<PAGE> 1
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 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
AASCHE TRANSPORTATION SERVICES, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(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)(1) 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:
- --------------------------------------------------------------------------------
<PAGE> 2
[AASCHE TRANSPORTATION SERVICES INC. LETTERHEAD]
April 19, 1999
Dear Stockholder:
It is my pleasure to invite you to the 1999 Annual Meeting of Stockholders
of Aasche Transportation Services, Inc. The meeting will be held at the Best
Western Clock Tower Resort and Conference Center, 7801 East State Street,
Rockford, Illinois 61108 on Wednesday, May 19, 1999, at 10:00 A.M. Central
Standard Time.
The accompanying Notice of Annual Meeting of Stockholders and Proxy
Statement describes the items of business which will be discussed during the
meeting. It is important that you vote your shares whether or not you plan to
attend the meeting. To be sure your vote is counted, we urge you to carefully
review the Proxy Statement and to vote your choices. PLEASE SIGN, DATE AND
RETURN THE ENCLOSED PROXY CARD IN THE ACCOMPANYING ENVELOPE AS SOON AS POSSIBLE.
If you attend the meeting and wish to vote in person, the ballot that you submit
at the meeting will supersede your proxy.
I look forward to seeing you at the meeting. On behalf of the management
and directors of Aasche Transportation Services, Inc., I want to thank you in
advance for your continued support and confidence in 1999.
Sincerely,
LARRY L. ASCHE
Larry L. Asche
Chairman of the Board and
Chief Executive Officer
<PAGE> 3
AASCHE TRANSPORTATION SERVICES, INC.
10214 NORTH MT. VERNON ROAD
SHANNON, ILLINOIS 61078
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 19, 1999
To the Stockholders of Aasche Transportation Services, Inc.:
The Annual Meeting of Stockholders of Aasche 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, May 19, 1999, at 10:00 A.M. Central Standard Time for the
following purposes, as more fully described in the accompanying Proxy Statement:
1. To elect two directors to serve a term of 3 years or until their
respective successors are elected and qualified;
2. To approve amendments to the Stock Option Plan which include a proposed
increase of 254,000 in the number of shares subject to the Plan;
3. To approve an amendment to the Company's Certificate of Incorporation to
authorize and create 1,000,000 shares of Preferred Stock whose terms will be
designated, and which may be issued from time to time by the Board of Directors;
4. To approve an amendment to the Company's Certificate of Incorporation to
change the name of the Company from Aasche Transportation Services, Inc. to
Asche Transportation Services, Inc.; and
5. To transact such other business as may properly come before the meeting
or any adjournment thereof.
Stockholders of record of the Company's Common Stock, par value $0.0001 per
share, at the close of business on March 25, 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.
Stockholders who cannot attend are urged to sign, date and otherwise
complete the enclosed proxy card and return it promptly in the envelope
provided. Any stockholder giving a proxy has the right to revoke it at any time
before it is voted.
The annual report of the Company for the fiscal year ended December 31,
1998 is being mailed to all Stockholders of record and accompanies this Proxy
Statement.
By order of the Board of Directors,
DIANE L. ASCHE
Diane L. Asche
Secretary
Shannon, Illinois
April 19, 1999
<PAGE> 4
AASCHE TRANSPORTATION SERVICES, INC.
10214 NORTH MT. VERNON ROAD
SHANNON, ILLINOIS 61078
PROXY STATEMENT
-------------------------
APPROXIMATE DATE PROXY MATERIAL
FIRST SENT TO STOCKHOLDERS:
APRIL 19, 1999
-------------------------
The following information is provided in connection with the solicitation
of proxies for the 1999 Annual Meeting of Stockholders of Aasche Transportation
Services, Inc., a Delaware corporation ("Aasche" or the "Company"), to be held
on May 19, 1999, and adjournments thereof (the "Annual Meeting"), for the
purposes stated in the Notice of Annual Meeting of Stockholders preceding this
Proxy Statement.
VOTING OF SHARES
This Proxy Statement and the accompanying proxy card are being mailed to
stockholders, beginning on or about April 19, 1999, in connection with the
solicitation of proxies on behalf of the Board of Directors of Aasche (the
"Board") for the Annual Meeting. Proxies are solicited to give all stockholders
of record on March 25, 1999 (the "Record Date") an opportunity to vote on
matters to be presented at the Annual Meeting. Shares can be voted at the
meeting only if the stockholder is present or represented by proxy.
Each share of the Company's common stock, par value $0.0001 per share (the
"Common Stock"), represented at the Annual Meeting is entitled to one vote on
each matter properly brought before the meeting. Please specify your choices by
marking the appropriate boxes on the enclosed proxy card and signing it.
Directors are elected by a plurality of the votes cast by the shares entitled to
vote at a meeting at which a quorum is present. A plurality means that the
nominees with the largest number of votes are elected as directors up to the
maximum number of directors to be chosen at the meeting. The affirmative vote of
the holders of a majority of the shares of Common Stock outstanding as of the
Record Date will be required to adopt each of the proposed amendments to the
Company's Certificate of Incorporation and the amendment to the Company's Stock
Option Plan. Any other matters that may be submitted at the meeting shall be
determined by a majority of the votes cast. Shares represented by proxies that
are marked "withhold authority" with respect to the election of one or more
nominees for election as directors, and proxies which are marked to deny
discretionary authority on other matters will not be counted in determining
whether a majority vote was obtained in such matters. If no directions are given
and the signed card is returned, the persons named in the proxy card will vote
the shares in favor of the election of all listed nominees, and at their
discretion, on any other matter that may properly come before the meeting in
accordance with their best judgment. Abstentions and broker non-votes are
counted for purposes of determining the presence or absence of a quorum for the
transaction of business. Abstentions are counted in tabulations of the votes
cast on proposals presented to stockholders, whereas broker non-votes are not
counted for purposes of determining whether a proposal has been approved.
Stockholders voting by proxy may revoke that proxy at any time before it is
voted at the meeting by delivering to the Company a proxy bearing a later date
or by attending in person and casting a ballot.
YOUR VOTE IS IMPORTANT. PLEASE RETURN YOUR MARKED AND SIGNED PROXY CARD
PROMPTLY SO YOUR SHARES CAN BE REPRESENTED, EVEN IF YOU PLAN TO ATTEND THE
MEETING IN PERSON.
As of the Record Date, 5,098,930 shares of Common Stock were issued and
outstanding.
<PAGE> 5
BOARD OF DIRECTORS
GENERAL
The business affairs of the Company are managed under the direction of the
Board. Members of the Board are kept informed through various reports and
documents sent to them on a regular basis, through operating and financial
reports routinely presented at Board and committee meetings by the Chief
Executive Officer and other officers, and through other means.
The Board had four meetings in 1998. Except for the absence of one director
at one meeting, the attendance of all directors at Board meetings was 100%.
Biographical information on the director nominees and the directors serving
unexpired terms is set forth herein under the caption "Item No. 1 -- Election of
Directors."
