SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): October 30, 1998
SMITHWAY MOTOR XPRESS CORP.
(Exact name of registrant as specified in its charter)
NEVADA 000-20793 42-1433844
(State or other jurisdiction (Commission File Number) (IRS Employer ID No.)
of incorporation)
2031 Quail Avenue, Fort Dodge, Iowa 50501
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area (515) 576-7418
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ITEM 2. Acquisition or Disposition of Assets
Smithway Motor Xpress Corp., a Nevada corporation ("SMXC"), is the
reporting company under this Form 8-K. On October 30, 1998, SMXC formed a new,
wholly-owned subsidiary ("New JHT") in connection with the purchase of certain
assets from the following related businesses: JHT, Inc., a Minnesota corporation
("Old JHT"); JHT LOGISTICS, INC., a Minnesota corporation; Bass Brook Truck
Service, Inc., a Minnesota corporation; and JERDON TERMINAL HOLDINGS, LLC, a
Minnesota limited liability company (individually a "Seller" and together the
"Sellers" or the "Related Businesses").
The Related Businesses operated a terminal in Cohasset, Minnesota from
which they provided regional, dry van, truckload transportation of general
commodities. The Related Businesses generated approximately $24 million in
combined revenue in 1997. New JHT intends to continue operating the equipment in
this manner, using the assets acquired to augment the existing operations of
SMXC's other wholly-owned subsidiaries. SMXC is a truckload carrier that
provides nationwide transportation of diversified freight, concentrating
primarily on the flatbed segment of the truckload market.
Effective October 30, 1998, New JHT consummated the acquisition of certain
assets owned by the Related Businesses pursuant to the Asset Purchase Agreement
dated September 23, 1998 (the "Agreement"). The Agreement called for a purchase
price of approximately $12.5 million in cash, the first $10.2 million of which
was paid directly to the Sellers' creditors to retire all obligations and remove
all liens relating to the certain assets acquired. The purchased assets included
tractors, trailers, prepaid licenses, miscellaneous assets and inventory, and
mobile communication terminals. The purchase of the terminal location and 12
surrounding acres from JERDON TERMINAL HOLDINGS, LLC is contingent upon the
results and any required remediation in connection with an environmental survey
of the property. In the interim New JHT is renting the terminal for $100 per
day.
Under the Agreement, the Sellers, their shareholders or members, and the
spouses of the shareholders or members are prohibited from competing in the
truckload freight transportation business for a period of three years after the
later of the individual shareholder or spouse's final day of employment by SMXC
or any affiliate or the date of Closing. Following the Closing for a period of
six months, Jerry H. Hammann will provide consulting services to New JHT and
SMXC's other wholly-owned subsidiaries, as an independent contractor. No
consideration separate from the Agreement itself is allocated to either the
noncompetition or consultation undertakings.
SMXC increased its line of credit with LaSalle National Bank to finance
the transaction. The consideration exchanged was determined through arms'-length
negotiations. There is no material relationship between the Related Businesses
or their shareholders or members and SMXC, New JHT, or SMXC's other wholly-owned
subsidiaries, any of their affiliates, any of their directors or officers, or
any associate of any such director or officer.
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The reporting company is not required to file financial statements of the
acquired entity or pro forma financial statements in connection with this
Current Report on Form 8-K.
ITEM 7. Exhibits.
The terms of the acquisition are more fully described in the Agreement and
the First Amendment to the Asset Purchase Agreement and Real Estate Purchase
Agreement, copies of which are attached hereto as Exhibits 2.1 and 2.2,
respectively. In addition, the SMXC press release announcing the acquisition is
filed herewith as Exhibit 99.
2.1 Asset Purchase Agreement dated September 23, 1998, by and among
Smithway Motor Xpress, Inc., JHT, Inc.; LOGISTICS, INC.; Bass Brook
Truck Service, Inc.; JERDON TERMINAL HOLDINGS, LLC;, and Jerry H.
Hammann, Donna Hammann, Vicki Dunell, Tammi Smith, and Jerry S.
Hammann*
2.2 First Amendment to Asset Purchase Agreement and Real Estate Purchase
Agreement dated October 29, 1998, by and among SMITHWAY MOTOR
XPRESS, INC.; JHT, Inc.; JHT LOGISTICS, INC.; Bass Brook Truck
Service, Inc.; JERDON TERMINAL HOLDINGS, LLC; and Jerry H. Hammann,
Donna Hammann, Vicki Dunnell, Tammi Smith, and Jerry S. Hammann*
99 Press release issued by SMXC announcing the transaction
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* All of the schedules and exhibits have been omitted. SMXC hereby agrees
to furnish supplementally to the Commission a copy of any schedule or
exhibit omitted upon the Commission's request.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
SMITHWAY MOTOR XPRESS CORP.
Date: November 10, 1998 By: /s/ G. LARRY OWENS
G. Larry Owens, Executive Vice President
and Chief Operating Officer
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Exhibit 2.1
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ASSET PURCHASE AGREEMENT
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THIS AGREEMENT is made as of September 23, 1998, by and among SMITHWAY
MOTOR XPRESS, INC., an Iowa corporation ("Buyer"); JHT, Inc., a Minnesota
corporation ("JHT"), JHT LOGISTICS, INC., a Minnesota corporation ("LOGISTICS"),
Bass Brook Truck Service, Inc., a Minnesota corporation ("Bass Brook"), and
JERDON TERMINAL HOLDINGS, LLC ("JERDON"), a Minnesota limited liability company
(individually a "Company" and together the "Companies"), and Jerry H. Hammann,
Donna Hammann, Vicki Dunnell, Tammi Smith, and Jerry S. Hammann, shareholders of
the Companies, (individually a "Shareholder" and together the "Shareholders").
RECITALS
The Companies conduct activities related to the trucking business and are
the owners of certain assets. The Companies propose to sell and Buyer proposes
to acquire such assets. The parties desire to reduce their agreement to writing
and make certain other agreements as set forth herein.
NOW, THEREFORE, in consideration of the foregoing recitals and the mutual
covenants herein contained, the parties agree as follows:
TERMS
1. Purchase and Condition of Assets.
1.1 Purchase of Specific Assets. At the Closing, the Companies shall
sell to Buyer and Buyer shall purchase for the price set forth on Exhibit
A attached hereto, as adjusted under Section 1.5 (the "Purchase Price"),
the assets listed on Exhibit A (collectively, the "Transferred Assets")
free and clear of all liens, claims, encumbrances, security interests, and
impairments of title of any kind or nature ("Liens"). Buyer shall deliver
the Purchase Price as follows: (i) the amount required to retire all
obligations and remove all Liens relating to the Transferred Assets (the
"Payoff Amount") shall be paid to the respective holders, as set forth in
the Payoff Letters, as defined in Section 6.4, (ii) the balance of the
Purchase Price, if any, shall be delivered to the Companies at Closing in
accordance with the Transferred Assets sold by each as set forth on
Exhibit A, and (iii) the amount of the useable portion of any prepaid
licenses and permits on the Transferred Assets as of Closing shall be
delivered to the appropriate Company at Closing ((ii) and (iii) being
referred to as the "Cash Purchase Price" (with the portion of any prepaid
license or permit later determined to be invalidly transferred being
refunded by the Companies to Buyer and subject to set-off if not
refunded). The parties agree that the Purchase Price, Real Estate purchase
price, Goodwill Payment, and all other costs that are capable of being
capitalized shall be allocated among the Transferred Assets sold by each
Company on IRS Form 8594 attached hereto as Exhibit B.
