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SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[X] Preliminary proxy statement [ ] Confidential, for Use of the
Commission Only (as permitted
by Rule 14a-6(e)(2))
[ ] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
ASCHE TRANSPORTATION SERVICES, INC.
(Name of Registrant as Specified in Its Charter)
ASCHE TRANSPORTATION SERVICES, INC.
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, schedule or registration statement no.:
(3) Filing party:
(4) Date filed:
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ASCHE TRANSPORTATION SERVICES, INC.
10214 NORTH MT. VERNON ROAD
SHANNON, ILLINOIS 61078
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON SEPTEMBER 17, 1999
To the Stockholders of Asche Transportation Services, Inc.:
A Special Meeting of Stockholders of Asche Transportation Services,
Inc., a Delaware corporation (the "Company"), will be held at the Best Western
Clock Tower Resort and Conference Center, 7801 East State Street, Rockford,
Illinois 61108, on Wednesday, September 17, 1999, at 10:00 A.M. Central Standard
Time for the following purposes, as more fully described in the accompanying
Proxy Statement:
1. To approve the issuance and sale of shares of the Company's
Common Stock, par value $.0001 per share to Churchill Capital
Environmental & Industrial Equity Partners, L.P.(the
"Purchaser") (the "Investment Proposal") equal to (i)
2,666,667 shares at a price of $4.50 per share in cash if the
average closing price of the Common Stock on the NASDAQ for
the ten consecutive trading days immediately preceding the
closing date of the Investment Proposal is less than $5.00 per
share or (ii) 2,400,000 shares at a price of $5.00 per share
in cash if the average closing price of the Common Stock on
the NASDAQ for the ten consecutive trading days immediately
preceding the closing date of the Investment Proposal is equal
to, or greater than $5.00 per share pursuant to the terms of
the Stock Purchase Agreement dated as of August __, 1999 (the
"Stock Purchase Agreement") by and among the Company, its
subsidiaries and the Purchaser. The Stock Purchase Agreement
also requires the Company to issue to Purchaser additional
shares of Common Stock (the "Additional Shares") if the
highest average closing price on the NASDAQ of the Company's
Common Stock for any ten consecutive trading days beginning on
September 1, 2000 and ending on November 1, 2000 (the
"Measurement Period") is less than (i) $6.50 (if the initial
purchase price for the Common Stock is $4.50 per share under
the Stock Purchase Agreement), or (ii) $3.00, (if the purchase
price for the Common Stock is $5.00 per share).
2. To approve an amendment to the Company's Certificate of
Incorporation to increase the number of the Company's
authorized shares of Common Stock par value $.0001 per share
from 10,000,000 to 25,000,000.
3. To approve an amendment to the Company's Certificate of
Incorporation and By-Laws to increase the number of directors
from nine to fifteen.
The Board of Directors has carefully reviewed and considered the terms
and conditions of the Investment Proposal. Details of the Investment Proposal
are also set forth in the accompanying Proxy Statement and attached exhibits. We
urge you to read the Proxy Statement and attached exhibits carefully. Your vote
is important. THE BOARD OF DIRECTORS HAS APPROVED THE INVESTMENT PROPOSAL AND
THE OTHER PROPOSALS AND UNANIMOUSLY RECOMMENDS THAT YOU VOTE IN FAVOR OF EACH OF
THE PROPOSALS TO BE PRESENTED AT THE SPECIAL MEETING.
Stockholders of record of the Company's Common Stock, par value $.0001
per share, at the close of business on August 6, 1999, the record date fixed by
the Board of Directors, are entitled to notice of, and to vote at, the meeting,
as more fully described in the Proxy Statement.
PLEASE COMPLETE AND RETURN THE ENCLOSED PROXY IN THE ENVELOPE PROVIDED
WHETHER OR NOT YOU INTEND TO BE PRESENT AT THE MEETING IN PERSON.
By order of the Board of Directors,
Diane L. Asche
Secretary
Shannon, Illinois
August 17, 1999
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ASCHE TRANSPORTATION SERVICES, INC.
10214 NORTH MT. VERNON ROAD
SHANNON, ILLINOIS 61078
PROXY STATEMENT
FOR SPECIAL MEETING OF STOCKHOLDERS
SEPTEMBER 17, 1999
INTRODUCTION
The enclosed proxy is solicited on behalf of the Board of Directors
(the "Board") of Asche Transportation Services, Inc., a Delaware corporation
(the "Company"), for use at a Special Meeting of Stockholders to be held on
September 17, 1999 at 10:00 a.m. local time (the "Special Meeting"), or at any
adjournment or postponement thereof, for the purposes set forth herein and in
the accompanying Notice of Special Meeting. The Special Meeting will be held at
the Best Western Clock Tower Resort and Conference Center, 7801 East State
Street, Rockford, Illinois 61108. The Company intends to mail this proxy
statement and accompanying proxy card on or about August 17, 1999 to all
stockholders entitled to vote at the Special Meeting.
The Special Meeting has been called to consider and approve three
matters: (a) to approve the issuance and sale of shares of the Company's Common
Stock, par value $.0001 per share ("Common Stock") to Churchill Capital
Environmental & Industrial Equity Partners, L.P. (the "Purchaser") (the
"Investment Proposal") equal to either (i) 2,666,667 shares at a price of $4.50
per share in cash if the average closing price of the Common Stock on the NASDAQ
for the ten consecutive trading days immediately preceding the closing date of
the Investment Proposal is less than $5.00 per share or (ii) 2,400,000 shares at
a price of $5.00 per share in cash if the average closing price of the Common
Stock on the NASDAQ for the ten consecutive trading days immediately preceding
the closing date of the Investment Proposal is equal to, or greater than $5.00
per share pursuant to the Stock Purchase Agreement dated as of August __, 1999
(the "Stock Purchase Agreement") by and among the Company, its subsidiaries and
the Purchaser. The Stock Purchase Agreement also requires the Company to issue
to Purchaser additional shares of Common Stock (the "Additional Shares") if the
highest average closing price on the NASDAQ of the Company's Common Stock for
any ten consecutive trading days beginning on September 1, 2000 and ending on
November 1, 2000 (the "Measurement Period") is less than (i) $6.50 (if the
initial purchase price for the Common Stock is $4.50 per share under the Stock
Purchase Agreement) or (ii) $7.00, (if the initial purchase price for the Common
Stock is $5.00 per share) ("Investment Proposal (Proposal 1)"); (b) to approve
an amendment to the Company's Certificate of Incorporation to increase the
number of the Company's authorized shares of Common Stock from 10,000,000 to
25,000,000 ("Charter Amendment (Proposal 2)"); and (c) to approve amendments to
the Company's Certificate of Incorporation and By-Laws to increase the number of
directors from nine to fifteen ("Charter and By-Laws Amendments (Proposal 3)").
See "PROPOSAL 1--THE INVESTMENT PROPOSAL," "PROPOSAL 2-- CHARTER AMENDMENT,"
AND "PROPOSAL 3--AMENDMENT TO CHARTER AND BY-LAWS."
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024, Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549, and at the Commission's
following Regional
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Offices: Suite 1400, Northwest Atrium Center, 500 West Madison Street, Chicago,
Illinois 60661; and 13th Floor, Seven World Trade Center, New York, New York
10048. Copies of such material can be obtained at prescribed rates from the
Public Reference Section of the Commission at Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549. The Common Stock is quoted for trading on the
Nasdaq National Market and reports, proxy statements and other information
concerning the Company also may be inspected at the offices of the National
Association of Securities Dealers, 1735 K Street, N.W., Washington, D.C. 20006.
The Commission maintains a World Wide Web site that contains reports, proxy and
information statements and other information regarding registrants that file
electronically with the Commission. This website is located at www.sec.gov.
SUMMARY
The following is a summary of certain significant matters discussed
elsewhere in this Proxy Statement. This summary should be read in conjunction
with the more detailed information appearing, or incorporated by reference, in
this Proxy Statement and the Exhibits hereto. Stockholders are urged to read
this Proxy Statement (including the documents incorporated by reference) and the
Exhibits hereto in their entirety. Unless otherwise stated herein, the numbers
of shares and percentage thereof set forth herein are as of August 15, 1999.
This Proxy Statement contains forward-looking statements that involve
risks and uncertainties. Actual results could differ materially from those
discussed in the forward-looking statements as a result of certain factors,
including those set forth in the section of this Proxy Statement entitled "Risk
Factors."
THE COMPANY
Asche Transportation Services, Inc. (the "Company"), through its
subsidiaries is a diversified transportation services company. The Company
operates primarily in two segments of the transportation services industry.
Asche Transfer, Inc. and AG Carriers, Inc. are truckload operations delivering a
variety of foods and other products for many Fortune 500 companies that require
temperature-controlled service and "just-in-time" delivery. Specialty
Transportation Services, Inc. ("STS") is the only national and the largest
for-hire carrier of municipal solid waste and special waste in transfer vehicles
in the United States. STS has long-term contracts ranging from five to twenty
years with municipalities and large national waste service companies, including
Waste Management, Inc., Republic Industries, Inc., Allied Waste Services, Inc.
and Browning-Ferris Industries, Inc. The Company's mailing address and principal
executive offices are located at 10214 N. Mt. Vernon Road, Shannon, Illinois
61078.
THE PURCHASER
The Purchaser, organized as a Delaware limited partnership, is a
private investment partnership fund with offices in Minneapolis, Minnesota and
New York City, New York. The Purchaser provides bridge senior debt, subordinated
debt, preferred stock and common equity for owner recapitalizations, management
buyouts, capital for growth, and for platform consolidation strategies within
specific sectors of the environmental industry. As of July 31, 1999, the
Purchaser has closed on two investment transactions aggregating $23,250,000. The
Purchaser is the fifth investment fund organized by Churchill Capital, Inc.
which performs the underwriting, administrative and management duties associated
with the responsibilities of the general partner of the Purchaser.
GENERAL
The Company has agreed to issue and sell to Purchaser, and Purchaser
has agreed to purchase from the Company either (i) 2,666,667 shares at a price
of $4.50 per share in cash if the average closing price of the Common Stock on
the NASDAQ for the ten consecutive trading days immediately preceding the
closing date
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of the Investment Proposal is less than $5.00 per share or (ii) 2,400,000 shares
at a price of $5.00 per share in cash if the average closing price of the Common
Stock on the NASDAQ for the ten consecutive trading days immediately preceding
the closing date of the Investment Proposal is equal to, or greater than $5.00
per share pursuant to the Stock Purchase Agreement Purchaser.
The Stock Purchase Agreement also requires the Company to issue to
Purchaser Additional Shares if the highest average closing price on the NASDAQ
of the Company's Common Stock for any ten consecutive trading days during
Measurement Period is less than $6.50, if the purchase price for the Common
Stock is $4.50 per share under the Stock Purchase Agreement (less than $7.00, if
the purchase price for the Common Stock is $5.00 per share). The number of
additional shares to be issued to Purchaser will be equal to the quotient of (x)
(1) $6.50 ($7.00 if the purchase price is $5.00 per share) multiplied by the
number of shares originally purchased by Purchaser at the Closing (the "Initial
Shares"), minus (2) the Adjustment Price (as defined herein) multiplied by the
number of Initial Shares, divided by (y) the greater of the Adjustment Price or
$3.00 per share (the "Share Price Guaranty"). The "Adjustment Price" is defined
as the highest average closing price of the Common Stock on the NASDAQ for any
ten consecutive trading days during the Measurement Period.
Simultaneously with the closing of the Investment Proposal, the Company
and Purchaser will enter into a Registration Rights Agreement (the "Registration
Rights Agreement") and an Advisory Services Agreement (the "Advisory Services
Agreement"). See "Proposal 1--Approval of the Investment Proposal."
Certain directors, executive officers and significant shareholders of
the Company holding approximately 47% of the outstanding Common Stock have
entered into Voting Agreements with Purchaser pursuant to which such persons
have agreed, among other things, to vote for (i) the Investment Proposal
(Proposal 1), (ii) the Charter Amendment (Proposal 2), (iii) the Charter and
Bylaws Amendments (Proposal 3) and (iv) the appointment of Purchaser's designees
to the Company's Board of Directors (the "Voting Agreements").
PURPOSE AND EFFECT OF THE INVESTMENT PROPOSAL
The Company's primary purposes for consummating the Investment Proposal
include (i) providing the Company with significant cash resources to repay
indebtedness, (ii) providing the Company with liquidity for continued growth and
(iii) providing the Company with a strategic partner.
Immediately following the consummation of the Investment Proposal,
Purchaser will hold approximately 31% of the outstanding Common Stock if
2,666,667 Initial Shares are purchased (or approximately 29% of the outstanding
Common Stock if 2,400,000 Initial Shares are purchased). In addition, if the
Company is required to issue Additional Shares to the Purchaser by virtue of the
Share Price Guaranty, the Purchaser could hold as much as 49% of the outstanding
Common Stock. Such ownership could be sufficient to enable the Purchaser to
significantly influence and possibly control the vote on most matters submitted
to a vote of the Company's stockholders, including the election of the Board who
shall take office upon the Closing of the Investment Proposal. In addition,
under the Stock Purchase Agreement, the Purchaser will have the right to
designate four directors to serve on the Board of Directors of the Company. See
"Risks Associated with the Investment Proposal" and "Proposal 1--Approval of the
Investment Proposal."
THE SPECIAL MEETING
Place, Time And Date. The Special Meeting will be held on September 17,
1999 at the Best Western Clock Tower Resort and Conference Center, 7801 East
State Street, Rockford, Illinois 61108 at 10:00 a.m. Local Time, and at any
adjournments or postponements thereof.
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Matters To Be Considered. At the Special Meeting, holders of record of
shares of Common Stock will vote on the approval of the Investment Proposal
(Proposal 1), the Charter Amendment (Proposal 2) and the Charter and By-Laws
Amendments (Proposal 3). See "Proposal 1--Approval of the Investment Proposal,"
"Proposal 2--Charter Amendment" and "Proposal 3--Charter and By-Laws
Amendments."
Record Date; Vote Required. Only holders of record at the close of
business on August 6, 1999 are entitled to notice of and to vote at the Special
Meeting. It is a condition to the Company's obligations under the Stock Purchase
Agreement that the Investment Proposal (Proposal 1), the Charter Amendment
(Proposal 2) and the Charter and By-Laws Amendments (Proposal 3) be approved by
the affirmative vote of the holders of a majority of the Common Stock present in
person or represented by proxy and voting on such proposals. In addition, the
rules of The Nasdaq Stock Market also require the affirmative vote of the
holders of a majority of the Company's voting capital stock present in person or
represented by proxy and entitled to vote at the meeting in order for the
Company to consummate the Investment Proposal.
With respect to the Charter Amendment (Proposal 2) and the
Charter and By-Laws Amendments (Proposal 3), under the Delaware General
Corporate Law (the "DGCL"), amendments to the Charter and By-Laws require
the affirmative vote of the holders of a majority of the Common Stock entitled
to vote at the Special Meeting. See "The Special Meeting--Voting Rights And
Outstanding Shares" and "--Vote Required."
Proxies. Any person giving a proxy pursuant to this solicitation has
the power to revoke it at any time before it is voted. It may be revoked by
filing with the Secretary of the Company at the Company's principal executive
office a written notice of revocation or a duly executed proxy bearing a later
date, or it may be revoked by attending the meeting and voting in person.
Attendance at the meeting will not, by itself, revoke a proxy. See "The Special
Meeting--Revocability Of Proxies."
THE INVESTMENT PROPOSAL
The stockholders of the Company are being asked to consider and vote
upon the Investment Proposal. If the Investment Proposal is consummated,
Purchaser will own approximately 31% of the Company's outstanding Common Stock
if 2,666,667 Initial Shares are purchased (or approximately 29% of the
outstanding Common Stock if 2,400,000 Initial Shares are purchased), plus up to
3,111,111 Additional Shares which may be issued under the Share Price Guaranty.
The Initial Shares together with the Additional Shares could result in Purchaser
owning up to 49% of the Company's outstanding Common Stock. The Stock Purchase
Agreement is attached to this Proxy Statement as Exhibit A. See "Risk
Factors--Risks Associated With the Investment Proposal," "Proposal 1--Approval
Of The Investment Proposal" And "Stock Ownership Of Directors, Executive
Officers and Principal Holders."
AMENDMENT TO THE CHARTER
The stockholders of the Company are being asked to consider and vote
upon the adoption of an amendment to the Certificate, which will increase the
authorized shares of capital stock from 10,000,000 to 25,000,000. See "Proposal
2--Amendment to the Charter."
AMENDMENTS TO THE CHARTER AND BY-LAWS
The stockholders of the Company are being asked to consider and vote
upon adoptions of amendments to the Charter and By-Laws, which will increase
the number of directors on the Board from nine to fifteen.
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Pursuant to the Stock Purchase Agreement, Purchaser will have the right to
designate four directors upon purchase of the Initial Shares at the Closing. See
"Proposal 3--Amendments to the Charter and By-Laws"
RISKS ASSOCIATED WITH THE INVESTMENT PROPOSAL
The Investment Proposal poses certain risks to the current stockholders
of the Company including, without limitation, the ability of Purchaser and its
affiliates to significantly influence actions taken by the Board and the Company
and to significantly influence the vote on most matters submitted for approval
of the stockholders. Stockholders are urged to consider these risks carefully
before voting.
Influence Over Company Actions. Upon completion of the Investment
Proposal, Purchaser will own approximately 31% of the outstanding Common Stock
if 2,666,667 Initial Shares are purchased or (approximately 29% of the
outstanding Common Stock if 2,400,000 Initial Shares are purchased) plus up to
3,111,111 Additional Shares which may be issued under the Share Price Guaranty.
The Initial Shares together with the Additional Shares could result in the
Purchaser owning up to 49% of the Company's outstanding Common Stock. Pursuant
to the Stock Purchase Agreement, the Company has agreed that it shall continue
to nominate four individuals designated by Purchaser for election to the Board
and use its best efforts to cause such persons to be elected to the Board for so
long as Purchaser holds at least 50% of the Initial Shares and Additional Shares
purchased pursuant to the Stock Purchase Agreement. In addition, pursuant to the
Voting Agreements, holders of 2,777,566 shares of Common Stock (or 47% of the
Company's outstanding Common Stock), including certain directors, executive
officers and significant shareholders of the Company, have agreed to vote their
shares of Common Stock in favor of the appointment of Purchaser's designees to
the Board. Accordingly, consummation of the Investment Proposal could permit
Purchaser to significantly influence many actions taken by the Board or the
Company and could limit the ability of the Company's current stockholders to
affect or influence the direction of the Company and the composition of the
Board.
Conflicts of Interest. Conflicts of interest may arise as a consequence
of the relationship between Purchaser and the Company, including (a) conflicts
between Purchaser, as a stockholder with a significant ownership interest in the
Company and representation on the Company's Board of Directors, and the other
stockholders of the Company, whose interests may differ with respect to, among
other things, the strategic direction of the Company or significant corporate
transactions and (b) conflicts arising in respect of corporate opportunities
that could be pursued by the Company, on the one hand, or by Purchaser and any
of its other affiliated entities, on the other hand. To the extent that
conflicts arise as a result of Purchaser's relationship with the Company, the
Board of Directors (including any directors designated by Purchaser) would be
guided by its fiduciary obligations as directors under the DGCL, including the
directors' duty of loyalty.
Ability to Prevent Third Parties from Seeking a Change in Control.
Purchaser's Common Stock ownership will make it more difficult for a third party
to effect a change in management or to acquire control of the Company without
the approval of Purchaser and, therefore, may delay, prevent or deter a proxy
contest for control of the Company or other changes in management, or discourage
bids for a merger, acquisition or tender offer, in which the Company's
stockholders could receive a premium for their shares.
THE SPECIAL MEETING
GENERAL
The proxy enclosed with this Proxy Statement is solicited on behalf of
the Board for use at the Special Meeting, which is to be held on September 17,
1999 at 10:00 a.m. Local Time, or at any adjournment or postponement thereof,
for the purposes set forth in this Proxy Statement and in the accompanying
Notice of Special Meeting. The Special Meeting will be held at Best Western
Clock Tower Resort and Conference Center, 7801 East
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State Street, Rockford, Illinois 61108. The Company intends to mail this Proxy
Statement and accompanying proxy card on or about August 17, 1999 to all
stockholders entitled to vote at the Special Meeting.
SOLICITATION
The Company will bear the entire cost of the solicitation. It is
expected that the solicitation will be made primarily by mail, but directors,
officers, employees, financial advisors or other
representatives of the Company (none of whom will receive any extra compensation
for their activities) may also solicit proxies by telephone, facsimile and in
person and arrange for brokerage houses and other custodians, nominees and
fiduciaries to send proxies and proxy materials to their principals at the
expense of the Company.
VOTING RIGHTS AND OUTSTANDING SHARES
Only holders of record of Common Stock at the close of business on
August 6, 1999, will be entitled to notice of and to vote at the Special
Meeting. At the close of business on August 15, 1999, the Company had
outstanding and entitled to vote 5,956,920 shares of Common Stock held by ___
holders of record.
Each holder of record of Common Stock on such date will be entitled to
one vote for each share held on all matters to be voted upon at the Special
Meeting.
VOTE REQUIRED
It is a condition to the Company's obligations under the Stock Purchase
Agreement that the Investment Proposal (Proposal 1), the Charter Amendment
(Proposal 2) and the Charter and By-Laws Amendments (Proposal 3) be approved by
the affirmative vote of the holders of a majority of the Company's Common Stock
present in person or represented by proxy and voting on such proposals. The
rules of The Nasdaq Stock Market also require that the Investment Proposal be
approved by the holders of a majority of the Common Stock present in person or
represented by proxy and voting on such proposals.
With respect to the Charter Amendment (Proposal 2) and the Charter and
By-Laws Amendments (Proposal 3), the DGCL requires the affirmative vote of a
majority of the Common Stock outstanding entitled to vote at the Special
Meeting.
Pursuant to a certain Securities Purchase Agreement dated as of July 9,
1999 between the Company and James A. Jalovec, Mr. Jalovec has agreed to vote
all of the shares of Common Stock owned beneficially or of record by him in
favor of the Investment Proposal, the Certificate Amendment (Proposal 2), the
Certificate and By-Laws Amendments (Proposal 3) and any matter that could
reasonably be expected to facilitate such transactions. Mr. Jalovec holds
approximately 22% of the shares of Common Stock entitled to vote at the Special
Meeting. In addition, pursuant to the Voting Agreements, holders of 47% of the
outstanding Common Stock (including Mr. Jalovec) have agreed to vote for (i) the
Investment Proposal (Proposal 1), (ii) the Charter Amendment (Proposal 2), (iii)
the Charter and Bylaws Amendments (Proposal 3) and (iv) the appointment of the
Purchaser's designees to the Company's Board of Directors.
REVOCABILITY OF PROXIES
Any person giving a proxy pursuant to this solicitation has the power
to revoke it at any time before it is voted. It may be revoked by filing a
written notice of revocation or a duly executed proxy bearing a later date with
the Secretary of the Company at the Company's principal executive office at
10214 N. Mt. Vernon Road, Shannon, Illinois 61078, or it may be revoked by
attending the meeting and voting in person. Attendance at the meeting will not,
by itself, revoke a proxy.
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QUORUM; ABSTENTIONS; BROKER NON-VOTES
All votes will be tabulated by the inspector of election appointed for
the Special Meeting, who will separately tabulate affirmative and negative
votes, abstentions and broker "no-votes" (proxies that are returned by the
record holder, typically a brokerage house, but not voted on a particular matter
because no instructions were received from the beneficial owner). The presence,
in person or by proxy, of a majority of the shares of the Common Stock
outstanding on the record date is necessary to constitute a quorum for the
transaction of business at the Special Meeting. Abstentions and, if applicable,
broker non-votes will each be included in determining whether a quorum is
present. For purposes of determining whether the Investment Proposal (Proposal
1), the Charter Amendment (Proposal 2) and the Charter and By-Laws
Amendments (Proposal 3) have been approved, broker no-votes will be treated as
votes against the proposal.
NO DISSENTERS' RIGHTS
The holders of Common Stock will not have any dissenters' rights in
connection with, or as a result of, the matters to be acted upon at the Special
Meeting.
BACKGROUND OF THE TRANSACTION
As part of an on-going strategic effort to expand its business, the
Company has been considering financing alternatives for several months. In
December 1998, the Company retained Madison Securities, Inc. ("Madison") to
advise the Company with respect to various financing alternatives including the
placement of private equity with an institutional investor. Madison identified
Churchill Capital, Inc., the general partner of Purchaser ("CCI"), as a
potential source of equity capital. In February 1999, a meeting was arranged
among representatives of CCI, Madison, Larry L. Asche, Chairman and Chief
Executive Officer of the Company, Leon M. Monachos, Chief Financial Officer of
the Company and Gary I. Goldberg, Vice President of the Company (and President
of STS) to discuss the possibility of an investment in the Company by Purchaser.
At the meeting, Mr. Asche expressed an interest in raising at least $5,000,000
from a strategic investor. He was interested in discussing the merits of a
strategic relationship with CCI and Purchaser and wished to further explore the
potential benefits of any relationship.
During May 1999, representatives of CCI held numerous discussions with
Messrs. Asche, Monachos and Goldberg, to discuss a strategic investment by
Purchaser in the Company. During these discussions, the parties considered an
investment by Purchaser ranging in amount from $10,000,000 to $15,000,000 to
acquire a significant ownership interest in the Company, and discussed issues
relating to board representation and approval rights for Purchaser.
During May and June 1999, CCI, together with representatives of
Madison, held a series of meetings and conference calls with the Company for the
purpose of, among other things, conducting financial due diligence regarding the
Company. During this period, CCI and the Company discussed various possibilities
for the structure of the proposed transaction.
Throughout June 1999, the parties continued to hold discussions to
address both CCI's and the Company's concerns and to evaluate the feasibility of
various structures for the Investment Proposal. On or about June 21, 1999, CCI
delivered a letter of intent to the Company proposing an investment by Purchaser
in the Common Stock for a minimum of $10,000,000 and a maximum of $15,000,000.
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On May 19, 1999, at a meeting of the Company's Board of Directors, the
directors discussed the benefits of the proposed transaction with CCI. The Board
discussed the material components of the transaction. The Board discussed the
benefits of a transaction which would include (i) providing the Company with
significant cash resources to repay indebtedness, (ii) providing the Company
with a source of liquidity for the Company's continued growth, and (iii)
aligning the Company with a strategic partner. The Board authorized Messrs.
Asche, Monachos and Goldberg to continue negotiations with CCI and Purchaser
with the assistance of the Company's financial and legal advisors.
On July 14, 1999, Purchaser's counsel provided the Company and its
counsel with preliminary drafts of the Stock Purchase Agreement. During the next
few weeks, management with the assistance of their counsel, negotiated the terms
of the Stock Purchase Agreement and the other transaction documents. Purchaser
and the Company, together with their representatives (including legal counsel),
proceeded to negotiate the definitive terms of the Stock Purchase Agreement and
the other transaction documents. During this process, the parties continued to
negotiate the exact terms of the transaction, including the Stock Purchase
Agreement, the Registration Rights Agreement, the Advisory Services Agreement
and the Voting Agreements. Following extensive negotiations, the parties agreed
on the terms of the agreements.
A meeting of the Board was held telephonically on August 1999. The
Board received a report on the status of negotiations with Purchaser from
members of management and legal counsel, which informed the Board that all
material issues had been resolved. The Board had a full discussion of the sale
of the Common Stock. Additionally, the Board reviewed in detail the terms of the
proposal embodied in the various agreements. The Board again discussed the
various benefits of a transaction which would include (i) providing the Company
with significant cash resources to repay indebtedness; (ii) providing the
Company with a source of liquidity for continued growth; and (iii) aligning the
Company with a strategic partner.
