents incorporated by reference therein) shall not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein, or necessary to make the statements therein not
misleading.
3.2 The Company shall prepare and file with the SEC such amendments
(including post- effective amendments) and supplements to a Registration
Statement and the prospectus used in connection with the Registration Statement
as may be necessary to keep the Registration Statement effective at all times
during the Registration Period, and, during such period, comply with the
provisions of the Securities Act with respect to the disposition of all
Registrable Securities of the Company covered by the Registration Statement
until the termination of the Registration Period or, if earlier, such time as
all of such Registrable Securities have been disposed of in accordance with the
intended methods of disposition by the seller or sellers thereof as set forth in
the Registration Statement. In the event the number of shares available under a
Registration Statement filed pursuant to this Agreement is insufficient to cover
all of the Registerable Securities issued pursuant to the Securities Purchase
Agreement, the Company shall amend the Registration Statement or file a new
Registration Statement (on the short form available therefor, if applicable), or
both, so as to cover all of the Registerable Securities, in each case, as soon
as practicable, but in any event within twenty (20) business days after the
necessity therefore arises. The Company shall use its best efforts to cause such
amendment and/or new Registration Statement to become effective as soon as
practicable following the filing thereof.
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3.3 The Company shall furnish to Purchaser whose Registrable Securities
are included in the Registration Statement and its legal counsel (a) promptly
after the same is prepared and publicly distributed, filed with the SEC, or
received by the Company, one copy of the Registration Statement and any
amendment thereto, each preliminary prospectus and prospectus and each amendment
or supplement thereto, and, in the case of the Registration Statement referred
to in Section 2.1, each letter written by or on behalf of the Company to the SEC
or the staff of the SEC, and each item of correspondence from the SEC or the
staff of the SEC, in each case relating to such Registration Statement (other
than any portion, if any, thereof which contains information for which the
Company has sought confidential treatment), and (b) such number of copies of a
prospectus, including a preliminary prospectus, and all amendments and
supplements thereto and such other documents as Purchaser may reasonably request
in order to facilitate the disposition of the Registrable Securities owned (or
to be owned) by Purchaser.
3.4 The Company shall use reasonable efforts to (a) register and
qualify the Registrable Securities covered by the Registration Statement under
securities laws of such jurisdictions in the United States as Purchaser who
holds (or has the right to hold) Registrable Securities being offered reasonably
requests, (b) prepare and file in those jurisdictions such amendments (including
post-effective amendments) and supplements to such registrations and
qualifications as may be necessary to maintain the effectiveness thereof during
the Registration Period, (c) take such other actions as may be necessary to
maintain such registrations and qualifications in effect at all times during the
Registration Period, and (d) take all other actions reasonably necessary or
advisable to qualify the Registrable Securities for sale in such jurisdictions;
provided, however, that the Company shall not be required in connection
therewith or as a condition thereto to (i) qualify to do business in any
jurisdiction where it would not otherwise be required to qualify but for this
Section 3.4, (ii) subject itself to general taxation in any such jurisdiction,
(iii) file a general consent to service of process in any such jurisdiction,
(iv) provide any undertakings that cause the Company material expense or burden,
or (v) make any change in its charter or by-laws, which in each case the board
of directors of the Company determines to be contrary to the best interests of
the Company and its stockholders.
3.5 As soon as practicable after becoming aware of such event, the
Company shall notify (by telephone and also by facsimile and reputable overnight
courier) Purchaser of the happening of any event, of which the Company has
knowledge, as a result of which the prospectus included in the Registration
Statement, as then in effect, includes an untrue statement of a material fact or
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<PAGE> 33
omission to state a material fact required to be stated therein or necessary to
make the statements therein not misleading, and use its best efforts promptly
(but in any event within five (5) days) to prepare a supplement or amendment to
the Registration Statement to correct such untrue statement or omission, and
deliver such number of copies of such supplement or amendment to Purchaser as
Purchaser may reasonably request.
3.6 The Company shall use its best efforts to prevent the issuance of
any stop order or other suspension of effectiveness of a Registration Statement,
and, if such an order is issued, to obtain the withdrawal of such order at the
earliest practicable time and to notify (by telephone and also by facsimile and
reputable overnight carrier) Purchaser who holds Registrable Securities being
sold (or, in the event of an underwritten offering, the managing underwriters)
of the issuance of such order and the resolution thereof.
3.7 The Company shall permit Purchaser's counsel to review the
Registration Statement and all amendments and supplements thereto (as well as
all requests for acceleration or effectiveness thereof) within a reasonable
period of time prior to their filing with the SEC, and not file any document in
a form to which such counsel reasonably objects and will not request
acceleration of the Registration Statement without prior notice to such counsel.