COMMITTEES
The Board has formed the standing Audit Committee, the Compensation
Committee and the Stock Option Committee to assist the Board in carrying out its
duties.
The AUDIT COMMITTEE has three members, two of whom are independent,
nonemployee directors. Members of this committee are Dennis D. Wilson, Michael
Todd Recob and Leon M. Monachos, who is Chief Financial Officer of the Company.
The Audit Committee considers the adequacy of the internal controls of the
Company and the objectivity and integrity of financial reporting and meets with
the independent certified public accountants and appropriate Company financial
personnel about these matters.
The COMPENSATION COMMITTEE has three members, two of whom are independent,
nonemployee directors. Members of the committee are Messrs. Wilson, Recob and
Larry L. Asche, who is the Chief Executive Officer of the Company. This
committee monitors and makes recommendations to the Board with respect to
compensation programs for directors and officers and administers compensation
plans for executive officers.
The STOCK OPTION COMMITTEE has two members, each of whom are independent,
nonemployee directors. Members of this committee are Messrs. Wilson and Recob.
The Stock Option Committee administers the Company's Stock Option Plan.
DIRECTOR COMPENSATION
Directors are reimbursed for travel expenses incurred in connection with
attending board and committee meetings. Directors are not entitled to additional
fees for serving on committees of the Board of Directors. Pursuant to the terms
of the formula program of the Company's Stock Option Plan, each nonemployee
director of the Company upon his initial election to the Board, and at the
adjournment of each annual meeting, is granted an option to purchase 5,000
shares of Common Stock at an exercise price per share equal to the closing price
of the Common Stock on the date of grant.
ITEM NO. 1 -- ELECTION OF DIRECTORS
The Board, pursuant to the Company's Certificate of Incorporation and
By-laws, has determined that the number of directors of the Company shall be
eight. The six employee directors on the Board are the Company's Chief Executive
Officer, President, Chief Financial Officer, Vice-President (and President of
STS subsidiary), President of AG and Vice-President and Secretary. The Board is
divided into three classes with staggered terms so that the term of one class
expires at each annual meeting of stockholders. Directors are elected by a
plurality of the votes cast.
The following nominees have been selected and approved by the Board for
submission to the stockholders: Richard S. Baugh and Michael Todd Recob, each to
serve a three-year term expiring at the 2002 Annual Meeting. Except as otherwise
specified in the proxy, proxies will be voted for election of these nominees.
2
<PAGE> 6
If a nominee becomes unable or unwilling to serve, proxies will be voted
for election of such person as shall be designated by the Board; however,
management knows of no reason why any nominee should be unable or unwilling to
serve.
A summary description of each nominee and each director serving an
unexpired term follows.
NOMINEES FOR ELECTION AT THIS
MEETING TO TERMS EXPIRING IN 2002:
RICHARD S. BAUGH, age 52, has served as President of AG Carriers, Inc. ("AG
Carriers") and a Director since May 1995. Mr. Baugh served as President and
Chief Operating Officer of AG Carriers, Inc. from 1982 to May 1995. Prior to
1982, Mr. Baugh served as Vice President and General Manager of AG Carriers,
Inc. Mr. Baugh presently serves on the Board of Directors of the Florida
Trucking Association.
MICHAEL TODD RECOB, 47, has served as the Sales Manager for Peterbilt of
Wisconsin, Inc. ("Peterbilt") and Fleet Business Manager for JX Enterprises,
Inc. (a subsidiary of Peterbilt) since September 1996 and March 1996,
respectively. Prior to March 1996, Mr. Recob served as a sales representative
for Peterbilt from September 1977 to March 1996.
THE BOARD RECOMMENDS A VOTE "FOR" THESE NOMINEES
DIRECTORS WHOSE TERMS
CONTINUE UNTIL 2000:
KEVIN M. CLARK, age 43, has served as President and Director of the Company
since July 1994. Mr. Clark also served as Chief Executive Officer from July 1994
to November 1996. Since May 1987, Mr. Clark has served as Vice President of
Asche Transfer, Inc. ("Asche Transfer"). He also serves as Vice-President of AG
Carriers and Vice-President of Specialty Transportation Services, Inc. ("STS").
Prior to joining Asche Transfer, Mr. Clark served for over two years as a
management consultant to Asche Transfer. From 1982 to 1984, Mr. Clark was Vice
President and Director of Batt Trucking, Inc., Caldwell, Idaho, a refrigerated
trucking company. From 1980 to 1984, Mr. Clark was the founder and President of
National Traffic Services Corporation, Boise, Idaho, a management consulting
firm providing regulatory compliance assistance to regional and national
transportation companies. Prior to that time, Mr. Clark served as the
Transportation Auditor, Acting Director, Idaho Public Utilities Commission,
Boise, Idaho and prior thereto, he was a transportation specialist with
Consolidated Freightways, Boise, Idaho. Mr. Clark has a B.S. degree in business
from Ottawa University, Phoenix, Arizona. Mr. Clark has also received a
Transportation Practitioner Degree from the College of Advanced Traffic,
Chicago, Illinois and has been admitted to practice before the Interstate
Commerce Commission and Federal Maritime Commission. Mr. Clark has served as
Chairman of the Advisory Board of Directors of the University of Georgia
Trucking Profitability Strategies Conference. He is also the author of three
books in the transportation and business fields and has been a frequent speaker
for various national organizations.
DIANE L. ASCHE, age 45, has served as Vice President, Secretary and
Director of the Company since July 1994. Mrs. Asche has served as Vice
President, Secretary and Director of Asche Transfer since its incorporation in
February 1983 and in addition, serves as Secretary of AG Carriers and STS. Mrs.
Asche is the wife of Larry L. Asche.
DIRECTOR WHOSE TERM
CONTINUES UNTIL 2001:
LARRY L. ASCHE, age 47, has served as Chairman and Director of the Company
since July 1994 and as Chief Executive Officer since November 1996. Mr. Asche
also served as Chief Operating Officer from July 1994 to November 1996. Mr.
Asche has served as President and Director of Asche Transfer since its
incorporation in February 1983. He also serves as Chairman of the Board of AG
Carriers and Vice President
3
<PAGE> 7
and Director of STS. Mr. Asche acquired the business from Clarence Asche, Mr.
Asche's uncle, in 1973 and operated Asche Transfer for ten years as a sole
proprietorship. Mr. Asche is the husband of Diane L. Asche.
LEON M. MONACHOS, age 47, has served as a Director of the Company since
March 1996 and as Chief Financial Officer since May 1996. Since September 1996,
Mr. Monachos has served as Vice-President -- Finance of Asche Transfer and AG
Carriers. He also serves as Vice-President -- Finance and Director of STS. From
October 1995 to May 1996, Mr. Monachos had been an advisor to the president and
founder of a privately-held transportation services company. From June 1986 to
September 1995, he was employed at Ernst & Young LLP, a public accounting firm,
most recently as Senior Manager. Mr. Monachos has a B.S. degree from the
University of Illinois and is a certified public accountant.
