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Exhibit 10.5
Chicago, Illinois, January 16, 1998 $500,000
AASCHE TRANSPORTATION SERVICES, INC.
SENIOR SUBORDINATED PROMISSORY NOTE
THIS NOTE (THE "NOTE") HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR UNDER THE TRUST INDENTURE ACT OF 1939 AND
MAY NOT BE SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED
WITHOUT COMPLIANCE WITH THE REGISTRATION OR QUALIFICATION PROVISIONS
OF APPLICABLE FEDERAL AND STATE SECURITIES LAWS OR APPLICABLE
EXEMPTIONS THEREFROM.
FOR VALUE RECEIVED, Aasche Transportation Services, Inc., a Delaware
corporation (the "COMPANY"), promises to pay to the order of Diane L. Asche,
the registered holder or registered assigns hereof (the "HOLDER"), the
principal amount of Five Hundred Thousand Dollars ($500,000) payable on
February 1, 2003 (the "MATURITY DATE"), together with accrued interest on the
outstanding principal amount of this Note, all as hereinafter set forth.
1. Payments and Prepayments.
(a) Provided no Event of Default (as defined below) shall have
occurred and be continuing, from and after the date of disbursement of funds,
the principal balance from time to time unpaid shall bear interest at the fixed
rate (determined from time to time in accordance with the terms hereof) equal
to the Prime Rate less .25% per annum (the "INTEREST RATE"). As used herein,
the "PRIME RATE" shall mean the prime rate of interest quoted on each
Adjustment Date (as defined below) by the Wall Street Journal as the base rate
on corporate loans at large U.S. money center commercial banks on such day;
provided that in the event the Wall Street Journal ceases quoting a prime rate,
Prime Rate shall mean the per annum rate of interest quoted as the Bank Prime
Loan Rate for the most recent weekday for which such rate is quoted in
Statistical Release H.15 (519) published from time to time by the Board of
Governors of the Federal Reserve System; provided further that in the event
that both of the aforesaid indices cease to be published or to quote rates of
the aforesaid types, the Prime Rate shall be determined from a comparable index
chosen by the Company in good faith.
(b) For a period commencing on the date of disbursement hereof and
ending December 31, 1998, the Interest Rate, determined in accordance with the
terms of Section 1(a) hereof, shall be 8.25% per annum. On February 1, 1999
and on February 1 of each year thereafter (each an "ADJUSTMENT DATE"), the
Interest Rate shall be adjusted to an amount equal to the then applicable Prime
Rate less .25% per annum and shall thereupon be fixed until the next occurring
Adjustment Date.
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(c) After the earlier of (i) the Maturity Date, whether by
acceleration or otherwise, or (ii) the occurrence of any Event of Default
hereunder, the total unpaid indebtedness hereunder shall bear interest at the
rate of two percent (2%) plus the Prime Rate (the "DEFAULT RATE").
(d) Interest shall be computed on the basis of a 360 day year and
charged for the actual number of days elapsed.
(e) The Company shall make successive monthly installment payments
of interest with the final payment of all unpaid principal and all accrued and
unpaid interest due and payable on the Maturity Date. Payments of interest
shall be made in arrears commencing on February 1, 1998 and thereafter on the
first day of each successive month through and including February 1, 2003.
(f) Payments of principal and/or interest on this Note shall be
made at the principal office of the Company, located at 10214 N. Mt. Vernon
Road, Shannon, Illinois 61078, or such other place or places within the United
States as may be specified by the Holder of this Note in a written notice to
the Company at least ten (10) business days before a given payment date.
(g) Payment of principal and interest on this Note shall be made
in lawful money of the United States of America by mailing the Company's check
in the proper amount to the Holder at least three days prior to the due date of
the payment or otherwise transferring good funds so as to be received by the
Holder on the due date of the payment.
(h) This Note is subject to prepayment, in whole or in part, at
the option of the Company without premium or penalty.
(i) The Company will give the Holder written notice indicating the
amount of any prepayment and the proposed date thereof not less than fifteen
(15) days prior to any such prepayment of this Note.
2. Obligation Absolute. The obligations under this Note are
absolute and unconditional obligations of the Company and no modification,
release, consent, waiver, rearrangement or amendment shall impair the
obligations of the Company hereunder.