The sections of the Registration Statement covering information with respect to
Purchaser, Purchaser's beneficial ownership of securities of the Company or
Purchaser's intended method of disposition of the Registerable Securities shall
conform to the information provided to the Company by Purchaser.
3.8 The Company shall hold in confidence and not make any disclosure of
information concerning Purchaser provided to the Company unless (a) disclosure
of such information is necessary to comply with federal or state securities
laws, (b) the disclosure of such information is necessary to avoid or correct a
misstatement or omission in any Registration Statement, (c) the release of such
information is ordered pursuant to a subpoena or other order from a court or
governmental body of competent jurisdiction or is otherwise required by
applicable law or legal process, (d) such information has been made generally
available to the public other than by disclosure in violation of this or any
other agreement (to the knowledge of the Company), or (e) Purchaser consents to
the form and content of any such disclosure. The Company agrees that it shall,
upon learning that disclosure of such information concerning Purchaser is sought
in or by a court or governmental body of competent jurisdiction or through other
means, give prompt notice to Purchaser prior to making such disclosure, and
allow Purchaser, at its expense, to undertake
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<PAGE> 34
appropriate action to prevent disclosure of, or to obtain a protective order
for, such information.
3.9 For so long as Purchaser owns any of the Common Shares or three (3)
years from the Closing Date, whichever is sooner, the Company shall use
reasonable efforts to cause the listing and the continuation of listing of all
the Registrable Securities covered by the Registration Statement on the NASDAQ
National Market System and any other national securities exchange or quotation
system upon which the Common Stock is then listed or quoted.
3.10 The Company shall provide a transfer agent and registrar, which
may be a single entity, for the Registrable Securities not later than the
effective date of the Registration Statement.
3.11 The Company shall comply with all applicable laws related to a
Registration Statement and offering and sale of securities and all applicable
rules and regulations of governmental authorities in connection therewith
(including, without limitation, the Securities Act and the Securities Exchange
Act of 1934, as amended, and the rules and regulations promulgated by the
Commission).
3.12 The Company shall take all such other actions as Purchaser
reasonably requests in order to expedite or facilitate the disposition of such
Registrable Securities.
ARTICLE IV
OBLIGATIONS OF PURCHASER
In connection with the registration of the Registrable Securities,
Purchaser shall have the following obligations:
4.1 Purchaser shall furnish to the Company such information regarding
itself, the Registrable Securities held by it and the intended method of
disposition of the Registrable Securities held by it as shall be reasonably
required to effect the registration of such Registrable Securities and shall
execute such documents in connection with such registration as the Company may
reasonably request. At least ten (10) business days prior to the first
anticipated filing date of the Registration Statement, the Company shall notify
Purchaser of the information the Company requires from Purchaser.
4.2 Purchaser, by such Purchaser's acceptance of the Registrable
Securities, agrees to cooperate with the Company as reasonably requested by the
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<PAGE> 35
Company in connection with the preparation and filing of the Registration
Statement hereunder, unless Purchaser has notified the Company in writing of
such Purchaser's election to exclude all of Purchaser's Registrable Securities
from the Registration Statement.
4.3 Purchaser understands that the Securities Act may require delivery
of a prospectus relating thereto in connection with any sale thereof pursuant to
such Registration Statement, and Purchaser shall comply with the applicable
prospectus delivery requirements of the Securities Act in connection with any
such sale.
4.4 Purchaser agrees that, upon receipt of written notice from the
Company of the happening of any event of the kind described in Section 3.5,
Purchaser will immediately discontinue disposition of Registrable Securities
pursuant to the Registration Statement covering such Registrable Securities
until Purchaser's receipt of the copies of the supplemented or amended
prospectus contemplated by Section 3.5 and, if so directed by the Company,
Purchaser shall deliver to the Company (at the expense of the Company) or
destroy (and deliver to the Company a certificate of destruction) all copies in
Purchaser's possession (other than a limited number of permanent file copies),
of the prospectus covering such Registrable Securities current at the time of
receipt of such notice.
ARTICLE V
EXPENSES OF REGISTRATION
All expenses, other than underwriting discounts and commissions,
incurred in connection with registrations, filings or qualifications pursuant to
Articles II and III, including, without limitation, all registration, listing
and qualification fees, printers and accounting fees, the fees and disbursements
of counsel for the Company, and the reasonable fees and disbursements of counsel
of Purchaser pursuant hereof shall be borne by the Company.