1.2 Real Estate Purchase. At Closing, Buyer shall purchase for
$645,000, less the amount required to retire all obligations and remove
all Liens relating to the Real Estate, the approximately 12 acres of real
estate and any and all improvements thereon (the "Real Estate") presently
owned by JERDON and comprised of an office building, maintenance shop, and
yard,
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as more fully described in the real estate purchase agreement attached
hereto as Exhibit C ("Purchase Agreement").
1.3 Goodwill Payment. Buyer shall purchase the goodwill relating to
the Companies' business by delivering the following amounts to JHT (the
"Goodwill Payment"):
1.3.1 At Closing, $482,280 shall be delivered;
1.3.2 On February 1, May 1, August 1, and November 1 of 1999,
$60,285 shall be delivered; and
1.3.3 On February 1, May 1, August 1, and November 1, of 2000,
$60,285, minus the "Adjustment Amount," if applicable, shall be
delivered. The Adjustment Amount is $31,408 and shall apply only if
revenue generated from Buyer's service to Blandin is less than
$3,120,000 for the period from Closing to the first anniversary of
Closing.
1.4 Condition of Transferred Assets. Buyer shall have the
opportunity to inspect the Transferred Assets. Each of the Companies and
each of the Shareholders, jointly and severally, represent and warrant the
following as to the condition and title of the Transferred Assets: (i)
each of the Transferred Assets is in good repair and condition and, if a
tractor or trailer, acceptable for use as intended in the interstate
transportation of truckloads of freight; (ii) each tractor and trailer has
been maintained in accordance with the manufacturer's specifications and
warranties; (iii) each tractor and trailer meets all DOT requirements, has
less than $250 of damage, does not require engine or drive train repair,
has no seat tears or broken or cracked glass, has all major systems
functioning properly, and has all required safety equipment; (iv) each
Transferred Asset other than tractors and trailers is in good repair and
condition, not obsolete, and adequate for use in the ordinary course of
business; (v) each of the tractors and trailers has at least 50% tread
depth on all tires and at least 50% wear remaining on all brakes; and (vi)
each of the Transferred Assets is owned by the Companies free and clear of
all Liens other than Liens represented by Payoff Letters (as hereinafter
defined).
1.5 Adjustment to Purchase Price. The Purchase Price shall be
reduced by the amount, if any, equal to (a) the value of any Transferred
Assets that are missing, destroyed, or damaged beyond ordinary repair (any
such assets being excluded from the transaction and retained by the
Companies) plus (b) the amount required to bring the Transferred Assets
into the condition required under Section 1.4 hereof. As an alternative to
adjusting the Purchase Price under clause (b) of the preceding sentence,
the parties may agree to exclude an asset from the transaction. In such
event, the Companies shall retain the asset and the Purchase Price shall
be reduced accordingly. To the extent any deficiency in the condition of a
Transferred Asset are discovered after Closing, the Companies and
Shareholders shall indemnify the Buyer for such amount under Section 9.2
hereof and such amount shall be eligible for set-off under Section 9.4
hereof.
1.6 Risk of Loss. Subject to Section 8.1, the Companies shall bear
the risk of loss and repair to the Transferred Assets arising from events
or circumstances occurring prior to Closing, including the cost of repair
for material damage or restoration to operating condition where such
damage to or cessation of operation of any of the Transferred Assets
occurs prior to Closing. Subject to Section 8.1, Buyer shall bear the risk
of loss to the Transferred Assets arising from events or circumstances
occurring after Closing.
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2. Representations of the Companies and Shareholders. Each of the
Companies and each of the Shareholders, jointly and severally, represent and
warrant the following:
2.1 Approvals. The Companies are duly formed, validly existing
entities, with full power and authority to enter into this Agreement by
and through the person executing their name hereto, and any approvals
required will have been obtained at or prior to Closing, including but not
limited to requisite approvals of the Board of Directors, shareholders,
managers, and members, as appropriate, of the Companies.
2.2 Authorizations. At and as of the Closing, all corporate,
governmental, and other actions (other than those to be taken by Buyer)
will have been duly taken to approve and authorize the execution and
delivery of this Agreement, the transfer of the Transferred Assets at the
Closing, the performance and consummation by the Companies of the
transactions contemplated herein, and the execution and delivery of all
documents required hereunder and incidental hereto. The Companies have
obtained all consents of third parties required to transfer the
Transferred Assets and take the other actions required of the Companies
under this Agreement. The execution, delivery, and performance of this
Agreement by the Companies and the Shareholders will not result in
violation of, or a default under, any agreement, charter document, or
other obligation to which any of the Companies or the Shareholders is a
party or by which they may be bound. This Agreement constitutes the valid
and binding obligation of the Companies and the Shareholders and is
enforceable in accordance with its terms.
2.3 Financial Statements. The Companies have delivered to Buyer
copies of their balance sheets and the related statements of earnings and
retained earnings and of changes in financial position at and for the
periods ended December 31, 1995, 1996, and 1997, and June 30, 1998. Such
financial statements present fairly the financial condition and results of
the operations of the respective Companies at and for the respective
periods to which they relate.
2.4 Financial and Operating Information. The Companies have provided
to Buyer operating information, including operating information depicted
on the income statement, rates charged customers, miles per tractor, empty
miles, and other information underlying the financial statements provided
to Buyer. All of such information is accurate and fairly depicts the
operations represented by such information.
2.5 No Changes. Since December 31, 1997, the Companies have not
experienced any material, adverse event, including but not limited to a
notification of termination of or reduction in customer traffic or
revenues or efforts to organize employees in a collective bargaining unit.
2.6 Litigation. There is no action, suit, proceeding, demand, claim,
assessment, judgment, litigation, Lien, claim, or governmental
investigation against any of the Companies or the Shareholders or
otherwise outstanding, pending, or threatened which (i) questions or might
question the validity or legality of the transaction contemplated hereby,
(ii) seeks or might seek to enjoin any transaction contemplated hereby,
(iii) seeks or might seek damages on account of the consummation of any
transaction contemplated hereby, (iv) seeks or might seek to impair or
place a Lien on the Transferred Assets or the Real Estate, or (v) seeks
damages from any of the Companies (other than claims for which the
Companies are fully insured). None of the Companies or the Shareholders is
the subject of any claim involving any employment, tax, or environmental
matter, nor are any of the Companies aware of any factual basis of such a
claim.
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2.7 No Default. None of the Companies is in material default under
any contract, agreement, license, franchise, lease, permit, or other
document which might affect Buyer's rights thereunder if assigned to
Buyer, the condition of the Transferred Assets or Real Estate, or any
performance hereunder.
