<PAGE>
[EXECUTION COPY]
NOTE AND WARRANT PURCHASE AGREEMENT
DATED JULY 7, 2000
BETWEEN CHURCHILL ENVIRONMENTAL & INDUSTRIAL
EQUITY PARTNERS, L.P.,
ASCHE TRANSPORTATION SERVICES, INC.,
AND
SPECIALTY TRANSPORTATION SERVICES, INC.
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TABLE OF CONTENTS
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1. Authorization and Closing.................................................................................. 1
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1A. Authorization of the Note and the Warrant............................................................. 1
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1B. Purchase and Sale of the Note and the Warrant......................................................... 1
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1C. The Closing........................................................................................... 1
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1D. Issuance of Additional Shares......................................................................... 1
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2. Conditions of Purchaser's Obligation at the Closing........................................................ 2
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2A. Representations and Warranties; Covenants............................................................. 2
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2B. Registration Agreement................................................................................ 2
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2C. Security Agreement.................................................................................... 2
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2D. STS Credit Agreement.................................................................................. 2
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2E. Subordination Agreement............................................................................... 2
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2F. Intercompany Loan and Business Plan................................................................... 3
2G. ATS Credit Agreement.................................................................................. 3
2H. STS and ATS Unsecured Creditors....................................................................... 3
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2I. Consents and Approvals................................................................................ 3
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2J. Fairness Opinion...................................................................................... 4
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2K. STS Business Plan..................................................................................... 4
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2L. No Material Adverse Change............................................................................ 4
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2M. No Litigation......................................................................................... 4
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2N. Charter Amendments.................................................................................... 4
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2O. Special Account....................................................................................... 4
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2P. Securities Law Compliance............................................................................. 5
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2Q. Opinion of Counsel.................................................................................... 5
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2R. Closing Documents..................................................................................... 5
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2S. Proceedings........................................................................................... 6
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2T. Waiver................................................................................................ 6
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2U. Expenses.............................................................................................. 6
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3. Covenants.................................................................................................. 6
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3A. Financial Statements and Other Information............................................................ 6
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3B. Inspection of Property................................................................................ 9
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3C. Attendance at Board Meetings.......................................................................... 9
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3D. ATS Restrictive Covenants............................................................................. 9
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3E. ATS Affirmative Covenants............................................................................. 10
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3F. Use of Proceeds....................................................................................... 11
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3G. Intentionally Omitted................................................................................. 11
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3H. Insurance............................................................................................. 11
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3I. Payment of Taxes and Other Potential Charges and Priority Claims...................................... 11
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3J. Preservation of Corporate Status....................................................................... 12
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3K. Governmental Approvals and Filings.................................................................... 12
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3L. Maintenance of Properties............................................................................. 12
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3M. Avoidance of Other Conflicts.......................................................................... 12
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3N. Financial Accounting Practices........................................................................ 13
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3O. Continuation of or Change in Business................................................................. 13
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3P. Consolidated Tax Return............................................................................... 13
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3Q. Fiscal Year........................................................................................... 13
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3R. Plan and Multiemployer Plans.......................................................................... 13
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3S. Liens................................................................................................. 14
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3T. Indebtedness.......................................................................................... 15
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3U. Guaranties, Indemnities, etc.......................................................................... 16
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3V. Loans, Advances and Investments....................................................................... 16
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3W. Dividends and Related Distributions................................................................... 17
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3X. Sale-Leasebacks....................................................................................... 17
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3Z. Mergers, Acquisitions, etc............................................................................ 17
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3AA. Dispositions of Properties............................................................................ 18
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3BB. Subsidiaries.......................................................................................... 18
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3CC. Dealings with Affiliates.............................................................................. 18
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3DD. Capital Expenditures.................................................................................. 18
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3EE. Issuance of Equity.................................................................................... 19
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3FF. Limitations on Modification of Certain Agreements and Instruments..................................... 19
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3GG. Limitation on Payments and Modification of Restricted Indebtedness.................................... 19
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3HH. Limitation on Other Restrictions on Liens, Transfer or Dispositions................................... 19
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3II. Limitation on Other Restrictions on Amendment of the Loan Documents, etc.............................. 20
4. Representations and Warranties of ATS and STS.............................................................. 20
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4A. Organization, Corporate Power and Licenses............................................................ 20
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4B. Capital Stock and Related Matters..................................................................... 20
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4C. Subsidiaries; Investments............................................................................. 21
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4D. Authorization; No Breach.............................................................................. 21
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4E. Financial Statements.................................................................................. 22
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4F. Absence of Undisclosed Liabilities.................................................................... 23
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4G. No Material Adverse Change............................................................................ 23
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4H. Assets................................................................................................ 23
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4I. Tax Matters........................................................................................... 23
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4J. Contracts and Commitments............................................................................. 24
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4K. Intellectual Property Rights.......................................................................... 24
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4L. Litigation, and Related Matters....................................................................... 25
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4M. Brokerage............................................................................................. 25
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4N. Insurance............................................................................................. 25
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4O. Employees............................................................................................. 25
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4P. ERISA................................................................................................. 26
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4Q. Compliance with Laws.................................................................................. 27
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4R. Environmental and Safety Matters...................................................................... 27
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4S. Affiliated Transactions............................................................................... 29
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4T. Solvency, etc......................................................................................... 29
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4U. Investment Company; Public Utility Holding Company.................................................... 29
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4W. Disclosure............................................................................................ 29
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4X. Knowledge............................................................................................. 30
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5. Transfer of Restricted Securities.......................................................................... 30
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5A. General Provisions.................................................................................... 30
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5B. Opinion Delivery...................................................................................... 30
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5C. Rule 144A............................................................................................. 30
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5D. Legend Removal........................................................................................ 30
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5E. Purchaser's Investment Representations................................................................ 30
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6. Terms Applicable to the Note............................................................................... 31
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6A. Events of Default..................................................................................... 31
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6B. Consequences of Events of Default..................................................................... 32
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6C. Business Days......................................................................................... 33
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6D. Usury Laws............................................................................................ 33
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6E. Conversion............................................................................................ 34
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6F. Liquidating Dividends................................................................................. 40
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6G. Purchase Rights....................................................................................... 41
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7. Definitions................................................................................................ 41
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7A. Definitions........................................................................................... 41
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8. Miscellaneous.............................................................................................. 50
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8A. Expenses.............................................................................................. 50
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8B. Closing Fee........................................................................................... 50
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8C. Remedies.............................................................................................. 50
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8D. Intentionally Omitted................................................................................. 51
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8E. Consent to Amendments................................................................................. 51
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8F. Survival of Representations and Warranties............................................................ 51
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8G. Successors and Assigns................................................................................ 51
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8H. Generally Accepted Accounting Principles.............................................................. 51
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8I. Severability.......................................................................................... 51
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8J. Counterparts.......................................................................................... 51
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8K. Descriptive Headings; Interpretation.................................................................. 51
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8L. Governing Law......................................................................................... 52
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8N. Notices............................................................................................... 52
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8O. Consideration for the Note and the Warrant............................................................ 53
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8P. No Strict Construction................................................................................ 53
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8Q. Indemnification....................................................................................... 54
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8R. Payment Set Aside..................................................................................... 54
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SCHEDULES AND EXHIBITS
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List of Exhibits
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Exhibit A Note
Exhibit B Warrant
Exhibit C Registration Agreement Amendment
Exhibit D Security Agreement
Exhibit E Subordination Agreement
Exhibit F Opinion of Counsel
List of Disclosure Schedules
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Equity Schedule
Sources and Uses Schedule
Guaranty Schedule
Loans and Investments Schedule
Affiliated Transactions Schedule
Capitalization Schedule
Subsidiary Schedule
Restrictions Schedule
Financial Statements Schedule
Liabilities Schedule
Material Adverse Change Schedule
Taxes Schedule
Intellectual Property Schedule
Litigation Schedule
Brokerage Schedule
Employees Schedule
ERISA Schedule
Compliance Schedule
Environmental Schedule
Affiliated Transactions Schedule
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<PAGE>
THIS AGREEMENT IS SUBJECT TO THE
TERMS OF A SUBORDINATION AND INTERCREDITOR
AGREEMENT, DATED AS OF JULY 7, 2000,
IN FAVOR OF MELLON BANK, N.A., AS AGENT
NOTE AND WARRANT PURCHASE AGREEMENT
-----------------------------------
THIS AGREEMENT is made as of July 7, 2000, among Asche Transportation
Services, Inc., a Delaware corporation ("ATS"), Specialty Transportation
---
Services, Inc., an Illinois corporation ("STS"), and Churchill Environmental &
---
Industrial Equity Partners, L.P., a Delaware limited partnership ("Purchaser").
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Except as otherwise indicated herein, capitalized terms used herein are defined
in Section 7 hereof.
The parties hereto agree as follows:
Section 1. Authorization and Closing.
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1A. Authorization of the Note and the Warrant. STS shall authorize
-----------------------------------------
the issuance and sale to Purchaser of its Convertible Senior Subordinated
Promissory Note in an aggregate principal amount of $7,000,000, containing the
terms and conditions and in the form set forth in Exhibit A attached hereto (the
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"Note" and together with all PIK Notes issued with respect thereto, the "Notes")
---- -----
which shall be initially convertible in accordance with the provisions of
Section 6E below into 10,500,000 shares of STS Common Stock. ATS shall
authorize the issuance and sale to Purchaser of its Stock Purchase Warrant,
containing the terms and conditions and in the form set forth in Exhibit B
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attached hereto (the "Warrant"), to acquire 950,000 shares of ATS Common Stock.
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1B. Purchase and Sale of the Note and the Warrant. At the Closing,
---------------------------------------------
STS and ATS shall sell to Purchaser and, subject to the terms and conditions set
forth herein, Purchaser shall purchase from STS and ATS, respectively, the Note
and the Warrant, in exchange for $7,000,000 (the "Purchase Price").
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1C. The Closing. The closing of the purchase and sale of the Note
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and the Warrant (the "Closing") shall take place at the offices of Kirkland &
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Ellis at 10:00 a.m. on July 7, 2000, or at such other place or on such other
date as may be mutually agreeable to ATS, STS and Purchaser. At the Closing, STS
and ATS shall deliver to Purchaser instruments evidencing the Note payable to
the order of Purchaser or its nominee and the Warrant registered in Purchaser's
or its nominee's name upon payment of the Purchase Price by Purchaser by wire
transfer of immediately available funds to STS in an amount equal to the
Purchase Price.
1D. Issuance of Additional Shares. In further consideration of
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Purchaser entering into the transactions contemplated hereby, ATS, STS and
Purchaser hereby agree that the issuance of ATS Common Stock to Purchaser
pursuant to Section 2.02(c) of the Stock Purchase Agreement among STS, ATS and
Purchaser dated August 17, 1999 (the "Asche Stock Purchase Agreement") as
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"Additional Shares" (as defined in the Asche Stock Purchase Agreement) shall be
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accelerated and
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shall be effected at the Closing, notwithstanding the fact that the Adjustment
Period (as defined in the Asche Stock Purchase Agreement) has not expired or
that any of the other conditions to the issuance of the Additional Shares have
not been satisfied. Accordingly, at the Closing, ATS shall issue to Purchaser
3,111,111 shares of ATS Common Stock, free and clear of all Liens and other
encumbrances, in full satisfaction of its obligation to issue the Additional
Shares and ATS shall deliver to Purchaser a certificate evidencing the
Additional Shares requested in Purchaser's or its nominee's name.
Section 2. Conditions of Purchaser's Obligation at the Closing. The
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obligation of Purchaser to purchase and pay for the Note and the Warrant at the
Closing is subject to the satisfaction as of the Closing of the following
conditions:
2A. Representations and Warranties; Covenants. The representations
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and warranties contained in Section 4 hereof shall be true and correct as of the
Closing as though then made, except to the extent of changes caused by the
transactions expressly contemplated herein, and ATS and STS shall have performed
in all material respects all of the covenants required to be performed by it
hereunder prior to the Closing.
2B. Registration Agreement. ATS and Purchaser shall have amended the
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Registration Rights Agreement dated as of August 17, 1999 (the "Registration
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Agreement") to provide that Purchaser shall be entitled to all rights and
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benefits thereunder with respect to all ATS Common Stock held by Purchaser prior
to and following the issuance of the Additional Shares and the exercise of the
Warrant, such amendment to be in form and substance as set forth in Exhibit C
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attached hereto (the "Registration Agreement Amendment"), and the Registration
--------------------------------
Agreement Amendment and the Registration Agreement, as amended by the
Registration Agreement Amendment, shall be in full force and effect as of the
Closing.
2C. Security Agreement. STS and Purchaser shall have entered into a
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security agreement (the "Security Agreement") in form and substance as set forth
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in Exhibit D attached hereto, and the Security Agreement shall be in full force
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and effect at the Closing.
2D. STS Credit Agreement. The Credit Agreement dated as of January
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30, 1998, amended and restated as of July 7, 2000, among STS, the lender parties
thereto (the "Senior Lenders") Mellon Bank, N.A., as issuing bank and as agent
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(the "Agent"), as amended (the "STS Credit Agreement"), shall have been executed
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and delivered by the parties thereto in form and substance satisfactory to
Purchaser.
2E. Subordination Agreement. STS, Purchaser and the Agent on behalf
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of the Senior Lenders shall have entered into a subordination and intercreditor
agreement (the "Subordination Agreement") setting forth the respective rights
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and priorities of Purchaser and the Agent on behalf of the Senior Lenders with
respect to STS, in form substantially the same as that attached hereto as
Exhibit E, and the Subordination Agreement shall be in full force and effect at
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the Closing.
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2F. Intercompany Loan and Business Plan. The documentation for the
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Intercompany Loan (including, without limitation, a subordination agreement with
ATS's senior lenders) shall have been executed and delivered by ATS, STS and the
other parties thereto in form and substance reasonably satisfactory to
Purchaser, and a two-year business plan for ATS and its Subsidiaries shall have
been submitted to Purchaser in form and substance reasonably satisfactory to
Purchaser.
2G. ATS Credit Agreement. The Loan and Security Agreement dated as
--------------------
of June 23, 1998, among Asche Transfer, Inc. and AG Carriers, Inc. (as
borrowers), ATS (as guarantor) and American National Bank and Trust Company of
Chicago, as amended (the "ATS Credit Agreement"), shall have been amended by the
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parties thereto in form and substance satisfactory to Purchaser.
2H. STS and ATS Unsecured Creditors. Agreements in form and
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substance reasonably satisfactory to Purchaser shall have been reached between
(i) ATS and Richard S. Baugh, (ii) STS and trade creditors of STS to which STS
owes a minimum aggregate amount of $750,000, and (iii) trade creditors of ATS or
its Subsidiaries (other than STS) to which ATS or its Subsidiaries other than
STS owe a minimum aggregate amount of $750,000, providing for the extension of
the period during which the respective amounts owed by STS, ATS and its
Subsidiaries (as appropriate) must be paid.
2I. Consents and Approvals.
----------------------
(i) ATS and STS shall have received or obtained all
stockholder and third-party consents and approvals that are necessary
for the consummation of the transactions contemplated hereby (including
the issuance of ATS Common Stock upon exercise of the Warrant and STS
Common Stock upon conversion of the Notes) or to prevent a breach of or
default under, or a termination, modification or acceleration of, any
material instrument, contract, lease, license or other agreement to
which ATS, STS and/or any Subsidiary is a party, in each case on terms
and conditions reasonably satisfactory to Purchaser.
(ii) Purchaser, ATS and STS shall have received or obtained all
governmental and regulatory consents, approvals, licenses and
authorizations that are necessary for the consummation of the
transactions contemplated hereby or for Purchaser to own the Note and
Warrant and the ATS Common Stock issuable upon exercise of the Warrant
and the STS Common Stock issuable upon conversion of the Notes, in each
case on terms and conditions reasonably satisfactory to Purchaser
(provided that filings and clearance under the Hart-Scott-Rodino Act
with respect to the issuance of stock upon exercise of the Warrant or
the conversion of the Note need not be obtained prior to the Closing).
(iii) ATS shall have taken all actions reasonably necessary to
ensure that Purchaser, following issuance or exercise of the Warrant,
shall not be deemed to be an "interested stockholder" under, or
otherwise be subject to the provisions of, Section 203 of
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the Delaware General Corporation Law, or any other applicable anti-
takeover or similar law of any jurisdiction.
2J. Fairness Opinion. STS and ATS shall have received an opinion
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from Houlihan Smith & Company, Inc. reasonably satisfactory in form and
substance to Purchaser as to the fairness of the transactions contemplated under
this Agreement.
2K. STS Business Plan. A two-year business plan for STS, including
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appropriate financial projections, shall have been submitted to Purchaser in
form and substance reasonably satisfactory to Purchaser.
2L. No Material Adverse Change. Except for the June 14, 2000
--------------------------
delisting of the ATS Common Stock from the NASDAQ Stock Market, since April 30,
2000, there shall have been no material adverse change or development, in the
aggregate taking into account all changes and developments, in the business,
financial condition, value, operating results, assets, operations, business
prospects, cash flow or customer, supplier or employee relations of STS, ATS or
any of their Subsidiaries (as determined by Purchaser in its sole discretion).
2M. No Litigation. No suit, action or other proceeding shall be
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pending or threatened before any court or governmental or regulatory official,
body or authority or any arbitrator wherein an unfavorable injunction, judgment,
order, decree, ruling or charge would (i) prevent the performance of this
Agreement or the consummation of any of the transactions contemplated hereby or
declare unlawful any of the transactions contemplated hereby, (ii) cause any of
the transactions contemplated by this Agreement to be rescinded following
consummation, (iii) affect adversely the right of Purchaser to (A) own the
Warrant, the Notes, the ATS Common Stock issuable upon exercise of the Warrant
or the STS Common Stock issuable upon conversion of the Notes or (B) exercise
voting control of ATS or STS or (iv) affect adversely the right of ATS or STS to
own their respective assets or control their respective business, and no such
injunction, judgment, order, decree or ruling shall have been entered or be in
effect.
