SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549-1004
------------------------------------
FORM 10-Q
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1998.
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File Number 0-20793
Smithway Motor Xpress Corp.
(Exact name of registrant as specified in its charter)
Nevada 42-1433844
(State or other jurisdiction of incorp(I.R.S. employer identification number)
or organization)
2031 Quail Avenue
Fort Dodge, Iowa 50501
(515) 576-7418
(Address, including zip code, and telephone number,
including area code, of registrant's
principal executive office)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to the filing
requirements for at least the past 90 days.
YES X NO
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date (May 8, 1998).
Class A Common Stock, $.01 par value: 4,015,015 shares
Class B Common Stock, $.01 par value: 1,000,000 shares
Exhibit Index is on Page 14.
Page 1 of 17
<PAGE>
PART I
FINANCIAL INFORMATION
PAGE
NUMBER
Item 1. Financial Statements......................................... 3
Condensed Consolidated Balance Sheets as of December 31, 1997
and March 31, 1998 (unaudited)......................... 3
Condensed Consolidated Statements of Earnings for the three
months ended March 31, 1998 and 1997 (unaudited)....... 5
Condensed Consolidated Statements of Stockholders' Equity for
the year ended December 31, 1997, and the three months
ended March 31, 1998 (unaudited)....................... 6
Condensed Consolidated Statements of Cash Flows for the three
months ended March 31, 1998 and 1997 (unaudited)....... 7
Notes to Condensed Consolidated Financial Statements (unaudited) 9
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.................................... 10
PART II
OTHER INFORMATION
Item 1 Legal Proceedings.............................................. 14
Item 2 Changes in Securities.......................................... 14
Item 3 Defaults Upon Senior Securities................................ 14
Item 4 Submission of Matters to a Vote of Security Holders............ 14
Item 5 Other Information.............................................. 14
Item 6 Exhibits and Reports on Form 8-K............................... 14
FORWARD LOOKING STATEMENTS
This document contains forward-looking statements in paragraphs that are
marked with an asterisk. Statements by the Company in press releases, public
filings, and stockholder reports, as well as oral public statements by Company
representatives, also may contain certain forward-looking information.
Forward-looking information is subject to certain risks and uncertainties that
could cause actual results to differ materially from those projected. Without
limitation, these risks and uncertainties include economic factors such as
recessions, downturns in customers' business cycles, surplus inventories,
inflation, higher interest rates, and fuel price increases; the resale value of
the Company's used revenue equipment; the availability and compensation of
qualified drivers and owner-operators; competition from trucking, rail, and
intermodal competitors; and the availability of desirable target companies and
financing for acquisitions. Readers should review and consider the various
disclosures made by the Company in its press releases, stockholder reports, and
public filings, as well as the factors explained in greater detail in the
Company's annual report on Form 10-K.
Page 2 of 17
<PAGE>
PART I
FINANCIAL INFORMATION
SMITHWAY MOTOR XPRESS CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
March 31, December 31,
1998 1997
------------------------
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents...........................$ 1,406 $ 4,082
Receivables:
Trade............................................. 13,600 11,040
Other............................................. 2,142 1,261
Inventories........................................... 1,277 1,064
Deposits, primarily with insurers..................... 240 770
Prepaid expenses...................................... 1,943 1,160
Deferred income taxes................................. 410 350
------------------------
Total current assets............................ 21,018 19,727
------------------------
Property and equipment:
Land................................................ 781 531
Buildings and improvements.......................... 5,651 5,100
Tractors............................................ 44,552 38,217
Trailers............................................ 29,198 24,233
Other equipment..................................... 5,651 5,308
------------------------
85,883 73,389
Less accumulated depreciation and amortization...... 22,244 20,257
------------------------
Net property and equipment...................... 63,589 53,132
------------------------
Other assets.......................................... 4,419 2,019
------------------------
$ 89,026 $ 74,878
========================
Page 3 of 17
See accompanying notes to condensed consolidated financial statements.
<PAGE>
SMITHWAY MOTOR XPRESS CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
March 31, December 31,
1998 1997
------------------------
(unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt................$ 4,205 $ 3,971
Accounts payable.................................... 3,661 2,277
Accrued compensation................................ 1,428 1,278
Income taxes payables............................... 601 275
Accrued loss reserves............................... 1,077 905
Other accrued expenses.............................. 318 921
------------------------
Total current liabilities....................... 11,290 9,627
Long-term debt, less current maturities............... 37,782 27,005
Deferred income taxes................................. 8,830 8,340
------------------------
Total liabilities............................... 57,902 44,972
------------------------
Stockholders' equity:
Preferred stock..................................... - -
Common stock:
Class A........................................... 40 40
Class B........................................... 10 10
Additional paid-in capital.......................... 11,219 11,144
Retained earnings................................... 19,932 18,789
Reacquired shares, at cost.......................... (77) (77)
------------------------
Total stockholders' equity...................... 31,124 29,906
Commitments...........................................
------------------------
$ 89,026 $ 74,878
========================
Page 4 of 17
See accompanying notes to condensed consolidated financial statements.
<PAGE>
SMITHWAY MOTOR XPRESS CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Dollars in thousands, except share and per share data)
(Unaudited)
Three Months Ended
March 31,
-------------------------
1998 1997
------------ -----------
Operating revenue:
Freight............................................$ 33,294 $ 26,881
Other.............................................. 97 27
------------ -----------
Operating revenue.............................. 33,391 26,908
------------ -----------
Operating expenses:
Purchased transportation........................... 13,206 10,537
Compensation and employee benefits................. 7,866 6,047
Fuel, supplies, and maintenance.................... 4,344 3,833
Insurance and claims............................... 737 472
Taxes and licenses................................. 632 528
General and administrative......................... 1,348 1,270
Communication and utilities........................ 413 363
Depreciation and amortization...................... 2,352 1,903
------------ -----------
Total operating expenses....................... 30,898 24,953
------------ -----------
Earnings from operations....................... 2,493 1,955
Financial (expense) income:
Interest expense................................... (585) (320)
Interest income.................................... 80 4
------------ -----------
Earnings before income taxes................... 1,988 1,639
Income taxes......................................... 845 688
------------ -----------
Net earnings.........................................$ 1,143 $ 951
============ ===========
Basic and diluted earnings per common share.......... $ 0.23 $ 0.19
============ ===========
Basic weighted average common shares outstanding..... 5,005,804 4,999,293
Common stock options and awards.................... 39,727 910
------------ -----------
Diluted weighted average common shares outstanding... 5,045,531 5,000,203
============ ===========
Page 5 of 17
See accompanying notes to condensed consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
SMITHWAY MOTOR XPRESS CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF
STOCKHOLDERS' EQUITY
(Dollars in thousands)
(Unaudited)
Additional Total
Common paid-in Retained Reacquired stockholders'
stock capital earnings shares equity
-------- ---------- -------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1996...$ 50 $ 11,104 $ 13,116 $ (77) $ 24,193
Net earnings................... - - 5,673 - 5,673
Issuance of stock bonuses...... - 40 - - 40
-------- -------- -------- ---------- ------------
Balance at December 31, 1997... 50 11,144 18,789 (77) 29,906
Net earnings................... - - 1,143 - 1,143
Issuance of stock bonuses...... - 75 - - 75
-------- -------- -------- ---------- ------------
Balance at March 31, 1998......$ 50 $ 11,219 $ 19,932 $ (77) $ 31,124
======== ======== ======== ========== ============
</TABLE>
Page 6 of 17
See accompanying notes to condensed consolidated financial statements.