GARY I. GOLDBERG, age 55, has served as Vice President of the Company since
February 1998 and a Director since July, 1996. Mr. Goldberg is President and
Director of STS. From 1977 to 1997, Mr. Goldberg served as Executive Vice
President of Jack Gray Transport, Inc. ("JGT"). Prior to joining JGT, he was
employed by Material Service Corporation and Vulcan Materials Company as
controller for eight years. Mr. Goldberg has a B.A. degree in commerce from
DePaul University.
DENNIS D. WILSON, age 47, has served as a Director of the Company since
November 1997. Mr. Wilson serves as Chief Accounting Officer and Director of
Schawk, Inc. Prior to that, he served as a principal of Wilson Financial
Services, Crete, Illinois and Chief Financial Officer of Family Services Center,
Matteson, Illinois from 1992 to 1994. Mr. Wilson is a certified public
accountant.
BOARD COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
Although neither the Board of Directors nor the Compensation Committee has
adopted a formal compensation policy applicable to the Company's executive
officers, the purpose of the Company's executive compensation is to enable the
Company to attract, retain and motivate qualified executives to ensure the long-
term success of the Company and its business strategies. The Compensation
Committee intends to review the compensation policy for the Company's executive
officers in order to align executive compensation with the business objectives
and performance of the Company and to place greater emphasis on incentive
compensation.
Executive compensation has generally consisted of two principal components:
base salary and bonus. At the time of the Company's initial public offering in
1994, the Company entered into a five-year employment and stock option agreement
with Larry L. Asche, its Chief Executive Officer. Under the agreement, Mr. Asche
received a base salary of $200,000 in 1998. In addition, Mr. Asche is eligible
to receive a cash and/or stock bonus following the end of each fiscal year as
the Compensation Committee, in its sole discretion, deems appropriate, after
taking into consideration the Company's achievement of revenue and operating
goals and financial performance for the fiscal year then ended and the
executive's contribution thereto. Based on Mr. Asche's efforts in returning
Asche Transfer to profitability, his efforts in completing the acquisition of
the Waste Transport Business and Mr. Asche's outstanding leadership, the
Compensation Committee approved a cash bonus of $50,000 to Mr. Asche. Mr. Asche
abstained from such approval. In addition, the Stock Option Committee approved a
grant of options to purchase 25,000 shares of Common Stock at an exercise price
of $3.66. The Options are currently exercisable. The employment and stock option
agreement with Mr. Asche is described in the section captioned "Employment
Agreements."
As part of Mr. Asche's employment and stock option agreement, Mr. Asche was
granted an option to purchase 26,000 shares of Common Stock vesting (i) 5,000
shares on January 1, 1995 at an exercise price of $8.75 per share; (ii) 6,000
shares on January 1, 1996 at an exercise price of $9.00; (iii) 7,000 shares on
January 1, 1997 at an exercise price of $9.25 per share; and (iv) 8,000 shares
on January 1, 1998 at an exercise price of $9.50 per share. These options, which
were granted with an exercise price greater than the fair market value per share
of the Common Stock on the date of grant, are intended to encourage the creation
of stockholder value over the long-term by aligning the financial interests of
Mr. Asche with those of the Company's stockholders.
4
<PAGE> 8
The salary, bonus and stock options paid or granted by the Company to the
Chief Executive Officer and the other most highly compensated executive officer
of the Company in 1998 is set forth in the tables following this report. The
Board of Directors believes that the present executive officers of the Company
are dedicated to increasing profitability and stockholder value and that the
compensation to be paid to the executives of the Company will contribute to this
focus.
COMPENSATION COMMITTEE
Dennis D. Wilson
Michael Todd Recob
Larry L. Asche
COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
The Compensation Committee is presently composed of Dennis D. Wilson,
Michael Todd Recob and Larry L. Asche. Except for Mr. Asche, none of the members
of the Compensation Committee is or was formerly an officer or employee of the
Company.
STOCKHOLDER RETURN PERFORMANCE GRAPH
Set forth on the following page is a line graph comparing the percentage
change in the cumulative total stockholder return on the Company's Common Stock
against the Nasdaq Market Index and a Company-selected peer group of
transportation services companies (the "Peer Group"). The graph assumes that
$100 was invested on September 23, 1994 (the effective date of the Company's
initial public offering) at the initial public offering price of $7.00 per
share, in each of the Company's Common Stock, the Nasdaq Market Index and the
Peer Group, and that all dividends were reinvested.
5
<PAGE> 9
TOTAL SHAREHOLDER RETURNS
PERFORMANCE GRAPH FOR AASCHE TRANSPORTATION SERVICES, INC.
Prepared by Media General Financial Services
Produced on 2/26/99 including data to 12/31/98
PERFORMANCE GRAPH
<TABLE>
<CAPTION>
AASCHE TRANSPORTATION CUSTOMER SELECTED STOCK
SERVICES, INC. LIST NASDAQ MARKET INDEX
--------------------- ----------------------- -------------------
<S> <C> <C> <C>
'9/23/94' 100.00 100.00 100.00
'12/31/94' 92.42 90.56 97.99
'12/31/95' 63.64 66.46 127.10
'12/31/96' 62.12 69.54 157.94
'12/31/97' 48.48 85.21 193.20
'12/31/98' 48.48 60.56 272.49
</TABLE>
<TABLE>
<CAPTION>
9/23/94 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98
<S> <C> <C> <C> <C> <C> <C>
AASCHE Transportation Services 100.00 92.42 63.64 62.12 48.48 48.48
Customer Selected Stock List 100.00 90.56 66.46 69.54 85.21 60.56
NASDAQ Market Index 100.00 97.99 127.10 157.94 193.20 272.49
</TABLE>
- -------------------------
NOTES:
(a) Peer Group return is weighted by market capitalization.
(b) The Peer Group is comprised of the common stock of the following companies:
Frozen Food Express, Inc., KLLM Transport Services, Inc., Marten Transport,
Ltd. and Simon Transportation Services, Inc.
6
<PAGE> 10
EXECUTIVE COMPENSATION
GENERAL
The following table sets forth compensation awarded or earned by the
Company's Chief Executive Officer and to the other named executive officers as
of the end of 1998.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION AWARDS
-----------------------
SECURITIES
ANNUAL COMPENSATION RESTRICTED UNDERLYING
-------------------- STOCK OPTIONS ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) AWARDS($) (#) COMPENSATION(1)
- --------------------------- ---- --------- -------- ---------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Larry L. Asche..................... 1998 200,000 50,000 0 51,000 3,375
Chairman of the Board & 1997 200,000 0 0 26,000 4,750
Chief Executive Officer 1996 150,000 0 0 26,000 5,230
Kevin M. Clark..................... 1998 135,000 0 0 26,000 4,725
President 1997 135,000 0 0 26,000 4,725
4,624
1996 135,000 0 0 26,000
Leon M. Monachos................... 1998 150,000 50,000 0 330,000 0
Chief Financial Officer 1997 150,000 0 0 205,000 0
0
1996 120,000 0 0 205,000
Gary I. Goldberg................... 1998 175,000 0 0 545,000 2,019
Vice President(2)
</TABLE>
- -------------------------
(1) Represents matching payments under the Company's 401(k) Plan.