ARTICLE VI
INDEMNIFICATION
In the event any Registrable Securities are included in a Registration
Statement under this Agreement:
6.1 To the extent permitted by law, the Company will indemnify, hold
harmless and defend (a) Purchaser and (b) agents and representatives of
Purchaser within the meaning of Section 15 of the Securities Act or Section 20
of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), if any,
(each,
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<PAGE> 36
an "Indemnified Person"), against any joint or several losses, claims, damages,
liabilities or expenses (collectively, together with actions, proceedings or
inquiries by any regulatory or self-regulatory organization, whether commenced
or threatened, in respect thereof, "Claims") to which any of them may become
subject insofar as such Claims arise out of or are based upon: (i) any untrue
statement or alleged untrue statement of a material fact in a Registration
Statement or the omission or alleged omission to state therein a material fact
required to be stated or necessary to make the statements therein not
misleading, (ii) any untrue statement or alleged untrue statement of a material
fact contained in any preliminary prospectus if used prior to the effective date
of such Registration Statement, or contained in the final prospectus (as amended
or supplemented, if the Company files any amendment thereof or supplement
thereto with the SEC) or the omission or alleged omission to state therein any
material fact necessary to make the statements made therein, in light of the
circumstances under which the statements therein were made, not misleading, or
(iii) any violation or alleged violation by the Company of the Securities Act,
the Exchange Act, any other law, including, without limitation, any state
securities law, or any rule or regulation thereunder relating to the offer or
sale of the Registrable Securities (the matters in the foregoing clauses (i)
through (iii) being, collectively, "Violations"). Subject to the restrictions
set forth in Section 6.3 with respect to the number of legal counsel, the
Company shall reimburse Purchaser and each such other Indemnified Person,
promptly as such expenses are incurred and are due and payable, for any
reasonable legal fees or other reasonable expenses incurred by them in
connection with investigating or defending any such Claim. Notwithstanding
anything to the contrary contained herein, the indemnification agreement
contained in this Section 6.1: (x) shall not apply to an Indemnified Person with
respect to a Claim arising out of or based upon a Violation which occurs in
reliance upon and in conformity with information furnished in writing to the
Company by such Indemnified Person expressly for use in the Registration
Statement or any such amendment thereof or supplement thereto; (y) shall not
apply to amounts paid in settlement of any Claim if such settlement is effected
without the prior written consent of the Company, which consent shall not be
unreasonably withheld; and (z) with respect to any preliminary prospectus, shall
not inure to the benefit of any Indemnified Person if the untrue statement or
omission of material fact contained in the preliminary prospectus was corrected
on a timely basis in the prospectus, as then amended or supplemented, if such
corrected prospectus was timely made available by the Company pursuant to
Section 3.3 hereof, and the Indemnified Person was promptly advised in writing
not to use the incorrect prospectus prior to the use giving rise to a Violation
and such Indemnified Person, notwithstanding such advice, used it. Such
indemnity shall remain in full force and effect regardless of any investigation
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made by or on behalf of the Indemnified Person and shall survive the transfer of
the Registrable Securities by Purchaser pursuant to Article IX.
6.2 In connection with any Registration Statement in which Purchaser is
participating, Purchaser agrees to indemnify, hold harmless and defend, to the
same extent and in the same manner set forth in Section 6. 1, the Company, each
of its directors, each of its officers who signs the Registration Statement, its
employees, agents and persons, if any, who control the Company within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act
(such an "Indemnified Party"), against any Claim to which any of them may become
subject, under the Securities Act, the Exchange Act or otherwise, insofar as
such Claim arises out of or is based upon any Violation, in each case to the
extent (and only to the extent) that such Violation occurs in reliance upon and
in conformity with written information furnished to the Company by Purchaser
expressly for use in connection with such Registration Statement; and subject to
Section 6.3 Purchaser will reimburse any legal or other expenses (promptly as
such expenses are incurred and are due and payable) reasonably incurred by them
in connection with investigating or defending any such Claim; provided, however,
that the indemnity agreement contained in this Section 6.2 shall not apply to
amounts paid in settlement of any Claim if such settlement is effected without
the prior written consent of Purchaser, which consent shall not be unreasonably
withheld; provided, further, however, that Purchaser shall be liable under this
Agreement (including this Section 6.2 and Article VII) for only that amount as
does not exceed the net proceeds actually received by Purchaser as a result of
the sale of Registrable Securities pursuant to such Registration Statement. Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of such Indemnified Party and shall survive the transfer of
the Registrable Securities by Purchaser pursuant to Article IX. Notwithstanding
anything to the contrary contained herein, the indemnification agreement
contained in this Section 6.2 with respect to any preliminary prospectus shall
not inure to the benefit of any Indemnified Party if the untrue statement or
omission of material fact contained in the preliminary prospectus was corrected
on a timely basis in the prospectus, as then amended or supplemented, and the
Indemnified Party failed to utilize such corrected prospectus.