2N. Charter Amendments. STS shall have amended its articles of
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incorporation (the "Charter Amendment") to provide that the number of authorized
-----------------
shares of STS Common Stock shall be increased as necessary to enable STS to
issue the STS Common Stock issuable upon conversion of the Note.
2O. Release of Mellon Cash Collateral by Agent. Prior to or
-------------------------------------------
contemporaneous with the Closing, Mellon Bank, N.A. shall have released to STS
all remaining Mellon Cash Collateral (as such term is used and defined in the
STS Credit Agreement).
2P. Securities Law Compliance. The Company shall have made all
-------------------------
filings under all applicable federal and state securities laws necessary to
consummate the issuance of the Notes and the Warrant pursuant to this Agreement
to comply with such laws.
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2Q. Opinion of Counsel. Purchaser shall have received from Sachnoff
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& Weaver, Ltd., counsel for ATS and STS, an opinion with respect to the matters
set forth in Exhibit F, which shall be addressed to Purchaser, dated the date of
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the Closing and in form and substance reasonably satisfactory to Purchaser.
2R. Closing Documents. ATS and STS shall each have delivered to
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Purchaser all of the following documents:
(i) an Officer's Certificate, dated the date of the Closing,
stating that the conditions specified in Section 1 and Sections 2A through
2P, inclusive, have been fully satisfied;
(ii) certified copies of the resolutions duly adopted by ATS's
and STS's boards of directors authorizing (as appropriate) the execution,
delivery and performance of this Agreement and each of the other agreements
contemplated hereby, the issuance and sale of the Note, the issuance of the
Warrant, the reservation of shares of STS Common Stock issuable upon
conversion of the Notes and the reservation of shares of ATS Common Stock
issuable upon exercise of the Warrant, and the consummation of all other
transactions contemplated by this Agreement;
(iii) certified copies of ATS's and STS's respective
certificates and articles of incorporation and bylaws, each as in effect at
the Closing, containing, in the case of STS, the Charter Amendment.
(iv) certified copies of the STS Credit Agreement, the ATS
Credit Agreement and the agreements evidencing the Intercompany Loan, each
as in effect at the Closing;
(v) copies of all third party and governmental consents,
approvals and filings required in connection with the consummation of the
transactions hereunder (including, without limitation, all blue sky law
filings and waivers of all preemptive rights and rights of first refusal);
(vi) good standing certificates for ATS and STS for each
jurisdiction in which such corporation is organized or in which it is
required to qualify to do business as a foreign corporation;
(vii) duly executed UCC financing statements for each
jurisdiction in which STS owns any personal property;
(viii) insurance policy endorsements as required by the Security
Agreement;
(ix) the Note executed in favor of Purchaser;
(x) the Warrant registered in Purchaser's name;
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(xi) a stock certificate registered in Purchaser's name
evidencing the Additional Shares; and
(xii) such other documents relating to the transactions
contemplated by this Agreement as Purchaser or its special counsel may
reasonably request.
2S. Proceedings. All corporate and other proceedings taken or
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required to be taken by ATS or STS in connection with the transactions
contemplated hereby to be consummated at or prior to the Closing and all
documents incident thereto shall be satisfactory in form and substance to
Purchaser and its special counsel.
2T. Waiver. Any condition specified in this Section 2 may be waived
------
if consented to by Purchaser.
2U. Expenses. At the Closing, ATS shall have reimbursed Purchaser
--------
for its fees and expenses as provided in Section 8A.
Section 3. Covenants.
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3A. Financial Statements and Other Information. ATS (commencing
------------------------------------------
immediately following the completion of the audited 1999 ATS financial
statements or December 31, 2000, whichever first occurs) and STS (commencing
immediately following the Closing) shall deliver to Purchaser (so long as
Purchaser holds any Notes, the Warrant, any ATS Common Stock or any STS Common
Stock), and to all other holders of Note(s) or Warrant(s) (if any):
(i) as soon as available but in any event within 30 days after
the end of each monthly accounting period in each fiscal year, unaudited
consolidating and consolidated statements of income and cash flows of ATS
and its Subsidiaries and of STS and its Subsidiaries for such monthly
period and for the period from the beginning of the fiscal year to the end
of such month, and unaudited consolidating and consolidated balance sheets
of ATS and its Subsidiaries and of STS and its Subsidiaries as of the end
of such monthly period, setting forth in each case (as appropriate)
comparisons to ATS's or STS's annual budget and to the corresponding period
in the preceding fiscal year, and all such statements shall be prepared in
accordance with generally accepted accounting principles, consistently
applied and shall be certified by ATS's or STS's president or chief
financial officer (as appropriate);
(ii) accompanying the STS financial statements referred to in
subparagraph (i) above, an Officer's Certificate stating that there is no
Event of Default or Potential Event of Default in existence and that
neither STS nor any of its Subsidiaries is in default under the STS Credit
Agreement or any other material agreement to which it is a party or, if any
Event of Default or Potential Event of Default or any such default exists,
specifying the nature and period of existence thereof and what actions STS
and its Subsidiaries have taken and propose to take with respect thereto;
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(iii) within 90 days after the end of each fiscal year,
consolidating and consolidated statements of income and cash flows of ATS
and its Subsidiaries and of STS and its Subsidiaries for such fiscal year,
and consolidating and consolidated balance sheets of ATS and its
Subsidiaries and of STS and its Subsidiaries as of the end of such fiscal
year, setting forth in each case comparisons (as appropriate) to ATS's or
STS's annual budget and to the preceding fiscal year, all prepared in
accordance with generally accepted accounting principles, consistently
applied, and accompanied by (a) with respect to the consolidated portions
of such statements, an opinion of an independent accounting firm of
recognized national standing, (b) a certificate from such accounting firm,
addressed to STS's board of directors, stating that in the course of its
examination nothing came to its attention that caused it to believe that
there was an Event of Default or Potential Event of Default in existence or
that there was any other default by STS or any of its Subsidiaries in the
fulfillment of or compliance with any of the terms, covenants, provisions
or conditions of any other material agreement to which STS or any of its
Subsidiaries is a party or, if such accountants have reason to believe any
Event of Default or Potential Event of Default or other default by STS or
any of its Subsidiaries exists, a certificate specifying the nature and
period of existence thereof, and (c) copies of such firm's annual
management letters to ATS's and STS's boards of directors;
(iv) promptly upon receipt thereof, any additional reports,
management letters or other detailed information concerning significant
aspects of ATS's or STS's operations or financial affairs given to ATS or
STS by its independent accountants (and not otherwise contained in other
materials provided hereunder);
(v) no later than five days following the end of each business
week, weekly financial reports regarding the operations of STS and its
Subsidiaries during such week, including updated monthly forecasts of
revenue and EBITDA and a statement of amounts available to be drawn by STS
under the revolving credit portion of the Senior Debt;
(vi) prior to the beginning of each fiscal year, an annual
budget prepared on a monthly basis for ATS and its Subsidiaries and for STS
and its Subsidiaries for such fiscal year (displaying anticipated
statements of income and cash flows and balance sheets), and promptly upon
preparation thereof any other significant budgets and any material
revisions of such annual or other budgets, and within 30 days after any
monthly period in which there is a material adverse deviation from either
annual budget, an Officer's Certificate giving notice thereof;
(vii) written notice of any of the following, promptly upon
becoming aware thereof, together with an Officer's Certificate setting
forth the details thereof and any action with respect thereto taken or
proposed to be taken by ATS and STS:
(A) any Event of Default or Potential Event of Default;
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(B) any material adverse change or development affecting
the business, operations or condition (financial or otherwise) or
prospects of ATS or STS;
(C) any pending or threatened action, suit, proceeding or
investigation by or before any governmental authority against or
affecting ATS or STS or any of their Subsidiaries, involving an amount
of $50,000 or more or seeking specific performance or injunctive
relief;
(D) any material violation, breach or default by ATS or
STS or any of their Subsidiaries of or under any agreement or
instrument material to the business, operations, condition (financial
or otherwise) or prospects of STS or any of its Subsidiaries; and
(E) any amendment or supplement to, or extension,
renewal, refinancing, or refunding of, or waiver by any other party
thereto of any right under or conditions of any agreement or
instrument creating, evidencing or securing any Indebtedness involving
an amount of $50,000 or more.
(viii) concurrently with STS's delivery or receipt thereof,
copies of any reports, certificates or notices furnished by STS to any
other party to any agreement or instrument material to the business,
operations, condition (financial or otherwise) or prospects of STS or any
of its Subsidiaries or any agreement or instrument creating, evidencing or
securing any Indebtedness of STS or any of its Subsidiaries involving an
amount of $50,000 or more;
(ix) [intentionally omitted];
(x) promptly upon their becoming available to ATS or STS, a
copy of (i) all regular or special reports, registration statements and
amendments to the foregoing which ATS or STS shall file with the Securities
and Exchange Commission (or any successor thereto) or any securities
exchange, (ii) all reports, proxy statements, financial statements and
other information distributed by ATS or STS to its stockholders,
bondholders or the financial community generally, and (iii) all accountants
management letters pertaining to, all other reports submitted by
accountants in connection with any audit of, and all other material reports
from outside accountants with respect to, ATS or STS; and
(xi) with reasonable promptness, such other information and
financial data concerning ATS and its Subsidiaries or STS and its
Subsidiaries as any Person entitled to receive information under this
Section 3A may reasonably request.
Each of the financial statements referred to in subparagraphs (i) and (iii)
above shall be true and correct in all material respects as of the dates and for
the periods stated therein, subject in the case of the unaudited financial
statements to changes resulting from normal year-end adjustments for recurring
accruals (none of which would, alone or in the aggregate, be materially adverse
to the
-8-
<PAGE>
financial condition, operating results, assets, operations or business
prospects of ATS and its Subsidiaries or STS and its Subsidiaries).
3B. Inspection of Property. STS shall permit any representatives
----------------------
designated by Purchaser (so long as Purchaser holds any Notes or any STS Common
Stock) and any other holder of the Note(s), upon reasonable notice and during
normal business hours to (i) visit and inspect any of the properties of STS and
its Subsidiaries, (ii) examine the corporate and financial records of STS and
its Subsidiaries and make copies thereof or extracts therefrom and (iii) discuss
the affairs, finances and accounts of any such corporations with the directors,
officers, key employees and independent accountants of STS and its Subsidiaries.
The presentation of an executed copy of this Agreement by Purchaser to STS's
independent accountants shall constitute STS's permission to its independent
accountants to participate in discussions with such Persons.
3C. Attendance at Board Meetings. STS shall permit a representative
----------------------------
of Purchaser (other than representatives of Purchaser serving on the board of
STS) to attend as an observer all meetings of STS directors and all committees
thereof.
3D. ATS Restrictive Covenants. From the date hereof to and including
-------------------------
the date of the Closing and thereafter so long as Purchaser holds the Warrant or
any ATS Common Stock, ATS shall not, without Purchaser's prior written consent:
(i) directly or indirectly declare or pay any dividends or
make any distributions upon any of its capital stock or other equity
securities;
(ii) directly or indirectly redeem, purchase or otherwise
acquire, or permit any of its Subsidiaries to redeem, purchase or otherwise
acquire, any of its or any of its Subsidiaries' capital stock or other
equity securities (including, without limitation, warrants, options and
other rights to acquire such capital stock or other equity securities);
(iii) except as expressly contemplated by this Agreement,
authorize, issue or enter into any agreement providing for the issuance
(contingent or otherwise) of any of its capital stock or other equity
securities other than (A) the granting and exercise of Options granted
subsequent to the date of this Agreement to officers and employees of ATS
and its Subsidiaries, provided that such Options are not exercisable in the
aggregate into more than one percent of the ATS Common Stock outstanding on
a fully-diluted basis assuming exercise and conversion of all outstanding
Options and Convertible Securities, including all of such Options, and (B)
the exercise of the presently outstanding Options identified on the Equity
------
Schedule;
--------
(iv) merge or consolidate with any Person or permit any of its
Subsidiaries to merge or consolidate with any Person (other than a Wholly-
Owned Subsidiary);
(v) sell, lease or otherwise dispose of, or permit any of its
Subsidiaries to sell, lease or otherwise dispose of, (A) any of the STS
Common Stock owned by ATS or (B) any
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<PAGE>
assets having a value (based on the greater of the book value thereof,
determined in accordance with generally accepted accounting principles
consistently applied, or the consideration paid therefor) of more than
$100,000 in any transaction or series of related transactions (other than
sales in the ordinary course of business), except for the truck terminals
owned by ATS located in Atlanta, Georgia and Rockford, Illinois;
(vi) liquidate, dissolve or effect a recapitalization or
reorganization in any form of transaction (including, without limitation,
any reorganization into a limited liability company, a partnership or any
other non-corporate entity which is treated as a partnership for federal
income tax purposes);
(vii) acquire, or permit any of its Subsidiaries to acquire, any
interest in any company or business (whether by a purchase of assets,
purchase of stock, merger or otherwise), or enter into any joint venture;
(viii) enter into, or permit any of its Subsidiaries to enter
into, the ownership, active management or operation of any business other
than that engaged in by them as of the date hereof; or
(ix) settle, compromise or dismiss with prejudice any material
litigation to which ATS or any of its Subsidiaries is a party.
3E. ATS Affirmative Covenants. From the date hereof to and including
-------------------------
the Closing and thereafter so long as Purchaser holds the Warrant or any ATS
Common Stock, ATS shall deliver to Purchaser, promptly following receipt
thereof, any written notices or correspondence from the Securities and Exchange
Commission, the National Association of Securities Dealers or any other
governmental or private regulatory body, and ATS shall consult and cooperate
with Purchaser in preparing any notices or responses to any such regulatory
body. ATS hereby forever waives its right under Section 5.02(c) of the Stock
Purchase Agreement among Purchaser, ATS and STS to prohibit Purchaser and
Churchill Capital, Inc. from buying, selling or otherwise disposing of shares of
ATS Common Stock. ATS shall prepare all documentation necessary to comply with
and shall cooperate with Purchaser, in complying with the Hart-Scott-Rodino Act
in connection with Purchaser's exercise of the Warrant, and ATS shall file such
documents with the Federal Trade Commission promptly after the Closing and shall
request early termination of the waiting period.
3F. Use of Proceeds. STS shall not, nor shall it permit any of its
---------------
Subsidiaries to, use any proceeds from the sale of the Note hereunder, directly
or indirectly, for the purposes of purchasing or carrying any "margin
securities" within the meaning of one or more regulation(s) promulgated by the
Board of Governors of the Federal Reserve Board or for the purpose of arranging
for the extension of credit secured, directly or indirectly, in whole or in part
by collateral that includes any "margin securities," and STS shall apply the
proceeds of the sale of the Note only for working capital, general corporate
purposes, the funding of the Intercompany Loan and the repayment of up to
$600,000 of Indebtedness owed by STS to another Subsidiary of ATS, in each case
in accordance with the attached Sources and Uses Schedule. STS shall not use
-------------------------
the proceeds of
-10-
<PAGE>
the sale of the Note directly or indirectly for any unlawful purpose, in any
manner inconsistent with this Section 3F, or inconsistent with any other
provision of this Agreement.
3G. Intentionally Omitted.
---------------------
3H. Insurance. STS and each of its Subsidiaries shall (i) maintain
---------
with financially sound and reputable insurers acceptable to Purchaser insurance
with respect to its properties and business and against such liabilities,
casualties and contingencies and of such types and in such amounts as is
customary in the case of Persons engaged in the same or similar businesses or
having similar properties similarly situated (including, without limitation,
business interruption, product and other liability, casualty, workers'
compensation and umbrella insurance), (ii) provide that such insurance cannot
terminate, expire, be canceled or amended in any material respect without 30
days' prior notice to Purchaser, (iii) furnish to Purchaser from time to time
upon request the policies under which such insurance is issued, certificates of
insurance and such other information relating to such insurance as Purchaser may
request, and (iv) provide such other insurance and endorsements as are required
by this Agreement or the Security Agreement.
3I. Payment of Taxes and Other Potential Charges and Priority
---------------------------------------------------------
Claims. STS and each of its Subsidiaries shall pay or discharge
------
(i) on or prior to the date on which penalties attach thereto,
all taxes, assessments and other governmental charges imposed upon it or
any of its properties;
(ii) on or prior to the date when due, all claims of
materialmen, mechanics, carriers, warehousemen, landlords and other like
Persons which, if unpaid, would result in the creation of a Lien upon such
property; and
(iii) on or prior to the date when due, all other lawful claims
which, if unpaid, would result in the creation of a Lien upon any such
property or which, if unpaid, would give rise to a claim entitled to
priority over general creditors of STS or any of its Subsidiaries in a case
under Title 11 (Bankruptcy) of the United States Code, as amended;
provided that unless and until foreclosure, distraint, levy, sale or similar
--------
proceedings shall have been commenced STS or such Subsidiary need not pay or
discharge any such tax, assessment, charge or claim so long as (x) the validity
thereof is contested in good faith and by appropriate proceedings diligently
conducted, (y) such reserves or other appropriate provisions as may be required
by GAAP shall have been made therefor, and (z) such failure to pay or discharge,
individually or in the aggregate, would not have a Material Adverse Effect.
3J. Preservation of Corporate Status. STS and each of its
--------------------------------
Subsidiaries shall maintain their status as a corporation duly organized,
validly existing and in good standing under the laws of their respective
jurisdiction of incorporation and to be duly qualified to do business as a
foreign corporation and in good standing in all jurisdictions in which the
ownership of its properties or the
-11-
<PAGE>
nature of its business or both make such qualification necessary or advisable,
except for matters that, individually or in the aggregate, would not have a
Material Adverse Effect.