<PAGE>
SMITHWAY MOTOR XPRESS CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in thousands)
Three Months Ended
March 31,
-------------------
1998 1997
--------- ---------
Cash flows from operating activities:
Net earnings.............................................$ 1,143 $ 951
--------- ---------
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation and amortization.......................... 2,352 1,903
Deferred income taxes.................................. 430 (613)
Provision for bad debts................................ 12 -
Stock bonuses.......................................... 75 -
Changes in:
Receivables.......................................... (3,453) (2,835)
Inventories.......................................... (84) (7)
Deposits, primarily with insurers.................... 530 171
Prepaid expenses..................................... (601) (2,625)
Accounts payable and other accrued liabilities....... 1,429 3,595
--------- ---------
Total adjustments............................. 690 (411)
--------- ---------
Net cash provided by operating activities..... 1,833 540
--------- ---------
Cash flows from investing activities:
Payments for acquisitions................................ (11,346) (1,421)
Purchase of property and equipment....................... (1,509) (2,687)
Proceeds from the sale of property and equipment......... 510 113
Purchase of other assets................................. (59) (43)
--------- ---------
Net cash used in investing activities......... (12,404) (4,038)
--------- ---------
Cash flows from financing activities:
Proceeds from long-term debt............................. 11,000 3,000
Principal payments on long-term debt..................... (3,105) (1,859)
Borrowings on line of credit agreement................... - 37,887
Payments on line of credit agreement..................... - (35,863)
--------- ---------
Net cash provided by financing activities............ 7,895 3,165
--------- ---------
Net decrease in cash and cash equivalents............ (2,676) (333)
Cash and cash equivalents at beginning of period........... 4,082 940
--------- ---------
Cash and cash equivalents at end of period.................$ 1,406 $ 607
========= =========
Page 7 of 17
See accompanying notes to condensed consolidated financial statements.
<PAGE>
SMITHWAY MOTOR XPRESS CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS, CONTINUED
(Unaudited)
(Dollars in thousands)
Three months ended
March 31,
----------------------
1998 1997
---------- ---------
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest......................................... $ 737 $ 301
Income taxes..................................... 91 2
========== =========
Supplemental schedules of noncash investing and financing
activities:
Notes payable issued for tractors and trailers..... $ 1,962 $ -
Issuance of stock bonuses.......................... 75 -
Liability issued for intangible assets............. 1,154 -
========== =========
Cash payments for acquisitions:
Revenue equipment.................................. $ 8,913 $ 1,175
Intangible assets.................................. 1,162 171
Other assets....................................... 1,271 75
---------- ---------
Total cash paid for acquisitions....................... $ 11,346 $ 1,421
--======== =========
Page 8 of 17
See accompanying notes to condensed consolidated financial statements.
<PAGE>
SMITHWAY MOTOR XPRESS CORP. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1. Basis of Presentation
The condensed consolidated financial statements include the accounts
of Smithway Motor Xpress Corp., a Nevada holding company, and its
wholly owned subsidiaries, Smithway Motor Xpress, Inc. and East West
Motor Express, Inc. Unless otherwise indicated, the companies named
in this paragraph are collectively referred to as the "Company." All
significant intercompany balances and transactions have been
eliminated in consolidation.
The condensed consolidated financial statements have been prepared,
without audit, in accordance with generally accepted accounting
principles, pursuant to the published rules and regulations of the
Securities and Exchange Commission. In the opinion of management,
the accompanying condensed consolidated financial statements include
all adjustments which are necessary for a fair presentation of the
results for the interim periods presented, such adjustments being of
a normal recurring nature. Certain information and footnote
disclosures have been condensed or omitted pursuant to such rules
and regulations. Results of operations in interim periods are not
necessarily indicative of results to be expected for a full year.
Note 2. Acquisition
In February 1998, the Company acquired tractors, trailers, and
certain other assets of East West Motor Express, Inc. of Black Hawk,
South Dakota. In exchange for these assets, the Company paid
approximately $6,852 to the previous owners, assumed and repaid
approximately $4,017 in equipment financing secured by these assets
and agreed to pay $2,256 goodwill. East West Motor Express, Inc. had
approximately $31 million in revenue during 1997.
Note 3. Change in Accounting Estimate
The Company changed its estimate of the useful life of tires
purchased with revenue equipment from two years to the estimated
life of the underlying revenue equipment. This change was based on
the Company's experience with warranties and tread life of tires and
has been accounted for prospectively beginning January 1, 1998. The
effect on net earnings and basic and diluted earnings per share was
not material for the 1998 quarter.
Page 9 of 17
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Overview
The Company's fiscal year ends on December 31 of each year. Thus, this
report discusses the first three months of the Company's 1998 and 1997 fiscal
years, respectively.
Results of Operations
The Company has expanded its operations substantially over the past three
years through a combination of internal growth and acquisitions. In the quarter
ended March 31, 1998, revenue increased 24.1% and net earnings increased 20.2%,
compared with the same quarter in 1997. During the quarter the Company completed
its sixth acquisition since 1995, purchasing the trucking assets and business of
East West Motor Express, Inc., a $31.0 million annual revenue dry van and
flatbed carrier based in Black Hawk, South Dakota. The acquisition resulted in
net capital expenditures of approximately $11.3 million by the Company.
The Company operates a tractor-trailer fleet comprised of Company-owned
vehicles and vehicles obtained under leases from independent contractors.
Fluctuations among expense categories may occur primarily as a result of two
factors: (i) the percentage of the Company's tractor fleet being obtained
through independent contractors, and (ii) the use of operating leases to finance
revenue equipment. Costs associated with revenue equipment acquired under
operating leases or through agreements with independent contractors are expensed
as "purchased transportation." For these categories of equipment the Company
does not incur costs such as interest and depreciation as it might with owned
equipment. In addition, for independent contractors, tractors, driver
compensation, fuel, communications, and certain other expenses are borne by the
independent contractors and are not incurred by the Company. Obtaining equipment
from independent contractors and under operating leases reduces capital
expenditures and on-balance sheet leverage and effectively shifts expenses from
interest to "above the line" operating expenses. The fleet profile of acquired
companies and the Company's relative recruiting and retention success with
Company-employed drivers and independent contractors will cause fluctuations
from time-to-time in the percentage of the Company's fleet that is owned versus
obtained from independent contractors and under operating leases. Accordingly,
management intends to evaluate the Company's efficiency using pretax margin and
net margin rather than operating ratio(*).