On August __, 1999, the Stock Purchase Agreement and the Voting
Agreements were executed and delivered.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors, by unanimous vote, has approved the Stock
Purchase Agreement and all exhibits thereto, including the Registration Rights
Agreement and the Advisory Services Agreement and each of the transactions
contemplated thereby and recommends approval of the Investment Proposal.
In approving the Stock Purchase Agreement and the transactions
contemplated thereby, the Board of Directors considered the following material
factors:
(i) The terms of the Stock Purchase Agreement, the Registration
Rights Agreement, the Advisory Services Agreement and the
Voting Agreements, which were the product of arm's length
negotiations among the parties;
(ii) The Company's increased cash resources as a result of the
Company's cash infusion by Purchaser to repay indebtedness and
to finance the Company's future growth; and
(iii) The Company's desire to align itself with a strategic partner.
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<PAGE> 11
The Board of Directors did not assign relative weight to the above
factors or determine that any factor was of particular importance. Rather, the
Board of Directors view this position and its recommendations as being based on
the totality of the information presented to it and considered by it.
PROPOSAL 1
APPROVAL OF THE INVESTMENT PROPOSAL
The Company's stockholders are being requested to approve the issuance
and sale of shares to the Purchaser of the Company's Common Stock pursuant to
the Stock Purchase Agreement.
THE STOCK PURCHASE AGREEMENT
The following summary of certain terms of the Stock Purchase Agreement
does not purport to be complete and is qualified in its entirety by reference to
the complete text of the Stock Purchase Agreement, which is attached hereto as
Exhibit A. Capitalized terms used herein and not otherwise defined shall have
the meanings assigned to them in the Stock Purchase Agreement. STOCKHOLDERS ARE
URGED TO CAREFULLY READ THE STOCK PURCHASE AGREEMENT IN ITS ENTIRETY.
Initial Shares. The Company has agreed to issue and sell to Purchaser,
and Purchaser has agreed to purchase from the Company either (i) 2,666,667
shares of the Company's Common Stock at a price of $4.50 per share if the
average closing price of the Company's Common Stock on the NASDAQ for the ten
Trading Days immediately preceding the Closing Date is less than $5.00 per share
or (ii) 2,400,000 shares at a price of $5.00 per share of Common Stock if the
average closing price of the Company's Common Stock on the NASDAQ for the ten
Trading Days immediately preceding the Closing Date is equal to or greater than
$5.00 per share.
Additional Shares. Under the Stock Purchase Agreement, the Company is
required to issue to Purchaser additional shares of Common Stock if the highest
average closing price on the NASDAQ of the Company's Common Stock for any ten
consecutive Trading Days during the period beginning on September 1, 2000 and
ending on November 1, 2000 (the "Measurement Period") is less than $6.50 (if the
Initial Price Per Share is $4.50 per share) or $7.00 (if the Initial Price Per
Share is $5.00 per share). The number of additional shares to be issued to
Purchaser will be equal to the quotient of (x) (1) $6.50 ($7.00 if the Initial
Price Per Share is $5.00 per share) multiplied by the number of shares purchased
in the Stock Purchase Agreement (the "Initial Shares"), minus (2) the Adjustment
Price (as defined herein) multiplied by the number of Initial Shares, divided by
(y) the greater of the Adjustment Price or $3.00 per share (the "Share Price
Guaranty"). The "Adjustment Price" is defined as the highest average closing
price of the Common Stock on the NASDAQ for any ten consecutive Trading Days
during the Measurement Period.
If the Investment Proposal 1, the Charter Amendment Proposal 2 or the
Charter and By-Laws Amendments Proposal 2 shall not have been approved by the
stockholders of the Company, the Stock Purchase Agreement provides that
Purchaser may, in its sole discretion, elect to purchase at the Closing a number
of shares of Common Stock (the "Revised Initial Shares") equal to the number of
shares of Common Stock authorized by the Company's Certificate minus (1) shares
of Common Stock issued and outstanding and (2) shares of Common Stock reserved
for issuance pursuant to stock options and warrants. The price per share of the
Revised Initial Shares shall be equal to the Initial Price Per Share.
Closing. The closing of the Stock Purchase Agreement is to occur on
September 24, 1999 or, at the Purchaser's option, within thirty days after the
satisfaction or waiver of the conditions set forth in the Stock Purchase
Agreement. The closing is subject to certain conditions including: (i) the prior
approval by the Company's stockholders at the Special Meeting of the Investment
Proposal (Proposal 1), the Charter Amendment (Proposal 2) and the Charter and
By-Laws Amendments (Proposal 3); (ii) the absence of a material adverse change
in the Company's
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<PAGE> 12
business, properties, results of operations or financial condition from August
__, 1999 to the Closing Date; (iii) the truth and accuracy at the closing of the
representations and warranties made by the parties in the Stock Purchase
Agreement; (iv) the parties' material compliance with their respective
obligations under the Stock Purchase Agreement; (v) the delivery and execution
of the Registration Rights Agreement, the Advisory Services Agreement and the
Voting Agreements; (vi) the consents of certain of the Company's senior and
subordinated lenders and (vii) other customary closing conditions.
Board Composition. In accordance with the requirements of the Stock
Purchase Agreement, at the Closing the Purchaser shall be entitled to designate
four directors to serve on the Board of Directors of the Company (the "Purchaser
Designees"). So long as the Purchaser owns at least 50% of the total shares of
Common Stock purchased pursuant to the Stock Purchase Agreement, the Company
will nominate at each stockholder meeting at which the election of directors is
considered all four Purchaser Designees for election to the Board and will use
its best efforts to cause such persons to be continually elected to the Board
of Directors.
The Special Meeting. The Stock Purchase Agreement requires the Company
to call and hold on or prior to September 17, 1999 or such later date as the
Company deems necessary so as to obtain the number of votes required to approve
the Investment Proposal (Proposal 1), the Charter Amendment (Proposal 2) and the
Charter and By-Laws Amendments (Proposal 3), but in no event later than October
15, 1999, the Special Meeting for the purpose of voting on the approval of the
Investment Proposal (Proposal 1), the Charter Amendment (Proposal 2) and the
Charter and By-Laws Amendments (Proposal 3). The Company has agreed that the
proxy materials for the Special Meeting will contain the recommendation of the
Board of Directors that the stockholders approve the Investment Proposal
(Proposal 1), the Charter Amendment (Proposal 2) and the Charter and By-Laws
Amendments (Proposal 3).
Representations And Warranties. The Stock Purchase Agreement contains
various customary representations and warranties of the parties, including
representations by the Company as to (i) the absence of a material adverse
change to the business or financial condition of the Company, (ii) the absence
of certain other changes or events concerning the Company, and (iii) compliance
with laws, litigation, employee benefit plans, intellectual property, taxes and
material contracts.
Conduct Of Business Of The Company. The Stock Purchase Agreement
provides that from the date of the Stock Purchase Agreement until the later of
the date on which Purchaser receives the Additional Shares or the Revised
Initial Shares, as the case may be, the business of the Company and each of its
subsidiaries will be conducted in the ordinary course of business and in
accordance with past practice. Accordingly, without Purchaser's prior written
consent, neither the Company nor any of its subsidiaries may, until the later of
the date on which Purchaser receives the Additional Shares or the Revised
Initial Shares, as the case may be, engage or agree to engage in an enumerated
list of actions generally characterized as being outside the ordinary course of
business. Such actions requiring Purchaser's prior approval include, among other
things (but subject to certain exceptions stated in the Stock Purchase
Agreement), (i) issuing any stock or granting options or warrants other than
under existing agreements and plans; (ii) increasing any compensation under any
employment agreement with present or future employees, officers or directors
except for normal increases consistent with past practice and in connection with
the renewal or extension of employment agreements between any executive officer
and the Company or any subsidiary; (iii) granting any severance or termination
pay with any executive officer or director; (iv) adopting any new employee
benefit plan; (iv) selling, leasing or otherwise disposing of its assets
(including the capital stock of any Subsidiary) except in the ordinary course of
business; (v) declaring or paying dividends or redeeming any of capital stock;
or (vi) entering into any transaction with any officer or director other than
employment arrangements made in the ordinary course of business and other than
repayment of existing indebtedness to such persons utilizing the proceeds from
the sale of the Common Stock to Purchaser.
Use of Proceeds. The Stock Purchase Agreement provides that the Company
shall use the proceeds received by it from the sale of Common Stock to Purchaser
to (1) repay its subordinated debt and repurchase outstanding warrants held by
American Capital Strategies Ltd. ("ASC"), in STS, (2) repay other senior and
subordinated debt not exceeding $___________, (3) purchase the ten percent (10%)
ownership position held by
12
<PAGE> 13
ACS in STS, (4) finance acquisitions, (5) pay fees and expenses relating to
consummation of the Investment Proposal, and (5) for general corporate purposes.
Other Covenants Of The Parties. The Stock Purchase Agreement provides
that Purchaser shall not, for a period of two years after the Closing Date, sell
or transfer any of the shares of Common Stock purchased pursuant to the Stock
Purchase Agreement except for (i) sales in connection with an Underwritten
Registration or Underwritten Offering and (ii) transfers to certain permitted
transferees specified in the Stock Purchase Agreement.
Other Potential Transactions. Until the earlier to occur of the
termination of the Stock Purchase Agreement or the Closing, the Stock Purchase
Agreement requires the Company, its subsidiaries and their respective officers,
directors, agents and representatives not to directly or indirectly (A) solicit
or discuss any proposal or offer from any party relating to any (i)
reorganization, dissolution or recapitalization involving the Company or any of
its subsidiaries, (ii) any merger or consolidation involving the Company or any
of its subsidiaries, (iii) sale of assets of the Company outside the ordinary
course of business or sale of capital stock or equity interests in the Company
or any of its subsidiaries, or (iv) similar transaction or business combination
involving the Company or any of its subsidiaries or any of their respective
assets, capital stock or equity interests (each a "Competing Transaction") or
(B) furnish any information with respect to, assist or participate in or
facilitate in any other manner any effort or attempt by any person to do or seek
the foregoing.
The Stock Purchase Agreement provides that if it is terminated because
the Closing has not taken place on or before December 31, 1999 or because the
stockholders have not approved the Investment Proposal (Proposal 1), the Charter
Amendment (Proposal 2) or the Charter and By-Laws Amendments (Proposal 3) at the
Special Meeting and at or prior to the time of termination: (1) a Competing
Transaction shall have been made, and (2) such Competing Transaction is
consummated within eighteen months of termination of the Stock Purchase
Agreement or an agreement with respect to such Competing Transaction is entered
into within eighteen months of termination of the Stock Purchase Agreement, the
Company must pay to CCI a $750,000 cash fee plus the Purchaser's reasonable
out-of-pocket expenses. Such cash fee would constitute liquidated damages and,
except for fraud in connection with the Stock Purchase Agreement, would
constitute Purchaser's sole and exclusive remedy under the Stock Purchase
Agreement.
Termination. The Stock Purchase Agreement permits either Purchaser or
the Company to terminate its obligations to consummate the Agreement (i) by
mutual agreement of the Company and Purchaser, or (ii) if the closing of the
Agreement does not occur by December 31, 1999 and the failure to close on or
before such date did not result from a breach of the Agreement by the party
seeking termination. The Purchaser may terminate the Stock Purchase Agreement if
(i) the Company's stockholders do not approve the Investment Proposal (Proposal
1), the Charter Amendment (Proposal 2) or the Charter and By-Laws Amendments
(Proposal 3) at the Special Meeting, or (ii) on or before September 13, 1999 the
Purchaser shall not have completed its due diligence in relation to the
transactions contemplated by the Agreement in a manner satisfactory to the
Purchaser in its sole discretion.
Indemnification. The representations, warranties, covenants and
agreements of the Company and its subsidiaries made in the Stock Purchase
Agreement will survive the Closing Date for the periods specified in the Stock
Purchase Agreement. The Company and its subsidiaries have agreed, jointly and
severally, to indemnify the Purchaser for any loss incurred which results from
(1) the inaccuracy of any representation or warranty of the Company or its
subsidiaries made in the Stock Purchase Agreement, (2) any breach or failure to
perform any covenant or agreement made by the Company or its subsidiaries in the
Stock Purchase Agreement and (3) any untrue statement or alleged untrue
statement of a material fact contained in this Proxy Statement or omission or
alleged omission of a material fact required to be stated in this Proxy
Statement or necessary to make a statement herein not misleading, other than the
section titled "The Purchaser" in the Proxy Statement. The Purchaser has agreed
to indemnify the Company and its subsidiaries for any loss incurred by them
which results from (1) the inaccuracy of any representation or warranty of
Purchaser made in the Stock Purchase Agreement and (2) any breach or failure to
perform any covenant or agreement made by Purchaser in the Stock Purchase
Agreement.
13
<PAGE> 14
REGISTRATION RIGHTS AGREEMENT
Pursuant to the terms of the Registration Rights Agreement attached
hereto as Exhibit B, the Purchaser and its permitted assignees ("Holders") shall
have the right to request the Company to register under and in accordance with
the Securities Act, all or any portion of their shares of Common Stock (commonly
referred to as a "Demand Registration"), provided, however, that the minimum
number of shares to be so registered shall be 100,000 shares of Common Stock.
The registration of such shares is subject to adjustment by the underwriter
participating in an underwritten offering. The Holders shall also have the right
to register all or any portion of their shares of Common Stock if the Company
files a Registration Statement with the SEC pursuant to a firm-commitment public
offering of Common Stock (commonly referred to as a "Piggyback Registration").
The terms of the Registration Rights Agreement also provide that in
connection with any Demand Registration or Piggyback Registration, the Company
will indemnify the Holders for all losses incurred by the Holders resulting from
a violation by the Company of any law, or with respect to any untrue or
allegedly untrue statement of material fact contained in a Registration
Statement or Prospectus or amendment or supplement thereto, or in any
preliminary prospectus. Similarly, the Holders have agreed to indemnify the
Company for all losses incurred by the Company in connection with any
information furnished by the Holders to the Company for use in connection with
such Registration Statement or the related Prospectus.
ADVISORY SERVICES AGREEMENT
Pursuant to the terms of the Advisory Services Agreement attached
hereto as Exhibit C, Churchill Capital, Inc. (the "Advisor"), shall provide
management and financial advisory services to the Company and its subsidiaries
upon the reasonable request of the Board of Directors of the Company. Services
rendered shall include periodic review of the strategic direction and plans of
the Company and its subsidiaries, review and evaluation of the annual business
plan and budget of the Company and its subsidiaries, review and evaluation of
sales, profitability, working capital and other financing requirements of the
Company and its subsidiaries, and assistance to the Company and its subsidiaries
with respect to the identification and negotiation of potential financing
sources. In consideration of the services rendered by the Advisor to the Company
during the term of the Advisor's engagement, the Company shall pay the Advisor a
monthly management fee of $10,000. The Advisor shall also be paid an investment
banking fee of $360,000 at the Closing, and the Company shall reimburse Advisor
for its out-of-pocket expenses, including environmental, legal, accounting and
administrative fees.
The terms of the Advisory Services Agreement also provide that the
Company shall indemnify the Advisor and its affiliates against all losses
incurred or which arise out of the provision of its services. The Company is
not, however, required to indemnify for losses resulting primarily from the
gross negligence or willful misconduct of the Advisor or its affiliates. Subject
to the right of the Advisor to terminate the Advisory Services Agreement upon
prior written notice to the Company, the term of the Advisor's engagement shall
continue until the earlier of (i) the time the Purchaser, its successors and
assigns no longer own in the aggregate more than fifty percent (50%) of the
shares of Common Stock acquired pursuant to the Stock Purchase Agreement, or
(ii) the fifth anniversary of the Advisor's appointment.
VOTING AGREEMENTS
Pursuant to the Voting Agreements previously executed by Larry L.
Asche, Diane L. Asche, Kevin M. Clark, Richard Baugh, Gary I. Goldberg and James
A. Jalovec, a form of which is attached hereto as Exhibit D, each of such
stockholders (excluding James A. Jalovec) has agreed that for so long as such
person is a stockholder of the Company, at any meeting of the holders of Common
Stock, each stockholder shall vote all shares of Common
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<PAGE> 15
Stock owned by it in favor of the appointment of the Purchaser Designees to the
Board of Directors of the Company. In addition, each of such stockholders
(including James A. Jalovec) has agreed, at a special meeting called for or in
connection with the Investment Proposal (Proposal 1), to vote (i) in favor of
the Charter Amendment (Proposal 2), (ii) in favor of the Investment Proposal
(Proposal 1), and (iii) in favor of the Charter and By-Laws Amendments (Proposal
3). The Voting Agreements shall terminate only upon and simultaneously with the
termination of the Stock Purchase Agreement in accordance with its terms.
INTERESTS OF CERTAIN PERSONS IN THE INVESTMENT PROPOSAL
Repayment of Indebtedness. A portion of the proceeds from the
Investment Proposal (Proposal 1) will be used to repay indebtedness owed by the
Company to (i) Larry L. Asche, Diane L. Asche and Kevin M. Clark which was
incurred by the Company to finance the acquisition of certain municipal solid
waste assets by STS and (ii) Richard S. Baugh which was incurred by the Company
to finance the acquisition of AG Carriers, Inc. The total amount of proceeds to
be used to repay this indebtedness is $3,131,000.
VOTE REQUIRED
The rules of The Nasdaq Stock Market require that the holders of a
majority of the shares present in person or represented by proxy and casting
votes on the proposal at the meeting approve the Investment Proposal. It is a
condition to the Company's obligations under the Stock Purchase Agreement that
such vote be obtained.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF PROPOSAL 1.
PROPOSAL 2
CHARTER AMENDMENT
General. On August __, 1999, the Board of Directors adopted the Charter
Amendment (Proposal 2), subject to approval by the stockholders, to increase the
number of authorized shares of capital stock from 10,000,000 shares to
25,000,000. The Board of Directors has determined it is advisable and in the
best interests of the stockholders of the Company to increase the number of
authorized shares of capital stock to complete the Investment Proposal (Proposal
1) and to accommodate future corporate transactions. The Board of Directors also
directed that the Charter Amendment be submitted for action at the Special
Meeting of Stockholders to be held on September 17, 1999.
Increase In The Number Of Authorized Shares Of Common Stock. The
Company's Certificate of Incorporation (the "Certificate") currently authorizes
the issuance of a total of 10,000,000 shares of capital stock, consisting of
10,000,000 shares of Common Stock, par value $.0001 per share. The Charter
Amendment will modify Article 4 of the Certificate to read as follows:
4 : The total number of shares of stock which the Corporation is
authorized to issue is 25,000,000 all of which are classified as Common
Stock with a par value of $.0001:
As of August 15, 1999, an aggregate of 5,956,920 shares of Common Stock
had been issued and 3,788,456 shares of Common Stock had been reserved for
issuance under the Company's various stock plans, employment agreements and
warrants. Upon approval of the Charter Amendment (Proposal 2), there will be an
aggregate of 15,254,624 authorized, unissued and unreserved shares of Common
Stock. Pursuant to the Stock
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<PAGE> 16
Purchase Agreement, the Company will issue up to 2,666,667 shares of Common
Stock to Purchaser at the closing of the Investment Proposal, plus up to
3,111,111 Additional Shares pursuant to the Share Price Guaranty.
The additional shares of Common Stock for which authorization is sought
would have the same rights and preferences of the Common Stock which is
currently authorized. Adoption of the proposed amendment and the subsequent
issuance of Common Stock would not affect the rights of holders of currently
outstanding Common Stock, except that increasing the number of shares of Common
Stock outstanding would have a dilutive effect on current stockholders of the
Company. Holders of Common Stock do not have preemptive rights to subscribe for
additional securities that may be issued by the Company, which means that
current stockholders do not have a prior right to purchase any new issue of
capital stock of the Company in order to maintain their proportionate ownership
thereof. If the Charter Amendment is adopted, it will become effective upon the
filing of an amendment to the Certificate with the Delaware Secretary of State.
All additional authorized shares could be issued by the Board of
Directors of the Company, without the necessity of any stockholder action,
except to the extent otherwise required by the DGCL or the rules of The Nasdaq
Stock Market. The rules of The Nasdaq Stock Market, in the case of a merger or
other acquisition transaction, generally require stockholder approval if more
than 20% of the outstanding common stock of a company is to be issued in a
single transaction or group of related transactions. Other than as described in
this Proxy Statement, the management of the Company is not aware of any specific
effort to accumulate the Company's securities or to obtain control of the
Company by means of a merger, tender offer, solicitation in opposition to
management or otherwise. However, the availability of additional, unreserved
shares might give the Board of Directors greater power to take actions in
opposition to an actual or threatened attempt to acquire control of the Company
and in certain respects may have the effect of limiting the ability of a third
party to effect a change in control of the Company. For example, additional
shares of Common Stock could be issued to make attempts to gain control of the
Company or the Board of Directors more difficult or time-consuming.
The Board of Directors of the Company believes that it is in the best
interests of the Company and its stockholders to have available a significant
number of shares of Common Stock. These shares would be available for issuance
in connection with the Investment Proposal, including the possible issuance of
the Additional Shares pursuant to the Share Price Guaranty, as well as future
public and private equity financings, mergers or acquisitions or other corporate
transactions, benefit programs (such as the Company's Stock Option Plan), or
stock splits or stock dividends.
Appraisal Rights In Respect Of The Proposed Amendment. Under the
applicable provisions of the DGCL, the Company's stockholders have no appraisal
rights with respect to the Certificate Amendment (Proposal 2).
VOTE REQUIRED
Under the DGCL, an amendment to the Certificate requires the
affirmative vote of the holders of a majority of the outstanding Common Stock
entitled to vote at the Special Meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF PROPOSAL 2.
PROPOSAL 3
CHARTER AND BY-LAWS AMENDMENTS
On August __, 1999, the Board of Directors adopted the Charter and
By-Laws Amendments (Proposal 3), subject to approval by the stockholders, to
increase the size of the Board to a maximum of fifteen directors. The
Certificate and By-Laws presently allow for a maximum of nine directors. The
Board currently has nine
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<PAGE> 17
members. Pursuant to the Stock Purchase Agreement, the Purchaser has the right
to designate four directors who will take office effective upon the Closing
("Purchaser Designees"). Additionally, pursuant to the Stock Purchase Agreement,
the Company has agreed that it shall take all actions necessary to cause to be
nominated, and shall use its best efforts to cause to be elected four
individuals designated by Purchaser so long as Purchaser holds at least 50% of
the shares of Common Stock purchased pursuant to the Stock Purchase Agreement.
In addition, under that certain Securities Purchase Agreement dated July 9, 1999
by and between the Company and James A. Jalovec (the "Jalovec Agreement"), Mr.
Jalovec has the right to designate two directors, one of whom has been
designated and appointed to the Board and the other of whom will be designated
upon approval by the stockholders of the Charter and By-Laws Amendments
(Proposal 3). The Board of Directors has determined it is advisable and in the
best interests of the stockholders of the Company to increase the size of the
Board to complete the Investment Proposal (Proposal 1) and consummate the
Jalovec Agreement. The Board of Directors also directed that the Charter and
By-Laws Amendments (Proposal 3) be submitted for action at the Special Meeting
of Stockholders to be held on September 17, 1999.
VOTE REQUIRED
Under the DGCL, an amendment to the Certificate requires the
affirmative vote of the holders of a majority of the Company's outstanding
Common Stock entitled to vote at the Special Meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF PROPOSAL 3.
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<PAGE> 18
STOCK OWNERSHIP OF DIRECTORS, EXECUTIVE
OFFICERS AND PRINCIPAL HOLDERS
The following table sets forth certain information regarding the
beneficial ownership of Common Stock as of August [15], 1999 by: (i) each person
known by the Company to own beneficially more than five percent of the
outstanding shares of Common Stock; (ii) each of the Company's directors; (iii)
each of the named executive officers; and (iv) all directors and named executive
officers as a group. Except as otherwise indicated, each person named below has
an address in care of the Company's principal executive offices. The Company
believes that each person named below has sole voting and investment power with
respect to all shares of Common Stock shown as beneficially owned by such
holder.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
BENEFICIAL PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNER OWNERSHIP(1) OF CLASS
- ------------------------------------ ------------ --------
<S> <C> <C>
Larry L. Asche 594,011(2)(4) 9.7
Diane L. Asche 544,842(3)(4) 9.0
Kevin M. Clark 536,956(5) 8.8
Leon M. Monachos 315,000(6) 5.0
Richard S. Baugh 140,075(7) 2.3
Gary I. Goldberg 456,932(8) 7.3
Dennis D. Wilson 16,500(9) *
Michael Todd Recob 27,500(10) *
Karl R. Sattler 5,000(11) *
James A. Jalovec 1,491,250(12) 24.2
All directors and executive
officers as a group (9 persons) 2,636,816(1)(2)(3)(4)(5)(6)(7)(8)(9)(10)(11)(13) 37.1
</TABLE>
- -----------------------
*less than 1%
(1) Applicable percentage of ownership as of August [15], 1999 is based
upon 5,956,920 shares of Common Stock outstanding. Beneficial ownership
is determined in accordance with the rules of the Securities and
Exchange Commission, and includes voting and investment power with
respect to the shares shown as beneficially owned. Shares of Common
Stock subject to options currently exercisable or exercisable within 60
days after August 6, 1999 are deemed outstanding for computing the
percentage ownership of the person holding such options, but are not
deemed outstanding for computing the percentage ownership of any other
person.
(2) Includes (i) options to purchase 26,000 shares of Common Stock pursuant
to an employment and stock option agreement; (ii) options to purchase
50,000 shares of Common Stock pursuant to the Stock Option Plan; and
(iii) warrants to purchase 100,000 shares of Common Stock issued in
connection with the subordinated debt financing of the acquisition of
the Waste Transport Business. See "Certain Relationships and Related
Transactions."
(3) Includes (i) options to purchase 26,000 shares of Common Stock pursuant
to an employment and stock option agreement; and (ii) warrants to
purchase 102,500 shares of Common Stock issued in connection with
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<PAGE> 19
the subordinated debt financing of the acquisition of the Waste
Transport Business. See "Certain Relationships and Related
Transactions."
(4) Larry L. Asche and Diane L. Asche are husband and wife. Each of the
Asches disclaims beneficial interest in the Common Stock held in the
name of his or her spouse.
(5) Includes (i) options to purchase 26,000 shares of Common Stock pursuant
to an employment and stock option agreement; and (ii) warrants to
purchase 100,000 shares of Common Stock issued in connection with the
subordinated debt financing of the acquisition of the Waste Transport
Business. See "Certain Relationships and Related Transactions."
(6) Represents (i) options to purchase 160,000 shares of Common Stock
pursuant to an employment and stock option agreement between the
Company and Mr. Monachos; and (ii) options to purchase 155,000 shares
of Common Stock pursuant to the Stock Option Plan.
(7) Includes warrants to purchase 25,000 shares of Common Stock issued in
connection with the subordinated debt financing of the acquisition of
the Waste Transport Business. See "Certain Relationships and Related
Transactions."
(8) Includes (i) options to purchase 250,000 shares of Common Stock
pursuant to an employment and stock option agreement between the
Company and Mr. Goldberg; (ii) options to purchase 70,000 shares of
Common Stock pursuant to the Stock Option Plan; and (iii) warrants to
purchase 25,000 shares of Common Stock issued in connection with the
subordinated debt financing of the acquisition of the Waste Transport
Business. See "Certain Relationships and Related Transactions."
(9) Includes options to purchase 15,000 shares of Common Stock pursuant to
the Stock Option Plan.
(10) Includes (i) options to purchase 10,000 shares of Common Stock pursuant
to the Stock Option Plan; and (ii) warrants to purchase 5,000 shares of
Common Stock issued in connection with the acquisition of the Waste
Transport Business.
(11) Represents options to purchase 5,000 shares of Common Stock pursuant
to the Stock Option Plan.