(2) Mr. Goldberg also serves as President of STS.
OPTION GRANTS IN 1998
The following table provides further information on individual stock option
grants made for fiscal 1998 to the named executive officers.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
----------------------------------------------- POTENTIAL REALIZABLE
NUMBER OF % OF VALUE AT ASSUMED ANNUAL
SHARES TOTAL RATES OF STOCK PRICE
UNDERLYING OPTIONS APPRECIATION FOR
OPTIONS GRANTED TO EXERCISE OPTION TERM(1)
GRANTED EMPLOYEES PRICE EXPIRATION -----------------------
NAME (#)(2) IN 1998 ($/SH) DATE 5%($) 10%($)
---- ---------- ---------- -------- ---------- ----- ------
<S> <C> <C> <C> <C> <C> <C>
Larry L. Asche.................. 25,000 2.1% 3.66 12/23/08 57,500 145,750
Kevin M. Clark.................. 0 0 -- -- 0 0
Leon M. Monachos................ 25,000 2.1% 3.66 12/23/08 57,500 145,750
100,000 8.5% 4.03 01/01/08 253,000 642,000
Gary I. Goldberg................ 35,000 3.0% 3.66 12/23/08 80,500 204,050
500,000 42.4% 3.9375 01/01/08 1,240,000 3,140,000
</TABLE>
- -------------------------
(1) The potential realizable value columns of the table illustrate values that
might be realized upon exercise of the options immediately prior to their
expiration, assuming the Company's Common Stock appreciates at the
compounded rates specified over the term of the options. These numbers do
not take into account provisions of certain options providing for
termination of the option following termination of employment or
nontransferability of the options and do not make any provision for taxes
associated with exercise.
7
<PAGE> 11
Because actual gains will depend, among other things, on future performance
of the Common Stock, the amount reflected in this table may not necessarily
be achieved.
(2) Options are at the market price on the grant date and, except for 250,000 of
the options held by Mr. Goldberg which are exercisable in five years, all
options listed are immediately exercisable.
The following table provides information on the value of the named
executive officers' unexercised stock options.
OPTION VALUE AS OF DECEMBER 31, 1998
<TABLE>
<CAPTION>
NUMBER OF SHARES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS AT
DECEMBER 31, 1998(#) DECEMBER 31, 1998($)(1)
--------------------------- ---------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Larry L. Asche................................. 51,000 0 $ 8,500 $ 0
Kevin M. Clark................................. 26,000 0 0 0
Leon M. Monachos............................... 270,000 60,000 44,750 15,000
Gary I. Goldberg............................... 295,000 250,000 27,525 15,625
</TABLE>
- -------------------------
(1) Assumes a stock price of $4 per share, the closing price of the Company's
Common Stock reported by the NASDAQ Stock Market on December 31, 1998.
EMPLOYMENT AGREEMENTS
On September 23, 1994, the Company entered into five-year Employment and
Stock Option Agreements with Messrs. Asche and Clark. Under each agreement,
Messrs. Asche and Clark currently receive an annual salary of $200,000 and
$135,000, respectively.
As part of their employment agreements, each of Messrs. Asche and Clark
have been granted an option to purchase 26,000 shares of the Company's Common
Stock beginning on the dates and at the prices set forth below: (i) up to 5,000
shares on January 1, 1995 at an option price of $8.75 per share; (ii) up to
6,000 shares on January 1, 1996 at an option price of $9.00 per share; (iii) up
to 7,000 shares on January 1, 1997 at an option price of $9.25 per share; and
(iv) up to 8,000 shares on January 1, 1998 at an option price of $9.50 per
share. These options shall expire on, and shall be exercised (if at all) prior
to, the first to occur of: (i) seven years after the date of grant of such
options; or (ii) the date as of which the executive shall cease, for any reason
or cause whatsoever and without regard for such reason or cause, to be an
officer of the Company. As of December 31, 1998, options to purchase 26,000
shares of the Company's Common Stock have become exercisable under each of their
respective employment agreements.
On May 15, 1996, the Company entered into a five-year Employment and Stock
Option Agreement with Leon M. Monachos. Under the agreement, Mr. Monachos
currently receives an annual salary of $150,000. As a part of the employment
agreement, Mr. Monachos has been granted an option to purchase 200,000 shares of
the Company's Common Stock at an option price of $3.75 per share, 140,000 of
which are currently exercisable and 20,000 of which become exercisable on each
anniversary date of such agreement.
On January 2, 1998, the Company entered into a five-year Employment and
Stock Option Agreement with Gary I. Goldberg. Under the Agreement, Mr. Goldberg
currently receives a salary of $175,000. As a part of the employment agreement,
Mr. Goldberg was granted an option to purchase 500,000 shares of the Company's
common stock at an option price of $3.9375 per share, 250,000 of which are
currently exercisable and 250,000 are exercisable on the fifth anniversary date
of such agreement.
8
<PAGE> 12
STOCK OPTION PLAN
The Board has adopted the Aasche Transportation Services, Inc. Stock Option
Plan (the "Stock Option Plan"), which was an amendment and restatement of the
Company's Key Employee Incentive Stock Option Plan ("Prior Plan") and reflected
(i) certain design changes to the Prior Plan, and (ii) the merger into the Prior
Plan of a number of plans and agreements maintained by the Company and certain
of its affiliates ("Other Prior Plans"). The purpose of the Stock Option Plan is
to promote the interests and enhance the value of the Company by linking the
personal interests of its employees and directors with those of its
stockholders, by inducing individuals of outstanding ability and potential to
join and remain with the Company and by providing the participating employees
and directors with an additional incentive to promote the success of the
Company. The restatement of the Prior Plan and the Other Prior Plans does not
affect the rights of individuals who participated in the Prior Plan and the
Other Prior Plans in accordance with their provisions. All matters relating to
eligibility for options and the number of options to which such individuals may
be entitled based upon events occurring prior to the adoption of the Stock
Option Plan, except as otherwise expressly provided therein, are determined in
accordance with the applicable provisions of the Prior Plan and the Other Prior
Plans.