3K. Governmental Approvals and Filings. STS and each of its
----------------------------------
Subsidiaries shall keep and maintain in full force and effect all Governmental
Actions necessary in connection with execution and delivery of this Agreement,
the Notes and the Security Agreement, consummation of the transactions herein or
therein contemplated, performance of or compliance with the terms and conditions
hereof or thereof or to ensure the legality, validity, binding effect,
enforceability or admissibility in evidence hereof or thereof.
3L. Maintenance of Properties. STS and each of its Subsidiaries
-------------------------
shall maintain or cause to be maintained in good repair, working order and
condition all material properties now or hereafter owned, leased or otherwise
possessed by them and shall make or cause to be made all needful and proper
repairs, renewals, replacements and improvements thereto so that the business
carried on in connection therewith may be properly and advantageously conducted
at all times.
3M. Avoidance of Other Conflicts. STS and each of its Subsidiaries
----------------------------
shall not violate or conflict with, be in violation of or conflict with, or be
or remain subject to any liability (contingent or otherwise) on account of any
violation or conflict with
(i) any Law,
(ii) their respective articles or certificates of incorporation
or bylaws (or other constituent documents), or
(iii) any agreement or instrument to which they are a party or
by which they or any of their properties (now owned or hereafter acquired)
may be subject or bound,
except for matters that could not, individually or in the aggregate, have a
Material Adverse Effect.
3N. Financial Accounting Practices. STS and each of its Subsidiaries
------------------------------
shall make and keep books, records and accounts which, in reasonable detail,
accurately and fairly reflect its transactions and dispositions of its assets
and maintain a system of internal accounting controls sufficient to provide
reasonable assurances that (i) transactions are executed in accordance with
management's general or specific authorization, (ii) transactions are recorded
as necessary (A) to permit preparation of financial statements in conformity
with GAAP and (B) to maintain accountability for assets, (iii) access to assets
is permitted only in accordance with management's general or specific
authorization and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
3O. Continuation of or Change in Business. STS and each of its
-------------------------------------
Subsidiaries shall continue to engage in their respective businesses
substantially as conducted and operated during the present and preceding fiscal
year, and STS and each of its Subsidiaries shall not engage in any business
other than solid waste and bulk industrial transport services.
-12-
<PAGE>
3P. Consolidated Tax Return. Prior to the full conversion of all
-----------------------
Notes, STS shall not file or consent to the filing of any consolidated income
tax return with any Person, except as permitted under the Tax Sharing Agreement.
STS shall not amend, or consent to an amendment of, the Tax Sharing Agreement.
3Q. Fiscal Year. STS and each of its Subsidiaries shall not change
-----------
their respective fiscal year or fiscal quarter.
3R. Plan and Multiemployer Plans.
----------------------------
(i) STS shall, and shall cause each of its Controlled Group
Members to, make contributions to each Plan maintained by STS and its
Controlled Group Members, respectively, when due in accordance with the
terms of the Plan and minimum funding requirements under ERISA and the Code
applicable to such Plan and pay PBGC premiums as and when due for such
Plan.
(ii) As soon as such liability has been determined, or within 65
days after STS receives a request for such liability determination from
Purchaser, STS shall deliver or cause to be delivered to Purchaser (i) with
respect to each Plan subject to Title IV of ERISA and maintained by STS or
any Controlled Group Member, the "amount of unfunded benefit liabilities"
(as defined in Section 4001(a)(18) of ERISA), as certified by the actuary
for each such Plan, and (ii) the aggregate amount of Postretirement Benefit
Obligations, as certified by an actuary satisfactory to Purchaser. STS
shall notify Purchaser within 30 days of the occurrence of any event that
would materially affect the "amount of unfunded benefit liabilities" (as
defined in Section 4001(a)(18) of ERISA) for any such Plan or materially
affect Postretirement Benefit Obligations.
(iii) Within not more than 60 days after the earlier of
implementation, or corporate authorization to implement, a Plan (other than
one described in subparagraph (b) of the definition thereof herein), STS
shall give written notice to Purchaser of such action.
(iv) Within not more than 60 days after STS or any Controlled
Group Member becomes obligated to any Multiemployer Plan, STS shall give
written notice thereof to Purchaser.
(v) STS shall, and shall cause each of its Controlled Group
Members to, make contributions required to be made by it, or any of them,
to each Multiemployer Plan when due in accordance with its, or any of
their, obligations under any collective bargaining agreement related to
such Multiemployer Plan or participation agreements applicable to such
Multiemployer Plan; provided nothing herein shall be interpreted as
preventing STS from contesting in good faith any said obligation and/or the
contributions required thereunder.
3S. Liens. Neither STS nor any of its Subsidiaries shall at any time
-----
create, incur, assume or suffer to exist any Lien on any of its property (now
owned or hereafter acquired), or agree,
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<PAGE>
become or remain liable (contingently or otherwise) to do any of the foregoing,
except for the following ("Permitted Liens"):
---------------
(i) Liens pursuant to the Senior Debt Documents in favor of the
Agent for the benefit of the Senior Lenders and the Agent to secure the
debt incurred thereunder;
(ii) Liens pursuant to the Security Agreement in favor of
Purchaser to secure the debt evidenced by the Notes, subject to the
Subordination Agreement;
(iii) Liens existing on the date hereof securing obligations
existing on the date hereof, as and to the extent such Liens exist as of
the date hereof (and Liens securing successor obligations incurred to
refinance predecessor obligations allowed under this subsection (iii);
provided that in each case the successor obligation is an obligation of the
--------
same Person subject to the predecessor Indebtedness and is not greater than
(and is not otherwise on terms less advantageous than) the predecessor
obligation immediately before such refinancing, and the Lien securing the
predecessor obligation immediately before such refinancing);
(iv) Liens (whether or not assumed) existing on property at the
time of purchase thereof by STS or to secure payment of the purchase price
thereof, provided, that:
(A) such Lien is created before or substantially
simultaneously with the purchase of such property in the
ordinary course of business by STS;
(B) such Lien is confined solely to the property so
purchased, improvements thereto and proceeds thereof;
(C) the aggregate amount secured by all such Liens on any
particular property at the time purchased by STS, as the
case may be, shall not exceed the lesser of the purchase
price of such property or the fair market value of such
property at the time of purchase thereof ("purchase price"
for this purpose including the amount secured by each such
Lien thereon whether or not assumed); and
(D) the obligation secured by such Lien is Indebtedness
permitted under Section 3T(ii);
(v) Liens arising from taxes, assessments, charges or claims
described in Section 3I that are not yet due or that remain payable without
penalty or to the extent permitted to remain unpaid under the proviso to
such Section 3I;
(vi) Deposits or pledges of cash or securities in the ordinary
course of business to secure (A) workmen's compensation, unemployment
insurance or other social security obligations, (B) performance of bids,
tenders, trade contracts (other than for payment of
-14-
<PAGE>
money) or leases, (C) stay, surety or appeal bonds, or (D) other
obligations of a like nature incurred in the ordinary course of business;
(vii) Zoning restrictions, easements, minor restrictions on the
use of real property, minor irregularities in title thereto and other minor
Liens that do not secure the payment of money or the performance of an
obligation and that do not in the aggregate materially detract from the
value of a property or asset to, or materially impair its use in the
business of, STS; and
(viii) With respect to the real property owned by STS, (i)
mechanics', materialmen's, carriers', landlords' or other like liens
arising by operation of law and in the ordinary course of business and
securing obligations of a Person that are not overdue for a period of more
than 30 days or are being contested in good faith; and (ii) easements,
rights-of-way, zoning and similar restrictions and other charges or
encroachments or encumbrances not interfering with the ordinary conduct of
the business of STS and which do not detract materially from the value of
the property to which they attach or impair materially the use thereof by
STS.
"Permitted Lien" shall in no event include any Lien imposed by, or required to
--------------
be granted pursuant to, ERISA or any Environmental Law. Nothing in this Section
3S shall be construed to limit any other restriction on Liens imposed by the
Security Agreement.
3T. Indebtedness. Neither STS nor any of its Subsidiaries shall at
------------
any time create, incur, assume or suffer to exist any Indebtedness, or agree,
become or remain liable (contingently or otherwise) to create, incur, assume or
suffer to exist any Indebtedness, except:
(i) subject to the Subordination Agreement, Indebtedness to the
Senior Lenders and the Agent pursuant to the Senior Debt Documents;
(ii) Indebtedness to Purchaser under this Agreement, the Notes
and the Security Agreement;
(iii) Indebtedness secured by Liens permitted by Section 3S(iv);
provided, that the aggregate principal amount of such Indebtedness shall
not exceed $1,000,000;
(iv) Accounts payable to trade creditors arising out of
purchases of goods or services in the ordinary course of business, other
than under trac leases of trucks, tractors, trailers, tippers and other
equipment the payment terms of which are extended under agreements reached
no later than 30 days following the Closing; provided that (i) such account
payable is payable not later than 90 days after the original invoice date
according to the original term of sale, and (ii) such account payable is
not overdue by more than 90 days according to the original terms of sale
(except to the extent such account payable is being contested in good faith
------
and by appropriate proceedings diligently conducted and so long as
-15-
<PAGE>
such reserves or other appropriate provisions as may be required by GAAP
shall have been made with respect therefor);
(v) Indebtedness under Interest Rate Hedging Agreements; or
(vi) Capitalized Lease Obligations, to the extent permitted by
Section 3DD hereof.
3U. Guaranties, Indemnities, etc. Neither STS nor any of its
-----------------------------
Subsidiaries shall be or become subject to or bound by any Guaranty Equivalent,
or agree, become or remain liable (contingently or otherwise) to do any of the
foregoing, except:
(i) Guaranty Equivalents existing on the date hereof and listed
in the Guaranty Schedule hereto (and extensions, renewals and refinancings
-----------------
thereof and of the associated Assured Obligations on terms no more
burdensome to STS than those existing immediately before such extension,
renewal or refinancing);
(ii) contingent liabilities arising from the endorsement of
negotiable or other instruments for deposit or collection or similar
transactions in the ordinary course of business; and
(iii) indemnities by STS of the liabilities of its directors or
officers, in their capacities as such, pursuant to provisions presently
contained in STS's articles or certificates of incorporation or bylaws or
as permitted by Law.
3V. Loans, Advances and Investments. Neither STS nor any of its
-------------------------------
Subsidiaries shall at any time make or suffer to exist or remain outstanding any
loan or advance to, to purchase, acquire or own (beneficially or of record) any
stock, bonds, notes or securities of, or any partnership interest (whether
general or limited) in, or any other interest in, or make any capital
contribution to or other investment in, any other Person, or agree, become or
remain liable (contingently or otherwise) to do any of the foregoing, except:
------
(i) loans and investments existing on the date hereof and
listed in the Loans and Investments Schedule (and extensions, renewals and
------------------------------
refinancings thereof on terms no less favorable than those existing
immediately before such extension, renewal or refinancing);
(ii) receivables owing to STS arising from providing services
under usual and customary terms in the ordinary course of business; and
loans and advances extended by STS to subcontractors or suppliers
(excluding contractors or suppliers who are Affiliates of STS) under usual
and customary terms in the ordinary course of business;
-16-
<PAGE>
(iii) advances to officers and employees of the STS to meet
expenses incurred by such officers and employees in the ordinary course of
business and in the aggregate amounts at any time outstanding not exceeding
$300,000;
(iv) Cash Equivalent Investments; and
(v) the Intercompany Loan.
3W. Dividends and Related Distributions. Neither STS nor any of its
-----------------------------------
Subsidiaries shall declare or make any Stock Payment, or agree, become or remain
liable (contingently or otherwise) to do so.
3X. Sale-Leasebacks. Neither STS nor any of its Subsidiaries shall
---------------
at any time enter into or suffer to remain in effect any transaction to which
STS or such Subsidiary is a party involving the sale, transfer or other
disposition by STS or such Subsidiary of any property (now owned or hereafter
acquired), with a view directly or indirectly to the leasing back of any part of
the same property or any other property used for the same or a similar purpose
or purposes, or agree, become or remain liable (contingently or otherwise) to do
any of the foregoing.
3Y. Leases. Neither STS nor any of its Subsidiaries shall at any
-------
time enter into or suffer to remain in effect any lease, as lessee, of any
property, or agree, become or remain liable (contingently or otherwise) to do
any of the foregoing, other than the leasing of tractors, trailers, tippers and
other equipment, terminals and other property in the ordinary course of
business.
3Z. Mergers, Acquisitions, etc. Neither STS nor any of its
---------------------------
Subsidiaries shall (i) merge with or into or consolidate with any other Person,
(ii) liquidate, wind-up, dissolve or divide, (iii) acquire all or any
substantial portion of the properties of any going concern or going line of
business, (iv) acquire all or any substantial portion of the properties of any
other Person other than in the ordinary course of business, or (v) agree, become
or remain liable (contingently or otherwise) to do any of the foregoing.
3AA. Dispositions of Properties. Neither STS nor any of its
--------------------------
Subsidiaries shall sell, convey, assign, lease, transfer, abandon or otherwise
dispose of, voluntarily or involuntarily, any of its properties, or agree,
become or remain liable (contingently or otherwise) to do any of the foregoing,
except STS may, for no consideration other than cash, dispose of equipment in
the ordinary course of business which is obsolete or no longer useful in the
business of STS; provided, that STS will report such disposition to Purchaser in
--------
writing at least quarterly.
3BB. Subsidiaries. STS shall not, and shall not allow any of its
------------
Subsidiaries to, establish or acquire any additional Subsidiary.
3CC. Dealings with Affiliates. Neither STS nor any of its
------------------------
Subsidiaries shall enter into or carry out any transaction with (including,
without limitation, purchase or lease property or services from, sell or lease
property or services to, loan or advance to, or enter into, suffer to remain in
-17-
<PAGE>
existence or amend any contract, agreement or arrangement with) any Affiliate of
STS or such Subsidiary, directly or indirectly, or agree, become or remain
liable (contingently or otherwise) to do any of the foregoing, except:
(i) Existence and performance of contracts, agreements and
arrangements of STS in existence as of the date hereof or proposed as of
the date hereof (including without limitation the Intercompany Loan) and in
any event set forth in the Affiliated Transactions Schedule; and
--------------------------------
(ii) Officers and employees of STS may be compensated for services
rendered in such capacity to STS, provided that (A) such compensation is in
--------
good faith and on terms no less favorable to STS than those that could have
been obtained in a comparable transaction on an arm's-length basis from an
unrelated Person, (B) the board of directors of STS (including a majority
of the directors having no direct or indirect interest in such transaction)
approve such compensation and (C) such compensation to any single officer
or employee in any fiscal year shall not exceed $300,000.
3DD. Capital Expenditures. Neither STS nor any of its Subsidiaries
--------------------
shall make any Capital Expenditures on or after the date hereof, except
(i) subject to subsection (iii) below, Capital Expenditures by
STS not in excess of $4,000,000 in any fiscal year of STS; and
(ii) Capital Expenditures by STS funded entirely with the
proceeds of the sale or other disposition of equipment in accordance with
Section 3AA hereof.
3EE. Issuance of Equity. Neither STS nor any of its Subsidiaries
------------------
shall issue any capital stock or other equity securities or rights to acquire
capital stock or other equity securities, except (i) in connection with the
conversion of the Notes and (ii) options granted to STS management, provided
--------
that Purchaser shall be granted full anti-dilution protections with respect to
all such options granted on or prior to December 31, 2001.
3FF. Limitations on Modification of Certain Agreements and
-----------------------------------------------------
Instruments. Neither STS nor any of its Subsidiaries shall amend, modify or
-----------
supplement their respective articles or certificates of incorporation or bylaws
(or similar constituent documents).
3GG. Limitation on Payments and Modification of Restricted
-----------------------------------------------------
Indebtedness. Neither STS nor any of its Subsidiaries shall directly or
------------
indirectly, pay, prepay, purchase, redeem, retire, defease or acquire, or make
any payment (on account of principal, interest, premium or otherwise) of, or
grant, or amend, modify or supplement any of the terms and conditions of, any
Indebtedness, or agree, become or remain liable (contingently or otherwise) to
do any of the foregoing, except as follows:
-18-
<PAGE>
(i) STS may pay principal and interest on the Senior Debt to
the extent consistent with the Subordination Agreement; and
(ii) STS may amend, modify or supplement the terms of the Senior
Debt and the Senior Debt Documents to the extent consistent with the
Subordination Agreement.
3HH. Limitation on Other Restrictions on Liens, Transfer or
------------------------------------------------------
Dispositions. Neither STS nor any of its Subsidiaries shall enter into, become
------------
or remain subject to any agreement or instrument to which STS or any of its
Subsidiaries is a party or by which it or any of its properties (now owned or
hereafter acquired) may be subject or bound containing provisions that would
prohibit, restrict or limit the grant or continuance of any Lien upon any of its
properties (now owed or hereafter acquired) or prohibit, restrict or limit its
ability to transfer or dispose of any of its properties (now owned or hereafter
acquired), to require it to apply the proceeds of any such transfer disposition
in a specified manner, except:
(i) The STS Credit Agreement;
(ii) This Agreement, the Securities Agreement and the documents
and agreements contemplated hereby and thereby; and
(iii) Restrictions pursuant to a non-assignment provision of any
executory contract or of any lease by STS as lessee, and restrictions on
granting Liens on property of STS subject to a Permitted Lien for the
benefit of the holder of such Permitted Lien to the extent in existence on
the date hereof.
3II. Limitation on Other Restrictions on Amendment of the Loan
---------------------------------------------------------
Documents, etc. Neither STS nor any of its Subsidiaries shall enter into, become
---------------
or remain subject to any agreement or instrument to which STS or any of its
Subsidiaries is a party or by which it or any of its properties (now owned or
hereafter acquired) may be subject or bound that would prohibit or require the
consent of any Person to any amendment, modification or supplement to this
Agreement, the Notes and the Security Agreement except the STS Credit Agreement
and the Subordination Agreement.