(12) Includes (i) options to purchase 10,000 shares of Common Stock pursuant
to the Stock Option Plan; (ii) warrants to purchase 115,000 shares of
Common Stock issued in connection with the subordinated debt financing
of the acquisition of the Waste Transport Business; and (iii) warrants
to purchase 75,000 shares of Common Stock issued in connection with the
conversion of the subordinated debt financing into shares of Common
Stock. See "Certain Relationships and Related Transactions." The
address of Mr. Jalovec is 7170 South Woelfel Road, Franklin, Wisconsin
53132.
(13) Excludes (i) options to purchase 40,000 shares of Common Stock not
currently exercisable pursuant to an employment and stock option
agreement between the Company and Mr. Monachos; (ii) warrants held by
the underwriters of the Company's initial public offering for the
purchase of 53,125 shares of Common Stock, which are currently
exercisable; (iii) options to purchase 113,000 shares of Common Stock
currently exercisable issued to the Company's non-executive employees
pursuant to the Stock Option Plan, as amended; (iv) Series B warrants
to purchase 965,705 shares of the Company's Common Stock issued to the
stockholders of Polar Express Corporation upon the merger with the
Company; (v) options to purchase 35,000 shares of the Company's Common
Stock held by former directors and advisor; (vi) options to purchase
250,000 shares of Common Stock not currently exercisable pursuant to an
employment and stock
19
<PAGE> 20
option agreement between the Company and Mr. Goldberg; (vii) warrants
to purchase 108,126 shares of Common Stock issued to investors and the
placement agent in connection with the July 1997 private placement;
(viii) warrants to purchase 455,000 shares of Common Stock issued to
investors (other than Directors and certain executive officers of the
Company) and the placement agent in connection with the subordinated
debt financing of the acquisition of the Waste Transport Business; and
(ix) options to purchase 360,000 shares of Common Stock granted
pursuant to employment and stock option agreements between the Company
and certain officers of STS (other than Mr. Goldberg), which options
were granted as an inducement essential to such officers entering into
the employment agreements.
DESCRIPTION OF THE COMPANY'S CAPITAL STOCK
The authorized capital stock of the Company consists of 10,000,000
shares of Common Stock with $.0001 par value per share. As of August 15, 1999,
there were 5,956,920 shares of Common Stock outstanding held by approximately
___ holders of record.
COMMON STOCK
Holders of Common Stock are entitled to receive dividends declared and
paid on the Common Stock from funds lawfully available therefor as and when
determined by the Board of Directors. Except as otherwise required by law or the
Certificate, each holder of Common Stock has one vote in respect of each share
of stock held by him of record on the books of the Company for the election of
directors and on all matters submitted to a vote of stockholders of the Company.
There is no cumulative voting meaning that the holders of a majority of the
shares voting for the election of directors can elect all the directors if they
choose to do so. In the event of any dissolution, liquidation or winding up of
the affairs of the Company, whether voluntary or involuntary, the holders of
Common Stock are entitled to receive an equal portion of the net assets of the
Company available for distribution to holders of Common Stock.
CERTAIN CORPORATE GOVERNANCE MATTERS
General. Certain provisions of the Certificate, the Bylaws and the DGCL
may have the effect of impeding the acquisition of control of the Company by
means of a tender offer, a proxy fight, open market purchases or otherwise in a
transaction not approved by the Board.
The provisions of the Certificate, the Bylaws and the DGCL described
below are designed to reduce, or have the effect of reducing, the vulnerability
of the Company to an unsolicited proposal for the restructuring or sale of all
or substantially all of the assets of the Company or an unsolicited takeover
attempt that is unfair to the Company stockholders. The summary of such
provisions set forth below does not purport to be complete and is subject to and
qualified in its entirety by reference to the Certificate, Bylaws and the DGCL.
Business Combinations. Section 203 of the DGCL restricts a wide range
of transactions ("Business Combinations") between a corporation and an
interested stockholder. An "Interested Stockholder" is, generally, any person
who beneficially owns, directly or indirectly, 15% or more of the corporation's
outstanding voting stock. Business Combinations are broadly defined to include
(i) mergers or consolidations with, (ii) sales or other dispositions of more
than 10% of the corporation's assets to, (iii) certain transactions resulting in
the issuance or transfer of any stock of the corporation or any subsidiary to,
(iv) certain transactions which would result in increasing the proportionate
share of stock of the corporation or any subsidiary owned by, or (v) receipt of
the benefit (other than proportionately as a stockholder) of any loans, advances
or other financial benefits by, an interested stockholder. Section 203 of the
DGCL provides that an interested stockholder may not engage in a business
combination with the corporation for a period of three years from the time of
becoming an interested
20
<PAGE> 21
stockholder unless (i) the board of directors approved either the business
combination or the transaction which resulted in the person becoming an
interested stockholder prior to the time such person became an interested
stockholder, (ii) upon consummation of the transaction which resulted in the
person becoming an interested stockholder, that person owned at least 85% of the
corporation's voting stock (excluding shares owned by persons who are officers
and also directors and shares owned by certain employee stock plans) or (iii)
the business combination is approved by the board of directors and authorized by
the affirmative vote of at least two-thirds of the outstanding voting stock not
owned by the interested stockholder. The restrictions on business combinations
with interested stockholders contained in Section 203 do not apply to a
corporation whose certificate of incorporation contains a provision expressly
electing not to be governed by the statute. The Certificate does not contain a
provision electing to "Opt-Out" of Section 203.
Upon consummation of the Investment Proposal (Proposal 1), Purchaser
will become an interested stockholder within the meaning of Section 203 of the
DGCL pursuant to the Stock Purchase Agreement. The Board of Directors of the
Company approved the Stock Purchase Agreement and the transactions contemplated
thereby prior to the time that Purchaser will have become an interested
stockholder. Accordingly Section 203 of the DGCL is inapplicable to the
Investment Proposal (Proposal 1).
LIMITATION OF LIABILITY
Delaware law authorizes corporations to limit or eliminate the personal
liability of directors to corporations and their stockholders for monetary
damages for breach of directors' fiduciary duty of care. The duty of care
requires that, when acting on behalf of the corporation, directors must exercise
an informed business judgment based on all material information reasonably
available to them. Absent the limitations authorized by Delaware law, directors
are accountable to corporations and their stockholders for monetary damages for
conduct constituting gross negligence in the exercise of their duty of care.
Delaware law enables corporations to limit available relief to equitable
remedies such as injunction or rescission. The Certificate limits the liability
of directors of the Company to the Company or its stockholders (in their
capacity as directors but not their capacity as officers) to the fullest extent
permitted by Delaware law. Specifically, directors of the Company will not be
personally liable for monetary damages for breach of director's fiduciary duty
as a director, except for liability (i) for any breach of director's duty of
loyalty to the Company or its stockholders, (ii) for acts or omissions not in
good faith or which involve intentional misconduct or a knowing violation of
law, (iii) for unlawful payments of dividends or unlawful stock repurchases or
redemptions as provided in Section 174 of the DGCL, or (iv) for any transaction
from which the director derived an improper personal benefit.
The inclusion of this provision in the Certificate may have the effect
of reducing the likelihood of derivative litigation against directors and may
discourage or deter stockholders or management from bringing a lawsuit against
directors for breach of their duty of care, even though such an action, if
successful, might otherwise have benefited the Company and its stockholders. The
Company's Bylaws also provide indemnification to the Company's officers and
directors and certain other persons with respect to certain matters.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the Company is Continental Stock
Transfer and Trust Company.
21
<PAGE> 22
STOCKHOLDER PROPOSALS FOR THE 2000 PROXY STATEMENT
Any stockholder satisfying the SEC requirements and wishing to submit a
proposal to be included in the Proxy Statement for the 2000 Annual Meeting of
Stockholders should submit the proposal in writing to the Company's Secretary,
Aasche Transportation Services, Inc., 10214 N. Mt. Vernon Rd., Shannon, Illinois
61078.
INFORMATION INCORPORATED BY REFERENCE
The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1998, the Company's Quarterly Reports on Form 10-Q for the quarter
ended March 31, 1999 and June 30, 1999 and the Company's Current Reports on Form
8-K filed July 22, 1999 and August __, 1999, each of which has been filed with
the Commission, are incorporated by reference in this Proxy Statement except as
superseded or modified herein. All documents filed by the Company with the
Commission pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act
after the date of this Proxy Statement and before the Special Meeting will be
deemed to be incorporated herein by reference and to be a part hereof from the
date of filing such documents. Any statement contained in any document
incorporated or deemed to be incorporated by reference herein will be deemed to
be modified or superseded for purposes of this Proxy Statement to the extent
that a statement contained herein or in any other subsequently filed document
that also is incorporated or deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded will not be deemed, except as so modified or superseded, to
constitute a part of this Proxy Statement.
Statements contained in this Proxy Statement as to the contents of any
contract or other document that is included as (or as part of) an Exhibit to
this Proxy Statement are not necessarily complete, and in each instance
reference is made to the copy of such contract or other document included as an
Exhibit to this Proxy Statement.
The information contained in this Proxy Statement with respect to the
business of Purchaser and the persons presently contemplated to be designated by
Purchaser to serve as directors of the Company has been supplied by Purchaser.
THE COMPANY WILL PROVIDE WITHOUT CHARGE, UPON THE WRITTEN OR ORAL
REQUEST OF ANY PERSON TO WHOM THIS PROXY STATEMENT IS DELIVERED, INCLUDING ANY
BENEFICIAL OWNER OF COMMON STOCK, A COPY OF ANY AND ALL OF THE DOCUMENTS
(EXCLUDING CERTAIN EXHIBITS) RELATING TO THE COMPANY THAT HAVE BEEN OR WILL BE
INCORPORATED BY REFERENCE IN THIS PROXY STATEMENT. SUCH REQUESTS FOR THE
DOCUMENTS SHOULD BE DIRECTED TO CORPORATE SECRETARY, ASCHE TRANSPORTATION
SERVICES, INC., 10214 NORTH MT. VERNON ROAD, SHANNON, ILLINOIS 61078.
INDEPENDENT PUBLIC ACCOUNTANTS
The Company expects representatives of Ernst & Young LLP, independent
auditors, to be available at the Special Meeting to respond to appropriate
questions from stockholders.
22
<PAGE> 23
OTHER MATTERS
If any matter not described herein should properly come before the
meeting, the persons named in the proxy card will vote the shares in accordance
with their best judgment. At the same time this Proxy Statement went to press,
the Company knew of no other matters which might be presented for stockholder
action at the Special Meeting.
For the Board of Directors
DIANE L. ASCHE
Secretary
Shannon, Illinois
August 17, 1999
23
<PAGE> 24
APPENDIX A
TEXT OF AMENDMENT TO THE CERTIFICATE OF INCORPORATION
INCREASE IN AUTHORIZED SHARES
AMENDMENT TO THE
ASCHE TRANSPORTATION SERVICES, INC.
CERTIFICATE OF INCORPORATION
The Asche Transportation Services, Inc. Certificate of Incorporation is
hereby amended, effective ________, 1999, by striking Paragraph 4 in its
entirety and replacing it with the following:
"4. The total number of shares of stock which the Corporation is
authorized to issue is 20,000,000 all of which are classified as Common
Stock with a par value of $.0001."
IN WITNESS WHEREOF, Asche Transportation Services, Inc. has caused this
Amendment to be executed by its officer hereto duly authorized this _____ day of
_______, 1999.
ASCHE TRANSPORTATION SERVICES, INC.
By:
Name: Larry L. Asche
Its: Chairman and Chief Executive Officer
24
<PAGE> 25
APPENDIX B
TEXT OF AMENDMENT TO THE CERTIFICATE OF INCORPORATION
INCREASE IN DIRECTORS
AMENDMENT TO THE
ASCHE TRANSPORTATION SERVICES, INC.
CERTIFICATE OF INCORPORATION
The Asche Transportation Services, Inc. Certificate of Incorporation is
hereby amended, effective ________, 1999, by striking the first sentence of
Paragraph 5 in its entirety and replacing it with the following:
"The Board of Directors of the Corporation shall consist of not less
than five (5) nor more than fifteen (15) directors, the precise number
to be fixed from time to time by a majority vote of the Board of
Directors; provided, however, that the number of directors shall not be
reduced so as to shorten the term of any director at the time in
office."
IN WITNESS WHEREOF, Asche Transportation Services, Inc. has caused this
Amendment to be executed by its officer hereto duly authorized this ____ day of
_____, 1999.
ASCHE TRANSPORTATION SERVICES, INC.
By:
Name: Larry L. Asche
Its: Chairman and Chief Executive Officer
25
<PAGE> 26
APPENDIX C
TEXT OF AMENDMENT TO THE BY-LAWS
INCREASE IN DIRECTORS
The Asche Transportation Services, Inc. By-Laws are hereby amended,
effective _______, 1999, by striking the first sentence of Section 3.3 in its
entirety and replacing it with the following:
"3.3 NUMBER AND TERM OF OFFICE. The Board of Directors of the
Corporation shall consist of not less than five (5) nor more than
fifteen (15) directors, the precise number to be fixed from time to
time by a majority vote of the Board of Directors; provided, however,
that the number of directors shall not be reduced so as to shorten the
term of any director at the time in office."
IN WITNESS WHEREOF, Asche Transportation Services, Inc. has caused this
Amendment to be executed by its officer hereto duly authorized this ____ day of
_____, 1999.
ASCHE TRANSPORTATION SERVICES, INC.
By:
Name: Larry L. Asche
Its: Chairman and Chief Executive Officer
26
<PAGE> 27
R&W LLP DRAFT
8/4/99
STOCK PURCHASE AGREEMENT
by and between
ASCHE TRANSPORTATION SERVICES, INC.,
SPECIALTY TRANSPORTATION SERVICES, INC., ASCHE TRANSFER, INC.,
AG CARRIERS, INC.,
and
CHURCHILL ENVIRONMENTAL & INDUSTRIAL EQUITY PARTNERS, L.P.
dated as of August , 1999
<PAGE> 28
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
Section 1. Definitions and Principles of Construction...............................................1
1.01. Defined Terms............................................................................1
1.02. Principles of Construction...............................................................5
Section 2. Sale and Purchase of Stock...............................................................5
2.01. Sale and Purchase of Stock...............................................................5
2.02. Purchase Price; Number of Shares to be Purchased.........................................5
2.03. Closing..................................................................................6
Section 3. Representations and Warranties of the Company and the Subsidiaries.......................6
3.01. Organization and Good Standing...........................................................6
3.02. Authorization; No Conflict...............................................................6
3.03. Enforceability...........................................................................7
3.04. Approvals................................................................................7
3.05. Capitalization...........................................................................7
3.06. Subsidiaries.............................................................................8
3.07. Compliance with Laws and Orders..........................................................8
3.08. SEC Reports and Financial Statements.....................................................8
3.09. Absence of Certain Changes or Events.....................................................9
3.10. Absence of Undisclosed Liabilities.......................................................9
3.11. Legal Proceedings........................................................................9
3.12. Taxes....................................................................................9
3.13. Employee Benefit Plans..................................................................10
3.14. Environmental...........................................................................10
3.15. Affiliate Transactions..................................................................11
3.16. Brokers.................................................................................11
3.17. Exemption from Registration; Restrictions on Offer and Sale of Same or Similar
Securities.............................................................................11
3.18. Disclosure..............................................................................11
Section 4. Representations and Warranties of Purchaser.............................................11
4.01. Organization............................................................................11
4.02. Investment Intent.......................................................................11
4.03. No Registration of Securities...........................................................11
4.04. Investor Status.........................................................................12
</TABLE>
i
<PAGE> 29
<TABLE>
<S> <C> <C>
4.05. Authority to Execute and Perform Agreement; No Conflict.................................12
4.06. Brokers.................................................................................12
4.07. Approvals...............................................................................12
Section 5. Covenants of the Company, the Subsidiaries and Purchaser................................12
5.01. Company.................................................................................12
5.02. Purchaser...............................................................................16
Section 6. Conditions Precedent to Obligations of Purchaser........................................17
Section 7. Conditions Precedent to Obligations of the Company and the Subsidiaries.................19
Section 8. Notices.................................................................................20
Section 9. Survival of Representations, Warranties, Covenants and Agreements.......................21
Section 10. Indemnification.........................................................................21
10.01. Indemnity by the Company and the Subsidiaries...........................................21
10.02. Purchaser's Indemnity...................................................................22
10.03. Procedure...............................................................................22
10.04. Indemnification not Affected by Knowledge...............................................23
Section 11. Termination.............................................................................23
11.01. Termination.............................................................................23
11.02. Effect of Termination...................................................................24
11.03. No Liability............................................................................24
Section 12. Miscellaneous...........................................................................24
12.01. Amendment or Waiver.....................................................................24
12.02. Consent to Jurisdiction.................................................................25
12.03. Further Assurances......................................................................25
12.04. Attorney's Fees and Costs...............................................................25
12.05. Assignment..............................................................................25
12.06. Entire Agreement........................................................................25
12.07. Expenses................................................................................25
12.08. Public Announcements....................................................................25
</TABLE>
Exhibit A - Form of Opinion of Special Counsel to the Company
Exhibit B - Form of Registration Rights Agreement
Exhibit C-1 - Form of Opinion of Counsel to Purchaser
Exhibit C-2 - Form of Opinion of Legal Counsel to Purchaser
Exhibit D - Form of Advisory Services Agreement
Exhibit E-1 - Form of Voting Agreement
Exhibit E-2 - Form of Jalovec Voting Agreement
ii
<PAGE> 30
This STOCK PURCHASE AGREEMENT, dated as of August , 1999, is by
and between Asche Transportation Services, Inc., a Delaware corporation (the
"Company"), Churchill Environmental & Industrial Equity Partners, L.P., a
limited partnership organized under the laws of the State of Delaware
("Purchaser"), and Specialty Transportation Services, Inc., Asche Transfer,
Inc., and AG Carriers, Inc., (each a "Subsidiary" and collectively, the
"Subsidiaries").
WHEREAS, the Company, through its Subsidiaries, is a diversified
transportation services company;
WHEREAS, in order to repay certain of the Company's indebtedness, and
in order to finance the Company's continued growth, the Company desires to issue
and sell to Purchaser, and Purchaser desires to purchase from the Company,
shares of common stock of the Company, par value $.0001 per share (the "Common
Stock");
WHEREAS, in order to induce the Purchaser to enter into this Agreement,
and concurrently herewith, Purchaser has entered into voting agreements
(collectively, the "Voting Agreements") substantially in the form attached
hereto as Exhibit E-1 with each of Larry L. Asche, Diane L. Asche, Kevin M.
Clark, Richard Baugh and Gary I. Goldberg, and substantially in the form
attached hereto as Exhibit E-2 with James A. Jalovec, pursuant to which each of
such persons has agreed, among other things, to vote the shares of the Company's
Common Stock owned by them in favor of: (i) the Charter Amendment (as
hereinafter defined), (ii) the Investment Proposal (as hereinafter defined),
(iii) the Charter and By-Law Amendments and (iv) the continued appointment of
the Purchaser Designees to the Company's Board of Directors.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth herein and for good and valuable consideration, the receipt of which
is hereby acknowledged, the parties agree as follows:
Section 1. Definitions and Principles of Construction.
1.01. Defined Terms. As used in this Agreement, and unless the
context requires a different meaning, the following terms have the meanings
indicated:
"Additional Shares" has the meaning set forth in Section 2.02(c).
"Adjustment Period" means the period beginning on September 1,
2000, and ending on November 1, 2000.
"Adjustment Price" has the meaning set forth in Section 2.02(c).
"Advisor" has the meaning set forth in the Advisory Services
Agreement.
"Advisory Services Agreement" means an agreement in the form
attached hereto as Exhibit D.
"Affiliate" means any Person that, directly or indirectly, through
one or more intermediaries, controls or is controlled by or is under common
control with the Person specified. For purposes of this definition, control of a
Person means (i) being the executive officer or director of the Company; and
(ii) having the power, direct or indirect, to direct or cause the direction of
the management and policies of such Person, whether by contract or otherwise. In
any event, and without limitation of the previous sentence, any Person owning
more than ten percent (10%) of the voting securities of a second
<PAGE> 31
Person shall be deemed to control that second Person, provided, however, that in
no event shall the Purchaser or James A. Jalovec be deemed an Affiliate of the
Company.
"Agreement" means this Agreement, as the same may be amended,
supplemented or modified in accordance with the terms hereof.
"Benefit Plan" has the meaning set forth in Section 3.13.
"Board of Directors" means the Board of Directors of the Company,
as constituted from time to time.
"Business Day" means any day other than a Saturday or a Sunday or
a day when commercial banks are permitted or required by law to be closed in New
York City.
"Charter and By-Law Amendments" means amendments to the Company's
Charter and By-Laws for the purpose of increasing the maximum number of
directors to fifteen (15) persons in accordance with Section 5.01(b) of this
Agreement.
"Charter Amendment" means an amendment to the Company's
Certificate of Incorporation for the purpose of increasing the maximum number of
shares of Common Stock that the Company is authorized to issue [Twenty-Five
Million (25,000,000)] shares of Common Stock, to permit the sale by the Company,
and the purchase by the Purchaser, of the Initial Shares and Additional Shares.
"Claim Notice" has the meaning set forth in Section 10.03(a).
"Closing" has the meaning set forth in Section 2.03(a).
"Closing Date" shall mean the date on which the Closing occurs.
"Code" means the Internal Revenue Code of 1986, as amended.
"Common Stock" means the Common Stock of the Company, $.0001 par
value per share.
"Company" means Asche Transportation Services, Inc.
"Company Disclosure Schedule" means the disclosure letter dated
the date of this Agreement from the Company to Purchaser.
"Company Financial Statements" has the meaning set forth in
Section 3.08.
"Company Permits" has the meaning set forth in Section 3.07.
"Company SEC Reports" has the meaning set forth in Section 3.08.
"Competing Transactions" has the meaning set forth in Section
5.01(c).
"Damages" has the meaning set forth in Section 10.01.
"Diligence Out Date" has the meaning set forth in Section
11.01(c).
"ERISA" has the meaning set forth in Section 3.13.
2
<PAGE> 32
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
"Extraordinary Transaction" has the meaning set forth in Section
2.02(c).
"Governmental or Regulatory Authorities" means any court,
tribunal, arbitrator, authority, agency, commission, official or other
instrumentality of the United States, any foreign jurisdiction, the European
Community or any political subdivision or agency of any of the foregoing.
"HSR Act" means Section 7A of the Clayton Act (Title II of the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended) and the rules
and regulations promulgated thereunder.
"Indemnified Party" and "Indemnifying Party" have the meanings set
forth in Section 10.03.
"Individual Transferee" has the meaning set forth in Section
5.02(b).
"Initial Price Per Share" means a price of (a) Five Dollars
($5.00) per share of Common Stock, if the average closing price of the Company's
Common Stock on the NASDAQ for the ten (10) Trading Days immediately preceding
the Closing Date is equal to, or greater than, Five Dollars ($5.00) per share,
or (b) Four Dollars and Fifty Cents ($4.50) per share of Common Stock, if the
average closing price of the Company's Common Stock on the NASDAQ for the ten
(10) Trading Days immediately preceding the Closing Date is less than Five
Dollars ($5.00) per share.
"Initial Shares" has the meaning set forth in Section 2.02(b).
"Investment Proposal" has the meaning set forth in Section
5.01(vii).
"Knowledge" means, as to any specified facts or information, that
those facts or information are within the actual knowledge of any executive
officer or director of the Company.
"Law" means any law, statute, rule, regulation, ordinance or other
pronouncement having the effect of law in the United States, any foreign
jurisdiction, the European Union or any political subdivision of the foregoing.
"Lien" means any lien, pledge, hypothecation, mortgage, security
interest, claim, lease, charge, option, right of first refusal, easement,
encroachment, transfer restriction, or other encumbrance of any kind.
"Lock-Up Period" has the meaning set forth in Section 5.02(b).
"Material Adverse Effect" means a material adverse effect or
impact upon the business, assets, condition (financial or otherwise), or results
of operations of the Company and its Subsidiaries, taken as a whole, or on the
ability of the Company or any of the Subsidiaries to perform its respective
obligations hereunder.
"Most Recent Balance Sheet" means the unaudited balance sheet of
the Company as of June 30, 1999.
"NASDAQ" means the Nasdaq National Market.
"Notice Period" has the meaning set forth in Section 10.03(a).
3
<PAGE> 33
"Order" means any writ, judgment, decree, injunction or similar
order of any Governmental or Regulatory Authority.
"Person" means an individual, partnership, corporation,
association, trust, joint venture, unincorporated organization, and any
government, governmental department or agency or political subdivision thereof.
"Proxy Statement" means the proxy statement of the Company on
Schedule 14A to be filed with the SEC in connection with the Stockholder
Meeting, as amended or supplemented (including all exhibits and schedules
thereto and documents incorporated by reference therein).
"Purchase Price" has the meaning set forth in Section 2.02.
"Purchaser" means Churchill Environmental & Industrial Equity
Partners, L.P.
"Purchaser Designees" has the meaning set forth in Section
5.01(b).
"Registration Rights Agreement" means an agreement in the form
attached as Exhibit B.
"Related Agreements" means the Registration Rights Agreement, the
Advisory Services Agreement and the Voting Agreements.
"Revised Initial Shares" means, at any time, a number of shares of
Common Stock equal to the number of shares of Common Stock authorized by the
Company's Certificate of Incorporation minus (a) shares of Common Stock issued
and outstanding, (b) shares of Common Stock reserved for issuance pursuant to
stock options and warrants [and (c) the number of shares of Common Stock
reserved for issuance upon conversion of the debt owed to Madison Securities,
Inc.]; provided, however, the number of Revised Initial Shares shall in no event
exceed the maximum number of shares of Common Stock which can be issued by the
Company to Purchaser without stockholder approval in accordance with Section
4310(c)(25)(H)(i)d of the NASDAQ Stock Market rules.
"Securities Act" means the Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder.
"SEC" means the Securities and Exchange Commission.
"Shares" has the meaning set forth in Section 2.01.
"Stockholder Meeting" has the meaning set forth in Section
5.01(vii).
"Subsidiaries" has the meaning set forth in the recitals to this
Agreement.
"Taxes" means any federal, state, county, local or foreign taxes,
charges, fees, levies, or other assessments, including all net income, gross
income, sales and use, ad valorem, transfer, gains, profits, excise, franchise,
real and personal property, gross receipt, capital stock, production, business
and occupation, disability, employment, payroll, license, estimated, stamp,
custom duties, severance or withholding taxes or charges imposed by any
governmental entity, including any interest and penalties (civil or criminal) on
or additions to any such taxes and any expenses incurred in connection with the
determination, settlement or litigation of any Tax liability.
4
<PAGE> 34
"Tax Return" means a report, return or other information required
to be supplied to a governmental entity with respect to Taxes including, where
permitted or required, combined or consolidated returns for any group of
entities that include the Company or any Subsidiary.
"Termination Fee" has the meaning set forth in Section 11.02.
"Trading Day" means a day on which the NASDAQ is open for trading
and on which one thousand (1000) shares or more of the Company's Common Stock
are traded.
"Transactions" means the Investment Proposal, Charter Amendment,
the Charter and By-Law Amendments.
"Underwritten Registration or Underwritten Offering" has the
meaning set forth in the Registration Rights Agreement.
"Voting Agreements" has the meaning set forth in the recitals to
this Agreement.
1.02. Principles of Construction. (a) All references to sections,
schedules and exhibits are to sections, schedules and exhibits in or to this
Agreement unless otherwise specified. The words "hereof," "herein," and
"hereunder" and words of similar import, when used in this Agreement, shall
refer to this Agreement as a whole and not to any particular provisions of this
Agreement.
(b) All accounting terms used in this Agreement shall be construed
in accordance with generally accepted accounting principles in the United
States.
Section 2. Sale and Purchase of Stock.
2.01. Sale and Purchase of Stock. The Company agrees to issue and
sell to Purchaser, and, subject to the terms and conditions hereof and in
reliance on the representations, warranties and covenants set forth or referred
to herein, Purchaser agrees to purchase from the Company, the number of shares
of Common Stock determined in accordance with Section 2.02 (the "Shares").