The Stock Option Plan is administered by the Stock Option Committee. The
Stock Option Committee has discretion to determine which "key employees" and
"key non-employees" (i.e., non-employee directors, consultants or independent
contractors) will be recipients of options under the Stock Option Plan, and to
establish the terms, conditions and limitations of each option (subject to the
terms of the Stock Option Plan and the applicable provisions of the Internal
Revenue Code of 1986, as amended (the "Code")), including the type and amount of
the options, the number of shares of Common Stock to be subject to any option,
the exercise price of any options, and the date or dates upon which options
become exercisable or upon which any restrictions applicable to any option
lapse. Options may also be granted to a prospective employee, conditioned upon
such person becoming an employee. Members of the Committee are not eligible for
options while serving on the Committee, unless the option is made pursuant to a
formula that either states the amount and price of the Common Stock to be
awarded to the members of the Committee and specifies the timing of the option,
or sets a formula that determines the amount, price and timing of the option
using objective criteria. Other than formula options, the members of the Stock
Option Committee must not have received any options pursuant to the Stock Option
Plan or any similar plan for one year prior to being appointed to the Committee,
or for such other time period necessary to fulfill the then current Rule 16b-3
requirements under the Securities Exchange Act of 1934, as amended. The
Committee also has full power to construe and interpret the Stock Option Plan
and the options granted under the Stock Option Plan, and to establish rules and
regulations necessary or advisable for its administration. The determination of
the Committee with respect to any matter under the Stock Option Plan to be acted
upon by the Committee is conclusive and binding.
All options granted under the Stock Option Plan will have an exercise price
per share equal to the fair market value of a share at the time the option is
granted. As required by the Code, if an incentive option is granted to any
participant who owns more than ten percent of the voting power of the Company (a
"Significant Stockholder"), then the exercise price per share to such
participant must be not less than one hundred ten percent (110%) of fair market
value on the date of grant. Fair market value equals the closing sales price of
the Common Stock on the date of grant.
The Committee may at any time and from time to time grant one or more
options to one or more key employees and may designate the number of Shares to
be subject to each option so granted, provided, however, that (i) each
participant receiving an incentive option must be a key employee of the Company
or of an affiliate at the time an incentive option is granted; (ii) no incentive
options shall be granted after the expiration of ten (10) years from the earlier
of the date of the adoption of the Stock Option Plan by the Company or the
approval of the Stock Option Plan by the stockholders of the Company; the
maximum term of all incentive options granted under the Stock Option Plan may
not be greater than ten years (incentive options granted to a Significant
Stockholder have a maximum term of five years; and (iv) the fair market value of
the Shares (determined at the time the option is granted) as to which incentive
options are exercisable for the first time by any key employee during any single
calendar year (under the Stock Option Plan and under any other incentive option
plan of the Company or an Affiliate) shall not exceed $100,000.
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<PAGE> 13
A participant who ceases to be an employee or non-employee director of the
Company or its subsidiaries for any reason other than death, disability or
termination "for cause" will be permitted to exercise any option, to the extent
it was exercisable on the date of such cessation, but only within three months
of such cessation (or, if earlier, within the originally prescribed term of the
option.) A participant who is terminated for "cause," as defined in the Stock
Option Plan, will immediately lose all rights to exercise any options. If a
participant dies, his or her estate or personal representative may exercise the
option, to the extent it was exercisable on the date of death. If a participant
becomes permanently disabled, he or she may exercise an option to the extent it
was exercisable at the time of the onset of the disability or, if the option
vests periodically, to the extent it would have been exercisable as of the next
periodic vesting date. In the case of death or disability, the Option must be
exercised within six (6) or twelve (12) months after the date of death or onset
of disability, respectively, and prior to the original expiration date of the
option.
In the event the Company pays a stock dividend or makes a distribution of
shares, or splits up, combines, reclassifies or substitutes other securities for
its outstanding shares of Common Stock, the Committee shall make an appropriate
adjustment to the number of shares subject to outstanding options and the
exercise prices thereof.
Options under the Stock Option Plan are also granted to directors and
advisors who are not employees of the Company. Each director and non-employee
advisor is automatically granted options to purchase 5,000 shares of the
Company's common stock on the date such director or advisor is first appointed
and at the adjournment of each annual meeting. The exercise price of each option
is equal to the closing price of the common stock on the date of grant. An
option may be exercised at any time within 10 years from the date of grant. At
December 31, 1998, 1997 and 1996, options to purchase 318,000, 55,000 and 25,000
shares, respectively, have been granted at prices ranging from $3.66 to $10.94,
of which 5,000 options were exercised at a price per share of $3.75 in May 1997.
No options were exercised in 1998 or 1996.
The Board may amend the Stock Option Plan in any respect, except that the
following changes may not be made without stockholder approval: (i) the maximum
number of shares available for options may not be increased (except upon stock
splits and dividends, combinations and similar events), (ii) the requirements as
to eligibility may not be materially modified, (iii) the cost of the Stock
Option Plan or benefits to participants may not be materially modified, (iv) the
period during which options may be granted or exercised may not be extended, (v)
the provisions of the Stock Option Plan regarding option price may not be
modified, and (vi) the class of employees eligible to receive incentive options
may not be modified.
The Board may terminate the Stock Option Plan at any time. However, no
termination or amendment will affect the rights of participants under options
previously granted without a participant's consent. Unless previously
terminated, the Stock Option Plan will terminate on June 1, 2006, and no options
shall be granted after that date.
The maximum number of Common Stock which may be issued and sold under the
Stock Option Plan, subject to adjustment, is 908,500 shares. As of the Record
Date, the Company had outstanding options to purchase an aggregate of 714,000
shares of Common Stock at per share exercise prices ranging from $3.66 to
$10.94.
FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the United States federal income tax
consequences that generally will arise with respect to the grant and exercise of
options under the Stock Option Plan and with respect to the sale of Common Stock
acquired under the Stock Option Plan.
Incentive Stock Options. In general, a participant will not recognize
ordinary income upon the grant or exercise of an incentive stock option. If the
participant holds the stock acquired through the exercise of an incentive stock
option for one year from the date of exercise and two years from the date of the
grant, the participant will thereafter recognize a long-term capital gain or
loss upon a subsequent sale of the stock, based upon the difference between the
incentive stock option's exercise price and the sale price. If the participant
sells the stock before the requisite holding period, then the participant will
recognize ordinary income based
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<PAGE> 14
upon the difference between the exercise price and the lesser of the sales price
or the fair market value upon the date of exercise.
Non-Statutory Options. As in the case of an incentive stock option, a
participant will not recognize ordinary income upon the grant of a non-statutory
option. Unlike in the case of an incentive stock option, however, upon exercise
of a non-statutory option, a participant generally will recognize ordinary
income in an amount equal to the difference between the exercise price for the
option and the fair market value of the Company's Common Stock on the exercise
date. With respect to any Common Stock acquired upon exercise of a non-statutory
option ("NSO Stock"), a participant will have a tax basis equal to the exercise
price plus any income recognized upon the exercise of the option. Upon selling
NSO Stock, a participant generally will recognize capital gain or loss in an
amount equal to the excess of the sale price of the NSO Stock over the
participant's tax basis in the NSO Stock. The capital gain or loss will be
long-term or short-term gain or loss, depending upon the holding period of the
shares.
Tax Consequences to the Company. The grant of an option under the Stock
Option Plan will have no tax consequences to the Company. Moreover, in general,
neither the exercise of an incentive stock option acquired under the Stock
Option Plan nor the sale of any Common Stock acquired under the Stock Option
Plan will have any tax consequences to the Company. The Company generally will
be entitled to a business-expense deduction, however, with respect to any
ordinary compensation income recognized by a participant under the Stock Option
Plan, provided the Company includes and reports such amounts on a timely filed
Form W-2 or Form 1099-MISC (or similar such IRS form filing).
