-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, TS7agJBEA32xbd1gvxaRBonHi11VXKnl5LbRHBRx2f52Ijm5rnESQpG7R7EkqeAi Sl2TTyloGqD1lvxLgjDQUA== /in/edgar/work/20000621/0000950131-00-004027/0000950131-00-004027.txt : 20000920 0000950131-00-004027.hdr.sgml : 20000920 ACCESSION NUMBER: 0000950131-00-004027 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 2 FILED AS OF DATE: 20000621 GROUP MEMBERS: CHURCHILL CAPITAL ENVIRONMENTAL GROUP MEMBERS: CHURCHILL CAPITAL, INC. GROUP MEMBERS: CHURCHILL ENVIRONMENTAL & INDUSTRIAL EQUITY PARTNERS LP SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: ASCHE TRANSPORTATION SERVICES INC CENTRAL INDEX KEY: 0000927809 STANDARD INDUSTRIAL CLASSIFICATION: [4213 ] IRS NUMBER: 363964954 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: SEC FILE NUMBER: 005-50651 FILM NUMBER: 658531 BUSINESS ADDRESS: STREET 1: 10214 N MT VERNON RD CITY: SHANNON STATE: IL ZIP: 61078 BUSINESS PHONE: 8158642421 MAIL ADDRESS: STREET 1: 10214 N MT VERNON ROAD CITY: SHANNON STATE: IL ZIP: 61078 FORMER COMPANY: FORMER CONFORMED NAME: AASCHE TRANSPORTATION SERVICES INC DATE OF NAME CHANGE: 19940802 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: CHURCHILL ENVIRONMENTAL & INDUSTRIAL EQUITY PARTNERS LP CENTRAL INDEX KEY: 0001074863 STANDARD INDUSTRIAL CLASSIFICATION: [ ] IRS NUMBER: 411927528 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: 3100 METROPOLITAN CENTRE STREET 2: 333 S 7TH ST CITY: MINNEAPOLIS STATE: MN ZIP: 55402 BUSINESS PHONE: 6126736700 MAIL ADDRESS: STREET 1: 333 SOUTH 7TH STREET STREET 2: SUITE 3100 CITY: MINNEAPOLIS STATE: MN ZIP: 55402 SC 13D/A 1 0001.txt AMENDMENT #3 TO FORM SC 13D SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Schedule 13D Under the Securities Exchange Act of 1934 (Amendment No. 3)* ASCHE TRANSPORTATION SERVICES, INC. (Name of Issuer) COMMON STOCK, PAR VALUE $ .0001 (Title of Class of Securities) 04362T100 (CUSIP Number) KEVIN C. DOOLEY, ESQ. SENIOR VICE PRESIDENT AND LEGAL COUNSEL CHURCHILL CAPITAL, INC. 3100 METROPOLITAN CENTRE 333 SOUTH 7TH STREET MINNEAPOLIS, MINNESOTA 55402 (612) 673-6708 --------------------------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) June 15, 2000 (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ]. - ------------------- ------------------ CUSIP No. 04362T100 13D Page 2 of 11 Pages - ------------------- ------------------ ============================================================================== 1. NAMES OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (entities only). CHURCHILL ENVIRONMENTAL & INDUSTRIAL EQUITY PARTNERS, L.P. ============================================================================== 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions) (a) [_] (b) [_] ============================================================================== 3. SEC USE ONLY ============================================================================== 4. SOURCE OF FUNDS WC ============================================================================== 5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [_] ============================================================================== CITIZENSHIP OR PLACE OF ORGANIZATION 6 DELAWARE ============================================================================== 7. NUMBER OF SOLE VOTING POWER UNITS BENEFICIALLY =========================================================== OWNED BY 8. EACH SHARED VOTING POWER REPORTING 4,138,983 PERSON WITH =========================================================== 9. SOLE DISPOSITIVE POWER =========================================================== 10. SHARED DISPOSITIVE POWER 2,666,667 ============================================================================== 11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 4,138,983 ============================================================================== 12. CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [_] ============================================================================== 13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 48% ============================================================================== 14. TYPE OF REPORTING PERSON PN ============================================================================== SCHEDULE 13D CUSIP NO. 04362T100 Page 3 of 11 Pages ----------------- - ------------------------------------------------------------------------------ NAMES OF REPORTING PERSONS 1 I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (entities only). CHURCHILL CAPITAL ENVIRONMENTAL, L.L.C. - ------------------------------------------------------------------------------ CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions) 2 (a) [_] (b) [_] - ------------------------------------------------------------------------------ SEC USE ONLY 3 - ------------------------------------------------------------------------------ SOURCE OF FUNDS (See Instructions) 4 AF - ------------------------------------------------------------------------------ CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [_] 5 - ------------------------------------------------------------------------------ CITIZENSHIP OR PLACE OF ORGANIZATION 6 DELAWARE - ------------------------------------------------------------------------------ SOLE VOTING POWER 7 NUMBER OF SHARES ----------------------------------------------------------- SHARED VOTING POWER BENEFICIALLY 8 OWNED BY 4,138,983 ----------------------------------------------------------- EACH SOLE DISPOSITIVE POWER 9 REPORTING PERSON ----------------------------------------------------------- SHARED DISPOSITIVE POWER WITH 10 2,666,667 - ------------------------------------------------------------------------------ AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 11 4,138,983 - ------------------------------------------------------------------------------ CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES 12 (See Instructions) - ------------------------------------------------------------------------------ PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 13 48% - ------------------------------------------------------------------------------ TYPE OF REPORTING PERSON (See Instructions) 14 CO - ------------------------------------------------------------------------------ - ------------------------------------------------------------------------------ - ------------------------------------------------------------------------------ - ------------------------------------------------------------------------------ - ------------------------------------------------------------------------------ - ------------------------------------------------------------------------------ SCHEDULE 13D CUSIP NO. 04362T100 Page 4 of 11 Pages ----------------- - ------------------------------------------------------------------------------ NAMES OF REPORTING PERSONS 1 I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (entities only). CHURCHILL CAPITAL, INC. - ------------------------------------------------------------------------------ CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions) 2 (a) [_] (b) [_] - ------------------------------------------------------------------------------ SEC USE ONLY 3 AF - ------------------------------------------------------------------------------ SOURCE OF FUNDS (See Instructions) 4 - ------------------------------------------------------------------------------ CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [_] 5 - ------------------------------------------------------------------------------ CITIZENSHIP OR PLACE OF ORGANIZATION 6 MINNESOTA - ------------------------------------------------------------------------------ SOLE VOTING POWER 7 NUMBER OF SHARES ----------------------------------------------------------- SHARED VOTING POWER BENEFICIALLY 8 OWNED BY 4,138,983 ----------------------------------------------------------- EACH SOLE DISPOSITIVE POWER 9 REPORTING PERSON ----------------------------------------------------------- SHARED DISPOSITIVE POWER WITH 10 2,666,667 - ------------------------------------------------------------------------------ AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 11 4,138,983 - ------------------------------------------------------------------------------ CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES 12 (See Instructions) - ------------------------------------------------------------------------------ PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 13 48% - ------------------------------------------------------------------------------ TYPE OF REPORTING PERSON (See Instructions) 14 CO - ------------------------------------------------------------------------------ - ------------------------------------------------------------------------------ - ------------------------------------------------------------------------------ - ------------------------------------------------------------------------------ - ------------------------------------------------------------------------------ - ------------------------------------------------------------------------------ PAGE 2 This Amendment No. 3 relates to shares of Common Stock, $0.0001 par value per share ("Common Stock"), of Asche Transportation Services, Inc., a Delaware corporation (the "Issuer") with principal offices located at 10214 North Mount Vernon Road, Shannon, Illinois 61078, and is being filed jointly by Churchill Environmental & Industrial Equity Partners, L.P., a Delaware limited partnership ("CEIP"), Churchill Capital Environmental, L.L.C., a Delaware limited liability company ("CCE"), and Churchill Capital, Inc., a Minnesota corporation ("CCI", and together with CEIP and CCE, the "Reporting Persons"). This Amendment No. 3 supplements and amends the statement on Schedule 13D originally filed with the Commission on September 17, 1999, as amended by Amendment No. 1 filed with the Commission on or about October 6, 1999 ("Amendment No. 1"), and Amendment No. 2 filed with the Commission on May 24, 2000 ("Amendment No. 2") (as amended, the "Statement"). Item 3. Source and Amount of Funds or Other Consideration As described more fully in Amendment No. 2, if the Transaction (as defined below) is consummated, the Issuer will issue the Warrant (as defined below) to CEIP in consideration of a $7,000,000 investment by CEIP in Specialty Transportation Services, Inc., a wholly owned subsidiary of the Issuer ("STS"). The proceeds of such loan are to be used as working capital by STS and to fund an intercompany loan (the "Intercompany Loan") in the amount of $2,250,000 by STS to the Issuer. The source of the funds to be invested in STS by CEIP, a private investment fund, as part of the Transaction are investment funds provided to CEIP by its limited partners. Item 4. Purpose of Transaction On June 9, 2000, CEIP, STS and the Issuer entered into a letter of intent (the "Letter of Intent") setting forth the terms of a transaction (the " Transaction") pursuant to which CEIP would invest $7,000,000 in STS in exchange for (a) a senior subordinated convertible promissory note (the "Note") convertible at any time into at least 70% but no more than 85% of the common stock of STS (such variance to depend upon the amount and form of interest paid under the Note and whether certain cash flow targets for STS's 2000 fiscal year are achieved) and (b) the issuance by the Issuer of a warrant (the "Warrant") to acquire the number of shares of Common Stock that, upon exercise of the Warrant, would result in CEIP owning 53% of the outstanding Common Stock on a fully diluted