2.8 No Restriction. None of the Companies or the Shareholders is a
party to, or subject to or bound by, any judgment, injunction, or decree
of any court or governmental authority that restricts or prohibits the
performance by the Companies or the Shareholders of the terms and
conditions of this Agreement.
2.9 Taxes. All federal, state, provincial, local, and other
governmental income, payroll, excise, sales, personal property, franchise,
and other taxes or assessments assessed by jurisdictions governing any of
the Companies or the Shareholders have been paid when due and all tax
returns lawfully due prior to Closing have been prepared and filed, and
none of the Companies or the Shareholders has granted any waiver currently
in effect of the statute of limitations with respect to any such taxes or
assessments. The Companies and the Shareholders have complied in all
respects with all applicable laws, rules, and regulations relating to the
payment and withholding of taxes and have, within the time and in the
manner prescribed by law, withheld from employee wages and paid over to
the proper governmental authorities all amounts required to be so withheld
and paid over under all applicable laws.
2.10 Compliance With Laws. The Companies have owned, leased, and
used all of their properties, including the Real Estate, and have
conducted their business, in compliance in all respects with all
applicable laws. None of the Companies has been charged with, or is under
investigation by, any governmental authority with respect to, any
violation of law. No material judgment is unsatisfied against any of the
Companies, and none of the Companies or the Shareholders is subject to any
material stipulation, order, consent, or decree arising from an action
before any governmental authority. The Companies possess all material
permits, licenses, franchises, and other approvals ("Permits") required to
operate their businesses. Such Permits are in full force and effect and no
proceeding is pending or threatened to revoke or limit any Permit, and the
Companies are operating in compliance in all material respects with all
Permits. All of the Companies' rolling stock is properly licensed and
registered with all applicable authorities in accordance with normal
industry practices, such licenses and registrations are current, all
current license plates and stickers are properly affixed to such
equipment, and all fees have been paid.
2.11 Compliance Reviews. JHT currently has a "satisfactory" safety
and fitness rating from the Federal Highway Administration ("FHWA") as a
result of its most recent compliance review. JHT did not receive an
unsatisfactory or conditional rating for any of the factors that are
considered by FHWA in determining a carrier's safety fitness rating. The
Companies are in compliance in all material respects with all Federal
Motor Carrier Safety Regulations and Hazardous Materials Regulations. The
Companies have provided Buyer with access to all of their driver files and
all information relating to their compliance review and related action by
the FHWA.
2.12 Claims. Except as set forth in Schedule 2.12, the Companies do
not have any claims against them made by their customers for cargo damage,
overcharges, or other matters.
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2.13 Drivers; Employees.
2.13.1The Companies are not a party to any collective
bargaining agreement relating to their employees, nor does any such
agreement determine the terms and conditions of employment of any
such employee. In the past five years there has not been any labor
unrest or union organizing activity involving the Companies.
2.13.2The Companies are not a party to an employment contract
with any employee, and there are no agreements, plans, or policies
that would give rise to any severance, termination,
change-in-control, accrued vacation, or other similar payment to
employees or independent contractors of the Companies as a result of
the consummation of this Agreement.
2.13.3Schedule 2.13 identifies each of the Companies' employee
benefit plans, including all retirement, profit sharing, defined
contribution, and defined benefit plans as well as any severance,
vacation pay, health and welfare, employment, or other agreements
(oral or written) relating to employees of the Companies
(collectively, "Plans"). No Plan is a multi-employer or a defined
benefit plan, and none of the Companies, the Shareholders, or any
predecessors or affiliates has been a party to or sponsored a
multi-employer or defined benefit plan. None of the Companies is a
member of a group of businesses under common control or businesses
constituting a single employer (a "Group"), except any Group in
which no member has been a party to a defined benefit plan.
2.13.4The Companies maintain files on all employee drivers and
individual contractors, and each employee driver, independent
contractor, and file meets all DOT requirements.
2.14 Environment, Health, and Safety.
2.14.1Each of the Companies and any predecessors and
affiliates has complied with all laws concerning pollution or
protection of the environment, all laws concerning public health and
safety, and all laws concerning employee health and safety,
including laws relating to emissions, discharges, releases, or
threatened release of pollutants, contaminants, or chemical,
industrial, hazardous, or toxic materials or wastes (including
petroleum and any fraction or derivative thereof) into ambient air,
surface water, ground water, or lands, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage,
disposal, transport, or hauling of such substances (collectively,
"Environmental Laws"), and no action, suit, proceeding, hearing,
investigation, charge, complaint, claim, demand, or notice has been
filed or commenced against any of them alleging any failure so to
comply. Each of the Companies and any predecessors and affiliates
has obtained and been in compliance with all of the terms and
conditions of all Permits which are required under all Environmental
Laws.
2.14.2None of the Companies has any liability (and none of the
Companies and any predecessors or affiliates has handled or disposed
of any substance, arranged for the disposal of any substance,
exposed any employee or other individual to any substance or
condition, or owned or operated any property or facility, including
the Real Estate, in any manner that could form the basis for any
present or future action, suit, proceeding, hearing, investigation,
charge, complaint, claim, or demand against any of the Companies
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giving rise to any liability) for damage to any site, location, or
body of water (surface or subsurface), for any illness of or
personal injury to any employee or other individual, or for any
reason under any Environmental Law.
3. Representations of Buyer. Buyer represents, warrants, and guarantees
the following:
3.1 Corporate Approvals. Buyer is a duly formed, validly existing
Iowa corporation, with full power and authority to enter into this
Agreement by and through the officer executing his name hereto, and any
corporate approvals required will have been obtained at or prior to
Closing.
3.2 Authorization. All corporate action to the extent necessary has
been duly taken to approve and authorize Buyer's execution and delivery of
this Agreement, the purchase of the Transferred Assets, Real Estate, and
rights of the Companies as provided for herein, the performance of the
transaction contemplated herein, and the execution of the documents
required hereunder and incidental hereto.
3.3 Ability to Perform Agreement. At the Closing, Buyer will possess
the unrestricted ability to consummate the transaction contemplated
hereby.
4. Assumed Liabilities. Buyer is not assuming, and shall not be deemed to
have assumed, any liabilities or obligations of any of the Companies or the
Shareholders of any kind or nature whatsoever. Without limiting the generality
of the foregoing, it is hereby agreed that Buyer is not assuming, and shall not
be deemed to have assumed, any liability and shall not have any obligation for
or with respect to any liability or obligation of or relating to any of the
Companies or the Shareholders (i) for any prepayment penalty, late fee,
interest, or other amount owing on the Transferred Assets; (ii) for wages,
bonuses, accrued vacation or sick leave, or other payments due for any reason to
employees of any of the Companies for periods during which they were employees
of any of the Companies; (iii) for any sales, use, excise, income, franchise, or
other taxes, or any legal, accounting, brokerage, finders fees, or other
expenses of whatsoever kind or nature incurred by any of the Companies, any of
the Shareholders, or any affiliates of the Companies or the Shareholders; or
(iv) arising out of any action, suit, claim, or proceeding based upon, any event
occurring prior to the Closing. Each of the Companies and each of the
Shareholders, jointly and severally, shall indemnify, defend, and hold harmless
Buyer against all liabilities of any of the Companies or any of the
Shareholders.