2.02. Purchase Price; Number of Shares to be Purchased. (a) The
aggregate purchase price for the Shares (the "Purchase Price") shall be
$12,000,000.
(b) The number of Shares (the "Initial Shares") to be issued and
sold by the Company at the Closing in consideration of the Purchase Price shall
be equal to the Purchase Price divided by the Initial Price Per Share.
(c) Not later than five (5) days after the end of the Adjustment
Period, the Company shall issue and deliver to Purchaser additional Shares, if
any, (the "Additional Shares") as follows: (i) (A) if the highest average
closing price on the NASDAQ of the Company's Common Stock for any ten (10)
consecutive Trading Days during the Adjustment Period (the "Adjustment Price")
is less than Six Dollars and Fifty Cents ($6.50) per share, and (B) the Initial
Price Per Share is Four Dollars and Fifty Cents ($4.50), the Company shall issue
and deliver to Purchaser a number of Additional Shares equal to the quotient of
(x) (1) Six Dollars and Fifty Cents ($6.50) multiplied by the number of Initial
Shares, minus (2) the Adjustment Price multiplied by
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the number of Initial Shares, divided by (y) the greater of the Adjustment Price
or Three Dollars ($3.00) per share, and (ii) (A) if the Adjustment Price is less
than Seven Dollars ($7.00) per share, and (B) the Initial Price Per Share is
Five Dollars ($5.00), the Company shall issue and deliver to Purchaser a number
of Additional Shares equal to the quotient of (x) (1) Seven Dollars ($7.00)
multiplied by the number of Initial Shares, minus (2) the Adjustment Price
multiplied by the number of Initial Shares, divided by (y) the greater of the
Adjustment Price or Three Dollars ($3.00) per share. If, prior to the end of the
Adjustment Period, the Company should subdivide or combine the outstanding
shares of the Company's Common Stock, then the reference amounts set forth in
this Section 2.02(c) shall be proportionately adjusted to place the Company and
Purchaser in the same position as if such subdivision or combination had not
occurred. If, prior to the end of the Adjustment Period, the Company merges or
consolidates with or into another corporation, with the result that the Company
is not the continuing corporation, or if, prior to the end of the Adjustment
Period the Company's outstanding Common Stock shall be changed, including, but
not limited to, by virtue of any merger, consolidation or recapitalization
(other than a subdivision or combination described above) (each an
"Extraordinary Transaction"), the Adjustment Period shall be, at the election of
Purchaser in its sole discretion, deemed to be the sixty (60) day period ending
on the Business Day prior to the consummation of the Extraordinary Transaction.
In the alternative, if Purchaser does not so elect, the provisions set forth in
the first sentence of this Section 2.02(c) shall apply to the securities into
which the Common Stock is converted or changed pursuant to the Extraordinary
Transaction and all references to the Company and Common Stock in such sentence
shall be deemed to refer to such securities and the issuer thereof,
respectively, and the term NASDAQ (including for the purposes of the definition
of Trading Day) will be deemed to refer to the exchange/trading system on which
such securities are traded and it shall be a condition to the consummation of
any Extraordinary Transaction by the Company that such issuer shall agree in
writing (to be delivered to Purchaser) to be bound by the provisions of this
Section 2.02(c) and Section 2.02(d).
2.03. Closing. (a) Subject to the other provisions of this
Agreement, the closing of the purchase and sale of the Initial Shares (the
"Closing") shall be held at the offices of Rogers & Wells LLP, 200 Park Avenue,
New York, New York, at 10:00 a.m. local time, on September 24, 1999, or, at the
option of the Purchaser, within thirty (30) days after the satisfaction or
waiver of the conditions contained in Sections 6 and 7.
(b) On the Closing Date, Purchaser shall pay the Purchase Price in
immediately available funds, by wire transfer to an account designated by the
Company not less than two (2) Business Days prior to the Closing Date or, if the
Company fails to so designate an account within the required time, by delivery
of a certified or official bank check payable to the order of the Company.
(c) Simultaneously with Purchaser's payment of the Purchase Price,
the Company shall deliver to Purchaser a certificate representing the Initial
Shares.
Section 3. Representations and Warranties of the Company and the
Subsidiaries. The Company and the Subsidiaries jointly and severally represent
and warrant to and for the benefit of Purchaser as follows:
3.01. Organization and Good Standing. Each of the Company and each
Subsidiary (a) is duly organized and existing in good standing in its
jurisdiction of formation, (b) is duly qualified and authorized to do business
in all other jurisdictions in which the nature of its business or property makes
such qualification necessary, and (c) has the power to own its properties and to
carry on its business as now conducted and as proposed to be conducted.
3.02. Authorization; No Conflict. Except as set forth in Section
3.02 of the Company Disclosure Schedule, the execution, delivery and performance
by the Company and each Subsidiary of this Agreement and the Related Agreements
to which it is a party, and the issuance and sale by the Company of the Shares,
(a) are within the Company's and each Subsidiary's corporate power and
authority, (b) have been duly authorized by all necessary corporate proceedings,
(c) do not and will not conflict with or result in any breach or violation of
any provision of the Certificate of Incorporation or
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Bylaws of the Company or any Subsidiary, (d) do not and will not conflict with
or result in any breach or violation of any provision of any law, regulation,
order, judgment, writ, injunction, license or permit, applicable to the Company
or any Subsidiary, except where such conflict, breach or violation would not
have a Material Adverse Effect, and (e) do not and will not conflict with or
result in any breach or violation of any of the terms or conditions of, or
constitute (or with notice or lapse of time or both constitute) a default under,
or give rise to the creation of any lien upon any of the property or assets of
the Company or any Subsidiary, under any material contract, agreement, lease or
other instrument to which the Company or any Subsidiary is a party or by which
any of their respective assets or properties is bound, except where such
conflict, breach or violation would not have a Material Adverse Effect.
3.03. Enforceability. Each of this Agreement and the Related
Agreements to which the Company and each Subsidiary is a party has been (or, in
the case of the Related Agreements, will be) duly executed and delivered by the
Company and each Subsidiary and constitutes (or, in the case of Related
Agreements, will constitute) the valid and legally binding obligation of the
Company and each Subsidiary enforceable against it in accordance with its
respective terms, except to the extent that its enforceability may be limited by
applicable bankruptcy, insolvency, reorganization or other laws affecting the
enforcement of creditors' rights generally and by principles of equity regarding
the availability of remedies.
3.04. Approvals. Except (i) for the approval of the Transactions
at the Stockholder Meeting by the Company's stockholders; (ii) any required
filing under the HSR Act, and the expiration or early termination of the waiting
period thereunder if the Company issues Additional Shares to Purchaser and (iii)
as set forth in Section 3.04 of the Company Disclosure Schedule, the execution,
delivery and performance by the Company and each Subsidiary of this Agreement
and the Related Agreements, and the purchase and sale of the Shares, do not and
will not require the approval or consent of, or any filing with or notice to,
any Governmental or Regulatory Authority or any other Person.
3.05. Capitalization. (a) The authorized capital stock of the
Company consists solely of Ten Million (10,000,000) shares of Common Stock at
the date hereof, and after the filing of the Charter Amendment at the Closing
will consist solely of [Twenty-Five Million (25,000,000)] shares of Common
Stock. All of the outstanding shares of capital stock of the Company are duly
authorized, validly issued, fully paid and nonassessable. Upon issuance and sale
to Purchaser in accordance with the terms of this Agreement the Shares will be
duly authorized, validly issued, fully paid and nonassessable and free and clear
of all Liens.
(b) Except as otherwise set forth in Section 3.05(b) of the
Company Disclosure Schedule, neither the Company nor any Subsidiary has
outstanding any rights (either pre-emptive or other) or options to subscribe for
or purchase from the Company or such Subsidiary or any warrants or other
agreements providing for or requiring the issuance or purchase or other
acquisition by or on behalf of the Company or such Subsidiary of, any capital
stock or other equity interests or any securities convertible into or
exchangeable for the Company's or such Subsidiary's capital stock or other
equity interests. Except as set forth in Section 3.05(b) of the Company
Disclosure Schedule, there are no voting trusts or other agreements or
understandings with respect to the voting of the capital stock or other equity
interests of the Company or such Subsidiary nor any restrictions on the
transferability or sale of such shares or other equity interests except as
provided under the Securities Act, state "blue sky" or securities laws, this
Agreement and the Related Agreements. Neither the Company nor any Subsidiary is
subject to any obligation (contingent or otherwise) to repurchase or otherwise
acquire, redeem or retire any shares of capital stock or other equity interests
of the Company or such Subsidiary or any securities convertible into or
exchangeable for any such capital stock or other equity interests.
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3.06. Subsidiaries. Section 3.06 of the Company Disclosure
Schedule sets forth the name, jurisdiction of organization, and amount of the
Company's and each other record owner's equity interest in each corporation or
other entity in which the Company, directly or indirectly, owns or has the power
to vote shares of any capital stock or other ownership interests having ordinary
voting power to elect a majority of the directors of such corporation, or other
persons performing similar functions for such entity, as the case may be, and
each partnership and limited liability company in which such corporation or
entity is a general partner or manager or member, as the case may be. Except for
ownership by the Company of the Subsidiaries as set forth in Section 3.06 of the
Company Disclosure Schedule or as otherwise set forth in Section 3.06 of the
Company Disclosure Schedule, neither the Company nor any Subsidiary directly or
indirectly owns any capital stock of, or other equity interest in, any person or
participates in any joint venture or similar arrangement with any person. Except
as set forth in Section 3.06 of the Company Disclosure Schedule, all of the
outstanding shares of capital stock of each Subsidiary have been duly authorized
and validly issued, are fully paid and non-assessable, and are owned,
beneficially and of record, directly or indirectly, by the Company free and
clear of all Liens.
3.07. Compliance with Laws and Orders. The Company and its
Subsidiaries hold all material permits, licenses, variances, exemptions, orders
and approvals of all Governmental and Regulatory Authorities necessary for the
lawful conduct of their respective businesses (the "Company Permits"). The
Company and its Subsidiaries are in compliance with the terms of the Company
Permits where the failure to comply would have a Material Adverse Effect. Except
as disclosed in the Company SEC Reports (as defined in Section 3.08) filed prior
to the date of this Agreement, the Company and its Subsidiaries are not in
material violation of or material default under any Law or Order of any
Governmental or Regulatory Authority.
3.08. SEC Reports and Financial Statements. The Company has
delivered or otherwise made available to Purchaser prior to the execution of
this Agreement a true and complete copy of each form, report, schedule,
registration statement and other document (together with all amendments thereof
and supplements thereto) filed by the Company or any of its Subsidiaries with
the SEC since January 1, 1996, (as such documents have since the time of their
filing been amended or supplemented, the "Company SEC Reports"), which, except
as disclosed in Section 3.08 of the Company Disclosure Schedule, are all the
documents (other than preliminary material) that the Company and its
Subsidiaries were required to file with the SEC since such date. Except as
disclosed in Section 3.08 of the Company Disclosure Schedule, and in the cases
where the Company SEC Reports have been amended, as of their respective dates,
the Company SEC Reports (i) complied as to form in all material respects with
the requirements of the Securities Act or the Exchange Act, as the case may be,
and (ii) did not contain any untrue statement of a material fact or omit 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. Except as disclosed in Section 3.08(b) of the Company
Disclosure Schedule, the audited consolidated financial statements and unaudited
interim consolidated financial statements (including, in each case, the notes,
if any, thereto) included in the Company SEC Reports (the "Company Financial
Statements") complied as to form in all material respects with the published
rules and regulations of the SEC with respect thereto, were prepared in
accordance with generally accepted accounting principles in the United States
applied on a consistent basis during the periods involved (except as may be
indicated therein or in the notes thereto and except with respect to unaudited
statements as permitted by Form 10-Q of the SEC) and fairly present in all
material respects (subject, in the case of the unaudited interim financial
statements, to normal, recurring year-end audit adjustments which are not
expected to be, individually or in the aggregate, material to the consolidated
financial position of the Company and its consolidated Subsidiaries taken as a
whole) the consolidated financial position of the Company and its consolidated
Subsidiaries as at the respective dates thereof and the consolidated results of
their operations and cash flows for the respective periods then ended. Except as
set forth in Section 3.08(b) of the Company Disclosure Schedule, each Subsidiary
of the Company is treated as a
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consolidated subsidiary of the Company in the Company Financial Statements for
all periods covered thereby.
3.09. Absence of Certain Changes or Events. Except as disclosed in
Section 3.09 of the Company Disclosure Schedule, (a) since December 31, 1998,
there has not been any change, event or development having, or that could be
reasonably expected to have, individually or in the aggregate with other
changes, events or developments a Material Adverse Effect, and (b) since
December 31, 1998, the Company and its Subsidiaries have conducted their
respective businesses only in the ordinary course of business consistent with
past practice.
3.10. Absence of Undisclosed Liabilities. Except for matters
reflected or reserved against in the balance sheet for the year ended December
31, 1998, included in the Company Financial Statements, as reflected on the Most
Recent Balance Sheet or as disclosed in Section 3.10 of the Company Disclosure
Schedule, neither the Company nor any of its Subsidiaries had at such date, or
has incurred since that date, any liabilities or obligations (whether absolute,
accrued, contingent, fixed or otherwise, or whether due or to become due) of any
nature that would be required by generally accepted accounting principles in the
United States, applied on a basis consistent with prior practice, to be
reflected on a consolidated balance sheet of the Company and its consolidated
subsidiaries (including the notes thereto), except liabilities or obligations
(i) which were incurred since such date in the ordinary course of business
consistent with past practice; and (ii) which are not, and could not reasonably
be expected to be, individually or in the aggregate, material to the business,
assets, condition (financial or otherwise) or operations of the Company, and its
Subsidiaries, taken as a whole.
3.11. Legal Proceedings. Except as disclosed in Section 3.11 of
the Company Disclosure Schedule, (i) there are no material claims, actions,
suits, arbitrations or proceedings pending or, to the Knowledge of the Company,
threatened against, relating to or affecting, nor to the Knowledge of the
Company are there any Governmental or Regulatory Authority investigations or
audits pending or threatened against, relating to or affecting, the Company or
any of its Subsidiaries or any of their respective assets and properties and
(ii) neither the Company nor any of its Subsidiaries is subject to any material
Order of any Governmental or Regulatory Authority.
3.12. Taxes. Each of the Company and each Subsidiary has filed all
Tax Returns required to be filed. All Tax Returns were in all material respects
true, complete and correct and have been filed on a timely basis. Each of the
Company and each Subsidiary have paid, in the time and manner prescribed by law,
all Taxes that are due and payable. There are no Tax liens on any property of
the Company or any Subsidiary. Each of the Company and each Subsidiary has
complied in all material respects with the provisions of the Code and have, in
the time and manner prescribed by law, withheld from employee wages and have
paid to the proper governmental authorities all amounts required. Each of the
Company and each Subsidiary has established on their books and records reserves
adequate to pay all Taxes not yet due and payable. There are no agreements,
waivers or other arrangements providing for an extension of time with respect to
the filing of any returns or the assessment of any Tax or deficiency against the
Company or any of the Subsidiaries nor, except as disclosed in Section 3.12 of
the Company Disclosure Schedule, to the Knowledge of the Company are there any
actions, suits, proceedings, investigations or claims pending against the
Company or any of the Subsidiaries in respect of any Tax, assessment or
governmental charge, or any other matters under discussion between the Company
or any of the Subsidiaries and any federal, state or local authority relating to
any Tax assessments, or governmental charges or, to the Knowledge of the Company
any claims against the Company or any of the Subsidiaries for additional Taxes,
assessments, or any governmental charges asserted by any such authority.
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3.13. Employee Benefit Plans. All employee benefit plans (as
defined in Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA")), and all plans, programs, policies, practices arrangements
or contracts (whether group or individual) providing for payments, benefits or
reimbursements to employees of the Company or any Subsidiary, former employees,
their beneficiaries and dependents, or under which such employees, former
employees, their beneficiaries and dependents, are covered through an employment
relationship with the Company or any entity required to be aggregated in a
controlled group or affiliated service group with the Company for purposes of
ERISA or the Code (including without limitation, under Section 414(b), (c), (m)
or (o) of the Code or Section 4001 of ERISA), at any relevant time ("Benefit
Plans") have been maintained and operated in material compliance with their
benefit terms and with the applicable provisions of ERISA, the Code and all
other applicable Laws, (and each such Benefit Plan intended to qualify under
Section 401(a) of the Code is the subject of a favorable unrevoked determination
letter issued by the Internal Revenue Service as to its tax-qualified status
under the Code). There is no material suit, action, dispute, claim, arbitration
or legal, administrative or other proceeding or governmental investigation
pending, or to the Knowledge of the Company threatened, alleging any breach of
the terms of any such Benefit Plan or of any fiduciary duties thereunder or
violation of any applicable Law with respect to any Benefit Plan. Neither
Purchaser nor any plan maintained by Purchaser or any of its Affiliates shall be
subject to any tax, fine, penalty or other liability of any kind whatsoever,
that would not have been incurred by Purchaser or any of its Affiliates but for
the transactions contemplated hereby. The execution of, and performance of the
transactions contemplated by this Agreement will not (either alone or upon the
occurrence of any additional or subsequent events) constitute an event under any
Benefit Plan, or any trust or loan that will or may result in any payment
(whether of severance pay or otherwise), acceleration, forgiveness of
indebtedness, vesting, distribution, increase in benefits or obligation to fund
benefits with respect to any employee of the Company or any of the Subsidiaries.
3.14. Environmental. Except as described in Section 3.14 of the
Company Disclosure Schedule: (i) the Company and each Subsidiary has conducted
its business in compliance with, and without giving rise to any liability under,
all applicable environmental laws, including, without limitation, by having all
material permits required under any environmental laws for the operation of its
business; (ii) none of the owned real property or, to the Company's Knowledge,
leased real property contains any hazardous substance in amounts exceeding the
levels permitted by applicable environmental laws; (iii) neither the Company nor
any Subsidiary has received any written notices, demand letters or requests for
information from any Governmental or Regulatory Authority or other person
indicating that the Company may be in violation of, or liable under, any
environmental law; (iv) no written reports have been filed, or are required to
be filed, by the Company or any Subsidiary concerning the release of any
hazardous substance or the threatened or actual violation of any environmental
law; (v) no hazardous substance has been disposed of, released or transported in
violation of any applicable environmental law to or from the owned real property
or, to the Company's Knowledge, the leased real property, or as a result of any
activity of the Company or any Subsidiary, that would give rise to liability
under any environmental law; (vi) there are no underground storage tanks on, in
or under any of the owned real property or the leased real property, and no
underground storage tanks have been closed or removed from any of the owned real
property or the leased real property in a manner that would give rise to
liability under any environmental law; and (vii) there is no asbestos present in
any of the owned real property or to the Company's Knowledge, the leased real
property the condition or existence of which currently requires remediation
under applicable environmental law. There have been no environmental
investigations, studies, audits, tests, reviews or other analyses regarding
compliance or noncompliance with any environmental law conducted by or on behalf
of the Company or any Subsidiary, or which are in the possession of the Company
or any Subsidiary, relating to the activities of the Company or any Subsidiary
or any of the owned real property or the leased real property that have not been
delivered or otherwise made available to Purchaser by the Company at its offices
prior to the date hereof.
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3.15. Affiliate Transactions. As of the date of this Agreement,
except as disclosed in Section 3.15 of the Company Disclosure Schedule and
except for bona fide intercompany obligations among the Company and its
Subsidiaries, (i) there are no outstanding amounts of indebtedness in excess of
$200,000, and (ii) there are no contracts or agreements, between the Company and
the Subsidiaries, or the Company and any officer, director or Affiliate of the
Company.
3.16. Brokers. Except for a fee payable by the Company to Madison
Group Securities Inc., in the amount of Seven Hundred Thousand Dollars
($700,000), and the grant to Madison Group Securities Inc., of five year
warrants to purchase 100,000 shares of Common Stock of the Company, all
negotiations relative to this Agreement or the Related Agreements and the
transactions contemplated hereby have been carried out by the Company directly
with Purchaser without the intervention of any Person on behalf of the Company
in such manner as to give rise to any valid claim by any Person against the
Company or the Purchaser or any of their respective Affiliates for a finder's
fee, brokerage commission or similar payment.
3.17. Exemption from Registration; Restrictions on Offer and Sale
of Same or Similar Securities. Assuming the representations and warranties of
the Purchaser set forth in Section 4.02 and Section 4.03 hereof are true and
correct in all material respects, the offer and sale of the Shares made pursuant
to this Agreement will be exempt from the registration requirements of the
Securities Act. Neither the Company nor any Person acting on its behalf has, in
connection with the offering of the Shares, engaged in (i) any form of general
solicitation or general advertising (as those terms are used within the meaning
of Rule 502(c) under the Securities Act), (ii) any action involving a public
offering within the meaning of Section 4(2) of the Securities Act, or (iii) any
action that would require the registration under the Securities Act of the
offering and sale of the Shares pursuant to this Agreement or that would violate
applicable state securities or blue sky laws. The Company has not made and will
not prior to the Closing make, directly or indirectly, any offer or sale of
Shares or of securities of the same or a similar class as the Shares if as a
result the offer and sale of the Shares contemplated hereby could fail to be
entitled to exemption from the registration requirements of the Securities Act.
As used herein, the terms "offer" and "sale" have the meanings specified in
Section 2(3) of the Securities Act.
3.18. Disclosure. No representation, warranty or statement made by
the Company or any Subsidiary in this Agreement or the Related Agreements, or in
any agreement, certificate, statement or document required to be delivered
pursuant hereto, contains any untrue statement of a material fact or omits to
state a material fact necessary in order to make the statements contained in
this Agreement or the Related Agreements or in such other agreement,
certificate, statement or document not misleading in light of the circumstances
in which they were made.
Section 4. Representations and Warranties of Purchaser. Purchaser
represents and warrants to and for the benefit of the Company as follows:
4.01. Organization. Purchaser is a limited partnership duly
formed, validly existing and in good standing under the laws of the State of
Delaware.
4.02. Investment Intent. Purchaser is acquiring the Shares for
investment, and not with a view to resell or otherwise distribute the Shares.
4.03. No Registration of Securities. Purchaser is aware that the
Shares have not been registered under the Securities Act or under state
securities or blue sky laws in reliance upon certain exemptions from such
registration, and may not be transferred except pursuant to an effective
registration under the Securities Act and under state securities or blue sky
laws or in a transaction exempt from such registration.
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4.04. Investor Status. Purchaser is able to bear the economic risk
of the investment of Purchaser in the Shares and has such knowledge and
experience in financial and business matters, so as to be capable of evaluating
the merits and risks of the prospective investment in the Shares. Purchaser is
aware that no Federal or state agency has (i) made any finding or determination
as to the fairness of any aspect of the investment in the Shares or (ii) passed
on or endorsed the merits of the offering of the Shares. Purchaser is an
"accredited investor," as that term is defined in Rule 501(a) of Regulation D
promulgated under the Securities Act.
4.05. Authority to Execute and Perform Agreement; No Conflict.
Purchaser has the legal right and power and all authority required to enter
into, execute and deliver this Agreement and each Related Agreement. Each of
this Agreement and the Related Agreements has been duly executed and delivered
and is the valid and binding obligation of such Purchaser enforceable in
accordance with its terms, except to the extent that its enforceability may be
limited by applicable bankruptcy, insolvency, reorganization or other laws
affecting the enforcement of creditors' rights generally and by principles of
equity regarding the availability of remedies. The execution, delivery and
performance by Purchaser of this Agreement and the Related Agreements, and the
purchase by Purchaser of the Shares hereunder, (a) are within Purchaser's power
and authority, (b) have been duly authorized by all necessary proceedings of
Purchaser, (c) do not conflict with or result in any breach or violation of any
provision of the limited partnership agreement of Purchaser, (d) do not conflict
with or result in any breach or violation of any provision of any material law,
regulation, order, judgment, writ, injunction, license or permit, applicable to
Purchaser, or (e) conflict with or result in any breach or violation of any of
the terms or conditions of, or constitute (or with notice or lapse of time or
both constitute) a default under, or give rise to the creation of any lien upon
any of the property or assets of Purchaser, under any material contract,
agreement, lease or other instrument to which Purchaser is a party or by which
any of its respective assets or properties is bound.
4.06. Brokers. Other than fees payable by the Company to Churchill
Capital, Inc., pursuant to the Advisory Services Agreement, all negotiations
relative to this Agreement and the transactions contemplated hereby, have been
carried out by Purchaser directly with the Company without the intervention of
any Person on behalf of Purchaser in such manner as to give rise to any valid
claim by any Person against the Company or any Subsidiary for a finder's fee,
brokerage commission or similar payment.
4.07. Approvals. Except for any required filing under the HSR Act,
and the expiration or early termination of the waiting period thereunder if the
Company issues Additional Shares to Purchaser, the execution, delivery and
performance by Purchaser of this Agreement and the Related Agreements, and the
purchase and sale of the Shares, do not require the approval or consent of, or
any filing with, any Governmental or Regulatory Authority or any other Person.
Section 5. Covenants of the Company, the Subsidiaries and Purchaser.
5.01. Company. (a) The Company and each Subsidiary jointly and
severally covenant and agree that, except with the written consent of Purchaser
it shall:
(i) Conduct of Business. From the date hereof until the later
of the date on which Purchaser receives the Additional Shares or the
Revised Initial Shares, as the case may be, the Company and each
Subsidiary shall operate its business in a manner consistent with the
manner in which it is being operated at the date of this Agreement and:
(1) Shall conduct its operations according to its usual,
regular and ordinary course in substantially the same manner as
heretofore conducted;
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(2) Shall use its reasonable efforts to preserve intact
its business organizations and goodwill, keep available the
services of its respective officers and employees and maintain
satisfactory relationships with those persons having business
relationships with them;
(3) Shall not amend its Certificate of Incorporation or
Bylaws or comparable governing instruments (other than the Charter
Amendment and the Charter and By-Law Amendments, as contemplated
by this Agreement);
(4) Shall promptly notify the Purchaser of any breach of
any representation or warranty by it contained herein;
(5) Shall promptly deliver to the Purchaser true and
correct copies of any report, statement or schedule filed with the
SEC subsequent to the date of this Agreement;
(6) Shall not (x) except pursuant to the exercise of
options, warrants, conversion rights and other contractual rights
of the Company with respect to the Company's Common Stock which
are existing on the date hereof and disclosed pursuant to this
Agreement or pursuant to a management incentive plan of the
Company currently being developed with respect to the Company's
Common Stock, issue any shares of its capital stock, effect any
stock split or otherwise change its capitalization as it existed
on the date hereof, provided, however, the maximum number of
shares of Common Stock and the option prices therefor which may be
issued pursuant to such management incentive plan shall be
disclosed in writing to Purchaser prior to the Diligence Out Date,
(y) grant, confer or award any option, warrant, conversion right
or other right not existing on the date hereof to acquire any
shares of its capital stock or grant, confer or award any bonuses
or other forms of cash incentives to any officer, director or key
employee except consistent with past practice or pursuant to such
management incentive plan, or (z) increase any compensation under
any employment agreement with any of its present or future
officers, directors or employees, except for normal increases
consistent with past practice and except in connection with the
renewal or extension of an employment agreement between any
executive officer and the Company or any Subsidiary, provided,
however, that such increase in compensation occurs prior to the
Diligence Out Date and notice thereof is provided in writing to
the Purchaser at the time of such increase, grant any severance or
termination pay to, or enter into any employment or severance
agreement with any officer or director except in connection with
the employment of a new hire or amend any such agreement in any
material respect other than severance arrangements which are
consistent with past practice with respect to employees terminated
by the Company, or adopt any new employee benefit plan (including
any stock option, stock benefit or stock purchase plan) or amend
any existing employee benefit plan in any material respect other
than to increase the number of shares reserved for option grants
subject to approval of the Stockholders;
(7) Shall not (i) declare, set aside or pay any dividend
or make any other distribution or payment with respect to any
shares of its capital stock or other ownership interests or (ii)
directly or indirectly redeem, purchase or otherwise acquire any
shares of its capital stock other than to repurchase from American
Capital Strategies, Ltd., its ownership interest in Specialty
Transportation Services, Inc., or make any commitment for, or
publicly announce its intention to take, any such action;
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<PAGE> 43
(8) Shall not sell, lease or otherwise dispose of any of
its assets except in the ordinary course of business;
(9) Shall not make any change to its accounting
(including tax accounting) methods, principles or practices,
except as may be required by generally accepted accounting
principles in the United States;
(10) Shall not enter into any transaction with any of
its Affiliates or their immediate family members (other than
employment arrangements made in the ordinary course of business,
consistent with past practice, and other than the repayment of the
Company's indebtedness to its Affiliates in the amount of [ ]
existing as of the date of this Agreement utilizing the proceeds
from the sale of Shares to Purchaser), or any Affiliate of any of
the foregoing;
(11) Shall not enter into any transaction with any of
its shareholders, officers, directors or employees or their
respective Affiliates that are not on terms any less favorable
than could be obtained from an independent third party on an arm's
length basis; and
(12) Shall not enter into any transaction with James A.