basis when combined with all shares of Common Stock held by CEIP. Many of the terms of the Transaction are contained in two term sheets attached to the Letter of Intent as Exhibit A thereto (the "Term Sheets"), earlier versions of which were presented by CEIP to the Special Committee of the Board of Directors of the Issuer on May 19, 2000, as described in Amendment No. 2. The May 19 versions of the Term Sheets and the Term Sheets attached to the Letter of Intent as Exhibit A are substantially the same. The only material differences between the two versions of the Term Sheets are the following additional terms contained in the Term Sheets attached to the Letter of Intent: 1. CEIP's equity stakes in STS (following conversion of the Note) and the Issuer (following issuance of the Warrant) would be protected by customary anti-dilution provisions, including (in the case of the Common Stock) automatic adjustments for new grants of options to management of the Issuer to purchase an aggregate of more than 1% of the outstanding Common Stock. 2. CEIP would be granted a second priority security interest securing the Note and the Issuer would be granted a second priority security interest securing the Intercompany Loan. Both security interests would be created in personal property collateral of the respective borrowers, and state and local filings would be made by CEIP and the Issuer (as respective secured parties) to perfect their respective security interests in all personal property other than motor vehicles and trailers. 3. All closing, legal and other professional fees payable by the Issuer to or on behalf of CEIP in connection with the Transaction would be paid at the closing, except for the Closing Fee (as defined in the Term Sheets), which would be paid under payment terms to be negotiated prior to the closing of the Transaction. 4. The closing of the Transaction would be conditioned upon STS and the Issuer reaching agreements with certain of their respective creditors regarding restructuring certain debts and securing the approval of the Transaction by such creditors. The Letter of Intent is non-binding on the parties except for certain specifically identified binding provisions. The binding provisions include provisions (1) establishing a period of exclusivity of negotiations with respect to the Transaction between the Issuer and STS and CEIP; (2) providing that fees and expenses of CEIP will be paid by the Issuer under certain circumstances; (3) prohibiting the parties from making public announcements regarding the Transaction without the approval of the other party(ies); and (4) setting forth indemnifications of CEIP and its affiliates by the Issuer and STS under certain circumstances. The Letter of Intent contemplates the parties will promptly prepare and negotiate definitive agreements and that the Transaction will be consummated no later than July 7, 2000, provided that certain conditions precedent identified in the Letter of Intent have been satisfied. The Special Committee of the Board of Directors of the Issuer approved the execution and delivery of the Letter of Intent, and on June 15, 2000, the Board of Directors of the Issuer voted to approve the Letter of Intent and its terms. (The members of the Board of Directors of the Issuer designated by CEIP abstained from such vote.) Item 5. Interest in Securities of the Issuer As of the date of filing of this Amendment No. 3 to the Statement, the Reporting Persons directly own 2,666,667 shares of Common Stock, representing approximately 31% of the outstanding Common Stock. And as more fully described and reported in Amendment No. 1, CEIP, CCE and CCI may be deemed to have "beneficial ownership" (as defined in Rule 13d-3 of the Securities Exchange Act of 1934, as amended) (the "Exchange Act") of approximately an additional 17% of the shares of outstanding Common Stock. As described above, if the Transaction is consummated and the Warrant is exercised by CEIP, CEIP would hold approximately 53% of the outstanding Common Stock. Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer If the Transaction is consummated and the Warrant is issued, CEIP would own and hold the right to acquire an aggregate of approximately 53% of the outstanding shares of Common Stock on a fully diluted basis. Neither the filing of this Statement nor any of its contents shall be deemed to constitute an admission that the Reporting Persons (or any of them) are the beneficial owners of any shares of Common Stock referred to herein for purposes of Section 13(d) of the Exchange Act or for any other purpose, and such beneficial ownership is expressly disclaimed. PAGE 4 SIGNATURE --------- After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Dated: June 21, 2000 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: /s/ Kevin C. Dooley ----------------------------------- Name: Kevin C. Dooley Title: Senior Vice President and Legal Counsel PAGE 5 SIGNATURE --------- After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Dated: June 21, 2000 CHURCHILL CAPITAL ENVIRONMENTAL, L.L.C. By Churchill Capital, Inc. Its Managing Agent By: /s/ Kevin C. Dooley -------------------------------- Name: Kevin C. Dooley Title: Senior Vice President and Legal Counsel PAGE 6 SIGNATURE --------- After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Dated: June 21, 2000 CHURCHILL CAPITAL, INC. By: /s/ Kevin C. Dooley --------------------------------------- Name: Kevin C. Dooley Title: Senior Vice President and Legal Counsel EXHIBIT INDEX ------------- Exhibit 7.1. Letter of Intent dated June 9, 2000 (and approved and adopted by the Board of Directors of the Issuer on June 15, 2000), among the Issuer, STS and CEIP EX-7.1 2 0002.txt LETTER OF INTENT DATED JUNE 15, 2000 EXHIBIT 7.1 Churchill Environmental & Industrial Equity Partners, L.P. June 9, 2000 Asche Transportation Services, Inc. Specialty Transportation Services, Inc. 5965 McCasland Ave. Portage, Indiana 46368 Attention: Mr. Gary L. Goldberg President and Chief Executive Officer Re: Proposal for Financing Specialty Transportation Services, Inc. (the "Company") Gentlemen: This letter sets forth the terms under which Churchill Environmental & Industrial Equity Partners, L.P. ("Churchill") would be willing to provide financing to the Company. The financing and the other transactions contemplated hereby are referred to collectively herein as the "Transactions." Section 1. Investment by Churchill. Subject to the terms and conditions set forth herein, and as more fully described on the Summary of Terms and Conditions set forth as Exhibit A hereto (the "Term Sheets"), Churchill will invest $7,000,000 in the Company, a portion of which would be used by the Company to make an intercompany loan to its parent corporation, Asche Transportation Services, Inc. ("ATS"), in the amount of $2,250,000. In exchange, Churchill would be issued (i) a subordinated convertible promissory note (the "Note")in the principal amount of $7,000,000, convertible at any time into at least 70% but no more than 85% of the outstanding Common Stock of the Company, and (ii) a five-year warrant (the "Warrant") to purchase the number of shares of ATS Common Stock that, when aggregated with all ATS Common Stock held by Churchill at the time of issuance of the Warrant (after giving effect to acceleration of Churchill's equity adjustment feature under the Stock Purchase Agreement among the Company, ATS and Churchill dated August 17, 1999), would result in it holding 53% of the outstanding ATS Common Stock on a fully diluted basis. Churchill's equity positions in the Company and ATS prior to Asche Transportation Services, Inc. Specialty Transportation Services, Inc. June 9, 2000 Page 2 conversion of the Note and/or exercise of the Warrant, respectively, would be protected by customary anti-dilution provisions. Section 2. Definitive Agreement; Timing. As promptly as practicable after the acceptance of this letter by the Company and ATS, Churchill's counsel will prepare definitive agreements embodying the terms and conditions of this letter and the Term Sheets and containing such other provisions as are mutually acceptable. The parties agree to negotiate in good faith and to use their reasonable efforts to consummate the Transactions as soon as reasonably practicable, but in no event later than July 7, 2000; provided, that no later than June 30, 2000, (i) the Company and Mellon Bank, N.A. and (ii) ATS and American National Bank, N.A. shall have reached substantial agreements with respect to definitive documents effecting the restructure of their respective loans and setting forth the approval by such lenders of the Transactions. In addition, Churchill and ATS each agree to prepare and file with the appropriate authorities a Notification and Report Form under the Hart- Scott-Rodino Act promptly following closing notifying such authorities of Churchill's planned exercise of the Warrant. Section 3. Access to Information. The Company and ATS shall afford, and shall cause their subsidiaries, officers, directors, employees, attorneys, accountants and other agents to afford, to Churchill and its accounting, legal and other representatives full and complete access at all reasonable times to the Company's and ATS's directors, officers and personnel and to business, financial, legal, tax, compensation and other data and information concerning the Company, ATS and their subsidiaries. Section 4. Exclusivity. (i) The Company and ATS agree that, unless negotiations between them (on one hand) and Churchill (on the other hand) are terminated earlier by mutual agreement, Churchill shall have, for a period commencing on the date hereof and ending 30 days after the Company and ATS execute and deliver this letter (the "Exclusivity Period"), the exclusive right to negotiate and execute definitive agreements embodying the terms and conditions of this letter and the Term Sheets and containing such other terms as are mutually acceptable and to consummate the Transactions with the Company and ATS. Asche Transportation Services, Inc. Specialty Transportation Services, Inc. June 9, 2000 Page 3 (ii) During the Exclusivity Period, neither the Company nor ATS or any of their subsidiaries shall, directly or indirectly, through any officer, director, employee, agent or otherwise (including, without limitation, through any investment banker, attorney or accountant retained by the Company, ATS or any of their subsidiaries), (a) solicit, initiate or encourage the submission of any proposal or offer (a "Proposal") from any person or entity (including any of its officers, directors, employees, agents and other representatives) relating to any liquidation, dissolution, recapitalization or financing of, merger or consolidation with or into, or acquisition or purchase of all or substantially all of the assets of, or any material asset of, or any capital stock, other equity securities or note, instrument or security convertible or exchangeable into equity securities of, or additional indebtedness of, the Company, ATS or any of their subsidiaries or relating to any other similar transaction or business combination involving the Company, ATS or any of their subsidiaries, or (b) participate in any discussions or negotiations regarding, or furnish to any other person or entity any information with respect to, or otherwise cooperate in any way with, or assist or participate in, facilitate or encourage any effort or attempt by any other person or entity to do or seek to do, any of the foregoing. (iii) The Company and ATS shall immediately cease