3JJ. Environmental Matters. ATS, STS and their Subsidiaries shall:
---------------------
(i) Comply in all material respects with all Environmental and
Safety Requirements, including, without limitation, all permits, licenses
and authorizations required thereunder; and
(ii) Promptly respond to, investigate and remediate all spills
or releases of or contamination by hazardous materials, substances or
wastes (including without limitation petroleum products and constituents
thereof) resulting from the operations of ATS, STS or their respective
Subsidiaries or occurring at any of their facilities or properties.
-19-
<PAGE>
Section 4. Representations and Warranties of ATS and STS. As a
---------------------------------------------
material inducement to Purchaser to enter into this Agreement and purchase the
Note and the Warrant hereunder, each of ATS and STS hereby represents and
warrants that:
4A. Organization, Corporate Power and Licenses. Each of ATS and STS
------------------------------------------
is a corporation duly organized, validly existing and in good standing under the
laws of Delaware and Illinois, respectively, and are qualified to do business in
every jurisdiction in which their respective ownership of property or conduct of
business requires them to qualify. Each of ATS and STS possesses all requisite
corporate power and authority and all material licenses, permits and
authorizations necessary to own and operate its properties, to carry on its
businesses as now conducted and presently proposed to be conducted and to carry
out the transactions contemplated by this Agreement. The copies of ATS's and
STS's charter documents and bylaws which have been furnished to Purchaser's
special counsel reflect all amendments made thereto at any time prior to the
date of this Agreement and are correct and complete.
4B. Capital Stock and Related Matters.
---------------------------------
(i) As of the Closing and immediately thereafter, the authorized
capital stock of ATS shall consist of 25,000,000 shares of ATS Common
Stock, of which 8,623,587 shares shall be issued and outstanding, 3,111,111
shares shall be issued as the Additional Shares and 950,000 shares shall be
reserved for issuance upon exercise of the Warrant. As of the Closing and
immediately thereafter, the authorized capital stock of STS shall consist
of 35,000,000 shares of STS Common Stock, of which 4,500,000 shares shall
be issued and outstanding and 25,500,000 shares shall be reserved for
issuance upon conversion of the Notes, and 100,000 shares of preferred
stock, none of which shall be issued and outstanding. As of the Closing,
neither ATS nor STS nor any Subsidiary shall have outstanding any stock or
securities convertible or exchangeable for any shares of its capital stock
or containing any profit participation features, nor shall it have
outstanding any rights or options to subscribe for or to purchase its
capital stock or any stock or securities convertible into or exchangeable
for its capital stock or any stock appreciation rights or phantom stock
plans, except for the Note and the Warrant and as set forth on the attached
Capitalization Schedule. As of the Closing, neither ATS nor STS nor any
-----------------------
Subsidiary shall be subject to any obligation (contingent or otherwise) to
repurchase or otherwise acquire or retire any shares of its capital stock
or any warrants, options or other rights to acquire its capital stock,
except as set forth on the Capitalization Schedule. As of the Closing, all
-----------------------
of the outstanding shares of ATS's and STS's capital stock (including,
without limitation, the Additional Shares) shall be validly issued, fully
paid and nonassessable.
(ii) There are no statutory or, to the best of ATS's and STS's
knowledge, contractual stockholders preemptive rights or rights of refusal
with respect to the issuance of the Notes or the Warrant hereunder or the
issuance of the ATS Common Stock or STS Common Stock upon conversion of the
Notes or upon exercise of the Warrant, respectively. Neither ATS nor STS
has violated any applicable federal or state securities laws in connection
with the offer, sale or issuance of any of its capital stock, and the
offer, sale and
-20-
<PAGE>
issuance of the Note or the Warrant hereunder do not require registration
under the Securities Act or any applicable state securities laws. To the
best of ATS's and STS's knowledge, there are no agreements between their
stockholders with respect to the voting or transfer of their capital stock
or with respect to any other aspect of their affairs, except for the
Registration Agreement and as set forth on the Capitalization Schedule.
-----------------------
4C. Subsidiaries; Investments. The attached Subsidiary Schedule
------------------------- -------------------
correctly sets forth the name of each Subsidiary of ATS and STS, the
jurisdiction of its incorporation and the Persons owning the outstanding capital
stock of such Subsidiary. Each Subsidiary is duly organized, validly existing
and in good standing under the laws of the jurisdiction of its incorporation,
possesses all requisite corporate power and authority and all material licenses,
permits and authorizations necessary to own its properties and to carry on its
businesses as now being conducted and as presently proposed to be conducted and
is qualified to do business in every jurisdiction in which its ownership of
property or the conduct of business requires it to qualify. All of the
outstanding shares of capital stock of each Subsidiary are validly issued, full
paid and nonassessable, and all such shares are owned by ATS or another
Subsidiary free and clear of any Lien, except as set forth on the Subsidiary
----------
Schedule, and not subject to any option or right to purchase any such shares.
--------
Except as set forth on the Subsidiary Schedule, none of ATS, STS or any
-------------------
Subsidiary owns or holds the right to acquire any shares of stock or any other
security or interest in any other Person.
4D. Authorization; No Breach. The execution, delivery and
------------------------
performance of this Agreement, the Note, the Amended Registration Agreement, the
Warrant, the Security Agreement and all other agreements and instruments
contemplated hereby to which ATS and/or STS is a party have been duly authorized
by ATS and STS (as the case may be). This Agreement, the Amended Registration
Agreement, the Note, the Warrant, the Security Agreement and all other
agreements and instruments contemplated hereby to which ATS and/or STS is a
party each constitutes a valid and binding obligation of ATS and STS,
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 principals of equity. Except as set forth on the attached
Restrictions Schedule (as the case may be), the execution and delivery by ATS
---------------------
and STS of this Agreement, the Notes, the Amended Registration Agreement , the
Warrant, the Security Agreement and all other agreements and instruments
contemplated hereby to which ATS and/or STS is a party, the offering, sale and
issuance of the Notes and the Warrant hereunder, the issuance of the STS Common
Stock upon conversion of the Notes, the issuance of ATS Common Stock upon
exercise of Warrant, the issuance of the Additional Shares and the fulfillment
of and compliance with the respective terms hereof and thereof by ATS and/or
STS, do not and shall not (i) conflict with or result in a breach of the terms,
conditions or provisions of, (ii) constitute a default under, (iii) result in
the creation of any lien, security interest, charge or encumbrance upon ATS
and/or STS or any Subsidiary's capital stock or assets pursuant to, (iv) give
any third party the right to modify, terminate or accelerate any obligation
under, (v) result in a violation of, or (vi) require any authorization, consent,
approval, exemption or other action by or notice or declaration to, or filing
with, any court or administrative or governmental body or agency pursuant to,
the charter or bylaws of the ATS, STS or any Subsidiary, or any law, statute,
rule or regulation to which the ATS, STS or any Subsidiary is subject
(including, without limitation, any usury laws applicable to the
-21-
<PAGE>
Note), or any material agreement, instrument, order, judgment or decree to which
ATS, STS or any Subsidiary is subject. Except as set forth on the Restrictions
------------
Schedule, none of the Subsidiaries are subject to any restrictions upon making
--------
loans or advances or paying dividends to, transferring property to, or repaying
any Indebtedness owed to, ATS, STS or another Subsidiary.
4E. Financial Statements. With respect to the following financial
--------------------
statements:
(i) the audited consolidated balance sheet of STS and its
Subsidiaries as of December 31, 1998, and the related statements of income
and cash flows (or the equivalent) for the twelve-month period then ended;
(ii) the unaudited consolidated balance sheet of STS and its
Subsidiaries as of December 31, 1999, and the related statements of income
and cash flows (or the equivalent) for the twelve-month period then ended;
and
(iii) the unaudited consolidated balance sheets of STS and its
Subsidiaries as of April 30, 2000 (the "Latest Balance Sheet"), and the
---------------------
related statements of income and cash flows (or the equivalent) for the
four-month period then ended,
each of the foregoing financial statements (including in all cases the notes
thereto, if any) is accurate and complete in all material respects, is
consistent with the books and records of STS and ATS (which, in turn, are
accurate and complete in all material respects) and has been prepared in
accordance with GAAP, except that (i) matters relating to intercompany
transactions between STS and ATS and its Subsidiaries may render such statements
inaccurate and incomplete, and Ernst & Young L.L.P. has withdrawn its opinion
with respect to its audit of the 1998 ATS and STS financial statements, and (ii)
the unaudited financial statements are subject to normal year-end adjustments
and lack footnote and other presentation items.
4F. Absence of Undisclosed Liabilities. Except as set forth on the
----------------------------------
attached Liabilities Schedule, none of ATS, STS or its Subsidiaries is subject
--------------------
to any material obligation or liability (whether accrued, absolute, contingent,
unliquidated or otherwise, whether or not known to ATS, STS or any Subsidiary,
whether due or to become due and regardless of when asserted) arising out of
transactions entered into at or prior to the Closing, or any action or inaction
at or prior to the Closing, or any state of facts existing at or prior to the
Closing other than: (i) liabilities set forth on the Latest Balance Sheet
(including any notes thereto), (ii) liabilities and obligations which have
arisen after the date of the Latest Balance Sheet in the ordinary course of
business (none of which is a liability resulting from breach of contract, breach
of warranty, tort, infringement, claim or lawsuit), (iii) other liabilities and
obligations expressly disclosed in the other Schedules to this Agreement and
(iv) liabilities and obligations which have not had and could not reasonably be
expected to have a Material Adverse Effect.
4G. No Material Adverse Change. Except as set forth on the Material
-------------------------- --------
Adverse Change Schedule, since the date of the Latest Balance Sheet, there has
-----------------------
been no material adverse
-22-
<PAGE>
change in the financial condition, operating results, assets, operations,
business prospects, employee relations or customer or supplier relations of ATS,
STS or any Subsidiary.
4H. Assets. ATS, STS and each Subsidiary have good and marketable
------
title to, or a valid leasehold interest in, all of the material properties and
assets used by them, located on their premises or shown on the Latest Balance
Sheet or acquired thereafter, free and clear of all Liens, except for Permitted
Liens. ATS, STS and each Subsidiary own, or have a valid leasehold interest in,
all material assets necessary for the conduct of their respective businesses as
presently conducted.
4I. Tax Matters.
-----------
(i) Except as set forth on the attached Taxes Schedule: ATS,
--------------
STS and each Subsidiary have filed all material Tax Returns which they are
required to file under applicable laws and regulations; all such Tax
Returns are complete and correct in all material respects and have been
prepared in compliance with all applicable laws and regulations in all
material respects; ATS, STS and each Subsidiary in all material respects
have paid all Taxes due and owing by them (whether or not such Taxes are
required to be shown on a Tax Return) and have withheld and paid over to
the appropriate taxing authority all Taxes which they are required to
withhold from amounts paid or owing to any employee, stockholder, creditor
or other third party; neither ATS, STS nor any Subsidiary has waived any
statute of limitations with respect to any Taxes or agreed to any extension
of time with respect to any Tax assessment or deficiency; no foreign,
federal, state or local tax audits or administrative or judicial
proceedings are pending or being conducted with respect to ATS or any
Subsidiary, no information related to Tax matters has been requested by any
foreign, federal, state or local taxing authority and no written notice
indicating an intent to open an audit or other review has been received by
ATS or STS from any foreign, federal, state or local taxing authority; and
there are no material unresolved questions or claims concerning ATS's or
any Subsidiary's Tax liability.
(ii) Neither ATS nor any Subsidiary has made an election under
(S)341(f) of the Internal Revenue Code of 1986, as amended. ATS and each
Subsidiary have disclosed on their federal income Tax Returns any position
taken for which substantial authority (within the meaning of IRC
(S)6662(d)(2)(B)(i)) did not exist at the time the return was filed.
Neither ATS nor any Subsidiary has made any payments, is obligated to make
payments or is a party to an agreement that could obligate it to make any
payments that would not be deductible under IRC (S)280G.
(iii) "Tax" or "Taxes" means federal, state, county, local,
--- -----
foreign or other income, gross receipts, ad valorem, franchise, profits,
sales or use, transfer, registration, excise, utility, environmental,
communications, real or personal property, capital stock, license, payroll,
wage or other withholding, employment, social security, severance, stamp,
occupation, alternative or add-on minimum, estimated and other taxes of any
kind whatsoever (including, without limitation, deficiencies, penalties,
additions to tax, and interest attributable thereto) whether disputed or
not. "Tax Return" means any return,
----------
-23-
<PAGE>
information report or filing with respect to Taxes, including any schedules
attached thereto and including any amendment thereof.
4J. Contracts and Commitments. All material contracts, agreements
-------------------------
and instruments to which ATS, STS or any of their Subsidiaries is a party (the
"Material Contracts") are valid, binding and enforceable in accordance with
------------------
their respective terms. ATS, STS and each Subsidiary have performed all
material obligations required to be performed by them under Material Contracts
and are not in default or breach in any material respect under nor in receipt of
any claim of default or breach under any Material Contract; no event has
occurred which with the passage of time or the giving of notice or both would
result in a material default, breach or event of noncompliance by ATS or any
Subsidiary under any Material Contract; neither ATS, STS nor any Subsidiary has
knowledge of any breach or anticipated breach by the other parties to any
Material Contract.
4K. Intellectual Property Rights. Except as set forth on the
----------------------------
Intellectual Property Schedule, ATS or one of its Subsidiaries owns all right,
------------------------------
title and interest to, or has the right to use pursuant to a valid license, all
Intellectual Property Rights necessary for the operation of the businesses of
ATS and its Subsidiaries as presently conducted and as presently proposed to be
conducted, free and clear of all Liens, except Permitted Liens. Except as set
forth on the Intellectual Property Schedule, the loss or expiration of any
------------------------------
Intellectual Property Right or related group of Intellectual Property Rights
owned or used by ATS or any Subsidiary has not had and would not reasonably be
expected to have a Material Adverse Effect on the conduct of ATS's and its
Subsidiaries' respective businesses. ATS and its Subsidiaries have taken all
necessary actions to maintain and protect the Intellectual Property Rights which
they own. Except as set forth on the Intellectual Property Schedule, (a) there
------------------------------
have been no claims made against ATS or any Subsidiary asserting the invalidity,
misuse or unenforceability of any of such Intellectual Property Rights, (b)
neither ATS nor any Subsidiary has received any notices of, and is not aware of
any facts which indicate a likelihood of, any infringement or misappropriation
by, or conflict with, any third party with respect to such Intellectual Property
Rights (including, without limitation, any demand or request that ATS or any
Subsidiary license any rights from a third party), and (c) the conduct of ATS's
and each Subsidiary's business has not infringed, misappropriated or conflicted
with and does not infringe, misappropriate or conflict with any Intellectual
Property Rights of other Persons which has had or would reasonably be expected
to have a Material Adverse Effect. Except as set forth on the Intellectual
------------
Property Schedule, the transactions contemplated by this Agreement shall have no
-----------------
Material Adverse Effect on ATS's or any Subsidiary's right, title and interest
in and to the Intellectual Property Rights listed on the Intellectual Property
---------------------
Schedule.
--------
4L. Litigation, and Related Matters. Except as set forth on the
-------------------------------
attached Litigation Schedule, there are no actions, suits, proceedings, orders,
-------------------
investigations or claims pending or, to the best of ATS's and STS's knowledge,
threatened against or affecting ATS or any Subsidiary (or to the best of the
ATS's and STS's knowledge, pending or threatened against or affecting any of the
officers, directors or employees of ATS and its Subsidiaries with respect to
their businesses or proposed business activities), or pending or threatened by
the Company or any Subsidiary against any third party, at law or in equity, or
before or by any governmental department, commission, board, bureau, agency or
instrumentality (including, without limitation, any actions, suit, proceedings
or
-24-
<PAGE>
investigations with respect to the transactions contemplated by this Agreement);
neither ATS nor any Subsidiary is subject to any arbitration proceedings under
collective bargaining agreements or otherwise or, to the best of ATS's and STS's
knowledge, any governmental investigations or inquiries (including, without
limitation, inquiries as to the qualification to hold or receive any license or
permit).
4M. Brokerage. Except as set forth in the attached Brokerage Schedule,
--------- ------------------
there are no claims for brokerage commissions, finders' fees or similar
compensation in connection with the transactions contemplated by this Agreement
based on any arrangement or agreement binding upon ATS or any Subsidiary. ATS
shall pay, and hold Purchaser harmless against, any liability, loss or expense
(including, without limitation, reasonable attorneys' fees and out-of-pocket
expenses) arising in connection with any such claim.
4N. Insurance. Neither ATS nor any Subsidiary is in default in any
---------
material respect of its obligations under any insurance policy maintained by it,
and neither ATS nor any Subsidiary has been denied insurance coverage. The
insurance coverage of ATS and its Subsidiaries is customary for corporations of
similar size engaged in similar lines of business.
4O. Employees. Except as set forth on the attached Employees Schedule,
--------- ------------------
neither ATS nor STS is aware that any executive or key employee of ATS or any
Subsidiary or any group of employees of ATS or any Subsidiary has any plans to
terminate employment with ATS or any Subsidiary. ATS and each Subsidiary have
complied in all material respects with all laws relating to the employment of
labor (including, without limitation, provisions thereof relating to wages,
hours, equal opportunity, collective bargaining and the payment of social
security and other taxes), and except as set forth on the Employees Schedule,
------------------
neither ATS nor STS is aware that it or any Subsidiary has any material labor
relations problems (including, without limitation, any union organization
activities, threatened or actual strikes or work stoppages or material
grievances). Except as set forth in the Employees Schedule, neither ATS, its
------------------
Subsidiaries nor, to the best of ATS's knowledge, any of their employees is
subject to any noncompete, nondisclosure, confidentiality, employment,
consulting or similar agreements relating to, affecting or in conflict with the
present or proposed business activities of ATS and its Subsidiaries, except for
agreements between ATS and its present and former employees.