5. Noncompetition Agreement.
5.1 Noncompetition. The parties have negotiated the noncompetition
provisions of this Agreement as an integral part of the transaction. Each
of the Companies, the Shareholders, and spouses of the Shareholders (the
"Spouses") acknowledges that Buyer is willing to pay the Purchase Price
and Goodwill Payment, commit to the Employment Obligations of Section
8.10, and proceed with the transaction because of customer relationships,
growth potential, and other prospects of the Companies, and that such
prospects would be severely and irreparably harmed by competition from the
Companies or the Shareholders. Each of the Companies, the Shareholders,
and the Spouses further acknowledges that Buyer would not have entered
into this Agreement without the noncompetition provisions contained
herein. Each of the Companies, the Shareholders, and the Spouses willingly
agrees to the noncompetition provisions hereof as consideration for the
Purchase Price, Goodwill Payment, and Employment Obligations of Section
8.10, and agrees that the noncompetition provisions are reasonable and are
necessary to induce Buyer to enter into this Agreement.
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5.2 Scope. In consideration of the Closing of this Agreement, the
Purchase Price, and Goodwill Payment, and the Employment Obligations of
Section 8.10, each of the Companies, the Shareholders, and the Spouses
hereby agrees that they shall not, directly or indirectly: (i) engage or
invest in, own, manage, operate, finance, control, or participate in the
ownership, management, operation, financing, or control of, be employed
by, associated with, or in any manner connected with, lend their name or
any similar name to, lend their credit to or render services or advice to,
any Competitive Business that engages in business in the United States
(except in the course of their employment by Buyer); (ii) whether for
their own account or for the account of any Competitive Business, at any
time after the Closing solicit business of the same or similar type being
carried on by the Buyer, from any person that is or was a customer of
Buyer or any of the Companies; (iii) whether for their own account or the
account of any Competitive Business at any time after Closing solicit,
employ, or otherwise engage as an employee, independent contractor, or
otherwise, any person who is or was an employee or independent contractor
of Buyer or any of the Companies or in any manner induce or attempt to
induce any employee or independent contractor of Buyer or any of the
Companies to terminate his or her employment with the Buyer, or at any
time interfere with the Buyer's relationship with any person, including
any person who at any time was an employee, contractor, supplier, or
customer of Buyer or any of the Companies; or (iv) at any time after
Closing, disparage Buyer or any of its shareholders, directors, officers,
employees, or agents. For the purposes of this Section 5, Competitive
Business shall include both dry van and flatbed operations, as well as
brokerage, intermodal, logistics, and freight consolidation activities
involving flatbed and dry van truckload transportation. The foregoing
notwithstanding, as this Section 5 applies to Vicki Dunnell, Robert D.
Dunnell, Jerry S. Hammann, Pamela J. Hammann, Tammi Smith, and Patrick D.
Smith, the term Competitive Business shall mean any person, firm,
corporation, or entity that: (i) solicits or provides freight
transportation, logistics, brokerage, or similar services to any shipper
that has been a customer of Buyer or the Companies at any time prior to
such person's last day of employment with Buyer or any affiliate (or his
or her spouse's last day of employment if such person is not an employee);
or (ii) solicits, employs, or hires as an independent contractor any
person who was an employee or independent contractor driver for Buyer, any
affiliate, or the Companies prior to such person's employment or service
as an independent contractor to such person, firm, corporation, or entity.
5.3 Nature; Term. The obligations of the Companies, the
Shareholders, and the Spouses under this Section are referred to herein as
the "Noncompetition Obligations." The obligations of each of the
Companies, the Shareholders, and the Spouses shall be joint and several as
to any violation of the Noncompetition Obligations by another Company or
person. The Noncompetition Obligations of the Companies, Jerry H. Hammann,
and Donna Hammann shall be for a period of three (3) years from the
Closing. The Noncompetition Obligations of Vicki Dunnell, Robert D.
Dunnell, Jerry S. Hammann, Pamela J. Hammann, Tammi Smith, and Patrick D.
Smith shall be for a period from Closing to the later of (i) six (6)
months after such person's final day of employment by Buyer or any
affiliate or (ii) July 1, 2000.
5.4 Severability. If any covenant in Section 5 is held to be
unreasonable, arbitrary, or against public policy, such covenant will be
considered to be divisible with respect to scope, time, and geographic
area, and such lesser scope, time, or geographic area, or all of them, as
a court of competent jurisdiction may determine to be reasonable, not
arbitrary, and not against
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public policy, will be effective, binding, and enforceable against the
Companies, the Shareholders, and the Spouses.
5.5 Damages. Each of the Companies, the Shareholders, and the
Spouses acknowledges that the injury that would be suffered by Buyer as a
result of a breach of the provisions of this Section 5 would be
irreparable and that even the award of monetary damages for such breach
would be an inadequate remedy. Consequently, Buyer shall have the right,
in addition to any other rights it may have, to obtain injunctive relief
to restrain any breach or threatened breach or otherwise to specifically
enforce any provision of this Agreement, and Buyer shall not be obligated
to post bond or other security in seeking such relief. Without limiting
Buyer's rights under this Section 5, or any other remedies of Buyer, any
of the Companies, the Shareholders, or the Spouses breach any of the
provisions of Section 5, Buyer will have the right to cease making further
payments on the Goodwill Payment otherwise due.
6. Conditions. The obligations of Buyer hereunder are subject to the
following conditions (all or any of which may be waived in whole or in part by
Buyer) having been fulfilled in all material respects on or before the date of
the Closing:
6.1 Representations and Warranties True; Compliance with Covenants.
The representations and warranties of the Companies and the Shareholders
shall be true and correct in all material respects at and as of the date
of the Closing with the same force and effect as though such
representations and warranties had been made at and as of the date of the
Closing and the Companies and the Shareholders shall in all material
respects have complied with and performed all covenants, obligations, and
conditions required by this Agreement to be complied with or performed
prior to the Closing, and Buyer shall have received from the President or
Manager of each of the Companies a certificate to that effect, dated the
date of the Closing, in form and substance reasonably satisfactory to
counsel for Buyer.
6.2 No Damage or Destruction. The Transferred Assets, as adjusted
under Section 1.5, shall not have suffered any destruction or damage by
fire, accident, or other casualty or act of God, whether or not covered by
insurance, which affects such Transferred Assets in a material and adverse
way.
6.3 Due Diligence. Buyer shall have completed its due diligence
investigation of the Companies' assets, liabilities, operations,
employees, customers, and business and shall be satisfied with the results
of such investigation in its sole discretion.
6.4 Payoff Letters. Prior to Closing, the Companies shall present to
Buyer payoff letters, with all prepayment penalties, late fees,
administrative fees, and other amounts due included, in substantially the
form attached as Exhibit D attached hereto (the "Payoff Letters"). The
Payoff Letters shall be executed by the lenders and lessors providing
financing on each of the Transferred Assets.