6.3 Promptly after receipt by an Indemnified Person or Indemnified
Party under this Article VI of notice of the commencement of any action
(including any governmental action), such Indemnified Person or Indemnified
Party shall, if a Claim in respect thereof is to made against any indemnifying
party under this Article VI, deliver to the indemnifying party a written notice
of the commencement
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thereof, and the indemnifying party shall have the right to participate in, and,
to the extent the indemnifying party so desires, jointly with any other
indemnifying party similarly noticed, to assume control of the defense thereof
with counsel mutually satisfactory to the indemnifying party and the Indemnified
Person or the Indemnified Party, as the case may be; provided, however, that
such indemnifying party shall diligently pursue such defense and that such
indemnifying party shall not be entitled to assume such defense and an
Indemnified Person or Indemnified Party shall have the right to retain its own
counsel with the fees and expenses to be paid by the indemnifying party, if the
representation by such counsel of the Indemnified Person or Indemnified Party
and the indemnifying party would be inappropriate due to actual or potential
conflicts of interest between such Indemnified Person or Indemnified Party and
any other party represented by such counsel in such proceeding or the actual or
potential defendants in, or targets of, any such action include both the
Indemnified Person or the Indemnified Party and any such Indemnified Person or
Indemnified Party reasonably determines that there may be legal defenses
available to such Indemnified Person or Indemnified Party which are different
from or in addition to those available to such indemnifying party. The
indemnifying party shall pay for only one separate firm of legal counsel for the
Indemnified Persons or the Indemnified Parties, as applicable, and such legal
counsel shall be selected by Purchaser if Purchaser is entitled to
indemnification hereunder, or by the Company, if the Company is entitled to
indemnification hereunder, as applicable. The failure to deliver written notice
to the indemnifying party within a reasonable time of the commencement of any
such action shall not relieve such indemnifying party of any liability to the
Indemnified Person or Indemnified Party under this Article VI, except to the
extent that the indemnifying party is actually prejudiced in its ability to
defend such action. The indemnification required by this Article VI shall be
made by periodic payments of the amount thereof during the course of the
investigation or defense, as such expense, loss, damage or liability is incurred
and is due and payable.
ARTICLE VII
CONTRIBUTION
To the extent any indemnification by an indemnifying party is
prohibited or limited by law, the indemnifying party agrees to make the maximum
contribution with respect to any amounts for which it would otherwise be liable
under Article VI to the fullest extent permitted by law; provided, however, that
(i) no contribution shall be made under circumstances where the maker would not
have been liable for indemnification under the fault standards set forth in
Article VI, (ii) no person guilty of fraudulent misrepresentation (within the
meaning of Section
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11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation, and (iii) contribution
(together with any indemnification or other obligations under this Agreement)
by any seller of Registrable Securities shall be limited in amount to the net
amount of proceeds received by such seller from the sale of such Registrable
Securities.
ARTICLE VIII
REPORTS UNDER THE EXCHANGE ACT
With a view to making available to Purchaser the benefits of Rule 144
promulgated under the Securities Act or any other similar rule or regulation of
the SEC that may at any time permit Purchaser to sell securities of the Company
to the public without registration ("Rule 144"), the Company agrees, during the
Registration Period and for one year thereafter, to:
8.1 Make and keep public information available, as those terms are
understood and defined in Rule 144;
8.2 File with the SEC in a timely manner and make and keep available
all reports and other documents required of the Company under the Securities Act
and the Exchange Act so long as the Company remains subject to such requirements
(it being understood that nothing herein shall limit the Company's obligations
under Section 4.3 of the Securities Purchase Agreement) and the filing and
availability of such reports and other documents is required for the applicable
provisions of Rule 144; and
8.3 Furnish to Purchaser so long as Purchaser holds Registrable
Securities, promptly upon request, (i) a written statement by the Company that
it has complied with the reporting requirements of Rule 144, the Securities Act
and the Exchange Act, (ii) a copy of the most recent annual or quarterly report
of the Company and such other reports and documents so filed by the Company, and
(iii) such other information as may be reasonably requested to permit Purchaser
to sell such securities pursuant to Rule 144 without registration.