4P. ERISA.
-----
(i) Multiemployer Plans. Except as set forth in the ERISA
------------------- -----
Schedule, to the knowledge of ATS and STS neither STS nor any Controlled
--------
Group Member has any obligation to contribute to (or any other liability,
including current or potential withdrawal liability, with respect to) any
Multiemployer Plan.
(ii) Retiree Welfare Plans. Neither STS nor any Controlled Group
---------------------
Member maintains or has any obligation to contribute to (or any other
liability with respect to) any plan or arrangement whether or not
terminated, which provides medical, health, life insurance or other
welfare-type benefits for current or future retired or terminated employees
-25-
<PAGE>
(except for limited continued medical benefit coverage required to be
provided under Section 4980B of the IRC or as required under applicable
state law).
(iii) Defined Benefit Plans. Except as set forth in the ERISA
--------------------- -----
Schedule, neither STS nor any Controlled Group Member maintains,
--------
contributes to or has any liability under (or with respect to) any employee
plan which is a tax-qualified "defined benefit plan" (as defined in Section
3(35) of ERISA), whether or not terminated.
(iv) Defined Contribution Plans. Except as set forth in the ERISA
-------------------------- -----
Schedule, neither STS nor any Controlled Group Member maintains,
--------
contributes to or has any liability under (or with respect to) any Plan
which is a tax-qualified "defined contribution plan" (as defined in Section
3(34) of ERISA), whether or not terminated.
(v) Contributions. Except as set forth in the ERISA Schedule, all
------------- --------------
contributions to Plans have been timely made in accordance with ERISA, the
Code, other applicable law and the terms of such Plan.
(vi) Compliance. Except as set forth in the ERISA Schedule, to the
---------- --------------
knowledge of ATS and STS, all Plans comply in form and operation in all
material respects with the applicable requirements of ERISA and the Code
and meet the requirements of "qualified plans" under Section 401(a) of the
Code, and no prohibited transaction under Section 406 of ERISA or 4975 of
the Code has occurred with respect to any Plan.
(vii) Correct Copies. STS has provided Purchaser with true and
--------------
complete copies of all documents pursuant to which the Plans are maintained
and administered and the most recent annual reports (Form 5500 and
attachments) for the Plans and except as set forth in the ERISA Schedule,
--------------
all such reports have been filed in a timely and complete manner.
(viii) Compliance. The Plans and all related trusts, insurance
----------
contracts and funds have been maintained, funded and administered in
compliance in all material respects with the applicable provisions of
ERISA, the IRC and other applicable laws. Neither ATS nor any trustee or
administrator of any Plan has engaged in any transaction with respect to
the Plans which could subject ATS or any trustee or administrator or the
Plans, or any party dealing with any such Plan, nor do the transactions
contemplated by this Agreement constitute transactions which could subject
any such party to either a civil penalty assessed pursuant to Section
502(i) of ERISA or the tax or penalty on prohibited transactions imposed by
Section 4975 of the IRC. No actions, suits or claims with respect to the
assets of the Plans (other than routine claims for benefits) are pending
or, to the knowledge of STS and ATS, threatened which could result in or
subject ATS to any material liability, and there are no circumstances which
could give rise to or be expected to give rise to any such actions, suits
or claims.
4Q. Compliance with Laws. Except as set forth on the Compliance
-------------------- ----------
Schedule, neither ATS nor any of its Subsidiaries has violated any law or any
--------
governmental regulation or requirement
-26-
<PAGE>
which violation has had or would reasonably be expected to have a Material
Adverse Effect on ATS or any of its Subsidiaries, and neither ATS nor any of its
Subsidiaries has received notice of any such violation.
4R. Environmental and Safety Matters. Except as set forth on the
--------------------------------
Environmental Schedule, to the knowledge of ATS, STS and their Subsidiaries:
----------------------
(i) ATS, STS and their Subsidiaries have complied and are
currently in compliance in all material respects with all Environmental and
Safety Requirements, and neither ATS, STS nor any of their Subsidiaries
have received any oral or written notice, report or other information
regarding any material liabilities (whether accrued, absolute, contingent,
unliquidated or otherwise) or any material corrective, investigatory or
remedial obligations arising under Environmental and Safety Requirements
and relating to any of them or their properties or facilities.
(ii) Without limiting the generality of the foregoing, ATS, STS,
and their Subsidiaries have obtained and complied with, and are currently
in compliance with, all material permits, licenses and other authorizations
that are required pursuant to any Environmental and Safety Requirements for
the occupancy of their properties or facilities or the operation of their
businesses.
(iii) Neither this Agreement nor the consummation of the
transactions contemplated by this Agreement will result in any liability
for site investigation or cleanup, or notification to or consent of any
government agencies or third parties under any Environmental and Safety
Requirements (including, without limitation, any so called "transaction-
triggered" or "responsible property transfer" laws and regulations).
(iv) None of the following exists at any property or facility
owned, occupied or operated by ATS, STS or any of their Subsidiaries:
(1) underground storage tanks, surface impoundments or disposal
areas;
(2) asbestos-containing materials in any form or condition; or
(3) materials or equipment containing polychlorinated biphenyls.
(v) Neither ATS, STS, any of their Subsidiaries nor any of their
respective predecessors has treated, stored, disposed of, arranged for or
permitted the disposal of, transported, handled or Released any substance
(including, without limitation, any hazardous substance) or owned, occupied
or operated any facility or property (and no such property or facility is
contaminated by any such substance), in a manner that has or would give
rise to any material liabilities including any liabilities for response
costs, corrective action costs, personal injury, property damage, natural
resource damages or attorneys fees pursuant to the
-27-
<PAGE>
Comprehensive Environmental Response, Compensation and Liability Act of
1980 ("CERCLA"), as amended, or any other Environmental and Safety
------
Requirements.
(vi) Without limiting the generality of the foregoing, no facts,
events or conditions relating to the past or present properties, facilities
or operations of ATS, STS or their Subsidiaries or any of their respective
predecessors shall prevent, hinder or limit continued compliance with
Environmental and Safety Requirements, give rise to any corrective,
investigatory or remedial obligations pursuant to Environmental and Safety
Requirements or give rise to any other liabilities (whether accrued,
absolute, contingent, unliquidated or otherwise) pursuant to Environmental
and Safety Requirements including, without limitation, those liabilities
relating to onsite or offsite Releases or threatened Releases of hazardous
materials, substances or wastes, personal injury, property damage or
natural resources damage.
(vii) Neither ATS, STS nor any of their Subsidiaries has, either
expressly or by operation of law, assumed or undertaken or otherwise become
subject to any liability or corrective, investigatory or remedial
obligation of any other Person relating to any Environmental and Safety
Requirements.
(viii) No Environmental Lien has attached to any property owned,
leased or operated by ATS, STS or any of their Subsidiaries.
(ix) ATS and STS have furnished to Purchaser all environmental
audits, reports and other material environmental documents relating to
the current and former operations and facilities of ATS, STS, and their
respective Subsidiaries and Affiliates, which are in their possession,
custody or control.
4S. Affiliated Transactions. Except as set forth on the attached
-----------------------
Affiliated Transactions Schedule, no officer, director, employee, stockholder or
--------------------------------
Affiliate of ATS or any Subsidiary or any individual related by blood, marriage
or adoption to any such individual or any entity in which any such Person or
individual owns any beneficial interest, is a party to any agreement, contract,
commitment or transaction with ATS or any Subsidiary or has any material
interest in any material property used by ATS or any Subsidiary.
4T. Solvency, etc. STS shall not become insolvent as a result of
--------------
the consummation of the transactions contemplated by this Agreement. STS is,
and after giving effect to the transactions contemplated by this Agreement shall
be, able to pay its debts as they become due, and STS's property now has, and
after giving effect to the transactions contemplated hereby shall have, a fair
salable value greater than the amounts required to pay its debts (including a
reasonable estimate of the amount of all contingent liabilities). STS has
adequate capital to carry on its businesses, and after giving effect to the
transactions contemplated by this Agreement, STS shall have adequate capital to
conduct its business. No transfer of property is being made and no obligation
is being incurred in connection with the transactions contemplated by this
Agreement with the intent to hinder, delay or defraud either present or future
creditors of the Company.
-28-
<PAGE>
4U. Investment Company; Public Utility Holding Company. Neither STS nor
--------------------------------------------------
any of its Subsidiaries is an "investment company" as defined under the
Investment Company Act of 1940, as amended, or a "holding company" or
"subsidiary and company" of a "holding company" or an "affiliate" of a "holding
company" as defined under the Public Utility Holding Company Act of 1935, as
amended.
4V. Margin Securities. Neither STS nor any of its Subsidiaries is
-----------------
engaged in the business of extending credit for the purpose of buying or
carrying "margin securities" within the meaning of any regulations promulgated
by the Board of Governors of the Federal Reserve Board, and no part of the
proceeds realized from the sale of the Note or Warrant shall be used to buy or
carry any such margin securities or used in violation of such regulations.
4W. Disclosure. To ATS's and STS's knowledge, neither this Agreement,
----------
nor any of the exhibits, schedules, attachments, written statements, documents,
certificates or other items prepared or supplied to Purchaser by or on behalf of
ATS or STS with respect to the transactions contemplated hereby contain any
untrue statement of a material fact or omit a material fact necessary to make
each statement contained herein or therein not misleading. There is no fact
which ATS or STS has not disclosed to Purchaser in writing and of which any of
its officers, directors or executive employees is aware and which has had or
would reasonably be expected to have a Material Adverse Effect on STS or ATS and
its Subsidiaries taken as a whole.
4X. Knowledge. As used in this Section 4, the terms "knowledge" or
---------
"aware" shall mean and include (i) the actual knowledge or awareness of ATS or
any of its Subsidiaries (which shall include the actual knowledge and awareness
of the officers, directors and key employees of ATS and its Subsidiaries and the
general managers of each facility of ATS and its Subsidiaries) and (ii) the
knowledge or awareness which a prudent business person would have obtained in
the conduct of his business after making reasonable inquiry and reasonable
diligence with respect to the particular matter in question.
Section 5. Transfer of Restricted Securities.
---------------------------------
5A. General Provisions. Restricted Securities are transferable only
------------------
pursuant to (i) public offerings registered under the Securities Act, (ii) Rule
144 or Rule 144A of the Securities and Exchange Commission (or any similar rule
or rules then in force) if such rule is available and (iii) subject to the
conditions specified in this Section 5, any other legally available means of
transfer.
5B. Opinion Delivery. In connection with the transfer of any Restricted
----------------
Securities (other than a transfer described in Section 5A(i) or (ii) above), the
holder thereof shall deliver written notice to ATS or STS (as appropriate)
describing in reasonable detail the transfer of proposed transfer, together with
an opinion of Kirkland & Ellis or other counsel which (to the reasonable
satisfaction of ATS or STS, as appropriate) is knowledgeable in securities law
matters to the effect that such transfer of Restricted Securities may be
effected without registration of such Restricted Securities under the Securities
Act. In addition, if the holder of the Restricted Securities delivers to ATS or
STS (as appropriate) an opinion of Kirkland & Ellis or such other counsel that
no subsequent
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<PAGE>
transfer of such Restricted Securities shall require registration under the
Securities Act, ATS or STS (as appropriate) shall promptly upon such
contemplated transfer deliver new certificates for such Restricted Securities
which do not bear the Securities Act legend set forth in Section 5E. If ATS or
STS (as appropriate) is not required to deliver new certificates for such
Restricted Securities not bearing such legend, the holder thereof shall not
transfer the same until the prospective transferee has confirmed to ATS or STS
(as appropriate) in writing its agreement to be bound by the conditions
contained in this Section 5.
5C. Rule 144A. Upon the request of Purchaser, ATS or STS (as
---------
appropriate) shall promptly supply to Purchaser or its prospective transferees
all information regarding ATS or STS (as appropriate) required to be delivered
in connection with a transfer pursuant to Rule 144A of the Securities and
Exchange Commission.
5D. Legend Removal. If any Restricted Securities become eligible for
--------------
sale pursuant to Rule 144(k), ATS or STS (as appropriate) shall, upon the
request of the holder of such Restricted Securities, remove the legend set forth
in Section 5E from the certificates for such Restricted Securities.
5E. Purchaser's Investment Representations. Purchaser hereby represents
--------------------------------------
that it is acquiring the Restricted Securities purchased hereunder or acquired
pursuant hereto for its own account with the present intention of holding such
securities for purposes of investment, and that it has no intention of selling
such securities in a public distribution in violation of the federal securities
laws or any applicable state securities laws; provided that nothing contained
herein shall prevent Purchaser and subsequent holders of Restricted Securities
from transferring such securities in compliance with the provisions of Section 5
hereof. Each certificate or instrument representing Restricted Securities shall
be imprinted with a legend in substantially the following form:
"The securities represented by this certificate were originally issued
on _________ ___, 2000 and have not been registered under the Securities
Act of 1933, as amended. The transfer of the securities represented by
this certificate is subject to the conditions specified in the Note and
Warrant Purchase Agreement, dated as of July 7, 2000 and as amended and
modified from time to time, between the issuer (the "Company") and
certain investors, and the Company reserves the right to refuse the
transfer of such securities until such conditions have been fulfilled
with respect to such transfer. A copy of such conditions shall be
furnished by the Company to the holder hereof upon written request and
without charge."
Section 6. Terms Applicable to the Note.
----------------------------
6A. Events of Default. For purposes of this Agreement and the Notes, an
-----------------
"Event of Default" shall be deemed to have occurred if
----------------
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<PAGE>
(i) STS fails to pay (either in cash or by issuance of PIK Notes)
when due and payable (whether at maturity or otherwise) the full amount of
interest then accrued on the Notes, or the full amount of any principal payment
on the Notes or any other amount due and payable under the terms of this
Agreement, the Notes or the Security Agreement and any such amounts remain
unpaid for more than five Business Days;
(ii) STS or any Subsidiary fails to perform or observe any other
provision contained in this Agreement, the Notes or the Security Agreement, and
such failure is not cured within 30 days after written notice thereof;
(iii) any representation, warranty or information contained in this
Agreement, the Notes or the Security Agreement relating to STS or its
Subsidiaries or required to be furnished by STS to Purchaser hereunder or
thereunder, or any writing furnished by STS to Purchaser, is false or misleading
in any material respect on the date made or furnished;
(iv) STS or any of its Subsidiaries makes an assignment for the
benefit of creditors or admits in writing its inability to pay its debts
generally as they become due; or an order, judgment or decree is entered
adjudicating STS or any of its Subsidiaries bankrupt or insolvent; or any order
for relief with respect to STS or any of its Subsidiaries is entered under the
Federal Bankruptcy Code; or STS or any of its Subsidiaries petitions or applies
to any tribunal for the appointment of a custodian, trustee, receiver or
liquidator of STS or any of its Subsidiaries, or of any substantial part of the
assets of STS or any of its Subsidiaries, or commences any proceeding (other
than a proceeding for the voluntary liquidation and dissolution of any
Subsidiary) relating to STS or any of its Subsidiaries under any bankruptcy
reorganization, arrangement, insolvency, readjustment of debt, dissolution or
liquidation law of any jurisdiction; or any such petition or application is
filed, or any such proceeding is commenced, against STS or any of its
Subsidiaries and either (A) STS or any of its Subsidiaries by any act indicates
its approval thereof, consent thereto or acquiescence therein or (B) such
petition, application or proceeding is not dismissed within 60 days;
(v) a judgment in excess of $300,000 is rendered against STS or any
of its Subsidiaries and, within 60 days after entry thereof, such judgment is
not discharged in full or execution thereof stayed pending appeal, or within 60
days after the expiration of any such stay, such judgment is not discharged in
full; or
(vi) STS or any of its Subsidiaries defaults in the performance of
any obligation if the effect of such default is to cause an amount exceeding
$250,000 of Indebtedness to become due prior to its stated maturity or to permit
the holder or holders of such obligation to cause an amount exceeding $250,000
to become due prior to its stated maturity; provided that with respect to Senior
Debt, an Event of Default shall occur under this clause (vi) only if all or a
portion of the Senior Debt has been accelerated; or
(vii) a Change in Control occurs.
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<PAGE>
The foregoing shall constitute Events of Default whatever the reason
or cause for any such Event of Default and whether it is voluntary or
involuntary or is effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body.
6B. Consequences of Events of Default.
---------------------------------
(i) If any Event of Default has occurred and is continuing, the
interest rate on the Notes shall increase immediately by an increment of
two percentage point(s) to the extent permitted by law. Any increase of the
interest rate resulting from the operation of this subparagraph shall
terminate as of the close of business on the date on which no Events of
Default exist (subject to subsequent increases pursuant to this
subparagraph).
(ii) If an Event of Default of the type described in Section
6A(iv) has occurred, the aggregate principal amount of the Notes (together
with all accrued interest thereon and all other amounts due and payable
with respect thereto) shall become immediately due and payable without any
action on the part of Purchaser, and STS shall immediately pay to Purchaser
all amounts due and payable with respect to the Notes.
(iii) If any Event of Default (other than under paragraph 6A(iv))
has occurred and is continuing, Purchaser may declare all or any portion of
the outstanding principal amount of the Notes (together with all accrued
interest thereon and all other amounts due and payable with respect
thereto) to be immediately due and payable and may demand immediate payment
of all or any portion of the outstanding principal amount of the Notes
(together with all such other amounts then due and payable) owned by
Purchaser.
(iv) Purchaser shall also have any other rights which Purchaser
may have been afforded under this Agreement or any other contract or
agreement (including, without limitation, the Security Agreement) at any
time and any other rights which Purchaser may have pursuant to applicable
law. All rights and remedies of Purchaser under this Agreement, the Notes
and the Security Agreement are subject to the provisions of the
Subordination Agreement.