The following table sets forth the percentage relationship of certain
items to operating revenue for the three months ended March 31, 1998 and 1997:
1998 1997
--------- -------
Operating revenue........................................... 100.0% 100.0%
Operating expenses
Purchased transportation.................................. 39.6 39.2
Compensation and employee benefits........................ 23.6 22.5
Fuel, supplies, and maintenance........................... 13.0 14.2
Insurance and claims...................................... 2.2 1.7
Taxes and licenses........................................ 1.9 2.0
General and administrative................................ 4.0 4.7
- --------
(*) May contain "forward-looking" statements.
Page 10 of 17
<PAGE>
Communications and utilities.............................. 1.2 1.3
Depreciation and amortization............................. 7.0 7.1
--------- -------
Total operating expenses................................ 92.5 92.7
--------- -------
Earnings from operations.................................... 7.5 7.3
Interest expense (net)...................................... (1.5) (1.2)
--------- -------
Earnings before income taxes................................ 6.0 6.1
Income taxes................................................ (2.6) (2.6)
--------- -------
Net earnings................................................ 3.4% 3.5%
========= =======
Comparison of three months ended March 31, 1998, with three months ended March
31, 1997
Operating revenue increased $6.5 million (24.1%) to $33.4 million during
the 1998 quarter from $26.9 million during the 1997 quarter. Expanded business
with existing customers and revenue from the acquired operations of Royal
Transport in September 1997 and East West Motor Express on February 27, 1998,
contributed to the Company's revenue growth. The increase was attributable to
(i) a 2.8% increase in revenue equipment utilization as the average billed miles
per tractor per week increased to 1,667 miles in the 1998 quarter from 1,621
miles in the 1997 quarter; and (ii) a 21.3% increase in weighted average
tractors, to 1,060 during the 1998 quarter from 874 during the 1997 quarter.
Purchased transportation increased $2.7 million (25.3%) to $13.2 million
in the 1998 quarter from $10.5 million in the 1997 quarter as the Company's
business expanded and the Company contracted with more independent contractor
providers of revenue equipment. As a percentage of revenue, purchased
transportation increased to 39.6% of revenue in the 1998 quarter from 39.2% in
the 1997 quarter. This reflects an increase in the percentage of the Company's
fleet supplied by independent contractors as a result of the Company's internal
recruiting efforts and the acquisition of East West, which has obtained a higher
percentage of its fleet from independent contractors.
Compensation and employee benefits increased $1.8 million (30.1%) to $7.9
million in the 1998 quarter from $6.0 million in the 1997 quarter. As a
percentage of revenue, compensation and employee benefits increased to 23.6% of
revenue in the 1998 quarter from 22.5% in the 1997 quarter. Higher claims
submissions under the Company's health insurance policy and an increase in the
per-mile wage paid to van division drivers more than offset a decrease in the
percentage of the Company's fleet attributable to Company-owned equipment.
Fuel, supplies, and maintenance increased $511,000 (13.3%) to $4.3 million
in the 1998 quarter from $3.8 million in the 1997 quarter. As a percentage of
revenue, fuel, supplies, and maintenance decreased to 13.0% of revenue for the
1998 quarter compared with 14.2% for the 1997 quarter reflecting a 13.7%
decrease in fuel costs to $1.07 during the 1998 quarter from $1.24 per gallon
during the 1997 quarter. The decrease was partially offset by an increase in the
cost of parts, tires, tarps, supplies, and binders used in the Company's tractor
fleet.
Insurance and claims increased $265,000 (56.1%) to $737,000 in the 1998
quarter from $472,000 in the 1997 quarter. As a percentage of revenue, insurance
and claims increased to 2.2% of revenue in the 1998 quarter from 1.7% in the
1997 period primarily as a result of an increase in the number of accidents
experienced by the Company.
Page 11 of 17
<PAGE>
Taxes and licenses increased $104,000 (19.7%) to $632,000 in the 1998
quarter from $528,000 in the 1997 quarter. As a percentage of revenue, taxes and
licenses remained essentially constant at 1.9% of revenue in the 1998 quarter
and 2.0% in the 1997 quarter.
General and administrative expenses increased $78,000 (6.1%) to $1,348,000
in the 1998 quarter from $1,270,000 in the 1997 quarter. As a percentage of
revenue, general and administrative expenses decreased to 4.0% of revenue in the
1998 quarter from 4.7% in the 1997 quarter as a result of a decrease in freight
revenue being dispatched by terminal agents, resulting in less commissions paid
during the 1998 quarter.
Communications and utilities increased $50,000 (13.8%) to $413,000 in the
1998 quarter from $363,000 in the 1997 quarter. As a percentage of revenue,
communications and utilities remained essentially constant at 1.2% of revenue in
the 1998 quarter and 1.3% in the 1997 quarter.
Depreciation and amortization increased $449,000 (23.6%) to $2.4 million
in the 1998 quarter from $1.9 million in the 1997 quarter. As a percentage of
revenue, depreciation and amortization decreased slightly to 7.0% of revenue in
the 1998 quarter from 7.1% in the 1997 quarter principally as a result of a 2.9%
increase in revenue per tractor per week in the 1998 quarter compared with the
1997 quarter, which spread the fixed cost of depreciation over greater revenue,
as well as a decrease in the percentage of the Company's fleet being comprised
of Company-owned tractors. These factors more than offset an increase in
amortization of goodwill resulting from the acquisitions of Royal Transport and
East West Motor Express after the 1997 quarter.
Interest expense (net) increased $189,000 (59.8%) to $505,000 in the 1998
quarter from $316,000 in the 1997 quarter. As a percentage of revenue, interest
expense (net) increased to 1.5% of revenue in the 1998 quarter from 1.2% in the
1997 quarter, due to higher average debt balances ($33.9 million in the 1998
quarter compared with $21.9 million in the 1997 quarter).
As a result of the foregoing, the Company's pretax margin improved to 6.0%
in the 1998 quarter from 6.1% in the 1997 quarter.
The Company's effective tax rate was 42.5% in the 1998 quarter (2.6% of
revenue) compared with 42.0% in the 1997 quarter (2.6% of revenue) in each case
including the cost of nondeductible driver per diem expense absorbed by the
Company. The effective tax rate is higher than the expected combined tax rate
for a company headquartered in Iowa because of the cost of nondeductible driver
per diem expense absorbed by the Company. The impact of the Company's paying per
diem travel expenses varies depending upon the ratio of drivers to independent
contractors and the Company's net earnings.
Primarily as a result of the factors described above, net earnings
increased $192,000 (20.2%) to $1,143,000 (3.4% of revenue) in the 1998 quarter
from $951,000 (3.5% of revenue) in the 1997 quarter.
Page 12 of 17
<PAGE>
Liquidity and Capital Resources
The growth of the Company's business has required significant investment
in new revenue equipment that the Company historically has financed with
borrowings under installment notes payable to commercial lending institutions
and equipment manufacturers, borrowings under a $25 million unsecured credit
agreement, cash flow from operations, equipment leases from third-party lessors,
and, in 1996, proceeds of the Company's initial public offering. The Company
also has obtained a portion of its revenue equipment fleet from independent
contractors who own and operate the equipment, which reduces overall capital
expenditure requirements compared with providing a fleet of entirely
Company-owned equipment. The Company's primary sources of liquidity currently
are funds provided by operations and borrowings under credit agreements with
financial institutions and equipment manufacturers. Management believes that its
sources of liquidity are adequate to meet its current anticipated working
capital requirements, capital expenditures, and other needs at least through
1998(*).