ARTICLE IX
ASSIGNMENT OF REGISTRATION RIGHTS
The rights of Purchaser hereunder, including the right to have the
Company register Registrable Securities pursuant to this Agreement, shall be
automatically assignable by Purchaser to any transferee of all or any portion of
the Registrable
12
<PAGE> 40
Securities if: (a) Purchaser agrees in writing with the transferee or assignee
to assign such rights, and a copy of such agreement is furnished to the Company
within a reasonable time after such assignment, (b) the Company is, within a
reasonable time after such transfer or assignment, furnished with written
notice of (i) the name and address of such transferee or assignee, and (ii) the
securities with respect to which such registration rights are being transferred
or assigned, (c) following such transfer or assignment, the further disposition
of such securities by the transferee or assignee is restricted under the
Securities Act or applicable state securities laws, (d) at or before the time
the Company receives the written notice contemplated by clause (ii) of this
sentence, the transferee or assignee agrees in writing for the benefit of the
Company to be bound by all of the provisions contained herein, and (e) such
transfer shall have been made in accordance with the applicable requirements of
the Securities Purchase Agreement including, but not limited to, Section 5.3
thereof.
ARTICLE X
AMENDMENT OF REGISTRATION RIGHTS
Provisions of this Agreement may be amended and the observance thereof
may be waived (either generally or in a particular instance and either
retroactively or prospectively), only with written consent of the Company and
Purchaser. Any amendment or waiver effected in accordance with this Article X
shall be binding upon Purchaser and the Company.
ARTICLE XI
MISCELLANEOUS
11.1 Subject to the provisions of Section 5.3 of the Securities
Purchase Agreement, a person or entity is deemed to be a holder of Registrable
Securities whenever such person or entity owns of record such Registrable
Securities. If the Company receives conflicting instructions, notices or
elections from two or more persons or entities with respect to the same
Registrable Securities, the Company shall act upon the basis of instructions,
notice or election received from the registered owner of such Registrable
Securities.
11.2 Any notices herein required or permitted to be given shall be in
writing and may be personally served or delivered by courier (including a
recognized overnight delivery service) or by confirmed telecopy, and shall be
deemed delivered at the time and date of receipt (which shall include telephone
line facsimile transmission). The addresses for such communications shall be:
13
<PAGE> 41
If to the Company:
Asche Transportation Services, Inc.
10214 N. Mt. Vernon Road
Shannon, Illinois 61078
Attention: Leon M. Monachos, Chief Financial Officer
Facsimile No.: (815) 864-2646
with a copy to:
Sachnoff & Weaver, Ltd.
30 South Wacker Drive
Suite 2900
Chicago, Illinois 60606
Attn: Joel R. Schaider, Esquire
Facsimile No.: (312) 207-6400
If to Purchaser:
James A. Jalovec
c/o J. A. J. Investments, Ltd.
7170 South Woelfel Road
Franklin, Wisconsin 53132
Facsimile No.: (414) 525-9716
with a copy to:
James E. Baker, Jr., Esquire
Baxter, Baker, Sidle & Conn, P.A.
120 E. Baltimore Street, Suite 2100
Baltimore, Maryland 21201
Facsimile no.: (410) 230-3801
or at such other address as each such party furnishes by notice given in
accordance with this Section 11.2.
11.3 Failure of any party to exercise any right or remedy under this
Agreement or otherwise, or delay by a party in exercising such right or remedy,
shall not operate as a waiver thereof.
14
<PAGE> 42
11.4 This Agreement shall be governed by and construed in accordance
with the laws of the State of Delaware applicable to contracts made and to be
performed in the State of Delaware. The Company irrevocably consents to the
jurisdiction of the federal courts located in the state of Delaware and the
state courts of the State of Delaware located in the County of New Castle in the
State of Delaware in any suit or proceeding based on or arising under this
Agreement and irrevocably agrees that all claims in respect of such suit or
proceeding may be determined in such courts. The Company irrevocably waives the
defense of an inconvenient forum to the maintenance of such suit or proceeding.
The parties hereto agree that a final non-appealable judgment, in any such suit
or proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on such judgment or in any other lawful manner.
11.5 This Agreement and the Securities Purchase Agreement (including
all schedules and exhibits thereto and all certificates and opinions required
thereby) constitute the entire agreement among the parties hereto with respect
to the subject matter hereof and thereof. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein and
therein. This Agreement and the Securities Purchase Agreement supersede all
prior agreements and understandings among the parties hereto with respect to the
subject matter hereof and thereof.
11.6 Subject to the requirements of Article IX hereof, this Agreement
shall inure to the benefit of and be binding upon the successors and permitted
assigns of each of the parties hereto.
11.7 The headings in this Agreement are for convenience of reference
only and shall not limit or otherwise affect the meaning hereof.
11.8 This Agreement may be executed in counterparts, each of which
shall be deemed an original but all of which shall constitute one and the same
agreement. This Agreement, once executed by a party, may be delivered to the
other party hereto, by facsimile transmission of a copy of this Agreement
bearing the signature of the party so delivering this Agreement.