6.5 Bulk Sales. The Companies shall have complied with the laws applicable
to bulk sales if such laws are in effect in Minnesota.
<PAGE>
7. The Closing.
7.1 Time. The transactions contemplated by this Agreement shall be
consummated at a Closing to be held at the offices of Buyer in Fort Dodge,
Iowa at 8:00 a.m. on October 30, 1998, or such other time or place as the
parties may agree (the "Closing").
7.2 Deliveries. At the Closing, the Companies shall deliver or
caused to be delivered to Buyer the following:
7.2.1 Possession of all of the Transferred Assets.
7.2.2 Original titles to all tractors, trailers, and other
vehicles included in the Transferred Assets, duly endorsed for
transfer and without any Lien noted thereon (or Payoff Letters
covering any Transferred Assets for which Buyer shall remit a
portion of the Purchase Price to a lienholder under Section 1.1).
7.2.3 A duly executed Bill of Sale executed by each Company
for the Transferred Assets sold by such company in substantially the
form attached as Exhibit E, F, and G.
7.2.4 A general warranty deed to the Real Estate in
substantially the form attached as Exhibit H.
7.3 At the Closing, Buyer shall deliver to the appropriate Company
the Cash Purchase Price, the payment for the Real Estate as set forth in
Section 1.2, and the Goodwill Payment as set forth in Section 1.3. Such
amounts shall be delivered by company check or wire transfer of
immediately available funds.
8. Conduct of Business Pre- and Post-Closing.
8.1 Inspection; Completion of Loads. For the period commencing with
the execution of this Agreement and continuing until two weeks after
Closing, the Companies shall direct all tractors and trailers to the
Cohasset terminal or the Fort Dodge terminal of Buyer for physical
inspection by Buyer. The Companies shall be responsible for billing,
collection, and for other costs, expenses, risk of loss, liabilities, and
claims in connection with all shipments dispatched prior to midnight on
Closing (and until such shipment has been delivered in the case of
shipments being completed after Closing), and all revenue from such
shipments shall be for the Companies' account. Any amounts relating to
such pre-Closing shipments collected by Buyer shall be turned over to the
Companies immediately as received. Buyer shall be responsible for
dispatching, and shall receive all revenue from, all loads dispatched
after midnight on Closing.
8.2 No Change in Practices. The Companies shall operate in the
ordinary course of business until Closing. Without limitation, the
Companies shall ensure that all fuel tanks on the tractors included in the
Transferred Assets are at least half full at Closing. In addition, the
Companies shall not change their procedures and practices with regard to
billing of freight unless specifically approved in advance by Buyer.
<PAGE>
8.3 Use of Name. Each of the Companies consents to the use of their
names until the later of (i) 60 days following Closing or (ii) expiration
of any prepaid license period on the tractors and trailers included in the
Transferred Assets. Following termination of such use, Buyer shall use its
best efforts to remove the Companies' names, or any derivative thereof,
from the tractors and trailers included in the Transferred Assets as soon
as practicable. Subject to the foregoing, Buyer agrees to indemnify,
defend, and hold harmless the Companies against all liabilities arising
out of Buyer's use of the Companies' names pursuant to this Section 8.3.
8.4 Disclosure. Each of the Companies and the Shareholders consents
to the disclosure of the material terms of this transaction by Buyer in
its SEC filings and press releases.
8.5 Standstill. Each of the Companies and the Shareholders agrees
not to solicit or respond to competing bids or to conduct negotiations
with any other party following the execution of this Agreement.
8.6 Licenses and Permits. Each of the Companies agrees to cooperate
with Buyer to achieve an acceptable licensing arrangement for the duration
of the licenses and permits that were purchased for the tractors and
trailers included in the Transferred Assets. If Buyer cannot relicense the
tractors and trailers at a cost acceptable to Buyer, then, at Buyer's
request, Buyer and the appropriate Company holding such licenses and
permits shall enter into a leasing or trust arrangement structured by
Buyer that is intended to preserve the use of such licenses and permits.
In the event the parties use such an arrangement, Buyer shall indemnify
the Companies and the Shareholders against any liability arising from such
arrangement.
8.7 Hammann Consulting Services. Jerry H. Hammann agrees to provide
consulting services to Buyer, as an independent contractor, for a period
of six months following Closing. Such consulting services may be provided
either in person or by telephone at the discretion of Mr. Hammann and
shall include Mr. Hammann using his best efforts to assist Buyer in
renewing and providing service under the Blandin contract and in
transitioning drivers, owner-operators, and employees.
8.8 Inventory Count and Office Equipment Verification. Prior to the
Closing, Buyer and the Companies shall conduct a physical count of the
inventory included in the Transferred Assets and agree on a price for such
inventory. Prior to the Closing, Buyer shall review and inspect all assets
listed under item 2. on Exhibit A to verify in its reasonable discretion
that such assets are useable in Buyer's business and agree on a price
adjustment, if necessary.
8.9 Approvals. The Shareholders, as directors, shareholders,
managers, or members, agree to vote in favor of the approval and adoption
of this Agreement and all related matters and agree to take all actions
required to gain the required approvals of the adoption of this Agreement
and all related matters.
8.10 Employment of Certain Shareholders and Spouses. From and after
the Closing through December 31, 1999, Buyer agrees to employ the
following Shareholders and Spouses at the annual salary identified, plus
benefits provided other Buyer employees: Vicki Dunnell ($25,850); Robert
D. Dunnell ($43,562); Jerry S. Hammann ($37,310); and Patrick D. Smith
($44,430) (the "Employment Obligations"). Such salary shall be payable on
the same frequency
<PAGE>
as wage payments made to other employees. Such Shareholder's or Spouse's
employment shall be "at-will;" provided, that if Buyer terminates
Shareholder or Spouse other than for "cause," Buyer shall pay such
Shareholder or Spouse the remaining salary payments as they come due or,
at Buyer's option, in a lump sum, discounted to present value at the
"prime" interest rate then in effect. For purposes hereof, the term
"cause" shall include conviction (or a plea of guilty or no contest) for
any crime other than routine traffic matters; conduct detrimental to the
Buyer's business or reputation; failure to carry out the lawful and
reasonable directions of Buyer's officers or Board of Directors; breach of
any fiduciary obligation to the Buyer; or continued violation of Buyer's
employment policies after written warning.
9. Survival of Representations, Warranties, and Covenants;
Indemnification.
9.1 Survival of Representations, Warranties, and Covenants. All
representations, warranties, and agreements made by each of the Companies,
the Shareholders, and Buyer, respectively, in this Agreement or pursuant
hereto, shall survive the Closing.
9.2 Indemnification by the Companies and the Shareholders. Each of
the Companies and each of the Shareholders, jointly and severally, shall
indemnify, defend, and hold harmless Buyer, its officers, directors,
employees, agents, and affiliates from and against any and all claims,
causes of action, suits, judgments, taxes, losses, damages, deficiencies,
obligations, costs, and expenses (including, without limitation, interest,
penalties, and reasonable fees and costs of attorneys and other experts)
arising out of or otherwise in respect of (i) any misrepresentation,
inaccuracy in, or breach of any representation, warranty, covenant, or
agreement of any the Companies or the Shareholders contained in this
Agreement or any contract executed in connection herewith; and (ii) any
liability of any of the Companies or the Shareholders whatsoever,
including any third-party claims arising from the act or omission of any
of the Companies or the Shareholders, either prior to or after the
Closing.