Net cash provided by operating activities was $1.8 million for the three
months ended March 31, 1998. The primary sources of cash from operations were
net earnings of $1.1 million increased by $2.4 million in depreciation and
amortization and a $1.4 million increase in accounts payable and other accrued
liabilities. The Company's principal uses of cash from operations were to
service debt and internally finance accounts receivable associated with growth
in the business. Accounts receivable increased $3.5 million for the three months
ended March 31, 1998. The average age of the Company's accounts receivable was
approximately 34.6 days for the 1998 quarter.
Net cash used in investing activities of $12.4 million in the 1998 quarter
related primarily to payments made for the acquisition of assets of East West
Motor Express, and purchases, sales, and trades of revenue equipment. The
Company expects capital expenditures (primarily for revenue equipment and
satellite communications units), net of revenue equipment trade-ins, to be
approximately $14.5 million during the remaining nine months of 1998. Such
projected capital expenditures are expected to be funded with cash flow from
operations, borrowings, or operating leases(*).
Net cash provided by financing activities of $7.9 million for the three
months ended March 31, 1998, consisted primarily of net borrowings of $11.0
million of principal under the Company's long-term unsecured credit agreement
and net repayments of $3.1 million of principal under other long-term debt
agreements.
The maximum amount available under the Company's unsecured credit
agreement at March 31, 1998, was $25 million, on which the Company had an
outstanding balance of $19.0 million. The interest rate on the outstanding
balance is defined in the agreement and at March 31, 1998 was 6.6875%. At March
31, 1998, the Company had total outstanding long-term debt (including current
maturities) of approximately $42.0 million, most of which was comprised of
obligations for the purchase of revenue equipment and borrowings under the
Company's unsecured credit agreement. Interest rates on this debt range from
5.7% to 7.9%, and the principal amounts mature at various dates through December
2002.
- --------
(*) May contain "forward-looking" statements.
Page 13 of 17
<PAGE>
PART II
OTHER INFORMATION
Item 1. Legal Proceedings.
No reportable events or material changes occurred during the
quarter for which this report is filed.
Item 2. Changes in Securities.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
Item 5. Other Information.
None.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit
Number Description
2.1 + Asset Purchase Agreement dated January 10, 1996, among Smithway Motor
Xpress, Inc., an Iowa corporation, Smith Trucking Company, a Kansas
corporation, and Delmar Smith.
2.2 * Asset Purchase Agreement dated October 4, 1996, among Smithway Motor
Xpress, Inc., an Iowa corporation, Smithway Motor Xpress Corp., a
Nevada corporation, Marquardt Transportation, Inc., a South Dakota
corporation, and Ralph and Lucille Marquardt.
2.3 * First Amendment to Asset Purchase Agreement dated as of October 24,
1996, among Smithway Motor Xpress, Inc., an Iowa corporation, Smithway
Motor Xpress Corp., a Nevada corporation, Marquardt Transportation,
Inc., a South Dakota corporation, and Ralph and Lucille Marquardt.
2.4 * Second Amendment to Asset Purchase Agreement dated as of December 27,
1996, among Smithway Motor Xpress, Inc., an Iowa corporation, Smithway
Motor Xpress Corp., a Nevada corporation, Marquardt Transportation,
Inc., a South Dakota corporation, and Ralph and Lucille Marquardt.
Page 14 of 17
<PAGE>
Exhibit
Number Description
2.5 ^ Asset Purchase Agreement dated February 20, 1998, by and among
Smithway Motor Xpress, Inc., East West Motor Express, Inc. and Darwyn
and David Stebbins.
3.1 + Articles of Incorporation.
3.2 + Bylaws.
4.1 + Articles of Incorporation.
4.2 + Bylaws.
10.1 + Outside Director Stock Plan dated March 1, 1995.
10.2 + Incentive Stock Plan, adopted March 1, 1995.
10.3 + 401(k) Plan, adopted August 14, 1992, as amended.
10.4 + Form of Agency Agreement between Smithway Motor Xpress, Inc. and its
independent commission agents.
10.5 + Memorandum of officer incentive compensation policy.
10.6 + Form of Independent Contractor Agreement between Smithway Motor
Xpress, Inc. and its independent contractor providers of tractors.
10.7 + Asset Purchase Agreement dated January 10, 1996, among Smithway Motor
Xpress, Inc., an Iowa corporation, Smith Trucking Company, a Kansas
corporation, and Delmar Smith, filed as Exhibit 2.4 to this
Registration Statement and incorporated by reference.
10.8 * Asset Purchase Agreement dated October 4, 1996, among Smithway Motor
Xpress, Inc., an Iowa corporation, Smithway Motor Xpress Corp., a
Nevada corporation, Marquardt Transportation, Inc., a South Dakota
corporation, and Ralph and Lucille Marquardt.
10.9 * First Amendment to Asset Purchase Agreement dated as of October 24,
1996, among Smithway Motor Xpress, Inc., an Iowa corporation, Smithway
Motor Xpress Corp., a Nevada corporation, Marquardt Transportation,
Inc., a South Dakota corporation, and Ralph and Lucille Marquardt.
10.10 * Second Amendment to Asset Purchase Agreement dated as of December 27,
1996, among Smithway Motor Xpress, Inc., an Iowa corporation, Smithway
Motor Xpress Corp., a Nevada corporation, Marquardt Transportation,
Inc., a South Dakota corporation, and Ralph and Lucille Marquardt.
10.11 = Credit Agreement dated September 3, 1997, between Smithway Motor
Xpress Corp., as Guarantor, Smithway Motor Xpress, Inc., as Borrower,
and LaSalle National Bank.
10.12 ^ Asset Purchase Agreement dated February 20, 1998, by and among
Smithway Motor Xpress, Inc., East West Motor Express, Inc., and Darwyn
and David Stebbins.
Page 15 of 17
<PAGE>
Exhibit
Number Description
10.13 # First Amendment to Credit Agreement dated March 1, 1998, between
Smithway Motor Xpress Corp., as Guarantor, Smithway Motor Xpress, Inc.,
as Borrower, and LaSalle National Bank.
10.14 # Second Amendment to Credit Agreement dated March 15, 1998, between
Smithway Motor Xpress Corp., as Guarantor, Smithway Motor Xpress, Inc.,
as Borrower, and LaSalle National Bank.
27 # Financial Data Schedule.
- ------------
+ Incorporated by reference from the Company's Registration Statement on
Form S-1, Registration No. 33-90356, effective June 27, 1996.
* Incorporated by reference from the Company's Yearly Report on Form 10-K
for the fiscal year ended December 31, 1996. Commission File No.
000-20793, dated March 31, 1997.
= Incorporated by reference from the Company's Quarterly Report on Form 10-Q
for the period ended September 30, 1997. Commission File No. 000-20793,
dated November 12, 1997.
^ Incorporated by reference from the Company's Form 8-K. Commission File
No.000-20793, dated March 12, 1998.