(v) STS hereby waives diligence, presentment, protest and
demand and notice of protest and demand, dishonor and nonpayment of the
Notes, and expressly agrees that the Notes, or any payment thereunder, may
be extended from time to time and that Purchaser may accept security for
the Notes or release security for the Notes, all without in any way
affecting the liability of STS under this Agreement, the Notes or the
Security Agreement.
6C. Business Days. If any payment on the Notes is due, or any time
-------------
period for giving notice or taking action expires, on a day which is a Saturday,
Sunday or legal holiday in the State of Indiana (any other day being hereinafter
sometimes referred to as a "Business Day"), the payment shall be due and payable
------------
on, and the time period shall automatically be extended to, the next
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<PAGE>
Business Day immediately following such Saturday, Sunday or legal holiday, and
interest shall continue to accrue at the required rate hereunder until any such
payment is made.
6D. Usury Laws. It is the intention of STS and Purchaser to conform
----------
strictly to all applicable usury laws now or hereafter in force, and any
interest payable under the Notes shall be subject to reduction to the amount not
in excess of the maximum legal amount allowed under the applicable usury laws as
now or hereafter construed by the courts having jurisdiction over such matters.
If the maturity of the Notes is accelerated by reason of an election by
Purchaser resulting from an Event of Default or otherwise, then earned interest
may never include more than the maximum amount permitted by law, computed from
the date hereof until payment, and any interest in excess of the maximum amount
permitted by law shall be canceled automatically and, if theretofore paid, shall
at the option of Purchaser either be rebated to STS or credited on the principal
amount of the Notes, or if the Notes has been paid, then the excess shall be
rebated to STS. The aggregate of all interest (whether designated as interest,
service charges, points or otherwise) contracted for, chargeable, or receivable
under the Notes shall under no circumstances exceed the maximum legal rate upon
the unpaid principal balance of the Notes remaining unpaid from time to time. If
such interest does exceed the maximum legal rate, it shall be deemed a mistake
and such excess shall be canceled automatically and, if theretofore paid,
rebated to STS or credited on the principal amount of the Notes, or if the Notes
has been repaid, then such excess shall be rebated to STS.
6E. Conversion.
----------
(i) Conversion Procedure.
--------------------
(A) At any time and from time to time prior to the repayment of
the Notes in full, the holder of the Notes may convert all or any portion
of the outstanding principal amount of the Notes into a number of shares of
Conversion Stock determined by dividing the principal amount designated by
the holder thereof to be converted, by the Conversion Price then in effect;
provided that the Notes shall not be convertible into Conversion Stock to
the extent (if any) that the number of shares of Conversion Stock to be
issued upon any conversion of the Notes plus the number of shares of
Conversion Stock which have been issued upon any prior partial conversion
of the Notes exceeds 80% (or such percentage as is adjusted under Section
6E(ii)(C) below) of the Common Stock outstanding on a fully diluted basis
assuming exercise and conversion of all outstanding Options and Convertible
Securities (including the Notes except to the extent limited by this
proviso).
(B) Except as otherwise expressly provided herein, each
conversion of the Notes shall be deemed to have been effected as of the
close of business on the date on which such Notes have been surrendered for
conversion at the principal office of STS. At such time as such conversion
has been effected, the rights of the holder of the Notes as such holder to
the extent of the conversion shall cease, and the Person or Persons in
whose name or names any certificate or certificates for shares of
Conversion Stock are to be issued upon such conversion shall be deemed to
have become the holder or holders of record of the shares of Conversion
Stock represented thereby.
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<PAGE>
(C) Notwithstanding any other provision hereof, if a conversion
of any portion of the Notes is to be made in connection with a registered
public offering or a sale of STS, the conversion of any portion of the
Notes may, at the election of the holder thereof, be conditioned upon the
consummation of the public offering or the sale of STS, in which case such
conversion shall not be deemed to be effective until the consummation of
such transaction.
(D) As soon as possible after a conversion has been effected
(but in any event within five business days in the case of clause (1)
below), STS shall deliver to the converting holder:
(1) a certificate or certificates representing the number of
shares of Conversion Stock issuable by reason of such
conversion in such name or names and such denomination or
denominations as the converting holder has specified;
(2) payment in an amount equal to the sum of all accrued
interest with respect to the principal amount converted,
which has not been paid prior thereto (either in cash or by
issuance of PIK Notes); and
(3) a new Note representing any portion of the principal amount
which was represented by the Note(s) surrendered to STS in
connection with such conversion but which was not converted.
(E) The issuance of certificates for shares of Conversion Stock
upon conversion of the Notes shall be made without charge to the holder
hereof for any issuance tax in respect thereof or other cost incurred by
STS in connection with such conversion and the related issuance of shares
of Conversion Stock. Upon conversion of the Notes, STS shall take all such
actions as are necessary in order to insure that the Conversion Stock
issuable with respect to such conversion shall be validly issued, fully
paid and nonassessable.
(F) STS shall not close its books against the transfer of
Conversion Stock issued or issuable upon conversion of the Notes in any
manner which interferes with the timely conversion of the Notes. STS shall
assist and cooperate with any holder of the Notes required to make any
governmental filings or obtain any governmental approval prior to or in
connection with the conversion of the Notes (including, without limitation,
making any filings required to be made by STS).
(G) STS shall at all times reserve and keep available out of its
authorized but unissued shares of Conversion Stock, solely for the purpose
of issuance upon the conversion of the Notes, such number of shares of
Conversion Stock issuable upon the conversion of all outstanding Notes. All
shares of Conversion Stock which are so issuable shall, when issued, be
duly and validly issued, fully paid and nonassessable and free from all
taxes, liens and charges. STS shall take all such actions as may be
necessary to assure that all such shares
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<PAGE>
of Conversion Stock may be so issued without violation of any applicable
law or governmental regulation or any requirements of any domestic
securities exchange upon which shares of Conversion Stock may be listed
(except for official notice of issuance which shall be immediately
delivered by STS upon each such issuance).
(ii) Conversion Price.
----------------
(A) The initial Conversion Price shall be $0.66666. In order to
prevent dilution of the conversion rights granted under the Notes, the
Conversion Price shall be subject to adjustment from time to time pursuant
to this Section 6E(ii).
(B) If and whenever on or after the date of the Closing STS issues or
sells, or in accordance with Section 6E(iii) is deemed to have issued or
sold, any shares of STS Common Stock for a consideration per share less
than the Conversion Price in effect immediately prior to such time, then
immediately upon such issue or sale the Conversion Price shall be reduced
to the Conversion Price determined by dividing (A) an amount equal to the
sum of (x) the product derived by multiplying the Conversion Price in
effect immediately prior to such issue or sale by the number of shares of
STS Common Stock Deemed Outstanding immediately prior to such issue or
sale, plus (y) the consideration, if any, received or deemed received by
STS upon such issue on sale, by (B) the number of shares of STS Common
Stock Deemed Outstanding immediately after such issue or sale.
(C) In addition to the other adjustments to the Conversion Price to
be made hereunder, if STS's EBITDA for the fiscal year ended on December
31, 2000, is less than $7,300,000, the Conversion Price shall be reduced
automatically to the extent necessary to increase the number of shares of
Conversion Stock issuable upon conversion of the Notes according to the
following table:
<TABLE>
<CAPTION>
Increase in the Number of
Shares of Conversion Stock Issuable
2000 EBITDA upon Conversion of the Notes
------------------------------------------------ -----------------------------------
<S> <C>
Less than $7,300,000 but more than $7,039,999.99 1% of Fully-Diluted Common
Less than $7,040,000 but more than $6,779,999.99 2% of Fully-Diluted Common
Less than $6,780,000 but more than $6,519,999.99 3% of Fully-Diluted Common
Less than $6,520,000 but more than $6,259,999.99 4% of Fully-Diluted Common
Less than $6,260,000 5% of Fully-Diluted Common
</TABLE>
For purposes of this Agreement, "EBITDA" with respect to STS means STS's and its
------
Subsidiaries' consolidated net income for the fiscal year ended December 31,
2000, plus all fees and expenses incurred and paid by STS and treated as current
expenses (including without limitation fees and expenses of legal counsel,
accountants and other consultants) in connection with the negotiation and
execution of this Agreement and the consummation of the transactions
contemplated by this Agreement, plus the amount of interest expense, income
taxes and depreciation and amortization expense for such fiscal year, all
determined in accordance with generally accepted accounting principles,
consistently applied, and "Fully Diluted Common" means the STS Common Stock on a
--------------------
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<PAGE>
fully-diluted basis assuming exercise and conversion of all outstanding Options
and Convertible Securities, including all of the Notes. If any adjustment to
the Conversion Price is made pursuant to this Section 6E(ii)(C), the 80% limit
set forth in Section 6E(i)(A) above shall be increased by the applicable number
of percentage points set forth in the table above. Notwithstanding the
foregoing, the calculation of EBITDA under this Section 6E(ii)(C) shall not take
into account expenses incurred in connection with the transactions contemplated
under this Agreement.
(iii) Effect on Conversion Price of Certain Events. For purposes of
--------------------------------------------
determining the adjusted Conversion Price under Section 6E(ii), the
following shall be applicable:
(A) Issuance of Rights or Options. If STS in any manner grants or
-----------------------------
sells any Options and the price per share for which STS Common Stock is
issuable upon the exercise of such Options, or upon conversion or exchange
of any Convertible Securities issuable upon exercise of such Options, is
less than the Conversion Price in effect immediately prior to the time of
the granting or sale of such Options, then the total maximum number of
shares of STS Common Stock issuable upon the exercise of such Options, or
upon conversion or exchange of the total maximum amount of such Convertible
Securities issuable upon the exercise of such Options, shall be deemed to
be outstanding and to have been issued and sold by STS at the time of the
granting or sale of such Option for such price per share. For purposes of
this paragraph, the "price per share for which STS Common Stock is issuable
upon exercise of such Options or upon conversion or exchange of such
Convertible Securities" is determined by dividing (A) the total amount, if
any, received or receivable by STS as consideration for the granting or
sale of such Options, plus the minimum aggregate amount of additional
consideration payable to STS upon the exercise of all such Options, plus in
the case of such Options which relate to Convertible Securities, the
minimum aggregate amount of additional consideration, if any, payable to
STS upon the issuance or sale of such Convertible Securities and the
conversion or exchange thereof, by (B) the total maximum number of shares
of STS Common Stock issuable upon the exercise of such Options or upon the
conversion or exchange of all such Convertible Securities issuable upon the
exercise of such Options. No adjustment of the Conversion Price shall be
made upon the actual issuance of such STS Common Stock or of such
Convertible Securities upon the exercise of such Options or upon the actual
issuance of such STS Common Stock upon conversion or exchange of such
Convertible Securities.
(B) Issuance of Convertible Securities. If STS in any manner issues
----------------------------------
or sells any Convertible Securities and the price per share for which STS
Common Stock is issuable upon conversion or exchange thereof is less than
the Conversion Price in effect immediately prior to the time of such issue
or sale, then the maximum number of shares of STS Common Stock issuable
upon conversion or exchange of all such Convertible Securities shall be
deemed to be outstanding and to have been issued and sold by STS at the
time of the issuance or sale of such Convertible Securities for such price
per share. For the purposes of this paragraph, the "price per share for
which STS Common Stock is issuable upon conversion or exchange thereof" is
determined by dividing (A) the total amount received or receivable by STS
as consideration for the issue or sale of such Convertible Securities, plus
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<PAGE>
the minimum aggregate amount of additional consideration, if any, payable
to STS upon the conversion or exchange thereof, by (B) the total maximum
number of shares of STS Common Stock issuable upon the conversion or
exchange of all such Convertible Securities. No adjustment of the
Conversion Price shall be made upon the actual issue of such STS Common
Stock upon conversion or exchange of such Convertible Securities, and if
any such issue or sale of such Convertible Securities is made upon exercise
of any Options for which adjustments of the Conversion Price had been or
are to be made pursuant to other provisions of this Section 6E(iii), no
further adjustment of the Conversion Price shall be made by reason of such
issue or sale.
(C) Change in Option Price or Conversion Rate. If the purchase price
-----------------------------------------
provided for in any Option, the additional consideration (if any) payable
upon the issue, conversion or exchange of any Convertible Security, or the
rate at which any Convertible Security is convertible into or exchangeable
for STS Common Stock changes at any time, the Conversion Price in effect at
the time of such change shall be adjusted immediately to the Conversion
Price which would have been in effect at such time had such Option or
Convertible Security originally provided for such changed purchase price,
additional consideration or changed conversion rate, as the case may be, at
the time initially granted, issued or sold. For purposes of this Section
6E(iii)(C), if the terms of any Option or Convertible Security which was
outstanding as of the date of the Closing are changed in the manner
described in the immediately preceding sentence, then such Option or
Convertible Security and the Common Stock deemed issuable upon exercise,
conversion or exchange thereof shall be deemed to have been issued as of
the date of such change; provided that no such change shall at any time
cause the Conversion Price hereunder to be increased.
(D) Treatment of Expired Options and Unexercised Convertible
--------------------------------------------------------
Securities. Upon the expiration of any Option or the termination of any
----------
right to convert or exchange any Convertible Securities without the
exercise of such Option or right, the Conversion Price then in effect
hereunder shall be adjusted immediately to the Conversion Price which would
have been in effect at the time of such expiration or termination had such
Option or Convertible Securities, to the extent outstanding immediately
prior to such expiration or termination, never been issued. For purposes of
this Section 6E(iii)(D), the expiration or termination of any Option or
Convertible Security which was outstanding as of the date of the Closing
shall not cause the Exercise Price hereunder to be adjusted unless, and
only to the extent that, a change in the terms of such Option or
Convertible Security caused it to be deemed to have been issued after the
date of the Closing.
(E) Calculation of Consideration Received. If any STS Common Stock,
-------------------------------------
Options or Convertible Securities are issued or sold or deemed to have been
issued or sold for cash, the consideration received therefor shall be
deemed to be the net amount received by STS therefor. In case any STS
Common Stock, Options or Convertible Securities are issued or sold for a
consideration other than cash, the amount of the consideration other than
cash received by STS shall be the fair value of such consideration, except
where such consideration consists of securities, in which case the amount
of consideration received by
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<PAGE>
STS shall be the Market Price thereof as of the date of receipt. In case
any STS Common Stock, Options or Convertible Securities are issued to the
owners of the non-surviving entity in connection with any merger in which
STS is the surviving entity, the amount of consideration therefor shall be
deemed to be the fair value of such portion of the net assets and business
of the non-surviving entity as is attributable to such STS Common Stock,
Options or Convertible Securities, as the case may be. The fair value of
any consideration other than cash and securities shall be determined
jointly by STS and the holders of a majority of the outstanding principal
amount of the Notes. If such parties are unable to reach agreement within a
reasonable period of time, such fair value shall be determined by an
appraiser jointly selected by STS and the holders of a majority of the
outstanding principal amount of the Notes. The determination of such
appraiser shall be final and binding upon the parties, and the fees and
expenses of such appraiser shall be borne by STS.
(F) Integrated Transactions. In case any Option is issued in
-----------------------
connection with the issue or sale of other securities of STS, together
comprising one integrated transaction in which no specific consideration is
allocated to such Options by the parties thereto, the Options shall be
deemed to have been issued without consideration.
(G) Treasury Shares. The number of shares of STS Common Stock Deemed
---------------
Outstanding at any given time does not include shares owned or held by or
for the account of STS or any Subsidiary, and the disposition of any shares
so owned or held shall be considered an issue or sale of Common Stock.
(H) Record Date. If STS takes a record of the holders of Common
-----------
Stock for the purpose of entitling them (1) to receive a dividend or other
distribution payable in STS Common Stock, Options or in Convertible
Securities or (2) to subscribe for or purchase STS Common Stock, Options or
Convertible Securities, then such record date shall be deemed to be the
date of the issue or sale of the shares of STS Common Stock deemed to have
been issued or sold upon the declaration of such dividend or the making of
such other distribution or the date of the granting of such right of
subscription or purchase, as the case may be.
(iv) Subdivision or Combination of STS Common Stock. If STS at any
----------------------------------------------
time subdivides (by any stock split, stock dividend or otherwise) one or
more classes of outstanding shares of STS Common Stock into a greater
number of shares, the Conversion Price in effect immediately prior to such
subdivision shall be proportionately reduced, and if STS at any time
combines (by reverse stock split or otherwise) one or more classes of
outstanding shares of STS Common Stock into a smaller number of shares, the
Conversion Price in effect immediately prior to such combination shall be
proportionately increased.
(v) Reorganization, Reclassification, Consolidation, Merger or Sale.
---------------------------------------------------------------
Any recapitalization, reorganization, reclassification, consolidation,
merger, sale of all or substantially all of STS's assets or other
transaction, which in each case is effected in such a manner that holders
of' STS Common Stock are entitled to receive (either directly or upon
subsequent liquidation) stock, securities or assets with respect to or in
exchange for STS
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<PAGE>
Common Stock is referred to herein as an "Organic Change." Prior to the
--------------
consummation of any Organic Change, STS shall make lawful and adequate
provision (in form and substance satisfactory to the holders of a majority
of the principal amount of the Notes then outstanding) to insure that the
holders of the Notes shall thereafter have the right to acquire and
receive, in lieu of or addition to (as the case may be) shares of
Conversion Stock immediately theretofore acquirable and receivable upon the
conversion of such holder's Notes, such shares of stock, securities or
assets as may be issued or payable with respect to or in exchange for the
number of shares of Conversion Stock immediately theretofore acquirable and
receivable upon conversion of such holder's Note had such Organic Change
not taken place. In any such case, appropriate provision (in form and
substance satisfactory to the holders of a majority of the principal amount
of the Notes then outstanding) shall be made with respect to such holder's
rights and interests to insure that the provisions of this Section 6E(v)
and Sections 6F and 6G shall thereafter be applicable in relation to any
shares of stock, securities or assets thereafter deliverable upon the
conversion of the Notes (including, in the case of any such consolidation,
merger or sale in which the successor entity or purchasing entity is other
than STS, an immediate adjustment of the Conversion Price to the value for
the STS Common Stock reflected by the terms of such consolidation, merger
or sale, and a corresponding immediate adjustment in the number of shares
of Conversion Stock acquirable and receivable upon conversion of the Notes,
if the value so reflected is less than the Conversion Price in effect
immediately prior to such consolidation, merger or sale). STS shall not
effect any such consolidation, merger or sale, unless prior to the
consummation thereof, the successor entity (if other than STS) resulting
from consolidation or merger or the entity purchasing such assets assumes
by written instrument (in form reasonably satisfactory to the holders of a
majority of the principal amount of the Notes then outstanding), the
obligation to deliver to each such holder such shares of stock, securities
or assets as, in accordance with the foregoing provisions, such holder may
be entitled to acquire.