9.3 Indemnification by Buyer. Buyer shall indemnify, defend, and
hold harmless each of the Companies and the Shareholders, their heirs,
successors, and assigns, from and against any and all claims, causes of
action, suits, judgments, taxes, losses, damages, deficiencies,
obligations, costs, and expenses (including, without limitation, interest,
penalties, and reasonable fees, and costs of attorneys and other experts)
arising out of or otherwise in respect of: (i) any misrepresentation,
inaccuracy in, or breach of any representation, warranty, covenant, or
agreement of Buyer contained in this Agreement or any contract executed in
connection herewith; and (ii) any third-party claims relating to the
operation of the Transferred Assets by Buyer, the factual basis of which
transaction or claim arose subsequent to the Closing.
9.4 Set-Off. In addition to all other remedies available to Buyer
under this Agreement or by law, Buyer shall be entitled to withhold and
set-off payments of the Goodwill Payment against amounts for which it is
entitled to indemnification. If such amounts are later determined to be
less than the amount withheld and set-off, Buyer shall promptly pay the
difference between the amount originally withheld and set-off and the
actual amount.
10. Notices. All notices, requests, demands, and other communications
under this Agreement shall be in writing and shall be deemed to have been duly
given on the date of service if served personally (including by nationally
recognized overnight courier service) on the party to whom notice is to be
given,
<PAGE>
or on the second day after mailing if mailed to the party to whom notice is to
be given by first class mail, registered or certified, return receipt requested,
postage prepaid and properly addressed as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
To Buyer at: Mr. William G. Smith With copy to: Mark A. Scudder
President & CEO Scudder Law Firm, P.C.
Smithway Motor Xpress, Inc. 411 S. 13th Street
2031 Quail Avenue Suite 200
Fort Dodge, IA 50501 Lincoln, NE 68508
Telephone: 515-576-7418 Telephone: 402-435-3223
Fax: 515-576-3304 Fax: 402-435-4239
To the Mr. Jerry H. Hammann With copy to: James H. Wills
Companies or 8350 Splithand Road Kalina, Wills, Gisvold
the Grand Rapids, MN 55744 & Clark
Shareholders at: Telephone: 218-326-3582 1120 Industrial Park Road
Brainerd, MN 58401
Telephone: 218-829-7040
Fax: 218-829-7210
</TABLE>
11. Miscellaneous Provisions.
11.1 Entire Agreement. This Agreement, the attached Exhibits and
Schedules, and the Closing deliveries identified herein contain the entire
agreement between the parties hereto with respect to the transactions
contemplated herein.
11.2 Expenses. Except as otherwise herein expressly provided, each
party shall bear its own expenses (including without limitation fees of
their respective attorneys and consultants and experts) incurred by such
party in connection with this Agreement or the consummation of the
transactions contemplated herein.
11.3 Further Assurances. Following the Closing, upon reasonable
request by Buyer, the Companies and the Shareholders shall execute, or
cause to be executed, and shall deliver to Buyer such other and further
documents of assignment, transfer, and conveyance as may be necessary or
advisable, in the reasonable opinion of Buyer's counsel, to effectively
assign, transfer, and convey to Buyer all of the Transferred Assets being
sold hereunder.
11.4 Amendments. This Agreement shall not be changed or terminated
orally and no waiver of compliance with any provision or condition hereof
and no consent provided for herein shall be effective unless evidenced by
a written instrument duly executed by the party to be charged therewith.
11.5 Assignment. This Agreement shall be binding upon and inure to
the benefit of the parties and their respective heirs, successors, legal
representatives, and permitted assigns. This Agreement may not be assigned
by any party without the prior written consent of the other party.
<PAGE>
11.6 Governing Law. This Agreement shall be construed and enforced
in accordance with the laws of the State of Iowa.
11.7 Headings. Paragraph headings herein are for convenience only
and shall not affect the interpretation of any provision.
11.8 Counterparts. This Agreement may be executed in one or more
counterparts, all of which together shall constitute one instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement of the day,
month, and year first written above.
THE COMPANIES: BUYER:
JHT, INC., a Minnesota corporation SMITHWAY MOTOR XPRESS, INC.,
an Iowa corporation
By: /S/ DONNA HAMMANN By: /S/ G. LARRY OWENS
Donna Hammann, G. Larry Owens, Executive Vice
Chief Executive Officer President and Chief Operating Officer
JHT LOGISTICS, INC., a Minnesota SHAREHOLDERS AND SPOUSES:
corporation
By: /S/ DONNA HAMMANN /S/ JERRY H. HAMMANN
Donna Hammann, President Jerry H. Hammann, Individually
BASS BROOK TRUCK SERVICE, INC., /S/ DONNA HAMMANN
a Minnesota corporation Donna Hammann, Individually
/S/ VICKI DUNNELL
By: /S/ JERRY H. HAMMANN Vicki Dunnell, Individually
Jerry H. Hammann, President
/S/ ROBERT D. DUNNELL
JERDON TERMINAL HOLDINGS, LLC, Robert D. Dunnell, (Spouse), Individually,
a Minnesota limited liability to the extent set forth in Section 5
company
/S/ TAMMI SMITH
Tammi Smith, Individually
By: /S/ JERRY H. HAMMANN
Jerry H. Hammann, Manager
/S/ PATRICK D. SMITH
Patrick D. Smith, (Spouse), Individually,
to the extent set forth in Section 5
/S/ JERRY S. HAMMANN
Jerry S. Hammann, Individually
/S/ PAMELA J. HAMMANN
Pamela J. Hammann, (Spouse), Individually,
to the extent set forth in Section 5
<PAGE>
LIST OF EXHIBITS
Exhibit A Transferred Assets
Exhibit C Real Estate Purchase Agreement
Exhibit D Form of Payoff Letter
Exhibit E JHT, Inc. Bill of Sale
Exhibit F JHT LOGISTICS, INC. Bill of Sale
Exhibit G Bass Brook Truck Services, Inc. Bill of Sale
Exhibit H Warranty Deed
<PAGE>
LIST OF SCHEDULES
Schedule 2.12 Customer Claims
Schedule 2.13 Employee Benefit Plans
<PAGE>
Exhibit 2.2
--------------------------------------
FIRST AMENDMENT TO
ASSET PURCHASE AGREEMENT
AND REAL ESTATE PURCHASE AGREEMENT
--------------------------------------
This First Amendment to Asset Purchase Agreement and Real Estate Purchase
Agreement (the "Amendment") is made as of October 29, 1998, by and among
SMITHWAY MOTOR XPRESS, INC., an Iowa corporation ("Buyer"); JHT, Inc., a
Minnesota corporation ("JHT"), JHT LOGISTICS, INC., a Minnesota corporation
("Logistics"), Bass Brook Truck Service, Inc., a Minnesota corporation ("Bass
Brook"), and JERDON TERMINAL HOLDINGS, LLC ("Jerdon"), a Minnesota limited
liability company (individually a "Company" and together the "Companies"); and
Jerry H. Hammann, Donna Hammann, Vicki Dunnell, Tammi Smith, and Jerry S.