# Filed herewith.
(b) Reports on Form 8-K.
A Form 8-K was filed on March 12, 1998, pertaining to the
acquisition of certain assets from East West Motor Express, Inc.
Page 16 of 17
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
SMITHWAY MOTOR XPRESS CORP.,
a Nevada corporation
Date: May 14, 1998 By: /s/ Michael E. Oleson
---------------------
Michael E. Oleson
Treasurer and Chief Accounting Officer
Page 17 of 17
<PAGE>
FIRST AMENDMENT TO
CREDIT AGREEMENT
This FIRST AMENDMENT TO CREDIT AGREEMENT (this "Agreement") is entered
into as of March 1, 1998, by and between Smithway Motor Xpress, Inc.
("Borrower"), Smithway Motor Xpress Corp. as Guarantor (the "Guarantor") and
LaSalle National Bank, as Lender (the "Lender").
W I T N E S S E T H:
WHEREAS, the Borrower and the Guarantor entered into a Credit Agreement
dated as of September 3, 1997 and Borrower has requested a Ten Million Dollar
($10,000,000) increase in the Revolving Commitment, part of which will be used
to purchase the assets of East West Motor Express ("East West") and the Lender
has agreed to increase the amount of the Revolving Commitment subject to the
terms and conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual agreements, provisions and
covenants contained herein, the parties agree as follows:
1. Unless otherwise stated herein, all of the capitalized terms contained
in this document shall have the same meanings as contained in the Agreement.
2. The number "$15,000,000" appearing in Section 1.1(a) hereof is hereby
deleted and in lieu thereof is inserted the number "$25,000,000".
3. Section 1.2 is hereby deleted and in lieu thereof is inserted the
following:
1.2 Note. The Revolving Loans made by the Lender shall be evidenced
by a single Revolving Note payable to the order of the Lender in an
amount equal to $25,000,000.00 executed by the Borrower, in
substantially the form of Exhibit A.
4. Section 6.6 of the Agreement is hereby deleted and in lieu thereof is
inserted the following:
6.6 Consolidated Tangible Net Worth. The Borrower shall not permit
its consolidated Tangible Net Worth for any fiscal quarter to be
less than $20,000,000, plus 50% of the Consolidated Net Income for
each fiscal year hereafter .
5. Section 6.7 of the Agreement is hereby deleted and in lieu thereof is
inserted the following:
6.7 Leverage Ratio. The Borrower shall not permit its Leverage
Ratio, as determined as of each fiscal quarter for the twelve month
period ending on such date, to be greater than 2.75:1.
1
<PAGE>
6. Section 6.9 of the Agreement is hereby deleted and in lieu thereof is
inserted the following:
6.9 Total Indebtedness. The Borrower shall not incur Indebtedness,
at any time prior to the first anniversary of this Agreement, in
excess of $50,000,000, at any time after the first anniversary but
prior to the second anniversary of this Agreement, in excess of
$55,000,000, and thereafter, in excess of $65,000,000.
7. The term "Aggregate Commitment" is deleted and in lieu thereof is
inserted the following:
"Aggregate Commitment" means the combined Commitments of the Lender,
which shall initially be in the amount of $25,000,000.00, as such
amount may be reduced from time to time pursuant to this Agreement.
8. The term "Revolving Commitment" is deleted from the Agreement and in
lieu thereof is inserted the following:
"Revolving Commitment" means the combined Revolving Commitment of
the Lender, which shall be equal to $25,000,000.00.
9. Notwithstanding anything to the contrary contained in the Agreement,
Lender hereby consents to the purchase by Borrower of the assets of East West.
10. Borrower expressly acknowledges and agrees that all collateral,
security interests, liens, pledges, and mortgages heretofore, under this
Amendment, or hereafter granted to Lender, including, without limitation, such
collateral, security interests, liens, pledges and mortgages granted under the
Agreement, and all other supplements to the Agreement, extend to and cover all
of the obligations of Borrower to Lender, now existing or hereafter arising
including, without limitation, those arising in connection with the Agreement,
as amended by this Amendment, upon the terms set forth in such agreements, all
of which security interests, liens, pledges, and mortgages are hereby ratified,
reaffirmed, confirmed and approved.
11. Borrower represents and warrants to Lender that (i) it has all
necessary power and authority to execute and deliver this Amendment and perform
its obligations hereunder, (ii) this Amendment and the Agreement, as amended
hereby, constitute the legal, valid and binding obligations of Borrower and are
enforceable against Borrower in accordance with their terms, and (iii) all
representations and warranties of Borrower contained in the Agreement, as
amended, and all other agreements, instruments and other writings relating
thereto, are true, correct and complete as of the date hereof.
12. The parties hereto acknowledge and agree that the terms and provisions
of this Amendment amend, add to and constitute a part of the Agreement. Except
as expressly modified
2
<PAGE>
and amended by the terms of this Amendment, all of the other terms and
conditions of the Credit Agreement and all documents executed in connection
therewith or referred to or incorporated therein remain in full force and effect
and are hereby ratified, reaffirmed, confirmed and approved.
13. If there is an express conflict between the terms of this Amendment
and the terms of the Agreement, or any of the other agreements or documents
executed in connection therewith or referred to or incorporated therein, the
terms of this Amendment shall govern and control.
14. This Amendment may be executed in one or more counterparts, each of
which shall be deemed to be an original.
15. This Amendment was executed an delivered in Chicago, Illinois and
shall be governed by and construed in accordance with the internal laws (as
opposed to conflicts of law provisions) of the State of Illinois.
IN WITNESS WHEREOF, this Agreement has been duly executed as of the day
and year specified at the beginning hereof.
SMITHWAY MOTOR XPRESS, INC., as Borrower
By: /s/ G. Larry Owens
Title: Executive Vice President
Address Notice:
P.O. Box 404
Fort Dodge, Iowa 50501
Attn:
Facsimile: (515) 576-3304
Tel: (515) 576-7418
LASALLE NATIONAL BANK, as Lender
By: /s/ Bruce Linger
Title: Senior Vice President
Address notices and Lending Office::
135 S. LaSalle
Chicago, Illinois 60603
Attn: Mr. Bruce Linger
Facsimile: (312) 904-6150
Tel: (312) 904-8356
3
<PAGE>
CONSENT AND RATIFICATION
The undersigned, pursuant to that certain Guaranty dated as of
September 3, 1997, is a guarantor of all of the obligations of the Borrower to
the Lender under the terms of the Credit Agreement dated as of September 3,
1997, and hereby consents to the First Amendment to Credit Agreement. Guarantor
hereby reaffirms and ratifies his guaranty as if the same were fully set forth
herein.