Jalovec, or any Affiliate thereof.
(ii) Antitrust, Competition Law Requirements. In the event of
the issuance and delivery to Purchaser of Additional Shares, and in any
event within five (5) days after the end of the Adjustment Period, take
promptly all actions necessary to make the filings required of the
Company or its Affiliates with any Governmental or Regulatory
Authorities in connection with Purchaser's acquisition of Additional
Shares, including without limitation those required under the HSR Act,
and comply at the earliest practicable date with any request for
additional information received by the Company or its Affiliates from
any Governmental or Regulatory Authority in respect of such filing and
cooperate with Purchaser in connection with any similar or comparable
filing required to be made by Purchaser and in connection with
resolving any investigation or other inquiry concerning the
transactions contemplated by this Agreement commenced by any
Governmental or Regulatory Authority.
(iii) Investigation by Purchaser. Upon reasonable notice, the
Company and its Subsidiaries will permit Purchaser and its
representatives to have reasonable access to the Company's and each
Subsidiary's employees, agents, assets and properties and all relevant
books, records and documents of or relating to the business and assets
of the Company and its Subsidiaries during normal business hours and
will furnish to Purchaser such information, financial records and other
documents relating to the Company or its Subsidiaries and their
operations and business as Purchaser may reasonably request. The
Company and its Subsidiaries will permit Purchaser and its
representatives reasonable access to the Company's and each
Subsidiary's accountants, auditors and, upon the advance request of
Purchaser, suppliers and customers for reasonable consultation or
verification of any information obtained by Purchaser and will use
commercially reasonable efforts to cause such Persons to cooperate with
Purchaser and its representatives in such consultations and in
verifying such information.
(iv) Notice of Events. Promptly give Purchaser notice of (A)
any event, condition or circumstance occurring from the date hereof
through the Closing Date that would constitute a violation or breach of
this Agreement or (B) any event, occurrence, transaction or other item
which would have been required to have been disclosed on any Schedule
or statement
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<PAGE> 44
delivered hereunder, had such event, occurrence, transaction or item
existed on the date hereof other than items arising in the ordinary
course of business which would not render any representation or
warranty of such parties materially misleading.
(v) Equality of Rights. Grant to Purchaser (in addition to
rights already held by Purchaser) rights substantially equivalent to
those obtained by any other equity holder who acquires from the Company
or any Affiliate thereof an equal or smaller percentage of voting
interest in the Company than Purchaser.
(vi) Use of Proceeds. The Company will use the proceeds
received by the Company from the sale of the Common Stock contemplated
by this Agreement solely to (A) repay its subordinated debt and in
accordance with the respective terms of such debt and warrants,
repurchase outstanding warrants held by American Capital Strategies
Ltd. ("ACS") in Specialty Transportation Services, Inc., (B) repay
other senior and subordinated debt of the Company in accordance with
its terms including, but not limited to indebtedness owing to any
Affiliate of the Company in an amount not exceeding [ ], (C) purchase
the ten percent (10%) ownership position held by ACS in Specialty
Transportation Services, Inc. for an aggregate purchase price
determined in accordance with the agreements between the Company and
ACS, (D) finance acquisitions, (E) pay fees and expenses relating to
the transactions contemplated by this Agreement, and (F) for general
corporate purposes.
(vii) Stockholder Meeting; Proxy Material; Charter Amendment.
The Company shall cause a meeting of its stockholders to be duly called
and held on or prior to- September 17, 1999, or such later date as the
Company deems necessary so as to obtain the number of votes required to
approve the Transactions, but in no event later than October 15, 1999,
for the purpose of voting on (A) the approval of the purchase of the
Shares by the Purchaser pursuant to the terms of this Agreement (the
"Investment Proposal"), (B) the approval of the Charter Amendment and
the Charter By-Law Amendments and (C) transacting such other business
as may properly come before the meeting or any adjournment thereof (the
"Stockholder Meeting"). The Board of Directors shall recommend approval
and adoption of the Transactions. In connection with the Stockholder
Meeting, the Company: (A) shall promptly prepare and file with the SEC,
in accordance with the Exchange Act, the Proxy Statement, shall use its
best efforts to have the Proxy Statement and/or any amendment or
supplement thereto cleared by the SEC and shall thereafter mail to its
shareholders as promptly as practicable the Proxy Statement; (B) shall
use all best efforts to obtain the necessary approvals by its
shareholders of the Transactions; and (C) shall otherwise comply with
all legal requirements applicable to such meeting. The Company shall
make available to the Purchaser prior to the filing thereof with the
SEC copies of the preliminary Proxy Statement and any amendments or
supplements thereto, shall make any changes therein reasonably
requested by the Purchaser insofar as such changes relate to any
matters relating to the Purchaser or the description of the
transactions contemplated by this Agreement, the Transactions and the
Related Agreements and shall not file any such Proxy Statement or
amendments or supplements thereto as to which the Purchaser shall
reasonably object.
(b) Board of Directors. Prior to the Closing, the Company shall
take all actions necessary to increase the size of the Company's Board of
Directors from nine (9) members to fifteen (15) members and to elect four (4)
new members who shall take office effective upon the Closing and be designated
by the Purchaser (the "Purchaser Designees"). From and after the Closing and for
so long as Purchaser and its successors and assigns beneficially own in the
aggregate more than fifty percent (50%) of the number of Initial Shares and
Additional Shares originally issued to Purchaser, the Company shall take all
actions necessary to cause to be nominated, and shall use its best efforts to
cause to be elected, a
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<PAGE> 45
number of members of the Company's Board of Directors (rounded up to the next
whole number) (such members to be designated by the holders of a majority of the
shares of Common Stock beneficially owned by Purchaser and its successors and
assigns) which bears the same proportion to the total number of members of the
Company's Board of Directors as the number of shares of Common Stock then
beneficially owned in the aggregate by Purchaser and its successors and assigns
bears to the total number of shares of Common Stock then issued and outstanding.
The Company shall, so long as the Purchaser Designees serve on the Company's
Board of Directors, cause to be maintained in effect policies of directors' and
officers' liability insurance reasonably acceptable to Purchaser.
(c) Exclusivity. Until the earlier to occur of the Closing or the
termination of this Agreement, the Company and its Subsidiaries, and each
officer, director, agent and representative of the Company and its Subsidiaries
will not, directly or indirectly, (a) submit, solicit, initiate, encourage or
discuss any proposal or offer from any person relating to any (i)
reorganization, dissolution or recapitalization involving the Company or any of
its Subsidiaries, (ii) merger or consolidation involving the Company or any of
its Subsidiaries, (iii) sale of any assets of the Company or any of its
Subsidiaries outside the ordinary course of business or sale of capital stock or
other equity interests in the Company or any of its Subsidiaries, or (iv)
similar transaction or business combination involving the Company or any of its
Subsidiaries or its respective assets, capital stock or equity interests (the
transactions described in clauses (i) through (iv) above are hereinafter
referred to as "Competing Transactions"); or (b) furnish any information with
respect to, assist or participate in or facilitate in any other manner any
effort or attempt by any person to do or seek the foregoing. The Company and its
Subsidiaries will terminate all discussions with any third party regarding the
foregoing and will notify Purchaser immediately if any person engages in such
discussions or makes any proposal or offer with respect to the foregoing.
(d) Revised Initial Shares. If the Purchaser shall have waived the
conditions contained in Section 6(n) and elected not to terminate this
Agreement, the Company shall issue and deliver to Purchaser the Revised Initial
Shares at the Closing.
(e) Best Efforts. The Company and each Subsidiary jointly and
severally covenants and agrees that, except with the written consent of the
Purchaser, each shall use its respective best efforts to cause all of the
conditions set forth in Section 6 to be fulfilled as promptly as practicable
after the date of this Agreement.
5.02. Purchaser. (a) Purchaser covenants and agrees that, except
with the written consent of the Company, it shall use its best efforts to cause
all of the conditions set forth in Section 7 to be fulfilled as promptly as
practicable after the date of this Agreement.
(b) Lock-Up Period and Registration Rights. The Purchaser shall
not, for a period commencing on the Closing Date and terminating on the date two
(2) years after the Closing Date (the "Lock-Up Period"), effect any sale or
other transfer of the Shares acquired pursuant to this Agreement, provided,
however, that notwithstanding the above during the Lock-Up Period (i) Purchaser
or any of its permitted transferees set forth in this sentence may sell Shares
pursuant to an Underwritten Registration or Underwritten Offering, and (ii)
Purchaser may transfer Shares to any partner in the Purchaser and, in the case
of any partner in the Purchaser which is a corporation, partnership or limited
liability company, such partner may transfer to any stockholder, partner or
member thereof, respectively, or (iii) in the case where the permitted
transferee set forth in this sentence is an individual (an "Individual
Transferee") such Individual Transferee may transfer Shares to such Individual
Transferee's spouse or descendants (including adopted children and
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<PAGE> 46
stepchildren, if any), or a trust, the sole income beneficiary of which, or a
corporation, partnership or limited liability company, the sole stockholders,
limited and/or general partners or members, as the case may be, of which,
include the Individual Transferee, such Individual Transferee's spouse and/or
such Individual Transferee's descendants (including adopted children and
stepchildren, if any); provided that in the case of each transfer pursuant to
clauses (ii) or (iii) above the transferee agrees in writing (to be delivered to
the Company) to be bound by the provisions of this Section 5.02(b).
(c) Standstill. The Purchaser and Churchill Capital, Inc., shall
not from the date hereof until the end of the Adjustment Period, buy, sell, or
otherwise dispose of shares of Common Stock, other than as contemplated by this
Agreement and the Related Agreements.
Section 6. Conditions Precedent to Obligations of Purchaser.
Purchaser's obligation to purchase the Initial Shares or the Revised Initial
Shares, as the case may be, at the Closing pursuant to this Agreement is subject
to compliance by the Company and each Subsidiary with its agreements herein
contained and to the satisfaction, on or prior to the Closing Date with respect
to Purchaser's obligation to consummate the Closing, of the following
conditions:
(a) Charter Documents; Good Standing Certificate. Purchaser shall
have received from the Company and each Subsidiary (i) a certificate from a duly
authorized officer thereof dated as of the Closing Date certifying as to (A) the
absence of any amendment to its Certificate or Articles of Incorporation since
the date of the Secretary of State's certificate referred to in clause (ii)
below, and (B) the completeness and accuracy of its By-Laws as in effect on the
Closing Date, (ii) a long-form certificate, dated not more than ten (10) days
prior to the Closing Date, of the Secretary of state of incorporation listing
its Certificate or Articles of Incorporation and each amendment thereto on file
in his office and certifying that (A) the attached copy of its Certificate or
Articles of Incorporation and each amendment thereto is a true and correct copy
thereof, (B) such amendments are the only amendments on file in its office, (C)
that all franchise taxes have been paid to the date of such certificate and (D)
that such entity is duly incorporated and in good standing under the laws of the
state of incorporation.
(b) Proof of Corporate Action. Purchaser shall have received from
the Company and each Subsidiary copies, certified by a duly authorized officer
thereof to be true and complete as of the Closing Date, of the resolutions of
the Board of Directors of each Subsidiary and the Board of Directors and (to the
extent required under applicable Law or the requirements of NASDAQ) the
stockholders of the Company authorizing the Transactions and the execution,
delivery and performance of this Agreement and the Registration Rights
Agreement.
(c) Incumbency Certificate. Purchaser shall have received from the
Company and each Subsidiary an incumbency certificate, dated the Closing Date,
signed by a duly authorized officer thereof, and giving the name and bearing a
specimen signature of each individual who shall be authorized to sign, in the
name and on behalf of the Company and each Subsidiary, this Agreement.
(d) Legal Opinion. Purchaser shall have received from Sachnoff &
Weaver, Ltd., special counsel to the Company, their opinion, dated the Closing
Date, substantially in the form attached hereto as Exhibit A.
(e) Representations and Warranties; Officers' Certificates. The
representations and warranties of the Company and each Subsidiary contained
herein shall be true and correct in all material respects on and as of the
Closing Date with the same force and effect as though such representations and
warranties were made on and as of such date (except for representations and
warranties which by their terms are made expressly as of an earlier date, which
shall be true and correct as of such earlier date) and the Company and each
Subsidiary shall have performed and complied with all conditions, covenants and
agreements required to be performed or complied with by prior to the Closing
Date; and Purchaser shall have received on the Closing Date a certificate to
this effect signed by an authorized officer of the Company and each Subsidiary.
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<PAGE> 47
(f) Legality; Authorization; Consents. The purchase of the Shares
shall not be prohibited by any Law or Order. The applicable waiting period under
the HSR Act shall have expired.
(g) Litigation, Etc. There shall not be in effect on the Closing
Date any Order or Law restraining, enjoining or otherwise prohibiting or making
illegal the consummation of any of the transactions contemplated by this
Agreement or which could reasonably be expected to otherwise result in a
material diminution of the benefits of the transactions contemplated by this
Agreement to Purchaser, and there shall not be pending or threatened on the
Closing Date any Action or Proceeding or any other action in, before or by any
Governmental or Regulatory Authority which could reasonably be expected to
result in the issuance of any such Order or the enactment, promulgation or the
deemed applicability of any such Law to Purchaser, the Company, any Subsidiary
or the transactions contemplated by this Agreement.
(h) Registration Rights Agreement. The Company shall have
executed and delivered to the Purchaser the Registration Rights Agreement,
substantially in the form attached hereto as Exhibit B.
(i) NASDAQ Requirements. The shares of Common Stock issuable to
Purchaser shall have been approved for quotation on the NASDAQ, subject to
notice of issuance, by the Nasdaq Stock Market, Inc.
(j) Board of Directors. If the Purchaser purchases the Initial
Shares, the Purchaser Designees shall have been elected to the Company's Board
of Directors.
(k) Advisory Services Agreement. If the Purchaser purchases the
Initial Shares, the Company shall have executed and delivered the Advisory
Services Agreement, substantially in the form attached hereto as Exhibit D.
(l) Voting Agreements. The Voting Agreements and Jalovec Voting
Agreement shall be in full force and effect.
(m) Transaction Costs. Churchill Capital, Inc., shall have
received by wire transfer of immediately available funds from the Company (i) an
investment banking fee equal to three percent (3%) of the Purchase Price, or in
the event Purchaser purchases the Revised Initial Shares, an amount equal to
three percent (3%) of (A) the number of Revised Initial Shares multiplied by (B)
the Initial Price Per Share; (ii) an administrative and processing fee of Five
Thousand Dollars ($5,000); (iii) if Purchaser purchases Initial Shares, a fee of
Ten Thousand Dollars ($10,000) representing payment of the monthly management
fee for the initial month of the term of the Advisor's engagement pursuant to
the Advisory Services Agreement; and (iv) all reasonable out-of-pocket expenses
that the Purchaser and Churchill Capital, Inc. have incurred in connection with
the negotiation, execution and performance of this Agreement and the
transactions contemplated hereby (including legal, accounting, and environmental
and other professional fees).
(n) Stockholder Approval. The Transactions shall have been duly
approved by the holders of the Common Stock of the Company entitled to vote
thereon at the Stockholder Meeting; provided, however, that Purchaser, in its
sole discretion, in lieu of terminating this Agreement in accordance with clause
(B) of Section 11.01(c), may waive the foregoing condition, in which event the
Company shall proceed with the Closing on the terms and conditions set forth
herein except that, in lieu of the Initial Shares and the Additional Shares to
be issued hereunder, at the Closing the Company shall issue and deliver the
Revised Initial Shares to the Purchaser at a price per share equal to the
Initial Price Per Share.
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<PAGE> 48
(o) D&O Insurance. If the Purchaser purchases the Initial Shares,
the Company shall have obtained the insurance policies required pursuant to
Section 5.01(b).
(p) Warrants. The Company shall have delivered to the Purchaser
true and complete copies of the warrants issued to Madison Group Securities Inc.
(q) American Capital Strategies, Ltd. The Company shall have
delivered to the Purchaser true and complete copies of documents governing all
subordinated debt and outstanding warrants held by American Capital Strategies,
Ltd.
(r) Default Waivers. The Company shall have delivered to the
Purchaser true and complete copies of waivers of default and non-compliance
granted to the Company by American Capital Strategies, Ltd., and by each of the
Company's and its Affiliates' senior secured and unsecured lenders in relation
to all loans, warrants and other similar debt instruments pursuant to which the
Company and its Affiliates is considered in default, or in respect of which the
Company or its Affiliates has not complied with loan covenants contained
therein.
(s) Consents. The Company shall have obtained the consent of each
of Mellon Bank and American Capital Strategies, Ltd. to the Transactions and
furnished copies of such consents to Purchaser.
(t) General. All instruments and legal, governmental,
administrative and corporate proceedings in connection with the transactions
contemplated by this Agreement shall be reasonably satisfactory in form and
substance to Purchaser, and Purchaser shall have received copies of all
documents, including, without limitation, records of corporate or other
proceedings, opinions of counsel, consents, licenses, approvals, permits and
orders which Purchaser may have reasonably requested in connection therewith.
Section 7. Conditions Precedent to Obligations of the Company and the
Subsidiaries. The Company's obligation to issue and sell the Initial Shares or
the Revised Initial Shares as the case may be pursuant to this Agreement is
subject to compliance by Purchaser with the agreements herein contained, and to
the satisfaction, on or prior to the Closing Date with respect to its obligation
to consummate the Closing of the following conditions:
(a) Representations and Warranties. The representations and
warranties of Purchaser contained herein shall be true and correct in all
material respects on and as of the Closing Date with the same force and effect
as though such representations and warranties were made on and as of such date
(except for representations and warranties which by their terms are made
expressly as of an earlier date, which shall be true and correct as of such
earlier date) and Purchaser shall have performed and complied with all
conditions, covenants and agreements required to be performed or complied with
by it prior to the Closing Date; and the Company shall have received on the
Closing Date a certificate to this effect signed by an authorized officer of
Purchaser with respect to the certificate to be issued on the Closing Date.
(b) Legality; Authorization; Consents. The issuance and sale of
the Shares shall not be prohibited by any Law or Order. The applicable waiting
period under the HSR Act shall have expired.
(c) Legal Opinion. The Company shall have received from Rogers &
Wells LLP, special counsel for Purchaser, and Kevin Dooley, Esq., Senior Vice
President and Legal Counsel for Purchaser, their legal opinions, dated the
Closing Date, substantially in the form attached hereto as Exhibit C-1 and
Exhibit C-2, respectively.
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<PAGE> 49
(d) Incumbency Certificate. The Company shall have received from
Purchaser an incumbency certificate, dated the Closing Date, signed by a duly
authorized officer thereof, and giving the name and bearing a specimen signature
of each individual who shall be authorized to sign, in the name and on behalf of
Purchaser, this Agreement.
(e) Litigation, Etc. There shall not be in effect on the Closing
Date any Order or Law restraining, enjoining or otherwise prohibiting or making
illegal the consummation of any of the transactions contemplated by this
Agreement or which could reasonably be expected to otherwise result in a
material diminution of the benefits of the transactions contemplated by this
Agreement to Purchaser, and there shall not be pending or threatened on the
Closing Date any Action or Proceeding or any other action in, before or by any
Governmental or Regulatory Authority which could reasonably be expected to
result in the issuance of any such Order or the enactment, promulgation or
deemed applicability to Purchaser, the Company, any Subsidiary or the
transactions contemplated by this Agreement of any such Law.
(f) Stockholder Approval. If the Purchaser purchases the Initial
Shares, the Transactions shall have been duly approved by the holders of the
Common Stock of the Company entitled to vote thereon at the Stockholder Meeting.
(g) Consents. The Company shall have obtained the consent of each
of Mellon Bank and American Capital Strategies, Ltd. to the Transactions and
furnished copies of such consents to Purchaser.
Section 8. Notices. Any notice or other communication in connection
with this Agreement shall be deemed to be delivered if in writing (or in the
form of a telecopy) addressed as provided below and if either (a) actually
delivered or telecopied to said address or (b) in the case of a letter, three
(3) Business Days shall have elapsed after the same shall have been deposited in
the United States mail, postage prepaid and registered or certified:
If to the Company or any Subsidiary:
c/o - Asche Transportation Services, Inc.
10214 N. Mt. Vernon Road
Shannon, IL 61078
Attention: Leon M. Monachos
Telecopier: (815) 864-2646
With a copy to (which shall not constitute notice):
Sachnoff & Weaver, Ltd.
30 South Wacker Drive
Chicago, Illinois 60606-7484
Attention: Joel R. Schaider
Telecopier: (312) 207-6400
If to Purchaser:
Churchill Capital, Inc.
590 Madison Avenue
New York, New York 10022
Attention: John J. Quirk
Telecopier: (212) 832-4270
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<PAGE> 50
With a copy to (which shall not constitute notice):
Churchill Capital, Inc.
3100 Metropolitan Centre
333 South 7th Street
Minneapolis, Minnesota 55402
Attention: Kevin C. Dooley
Senior Vice President and
Legal Counsel
Telecopier: (612) 673-6615
With a copy to (which shall not constitute notice):
Rogers & Wells LLP
200 Park Avenue
New York, New York 10166
Attention: Steven A. Hobbs
Telecopier: (212) 878-8375
Section 9. Survival of Representations, Warranties, Covenants and
Agreements. The representations, warranties, covenants and agreements of the
Company, the Subsidiaries and Purchaser contained in this Agreement and or in
any other document or papers delivered pursuant to this Agreement, will survive
the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby (i) with respect to representations and
warranties or any covenant to be performed in whole or in part on or before the
Closing Date, until the date which is thirty-six (36) months after the Closing
Date; provided that the representations and warranties set forth in Sections
3.01, 3.02, 3.03, 3.05, 3.06, 3.12, 3.13, and 3.14 will survive until the
expiration of all applicable statutes of limitation with respect to the matters
covered thereby; and (ii) with respect to all other covenants and agreements,
until 90 days following the last date on which each such covenant or agreement
is to be performed, or if no such date is specified, indefinitely; provided,
however, that any representation, warranty, covenant or agreement that would
otherwise terminate in accordance with clause (i) or (ii) above will continue to
survive, if a Claim Notice shall have been given under Section 10.03 on or prior
to such termination date, until the related claim for indemnification has been
satisfied or otherwise resolved as provided in Section 10.03.
Section 10. Indemnification.
10.01. Indemnity by the Company and the Subsidiaries. (a) Subject
to the provisions of this Section 10, the Company and each Subsidiary jointly
and severally indemnify and hold Purchaser and its respective officers,
directors, stockholders, managers, agents, employees, representatives,
affiliates, successors and assigns, harmless from and against any and all
damage, loss (including loss of value), cost, obligation, claims, demands,
assessments, settlements, judgments or liability (whether based on contract,
tort, product liability, strict liability or otherwise), including Taxes, and
all expenses (including interest, penalties and attorneys' and accountants' fees
and disbursements) (collectively referred to herein as "Damages") incurred in
litigation or otherwise, and any investigation relating thereto, by any of the
above-named persons, directly or indirectly, arising from or in connection with:
(i) the inaccuracy, untruth or incompleteness, as of the date made or deemed
made, of any representation or warranty by the Company or any Subsidiary in this
Agreement or in any other agreement, certificate (including, without limitation,
the certificates delivered by the Company and each Subsidiary pursuant to
Section 6), schedule, exhibit or writing required to be delivered to Purchaser
pursuant to this Agreement; (ii) any breach of or failure to perform any
covenant or agreement made by the Company or its Subsidiaries in
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<PAGE> 51
this Agreement; and (iii) any untrue or alleged untrue statement of a material
fact contained in the Proxy Statement or in any amendment or supplement thereto,
or arising out of or based upon any omission or alleged omission of a material
fact required to be stated therein or necessary to make the statement therein
not misleading, except for the section in the Proxy Statement titled "The
Purchaser."
10.02. Purchaser's Indemnity. Subject to the provisions of this
Section 10, Purchaser, from and after the Closing Date, shall indemnify and hold
the Company and the Subsidiaries, and their respective officers, directors,
stockholders, agents, employees, representatives, affiliates, successors and
assigns, harmless from and against any Damages incurred in litigation or
otherwise, and any investigation related thereto, by the Company or any
Subsidiary, directly or indirectly, arising from or in connection with: (a) the
inaccuracy, untruth or incompleteness, as of the date made or deemed made, of
any representation or warranty by Purchaser in this Agreement or in any other
agreement, certificate (including without limitation the certificates delivered
by Purchaser pursuant to Section 7), schedule, exhibit or writing delivered to
the Company or any Subsidiary pursuant to this Agreement; and (b) any breach of
or failure to perform any covenant or agreement made by Purchaser in this
Agreement.
10.03. Procedure. No claim for indemnification shall be valid
unless made prior to the expiration (pursuant to Section 9) of the applicable
representation, warranty or covenant on which it is based. All claims for
indemnification by a party under this Section 10 (the party claiming
indemnification and the party against whom such claims are asserted being
hereinafter called the "Indemnified Party" and the "Indemnifying Party,"
respectively) shall be asserted and resolved as follows:
(a) In the event that any claim or demand for which an
Indemnifying Party would be liable to an Indemnified Party hereunder is asserted
against or sought to be collected from such Indemnified Party by a third party,
such Indemnified Party shall with reasonable promptness give notice (the "Claim
Notice") to the Indemnifying Party of such claim or demand, specifying the
nature of and specific basis for such claim or demand and the amount or the
estimated amount thereof to the extent then feasible (which estimate shall not
be conclusive of the final amount of such claim and demand); provided, however,
that no failure to give, or delay in giving, any such Claim Notice shall excuse
or diminish the Indemnifying Party's obligations to the Indemnified Party under
this Section 10, unless such failure or delay is prejudicial to Indemnifying
Party. The Indemnifying Party shall have ten (10) days from the date the Claim
Notice is given in accordance with Section 8 of this Agreement (the "Notice
Period") to notify the Indemnified Party (i) whether or not it disputes the
liability of the Indemnifying Party to the Indemnified Party hereunder with
respect to such claim or demand, and (ii) whether or not it desires, at the cost
and expense of the Indemnifying Party, to defend the Indemnified Party against
such claim or demand; provided, however, that any Indemnified Party is hereby
authorized, but is not obligated, prior to and during the Notice Period, to file
any motion, answer or other pleading that it shall deem necessary or appropriate
to protect its interests or those of the Indemnifying Party. If the Indemnifying
Party notifies the Indemnified Party within the Notice Period that it desires to
defend the Indemnified Party against such claim or demand, the Indemnifying
Party shall, subject to the last sentence of this paragraph, have the right to
control the defense against the claim by all appropriate proceedings and any
settlement negotiations. If the Indemnifying Party assumes the defense of a
proceeding, (i) no compromise or settlement of such claims may be effected by
the Indemnifying Party without the Indemnified Party's consent (such consent not
to be unreasonably withheld or delayed) unless the sole relief provided is
monetary damages that are paid in full by the Indemnifying Party; and (ii) the
Indemnified Party will have no liability with respect to any compromise or
settlement of such claims effected without its consent. If the Indemnified Party
desires to participate in, but not control, any such defense, it may do so at
its sole cost and expense. If the Indemnifying Party fails to respond to the
Indemnified Party within the Notice Period or otherwise elects not to defend the
Indemnified Party, or after electing to defend fails to commence or diligently
pursue such defense, then the Indemnified Party shall have the right, but not
the
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obligation, to undertake or continue such defense and to compromise or
settle the claim or other matter, all on behalf, for the account and at the risk
of the Indemnifying Party.