11.9 Each party shall do and perform, or cause to be done and
performed, all such further acts and things, and shall execute and deliver all
such other agreements, certificates, instruments and documents, as the other
party may reasonably request in order to carry out the intent and accomplish the
purposes of this Agreement and the consummation of the transactions contemplated
hereby.
15
<PAGE> 43
11.10 If any provision of this Agreement shall be invalid or
unenforceable, such invalidity or unenforceability shall not affect the validity
or enforceability of the remainder of this Agreement.
11.11 The language used in this Agreement will be deemed to be the
language chosen by the parties to express their mutual intent, and no rules of
strict construction will be applied against any party.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed under seal as of the date first above written.
COMPANY:
ASCHE TRANSPORTATION SERVICES, INC.
By: /s/ Leon M. Monachos (SEAL)
----------------------------------------
Name: Leon M. Monachos
Title: Chief Financial Officer
PURCHASER:
/s/ James A. Jalovec (SEAL)
- -------------------------------------------
James A. Jalovec
16
<PAGE> 44
EXHIBIT B
to Securities Purchase Agreement
BOARD ADVISORY AGREEMENT
THIS BOARD ADVISORY AGREEMENT (this "Agreement"), is made as of this
9th day of July, 1999, by and between Asche Transportation Services, Inc., a
Delaware corporation (the "Company"), and James A. Jalovec ("Jalovec").
RECITALS
A. In connection with the Securities Purchase Agreement dated of even
date herewith by and between the Company and Jalovec (the "Securities Purchase
Agreement"), the Company has agreed, upon the terms and subject to the
conditions contained therein, to issue and sell to Jalovec 750,000 shares of the
Company's Common Stock, par value $.0001 per share (the "Common Stock"). The
shares of Common Stock being purchased under the Securities Purchase Agreement
are referred to herein as the "Common Shares".
B. To induce Jalovec to execute and deliver the Securities Purchase
Agreement, the Company has agreed to engage Jalovec as an advisor to the Board
of Directors of the Company, all in accordance with the terms and conditions
contained herein.
AGREEMENTS
NOW THEREFORE, in consideration of the premises and the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company and
Jalovec hereby agree as follows:
1. Engagement. The Company hereby engages Jalovec to serve as a
non-voting advisor to the Board of Directors of the Company. Jalovec shall be
invited to all personal and telephonic meetings of the Board of Directors and
shall be entitled to participate therein. Jalovec shall be advised of the time
and place of all such meetings in the same manner as to all directors of the
Company.
2. Term. The term of this Agreement shall commence on the date hereof
and shall continue as long as Jalovec has the right to designate one additional
member of the Board of Directors (in addition to the member designated
<PAGE> 45
pursuant to Section 4.7 of the Securities Purchase Agreement) in accordance with
the provisions of the Voting Agreement of even date herewith entered into by and
among Jalovec and certain management stockholders of Company. In any event, the
term of this Agreement shall end no later than June 30, 2004. In the event
Jalovec serves on the Board of Directors, he shall continue to be entitled to
the compensation described in Section 3 below as well as any other consideration
payable to non-employee members of the Board of Directors.
3. Consideration. In consideration for the advisory services to be
provided hereunder, the Company shall pay to Jalovec an annual advisory fee of
$30,000, payable in equal monthly installments on the first day of each calendar
month commencing on August 1, 1999. In addition, the Company shall pay all
out-of-pocket expenses incurred by Jalovec and any director-designee of Jalovec
to travel to and review any operations of the Company.
4. Notices. Any notices herein required or permitted to be given shall
be in writing and may be personally served or delivered by courier (including a
recognized overnight delivery service) or by confirmed telecopy, and shall be
deemed delivered at the time and date of receipt (which shall include telephone
line facsimile transmission). The addresses for such communications shall be:
If to the Company:
Asche Transportation Services, Inc.
10214 N. Mt. Vernon Road
Shannon, Illinois 61078
Attention: Leon M. Monachos, Chief Financial Officer
Facsimile No.: (815) 864-2646
with a copy to:
Sachnoff & Weaver, Ltd.
30 South Wacker Drive
Suite 2900
Chicago, Illinois 60606
Attn: Joel R. Schaider, Esquire
Facsimile No.: (312) 207-6400
2
<PAGE> 46
If to Jalovec:
James A. Jalovec
c/o J. A. J. Investments, Ltd.
7170 South Woelfel Road
Franklin, Wisconsin 53132
Facsimile No.: (414) 525-9716
with a copy to:
James E. Baker, Jr., Esquire
Baxter, Baker, Sidle & Conn, P.A.
120 E. Baltimore Street, Suite 2100
Baltimore, Maryland 21201
Facsimile No.: (410) 230-3801
or at such other address as each such party furnishes by notice given in
accordance with this Section 4.
5. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware applicable to contracts made
and to be performed in the State of Delaware.
6. Successors. This Agreement shall inure to the benefit of and be
binding upon the successors and permitted assigns of each of the parties hereto.
7. Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original but all of which shall constitute one and
the same agreement. This Agreement, once executed by a party, may be delivered
to the other party hereto, by facsimile transmission of a copy of this Agreement
bearing the signature of the party so delivering this Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed under seal as of the date first above written.
COMPANY:
ASCHE TRANSPORTATION SERVICES, INC.
By: /s/ Leon M. Monachos (SEAL)
---------------------------------------
Name: Leon M. Monachos
Title: Chief Financial Officer
JALOVEC:
/s/ James A. Jalovec (SEAL)
- ------------------------------------------
James A. Jalovec
3
<PAGE> 47
EXHIBIT C
to Securities Purchase Agreement
VOTING AGREEMENT
THIS VOTING AGREEMENT is made and entered into as of July 9, 1999 (this
"Agreement") between James A. Jalovec ("Purchaser"), and Larry L. Asche, Diane
L. Asche, Kevin M. Clark, Richard S. Baugh and Gary I. Goldberg (the "Principal
Stockholders").
RECITALS
WHEREAS, on July 9, 1999, Purchaser and Asche Transportation Services,
Inc., a Delaware corporation (the "Company"), entered into a Securities Purchase
Agreement (the "Purchase Agreement"), pursuant to which Purchaser intends to
acquire 750,000 shares of the Company's Common Stock, par value $0.0001 per
share (the "Common Stock"); and
WHEREAS, as an inducement and a condition to consummating the Purchase
Agreement, the Purchaser has required that the Principal Stockholders agree, and
the Principal Stockholders have agreed, to enter into this Agreement.
NOW, THEREFORE, in consideration of the covenants set forth herein, and
for other good and valuable consideration, intending to be legally bound hereby,
the parties agree as follows:
1. Definitions. For purposes of this Agreement:
(a) "Beneficially Own" or "Beneficial Ownership" with respect to any
securities shall mean having "beneficial ownership" of such securities (as
determined pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act")), including pursuant to any agreement, arrangement
or understanding, whether or not in writing. Without duplicative counting of the
same securities by the same holder, securities Beneficially Owned by a Person
shall include securities Beneficially Owned by all other Persons with whom such
Person would constitute a "group" within the meaning of Section 13(d)(3) of the
Exchange Act.
<PAGE> 48
(b) "Person" shall mean an individual, corporation, partnership,
limited liability company, joint venture, association, trust, unincorporated
organization or other entity.
2. Composition and Nomination of Board of Directors.
2.1 Board Composition Requirements. The Company and Purchaser hereby
acknowledge and agree that Purchaser has been granted the right to designate one
member of the Board of Directors pursuant to Section 4.7 of the Securities
Purchase Agreement. The parties hereto intend that Jalovec shall have the right
to designate, for as long as he Beneficially Owns at least 50% of the number of
shares of Common Stock he will Beneficially Own after his purchase of the
750,000 shares pursuant to the Securities Purchase Agreement, two members of the
Board of Directors, including the director designated by Purchaser under Section
4.7 of the Securities Purchase Agreement (the "Board Composition Requirement").
At any meeting of stockholders at which directors are to be elected and with
respect to any written consent of stockholders of the Company in lieu of meeting
relating to the election of directors, the Principal Stockholders shall vote, or
execute and deliver a written consent with respect to, all shares of Common
Stock and any other voting securities of the Company held of record or
Beneficially Owned in favor of a slate of directors meeting the Board
Composition Requirement and nominated as contemplated by Section 3.2 hereof and
against any slate of directors that does not satisfy the Board Composition
Requirements or the nomination procedures contemplated by Section 3.2.
2.2 Nominating Procedures. In connection with each meeting of
stockholders of the Company at which directors of the Company are to be elected,
the parties hereto shall cause their designees on the Board to nominate a slate
of nominees for director which meets the Board Composition Requirements for so
long as this Agreement remains in effect.
The nominees so selected by the Board of Directors shall be
presented and voted upon at the meeting of stockholders as a slate.
2.3 Removal of Directors. Except as otherwise provided in this
Section 2.3, the Principal Stockholders agree not to take any action to remove,
with or without cause, any director of the Company designated by Purchaser.
Notwithstanding the foregoing, Purchaser shall at all times have the right to
remove and to cause the Principal Stockholders to remove, with or without cause,
any or all of the directors designated by Purchaser.