(vi) Certain Events. If any event occurs of the type contemplated
--------------
by the provisions of this Section 6E but not expressly provided for by such
provisions (including, without limitation, the granting of stock
appreciation rights, phantom stock rights or other rights with equity
features), then STS's board of directors shall make an appropriate
adjustment in the Conversion Price so as to protect the rights of the
holders of the Notes; provided that no such adjustment shall increase the
Conversion Price as otherwise determined pursuant to this Section 6E or
decrease the number of shares of Conversion Stock issuable upon conversion
of the Notes then outstanding.
(vii) Notices.
-------
(A) Immediately upon any adjustment of the Conversion Price, STS
shall send written notice thereof to the holder of the Notes, setting forth
in reasonable detail and certifying the calculation of such adjustment.
(B) STS shall send written notice to the holder of the Notes at
least 20 days prior to the date on which STS closes its books or takes a
record (A) with respect to any
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<PAGE>
dividend or distribution upon the STS Common Stock, (B) with respect to any
pro rata subscription offer to holders of STS Common Stock or (C) for
determining rights to vote with respect to any Organic Change, dissolution
or liquidation.
(C) STS shall also give at least 20 days prior written notice of the
date on which any Organic Change, dissolution or liquidation shall take place.
6F. Liquidating Dividends. If STS declares a dividend upon the
---------------------
STS Common Stock payable otherwise than in cash out of earnings or earned
surplus (determined in accordance with generally accepted accounting principles,
consistently applied) except for a stock dividend payable in shares of STS
Common Stock (a "Liquidating Dividend"), then STS shall pay to the holders of
--------------------
the Notes at the time of payment thereof the Liquidating Dividend which would
have been paid to the holder of the Notes on the Conversion Stock had the Notes
been fully converted immediately prior to the date on which a record is taken
for such Liquidating Dividend, or, if no record is taken, the date as of which
the record holders of STS Common Stock entitled to such dividends are to be
determined.
6G. Purchase Rights. If at any time STS grants, issues or sells any
---------------
Options, Convertible Securities or rights to purchase stock, warrants,
securities or other property pro rata to the record holders of any class of STS
Common Stock (the "Purchase Rights"), then each holder of the Notes shall be
---------------
entitled to acquire, upon the terms applicable to such Purchase Rights, the
aggregate Purchase Rights which such holder could have acquired if such holder
had held the number of shares of Conversion Stock acquirable upon conversion of
such holder's Note immediately before the date on which a record is taken for
the grant, issuance or sale of such Purchase Rights, or, if no such record is
taken, the date as of which the record holders of STS Common Stock are to be
determined for the grant, issue or sale of such Purchase Rights.
Section 7. Definitions.
-----------
7A. Definitions. For the purposes of this Agreement, the following terms
-----------
have the meanings set forth below:
"Additional Shares" has the meaning set forth in Section 1D.
-----------------
"Affiliate" of any particular Person means any other Person controlling,
---------
controlled by or under common control with such particular Person, where
"control" means the possession, directly or indirectly, of the power to direct
the management and policies of a Person whether through the ownership of voting
securities, contract or otherwise; provided, that notwithstanding the foregoing,
Purchaser shall not be deemed an Affiliate of either ATS or STS.
"Agent" has the meaning set forth in Section 2D.
-----
"Asche Stock Purchase Agreement" has the meaning set forth in Section
------------------------------
1D.
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"Assured Obligations" shall have the meaning set forth in the definition
-------------------
of "Guaranty Equivalent."
"ATS" has the meaning set forth in the preamble.
---
"ATS Common Stock" means, collectively, the ATS common stock, par value
$.0001 per share, and any capital stock of any class of ATS common stock
hereafter authorized which is not limited to a fixed sum or percentage of par or
stated value in respect to the rights of the holders thereof to participate in
dividends or in the distribution of assets upon any liquidation, dissolution or
winding up of ATS.
"ATS Credit Agreement" has the meaning set forth in Section 2G.
--------------------
"Business Day" has the meaning set forth in Section 6C.
------------
"Capital Expenditures" of any Person shall mean, for any period, all
--------------------
expenditures (whether paid in cash or accrued as liabilities during such period)
of such Person during such period which would be classified as capital
expenditures in accordance with GAAP (including, without limitation,
expenditures for maintenance and repairs which are capitalized, and Capitalized
Leases to the extent an asset is recorded in connection therewith in accordance
with GAAP).
"Capitalized Lease" shall mean at any time any lease which is, or is
-----------------
required under GAAP to be, capitalized on the balance sheet of the lessee at
such time, and "Capitalized Lease Obligation" of any Person at any time shall
----------------------------
mean the aggregate amount which is, or is required under GAAP to be, reported at
such time as a liability on the balance sheet of such Person as lessee under a
Capitalized Lease.
"Cash Equivalent Investments" shall mean any of the following, to the
---------------------------
extent acquired for investment and not with a view to achieving trading profits:
(a) obligations fully backed by the full faith and credit of the United States
of America maturing not in excess of six months from the date of acquisition,
(b) commercial paper maturing not in excess of six months from the date of
acquisition and rated "P-1" by Moody's Investors Service or "A-1" by Standard &
Poor's Corporation on the date of acquisition, and (c) the following obligations
of any domestic commercial bank having capital and surplus in excess of
$1,000,000,000, which has, or the holding company of which has, a commercial
paper rating meeting the requirements specified in clause (b) above: (i) time
deposits, certificates of deposit and acceptances maturing not in excess of six
months from the date of acquisition, or (ii) repurchase obligations with a term
of not more than seven days for underlying securities of the type referred to in
clause (a) above.
"Change of Control" shall mean that at any time Purchaser or ATS shall not
-----------------
have the sole right to vote at least 51% of the shares of the capital stock of
STS (assuming for purposes of such calculation that all then-outstanding
options, warrants, conversion rights or other rights held by any Person other
than Purchaser or ATS which may in any circumstances give such other Person the
right to acquire shares of capital stock are exercised at such time by such
other Person (so that all shares
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of capital stock potentially issuable pursuant to such rights shall be deemed
outstanding and held by such other Person for purposes of such calculation),
regardless of whether such rights are in fact then exercisable or whether any
conditions to such exercise are then met).
"Charter Amendments" has the meaning set forth in Section 2N.
------------------
"Closing" has the meaning set forth in Section 1C.
-------
"Closing Fee" has the meaning set forth in Section 8B.
-----------
"Controlled Group Member" shall mean each trade or business (whether or not
-----------------------
incorporated) which together with STS is treated as a single employer under
Sections 4001(a)(14) or 4001(b)(1) of ERISA or Sections 414(b), (c), (m) or (o)
of the IRC.
"Conversion Price" has the meaning as used in Section 6E.
----------------
"Conversion Stock" means shares of STS's authorized but unissued STS Common
----------------
Stock; provided that if there is a change such that the securities issuable upon
conversion of the Notes are issued by an entity other than STS or there is a
change in the class of securities so issuable, then the term "Conversion Stock"
shall mean one share of the security issuable upon conversion of these Notes if
such security is issuable in shares, or shall mean the smallest unit in which
such security is issuable if such security is not issuable in shares.
"Convertible Securities" means, with respect to an entity, any stock or
----------------------
securities (directly or indirectly) convertible into or exchangeable for such
entity's Common Stock.
"EBITDA" has the meaning set forth in Section 6E(ii)(C).
------
"Environmental and Safety Requirements" shall mean all federal, state,
-------------------------------------
local and foreign statutes, regulations, ordinances and other provisions having
the force of effect of law, all judicial and administrative orders and
determinations, all contractual obligations and all common law concerning public
health and safety, worker health and safety, and pollution or protection of the
environment, including without limitation all those relating to the presence,
use, production, generation, handling, transportation, treatment, storage,
disposal, distribution, labeling, testing, processing, discharge, release,
threatened release, control, or cleanup of any hazardous materials, substances
or wastes, chemical substances or mixtures, pesticides, pollutants,
contaminants, toxic chemicals, petroleum products or byproducts, asbestos,
polychlorinated biphenyls, noise or radiation, each as amended and as now or
hereafter in effect.
"Environmental Laws" has the meaning set forth in Section 4Q.
------------------
"Environmental Lien" has the meaning set forth in Section 4R(i).
------------------
"ERISA" has the meaning set forth in Section 4P(i).
-----
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<PAGE>
"Event of Default" has the meaning set forth in Section 6A.
----------------
"Fully Diluted Common" has the meaning set forth in Section 6E(ii)(C).
--------------------
"GAAP" shall mean United States generally accepted accounting principles,
----
as in effect from time to time.
"Governmental Actions" has the meaning set forth in Section 3K.
--------------------
"Governmental Authority " shall mean any government or political
-----------------------
subdivision or any agency, authority, bureau, central bank, commission,
department or instrumentality of either, or any court, tribunal, grand jury or
arbitrator, in each case whether foreign or domestic.
"Guaranty Equivalent": A Person (the "Deemed Guarantor") shall be deemed
------------------- ----------------
to be subject to a Guaranty Equivalent in respect of any indebtedness,
obligation or liability (the "Assured Obligation") of another Person (the
------------------
"Deemed Obligor") if the Deemed Guarantor directly or indirectly guarantees,
--------------
becomes surety for, endorses, assumes, agrees to indemnify the Deemed Obligor
against, or otherwise agrees, becomes or remains liable (contingently or
otherwise) for, such Assured Obligation other than endorsements of instruments
in the ordinary course of business. Without limitation, a Guaranty Equivalent
shall be deemed to exist if a Deemed Guarantor agrees, becomes or remains liable
(contingently or otherwise), directly or indirectly: (a) to purchase or assume,
or to supply funds for the payment, purchase or satisfaction of, an Assured
Obligation, (b) to make any loan, advance, capital contribution or other
investment in, or to purchase or lease any property or services from, a Deemed
Obligor (i) to maintain the solvency of the Deemed Obligor, (ii) to enable the
Deemed Obligor to meet any other financial condition, (iii) to enable the Deemed
principal to satisfy any Assured Obligation or to make any Stock Payment or any
other payment, or (iv) to assure the holder of such Assured Obligation against
loss, (c) to purchase or lease property or services from the Deemed Obligor
regardless of the non-delivery of or failure to furnish of such property or
services, (d) in a transaction having the characteristics of a take-or-pay or
throughput contract or as described in paragraph 6 of FASB Statement of
Financial Accounting Standards No. 47, or (e) in respect of any other
transaction the effect of which is to assure the payment or performance (or
payment of damages or other remedy in the event of nonpayment or nonperformance)
of any Assured Obligation.
"Indebtedness" of a Person shall mean the following (without duplication):
------------
(i) all obligations on account of money borrowed by, or credit extended to or on
behalf of, or for or on account of deposits with or advances to, such Person;
(ii) all obligations of such Person evidenced by bonds, debentures, notes or
similar instruments; (iii) all obligations of such Person for the deferred
purchase price of property or services other than trade payables incurred in the
ordinary course of business and on terms customary in the trade; (iv) all
obligations secured by a Lien on property owned by such Person (whether or not
assumed); and all obligations of such Person under Capitalized Leases (without
regard to any limitation of the rights and remedies the holder of such Lien or
the lessor under such Capitalized Lease to repossession or sale of such
property; (v) the face amount of all letters of credit issued for the account of
such Person and, without duplication, the
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<PAGE>
unreimbursed amount of all drafts drawn thereunder, and all other obligations of
such Person associated with such letters of credit or draws thereon; (vi) all
obligations of such Person in respect of acceptances or similar obligations
issued for the account of such Person; (vii) all obligations of such Person
under a product financing or similar arrangement described in paragraph 8 of
FASB Statement of Accounting Standards No. 49 or any similar requirement of
GAAP; and (viii) all obligations of such Person under any interest rate or
currency protection agreement, interest rate or currency future, interest rate
or currency option, interest rate or currency swap or cap or other interest rate
or currency hedge agreement.
"Indemnified Liabilities" has the meaning set forth in Section 8Q(i).
-----------------------
"Indemnitees" has the meaning set forth in Section 8Q(i).
-----------
"Intellectual Property Rights" means all (i) patents, patent
----------------------------
applications, patent disclosures and inventions, (ii) trademarks, service marks,
trade dress, trade names, logos and corporate names and registrations and
applications for registration thereof together with all of the goodwill
associated therewith, (iii) copyrights (registered or unregistered) and
copyrightable works and registrations and applications for registration thereof,
(iv) mask works and registrations and applications for registration thereof, (v)
computer software, data, data bases and documentation thereof, (vi) trade
secrets and other confidential information (including, without limitation,
ideas, formulas, compositions, inventions (whether patentable or unpatentable
and whether or not reduced to practice), know-how, manufacturing and production
processes and techniques, research and development information, drawings,
specifications, designs, plans, proposals, technical data, copyrightable works,
financial and marketing plans and customer and supplier lists and information),
(vii) other intellectual property rights and (viii) copies and tangible
embodiments thereof (in whatever form or medium).
"Intercompany Loan" shall mean a loan on or promptly following the Closing
-----------------
by STS to ATS in an amount not to exceed $2,250,000.
"IRC" means the Internal Revenue Code of 1986, as amended, and any
---
reference to any particular IRC section shall be interpreted to include any
revision of or successor to that section regardless of how numbered or
classified.
"IRS" means the United States Internal Revenue Service.
---
"Latest Balance Sheet" has the meaning set forth in Section 4E(ii).
--------------------
"Law" shall mean any law (including common law), constitution, statute,
---
treaty, convention, regulation, rule, ordinance, order, injunction, writ, decree
or award of any Governmental Authority.
"Liens" means any mortgage, pledge, security interest, encumbrance, lien
-----
or charge of any kind (including, without limitation, any conditional sale or
other title retention agreement or lease in the nature thereof), any sale of
receivables with recourse against ATS or STS or any
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<PAGE>
Subsidiary or any Affiliate thereof, any filing or agreement to file a financing
statement as debtor under the Uniform Commercial Code or any similar statute
other than to reflect ownership by a third party of property leased to ATS or
STS or any Subsidiary or any Affiliate thereof under a lease which is not in the
nature of a conditional sale or title retention agreement, or any subordination
arrangement in favor of another Person (other than any subordination arising in
the ordinary course of business).
"Liquidating Dividend" has the meaning set forth in Section 6F.
--------------------
"Market Price" of any security means the average of the closing prices of
------------
such security's sales on all securities exchanges on which such security may at
the time be listed, or, if there has been no sale on any such exchange on any
day, the average of the highest bid and lowest asked prices on all such
exchanges at the end of such day, or, if on any day such security is not so
listed, the average of the representative bid and asked prices quoted in the
NASDAQ System as of 4:00 P.M., New York time, or, if on any day such security is
not quoted in the NASDAQ System, the average of the highest bid and lowest asked
prices on such day in the domestic over-the-counter market as reported by the
National Quotation Bureau, Incorporated, or any similar successor organization,
in each such case averaged over a period of 21 days consisting of the day as of
which "Market Price" is being determined and the 20 consecutive business days
prior to such day. If at any time such security is not listed on any securities
exchange or quoted in the NASDAQ System or the over-the-counter market, the
"Market Price" shall be the fair value thereof determined jointly by STS and the
holders of a majority of the outstanding principal amount of the Notes. If such
parties are unable to reach agreement within a reasonable period of time, such
fair value shall be determined by an appraiser jointly selected by STS and the
holders of a majority of the outstanding principal amount of the Notes. The
determination of such appraiser shall be final and binding upon the parties, and
the fees and expenses of such appraiser shall be borne by STS.
"Material Adverse Effect" shall mean, with respect to any Person: (a) a
-----------------------
material adverse effect on the business, operations, condition (financial or
otherwise) or prospects of such Person, (b) a material adverse effect on the
ability of such Person to perform or comply with any of the terms and conditions
of this Agreement or any instrument, document or agreement contemplated
hereunder, (c) an adverse effect on the legality, validity, binding effect,
enforceability or admissibility into evidence of this Agreement or any
instrument, document or agreement contemplated hereunder, or the ability of
Purchaser to enforce any rights or remedies under or in connection with this
Agreement or any instrument, document or agreement contemplated hereunder.
"Material Contracts" has the meaning set forth in Section 4J.
------------------
"Multiemployer Plan" shall mean any employee benefit plan which is a
------------------
"multiemployer plan" within the meaning of Section 4001(a)(3) of ERISA and to
which STS or any Controlled Group Member has or had an obligation to contribute.
"Note" has the meaning set forth in Section 1A.
----
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"Officer's Certificate" means, with respect to an entity, a certificate
---------------------
signed by such entity's president or its chief financial officer, stating that
(i) the officer signing such certificate has made or has caused to be made such
investigations as are necessary in order to permit him to verify the accuracy of
the information set forth in such certificate and (ii) to the best of such
officer's knowledge, such certificate does not misstate any material fact and
does not omit to state any fact necessary to make the certificate not
misleading.