(b) If requested by the Indemnifying Party, the Indemnified Party
agrees, at the Indemnifying Party's expense and upon presentation of adequate
security for the payment of such expenses, to cooperate with the Indemnifying
Party and its counsel in contesting any claim or demand which the Indemnifying
Party elects to contest, or, if appropriate and related to the claim in
question, in making any counterclaim against any person asserting the
third-party claim or demand, or any cross-complaint against any person.
(c) If any Indemnified Party should have a claim against the
Indemnifying Party hereunder which does not involve a claim or demand being
asserted against or sought to be collected from it by a third party, the
Indemnified Party shall send a Claim Notice with respect to such claim to the
Indemnifying Party. If the Indemnifying Party disputes such claim, such dispute
shall be resolved by litigation in an appropriate court of competent
jurisdiction described in Section 12.02. If the Indemnifying Party does not
dispute such claim, then the Indemnifying Party shall pay to the Indemnified
Party the amount of such claim within thirty (30) days after receipt of such
Claim Notice.
(d) In connection with the matters for which indemnification is
sought hereunder (i) the Company agrees to give Purchaser and its
representatives reasonable access during regular business hours and upon five
(5) days' prior written notice to the Company, to the books, records and
employees of the Company to the extent such reasonably relate to the matters to
which the Claim Notice relates and (ii) Purchaser agrees to give the Company and
its representatives reasonable access, during regular business hours and upon
five (5) days' prior written notice to Purchaser, to the books, records and
employees of Purchaser to the extent they reasonably relate to the matters to
which the Claim Notice relates.
10.04. Indemnification not Affected by Knowledge. The right to
indemnification, payment for Damages or any other remedy based on any inaccuracy
in or breach of any representation, warranty, covenant or agreement contained in
this Agreement or in any document, certificate or other papers delivered
pursuant to this Agreement, will not be affected by any investigation conducted
with respect to, or any knowledge acquired (or capable of being acquired) at any
time, whether before or after the execution and delivery of this Agreement or
the Closing Date, with respect to, the accuracy or inaccuracy of or compliance
with, any such representation, warranty, covenant or obligation.
Section 11. Termination.
11.01. Termination. This Agreement may be terminated at any time
prior to the Closing:
(a) By mutual agreement of the Company and Purchaser;
(b) By either Purchaser or the Company if the Closing has not
taken place on or before December 31, 1999 or such other date specified by the
Purchaser in accordance with Section 2.03(a), and the failure to consummate the
Closing is not caused by a breach of this Agreement by the party seeking to
terminate this Agreement.
(c) By the Purchaser if:
(A) On or before September 13, 1999 (the "Diligence Out
Date") the Purchaser shall not have completed its due diligence in relation to
the transactions contemplated by this Agreement in a manner satisfactory to the
Purchaser in its sole discretion; provided, however, that if the
23
<PAGE> 53
Company or any Subsidiary fails to reasonably comply with Section 5.01(a)(iii),
the Diligence Out Date shall be the Closing Date; or
(B) The Stockholders fail to duly approve any of the
Transactions at a meeting duly convened therefor or at any adjournment thereof,
and the Purchaser has not elected to waive such approval in accordance with
Section 6(n).
11.02. Effect of Termination. In the event of termination
pursuant to Section 11.01(b) or clause (B) of Section 11.01(c), the Company
shall pay to Purchaser by wire transfer of immediately available funds to an
account designated by Churchill Capital, Inc. an amount in cash equal to
Purchaser's and Churchill Capital Inc.'s reasonable out-of-pocket expenses
(including legal, accounting, environmental and other professional fees) that
were incurred through the date of termination in connection with the
negotiation, execution and performance of this Agreement and the transactions
contemplated hereby. Notwithstanding the foregoing, if at or prior to the time
of termination pursuant to Section 11.01(b) or clause (B) of Section 11.01(c)
any Person other than Purchaser shall have made an offer or a proposal for a
Competing Transaction and the transactions contemplated by such a Competing
Transaction with such third party are consummated with such third party or a
definitive agreement is entered into with respect to such transaction within
eighteen months after such termination, then the Company shall pay at the
request of Purchaser to Churchill Capital, Inc. as its sole remedy for the
breach hereof, (A) a fee in an amount in cash equal to Seven Hundred Fifty
Thousand Dollars ($750,000) (the "Termination Fee") and (B) an amount in cash
equal to Purchaser's and Churchill Capital Inc.'s reasonable out-of-pocket
expenses (including legal, accounting, environmental and other professional
fees) that were incurred through the date of termination in connection with the
negotiation, execution and performance of this Agreement and the transactions
contemplated hereby. The Termination Fee and payment for out-of-pocket expenses
pursuant to the preceding sentence shall be paid by wire transfer of immediately
available funds to an account designated by Churchill Capital, Inc., and shall
be paid within three Business Days after the earlier of consummation of the
Competing Transaction or entering into of such definitive agreement. The Company
acknowledges that the agreements contained in this Section 11.02 are an integral
part of the transactions contemplated in this Agreement and that, without these
agreements, Purchaser would not enter into this Agreement; accordingly, if the
Company fails to promptly pay the amount due pursuant to this Section 11.02,
and, in order to obtain such payment, Purchaser or Churchill Capital, Inc.,
commences a suit which results in a judgment against the Company for the fee set
forth in this Section 11.02, the Company shall pay to Purchaser its costs and
expenses (including attorneys' fees) in connection with such suit, together with
interest on the amount of the fee at the rate of 12% per annum.
11.03. No Liability. In the event of a termination of this
Agreement pursuant to Section 11.01, there shall be no liability on the parties
hereto or any of their respective directors, officers, shareholders, members,
managers, or affiliates after such termination, provided, however, that such
termination shall not affect any liability which any party may have hereunder as
a consequence of any breach by any other party of this Agreement prior to such
termination or for the Termination Fee and reimbursement of out-of-pocket
expenses pursuant to Section 11.02.
(a) Notice. Any party hereto may exercise its right of
termination of this Agreement only by delivering written notice to that effect
to the other parties hereto, provided that such notice is received by the latter
party prior to the Closing.
Section 12. Miscellaneous.
12.01. Amendment or Waiver. Neither this Agreement nor any terms
hereof may be changed, waived, discharged or terminated unless such change,
waiver, discharge or termination is in writing signed by the Company, the
Subsidiaries and Purchaser.
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12.02. Consent to Jurisdiction. Each of the Company, the
Subsidiaries and Purchaser hereby agrees to submit to the exclusive jurisdiction
of the U.S. Federal courts in the Southern District of the State of New York.
12.03. Further Assurances. Each party agrees to execute any and
all documents and to perform such other acts as may be necessary or expedient to
further the purposes of this Agreement, the Related Agreements and the
transactions contemplated hereby and thereby.
12.04. Attorney's Fees and Costs. If attorney's fees or other
costs are incurred to secure performance of any obligations hereunder, or to
establish damages for the breach thereof or to obtain any other appropriate
relief, whether by way of prosecution or defense, the prevailing party will be
entitled to recover reasonable attorneys' fees and expenses incurred in
connection therewith (which in the case of Purchaser, shall include the
reasonable allocation of the costs of its in-house legal services, but without
duplication of the outside legal counsel fees) and interest on any amount of
money determined by any court to be due, at the legal rate in the State of New
York, from the date or dates the court determines that payment should have been
made.
12.05. Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder may be assigned or delegated by the Company,
any Subsidiary or Purchaser without the prior written consent of the other party
and any purported assignment or delegation in violation hereof shall be null and
void, provided, however, that Purchaser may assign all or any part of its
rights, interests and obligations hereunder to (a) any third party in the event
of a sale by Purchaser of all or a portion of the Shares to such third party or
(b) any Affiliate of Purchaser; provided, that no such assignment before the
Closing Date by Purchaser shall relieve Purchaser of its obligations hereunder.
This Agreement is not intended to confer any rights or benefits on any Person
other than the parties hereto.
12.06. Entire Agreement. This Agreement (including the Exhibits
and Schedules) sets forth the entire understanding of the parties hereto with
respect to the transactions contemplated hereby and supersede any prior written
or oral understandings with respect thereto, including, without limitation, any
letters of intent. The invalidity or unenforceability of any terms or provisions
hereof shall not affect the validity or enforceability of any other term or
provision hereof. The headings in this Agreement are for convenience of
reference only and shall not alter or otherwise affect the meaning hereof. This
Agreement may be executed in any number of counterparts which together shall
constitute one instrument and shall be governed by and construed in accordance
with laws of the State of New York without giving regard to the principles of
conflicts of law, and shall bind and inure to the benefit of the parties hereto
and their respective successors and permitted assigns.
12.07. Expenses. Except as otherwise expressly provided in this
Agreement, the Company agrees to pay, without right of reimbursement from
Purchaser, the costs incurred, incident to the preparation and execution of this
Agreement and the Related Agreements and performance of its obligations
hereunder, whether or not the transactions contemplated by this Agreement and
the Related Agreements shall be consummated, including, without limitation,
reasonable fees and disbursements of legal counsel, accountants and consultants
employed by the respective parties in connection with the transactions
contemplated by this Agreement and the Related Agreements.
12.08. Public Announcements. At all times at or before the
Closing, except as required by law or on the advice of counsel, neither the
Company and the Subsidiaries, on the one hand, and Purchaser on the other hand
will issue or make any release to the press or NASDAQ, or other public
disclosure with respect to this Agreement or the transactions contemplated
hereby without the consent of the other. Except as required by law or NASDAQ,
the Company and the Subsidiaries, on the one hand,
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<PAGE> 55
and Purchaser on the other hand, will also obtain the other's prior approval of
any press release to be issued immediately following the Closing announcing the
consummation of the transactions contemplated by this Agreement.
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<PAGE> 56
IN WITNESS WHEREOF, the parties hereto have caused their duly
authorized officers to execute and deliver this Agreement as of the date first
above written.
ASCHE TRANSPORTATION SERVICES, INC.
By:
-------------------------------------------
Name: Leon M. Monachos
Title: Chief Financial Officer
ASCHE TRANSFER, INC.
By:
-------------------------------------------
Name:
Title:
AG CARRIERS, INC.
By:
-------------------------------------------
Name:
Title:
SPECIALTY TRANSPORTATION SERVICES, INC.
By:
-------------------------------------------
Name:
Title:
CHURCHILL ENVIRONMENTAL & INDUSTRIAL EQUITY
PARTNERS, L.P., a Delaware limited partnership
By Churchill Capital Environmental, L.L.C., a
Delaware limited liability company
Its General Partner
By Churchill Capital, Inc.
Its Managing Agent
By:
--------------------------------
Name:
Title:
<PAGE> 57
EXHIBIT B
R&W LLP DRAFT
8/4/99
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated as of September __, 1999, between
ASCHE TRANSPORTATION SERVICES, INC., a Delaware corporation (the "Company"), and
CHURCHILL ENVIRONMENTAL & INDUSTRIAL EQUITY PARTNERS, L.P., a limited
partnership organized under the laws of the State of Delaware (together with its
permitted assigns under this Agreement, the "Holder").
WHEREAS, the Company and the Holder have entered into a Stock Purchase
Agreement, dated as of August __, 1999 (the "Stock Purchase Agreement"), by and
between the Company and the Holder, pursuant to which the Company has issued and
sold to the Holder shares of Common Stock of the Company (the "Shares");
WHEREAS, as a condition to the consummation of the transactions under
the Stock Purchase Agreement, the Company agreed to grant to the Holder the
registration rights set forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending to
be legally bound hereby, agree as follows:
SECTION 1. Definitions. As used in this Agreement, the following terms
shall have the following meanings:
"Advice" shall have the meaning set forth in Section 6.
"Affiliate" means any Person that, directly or indirectly, through one
or more intermediaries, controls or is controlled by or is under common control
with the Person specified. For purposes of this definition, control of a Person
means the power, direct or indirect, to direct or cause the direction of the
management and policies of such Person, whether by contract, through the
ownership of voting securities, or otherwise, and the terms "controlling" and
"controlled" have meanings correlative to the foregoing; provided, however, that
in no event shall the Holder be deemed an Affiliate of the Company.
"Business Day" means any day that is not a Saturday, a Sunday or a
legal holiday on which banking institutions in the State of New York are not
required to be open.
"Capital Stock" means, with respect to the Company, any and all shares,
interests, participations or other equivalents (however designated) of capital
stock issued by the Company, including each class of common stock and preferred
stock of the Company.
"Closing Date" has the meaning set forth in the Stock Purchase
Agreement.
"Common Stock" means the Common Stock, par value $.0001 per share, of
the Company or any other shares of capital stock or other securities of the
Company into which such shares of Common Stock shall be reclassified or changed,
including by reason of a merger, consolidation, reorganization or
recapitalization. If the Common Stock has been so reclassified or changed, or if
the Company pays a dividend or makes a distribution on the Common Stock in
shares of capital stock, or subdivides (or combines) its outstanding shares of
Common Stock into a greater (or smaller) number of shares of Common Stock, a
share of Common Stock shall be deemed to be such number of shares of stock and
amount of other securities to which a holder of a share of Common Stock
outstanding immediately prior
<PAGE> 58
to such change, reclassification, exchange, dividend, distribution, subdivision
or combination would be entitled.
"Company" has the meaning set forth in the introductory clauses.
"Demand Notice" has the meaning set forth in Section 2(a).
"Demand Registration" has the meaning set forth in Section 2(b).
"Effectiveness Period" has the meaning set forth in Section 2(d).
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations of the SEC promulgated thereunder.
"Holdback Period" has the meaning set forth in Section 4.
"Holder" has the meaning set forth in the introductory clauses and
includes any assignee thereof in accordance with Section 11 of this Agreement.
"Indemnified Party" has the meaning set forth in Section 9(c).
"Indemnifying Party" has the meaning set forth in Section 9(c).
"Inspectors" has the meaning set forth in Section 6(j).
"Interruption Period" has the meaning set forth in Section 6.
"Losses" has the meaning set forth in Section 9(a).
"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Piggyback Registration" has the meaning set forth in Section 3(a).
"Prospectus" means the prospectus included in any Registration
Statement (including a prospectus that discloses information previously omitted
from a prospectus filed as part of an effective registration statement in
reliance upon Rule 430A), as amended or supplemented by any prospectus
supplement, with respect to the terms of the offering of any portion of the
Registrable Shares covered by such Registration Statement and all other
amendments and supplements to such prospectus, including post-effective
amendments, and all material incorporated by reference or deemed to be
incorporated by reference in such prospectus.
"Records" has the meaning set forth in Section 6(j).
"Registrable Shares" means shares of Common Stock owned by a Holder at
any time, unless (i) they have been effectively registered under Section 5 of
the Securities Act and disposed of pursuant to an effective Registration
Statement, (ii) such securities can be freely sold and transferred without
restriction under Rule 144 or any other restrictions under the Securities Act or
(iii) such securities have been transferred pursuant to Rule 144 under the
Securities Act or any successor rule such that, after any such transfer referred
to in this clause (iii), such securities may be freely transferred without
restriction under the Securities Act.
"Registration" means registration under the Securities Act of an
offering of Registrable Shares pursuant to a Demand Registration or a Piggyback
Registration.
"Registration Statement" means any registration statement under the
Securities Act of the Company that covers any of the Registrable Shares pursuant
to the provisions of this Agreement, including the related Prospectus, all
amendments and supplements to such registration statement,
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<PAGE> 59
including pre-effective amendments and post-effective amendments, all exhibits
thereto and all material incorporated by reference or deemed to be incorporated
by reference in such registration statement.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the SEC promulgated thereunder.
"Shelf Registration" has the meaning set forth in Section 2(b).
"Stock Purchase Agreement" has the meaning set forth in the
introductory clauses.
"Underwritten Registration or Underwritten Offering" means a
registration under the Securities Act in which securities of the Company are
sold to an underwriter for reoffering to the public.
SECTION 2. Demand Registration.
(a) The Holder shall have the right at any time by written
notice (the "Demand Notice") given to the Company, to request the Company to
register under and in accordance with the provisions of the Securities Act all
or any portion of the Registrable Shares designated by such Holder; provided,
however, that the aggregate number of Registrable Shares requested to be
registered pursuant to any Demand Notice and pursuant to any related Demand
Notices received pursuant to the following sentence shall be at least [100,000]
(subject to adjustment) and provided, further, however, that such registration
shall, at the option of the Company, be on Form S-3 (or its successor form) if
such form is then available for use by the Company. Upon receipt of any such
Demand Notice, the Company shall promptly notify any other Holders of the
receipt of such Demand Notice and allow them the opportunity to include
Registrable Shares held by them in the proposed registration by submitting their
own Demand Notice. Inconnection with any Demand Registration in which more than
one Holder participates, in the event that such Demand Registration involves an
Underwritten Offering and the managing underwriter or underwriters participating
in such offering advise in writing the Holders of Registrable Shares to be
included in such offering that the total number of Registrable Shares to be
included in such offering exceeds the amount that can be sold in (or during the
time of) such offering without delaying or jeopardizing the success of such
offering (including the price per share of the Registrable Shares to be sold),
then the amount of Registrable Shares to be offered for the account of such
Holders shall be reduced pro rata on the basis of the number of Registrable
Shares to be registered by each such Holder. The Holders as a group shall be
entitled to three Demand Registrations pursuant to this Section 2 unless any
Demand Registration does not become effective, is not maintained for a period
(whether or not continuous) of at least the applicable period specified in
Section 2(c), or where the amount of Registrable Shares to be offered for the
account of such Holders is reduced pro rata as described in the preceding
sentence by more than ten percent (10%), in which case the Holders will be
entitled to an additional Demand Registration pursuant hereto.
(b) The Company, within thirty (30) days of the date on which
the Company receives a Demand Notice given by Holders in accordance with Section
2 (a) hereof, shall file with the SEC, and the Company thereafter shall use its
best efforts to cause to be declared effective, a Registration Statement on the
appropriate form (subject to the last proviso of the first sentence of Section
2(a)) for the registration and sale, in accordance with the intended method or
methods of distribution, of the total number of Registrable Shares specified by
the Holders in such Demand Notice, which may at the option of the Company
include a "shelf" registration (a "Shelf Registration") pursuant to Rule 415
under the Securities Act (a "Demand Registration").
(c) The Company shall use commercially reasonable efforts to
keep each Registration Statement filed pursuant to this Section 2 continuously
effective and usable for the resale of the Registrable Shares covered thereby
(i) in the case of a Registration that is not a Shelf Registration, for
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<PAGE> 60
a period of one hundred twenty (120) days from the date on which the SEC
declares such Registration Statement effective and (ii) in the case of a Shelf
Registration, continuously from the date on which the SEC declares such
Registration Statement effective, in either case (x) until all the Registrable
Shares covered by such Registration Statement have been sold pursuant to such
Registration Statement), and (y) as such period may be extended pursuant to this
Section 2.
(d) The time period for which the Company is required to
maintain the effectiveness of any Registration Statement shall be extended by
the aggregate number of days of all Holdback Periods (as defined in Section 4)
and all Interruption Periods (as defined in Section 6(k)) occurring during such
Registration and such period and any extension thereof is hereinafter referred
to as the "Effectiveness Period."
(e) Except to the extent required by agreements with other
security holders of the Company entered into prior to the date of the Stock
Purchase Agreement, the Company shall not include any securities that are not
Registrable Shares in any Registration Statement filed pursuant to this Section
2 without the prior written consent of the Holders of a majority in number of
the Registrable Shares covered by such Registration Statement, which consent
shall not be unreasonably withheld.
(f) Holders of a majority in number of the Registrable Shares
to be included in a Registration Statement pursuant to this Section 2 may, at
any time prior to the effective date of the Registration Statement relating to
such Registration, revoke such request by providing a written notice to the
Company revoking such request. Notwithstanding such revocation, such request
shall be deemed to be a Demand Registration pursuant to Section 2(a) unless the
Holders of Registrable Shares who revoke such request shall reimburse the
Company for all its out-of-pocket expenses incurred in the preparation, filing
and processing of the Registration Statement; provided, however, that, if such
revocation was based on the Company's failure to comply in any material respect
with its obligations hereunder, such reimbursement shall not be required.
SECTION 3. Piggyback Registration.
(a) Right to Piggyback. If at any time after the date hereof
the Company proposes to file a registration statement under the Securities Act
with respect to a public offering of securities of the same type as the
Registrable Shares pursuant to a firm commitment underwritten offering solely
for cash for its own account (other than a registration statement (i) on Form
S-4 or Form S-8 or any successor forms thereto, or (ii) filed solely in
connection with a dividend reinvestment plan or employee benefit plan covering
officers or directors of the Company or its Affiliates) or for the account of
any holder of securities of the same type as the Registrable Shares or the
securities into which the Registrable Securities then are convertible (to the
extent that the Company has the right to include Registrable Shares in any
registration statement to be filed by the Company on behalf of such holder),
then the Company shall give written notice of such proposed filing to the
Holders at least fifteen (15) days before the anticipated filing date. Such
notice shall offer the Holders the opportunity to register such amount of
Registrable Shares as they may request (a "Piggyback Registration"). Subject to
Section 3(b), the Company shall include in each such Piggyback Registration all
Registrable Shares with respect to which the Company has received written
requests for inclusion therein within ten (10) days after notice has been given
to the Holders. Each Holder shall be permitted to withdraw all or any portion of
the Registrable Shares of such Holder from a Piggyback Registration at any time
prior to the effective date of such Piggyback Registration.
(b) Priority on Piggyback Registrations. The Company shall
permit the Holders to include all such Registrable Shares on the same terms and
conditions as any similar securities, if any, of the Company included therein.
Notwithstanding the foregoing, if the managing underwriter or underwriters
participating in such offering advise the Holders in writing that the total
amount of securities requested to be included in such Piggyback Registration
exceeds the amount which can be sold in (or during the time of) such offering
without delaying or jeopardizing the success of the offering (including
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<PAGE> 61
the price per share of the securities to be sold), then the amount of
securities to be offered for the account of the Holders and other holders of
securities who have piggyback registration rights with respect thereto shall be
reduced (to zero if necessary) (i) first, by reducing pro-rata the securities
included therein held by each of the holders participating in such offering, and
(ii) second, by reducing the securities included therein held by the Holders
participating in such offering.
(c) Right To Abandon. Nothing in this Section 3 shall create
any liability on the part of the Company to the Holders if the Company in its
sole discretion should decide not to file a registration statement proposed to
be filed pursuant to Section 3(a) or to withdraw such registration statement
subsequent to its filing, regardless of any action whatsoever that a Holder
may have taken, whether as a result of the issuance by the Company of any
notice hereunder or otherwise.
SECTION 4. Holdback Agreement. If (i) during the Effectiveness Period,
the Company shall file a registration statement (other than in connection with
the registration of securities issuable pursuant to an employee stock option,
stock purchase or similar plan or pursuant to a merger, exchange offer or a
transaction of the type specified in Rule 145(a) under the Securities Act) with
respect to the Common Stock or similar securities or securities convertible
into, or exchangeable or exercisable for, such securities and (ii) with
reasonable prior notice, the Company (in the case of a non-underwritten public
offering by the Company pursuant to such registration statement) advises the
Holders in writing that a public sale or distribution of such Registrable Shares
would materially adversely affect such offering or the managing underwriter or
underwriters (in the case of an underwritten public offering by the Company
pursuant to such registration statement) advises the Company in writing (in
which case the Company shall notify the Holders) that a public sale or
distribution of Registrable Shares would materially adversely impact such
offering, then each Holder shall, to the extent not inconsistent with applicable
law, refrain from, and agree in a writing to the Company and the underwriter or
underwriters to refrain from, effecting any public sale or distribution of
Registrable Shares during the ten (10) days prior to the effective date of such
registration statement and until the earliest of (A) the abandonment of such
offering, (B) ninety (90) days from the effective date of such registration
statement and (C) if such offering is an underwritten offering, the termination
in whole or in part of any "hold back" period obtained by the underwriter or
underwriters in such offering from the Company in connection therewith (each
such period, a "Holdback Period").
SECTION 5. 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
resale by Holder of the Registrable Shares. The Company covenants and agrees
that for so long as Registrable Shares remain outstanding, the Company shall
continue to be eligible to use Form S-3 for registration of such resale 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.