SMITHWAY MOTOR XPRESS CORP, as Borrower
By: /s/ G. Larry Owens
Title: Executive Vice President
Address Notice:
P.O. Box 404
Fort Dodge, Iowa 50501
Attn:
Facsimile: (515) 576-3304
Tel: (515) 576-7418
T:\40934\09397\1st Amendment.wpd 02/18/98
4
<PAGE>
EXHIBIT A
AMENDED AND RESTATED NOTE
$25,000,000 as of March 1, 1997
Smithway Motor Xpress, Inc. an Iowa corporation (the "Borrower"),
promises to pay to the order of LaSalle National Bank (the "Lender") the lesser
of the principal sum of Twenty Five Million Dollars ($25,000,000) or the
aggregate unpaid principal amount of all Loans made by the Lender to the
Borrower pursuant to Article II of the Credit Agreement (as the same may be
amended or modified, the "Agreement") hereinafter referred to, in immediately
available funds at the main office of LaSalle National Bank in Chicago,
Illinois, together with interest on the unpaid principal amount hereof at the
rates and on the dates set forth in the Agreement. The Borrower shall pay the
principal of and accrued and unpaid interest on the Loans in full on the
Revolving Termination Date.
The Lender shall record in accordance with its usual practice, the
date, amount and interest rate of each Loan and the date and amount of each
principal and interest payment hereunder.
This Note is issued pursuant to, and is entitled to the benefits of,
the Credit Agreement, dated as of September 3, 1997, and as amended by the First
Amendment to Credit Agreement, dated as of March 1, 1998, between the Borrower
and Lender, to which Agreement, as it may be amended from time to time,
reference is hereby made for a statement of the terms and conditions governing
this Note, including the terms and conditions under which this Note may be
prepaid or its maturity date accelerated. Capitalized terms used herein and not
otherwise defined herein are used with the meanings attributed to them in the
Agreement.
SMITHWAY MOTOR XPRESS, INC.
By: /s/ G. Larry Owens
Print Name: G. Larry Owens
Title: Exec. Vice President &
Chief Financial Officer
<PAGE>
SECOND AMENDMENT TO
CREDIT AGREEMENT
This SECOND AMENDMENT TO CREDIT AGREEMENT (this "Agreement") is entered
into as of March 15, 1998, by and between Smithway Motor Xpress, Inc.
("Borrower"), Smithway Motor Xpress Corp. as Guarantor (the "Guarantor") and
LaSalle National Bank, as Lender (the "Lender").
W I T N E S S E T H:
WHEREAS, the Borrower and the Guarantor entered into a Credit Agreement
dated as of September 3, 1997, and a First Amendment to Credit Agreement dated
as of March 1, 1998 and the parties agree that certain modifications are
required to the Credit Agreement;
NOW, THEREFORE, in consideration of the mutual agreements, provisions and
covenants contained herein, the parties agree as follows:
1. Unless otherwise stated herein, all of the capitalized terms contained
in this document shall have the same meanings as contained in the Agreement.
2. The term "Borrowing Base" appearing in Section 9.1 hereof is hereby
deleted and in lieu thereof is inserted the following:
"Borrowing Base" means an amount as of any time of
determination equal to the sum of: (a) eighty five percent (85%) of
the aggregate amount of the Borrower's then existing Eligible
Accounts , plus (b) eighty five percent (85%) of the aggregate
amount of East West's then existing Eligible Accounts (which relate
to accounts owed or owing to East West), plus (c) seventy five
percent (75%) of the aggregate net book value of the Borrower's and
East West's unencumbered trucks and trailers. Net book value is
defined as the depreciated book value of all of Borrower's and East
West's trucks and trailers less all indebtedness and lease
obligations relating thereto.
3. Concurrently with the execution of this Amendment, East West Motor
Express, Inc. ("East West") shall execute a Guaranty, the form of which is
attached hereto as Exhibit A.
4. Borrower expressly acknowledges and agrees that all collateral,
security interests, liens, pledges, and mortgages heretofore, under this
Amendment, or hereafter granted to Lender, including, without limitation, such
collateral, security interests, liens, pledges and mortgages granted under the
Agreement, and all other supplements to the Agreement, extend to and cover all
of the obligations of Borrower to Lender, now existing or hereafter arising
including, without limitation, those arising in connection with the Agreement,
as amended by this Amendment, upon the terms set forth in such agreements, all
of which security interests, liens, pledges, and mortgages are hereby ratified,
reaffirmed, confirmed and approved.
1
<PAGE>
5. Borrower represents and warrants to Lender that (i) it has all
necessary power and authority to execute and deliver this Amendment and perform
its obligations hereunder, (ii) this Amendment and the Agreement, as amended
hereby, constitute the legal, valid and binding obligations of Borrower and are
enforceable against Borrower in accordance with their terms, and (iii) all
representations and warranties of Borrower contained in the Agreement, as
amended, and all other agreements, instruments and other writings relating
thereto, are true, correct and complete as of the date hereof.
6. The parties hereto acknowledge and agree that the terms and provisions
of this Amendment amend, add to and constitute a part of the Agreement. Except
as expressly modified and amended by the terms of this Amendment, all of the
other terms and conditions of the Credit Agreement, as amended, and all
documents executed in connection therewith or referred to or incorporated
therein remain in full force and effect and are hereby ratified, reaffirmed,
confirmed and approved.
7. If there is an express conflict between the terms of this Amendment and
the terms of the Agreement, or any of the other agreements or documents executed
in connection therewith or referred to or incorporated therein, the terms of
this Amendment shall govern and control.
8. This Amendment may be executed in one or more counterparts, each of
which shall be deemed to be an original.
9. This Amendment was executed an delivered in Chicago, Illinois and shall
be governed by and construed in accordance with the internal laws (as opposed to
conflicts of law provisions) of the State of Illinois.
IN WITNESS WHEREOF, this Agreement has been duly executed as of the day
and year specified at the beginning hereof.
SMITHWAY MOTOR XPRESS, INC., as Borrower
By: /s/ G. Larry Owens
Title: Executive Vice President
Address Notice:
P.O. Box 404
Fort Dodge, Iowa 50501
Attn:
Facsimile:
Tel:
2
<PAGE>
LASALLE NATIONAL BANK, as Lender
By: /s/ Bruce Linger
Title: Senior Vice President
Address notices and Lending Office::
135 S. LaSalle
Chicago, Illinois 60603
Attn: Mr. Bruce Linger
Facsimile: (312) 904-6150
Tel: (312) 904-8356
CONSENT AND RATIFICATION
The undersigned, pursuant to that certain Guaranty dated as of
September 3, 1997, is a guarantor of all of the obligations of the Borrower to
the Lender under the terms of the Credit Agreement dated as of September 3,
1997, as amended, and hereby consents to the Second Amendment to Credit
Agreement. Guarantor hereby reaffirms and ratifies his guaranty as if the same
were fully set forth herein.
SMITHWAY MOTOR XPRESS CORP, as Guarantor
By: /s/ G. Larry Owens
Title: Executive Vice President
Address Notice:
P.O. Box 404
Fort Dodge, Iowa 50501
Attn:
Facsimile:
Tel:
T:\40934\09397\2ndAmendment.wpd 03/16/98
3
<PAGE>
EXHIBIT A
GUARANTY
For value received and in consideration of any and all loans,
advances or other financial accommodations provided by LASALLE NATIONAL BANK, a
national banking association (referred to herein, together with its successors,
assigns and transferees, as "Lender") to SMITHWAY MOTOR XPRESS, INC. (the
"Borrower"), including, but not limited to, the revolving loans described in
that certain Credit Agreement dated as of September 3, 1997, as thereafter
amended from time to time (the "Credit Agreement") entered into by Lender
Borrower, and the undersigned.