and cause to be terminated any and all contacts, discussions and negotiations with third parties regarding any Proposal. The Company and ATS shall promptly notify Churchill if any Proposal, or any inquiry or contact with any person or entity with respect thereto, is made. Neither the Company nor ATS shall provide or release any information with respect to this letter or the Transactions except as permitted under Section 8 below. If, at any time after the date hereof, Churchill determines that it will not proceed with the Transactions, Churchill shall promptly so notify the Company and ATS in writing, whereupon the Company's and ATS's obligations pursuant to this Section 4 shall terminate and shall be of no further force and effect; provided that the Company's and ATS's obligations with respect to the provisions set forth in Sections 7, 9, 10, 11 and 12 of this letter shall survive the delivery of any such notice. Section 5. Conduct of Business. Except as otherwise expressly contemplated hereby, during the Exclusivity Period, the Company and ATS shall, and shall cause each of their subsidiaries to, conduct their respective businesses only in the ordinary course of business and consistent with past practice and preserve intact their respective business organizations and goodwill, and use commercially reasonable efforts to keep available the services of their respective officers Asche Transportation Services, Inc. Specialty Transportation Services, Inc. June 9, 2000 Page 4 and employees and maintain satisfactory relationships with material suppliers and customers and others having material business relationships with the Company, ATS or any of their subsidiaries. Section 6. Closing Conditions. The obligation of Churchill to consummate the Transactions is subject to the satisfaction of the following conditions in addition to the other conditions precedent set forth in the Term Sheets: (i) Churchill shall be satisfied with the results of the legal, accounting and business due diligence investigation and evaluation of the Company and ATS undertaken by it and its representatives; (ii) a satisfactory Note and Warrant Purchase Agreement (containing satisfactory closing conditions, covenants, representations and warranties, etc.) and related agreements shall have been negotiated and executed; (iii) the Company and ATS shall have received and obtained all material governmental, regulatory, third party and shareholder consents and approvals (including without limitation approval(s) by NASD or NASDAQ) required of the Company and ATS that are necessary for the consummation of the Transactions, the exercise of the Warrant and the conversion of the Note (other than approvals under the Hart-Scott-Rodino Act required to be obtained prior to exercise of the Warrant); (iv) ATS and its board of directors shall have taken all actions reasonably necessary to ensure that Churchill shall not, by virtue of consummating the Transactions, be deemed to be an "interested stockholder" under, or otherwise be subject to the provisions of, Section 203 of the Delaware General Corporation Law, or any other applicable anti-takeover or similar law of any jurisdiction; and (v) since April 30, 2000, there shall have been no material adverse change in the financial condition, operating results, assets, operations, business prospects, employee relations or customer or supplier relations of the Company, ATS or any of their subsidiaries. Asche Transportation Services, Inc. Specialty Transportation Services, Inc. June 9, 2000 Page 5 The Company's, ATS's and Churchill's respective obligations to consummate the Transactions are also subject to (i) the receipt by the Company of an opinion from Houlihan Smith & Company, Inc. reasonably satisfactory in form and substance to the Company, ATS and Churchill as to the fairness of the Transactions no later than June 15, 2000 (the "Fairness Opinion Condition"), and (ii) the approval of this letter and the Transactions by the respective boards of directors of the Company and ATS no later than June 15, 2000 (the "Board Approval Condition"). Section 7. Fees and Expenses. As a condition to Churchill's willingness to enter into this letter and negotiate with respect to the definitive agreements, the Company and ATS agree that in the event that (a) Churchill tenders to the Company and ATS during the Exclusivity Period for execution definitive agreements embodying the terms of this letter (and containing such other terms as are reasonably acceptable to the parties) and the Company or ATS fails to enter into such agreements or the Company or ATS otherwise materially breaches the binding provisions of this letter, or (b) Churchill, the Company and ATS enter into definitive agreements embodying the terms of this letter (and containing such other terms as are reasonably acceptable to the parties) and the Transactions are not consummated prior to July 7, 2000, other than as a result of (A) the failure to obtain all required third party consents (including those of Mellon Bank, N.A. and American National Bank, N.A. as contemplated in Section 2(i) and (ii) above) despite good faith efforts of the Company and ATS or (B) Churchill's election not to consummate the Transactions based substantially upon information known by it or its legal counsel, accountants or other consultants as of the date of this letter, or (c) the Company or ATS materially breaches the terms of such definitive agreements or the Company or ATS makes a material misrepresentation to Churchill regarding the financial condition, operating results, assets, operations, business prospects, employee relations or customer or supplier relations of the Company or ATS and as a result of such misrepresentation Churchill determines not to proceed with the Transactions, or (d) the Transactions are consummated, then ATS shall reimburse Churchill and its affiliates for all actual out-of-pocket fees and expenses incurred before or after the date of this letter by Churchill and its affiliates that are directly related to the Transactions (including, without limitation, fees and expenses of legal counsel, accountants, and other consultants and advisors not affiliated with Churchill). Section 8. Public Announcements. Any press release or other public disclosure issued or made by Churchill (on one hand) or the Company or ATS (on the other hand) relating to this letter or the Transactions shall be approved first by the other parties or party; provided that the Asche Transportation Services, Inc. Specialty Transportation Services, Inc. June 9, 2000 Page 6 Company or ATS may issue any such press release or other public disclosure without Churchill's approval if the Company or ATS is advised by independent counsel that such disclosure is necessary and if the Company or ATS provides Churchill with the contents of such disclosure as soon as reasonably practicable prior to making such disclosure. Section 9. Indemnification. As a condition to Churchill's willingness to enter into this letter and to negotiate with respect to definitive agreements documenting the Transactions, the Company and ATS agree to indemnify, pay on behalf of (on an as-incurred basis) and hold harmless, Churchill from and against any and all losses, claims, damages, liabilities (joint and several), costs, expenses, judgments, fines and amounts paid in settlement in connection with any threatened, pending or completed claim, action, suit, proceeding or investigation (whether arising before or after the date hereof), to which Churchill has or may become subject and which relates to or arises out of this letter or the Transactions, or the breach by the Company or ATS of any of the representations, warranties and covenants set forth in this letter, and the Company and ATS shall reimburse Churchill for all of its reasonable expenses (including counsel fees and expenses) as they are incurred in connection with the investigation of, preparation for or defense of any pending or threatened claim or any action or defense arising therefrom, whether arising before or after the date of this letter; provided that the Company and ATS shall not be responsible for any losses, claims, damages, liabilities, costs, expenses, judgments, fines or amounts paid in settlement or that have arisen primarily from (a) the gross negligence, willful misconduct or bad faith of a party claiming a right to indemnification hereunder, or (b) Churchill's breach of the definitive agreements or violation of federal or state securities laws. Any party entitled to indemnification hereunder will (i) give prompt written notice to the Company or ATS of any claim with respect to which it seeks indemnification and (ii) unless a conflict of interest between Churchill and the Company or ATS may exist with respect to such claim, allow the Company or ATS to participate in, and, to the extent that it shall wish, to assume the defense of any such claim with counsel reasonably satisfactory to Churchill, and after notice from the Company or ATS to Churchill of its election so to assume the defense thereof (if no conflict of interest exists as described above) the Company and ATS shall not be liable to Churchill for any legal or legal related fees and expenses. The Company and ATS will not be subject to any liability for any settlement made by Churchill without its consent; provided that such consent will not be unreasonably withheld. If the Company or ATS is not entitled to, or elects not to, assume the defense of any claim, the Company and ATS will not be obligated to pay the fees and expenses of more than one counsel for all parties indemnified by the Company and ATS with Asche Transportation Services, Inc. Specialty Transportation Services, Inc. June 9, 2000 Page 7 respect to such claim. The Company and ATS shall not, without the prior written consent of Churchill (which consent shall not be unreasonably withheld), effect any settlement of any pending or threatened proceeding in respect of which Churchill is or could have been a party if such settlement involves any admission of guilt or wrongdoing on the part of Churchill. To the extent the Company or ATS is prohibited from providing the full indemnification required hereby, the Company and ATS will provide contribution to Churchill so that Churchill will incur no losses in excess of the amount, if any, which it would otherwise have incurred had the Company or ATS not been prohibited from providing the full indemnification required hereby. Section 10. Representations of the Company and ATS. The Company and ATS represent and warrant that (i) the Special Committee of the board of directors of ATS has approved the execution and delivery of this letter on behalf of ATS and (ii) the Special Committee shall promptly recommend to the respective boards of directors of the Company and ATS that this letter be adopted and approved and the Transactions be consummated . The Company and ATS represent and warrant that neither the Company nor ATS is a party to or bound by any agreement or understanding which is in conflict with or would violate or be violated by the terms of this letter. Section 11. Governing Law. The provisions of this letter and all duties, obligations and rights arising herefrom shall be governed by and construed in accordance with the domestic laws of the State of Delaware, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Delaware. Section 12. Binding Effect; Termination; Miscellaneous. This letter is not intended to be a binding agreement between the parties hereto, except for the terms of Sections 4 and 7 through 