Hammann, shareholders or members of the Companies (individually a "Shareholder"
and together the "Shareholders").
RECITALS
The parties previously entered into that certain Asset Purchase Agreement
and that certain Real Estate Purchase Agreement each dated September 23, 1998
(together the "Agreements"). Certain events have transpired since the execution
of the Agreements that the parties wish to reflect in writing.
TERMS
NOW, THEREFORE, in consideration of the foregoing recitals and the mutual
covenants, representations, and warranties herein contained, and upon the terms
and conditions hereinafter set forth, the parties hereto agree as follows:
A. Amendment of Agreements. The provisions of this Amendment shall
supplement and amend the Agreements as specifically stated herein. If there is a
conflict between this Amendment and the Agreements, this Amendment shall
control. Except as stated herein, the Agreements shall continue in full force
and effect. Capitalized terms used herein and not otherwise defined herein shall
have the meanings ascribed in the Asset Purchase Agreement.
B. Purchase and Rental of Real Estate. Buyer shall purchase the Real
Estate from Jerdon for $645,000. Such amount shall be paid first to creditors to
retire all obligations and remove all Liens relating to the Real Estate, with
the remainder to be paid to Jerdon. The closing of such transaction (the "Real
Estate Closing") shall occur on the first business day immediately following the
occurrence of both of the following; (i) receipt of the final Phase I
environmental assessment on the Real Estate from American Engineering and (ii)
Buyer's reasonable satisfaction that either (a) there are no significant
environmental problems with Real Estate or (b) that such problems have been
fully remediated by the Companies and the Shareholders or adequate provision has
been made by the Companies and the Shareholders for all remediation costs. The
real estate purchase price shall be delivered via wire transfer to Abstract
Service Company of Grand Rapids, Minnesota, as closing agent for the Real Estate
Closing. Buyer shall lease the Real Estate pursuant to the lease attached hereto
as Exhibit 4 which provides the following: (i) Buyer shall pay Jerdon $100 per
day in rent for use of the Real Estate payable at the Real Estate Closing; (ii)
rental payments shall commence on the Closing, as hereinafter defined, and
terminate on the day immediately preceding the Real Estate Closing; and (iii)
Buyer shall promptly pay all utilities and insurance on the Real Estate from the
Closing through the day immediately preceding the Real Estate Closing. Real
estate taxes shall be prorated as of the Real Estate Closing. All risk of loss
to the Real Estate shall remain with Jerdon through the Real Estate Closing. At
the Real Estate Closing, the Companies shall deliver or cause to be delivered to
Buyer a general warranty deed to the Real Estate in substantially the form
attached as Exhibit H to the Asset Purchase Agreement. The parties have been
informed by American Engineering that the Phase I is expected to be finalized on
or before November 6, 1998.
<PAGE>
C. Removal of Underground Storage Tanks. Buyer shall assume the existing
contract between JHT, Inc. and Independent Petroleum Service, Inc. with a date
of acceptance of September 15, 1998 by delivery of written notification to
Independent Petroleum Service, Inc. and shall receive the benefit of the $5,543
prepayment under such contract already made by JHT. Buyer shall direct and
control the removal and, if desired, replacement of the underground storage
tanks located on the Real Estate. Buyer shall pay any costs of such removal and
replacement up to a maximum of $24,000, subject to downward adjustment as
described herein; provided that the Shareholders and Companies shall bear 100%
of the cost necessary to fill the tank sitting under the shop floor located on
the Real Estate and bring the tank into compliance with Environmental Laws and
such amount shall be paid by Buyer and subtracted from the $24,000 (the "Buyer
Amount"). In addition, after Buyer has paid the Buyer Amount, all costs to
remediate environmental conditions or otherwise to bring the Real Estate into
compliance with Environmental Laws shall be borne by the Shareholders and
Companies. If not promptly paid by the Shareholders and the Companies, Buyer may
pay any amounts owing on behalf of the Companies and the Shareholders and offset
such amounts against the Goodwill Payment owing the Companies. In connection
with such removal and replacement, Buyer shall reasonably consider the advice
and wishes of the Companies and the Shareholders and the Companies and the
Shareholders shall provide reasonable cooperation.
D. Remediation of Environmental Matters. The Companies and the
Shareholders shall be responsible for all remediation costs to the Real Estate
that are based upon conditions existing on the Real Estate or on violations of
Environmental Laws occurring prior to the Real Estate Closing; provided that
Buyer shall be responsible for the costs of any violation caused by it between
Closing and Real Estate Closing. The Companies and the Shareholders shall
promptly take all actions that are necessary to bring the Real Estate into
compliance with all Environmental Laws, with the exception of those items
addressed in C above as being Buyer's responsibility. The Companies and the
Shareholders shall be responsible for all out-of-pocket expenses incurred by
Buyer of every kind and character including fees and expenses of attorneys and
experts and costs of enforcing this obligation. Such amounts may be offset
against the Goodwill Payment owing the Companies.
E. Reimbursement for Removal, Remediation, or Related Costs.
Notwithstanding what costs are reimbursable under Environmental Laws,
reimbursement to Buyer, the Companies, or the Shareholders under any
Environmental Laws shall be shared by the parties pro-rata based upon the
percentage of the total costs incurred by each party under C and D above and the
prorated portion of any amounts received shall be paid promptly upon receipt to
the appropriate party.
F. Health Insurance. From and after Closing, Buyer, or its assignee, shall
offer health insurance coverage on the same basis as the existing coverage
provided by the Companies. Buyer is not assuming, and shall not be deemed to
assume, any of the Companies' obligations for health insurance and COBRA
coverage.
G. Rand McNally Contract. The amount set forth in the Payoff Letter from
Rand McNally shall be deducted from the Purchase Price under the Asset Purchase
Agreement and retained by Buyer following Closing (the "Retained Amount"). Buyer
shall not pay the Retained Amount to Rand McNally as directed in the Payoff
Letter. Logistics shall continue its contractual agreement with Rand McNally
through December 31, 1998. Buyer shall make the monthly contract payments of
approximately $1,941 due November 1, and December 1, 1998 to Rand McNally on
Logistics' behalf from the Retained Amount and pay any remaining Retained Amount
to Rand McNally on or before January 15, 1999. Buyer may, at its option,
thereafter assume such contract with the consent of Rand McNally. Buyer is not
assuming and shall not be deemed to assume any obligations under such contract
arising prior to or contemporaneously with the Closing, including the initial
contract fee of approximately $90,000 financed by Logistics over the term of the
contract. At Closing, Buyer shall pay Logistics the prorated portion of the
$15,500 annual fee for 1998 that was previously paid by Logistics to Rand
McNally.