EAST WEST MOTOR EXPRESS, INC., a South Dakota corporation
("Guarantor"), derives a substantial financial benefit from the Borrower, and
hereby unconditionally, irrevocably and absolutely guarantees (a) the full and
prompt payment, when due, whether at maturity or earlier by reason of
acceleration or otherwise, and at all times thereafter of all obligations of the
Borrower to Lender whenever and however created, including, but not limited to,
obligations of the Borrower with respect to payment of the principal of,
prepayment charges (if any) and interest on the Loans (including interest on any
overdue principal and prepayment charges, if any, and, to the extent permitted
by law, on any overdue interest), and all other amounts due to Lender under the
Credit Agreement and the other Loan Documents (this and all other capitalized
terms used herein and not otherwise defined shall have the meanings ascribed
thereto in the Credit Agreement), and (b) the prompt and faithful performance,
discharge and observance of any of all other obligations, covenants, agreements,
conditions, representations, warranties, indemnities and liabilities of the
Borrower to be performed, discharged or observed by the Borrower under or
pursuant to any agreement of the Borrower with Lender, including, but not
limited to the Credit Agreement, the other Loan Documents, and all agreements,
instruments and documents executed or delivered in connection therewith or
pursuant thereto (all such obligations of the Borrower guaranteed by the
Guarantor herein being hereinafter called the "Obligations"). If the Borrower
defaults in the payment when due of any of the Obligations (whether at their
stated maturity, by acceleration, or otherwise), the Guarantor shall pay to the
unpaid holders of the Obligations (the "Holders"), on demand, the full amount of
such Obligations in immediately available funds at the place provided in the
relevant document. The Guarantor further agrees to pay (a) all costs and
expenses including, without limitation, all court costs and reasonable
attorneys' fees and expenses paid or incurred by each of the Holders in
endeavoring to collect all or any part of the Obligations from, or in
prosecuting any action against, the Borrower, the Guarantor, or any other
guarantor of all or any part of the Obligations or in endeavoring to realize
upon any or all collateral (including, but not limited to Collateral as defined
under any of the Credit Agreement or the other Loan Documents), and (b) to the
extent permitted by law, interest on the Obligations and such costs and expenses
at the applicable per annum rate set forth in the relevant document.
The Guarantor hereby represents and warrants that:
(a) The Guarantor has full power, authority and legal right to
execute this Guaranty.
<PAGE>
(b) This Guaranty has been duly authorized, executed and delivered
by the Guarantor and constitutes a legal, valid and binding obligation of the
Guarantor enforceable in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, or other laws relative to or affecting the
enforcement of creditors' rights generally in effect from time to time and by
general principles of equity.
(c) No consent, approval or authorization of or filing with any
Governmental Body or other Person on the part of the Guarantor is required in
connection with this Guaranty, except such consents, approvals and
authorizations, if any, as have been obtained.
(d) The execution, delivery and performance of this Guaranty will
not violate any provision of any applicable law or regulation or of any Order,
domestic or foreign, or of the articles or bylaws of the Guarantor or of any
securities issued by the Guarantor or of any mortgage, indenture, lease,
contract, or loan agreement to which the Guarantor is a party, or any other
agreement, instrument or undertaking to which the Guarantor is a party or which
purports to be binding upon the Guarantor or upon any of its assets, and will
not result in the creation or imposition of any Lien on any of the assets of the
Guarantor except as contemplated by this Guaranty, the Credit Agreement, the
other Loan Documents or any other agreements between the Borrower and Lender.
The Guarantor hereby waives notice of acceptance of this Guaranty by
any Holder, of any action taken or omitted in reliance hereon or of any default
in the payment of any of the Obligations or in the performance of any covenants
and agreements of the Borrower contained in the Credit Agreement or any of the
other Loan Documents or any other agreement between the Borrower and Lender, and
any diligence, presentment, demand, protest, dishonor or notice of any kind.
This Guaranty constitutes a present and continuing guaranty of
payment and performance and not of collection of the Obligations, and shall be
absolute, primary, present and unconditional; and to the extent permitted by
applicable law, shall not be subject to any counterclaim, setoff, reduction or
defense based upon any claim the Guarantor may have against the Borrower or any
other Person and shall remain in full force and effect without regard to, and
shall not be released, discharged or in any way affected or impaired by any
thing, event, happening, matter, circumstance or condition whatsoever (whether
or not the Guarantor shall have any knowledge or notice thereof or shall consent
thereto), including, without limitation:
(i) any amendment or other modification of or supplement
to any provision of any agreement or document between the Borrower
and Lender, including, but not limited to the Credit Agreement or
any other Loan Document or any assignment or transfer thereof,
including without limitation any renewal or extension of the terms
of payment of any of the Loans or any other indebtedness of the
Borrower to Lender or the granting of time in respect of any payment
thereof, or any furnishing or acceptance of security or any release
of any security furnished or accepted for any of the Obligations;
<PAGE>
(ii) any waiver, consent, extension, granting of time,
forbearance, indulgence or other action or inaction under or in
respect of this Guaranty, the Credit Agreement, the other Loan
Documents, or any other agreements between the Borrower and Lender
or any of the Loans or other indebtedness of the Borrower to Lender
or any exercise or non-exercise of any right, remedy or power in
respect hereof or thereof;
(iii) any bankruptcy, insolvency, reorganization,
arrangement, readjustment, composition, liquidation or similar
proceedings with respect to the Borrower or any other Person except
the Guarantor, or the properties or creditors of any of them;
(iv) the occurrence of any event of default or event
which, with the giving of notice or lapse of time, or both, would
become an event of default, as defined under the relevant document,
or any invalidity or unenforceability of, or any misrepresentation,
irregularity or other defect in, the Credit Agreement, the other
Loan Documents, or any other agreement between the Borrower and
Lender;
(v) any transfer of any assets to or from the Guarantor
or the Borrower, including without limitation any transfer or
purported transfer to the Guarantor or the Borrower from any Person,
any invalidity, illegality of, or inability to enforce, any such
transfer or purported transfer, any consolidation or merger of the
Guarantor or the Borrower with or into any other corporation or
entity, or any change whatsoever in the objects, capital structure,
constitution or business of the Guarantor or the Borrower or any
Affiliate or Subsidiary of the Guarantor or of the Borrower;
(vi) any failure on the part of the Borrower or any
other Person to perform or comply with any term of the Loans, the
Credit Agreement, the other Loan Documents, or any other agreement
between the Borrower and Lender;
(vii) any suit or other action brought by the Guarantor,
the Borrower or any other Person, or by any partner, stockholder or
creditor of any of such Persons, for any reason whatsoever,
including without limitation any suit or action in any way attacking
or involving any issue, matter or thing in respect of the Loans, the
Credit Agreement, the other Loan Documents, or any other agreement
between the Borrower and Lender;
(viii) any lack or limitation of status or power,
incapacity or disability of the Borrower or of any officer, director
or agent of the Borrower or any of its stockholders;
(ix) the cessation from any cause whatsoever (other than
payment of the Obligations) of liability of the Borrower;
<PAGE>
(x) the termination of, or release or compromise of the
Credit Agreement, the other Loan Documents, or any other agreement
between the Borrower and Lender or any other agreement or document
executed or delivered in connection therewith or pursuant thereto
(other than as a result of payment of the Obligations);
(xi) any lack or limitation of the genuineness,
validity, regularity or enforceability of the Credit Agreement, any
Loan Document, any other Loan Document or any other agreement
between the Borrower and Lender or any other agreement or document
executed or delivered in connection therewith or pursuant thereto;
(xii) any failure by any of the Holders to take any
steps to perfect or maintain any security interest in or Liens upon,
or to preserve their rights to any security or collateral for the
Obligations;
(xiii) any election by any of the Holders, in any
proceeding instituted under Chapter 11 of Title 11 of the United
States Code (11 U.S.C. ss. 101 et seq.) (the "Bankruptcy Code"), of
the application of Section 1111(b)(2) of the Bankruptcy Code;
(xiv) the disallowance, under Section 502 of the
Bankruptcy Code, of all or any portion of any of the Holders' claims
for repayment of the Obligations;
(xv) any failure to pursue or enforce any rights or
remedies which any of the Holders may have against any other
guarantor of the Obligations, or any of them; or
(xvi) any other thing, event, happening, matter,
circumstance or condition whatsoever, not in any way limited to the
foregoing, which might otherwise constitute a legal or equitable
discharge or defense of a guarantor.