12, which the parties hereto hereby agree shall be binding upon them and their successors and assigns and (except for Sections 4 and 8) survive any termination hereof. This letter may be signed in two or more counterparts, any one of which need not contain the signature of more than one party, but all such counterparts taken together will constitute one and the same agreement. If the Company and ATS are in agreement with the terms of this letter and desire to proceed with respect to the Transactions on the basis described herein, please have the President and Asche Transportation Services, Inc. Specialty Transportation Services, Inc. June 9, 2000 Page 8 Chief Executive Officer of ATS and the Company execute the duplicate copy of this letter in the space provided below and return such executed copy to the attention of the undersigned not later than 5:00 p.m., Chicago time, on Friday June 9, 2000. If, after such date, the Company and ATS have not confirmed their respective acceptances of this letter in the manner set forth above, Churchill's proposal with respect to the Transactions may be terminated without further notice to the Company or ATS. * * * * * Asche Transportation Services, Inc. Specialty Transportation Services, Inc. June 9, 2000 Page 9 We look forward to working with you. Very truly yours, 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: Melissa M. White Title: Principal Agreed and Accepted as of June ___, 2000: ASCHE TRANSPORTATION SERVICES, INC. By ________________________ Its _______________________ SPECIALTY TRANSPORTATION SERVICES, INC. By ________________________ Its _______________________ EXHIBIT A --------- Churchill Environmental & Industrial Equity Partners, L.P. Specialty Transportation Services, Inc. $7.0 million Senior Subordinated Facility ______________________________________________ Asche Transportation Services, Inc. $2.25 million Inter-company Loan __________________________________________________________________________ Summary of Terms and Conditions Senior Subordinated Facility - ---------------------------- Borrower: Specialty Transportation Services, Inc. ("STS") --- Purpose: The investment will provide much-needed liquidity via a better- suited capital structure to be utilized by the board and management in execution of current turn-around efforts and pursuit of future growth opportunities. Facility: $7.0 million Senior Subordinated Facility, non-callable and convertible at any time subsequent to funding Investor: Churchill Environmental & Industrial Equity Partners, L.P. ("Churchill") Drawdown: $7.0 million to be invested at closing and used to pay down the Mellon Bank revolver. Mellon will permit drawdowns on the revolver up to $7.0 million without restriction, and the funds will be used to meet the cash requirements of STS, as established in a 90-day projected cash flow budget prepared by STS which is satisfactory to Churchill. Closing: As soon as practical Maturity: Five-Year Note Interest Rate: Floating at Mellon Prime Rate; Borrower will have PIK option (subject to the limitation on equity ownership by Churchill described below); customary default rate Conversion Ratio: $7.0 million principal amount is convertible into 70% of STS common stock on a fully diluted basis. Churchill's equity stake in STS following conversion of the note would be protected by customary anti-dilution provisions. Unpaid PIK interest is convertible into additional common stock at the same ratio as the Churchill Enviromental & Industrial Equity Partners, L.P. principal conversion. The total ownership of STS common stock on a fully diluted basis, from the conversion of the principal amount and unpaid PIK interest, is not to exceed 80%, except as provided below. If STS does not achieve 2000 EBITDA of at least $7.3 million, Churchill's maximum equity participation will be increased according to the following formula: the $7.0 million principal amount will be convertible into an additional 1% of the total ownership of STS common stock on a fully diluted basis for every $260,000 by which 2000 EBITDA is less than $7,300,000, to a maximum 5% additional total ownership. For example, if 2000 EBITDA is $7,040,000, the $7.0 million principal amount will be convertible into 71% of the total ownership of STS common stock on a fully diluted basis; if 2000 EBITDA is $6,520,000, the principal amount will be convertible into 73% of the total ownership of STS common stock on a fully diluted basis; and if 2000 EBITDA is $6,390,000, the principal amount will be convertible into 73.5% of the total ownership of STS common stock on a fully diluted basis. The 80% limit on Churchill's total direct ownership of STS common stock described in the immediately preceding paragraph will be revised upward, to a maximum of 85%, to accommodate the application of the formula contained in this paragraph in the event 2000 EBITDA of STS is less than $7.3 million. Inter-company Loan: $2.25 million inter-company loan to be allowed to be made by STS to its parent, Asche Transportation Services, Inc. ("ATS"), to be used in part to pay all transaction expenses. Up to an additional $600,000 will be used to repay the inter-company amount due from STS to another ATS subsidiary. (See terms and conditions below) Security: Second priority security interest behind existing bank creditors in all personal property collateral; state and local filings will be made to perfect security interests in all personal property other than motor vehicles and trailers Fees: ATS shall pay a 3% closing fee (the "Closing Fee") in addition to Churchill's legal and other professional fees incurred in connection with the financing, all of which shall be paid at the closing except for the Closing Fee and fees and expenses of Zolfo Cooper, LLC (both of which