2
<PAGE> 49
2.4 Vacancies. If a vacancy is created on the Board of Directors by
reason of the death, disability, removal or resignation of any one of the
directors designated by Purchaser, Purchaser shall designate a replacement
director. In the event Purchaser shall fail to designate such replacement within
thirty (30) days from the date such vacancy was created, the Principal
Stockholders shall have the right to designate a replacement director, or if
they so choose, to allow the position to remain vacant.
3. Action to Reconstitute Board of Directors. If at any time and for
any reason the Board of Directors shall fail to satisfy the Board Composition
Requirements, then, at the written request of Purchaser, the Principal
Stockholders shall, to the extent it has power to do so, cause to be called a
special meeting of the stockholders to be held for the purpose of taking
whatever action may be necessary to ensure that the Board is constituted so as
to satisfy the Board Composition Requirements as promptly as practicable.
4. Certificate of Incorporation and Bylaws. The Principal Stockholders
shall vote all shares of Common Stock and any other voting securities of the
Company then held of record or Beneficially Owned and shall take all other
actions necessary and appropriate (including, without limitation, removing any
director) to ensure that the Company's Certificate of Incorporation and Bylaws
do not at any time conflict with the provisions of this Agreement.
5. By-Law Amendments. The Principal Stockholders shall vote, or execute
and deliver a written consent with respect to, all shares of Common Stock and
any other voting securities of the Company held of record or Beneficially Owned
in favor of an amendment to the By-Laws of the Company to increase the number of
directors to no fewer than eleven and no greater than fifteen. The Principal
Stockholders shall not vote in favor of any further amendments to the By-Laws
increasing the number of directors.
6. Miscellaneous.
6.1 Modification and Waiver. No amendment or modification of the
terms or provisions of this Agreement shall be binding unless the same shall be
in writing and duly executed by the parties hereto. No waiver of any of the
provisions of this Agreement shall be deemed to or shall constitute a waiver of
any other provisions hereof. No delay on the part of any party in exercising any
right, power or privilege hereunder shall operate as a waiver thereof.
3
<PAGE> 50
6.2 Entire Agreement. Except as set forth in the Securities Purchase
Agreement, this Agreement sets forth the entire understanding of the parties
with respect to the subject matter hereof. Any previous agreement or
understandings between the parties regarding the subject matter hereof are
merged into and superseded by this Agreement.
6.3 Severability. In case any provision in this Agreement shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
6.4 No Implied Rights. Nothing herein, express or implied, is
intended to or shall be construed to confer upon or give to any person, firm,
corporation or legal entity, other than the parties hereto, any interest,
rights, remedies or other benefits with respect to or in connection with any
agreement or provision contained herein or contemplated hereby.
6.5 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware.
6.6 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same instrument.
6.7 Successors and Assigns. The provisions hereof shall inure to the
benefit of, and be binding upon, the successors, assigns, heirs, executors and
administrators of the parties hereto.
6.8 Notices. All notices and other communications under this
Agreement shall be in writing and may be personally served or delivered by
courier (including a recognized overnight delivery service) or by confirmed
telecopy, and shall be deemed delivered at the time and date of receipt (which
shall include telephone line facsimile transmission). The addresses of such
communications shall be:
If to Purchaser, to:
James A. Jalovec
c/o J. A. J. Investments, Ltd.
7170 South Woelfel Road
Franklin, Wisconsin 53132
Facsimile No.: (414) 525-9716
4
<PAGE> 51
with a copy to:
James E. Baker, Jr., Esquire
Baxter, Baker, Sidle & Conn, P.A.
120 E. Baltimore Street, Suite 2100
Baltimore, Maryland 21202
Facsimile No.: (410) 230-3801
If to the Principal Stockholders, to:
Larry L. Asche
Diane L. Asche
Kevin M. Clark
Richard S. Baugh
Gary I. Goldberg
c/o Asche Transportation Services, Inc.
10214 N. Mt. Vernon Road
Shannon, Illinois 61078
Facsimile No.: (815) 864-2646
or at such other address as each such party furnishes by notice given in
accordance with this Section 6.8.
6.9 Joint and Several. The obligations of the Principal Stockholders
shall be joint and several.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed under seal as of the date first above written.
/s/ James A. Jalovec (SEAL)
-------------------------------------
James A. Jalovec
/s/ Larry L. Asche (SEAL)
-------------------------------------
Larry L. Asche
/s/ Diane L. Asche (SEAL)
-------------------------------------
Diane L. Asche
/s/ Kevin M. Clark (SEAL)
-------------------------------------
Kevin M. Clark
/s/ Richard S. Baugh (SEAL)
-------------------------------------
Richard S. Baugh
/s/ Gary Goldberg (SEAL)
-------------------------------------
Gary I. Goldberg
5