Notwithstanding anything to the contrary contained herein or in any
other agreement, document or instrument, the Guarantor hereby irrevocably waives
, until such time as the Obligations have been paid in full, all rights of
subrogation (whether such rights arise under common law, contract or federal law
(including, without limitation, Section 509 of the Bankruptcy Code)) to the
claims of the Holders against the Borrower, and waives all contractual,
statutory and common law rights of contribution, reimbursement, indemnification
and similar rights and claims (as such term is defined in the Bankruptcy Code)
against the Borrower which may arise in connection with, or as a result of, this
Guaranty.
The Guarantor expressly waives any right it may have to require any
Person seeking enforcement of its obligations hereunder to (a) proceed against
the Borrower or any other guarantor or Person, (b) proceed against or exhaust
any security, or (c) pursue any other remedy in the power
<PAGE>
of the Person seeking such enforcement. The Holders from time to time may, at
their election, exercise any right or remedy they may have against the
Guarantor, including, without limitation, the right to foreclose upon any such
security by judicial or non-judicial sale, without affecting or limiting in any
way the liability of the Guarantor hereunder, except to the extent the
Obligations have been paid. The Guarantor waives any defense arising out of the
absence, impairment or loss of any right of reimbursement, contribution or
subrogation or any other right or remedy of the Guarantor against the Borrower
or any such security, whether resulting from such election by the Holders of the
Obligations or otherwise.
The Guarantor agrees that its obligations hereunder shall be
automatically reinstated if and to the extent that for any reason any payment by
or on behalf of the Borrower or the Guarantor is rescinded or must be otherwise
restored by any Holder of any Obligations, whether as a result of any
proceedings in bankruptcy or reorganization or otherwise. The Guarantor further
agrees that, without limiting the generality of the foregoing, if an event of
default shall have occurred and be continuing and any Holder is prevented by
applicable law from exercising any remedy under this Guaranty or under any of
the Obligations, such Holder shall be entitled to receive from the Guarantor
upon demand therefor, the sums which would otherwise have been due from the
Borrower had such remedies been exercised.
The Guarantor agrees that this Guaranty shall continue in full force
and effect and may not be terminated or otherwise revoked by the Guarantor until
the Obligations shall have been fully discharged.
This Guaranty shall be binding upon the Guarantor and upon the
successors and assigns of the Guarantor and shall inure to the benefit of Lender
and each other Holder and their respective successors and assigns; all
references herein to the Borrower and to the Guarantor shall be deemed to
include their respective successors and permitted assigns, including, without
limitation, a receiver, trustee or debtor-in-possession of or for the Borrower
or the Guarantor. All references to the singular shall be deemed to include the
plural where the context so requires.
THIS GUARANTY SHALL BE INTERPRETED, AND THE RIGHTS AND LIABILITIES
OF THE PARTIES HERETO DETERMINED, IN ACCORDANCE WITH THE INTERNAL LAWS (AS
OPPOSED TO CONFLICTS OF LAW PROVISIONS) AND THE DECISIONS OF THE STATE OF
ILLINOIS.
THE GUARANTOR HEREBY CONSENTS AND AGREES TO THE JURISDICTION OF ANY
STATE OR FEDERAL COURT SITTING IN THE COUNTY OF COOK, STATE OF ILLINOIS, AND
WAIVES ANY OBJECTION BASED ON VENUE OR FORUM NON CONVENIENS WITH RESPECT TO ANY
ACTION INSTITUTED THEREIN, AND AGREES THAT ANY DISPUTE CONCERNING THE
RELATIONSHIP BETWEEN LENDER OR HOLDERS OF OBLIGATIONS, ON THE ONE HAND, AND THE
GUARANTOR, ON THE OTHER HAND, OR THE CONDUCT OF ANY PARTY IN CONNECTION WITH
THIS GUARANTY OR OTHERWISE SHALL BE HEARD ONLY IN THE COURTS DESCRIBED ABOVE.
<PAGE>
Wherever possible each provision of this Guaranty shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Guaranty shall be prohibited by or invalid under
such law, such provision shall be ineffective to the extent of such prohibition
or invalidity without invalidating the remainder of such provision or the
remaining provisions of this Guaranty.
THE GUARANTOR HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM,
DEMAND, ACTION OR CAUSE OF ACTION (i) ARISING UNDER THIS GUARANTY OR ANY OTHER
INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH
OR (ii) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF
THE GUARANTOR IN RESPECT OF THIS GUARANTY OR ANY OTHER INSTRUMENT, DOCUMENT OR
AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH OR THE TRANSACTIONS
RELATED HERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND
WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE. THE GUARANTOR HEREBY AGREES
AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE
DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT ANY PARTY MAY FILE AN ORIGINAL
COUNTERPART OR A COPY OF THIS GUARANTY WITH ANY COURT AS WRITTEN EVIDENCE OF THE
CONSENT OF THE GUARANTOR TO THE WAIVER OF ITS RIGHT TO TRIAL BY JURY.
IN WITNESS WHEREOF, this Guaranty has been duly executed by the
Guarantor as of the 15th day of March, 1998.
EAST WEST MOTOR EXPRESS, INC., a South Dakota
corporation
By: /s/ William G. Smith
Title: Director
<PAGE>
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<CIK> 0000941914
<NAME> SMITHWAY MOTOR XPRESS CORP.
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<S> <C>
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<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
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0
0
<COMMON> 50
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<INCOME-PRETAX> 1988
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<INCOME-CONTINUING> 1143
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<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1143
<EPS-PRIMARY> 0.23
<EPS-DILUTED> 0.23
</TABLE>