3. Security. The payment of this Note and the Company's
obligations hereunder are not secured by any collateral.
4. Registration, Exchange and Transfer. The Company will keep a
register in which, subject to such reasonable regulations as it may prescribe,
it will register the Note. No transfer of this Note shall be valid as against
the Company unless made upon the register. This Note is subject to the
restrictions on transfer of this Note and in compliance with said restrictions
on transfer, the Company shall execute and deliver in the name of the
transferee or transferees a new Note or Notes for a like principal amount.
Subject to Section 7, this Note may be exchanged for like notes in the same
aggregate principal amount in other denominations; provided, however, that none
of the Notes shall be in denominations less than $100,000. To be exchanged,
this Note shall be surrendered for that purpose
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at the principal office of the Company, and the Company shall execute and
deliver in exchange therefor the Note or Notes which the holder making the
exchange shall be entitled to receive, bearing serial numbers not
contemporaneously outstanding.
This Note, if presented for transfer, exchange, redemption or payment, shall
(if so required by the Company) be duly endorsed by, or be accompanied by
instruments of transfer in form satisfactory to the Company duly executed by,
the registered Holder or by such Holder's duly authorized attorney.
The Company may deem and treat the registered Holder hereof as the absolute
owner hereof (whether or not this Note shall be overdue and notwithstanding any
notation of ownership or other writing hereon by anyone other than the
Company), for the purpose of receiving payment of or on account of the
principal hereof and interest hereon, and for all other purposes, and the
Company shall not be affected by any notice to the contrary.
5. Events of Default. In the event ("EVENT OF DEFAULT") that:
(i) the Company defaults in making the payment of any
installment of interest when due or principal and all accrued interest
on this Note at the Maturity Date and such failure continues for a
period of thirty (30) days after the due date thereof;
(ii) the Company hereafter makes an assignment for the
benefit of creditors, or files a petition in bankruptcy as to itself,
is adjudicated insolvent or bankrupt, petitions any receiver or of any
trustee for the Company or any substantial part of the property of the
Company under any bankruptcy, reorganization, arrangement,
readjustment of debt, dissolution or liquidation law or statute of any
jurisdiction, whether or not hereafter in effect; or if there is
hereafter commenced against the Company any such proceeding and an
order approving the petition is entered or such proceeding remains
undismissed for a period of sixty (60) days, or the Company by any act
or omission to act indicates its consent to or approval of or
acquiescence in any such proceeding or the appointment of any receiver
of, or trustee for, the Company or any substantial part of its
properties, or suffers any such receivership or trusteeship to
continue undischarged for a period of sixty (60) days; or
(iii) the Company defaults in the due observance or
performances, in any material respect, of any covenant, condition or
agreement to be observed or performed pursuant to the terms of this
Note (other than a default which is specifically provided for in this
Section 5) and such default continues unremedied for more than thirty
(30) days after the Company has received written notice thereof;
Then, and in each and every case, the holder of the Note may declare
the principal and accrued but unpaid interest of the Note to be due and payable
immediately, by written notice to the Company, and upon any such declaration
the same shall become and shall be immediately due and payable.
6. Certain Consequences Upon Default. If and during such time as
an Event of Default has occurred and is continuing, the Company shall on demand
from time to time pay interest, to the extent permitted by law, on such
defaulted amount up to (but not including) the date of actual payment (whether
before or after judgment) at the Default Rate. It is the intention of the
Company
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and the Holder of this Note to comply with applicable usury laws (now or
hereafter enacted); accordingly, notwithstanding any provision to the contrary
in this Note, and any other document executed in connection herewith, in no
event shall this Note or any such other document require the payment or permit
the collection of interest in excess of the maximum amount permitted by such
laws. If for any circumstances whatsoever, fulfillment of any provision of
this Note or of any such other document at the time performance of such
provision shall be due, shall involve transcending the limit of validity
prescribed by law for the collection or charging of interest, then, ipso facto,
the obligation to be fulfilled shall be reduced to the limit of such validity,
and if for any such circumstances the holder of this Note shall ever receive
anything of value as interest or deemed interest by applicable law under this
Note or any such other document or otherwise an amount that would exceed the
highest lawful rate, such amount that would be excessive interest shall be
applied to the reduction of the principal amount owing under this Note or on
account of any other indebtedness of the Company to such holder, and not to the
payment of interest, or if such excessive interest exceeds the unpaid balance
of principal of such indebtedness, such excess shall be refunded to the
Company. In determining whether or not the interest paid or payable with
respect to any indebtedness of the Company to the Holder, under any specific
contingency, exceeds the highest lawful rate, the Company and such holder
shall, to the maximum extent permitted by applicable law, (i) characterize any
non-principal payment as an expense, fee or premium rather than as interest,
(ii) exclude voluntary prepayments and the effects thereof, (iii) amortize,
prorate, allocate and spread the total amount of interest throughout the full
term of such indebtedness so that the actual rate of such interest does not
exceed the maximum amount permitted by applicable law, and/or (iv) allocate
interest between portions of such indebtedness, to the end that no such portion
shall bear interest at a rate greater than that permitted by applicable law.