401(K) PLAN
The Company currently maintains a 401(k) Retirement & Savings Plan (the
"401(k) Plan"). The 401(k) Plan is available to all full-time employees of the
Company who are at least 21 years of age and have been employed by the Company
for one year, including executive officers. In September 1994, the Company
amended and restated the 401(k) Plan to include as a part of the 401(k) Plan an
employee stock ownership plan for the benefit of all eligible employees of the
Company, including executive officers. The Company is required to provide a 50%
matching contribution of each participant's elective contributions to the plan
up to a maximum of 6% for each participant's annual compensation. Additionally,
the Company may also contribute a discretionary amount, as determined by the
Board of Directors. Contributions made by the Company to the 401(k) Plan were
$347,000, $104,000 and $97,000 for the years ended December 31, 1998 1997 and
1996, respectively. See "Employee Stock Ownership Plan."
EMPLOYEE STOCK OWNERSHIP PLAN
On September 22, 1994, the Company amended and restated the 401(k) Plan to
include an employee stock ownership plan ("ESOP") for the benefit of all
eligible employees of the Company. The ESOP was subsequently amended on October
14, 1994, November 15, 1994 and August 10, 1995. The current trustees of the
ESOP are Dennis D. Wilson and Michael Todd Recob, independent directors of the
Company (the "Trustees"). Participants direct the Trustees as to the voting of
the Company's Common Stock allocated to their accounts. Participants are
permitted to elect to purchase the Company's Common Stock from funds invested in
the 401(k) Plan.
The ESOP was funded by the sale of 75,000 shares of the Company's Common
Stock from Larry L. Asche, Diane L. Asche and Kevin M. Clark, which sale
occurred on October 21, 1994. The Company filed a Registration Statement on Form
S-8 under the Securities Act of 1933 to register such shares, which became
effective on December 21, 1994. The price of the shares sold to the ESOP was
$8.275 per share, which was determined by the Trustees with reference to the
average trading price of the Company's Common Stock during a period of time
after the effective date of its initial public offering. The purchase of the
shares by the ESOP was initially funded by a one-year loan in the principal
amount of $620,625 (plus interest at the prime rate) from Harris Trust and
Savings Bank, Chicago, Illinois. The remaining balance at December 31, 1998 of
$155,000 has been refinanced by a one-year loan from American National Bank and
Trust Company of Chicago, secured by approximately 42,000 shares of the
Company's Common Stock and guaranteed by the
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<PAGE> 15
Company, Asche Transfer and AG Carriers. The shares are held in escrow and are
released by the lender to participants' accounts in the ESOP as the loan is
repaid. The ESOP expects to repay the loan from future matching contributions by
the Company and from purchases of the Company's Common Stock by the participants
as described below.
Participants in the ESOP are permitted to contribute a percentage of their
before-tax earnings to purchase the Company's Common Stock as well as other
investments currently permitted under the 401(k) Plan. The Company is required
to make annual matching contributions equal to 50% of the amount of salary
contributed by each employee, not to exceed 6% of each participant's annual
compensation. The matching contribution may be used by the ESOP to purchase the
Company's Common Stock for the account of the participant. The Company may also
contribute a discretionary amount, as determined by the Company's Board of
Directors. Further, any matching contributions under the 401(k) Plan may be used
to purchase the Company's Common Stock for the account of the participant. The
Company made no contributions to the ESOP in 1998, 1997 or 1996. See "401(k)
Plan."
EMPLOYEE STOCK PURCHASE PLAN
In December 1994, the Company implemented an Employee Stock Purchase Plan
("ESPP") for the benefit of all eligible employees of the Company. Participants
in the ESPP may contribute "after-tax" compensation through payroll deductions.
Prior to May 1, 1996, the Company was required to provide a 25% matching
contribution. After May 1, 1996, contributions are no longer subject to any
matching by the Company. The contributions are used to purchase the Company's
Common Stock from either the ESOP or on the open market. The Company made no
contributions to the ESPP in 1998 and 1997 and made contributions of $6,000 in
1996. See "Employee Stock Ownership Plan."
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company currently leases certain of its revenue equipment from (i)
Asche-Nielsen, an entity owned by Mr. Asche; (ii) Angela Asche, Michele Asche
and Daniel Asche, children of Mr. and Mrs. Asche; (iii) L&D Leasing, an entity
owned by Mr. and Mrs. Asche; and (iv) K&D Leasing, an entity owned by Mr. Clark
and his wife. Payments to related parties on capital lease obligations in 1998,
1997 and 1996 were $686,000, $817,000 and $874,000, respectively.
In connection with the financing of the acquisition of the municipal solid
waste transport division of Jack Gray Transport, Inc., (the "Waste Transport
Business") the Company issued $2,175,000 of subordinated debt to Larry L. Asche,
Diane L. Asche, Kevin M. Clark, Richard S. Baugh, Gary I. Goldberg, Linda L.
Rockey, Dr. Robert L. Rockey and Michael Todd Recob at interest rates ranging
between 8.25% per annum and 14% per annum (which was equal to the interest rate
that other investors who were not affiliated with the Company or any of the
officers and directors received for like indebtedness). In addition, these same
individuals were issued warrants to purchase 367,500 shares of Common Stock at
prices ranging from $3.90 to $4.20 per share, which was the fair market value of
the stock on the date the warrants were issued.
On July 23, 1998, STS acquired all of the capital stock of Dump Truck
Services, Inc. ("DTS") from an individual and Gary I. Goldberg, the president of
STS, for approximately $1.4 million in cash. DTS transports dry bulk commodities
in dump vehicles in the northeastern United States.
On January 29, 1999, Gary I. Goldberg, Diane L. Asche, Michael Todd Recob,
Linda Rockey and an unrelated individual exchanged $675,000 of subordinated debt
bearing interest at 14% per annum for 135,000 shares of the Company's Common
Stock.
On March 12, 1999, James A. Jalovec exchanged $1,150,000 of subordinated
debt bearing 14% interest for 230,000 shares of the Company's Common Stock.
Additionally, $189,000 of accrued interest owed to Mr. Jalovec was exchanged for
an additional 37,800 shares of the Company's Common Stock and 75,000 warrants to
purchase the Company's Common Stock at $5 per share were issued to Mr. Jalovec.
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<PAGE> 16
The Company does not intend to enter into any other type of transaction
with officers, directors, 5% stockholders, or affiliates, including making any
loans, unless the terms are no less favorable to the Company than those that
could be obtained from unrelated third parties and the transactions are
unanimously approved by the Company's independent directors.