SECTION 6. Registration Procedures. In connection with the registration
obligations of the Company pursuant to and in accordance with Sections 2 and 3
(and subject to Sections 2 and 3), the Company shall use commercially reasonable
efforts to effect such registration to permit the sale of such Registrable
Shares in accordance with the intended method or methods of disposition thereof,
and pursuant thereto the Company shall as expeditiously as possible (but subject
to Sections 2 and 3):
(a) prepare and file with the SEC a Registration Statement for
the sale of the Registrable Shares on any form for which the Company then
qualifies or which counsel for the Company shall deem appropriate in accordance
with such Holders' intended method or methods of distribution thereof, subject
to the last proviso of the first sentence of Section 2(a), Section 2(b), and,
subject to the Company's right to terminate or abandon a registration pursuant
to Section 3(c),use commercially reasonable efforts to cause such Registration
Statement to become effective and remain effective as provided herein; provided,
however, that the Company shall permit the Holders and their counsel to review
the Registration Statement within a reasonable period of time prior to filing
the Registration
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Statement with the SEC and not file the Registration Statement in a
form to which such counsel reasonably objects;
(b) prepare and file with the SEC such amendments (including post-
effective amendments) to such Registration Statement, and such supplements to
the related Prospectus, as may be required by the rules, regulations or
instructions applicable to the Securities Act during the applicable period in
accordance with the intended methods of disposition specified by the Holders of
the Registrable Shares covered by such Registration Statement, make generally
available earnings statements satisfying the provisions of Section 11(a) of the
Securities Act (provided that the Company shall be deemed to have complied with
this clause if it has complied with Rule 158 under the Securities Act), and
cause the related Prospectus as so supplemented to be filed pursuant to Rule 424
under the Securities Act; provided, however, that before filing any amendments
or supplements to the Registration Statement, the Company shall permit the
Holders of Registrable Shares covered by such Registration Statement and their
counsel to review such amendment or supplement within a reasonable period of
time prior to filing such amendment or supplement with the SEC and not file
such amendment or supplement in a form to which such counsel reasonably objects;
(c) notify the Holders of any Registrable Shares covered by such
Registration Statement promptly and (if requested) confirm such notice in
writing, (i) when a Prospectus or any Prospectus supplement or post-effective
amendment has been filed, and, with respect to such Registration Statement or
any post-effective amendment, when the same has become effective; provided,
however, that the Company will not request acceleration without prior notice to
the Holders' counsel, (ii) of any request by the SEC for amendments or
supplements to such Registration Statement or the related Prospectus or for
additional information regarding such Holders, (iii) of the issuance by the SEC
of any stop order suspending the effectiveness of such Registration Statement or
the initiation of any proceedings for that purpose, (iv) of the receipt by the
Company of any notification with respect to the suspension of the qualification
or exemption from qualification of any of the Registrable Shares for sale in any
jurisdiction or the initiation or threatening of any proceeding for such
purpose, and (v) of the happening of any event that requires the making of any
changes in such Registration Statement, Prospectus or documents incorporated or
deemed to be incorporated therein by reference so that they will not contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein not misleading;
(d) use commercially reasonable efforts to obtain the withdrawal of
any order suspending the effectiveness of such Registration Statement, or the
lifting of any suspension of the qualification or exemption from qualification
of any Registrable Shares for sale in any jurisdiction in the United States;
(e) furnish to the Holders of any Registrable Shares covered by such
Registration Statement, each counsel for such Holders and each managing
underwriter, if any, without charge, one conformed copy of such Registration
Statement, as declared effective by the SEC, and of each post-effective
amendment thereto, in each case including financial statements and schedules and
all exhibits and reports incorporated or deemed to be incorporated therein by
reference; and deliver, without charge, such number of copies of the preliminary
prospectus, any amended preliminary prospectus, each final Prospectus and any
post-effective amendment or supplement thereto, as such Holder may reasonably
request in order to facilitate the disposition of the Registrable Shares of such
Holder covered by such Registration Statement in conformity with the
requirements of the Securities Act;
(f) prior to any public offering of Registrable Shares covered by such
Registration Statement, use commercially reasonable efforts to register or
qualify such Registrable Shares for offer and sale under the securities or Blue
Sky laws of such jurisdictions as the Holders of such Registrable Shares shall
reasonably request in writing; provided, however, that the Company shall in no
event be required to qualify generally to do business as a foreign corporation
or as a dealer in any jurisdiction where it is not at
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the time so qualified or to execute or file a general consent to service of
process in any such jurisdiction where it has not theretofore done so or to take
any action that would subject it to general service of process or taxation in
any such jurisdiction where it is not then subject;
(g) upon the occurrence of any event contemplated by paragraph 6(c)
(v), prepare a supplement or post-effective amendment to such Registration
Statement or the related Prospectus or any document incorporated or deemed to be
incorporated therein by reference and file any other required document so that,
as thereafter delivered to the purchasers of the Registrable Shares being sold
thereunder, such Prospectus will not contain an untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading;
(h) use commercially reasonable efforts to cause all Registrable
Shares covered by such Registration Statement to be listed on each securities
exchange or automated interdealer quotation system, if any, on which similar
securities issued by the Company are then listed or quoted;
(i) on or before the effective date of such Registration Statement,
provide the transfer agent of the Company for the Registrable Shares with
printed certificates for the Registrable Shares covered by such Registration
Statement, which are in a form eligible for deposit with The Depository Trust
Company;
(j) if such offering is an underwritten offering, make available for
inspection by any Holder of Registrable Shares included in such Registration
Statement, any underwriter participating in any offering pursuant to such
Registration Statement, and any attorney, accountant or other agent retained by
any such Holder or underwriter (collectively, the "Inspectors"), all financial
and other records and other information, pertinent corporate documents and
properties of any of the Company and its subsidiaries and affiliates
(collectively, the "Records"), as shall be reasonably necessary to enable them
to exercise their due diligence responsibilities; provided, however, that the
Records that the Company determines, in good faith, to be confidential and which
it notifies the Inspectors in writing are confidential shall not be disclosed to
any Inspector unless such Inspector signs a confidentiality agreement reasonably
satisfactory to the Company (which shall permit the disclosure of such Records
in such Registration Statement or the related Prospectus if necessary to avoid
or correct a material misstatement in or material omission from such
Registration Statement or Prospectus) or either (i) the disclosure of such
Records is necessary to avoid or correct a misstatement or omission in such
Registration Statement or (ii) the release of such Records is ordered pursuant
to a subpoena or other order from a court of competent jurisdiction; provided,
further, however, that (A) any decision regarding the disclosure of information
pursuant to subclause (i) shall be made only after consultation with counsel for
the applicable Inspectors and the Company and (B) with respect to any release of
Records pursuant to subclause (ii), each Holder of Registrable Shares agrees
that it shall, promptly after learning that disclosure of such Records is sought
in a court having jurisdiction, give notice to the Company so that the Company,
at the Company's expense, may undertake appropriate action to prevent disclosure
of such Records; and
(k) if such offering is an underwritten offering, enter into such
agreements (including an underwriting agreement in form, scope and substance as
is customary in underwritten offerings) and take all such other appropriate and
reasonable actions requested by the Holders of a majority of the Registrable
Shares being sold in connection therewith (including those reasonably requested
by the managing underwriters) in order to expedite or facilitate the disposition
of such Registrable Shares, and in such connection, (i) use commercially
reasonable efforts to obtain opinions of counsel to the Company and updates
thereof (which counsel and opinions (in form, scope and substance) shall be
reasonably satisfactory to the managing underwriters and counsel to the Holders
of the Registrable Shares being sold), addressed to each selling Holder of
Registrable Shares covered by such Registration Statement and each of the
underwriters as to the matters customarily covered in opinions requested in
underwritten offerings and such other matters as may be reasonably requested by
such counsel and underwriters, (ii)
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use commercially reasonable efforts to obtain "cold comfort" letters and updates
thereof from the independent certified public accountants of the Company (and,
if necessary, any other independent certified public accountants of any
subsidiary of the Company or of any business acquired by the Company for which
financial statements and financial data are, or are required to be, included in
the Registration Statement), addressed to each selling holder of Registrable
Shares covered by the Registration Statement (unless such accountants shall be
prohibited from so addressing such letters by applicable standards of the
accounting profession) and each of the underwriters, such letters to be in
customary form and covering matters of the type customarily covered in "cold
comfort" letters in connection with underwritten offerings, (iii) if requested
and if an underwriting agreement is entered into, provide indemnification
provisions and procedures substantially to the effect set forth in Section 9
hereof with respect to all parties to be indemnified pursuant to such Section.
The above shall be done at each closing under such underwriting or similar
agreement, or as and to the extent required thereunder.
The Company may require each Holder of Registrable Shares covered by a
Registration Statement to furnish such information regarding such Holder and
such Holder's intended method of disposition of such Registrable Shares as it
may from time to time reasonably request in writing. If any such information is
not furnished within a reasonable period of time after receipt of such request,
the Company may exclude such Holder's Registrable Shares from such Registration
Statement, provided, however, the Company shall hold in confidence and not make
any disclosure of information concerning the Holder 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) the Holder
consents to the form and content of any such disclosure. The Company agrees that
it shall, upon learning that disclosure of such information concerning the
Holder is sought in or by a court or governmental body of competent jurisdiction
or through other means, give prompt notice to the Holder prior to making such
disclosure, and allow the Holder, at its expense, to undertake appropriate
action to prevent disclosure of, or to obtain a protective order for, such
information.
Each Holder of Registrable Shares covered by a Registration Statement
agrees that, upon receipt of any notice from the Company of the happening of any
event of the kind described in Section 6(c)(ii), 6(c)(iii), 6(c)(iv) or 6(c)(v),
that such Holder shall forthwith discontinue disposition of any Registrable
Shares covered by such Registration Statement or the related Prospectus until
receipt of the copies of the supplemented or amended Prospectus contemplated by
Section 6(g), or until such Holder is advised in writing (the "Advice") by the
Company that the use of the applicable Prospectus may be resumed, and has
received copies of any amended or supplemented Prospectus or any additional or
supplemental filings which are incorporated, or deemed to be incorporated, by
reference in such Prospectus (such period during which disposition is
discontinued being an "Interruption Period") and, if requested by the Company,
the Holder shall deliver to the Company (at the expense of the Company) all
copies then in its possession, other than permanent file copies then in such
holder's possession, of the Prospectus covering such Registrable Shares at the
time of receipt of such request.
Each Holder of Registrable Shares covered by a Registration Statement
further agrees not to utilize any material other than the applicable current
preliminary prospectus or Prospectus in connection with the offering of such
Registrable Shares.
SECTION 7. Registration Expenses. Whether or not any Registration
Statement is filed or becomes effective, the Company shall pay all costs, fees
and expenses incident to the Company's performance of or compliance with this
Agreement, including (i) all registration and filing fees, including NASD filing
fees, (ii) all fees and expenses of compliance with securities or Blue Sky laws,
including
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reasonable fees and disbursements of counsel in connection therewith,
(iii) printing expenses (including expenses of printing certificates for
Registrable Shares and of printing prospectuses if the printing of prospectuses
is requested by the Holders or the managing underwriter, if any), (iv)
messenger, telephone and delivery expenses, (v) fees and disbursements of
counsel for the Company, (vi) fees and disbursements of all independent
certified public accountants of the Company (including expenses of any "cold
comfort" letters required in connection with this Agreement) and all other
persons retained by the Company in connection with such Registration Statement,
(vii) fees and disbursements of one counsel, other than the Company's counsel,
selected by Holders of a majority of the Registrable Shares being registered, to
represent all such Holders, (viii) fees and disbursements of underwriters
customarily paid by the issuers or sellers of securities and (ix) all other
costs, fees and expenses incident to the Company's performance or compliance
with this Agreement. Notwithstanding the foregoing, the fees and expenses of any
persons retained by any Holder, other than one counsel for all such Holders, and
any discounts, commissions or brokers' fees or fees of similar securities
industry professionals and any transfer taxes relating to the disposition of the
Registrable Shares by a Holder, will be payable by such Holder and the Company
will have no obligation to pay any such amounts.
SECTION 8. Underwriting Requirements.
(a) Subject to Section 8(b), any Holder shall have the right,
by written notice, to request that any Demand Registration provide for an
Underwritten Offering.
(b) In the case of any Underwritten Offering pursuant to a
Demand Registration, the Holders of a majority of the Registrable Shares to be
disposed of in connection therewith shall select the institution or institutions
that shall manage or lead such offering, which institution or institutions shall
be reasonably satisfactory to the Company. In the case of any Underwritten
Offering pursuant to a Piggyback Registration, the Company shall select the
institution or institutions that shall manage or lead such offering. No Holder
shall be entitled to participate in an Underwritten Offering unless and until
such Holder has entered into an underwriting or other agreement (including a
"holdback agreement" to the effect set forth in Section 4) with such institution
or institutions for such offering in such form as the Company and such
institution or institutions shall determine.
SECTION 9. Indemnification.
(a) Indemnification by the Company. The Company shall,
without limitation as to time, indemnify and hold harmless, to the full extent
permitted by law, each Holder of Registrable Shares whose Registrable Shares are
covered by a Registration Statement or Prospectus, the officers, directors and
agents and employees of each of them, each Person who controls each such Holder
(within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act) and the officers, directors, agents and employees of each such
controlling person, to the fullest extent lawful, from and against any and all
losses, claims, damages, liabilities, judgment, costs (including, without
limitation, costs of preparation and reasonable attorneys' fees) and expenses
(collectively, "Losses"), as incurred, arising out of or based upon (i) any
violation or alleged violation by the Company of the Securities Act, the
Exchange Act, or any other law, including, without limitation, any state
securities law, or any rule or regulation thereunder relating to the offer or
sale of securities, or (ii) any untrue or alleged untrue statement of a material
fact contained in a Registration Statement or Prospectus or in any amendment or
supplement thereto or in any preliminary prospectus, or arising out of or based
upon any omission or alleged omission of a material fact required to be stated
therein or necessary to make the statements therein not misleading, except
insofar as the same are based upon information furnished in writing to the
Company by or on behalf of such Holder expressly for use therein; provided,
however, that the Company shall not be liable to any such Holder to the extent
that any such Losses arise out of or are based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in any preliminary
prospectus if (A) having previously been furnished by or on behalf of the
Company with copies of the Prospectus, such Holder failed to send or deliver a
copy of the Prospectus with or prior to the delivery of
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<PAGE> 66
written confirmation of the sale of Registrable Shares by such Holder to the
person asserting the claim from which such Losses arise and (B) the Prospectus
would have corrected in all material respects such untrue statement or alleged
untrue statement or such omission or alleged omission; and provided, further,
however, that the Company shall not be liable in any such case to the extent
that any such Losses arise out of or are based upon an untrue statement or
alleged untrue statement or omission or alleged omission in the Prospectus, if
(x) such untrue statement or alleged untrue statement, omission or alleged
omission is corrected in all material respects in an amendment or supplement to
the Prospectus and (y) having previously been furnished by or on behalf of the
Company with copies of the Prospectus as so amended or supplemented, such Holder
thereafter fails to deliver such Prospectus as so amended or supplemented, prior
to or concurrently with the sale of Registrable Shares.
(b) Indemnification by Holder of Registrable Shares. In
connection with any Registration Statement in which a Holder is participating,
such Holder shall furnish to the Company in writing such information as the
Company reasonably requests for use in connection with such Registration
Statement or the related Prospectus and agrees to indemnify, to the full extent
permitted by law, the Company, its directors, officers, agents or employees,
each Person who controls the Company (within the meaning of Section 15 of the
Securities Act and Section 20 of the Exchange Act) and the directors, officers,
agents or employees of such controlling Persons, from and against all Losses
arising out of or based upon any untrue or alleged untrue statement of a
material fact contained in such Registration Statement or the related Prospectus
or any amendment or supplement thereto, or any preliminary prospectus, or
arising out of or based upon any omission or alleged omission of a material fact
required to be stated therein or necessary to make the statements therein not
misleading, to the extent, but only to the extent, that such untrue or alleged
untrue statement or omission or alleged omission is based upon any information
so furnished in writing by or on behalf of such Holder to the Company expressly
for use in such Registration Statement or Prospectus, provided, however, that
the indemnification obligations of the Holder pursuant to this Section 9(b)
shall be limited to a maximum amount equal to the cash proceeds actually
received by the Holder pursuant to any public offering of securities in
connection with such Registration Statement.
(c) Conduct of Indemnification Proceedings. If any Person
shall be entitled to indemnity hereunder (an "Indemnified Party"), such
Indemnified Party shall give prompt notice to the party from which such
indemnity is sought (the "Indemnifying Party") of any claim or of the
commencement of any proceeding with respect to which such Indemnified Party
seeks indemnification or contribution pursuant hereto; provided, however, that
the delay or failure to so notify the Indemnifying Party shall not relieve the
Indemnifying Party from any obligation or liability except to the extent that
the Indemnifying Party has been prejudiced by such delay or failure. The
Indemnifying Party shall have the right, exercisable by giving written notice to
an Indemnified Party promptly after the receipt of written notice from such
Indemnified Party of such claim or proceeding, to assume, at the Indemnifying
Party's expense, the defense of any such claim or proceeding, with counsel
reasonably satisfactory to such Indemnified Party; provided, however, that (i)
an Indemnified Party shall have the right to employ separate counsel in any such
claim or proceeding and to participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of such Indemnified Party
unless: (1) the Indemnifying Party agrees to pay such fees and expenses; (2) the
Indemnifying Party fails promptly to assume the defense of such claim or
proceeding or fails to employ counsel reasonably satisfactory to such
Indemnified Party; or (3) the named parties to any proceeding (including
impleaded parties) include both such Indemnified Party and the Indemnifying
Party, and such Indemnified Party shall have been advised by counsel that there
may be one or more legal defenses available to it that are inconsistent with
those available to the Indemnifying Party or that a conflict of interest is
likely to exist among such Indemnified Party and any other indemnified parties
(in which case the Indemnifying Party shall not have the right to assume the
defense of such action on behalf of such Indemnified Party); and (ii) subject to
clause (3) above, the Indemnifying Party shall not, in connection with any one
such claim or proceeding or separate
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but substantially similar or related claims or proceedings in the same
jurisdiction, arising out of the same general allegations or circumstances, be
liable for the fees and expenses of more than one firm of attorneys (together
with appropriate local counsel) at any time for all of the indemnified parties.
Whether or not such defense is assumed by the Indemnifying Party, such
Indemnified Party shall not be subject to any liability for any settlement made
without its consent. The Indemnifying Party shall not consent to entry of any
judgment or enter into any settlement that does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such Indemnified Party
of a release, in form and substance reasonably satisfactory to the Indemnified
Party, from all liability in respect of such claim or litigation for which such
Indemnified Party would be entitled to indemnification hereunder.
(d) Contribution. If the indemnification provided for in this
Section 9 is unavailable to an Indemnified Party in respect of any Losses (other
than in accordance with its terms), then each applicable Indemnifying Party, in
lieu of indemnifying such Indemnified Party, shall contribute to the amount paid
or payable by such Indemnified Party as a result of such Losses, in such
proportion as is appropriate to reflect the relative fault of the Indemnifying
Party, on the one hand, and such Indemnified Party, on the other hand, in
connection with the actions, statements or omissions that resulted in such
Losses as well as any other relevant equitable considerations. The relative
fault of such Indemnifying Party, on the one hand, and Indemnified Party, on the
other hand, shall be determined by reference to, among other things, whether any
action in question, including any untrue statement of a material fact or
omission or alleged omission to state a material fact, has been taken by, or
relates to information supplied by, such Indemnifying Party or Indemnified
Party, and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent any such action, statement or omission. The
amount paid or payable by a party as a result of any Losses shall be deemed to
include any legal or other fees or expenses incurred by such party in connection
with any investigation or proceeding. The parties hereto agree that it would not
be just and equitable if contribution pursuant to this Section 9(d) were
determined by pro rata allocation or by any other method of allocation that does
not take account of the equitable considerations referred to in the immediately
preceding paragraph. Notwithstanding the provisions of this Section 9(d), an
Indemnifying Party that is a Holder shall not be required to contribute any
amount which is in excess of the amount by which the total proceeds received by
such Holder from the sale of the Registrable Shares sold by such Holder (net of
all underwriting discounts and commissions) exceeds the amount of any damages
that such Indemnifying Party has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any Person
who was not guilty of such fraudulent misrepresentation.
SECTION 10. Reports Under the Exchange Act. With a view to making
available to the Holders 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 the Holders to sell securities of the Company to the public
without registration ("Rule 144"), the Company agrees, until termination of this
Agreement pursuant to Section 12(a), to:
(a) Make and keep "public information" available, as those
terms are understood and defined in Rule 144;
(b) 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 and the filing and availability of such reports and other
documents is required for the applicable provisions of Rule 144; and
(c) Furnish to the Holders so long as the Holders hold
Registrable Shares, 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
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information as may be reasonably requested to permit the Holders to sell such
securities pursuant to Rule 144 without registration.
SECTION 11. Transfer of Registration Rights. The rights to cause the
Company to register Registrable Shares pursuant to this Agreement may not be
assigned by a Holder to a transferee or assignee of such securities except to a
Person who has agreed to be bound by the terms of this Agreement as if such
Person were a Holder.
SECTION 12. Miscellaneous.
(a) Termination. This Agreement and the obligations of the
Company and the Holders hereunder (other than Section 9) shall terminate on the
first date on which no Registrable Shares remain outstanding.
(b) No Inconsistent Agreements. The Company shall not on or
after the date of this Agreement enter into any agreement with respect to its
securities which is inconsistent with or limits or impairs the rights granted to
the Holder in this Agreement or otherwise conflicts with the provisions hereof.
(c) Adjustments Affecting Registrable Shares. The Company
shall not take any action, or permit any change to occur, with respect to the
Registrable Shares which would adversely affect the ability of the Holders of
Registrable Shares to include such Registrable Shares in a registration
undertaken pursuant to this Agreement.
(d) Notices. All notices or communications hereunder shall be
in writing (including telecopy or similar writing), addressed as follows:
If to the Company:
Asche Transportation Services, Inc.
10214 N. Mt. Vernon Road
Shannon, IL 61078
Attention: Leon M. Monachos
Telecopier: (815) 864-2646
With a copy to (which shall not constitute notice):
Sachnoff & Weaver, Ltd.
30 South Wacker Drive, Suite 2900
Chicago, Illinois 60606-7484
Attention: Joel R. Schaider
Telecopier: (312) 207-6400
If to Purchaser:
Churchill Capital, Inc.
590 Madison Avenue
New York, New York 10022
Attention: John J. Quirk
Telecopier: (212) 832-4270
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With a copy to (which shall not constitute notice):
Churchill Capital, Inc.
3100 Metropolitan Centre
333 South 7th Street
Minneapolis, Minnesota 55402
Attention: Kevin C. Dooley
Senior Vice President and
Legal Counsel
Telecopier: (612) 673-6615
With a copy to (which shall not constitute notice):
Rogers & Wells LLP
200 Park Avenue
New York, New York 10166
Attention: Steven A. Hobbs
Telecopier: (212) 878-8375
or such other addresses as each of the parties hereto or any future Holder
may designate to the other parties.
Any such notice or communication shall be deemed given (i) when made,
if made by hand delivery, (ii) upon transmission, if sent by confirmed
telecopier, (iii) one business day after being deposited with a next-day
courier, postage prepaid, or (iv) three (3) business days after being sent
certified or registered mail, return receipt requested, postage prepaid, in each
case addressed as above (or to such other address or to such other telecopier
number as such party may designate in writing from time to time).
(e) Separability. If any provision of this Agreement shall be
declared to be invalid or unenforceable, in whole or in part, such invalidity or
unenforcibility shall not affect the remaining provisions hereof which shall
remain in full force and effect.
(f) Assignment. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective heirs, devisees,
legatees, legal representatives, successors and assigns.
(g) Entire Agreement. This Agreement represents the entire
agreement of the parties and shall supersede any and all previous contracts,
arrangements or understandings between the parties hereto with respect to the
subject matter hereof.
(h) Amendments and Waivers. Except as otherwise provided
herein, the provisions of this Agreement may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, unless the Company has obtained the written consent of Holders
of at least a majority in number of the Registrable Shares then outstanding.
(i) Publicity. No public release or announcement concerning
the transactions contemplated hereby shall be issued by any party without the
prior consent of the other parties, except to the extent that such party is
advised by counsel that such release or announcement is necessary or advisable
under applicable law or the rules or regulations of any securities exchange, in
which case the party required to make the release or announcement shall to the
extent practicable provide the other party with an opportunity to review and
comment on such release or announcement in advance of its issuance.
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(j) Expenses. Whether or not the transactions contemplated
hereby are consummated, except as otherwise provided herein, all costs and
expenses incurred in connection with the execution of this Agreement shall be
paid by the party incurring such costs or expenses, except as otherwise set
forth herein.
(k) Interpretation. The headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
(l) Counterparts. This Agreement may be executed in two or
more counterparts, all of which shall be one and the same agreement, and shall
become effective when counterparts have been signed by each of the parties and
delivered to each other party.
(m) Governing Law. This Agreement shall be construed,
interpreted, and governed in accordance with the internal laws of the State of
New York without giving regard to the principles of conflicts of law.
(n) Calculation of Time Periods. Except as otherwise
indicated, all periods of time referred to herein shall include all Saturdays,
Sundays and holidays; provided, however, that if the date to perform the act or
give any notice with respect to this Agreement shall fall on a day other than a
Business Day, such act or notice may be timely performed or given if performed
or given on the next succeeding Business Day.
(o) Consent to Jurisdiction. Subject to the provisions of
paragraph (n), each of the Company and the Holder hereby agrees to submit to the
exclusive jurisdiction of the U.S. Federal courts in the Southern District of
the State of New York.
(p) Further Assurances. Each party agrees to execute any and
all documents and to perform such other acts as may be necessary or expedient to
further the purposes of this Agreement and the transactions contemplated hereby.
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<PAGE> 71
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date and year first written above.
ASCHE TRANSPORTATION SERVICES, INC.
By:
------------------------------------------------
Name:
Title:
CHURCHILL ENVIRONMENTAL & INDUSTRIAL EQUITY PARTNERS,
L.P., a Delaware limited partnership
By Churchill Capital Environmental, L.L.C., a
Delaware limited liability company
Its General Partner
By Churchill Capital, Inc.
Its Managing Agent
By:
------------------------------------
Name:
Title:
<PAGE> 72
EXHIBIT D
R&W LLP DRAFT
8/4/99
ADVISORY SERVICES AGREEMENT
THIS ADVISORY SERVICES AGREEMENT is entered into as of
September [ ], 1999 (the "Agreement"), by and between Churchill Capital, Inc., a
Minnesota corporation (the "Advisor"), and Asche Transportation Services, Inc.,
a Delaware corporation (the "Company").
WITNESSETH:
WHEREAS, the Company has entered into a Stock Purchase
Agreement (the "Purchase Agreement") dated as of August , 1999, with an
affiliate of Advisor, Churchill Environmental & Industrial Equity Partners, L.P.
(the "Purchaser"), a limited partnership organized under the laws of the State
of Delaware;
WHEREAS, the Company and the Advisor have agreed that the
Advisor make available to the Company certain management and financial advisory
services commencing on the date hereof;
WHEREAS, the Advisor desires to provide such management and
financial advisory services to the Company commencing on the date hereof; and
WHEREAS, capitalized terms used but not defined herein have
meanings as set forth in the Purchase Agreement.
NOW THEREFORE, in consideration of the mutual covenants and
agreements contained herein, it is agreed as follows:
1. Engagement and Duties
1.1 The Company hereby appoints the Advisor as an advisor to
the Company, whereby the Advisor shall, from time to time, provide those
management and financial advisory services to the Company and the Subsidiaries
which are set forth in Section 1.2 hereof. The Advisor hereby accepts such
appointment and agrees to provide each of the services required to be provided
by it under this Agreement and to make itself available from time-to-time, on a
part-time basis, to consult with the management and Board of Directors of the
Company (the "Board") in connection with such services.
1.2 Upon the reasonable request of the Board, the Advisor
hereby agrees to provide the following services to the Company and its
subsidiaries, if any:
(a) review periodically the business, operations,
financial condition and prospects of the Company and its Subsidiaries,
including, without limitation: (i) reviewing the strategic direction and
plans of the Company and its Subsidiaries; (ii) reviewing and evaluating
the annual business plan and budget of the Company and its Subsidiaries;
and (iii) reviewing and evaluating the sales, profitability and working
capital and other financing requirements of the Company and its
Subsidiaries;
(b) assist the Company and its Subsidiaries in seeking
out and negotiating with potential financing sources in connection with
financing transactions of the Company;
<PAGE> 73
(c) provide to the Company and its Subsidiaries such
other management and financial advisory services as may be reasonably
requested by the Board; and
(d) assist the Company and its Subsidiaries regarding
any claims for indemnification on behalf of the Company or its
subsidiaries pursuant to the Purchase Agreement.
2. Nature of Relationship. Notwithstanding the services provided by
the Advisor, the Advisor shall be deemed to be an independent contractor and,
unless otherwise expressly authorized by the Company's Board, shall not be
authorized to manage the affairs of, act in the name of or bind the Company. The
Company shall not be obligated to follow or accept any advice or recommendation
made by the Advisor, and the management, policies and operations of the Company
shall be the sole responsibility of the Board and the management of the Company.
The obligations of the Advisor to the Company are not exclusive, and the Advisor
may, in its sole discretion, render the same or similar services to any other
person or entity. Nothing set forth in this Agreement shall be deemed to
prohibit the Advisor from serving any other person or entity in any capacity the
Advisor may deem appropriate or from conducting its business and affairs in any
manner it may elect, whether or not such activities might involve an actual or
potential conflict of interest with respect to the Company or any of its
subsidiaries. In the event Advisor engages in activities which are competitive
with the business of the Company, the Advisor agrees not to disclose any Company
proprietary information to such competitive enterprise.
3. Term. Subject to the termination provisions of Section 7 hereof,
the term of the Advisor's engagement hereunder (the "Term") shall commence on
the date hereof and continue until the earlier of (i) the time when Purchaser
and its successors and assigns no longer beneficially own in the aggregate more
then fifty percent (50%) of the number of Initial Shares and Additional Shares
originally issued to Purchaser and (ii) the fifth anniversary hereof.
4. Compensation and Expenses.
4.1 In consideration of the services to be provided by the Advisor to
the Company, during the Term the Company shall pay the Advisor a monthly
management fee of $10,000 (the "Management Fee"), payable at the Closing (as
defined in the Purchase Agreement) and on the first day of each month
thereafter.
4.2 On the date hereof, the Company shall pay to the Advisor an
investment banking fee of $360,000 by wire transfer of immediately available
funds.
4.3 Upon execution of this Agreement, Company shall pay Advisor a one
time administrative fee of $5,000.00 by wire transfer of immediately available
funds.