7. Investment Representations.
(a) The Holder hereby acknowledges that this Note is not being
registered (i) under the Securities Act of 1933, as amended (the "Act") or
under the Trust Indenture Act of 1939 (the "Trust Indenture Act") on the ground
that the issuance of the Note is exempt from registration under Section 4(2) of
the Act as not involving any public offering or (ii) under any applicable state
securities law because the issuance of this Note does not involve any public
offering; and that the Company's reliance on the Section 4(2) exemption of the
Act and under applicable state securities laws is predicated in part on the
representations hereby made to the Company by the Holder that it is acquiring
this Note for investment for its own account, with no present intention of
dividing its participation with others or reselling or otherwise distributing
the same.
(b) The Holder hereby agrees that it will not sell or transfer all
or any part of this Note unless and until it shall first have given written
notice to the Company describing such sale or transfer and furnished to the
Company either (i) an opinion, reasonably satisfactory to counsel for the
Company, of counsel (skilled in securities matters, selected by the Holder and
reasonably satisfactory to the Company) to the effect that the proposed sale or
transfer may be made without registration under either the Act or the Trust
Indenture Act and without registration or qualification under any state law, or
(ii) an interpretive letter from the Securities and Exchange Commission to the
effect that no enforcement action will be recommended if the proposed sale or
transfer is made without registration under the Act or the Trust Indenture Act.
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(c) The Company may refuse to recognize a transfer of this Note on
its books should a holder attempt to transfer this Note otherwise than in
compliance with this Section 7.
8. Notices. Any notice required by the provisions of this Note
shall be in writing and shall be delivered by hand, by telecopier, by overnight
courier or mailed by first class, registered or certified mail, postage
prepaid, at such address as may have been furnished to the Company in writing
by such Holder, or, until any such Holder furnishes to the Company an address,
then to, and at the address of, the last Holder of this Note who has so
furnished an address to the Company.
9. Miscellaneous.
(a) This Note is the obligation of the Company only, and no
recourse shall be had for the payment thereof or interest thereon against any
shareholder, officer or director of the Company, whether by virtue of any
constitution, statute, rule or law or otherwise, such liability, by the
acceptance hereof, and as part of the consideration hereof, being expressly
waived.
(b) Upon receipt of evidence reasonably satisfactory to the
Company the loss, theft, destruction or mutilation of this Note and of a letter
of indemnity reasonably satisfactory to the Company, and upon reimbursement to
the Company of all reasonable expenses incident thereto, and upon surrender or
cancellation of this Note, if mutilated, the Company will make and deliver a
new Note of like tenor in lieu of such lost, stolen, destroyed or mutilated
Note.
(c) THIS NOTE AND THE RIGHTS AND OBLIGATIONS OF EACH OF THE
COMPANY AND THE HOLDER HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE
GOVERNED BY THE LAWS OF THE STATE OF ILLINOIS APPLICABLE TO AGREEMENTS AND
INSTRUMENTS MADE AND TO BE PERFORMED IN ILLINOIS AND CANNOT BE MODIFIED OR
CHANGED ORALLY.
IN WITNESS WHEREOF, the Company has duly caused this Note to be signed
on its behalf, in its name and by its duly authorized officers as of this date
first written above.
AASCHE TRANSPORTATION SERVICES, INC.
By: /s/ Leon M. Monachos
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Name: Leon M. Monachos
Title: Chief Financial Officer
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