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 March 25, 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 PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1) CLASS
- ------------------------------------ ----------------------- ----------
<S> <C> <C>
Larry L. Asche.............................................. 569,011(2)(4) 10.8
Diane L. Asche.............................................. 544,842(3)(4) 10.4
Kevin M. Clark.............................................. 536,956(5) 10.3
Leon M. Monachos............................................ 290,000(6) 5.4
Richard S. Baugh............................................ 140,075(7) 2.7
Gary I. Goldberg............................................ 431,932(8) 8.0
Dennis D. Wilson............................................ 11,500(9) *
Michael Todd Recob.......................................... 22,500(10) *
James A. Jalovec............................................ 741,250(11) 14.0
All directors and executive officers as a group (8
persons).................................................. 2,546,816(12) 41.3
</TABLE>
- -------------------------
* less than 1%
(1) Applicable percentage of ownership as of March 25, 1999 is based upon
5,098,930 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 March 25,
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 25,000
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 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
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<PAGE> 17
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 130,000 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 45,000 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 10,000 shares of Common Stock pursuant to the
Stock Option Plan.
(10) Includes (i) options to purchase 5,000 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) 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.
(12) 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 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 outside of the Stock Option Plan 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.
ITEM NO. 2 -- AMENDMENT OF THE COMPANY'S STOCK OPTION PLAN
The Board of Directors of the Company has adopted, subject to stockholder
approval, the Second Amendment to the Aasche Transportation Services, Inc. Stock
Option Plan (the "Stock Option Plan"). In the event that stockholder approval is
received, the Stock Option Plan would be amended as set forth in Appendix A.
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<PAGE> 18
DISCUSSION OF PROPOSAL
The main purpose for amending the Stock Option Plan is to increase the
number of shares available for grant thereunder.
Under the Stock Option Plan, a total of 908,500 shares of common stock have
currently been reserved for issuance. The Company has determined to make the
Stock Option Plan available to greater numbers of employees and anticipates
requiring flexibility in compensating its key employees in the future and
otherwise as needed to attract and retain qualified employees and to sustain
future growth in the Company's operations. The Company will require additional
options for granting to certain key executives upon the renewal of their
employment agreements with the Company in 1999. The Board of Directors has
adopted, subject to stockholder approval, an amendment to increase the aggregate
number of shares reserved for issuance under the Stock Option Plan to 1,162,500.
As of March 25, 1999, the market value of the 254,000 additional shares proposed
to be reserved for issuance under the Stock Option Plan was $1,270,000. Cash
payments received by the Company under the Stock Option Plan will be used for
general corporate purposes. See "Stock Option Plan."
RECOMMENDATION AND VOTE REQUIRED
The affirmative vote of the holders of a majority of the shares of Common
Stock outstanding as of the Record Date will be required to adopt the amendment
to the Stock Option Plan. If stockholders do not approve the amendment to the
Stock Option Plan, the existing plan will continue in operation.
ITEM NO. 3 -- AMENDMENT OF THE COMPANY'S CERTIFICATE OF INCORPORATION
TO AUTHORIZE AND CREATE 1,000,000 SHARES OF PREFERRED STOCK WHOSE
TERMS WILL BE DESIGNATED AND WHICH MAY BE ISSUED FROM TIME TO TIME
BY THE BOARD OF DIRECTORS
The Board of Directors of the Company has adopted, subject to stockholder
approval, an amendment to the Company's Certificate of Incorporation to
authorize the issuance of 1,000,000 shares of Preferred Stock, the specific
terms of which the Board of Directors may from time to time designate. In the
event that stockholder approval is received, the Company's Certificate of
Incorporation would be amended as set forth in Appendix B.
DISCUSSION OF PROPOSAL
The proposed amendment to the Certificate of Incorporation will allow for
the issuance of Preferred Stock that will give the Company significant
flexibility to develop and structure transactions designed to raise working
capital in the future. The Company does not intend to issue Preferred Stock in
connection with any acquisitions, none of which are currently contemplated.
The authorization of the Preferred Stock will allow the Company to issue
securities with rights, preferences, and privileges that may be greater than
those of the holders of the Company's Common Stock. However, the authorization
of the Preferred Stock may create a voting impediment or frustrate persons
seeking to effect a merger or to otherwise gain control of the Company.
If this proposal is approved by the holders of a majority of the
outstanding shares of Common Stock, Paragraph 4 of the Certificate of
Incorporation will read as follows:
"The Corporation is authorized to issue a total of Eleven Million
shares (11,000,000) of stock consisting of two classes of shares designated
to be "Common Stock" and "Preferred Stock", respectively. The number of
shares of Common Stock authorized to be issued is Ten Million (10,000,000),
each with a par value of $0.0001, and the number of shares of Preferred
Stock authorized to be issued is One Million (1,000,000), each with a par
value of $0.0001. The Preferred Stock may be issued in any number of
series, as determined by the Board of Directors. The Board may, by
resolution, fix the designation and number of shares of any such series,
and may determine, alter, revoke the rights, including voting rights,
preferences, privileges, and restrictions, pertaining to any wholly
unissued series. The Board may
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<PAGE> 19
thereafter in the same manner increase or decrease the number of shares of
any series (but not below the number of shares of that series
outstanding)."
RECOMMENDATION AND VOTE REQUIRED
The affirmative vote of the holders of a majority of the shares of Common
Stock outstanding as of the Record Date will be required to adopt this amendment
to the Certificate of Incorporation. If stockholders do not approve the
amendment to the Company's Certificate of Incorporation, the Company shall not
be authorized to issue Preferred Stock.
ITEM NO. 4 -- AMENDMENT OF THE COMPANY'S CERTIFICATE OF INCORPORATION
TO CHANGE THE NAME OF THE CORPORATION TO
ASCHE TRANSPORTATION SERVICES, INC.
The Board of Directors of the Company has adopted, subject to stockholder
approval, an amendment to the Company's Certificate of Incorporation to
authorize the change of the name of the Company from Aasche Transportation
Services, Inc. to Asche Transportation Services, Inc. In the event that
stockholder approval is received, the Company's Certificate of Incorporation
would be amended as set forth in Appendix C.
DISCUSSION OF PROPOSAL
At the time of the Company's initial public offering in 1994, the Company
was formed with the name "Aasche Transportation Services Inc." to become the
holding company of a group of subsidiaries which included, at the time, its sole
subsidiary, Asche Transfer Inc. Since that time, the Company has experienced
confusion with its customers, vendors, employee and stockholders because of the
additional "A" in the parent company's name. The Board of Directors believes
that by conforming the spelling of the Asche name to the spelling of the Asche
Transfer Inc. subsidiary the confusion will be eliminated.
If this proposal is approved by the holders of a majority of the
outstanding shares of Common Stock, Paragraph 1 of the Certificate of
Incorporation will read as follows:
"1. The name of the Corporation is Asche Transportation Services, Inc."
RECOMMENDATION AND VOTE REQUIRED
The affirmative vote of the holders of a majority of the shares of Common
Stock outstanding as of the Record Date will be required to adopt this amendment
to the Certificate of Incorporation. If stockholders do not approve the
amendment to the Company's Certificate of Incorporation, the name of the Company
shall remain Aasche Transportation Services, Inc.