"Options" means, with respect to an entity, any rights or options to
-------
subscribe for or purchase such entity's Common Stock or Convertible Securities.
"Organic Change" has the meaning set forth in Section 6E(v).
--------------
"PBGC" means the Pension Benefit Guaranty Corporation established under
----
Title IV of ERISA or any other governmental agency, department or
instrumentality succeeding to the functions of said corporation.
"Permitted Liens" has the meaning set forth in Section 3S.
---------------
"Person" means an individual, a partnership, a corporation, a limited
------
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.
"PIK Notes" has the meaning set forth in the Note.
---------
"Plan" means any employee pension benefit plan within the meaning of
----
Section 3(2) of ERISA (other than a Multiemployer Plan) of which STS or any
Controlled Group Member is or has been within the preceding five years a
"contributing sponsor" within the meaning of Section 4001(a)(13) of ERISA, or
which is or has been within the preceding five years maintained for employees of
STS or any Controlled Group Member.
"Postretirement Benefit Obligation" shall mean that portion of the
---------------------------------
actuarial present value of all Postretirement Benefits expected to be provided
by STS which is attributable to employees' service rendered to the date of
determination (assuming that such liability accrues ratably over an employee's
working life to the earlier of his date of retirement or the date on which the
employee would first become eligible for full benefits), reduced by the fair
market value as of the date of determination of any assets which are segregated
from the assets of STS and which have been restricted so that they cannot be
used for any purpose other than to provide Postretirement Benefits or to defray
related expenses.
"Postretirement Benefits" shall mean any benefits, other than retirement
-----------------------
income, provided by STS to retired employees, or to their spouses, dependents or
beneficiaries, including, without limitation, group medical insurance or
benefits, or group life insurance or death benefits.
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"Potential Event of Default" means any event or occurrence which with the
--------------------------
passage of time or the giving of notice or both would constitute an Event of
Default.
"Purchase Price" has the meaning set forth in Section 1B.
--------------
"Purchase Rights" has the meaning set forth in Section 6G.
---------------
"Purchaser" has the meaning set forth in the preamble.
---------
"Registration Agreement" has the meaning set forth in Section 2B.
----------------------
"Registration Agreement Amendment" has the meaning set forth in Section
--------------------------------
2B.
"Release" has the meaning set forth in Section 4R(i).
-------
"Restricted Securities" means (i) the Additional Shares, the Notes and
---------------------
the Warrant, (ii) the STS Common Stock and ATS Common Stock issued upon
conversion of the Notes or upon exercise of the Warrant, respectively, and (iii)
any securities issued with respect to the securities referred to in clauses (i)
or (ii) above by way of a stock dividend or stock split or in connection with a
combination of shares, recapitalization, merger, consolidation or other
reorganization. As to any particular Restricted Securities, such securities
shall cease to be Restricted Securities when they have (a) been effectively
registered under the Securities Act and disposed of in accordance with the
registration statement covering them, (b) been distributed to the public through
a broker, dealer or market maker pursuant to Rule 144 (or any similar provision
then in force) under the Securities Act or become eligible for sale pursuant to
Rule 144 (or any similar provision then in force) under the Securities Act or
(c) been otherwise transferred and new certificates for them not bearing the
Securities Act legend set forth in Section 5E have been delivered by STS or ATS
(as the case may be) in accordance with Section 5. Whenever any particular
securities cease to be Restricted Securities, the holder thereof shall be
entitled to receive from STS or ATS (as the case may be), without expense, new
securities of like tenor not bearing a Securities Act legend of the character
set forth in Section 5E.
"Securities Act" means the Securities Act of 1933, as amended, or any
--------------
similar federal law then in force.
"Securities and Exchange Commission" includes any governmental body or
----------------------------------
agency succeeding to the functions thereof.
"Securities Exchange Act" means the Securities Exchange Act of 1934, as
-----------------------
amended, or any similar federal law then in force.
"Security Agreement" has the meaning set forth in Section 2C.
------------------
"Senior Debt" means the Senior Debt as defined in the Subordination
-----------
Agreement.
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"Senior Debt Documents" means the STS Credit Agreement and all other
---------------------
documents, agreements and instruments contemplated thereunder that are executed
or delivered in connection therewith.
"Senior Lenders" has the meaning set forth in Section 2D.
--------------
"Stock Payment" by any Person shall mean any dividend, distribution or
-------------
payment of any nature (whether in cash, securities, or other property) on
account of or in respect of any shares of the capital stock (or warrants,
options or rights therefor) of such Person, including but not limited to any
payment on account of the purchase, redemption, retirement, defeasance or
acquisition of any shares of the capital stock (or warrants, options or rights
therefor) of such Person, in each case regardless of whether required by the
terms of such capital stock (or warrants, options or rights) or any other
agreement or instrument.
"STS" has the meaning set forth in the preamble.
---
"STS Common Stock" means, collectively, the STS common stock, par value
----------------
$.01 per share, and any capital stock of any class of STS common stock hereafter
authorized which is not limited to a fixed sum or percentage of par or stated
value in respect to the rights of the holders thereof to participate in
dividends or in the distribution of assets upon any liquidation, dissolution or
winding up of STS.
"STS Common Stock Deemed Outstanding" means, at any given time, the
-----------------------------------
number of shares of STS Common Stock actually outstanding at such time, plus the
number of shares of STS Common Stock issuable upon exercise of all outstanding
Options and upon conversion or exchange of all outstanding Convertible
Securities, regardless of whether such Options and Convertible Securities are
actually exercisable at such time, including all shares of STS Common Stock
issuable upon conversion of the Notes.
"STS Credit Agreement" has the meaning set forth in Section 2D.
--------------------
"Subordination Agreement" has the meaning set forth in Section 2E.
-----------------------
"Subsidiary" means, with respect to an entity, any corporation of which the
----------
securities having a majority of the ordinary voting power in electing the board
of directors are, at the time as of which any determination is being made, owned
by such entity either directly or through one or more Subsidiaries; provided,
that notwithstanding the foregoing, neither ATS nor STS nor any of their
Subsidiaries shall be deemed a Subsidiary of Purchaser.
"Tax" or "Taxes" has the meaning set forth in Section 4I(iii).
--- -----
"Tax Return" has the meaning set forth in Section 4I(iii).
----------
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"Tax Sharing Agreement" shall mean the Tax Sharing Agreement among
---------------------
ATS and its Subsidiaries dated as of January 30, 1998, as such agreement may be
amended from time to time.
"Warrant" has the meaning set forth in Section 1A.
-------
"Wholly-Owned Subsidiary" means, with respect to any Person, a
-----------------------
Subsidiary of which all of the outstanding capital stock or other ownership
interests are owned by such Person or another Wholly-Owned Subsidiary of such
Person.
Section 8. Miscellaneous.
-------------
8A. Expenses. ATS shall pay, and hold Purchaser harmless against
--------
liability for the payment of, the fees and expenses incurred by Purchaser and
its Affiliates (including without limitation fees and expenses of legal counsel,
accountants and other consultants) in connection with the negotiation and
execution of this Agreement and the consummation of the transactions
contemplated by this Agreement which shall be payable at the Closing or, if the
Closing does not occur, payable upon demand. ATS and STS shall pay, and hold
Purchaser harmless against liability for the payment of, (i) the reasonable fees
and expenses incurred with respect to any amendments or waivers (whether or not
the same become effective) under or in respect of this Agreement, the Notes, the
Warrant, the Security Agreement and the agreements and instruments contemplated
hereby and thereby, (ii) stamp and other taxes which may be payable in respect
of the execution and delivery of this Agreement or the issuance, delivery or
acquisition of the Notes or the Warrant or any shares of STS Common Stock
issuable upon conversion of Notes or ATS Common Stock issuable upon exercise of
the Warrant, (iii) the fees and expenses incurred with respect to the
enforcement of the rights granted under this Agreement, the Notes, the Warrant,
the Security Agreement or the other agreements or instruments contemplated
hereby and thereby, and (iv) the reasonable fees and expenses incurred by
Purchaser in any filing with any governmental agency with respect to its
investment in STS and ATS (including, without limitation, any filings under the
Hart-Scott-Rodino Antitrust Investment Act of 1976) or in any other filing with
any governmental agency with respect to STS and ATS which mentions Purchaser.
Notwithstanding the foregoing, in the event that the transactions contemplated
under this Agreement are not consummated as a result of the failure to obtain
the third party consents identified in Section 2I hereof despite the good faith
efforts of STS and ATS, no fees or expenses shall be payable to Purchaser under
this Section 8A.
8B. Closing Fee. ATS shall pay to Churchill Capital, Inc. a closing
-----------
fee ("Closing Fee") in an amount equal to 3% of the Purchase Price, payable in
-----------
twelve equal monthly installments in the amount of $17,500 commencing July 15,
2000.
8C. Remedies. Any Person having any rights under any provision of
--------
this Agreement shall be entitled to enforce such rights specifically (without
posting a bond or other security), to recover damages by reason of any breach of
any provision of this Agreement and to exercise all other rights granted by law.
8D. Intentionally Omitted.
---------------------
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8E. Consent to Amendments. Except as otherwise expressly provided
---------------------
herein, the provisions of this Agreement may be amended and STS or ATS may take
action herein prohibited, or omit to perform any act herein required to be
performed by it, only if STS or ATS (as the case may be) has obtained the
written consent of Purchaser or its assign(s), and no other course of dealing
between STS or ATS and Purchaser or any delay in exercising any rights hereunder
or under the Notes or Warrant or the Security Agreement or the respective
certificates or articles of incorporation of ATS or STS shall operate as a
waiver of any rights of Purchaser. Subject only to the Subordination Agreement,
no document, agreement or instrument relating to the Intercompany Loan that is
executed by, on behalf of or for the benefit of STS and/or ATS may be modified,
altered or amended except with the prior written consent of Purchaser.
8F. Survival of Representations and Warranties. All representations
------------------------------------------
and warranties contained herein or made in writing by any party in connection
herewith shall survive the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby, regardless of any
investigation made by Purchaser or on its behalf.
8G. Successors and Assigns. Except as otherwise expressly provided
----------------------
herein, all covenants and agreements contained in this Agreement by or on behalf
of any of the parties hereto shall bind and inure to the benefit of the
respective successors and assigns of the parties hereto whether so expressed or
not. In addition, and whether or not any express assignment has been made, the
provisions of this Agreement which are for Purchaser's benefit as a purchaser or
holder of the Notes, the Warrant, ATS Common Stock or STS Common Stock are also
for the benefit of, and enforceable by, any subsequent holder of the Notes, the
Warrant, ATS Common Stock or Underlying STS Common Stock.
8H. Generally Accepted Accounting Principles. Where any accounting
----------------------------------------
determination or calculation is required to be made under this Agreement or the
exhibits hereto, such determination or calculation (unless otherwise provided)
shall be made in accordance with generally accepted accounting principles,
consistently applied.
8I. Severability. Whenever possible, each provision of this
------------
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision shall be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of this Agreement.
8J. Counterparts. This Agreement may be executed simultaneously in
------------
two or more counterparts, any one of which need not contain the signatures of
more than one party, but all such counterparts taken together shall constitute
one and the same Agreement.
8K. Descriptive Headings; Interpretation. The descriptive headings
------------------------------------
of this Agreement are inserted for convenience only and do not constitute a
substantive part of this Agreement. The use of the word "including" in this
Agreement shall be by way of example rather than by limitation.
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<PAGE>
8L. Governing Law. All issues and questions concerning the
-------------
construction, validity, enforcement and interpretation of this Agreement and the
exhibits and schedules hereto shall be governed by, and construed in accordance
with, the laws of the State of Illinois, without giving effect to any choice of
law or conflict of law rules or provisions (whether of the State of Illinois or
any other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of Illinois.
8M. Waiver of Jury Trial. Each party to this Agreement hereby waives,
--------------------
to the fullest extent permitted by applicable law, any right it may have to a
trial by jury in respect of any action, suit or proceeding arising out of or
relating to this Agreement or any of the transactions contemplated hereunder.
8N. Notices. All notices, demands or other communications to be
-------
given or delivered under or by reason of the provisions of this Agreement shall
be in writing and shall be deemed to have been given when delivered personally
to the recipient, sent to the recipient by reputable overnight courier service
(charges prepaid) or mailed to the recipient by certified or registered mail,
return receipt requested and postage prepaid. Such notices, demands and other
communications shall be sent to Purchaser, ATS and STS at the addresses
indicated below:
Purchaser: Churchill Environmental & Industrial Equity Partners, L.P.
c/o Churchill Capital, Inc.
Attn: John J. Quirk
590 Madison Avenue, 38/th/ Floor
New York, NY 10022
Telecopier: 212/832-4270
with a copy to:
Kirkland & Ellis
200 East Randolph
Chicago, IL 60601
Attn: Edward T. Swan, Esq.
Telecopy: (312) 861-2200
ATS: Asche Transportation Services, Inc.
Attn: Gary I. Goldberg
5965 McCasland Avenue
Portage, IN 46368
Telecopier: 219/764-4747
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with a copy to:
Joel R. Schaider, Esq.
Sachnoff & Weaver, Ltd.
30 South Wacker Drive
Suite 2900
Chicago, Illinois 60606
Telecopier: (312) 207-6400
STS: Specialty Transportation Services, Inc.
Attn: Gary I. Goldberg
5965 McCasland Avenue
Portage, IN 46368
Telecopier: 219/764-4747
with a copy to:
Joel R. Schaider, Esq.
Sachnoff & Weaver, Ltd.
30 South Wacker Drive
Suite 2900
Chicago, Illinois 60606
Telecopier: (312) 207-6400
or to such other address or to the attention of such other person as the
recipient party has specified by prior written notice to the sending party.
8O. Consideration for the Note and the Warrant. Purchaser, STS and
------------------------------------------
ATS acknowledge and agree that the fair market value of the Note issued
hereunder is $6,990,000 and the fair market value of the Warrant issued
hereunder is $10,000 and that, for all purposes (including tax and accounting),
the consideration for the issuance of the Warrant shall be allocated in
accordance with such amounts. Purchaser, STS and ATS shall file their
respective federal, state and local tax returns in a manner which is consistent
with such valuation and allocation and shall not take any contrary position with
any taxing authority.
8P. No Strict Construction. The parties hereto have participated
----------------------
jointly in the negotiation and drafting of this Agreement. In the event an
ambiguity or question of intent or interpretation arises, this Agreement shall
be construed as if drafted jointly by the parties hereto, and no presumption or
burden of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any of the provisions of this Agreement.
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8Q. Indemnification.
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(i) General. In consideration of Purchaser's execution and
-------
delivery of this Agreement and acquiring the Note and Warrant hereunder and
in addition to all of ATS's and STS's other obligations under this
Agreement, ATS and STS shall defend, protect, indemnify and hold harmless
Purchaser and all of its officers, directors, employees and agents
(including, without limitation, those retained in connection with the
transactions contemplated by this Agreement) (collectively, the
"Indemnitees") from and against any and all actions, causes of action,
-----------
suits, claims, losses, costs, penalties, fees, liabilities and damages, and
expenses in connection therewith (irrespective of whether any such
Indemnitee is a party to the action for which indemnification hereunder is
sought), and including reasonable attorneys' fees and disbursements (the
"Indemnified Liabilities"), incurred by the Indemnitees or any of them as
-----------------------
a result of, or arising out of, or relating to (a) any transaction financed
or to be financed in whole or in part, directly or indirectly, with the
proceeds of the issuance of the Note and Warrant or (b) the execution,
delivery, performance or enforcement of this Agreement and any other
instrument, document or agreement executed pursuant hereto by any of the
Indemnitees.
(ii) Environmental Liabilities. Without limiting the generality
-------------------------
of the indemnity set out in Section 7P(i) above, ATS and STS shall defend,
protect, indemnify and hold harmless Purchaser and all other Indemnitees
from and against any and all actions, causes of action, suits, losses,
liabilities, damages, injuries, penalties, fees, costs, expenses and claims
of any and every kind whatsoever (including without limitation any claims
for personal injury, property damages or natural resource damages) paid,
incurred or suffered by, or asserted against, Purchaser or any other
Indemnitee for, with respect to, or as a direct or indirect result of, any
violations of, or any liabilities or investigatory, corrective or remedial
obligations arising under, Environmental, Health and Safety Requirements
with respect to the past, current or future properties, facilities or
operations of ATS, STS, their Subsidiaries or their respective predecessors
or Affiliates (including, without limitation any past, present or future
environmental condition thereof), whether or not constituting a breach of
any representation or warranty hereunder and whether or not disclosed to
Purchaser prior to the Closing Date (whether on the Environmental Schedule
----------------------
or otherwise) or identified by Purchaser or its agents or representatives
through their due diligence investigations prior to the Closing Date.
8R. Payment Set Aside. To the extent that ATS or STS makes a payment
-----------------
or payments to Purchaser hereunder or under the Notes or Purchaser enforces its
rights or exercises its right of setoff hereunder or thereunder, and such
payment or payments or the proceeds of such enforcement or setoff or any part
thereof are subsequently invalidated, declared to be fraudulent or preferential,
set aside, recovered from, disgorged by or are required to be refunded, repaid
or otherwise restored to ATS or STS, a trustee, receiver or any other Person
under any law (including, without limitation, any bankruptcy law, state or
federal law, common law or equitable cause of action), then to the extent of any
such restoration the obligation or part thereof originally intended
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to be satisfied shall be revived and continued in full force and effect as if
such payment had not been made or such enforcement or setoff had not occurred.
* * * * *
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first written above.
ASCHE TRANSPORTATION SERVICES, INC.
By _________________________________________
Gary I. Goldberg, Chief Executive Officer
SPECIALTY TRANSPORTATION
SERVICES, INC.
By _________________________________________
Gary I. Goldberg, President
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: John J. Quirk
Title: Principal
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