shall be paid on payment terms to be negotiated prior to closing). Covenants and Default Provisions: Affirmative and Negative Covenants similar to existing bank group loan documents and cross defaulted with existing STS bank group loan document default provisions, customary default and remedy provisions Conditions: Subject to: . Execution of satisfactory Inter-creditor agreement . Satisfactory fairness opinion . Satisfactory opinion of counsel Churchill Enviromental & Industrial Equity Partners, L.P. . No material adverse change . Obtain all material consents . Satisfactory documentation of inter-company loan . Negotiate satisfactory forbearance, standstill and waivers with STS and ATS bank group . Acceleration of the adjustment to Churchill's common stock position in ATS under the 1999 investment documents . STS trade creditors exposure of $750,000 to be termed out over 9-12 months, or settled for some discount . Preparation of a three-year business plan for STS (including financial projections) which is acceptable to Churchill . (i) STS and Mellon Bank, N.A., (ii) ATS and American National Bank, N.A. and (iii) ATS and Dick Baugh shall have reached agreements with respect to the restructure of their respective debts, including the approval by such lenders of the transactions contemplated hereby STS Banks to agree to restructure existing exposure of $34.7 million (consisting of $18.0 million revolver, $14.1 million term loan and $2.6 million over-advance) as follows: New revolver $18.0 million New term loan $16.7 million Amortization schedule for new term loan:
Year 1 $1.5 million (quarterly payments of $375,000 commencing 9/30/00) - ---------------------------------------------------------------------------- Year 2 $2.0 million (quarterly payments of $500,000) - ---------------------------------------------------------------------------- Year 3 $2.0 million (quarterly payments of $500,000) - ---------------------------------------------------------------------------- Year 4 $2.0 million (quarterly payments of $500,000) - ---------------------------------------------------------------------------- Year 5 $2.0 million (quarterly payments of $500,000) - ---------------------------------------------------------------------------- Year 6 $2.0 million (quarterly payments of $500,000) - ---------------------------------------------------------------------------- Year 7 $5.2 million balloon - ----------------------------------------------------------------------------
No change to interest rate Priority: Senior Subordinated Facility shall be contractually subordinated to STS bank group, provided that Churchill will have priority to extent full $7.0 million is not drawn on revolver ATS Warrants: Churchill to receive 5-year warrants to acquire common stock of ATS for an exercise price of $0.01 per share whereby Churchill increases its ownership, on a fully diluted basis, to 53% of ATS (including the acceleration of the equity Churchill Enviromental & Industrial Equity Partners, L.P. adjustment feature). Conversion feature assumes 53% interest meets the criteria contained in Parent's articles/bylaws concerning controlling interest. Churchill's equity stake in ATS following issuance of the warrants would be protected by customary anti-dilution provisions, including automatic adjustments for new grants of options to ATS management to purchase an aggregate of more than 1% of the outstanding ATS common stock. Churchill Environmental & Industrial Equity Partners, L.P. Inter-company Loan - ------------------ Beneficiary: Asche Transportation Services, Inc. ("ATS" or "Parent") Purpose: The inter-company loan will ease the immediate cash crisis of the Parent and its subsidiaries and provide the platform whereby management, at the direction of the board, may work toward completion of the pending audit, initiate combining the business units of Asche Transfer, Inc. ("ATI") and AG Carriers, Inc. ("AGC") in pursuit of turn-around efforts and evaluation of future strategies. Form: Inter-company loan Source of Funds: Churchill via loan to Specialty Transportation Services, Inc. (STS) Drawdown: $ 2.25 million to be deposited with the American National Bank on behalf of ATS, with up to an additional $600,000 being paid to ATI on account of inter-company amounts due to ATI by STS. The total value of the loan is $2.25 million. Draw down to be based on the cash requirements of ATI, ATS and AGC, as established in 90 day projected cash flow budget prepared by ATS, ATI and AGC, which is satisfactory to Churchill. Maturity: Three Year Note, with the proviso of the earlier of three years or expiration of the ATI loan facility Interest Rate: Equal to the Applicable Federal Rate in effect from time to time Closing: As soon as practical Security: Second priority security interest in ATI and AGC assets behind existing bank creditors in all personal property collateral; state and local filings will be made to perfect security interests in all personal property other than motor vehicles and trailers Fees: ATS shall pay Churchill's legal and other professional fees in connection with the financing. Default Provisions: Cross defaulted with existing bank loan document default provisions Conditions: Subject to: . Execution of satisfactory Inter-creditor agreement . Satisfactory fairness opinion . Satisfactory opinion of counsel . ATS, ATI and AGC trade credit exposure of $750,000 to be termed out over 9-12 months, or settled for some discount Churchill Enviromental & Industrial Equity Partners, L.P. . Preparation of a three-year business plan for ATS, ATI and AGC (including financial projections) which is acceptable to Churchill Priority: Inter-company loan shall be contractually subordinate to the ATI bank creditor. -----END PRIVACY-ENHANCED MESSAGE-----