THE BOARD OF DIRECTORS RECOMMENDS APPROVAL OF THESE AMENDMENTS TO THE
COMPANY'S STOCK OPTION PLAN AND ITS CERTIFICATE OF INCORPORATION AND PROXIES
SOLICITED BY THE BOARD, WHICH ARE DULY EXECUTED AND RETURNED, WILL BE VOTED IN
FAVOR THEREOF UNLESS A STOCKHOLDER HAS INDICATED OTHERWISE ON THE PROXY.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act requires the Company's
directors and executive officers, and any persons who own more than ten percent
of the Company's Common Stock, to file with the SEC initial reports of ownership
and reports of changes in ownership of Common Stock. Such persons are required
by SEC regulations to furnish the Company with copies of all Section 16(a) forms
they file.
To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during the year ended December 31,
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<PAGE> 20
1998, all such Section 16(a) filing requirements were complied with except that
Larry Asche, Leon Monachos and Gary Goldberg inadvertently did not report until
their year-end report on Form 5 that they were granted options to purchase
25,000, 25,000 and 35,000 shares of Common Stock, respectively, on December 22,
1998 pursuant to the Stock Option Plan. In addition, James A. Jalovec
inadvertently did not report until 1999 that he purchased 5,000 shares of Common
Stock on June 4, 1998. At the time of such purchase, Mr. Jalovec was a director
of the Company.
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 Secretary, Aasche
Transportation Services, Inc., 10214 N. Mt. Vernon Rd., Shannon, Illinois 61078.
OTHER INFORMATION
The 1998 Annual Report to Stockholders of the Company which includes a copy
of the Company's Annual Report on Form 10-K for 1998 is being mailed to all
stockholders of record and accompanies this Proxy Statement. Additional copies
of the Annual Report on Form 10-K as filed with the SEC (excluding exhibits)
will be furnished, without charge, by writing to Leon Monachos, Aasche
Transportation Services, Inc., 10214 N. Mt. Vernon Road, Shannon, Illinois
61078.
INDEPENDENT PUBLIC ACCOUNTANTS
Ernst & Young LLP, the Company's independent public accountants, has
examined the Company's financial statements for the fiscal year ended December
31, 1998. The Company expects representatives of Ernst & Young LLP to be
available at the Annual Meeting to respond to appropriate questions from
stockholders.
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 Annual Meeting.
For the Board of Directors
DIANE L. ASCHE
DIANE L. ASCHE
Secretary
Shannon, Illinois
April 19, 1998
17
<PAGE> 21
APPENDIX A
TEXT OF AMENDMENT TO THE STOCK OPTION PLAN
SECOND AMENDMENT TO THE
AASCHE TRANSPORTATION SERVICES, INC.
STOCK OPTION PLAN
The Aasche Transportation Services, Inc. Stock Option Plan (the "Plan") is
hereby amended, effective , 1999, as follows:
1. The aggregate number of Shares as to which Options may be granted
pursuant to Article II of the Plan shall be increased from 908,500 to 1,162,500.
IN WITNESS WHEREOF, Aasche Transportation Services, Inc. has caused this
Amendment to be executed by its officer hereto duly authorized this
day of , 1999.
AASCHE TRANSPORTATION SERVICES, INC.
By:
------------------------------------
Name: Larry L. Asche
----------------------------------
Its: Chairman and Chief Executive
Officer
------------------------------------
18
<PAGE> 22
APPENDIX B
TEXT OF AMENDMENT TO THE CERTIFICATE OF INCORPORATION
PREFERRED STOCK
AMENDMENT TO THE
AASCHE TRANSPORTATION SERVICES, INC.
CERTIFICATE OF INCORPORATION
The Aasche Transportation Services, Inc. Certificate of Incorporation (the
"Certificate") is hereby amended, effective , 1999, by striking
Paragraph 4 in its entirety and replacing it with the following:
"The Corporation is authorized to issue a total of One Million shares
(1,000,000) of stock consisting of two classes of shares designated to be
"Common Stock" and "Preferred Stock", respectively. The number of shares of
Common Stock authorized to be issued is Ten Million shares (10,000,000),
each with a par value of $0.0001, and the number of shares of Preferred
Stock authorized to be issued is One Million shares (1,000,000), each with
a par value of $0.0001. The Preferred Stock may be issued in any number of
series, as determined by the Board of Directors. The Board may, by
resolution, fix the designation and number of shares of any such series,
and may determine, alter, revoke the rights, including voting rights,
preferences, privilege, and restrictions, pertaining to any wholly unissued
series. The Board may thereafter in the same manner increase or decrease
the number of shares of any series (but not below the number of shares of
that series outstanding)."
IN WITNESS WHEREOF, Aasche Transportation Services, Inc. has caused this
Amendment to be executed by its officer hereto duly authorized this day of
, 1999.
AASCHE TRANSPORTATION SERVICES, INC.
By:
------------------------------------
Name: Larry L. Asche
----------------------------------
Its: Chairman and Chief Executive
Officer
------------------------------------
19
<PAGE> 23
APPENDIX C
TEXT OF AMENDMENT TO THE CERTIFICATE OF INCORPORATION
NAME CHANGE
AMENDMENT TO THE
AASCHE TRANSPORTATION SERVICES, INC.
CERTIFICATE OF INCORPORATION
The Aasche Transportation Services, Inc. Certificate of Incorporation (the
"Certificate") is hereby amended, effective , 1999, by striking
Paragraph 1 in its entirety and replacing it with the following:
"1. The name of the Corporation is Asche Transportation Services, Inc."
IN WITNESS WHEREOF, Aasche Transportation Services, Inc. has caused this
Amendment to be executed by its officer hereto duly authorized this day of
, 1999.
AASCHE TRANSPORTATION SERVICES, INC.
By:
------------------------------------
Name: Larry L. Asche
----------------------------------
Its: Chairman and Chief Executive
Officer
------------------------------------
20
<PAGE> 24
AASCHE 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 Aasche
Transportation Services, Inc. which the undersigned is entitled to
vote at the Annual 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, May 19, 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, 3 AND
4
1. ELECTION OF DIRECTORS
<TABLE>
<S> <C>
[ ] FOR the nominees listed below except as marked to [ ] WITHHOLD AUTHORITY to vote for the nominees listed
the contrary below below
</TABLE>
RICHARD S. BAUGH AND MICHAEL TODD RECOB
----------------------------------------------------------------------
2. To approve an amendment to the Stock Option Plan to increase by
254,000 the number of shares subject to the Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. To approve an amendment to the Company's Certificate of
Incorporation to authorize and create one million shares of Preferred
Stock whose terms will be designated, and which may be issued from
time to time by the Board of Directors.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. To approve an amendment to the Company's Certificate of
Incorporation to change the name of the Company from Aasche
Transportation Services, Inc. to Asche Transportation Services, Inc.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. 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> 25
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, 4 AND 5.
Receipt is hereby acknowledged of the Notice of the Meeting and
Proxy Statement, as well as a copy of the 1998 Annual Report to
Stockholders.
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.