4.4 The Company shall also pay or reimburse the Advisor for all
Expenses incurred by the Advisor during the Term (as defined in Section 4.6).
4.5 Upon any termination of the Advisor's engagement hereunder, the
Management Fee payable with respect to the then current month shall be prorated
to reflect the actual number of days during which the Advisor was engaged by the
Company.
4.6 The term "Expenses" shall mean all fees, costs and expenses
reasonably incurred by the Advisor in connection with its provision of services
hereunder, including, without limitation: (i) all reasonable fees and expenses
of legal counsel, accountants and other consultants and experts retained by the
Advisor in connection with its provision of services hereunder, (ii) all travel
and other out-of-pocket costs and expenses incurred by the Advisor in connection
therewith, and (iii) all Losses (as defined
2
<PAGE> 74
below) that are the subject of indemnification pursuant to this Agreement. The
Company shall reimburse the Advisor promptly for all Expenses upon the Advisor's
presentation of invoices or other documents reasonably evidencing such Expenses.
5. Indemnification.
5.1 The Company shall, to the fullest extent permitted by law,
indemnify the Advisor and its Affiliates and their respective directors,
officers, stockholders, employees and agents (collectively, the "Indemnitees")
against, and the Company will hold harmless and will release each Indemnitee
from, any and all Losses (as defined below), including any incurred in
connection with any action, claim, suit, inquiry, proceeding, investigation or
appeal taken from the foregoing by or before any court or governmental,
administrative or other regulatory agency, body or commission, whether pending
or threatened, whether or not any Indemnitee is or may be a party thereto, which
arise out of, relate to or are in connection with the provision of any services
hereunder or otherwise relate to this Agreement or the management or conduct of
the business or affairs of the Company or any of its subsidiaries. The Company
shall not be required to indemnify any Indemnitee for Losses that are determined
by a court of competent jurisdiction pursuant to a final, nonappealable order to
have resulted primarily from the gross negligence or willful misconduct of the
Indemnitee seeking indemnification. The term "Losses" shall mean all losses,
claims, damages or liabilities of each Indemnitee, joint or several, and all
judgments, fines, penalties, interest and charges, and all costs and expenses
incurred inconnection with the investigation, defense or settlement of any
pending or threatened claims (including, without limitation, attorneys' fees and
expenses related thereto).
5.2 The termination of any proceeding by settlement shall not, of
itself, create a presumption that the Indemnitee acted in a manner which
constituted gross negligence or willful misconduct. The right of any Indemnitee
to the indemnification provided herein shall be cumulative of, and in addition
to, any and all rights to which such Indemnitee may otherwise be entitled by
contract or as matter of law or equity and shall extend to his heirs,
successors, assigns and legal representatives.
5.3 Promptly after receipt by an Indemnitee hereunder of written
notice of the commencement of any action or proceeding with respect to which a
claim for indemnification may be made pursuant to this Section 5, such
Indemnitee will, if a claim in respect thereof is to be made against the Company
promptly give written notice to the Company of the commencement of such action;
provided that the failure of any Indemnitee to give notice as provided herein
shall not relieve the Company of its obligations under this Section 5, except to
the extent that the Company is actually and materially prejudiced by such
failure to give notice. In case any such action is brought against an
Indemnitee, Company will be entitled to participate in and to assume the defense
thereof, to the extent that it may wish, with counsel reasonably satisfactory to
such Indemnitee, and after notice from the Company of its election to assume the
defense thereof, the Company will not be liable to such Indemnitee for any legal
or other expenses subsequently incurred by the Indemnitee in connection with the
defense thereof, unless in such Indemnitee's reasonable judgment a conflict of
interest between the Indemnitee and the Company arises in respect of such claim
after the assumption of the defense thereof (in which case, the Company shall
not assume the defense thereof, but shall be responsible for the fees and
expenses of one counsel in each jurisdiction for all parties indemnified by the
Company, subject to the same exception as is set forth in the last sentence of
this subsection 5.3), and the Company will not be subject to any liability for
any settlement made without its consent (which consent shall not be unreasonably
withheld). The Company will not consent to entry of any judgment or enter into
any settlement (a) which does not include as an unconditional term thereof the
giving by the claimant or plaintiff to such Indemnitee of a release from all
liability in respect to such claim or litigation, and (b) that imposes any
obligation on an Indemnitee (except any obligation to make payments which the
Company shall, and promptly does, pay). If the Company elects not to assume the
defense of a claim, it will not be obligated
3
<PAGE> 75
to pay the fees and expenses of more than one counsel for all parties
indemnified by the Company with respect to such claim, unless in the reasonable
judgment of any Indemnitee a conflict of interest may exist between such
Indemnitee and any other of such Indemnitees with respect to such claim, in
which event the Company shall be obligated to pay the fees and expenses of such
additional counsel or counsels.
5.4 Notwithstanding any termination of the Advisor's engagement
hereunder pursuant to Section 7, the expiration of the Term pursuant to Section
3 or otherwise, the indemnification and contribution provided under this
Agreement shall remain in full force and effect thereafter.
5.5 No Indemnitee shall be liable to the Company or its subsidiaries
for any error of judgment or mistake of law or for any loss incurred by the
Company or its subsidiaries or any of their respective Affiliates in connection
with the matters to which this Agreement relates, except for any damages that
are determined by a court of competent jurisdiction pursuant to a final,
nonappealable order to have resulted primarily from the gross negligence or
willful misconduct of the Indemnitee seeking indemnification. In no event shall
the Advisor or any Indemnitee be liable for (i) any indirect, special or
consequential damages arising out of or in connection with this Agreement and
(ii) damages in excess of the total fees (and expressly excluding Expenses)
actually received by the Advisor pursuant to Section 4 of this Agreement. The
Advisor and the Indemnitees may consult with legal counsel, accountants and
other consultants and experts in respect of the affairs of the Company and its
subsidiaries and shall be fully protected and justified in acting, or failing to
act, in a manner consistent with the advice or opinion of such legal counsel,
accountants and other consultants and experts.
6. Contribution. If the indemnification provided for in Section 5.1 is
judicially determined by a court of competent jurisdiction pursuant to a final,
nonappealable order to be unavailable (other than in accordance with the second
sentence of Section 5.1) to an Indemnitee in respect of any Losses, then, in
lieu of indemnifying such Indemnitee hereunder, the Company shall contribute to
the amount paid or payable by such Indemnitee as a result of such Losses (i) in
such proportion as is appropriate to reflect the relative benefits to the
Advisor and its Affiliates, on the one hand, and the Company, on the other hand,
in connection with the services heretofore provided to the Company by the
Advisor or the services provided by the Advisor under this Agreement, as the
case may be, or (ii) if the allocation provided by clause (i) above is not
available, in such proportion as is appropriate to reflect not only the relative
benefits referred to in such clause (i) but also the relative fault of each of
the Advisor and its Affiliates and the Company, as well as any other relevant
equitable considerations; provided, however, that in no event shall the
Indemnitee's aggregate contribution to the amount paid or payable exceed the
aggregate amount of fees (and expressly excluding Expenses) actually received by
the Advisor under Section 4 of this Agreement.
7. Termination. Notwithstanding anything to the contrary contained in
this Agreement the Advisor's engagement hereunder may be terminated by the
Advisor upon at least forty-five (45) days prior written notice to the Company.
8. Notices. All notices and other communications under or in
connection with this Agreement shall be in writing and shall be deemed given (a)
if delivered personally, upon delivery, (b) if delivered by registered or
certified mail (return receipt requested), upon the earlier of actual delivery
or three days after being mailed, or (c) if given by telecopy, upon confirmation
of transmission by telecopy, in each case to the parties at the following
addresses:
(a) If to Advisor, addressed to:
4
<PAGE> 76
Churchill Capital, Inc.
590 Madison Avenue, 38th Floor
New York, New York 10022
Telecopy: (212) 832-4270
Attention: John J. Quirk
(b) If to Company, addressed to:
Asche Transportation Services, Inc.
10214 N. Mt. Vernon Road
Shannon, IL 61078
Telecopy: (815) 864-2646
Attention: Leon M. Monachos
9. Entire Agreement. This Agreement constitutes the entire agreement
among the parties with respect to the subject matter hereof. It supersedes any
prior agreement or understanding among them, and it may not be modified or
amended in any manner other than by an instrument in writing signed by both
parties hereto, or their respective successors or assigns, or otherwise as
provided herein.
10. Consent to Jurisdiction and Service of Process. Each of the
Company and the Advisor hereby agrees to submit to the exclusive jurisdiction of
the U.S. Federal courts in the Southern District of the State of New York.
11. Governing Law. This Agreement shall be construed, interpreted, and
governed in accordance with the internal laws of the State of New York without
giving regard to the principles of conflicts of law.
12. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective heirs, devisees,
legatees, legal representatives, successors and assigns. Nothing in this
Agreement, express or implied, is intended or shall be construed to give any
person other than the parties to this Agreement and their respective successors
or permitted assigns, any legal or equitable right, remedy or claim under or in
respect of any agreement or any provision contained herein. Without the prior
written consent of the Advisor, the Company shall not be entitled to assign its
rights and obligations under this Agreement and any purported assignment in
violation hereof shall be null and void.
13. Force Majeure. If the performance by the Advisor of any of its
services hereunder is prevented, restricted or interfered with in whole or in
part by reason of any event or cause whatsoever beyond the reasonable control of
the Advisor, then in any such event, the Advisor shall be excused from such
performance to the extent of such prevention, restriction or interference, and
the compensation payable hereunder shall be reduced proportionately.
14. Headings. Captions contained in this Agreement are inserted only
as a matter of convenience and in no way define, limit or extend the scope or
intent of this Agreement or any provision hereof.
15. Severability. If any provision of this Agreement, or the
application of such provision to any person or circumstance, shall be held
invalid, the remainder of this Agreement, or the application
5
<PAGE> 77
of such provision to persons or circumstances other than those to which it is
held invalid, shall not be affected thereby.
16. Waivers. No provision of this Agreement shall be deemed to have
been waived unless such waiver is contained in a written notice given to the
party claiming such waiver, and no such waiver shall be deemed to be a waiver of
any other or further obligation or liability of the party or parties in whose
favor the waiver was given.
17. Counterparts. This Agreement may be executed in counterparts, each
of which shall constitute one and the same instrument.
18. Further Assurances. Each party agrees to execute any and all
documents and to perform such other acts as may be necessary or expedient to
further the purposes of this Agreement and the transactions contemplated hereby.
[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]
6
<PAGE> 78
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first written above.
CHURCHILL CAPITAL, INC.
By:------------------------------
Name:
Title:
ASCHE TRANSPORTATION SERVICES, INC.
By:-------------------------------
Name:
Title:
7
<PAGE> 79
EXHIBIT E-1
R&W LLP DRAFT
8/4/99
VOTING AGREEMENT
This Voting Agreement (this "Agreement"), dated as of August , 1999 among
Churchill Environmental & Industrial Equity Partners, L.P. a limited partnership
organized under the laws of the State of Delaware ("Purchaser"), and
[ ], a stockholder (the "Stockholder") of Asche
Transportation Services, Inc., a Delaware corporation (the "Company").
WITNESSETH:
WHEREAS, concurrently herewith, Purchaser and the Company are entering
into a Stock Purchase Agreement (as such agreement may hereafter be amended from
time to time, the "Stock Purchase Agreement"), pursuant to which the Purchaser
will purchase from the Company shares of Common Stock of the Company, par value
$.0001 per share (the "Common Stock"); and
WHEREAS, as an inducement and a condition to entering into the Stock
Purchase Agreement, Purchaser has required that the Stockholder agree, and the
Stockholder has agreed, to enter into this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual premises,
representations, warranties, covenants and agreements contained herein, the
parties hereto, intending to be legally bound, hereby agree as follows:
1. Definitions. Capitalized terms used and not defined herein have the
respective meanings ascribed to them in the Stock Purchase Agreement. For
purposes of this Agreement:
(a) "Company Stock" shall mean at any time, collectively, shares
of Common Stock.
(b) "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. Notwithstanding the foregoing,
securities Beneficially Owned by a Person shall not include securities which are
actually owned by other Persons but which such Person may be deemed to
Beneficially Own under Rule 13d-3 under the Exchange Act solely because such
Person may be deemed to be part of a "group" with such other Persons as within
the meaning of Section 13(d)(3) of the Exchange Act.
2. Provisions Concerning Company Stock.
(a) The Stockholder hereby agrees that during the period
commencing on the date hereof and continuing for so long as the Stockholder
holds any shares of Common Stock, at any meeting of the holders of Company
Stock, however called, or in connection with any written consent of the holders
of Company Stock, the Stockholder shall vote (or cause to be voted) all shares
of Company Stock held of record or Beneficially Owned by the Stockholder,
whether heretofore owned or hereafter acquired (collectively, the "Shares"): (i)
in favor of the Charter Amendment; (ii) in favor of the Investment
<PAGE> 80
Proposal and the execution and delivery by the Company of the Stock Purchase
Agreement and the Related Agreements, the approval of the terms thereof and each
of the other transactions and actions contemplated thereby (and the matters
related to the consummation thereof); (iii) in favor of the appointment of the
Purchaser Designees to the Board of Directors of the Company, as contemplated by
the Stock Purchase Agreement; (iv) in favor of the Charter and By-Law
Amendments; (v) against any action or agreement that would result in a breach in
any respect of any covenant, representation or warranty or any other obligation
or agreement of the Company under the Stock Purchase Agreement or the Related
Agreements or of the Stockholder under this Agreement or that would result in
any of the conditions to the obligations of the Company under the Stock Purchase
Agreement not being fulfilled; and (vi) until the Investment Proposal shall have
been duly approved by the holders of Company Stock, and except as otherwise
agreed to in writing in advance by Purchaser, against each of the following
actions (other than the transactions contemplated by, or required by, the Stock
Purchase Agreement and the Related Agreements): (A) any extraordinary corporate
transaction, such as a merger, consolidation or other business combination
involving the Company or its Subsidiaries; (B) a sale, lease or transfer of a
material amount of assets of the Company or its Subsidiaries, or a
reorganization, recapitalization, dissolution or liquidation of the Company or
its Subsidiaries; (C) any change in a majority of the Persons who constitute the
board of directors of the Company; (D) any change in the present capitalization
of the Company or any amendment of the Company's Certificate of Incorporation or
Bylaws; (E) any other material change in the Company's corporate structure or
business; or (F) any other action involving the Company or its Subsidiaries
which is intended, or could reasonably be expected, to impede, interfere with,
delay, postpone, or materially adversely affect the transactions contemplated by
the Stock Purchase Agreement, the Related Agreements and this Agreement.
(b) In the event of a stock dividend or distribution, or any
change in the Company Stock by reason of any stock dividend, split-up,
recapitalization, combination, exchange of shares or the like, the term "Shares"
shall be deemed to refer to and include the Shares as well as all such stock
dividends and distributions and any shares into which or for which any or all of
the Shares may be changed or exchanged.
3. Other Representations, Warranties and Covenants. The Stockholder
hereby represents, warrants and covenants to Purchaser as follows:
(a) Ownership of Shares. The Stockholder is, as of the date
hereof, the record holder of and Beneficially Owns the number of shares of
Company Stock set forth opposite the Stockholder's name on Schedule I hereto. As
of the date hereof, the Shares set forth opposite the Stockholder's name on
Schedule I hereto constitute all of the Shares owned of record or Beneficially
Owned by the Stockholder. The Stockholder has sole voting power or sole power to
issue instructions with respect to the matters covered hereby.
(b) Power; Binding Agreement. The Stockholder has the legal
capacity, power and authority to enter into and perform all of the Stockholder's
obligations under this Agreement. The execution, delivery and performance of
this Agreement by the Stockholder will not violate any other agreement to which
the Stockholder is a party including, without limitation, any other voting
agreement, stockholders agreement, voting trust or similar agreement. This
Agreement has been duly and validly executed and delivered and authorized, to
the extent required, by the Stockholder and constitutes a valid and binding
agreement of the Stockholder, enforceable against the Stockholder in accordance
with its terms. There is no beneficiary or holder of a voting trust certificate
or other interest of any trust of which the Stockholder is a trustee whose
consent is required for the execution and delivery of this Agreement or the
consummation by the Stockholder of the transactions contemplated hereby.
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<PAGE> 81
(c) No Conflicts. (i) No filing with, and no permit,
authorization, consent or approval of, any state or federal public body or
authority is necessary for the execution of this Agreement by the Stockholder
and the consummation by the Stockholder of the transactions contemplated hereby,
and (ii) none of the execution and delivery of this Agreement by the
Stockholder, the consummation by the Stockholder of the transactions
contemplated hereby or compliance by the Stockholder with any of the provisions
hereof shall (A) result in a violation or breach of, or constitute (with or
without notice or lapse of time or both) a default (or give rise to any third
party right of termination, cancellation, material modification or acceleration)
under any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, license, contract, commitment, arrangement, understanding, agreement
or other instrument or obligation of any kind to which the Stockholder is a
party or by which the Stockholder or any of the Stockholder's properties or
assets may be bound, or (B) violate any order, writ, injunction, decree,
judgment, order, statute, rule or regulation applicable to the Stockholder or
any of the Stockholder's properties or assets.
(d) Proxies and Non-Interference. Beginning on the date hereof and
continuing until this Agreement terminates pursuant to Section 4, the
Stockholder shall not, directly or indirectly, (i) except as contemplated by
this Agreement, grant any proxies or powers of attorney, deposit any Shares into
a voting trust or enter into or amend a voting agreement with respect to any
Shares, or (ii) take any action that would have the effect of preventing or
disabling the Stockholder from performing the Stockholder's obligations under
this Agreement.
(e) Standstill. Beginning on the date hereof and continuing until
the expiration of the Adjustment Period, without the prior written consent of
Purchaser, the Stockholder shall not (i) in any manner acquire, agree to acquire
or make any proposal to acquire, directly or indirectly [ ] percent or more of
the issued and outstanding shares of Common Stock of the Company, (ii) make or
in any way participate, directly or indirectly, in any "solicitation" of
"proxies" (as such rules are used in the proxy rules of the Securities &
Exchange Commission) to vote, or seek to advise or influence any person with
respect to the voting of, any shares of Common Stock of the Company [or (iii)
form, join or in any way participate in a "group" (within the meaning of Section
13(d) of the Exchange Act) with respect to any shares of Common Stock of the
Company.]
(f) Reliance by Purchaser. The Stockholder understands and
acknowledges that Purchaser is entering into the Stock Purchase Agreement in
reliance upon the Stockholder's execution and delivery of this Agreement.
(g) Further Assurances. From time to time, at the other party's
request and without further consideration, each party hereto shall execute and
deliver such additional documents and take all such further lawful action as may
be necessary or desirable to consummate and make effective, in the most
expeditious manner practicable, the transactions contemplated by this Agreement.
4. Termination. This Agreement shall terminate only upon, and
simultaneously with, the termination of the Stock Purchase Agreement in
accordance with its terms; provided, however, that no such termination shall
relieve any party of liability for a breach hereof prior to termination.
5. Stockholder Capacity. No Person executing this Agreement who is or
becomes during the term hereof a director of the Company makes any agreement or
understanding herein in his or her capacity as such director. The Stockholder
signs solely in his or her capacity as the record and/or Beneficial Owner of, or
the trustee of a trust whose beneficiaries are the Beneficial Owners of, the
Stockholder's Shares.
6. Miscellaneous.
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(a) Entire Agreement. This Agreement constitutes the entire
agreement between the parties with respect to the subject matter hereof and
supersede all other prior agreements and understandings, both written and oral,
between the parties with respect to the subject matter hereof.
(b) Restriction on Transfers. The Stockholder agrees that (i) this
Agreement and the obligations hereunder shall attach to the Stockholder's Shares
and shall be binding upon any Person to which legal or Beneficial Ownership of
such Shares shall pass, whether by operation of law or otherwise, including,
without limitation, the Stockholder's heirs, guardians, administrators or
successors and (ii) until the earlier of (x) the date upon which this Agreement
terminates pursuant to Section 4 and (y) the period ending on the fifth
anniversary after the Closing Date, the Stockholder shall not sell, transfer,
pledge, assign or otherwise dispose of (collectively, "Transfer"), or enter into
any contract, option or other arrangement with respect to the Transfer of any of
the Stockholder's Shares, unless as a condition of such Transfer the transferee
agrees in writing to be bound by the terms and conditions of this Agreement.
(c) Legends. The Stockholder hereby acknowledges and agrees the
Company shall place a legend on the shares of Company Stock so as to indicate
that all holders thereof shall be subject to the terms and conditions of this
Agreement.
(d) Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder may be assigned or delegated by the
Stockholder or Purchaser without the prior written consent of the other party
and any purported assignment or delegation in violation hereof shall be null and
void, provided, however, that Purchaser may assign all or any part of its
rights, interests and obligations hereunder to any Affiliate of Purchaser;
provided, that no such assignment before the Closing Date by Purchaser shall
relieve Purchaser of its obligations hereunder.
(e) Amendments, Waivers, Etc. This Agreement may not be amended,
changed, supplemented, waived or otherwise modified or terminated with respect
to the Stockholder, except upon the execution and delivery of a written
agreement executed by the parties hereto; provided that Schedule I hereto may be
supplemented by Purchaser by other relevant information concerning the
Stockholder of the Company without the agreement of the other party hereto.
(f) Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly received if so given) by hand delivery, telegram, telex
or telecopy, or by mail (registered or certified mail, postage prepaid, return
receipt requested) or by any courier service, such as Federal Express, providing
proof of delivery. All communications hereunder shall be delivered to the
respective parties at the following addresses:
If to Purchaser: Churchill Capital, Inc.
3100 Metropolitan Centre
333 South 7th Street
Minneapolis, Minnesota 55402
(612) 673-6615 (telecopier)
Attention: Kevin C. Dooley
Copy to: Rogers & Wells LLP
200 Park Avenue
New York, New York 10166
(212) 878-8375 (telecopier)
Attention: Steven A. Hobbs
4
<PAGE> 83
Or to such other address as the Person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
(g) Severability. Whenever possible, each provision or portion of
any provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law but if any provision or portion of any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unforceability will not affect any other provision or
portion of any provision in such jurisdiction, and this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision or portion of any provision had never been
contained herein.
(h) Specific Performance. Each of the parties hereto recognizes
and acknowledges that a breach by it of any covenant or agreement contained in
this Agreement will cause the other party to sustain damages for which it would
not have an adequate remedy at law for money damages, and therefore each of the
parties hereto agrees that in the event of any such breach the aggrieved party
shall be entitled to the remedy of specific performance of such covenants and
agreements and injunctive and other equitable relief in addition to any other
remedy to which it may be entitled, at law or in equity.
(i) Remedies Cumulative. All rights, powers and remedies provided
under this Agreement or otherwise available in respect hereof at law or in
equity shall be cumulative and not alternative, and the exercise of any thereof
by any party shall not preclude the simultaneous or later exercise of any other
such right, power or remedy by such party.
(j) No Waiver. The failure of any party hereto to exercise any
right, power or remedy provided under this Agreement or otherwise available in
respect hereof at law or in equity, or to insist upon compliance by any other
party hereto with its obligations hereunder, and any custom or practice of the
parties at variance with the terms hereof, shall not constitute a waiver by such
party of its right to exercise any such or other right, power or remedy or to
demand such compliance.
(k) No Third Party Beneficiaries. This Agreement is not intended
to be for the benefit of, and shall not be enforceable by, any Person who or
which is not a party hereto.
(l) Governing Law. This Agreement shall be governed by and
construed in accordance with laws of the State of New York without giving regard
to the principles of conflicts of law.
(m) Jurisdiction. Each of the parties hereto hereby agrees to
submit to the exclusive jurisdiction of the U.S. Federal courts in the Southern
District of the State of New York.
(n) Descriptive Headings. The descriptive headings used herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
(o) Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed to be an original, but all of which, taken
together, shall constitute one and the same Agreement.
[The remainder of this page intentionally left blank]
5
<PAGE> 84
IN WITNESS WHEREOF, Purchaser and each Stockholder have caused this Agreement to
be duly executed as of the day and year first above written.
STOCKHOLDER:
By:
----------------------------------------
Name:
Address:
CHURCHILL ENVIRONMENTAL & INDUSTRIAL EQUITY
PARTNERS, L.P., a Delaware limited partnership
By Churchill Capital Environmental, L.L.C., a
Delaware limited liability company
Its General Partner
By Churchill Capital, Inc.
Its Managing Agent
By:
------------------------------------
Name:
Title:
<PAGE> 85
SCHEDULE I
OWNERSHIP OF SHARES
- -------------------- ----------------------------------
Name Number of shares of Common Stock
<PAGE> 86
ASCHE TRANSPORTATION SERVICES, INC.
10214 N. MT. VERNON ROAD, SHANNON, ILLINOIS 61076
PROXY
The undersigned hereby appoints Larry L. Asche and Leon M. Monachos and
each of them, with power of substitution, to represent and to vote on behalf of
the undersigned all of the shares of Asche Transportation Services, Inc. which
the undersigned is entitled to vote at the Special Meeting of Stockholders to be
held at the Best Western Clock Tower Resort and Conference Center, 7801 East
State Street, Rockford, Illinois 61108 on Wednesday, September 17, 1999 at 10:00
a.m. (Central Standard Time), and at any adjournment or adjournments thereof,
hereby revoking all proxies heretofore given with respect to such stock, upon
all subjects that may properly come before the meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1, 2 AND 3
1. To approve the issuance and sale of shares of the Company's Common
Stock, par value $.0001 per share to Churchill Capital Environmental &
Industrial Equity Partners, L.P. (the "Purchaser") (the "Investment Proposal")
equal to (i) 2,666,667 at a price of $4.50 per share in cash if the average
closing price of the Common Stock on the NASDAQ for the ten consecutive trading
days immediately preceding the closing date of the Investment Proposal is less
than $5.00 per share or (ii) 2,400,000 at a price of $5.00 per share in cash if
the average closing price of the Common Stock on the NASDAQ for the ten
consecutive trading days immediately preceding the closing date of the
Investment Proposal is equal to, or greater than $5.00 per share) pursuant to
the terms of the Stock Purchase Agreement dated as of August __, 1999 (the
"Stock Purchase Agreement") between the Company and the Purchaser. The Stock
Purchase Agreement also requires the Company to issue to Purchaser additional
shares of Common Stock (the "Additional Shares") if the highest average closing
price on the NASDAQ of the Company's Common Stock for any ten consecutive
trading days beginning on September 1, 2000 and ending on November 1, 2000 (the
"Measurement Period") is less than (i) $6.50 (if the initial purchase price for
the Common Stock is $4.50 per share under the Stock Purchase Agreement) or (ii)
$7.00 (if the initial purchase price for the Common Stock is $5.00 per share).
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2. To approve the amendment to the Company's Certificate of Incorporation
to increase the number of authorized shares of Common Stock par value $.0001 per
share from 10,000,000 to 25,000,000.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. To approve amendments to the Company's Certificate of Incorporation
and By-Laws to increase the number of directors from not greater than nine to
not greater than fifteen.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. In their discretion, the proxies are authorized to vote upon such
other matters as may properly come before the meeting.
This Proxy is continued on the reverse side. Please sign on the reverse side and
return promptly.
<PAGE> 87
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR PROPOSALS 1, 2, 3 AND 4.
Receipt is hereby acknowledged of the Notice of the Meeting and Proxy
Statement.
Please sign exactly as your name appears on your
stock certificates. When shares are held by joint
tenants, both should sign. When signing as
attorney, executor, administrator, trustee, or
guardian, please give full title as such. If a
corporation, please sign in full corporate name by
President or other authorized officer. If a
partnership, please sign in partnership name by
authorized person.
Signature
Signature if held jointly
Dated:
(Please return in the enclosed postage-paid
envelope. I will [ ] will not [ ] attend the
meeting.) THIS PROXY IS SOLICITED ON BEHALF OF THE
BOARD OF DIRECTORS.