H. Purchase Price for Transferred Assets. Exhibit A to the Asset Purchase
Agreement among the parties is amended as revised on Exhibit 1 attached hereto;
provided all schedules to such Exhibit A are not amended except as provided in
Paragraph L hereof.
<PAGE>
I. Goodwill Payment. Section 1.3 of the Asset Purchase Agreement among the
parties is deleted in its entirety and replaced with new Section 1.3, which
shall read as follows:
"1.3 Goodwill Payment. Buyer shall purchase the goodwill relating to
the Companies' business by delivering the following amounts to the Company
designated by the Shareholders (the "Goodwill Payment"):
1.3.1 At Closing, $1,082,280 shall be delivered;
1.3.2 On February 1 and May 1, 1999, $35,285, shall be
delivered;
1.3.3 On August 1 and November 1, 1999, $60,285 shall be
delivered; and
1.3.4 On February 1, May 1, August 1, and November 1 of 2000,
$60,285, minus the "Adjustment Amount," if applicable, shall be
delivered. The Adjustment Amount is $31,408 and shall apply only if
revenue generated from Buyer's service to Blandin is less than
$3,120,000 for the period from Closing to the first anniversary of
Closing."
J. The Closing. All transactions contemplated by the Asset Purchase
Agreement, with the exception of the Real Estate Closing, shall be consummated
at a closing to be held at 11:00 a.m. Central Time via telephone conference call
on October 30, 1998, or such other time or means as the parties may agree (the
"Closing"). Scudder Law Firm, P.C. shall act as closing agent and hold all
signed documents necessary to consummate the Agreements and this Amendment
pending facsimile confirmation from James Wills or Carole Clark Isakson that it
may release all closing documents to the appropriate parties.
K. Right to Indemnification or Offset Not Affected by Knowledge. The
Buyer's right to indemnification, offset, or other remedy based on any
representations, warranties, covenants, and obligations contained in the
Agreements as amended hereby will not be affected by disclosure on any schedule
or by any investigation conducted with respect to, or any knowledge acquired (or
capable of being acquired) at any time, whether before or after the execution
and delivery of this Amendment, with respect to the accuracy or inaccuracy of or
compliance with, any such representation, warranty, covenant, or obligation. The
waiver of any condition based on the accuracy of any representation or warranty,
or on the performance of or compliance with any covenant or obligation, will not
affect the right to indemnification, offset, or other remedy based on such
representations, warranties, covenants, and obligations.
L. Omission of Schedules. Schedule A-3 to the Asset Purchase Agreement is
amended to add thereto the listing of Qualcomm units on Exhibit 2 attached
hereto. Schedule A-2 to the Asset Purchase Agreement is deleted and replaced
with Exhibit 3 attached hereto.
M. Inventory Count and Office Equipment Verification. Section 8.8 of the
Asset Purchase Agreement is amended to provide that the inventory count and
office equipment verification shall be conducted by Buyer no later than November
6, 1998, rather than prior to Closing.
N. Counterparts. This Amendment may be executed in any number of
counterparts and any party hereto may execute any such counterpart, each of
which when executed and delivered shall be deemed to be an original and all of
which counterparts taken together shall constitute but one and the same
instrument. This Amendment shall become binding when one or more counterparts
taken together shall have been executed and delivered by the parties. It shall
not be necessary in making proof of this Amendment or any counterpart hereof to
produce or account for any of the other counterparts.
*****************************
Signature Page Entitled "First Amendment To
Asset Purchase Agreement Among
Buyer, the Companies, and the Shareholders" Follows
*****************************
<PAGE>
*****************************
Signature Page to First Amendment
To
Asset Purchase Agreement
Among
Buyer, the Companies, and the Shareholders
IN WITNESS WHEREOF, the parties hereto have duly executed this Amendment
on the date first written.
THE SHAREHOLDERS THE COMPANIES
JHT, INC., a Minnesota corporation
/S/ JERRY H. HAMMANN By: /S/ DONNA HAMMANN
Jerry H. Hammann, Individually Donna Hammann, Chief Executive Officer
/S/ DONNA HAMMANN
Donna Hammann, Individually JHT LOGISTICS, INC.,
a Minnesota corporation
/S/ VICKI DUNNELL By: /S/DONNA HAMMANN
Vicki Dunnell, Individually Donna Hammann, President
/S/TAMMI SMITH
Tammi Smith, Individually BASS BROOK TRUCK SERVICE, INC., a
Minnesota corporation
/S/JERRY S. HAMMANN By: /S/JERRY H. HAMMANN
Jerry S. Hammann, Individually Jerry H. Hammann, President
BUYER JERDON TERMINAL HOLDINGS, LLC, a
Minnesota limited liability company
SMITHWAY MOTOR XPRESS, INC.
By: /S/JERRY H. HAMMANN
By: /S/WILLIAM G. SMITH Jerry H. Hammann, Manager
William G. Smith, President
<PAGE>
LIST OF EXHIBITS
Exhibit 1 Amendment to Exhibit A of Asset Purchase Agreement
<PAGE>
Exhibit 99
--------------------------------------
PRESS RELEASE
--------------------------------------
SMITHWAY MOTOR XPRESS CORP.
ANNOUNCES ACQUISITIONS
FORT DODGE, IOWA (PR Newswire) September 30, 1998 - Smithway Motor Xpress Corp.
(Nasdaq/NMS: SMXC) announced today the closing of one acquisition and the
signing of a definitive agreement on another acquisition. The combined
transactions are expected to add over $30 million to Smithway's annual revenue
and both are expected to be immediately accretive to earnings. After these two
acquisitions during 1998, Smithway will have acquired companies with nearly $60
million in annual revenue.
In August, Smithway closed the acquisition of $4 million (annual revenue) TP
Transportation of Enid, Oklahoma. TP operated 34 company-owned tractors and
served exclusively the flatbed market.
In September, Smithway signed a definitive asset purchase agreement to acquire
the freight operations and trucking assets of JHT, Inc. and related companies of
Grand Rapids, Minnesota. JHT operates approximately 185 tractors serving
exclusively the dry van market. Slightly over half of JHT's tractors are
company-owned, with the balance being provided by owner-operators. The
acquisition is contingent upon several factors, including due diligence, and is
expected to close October 30, 1998.
Chairman, President, and Chief Executive Officer, William G. Smith said, "We are
excited to add JHT and TP to the Smithway family. The transactions strengthen
our market presence in both the dry van and flatbed markets and raise our fleet
to over 1,450 power units. In both transactions the Company has followed its
policy of paying fair market value for the assets plus a percentage of revenue
for goodwill. The transactions are Smithway's seventh and eighth acquisitions
since May 1995. These acquisitions, plus internal growth, put Smithway on target
to meet anticipated gross revenue of $160 million in 1998. Smithway intends to
continue its strategy of expanding both internally and through acquisitions."
Smithway is a truckload carrier that provides nationwide transportation of
diversified freight, concentrating primarily on the flatbed segment of the
truckload market. Smithway's Class A Common Stock trades on the Nasdaq National
Market under the symbol "SMXC."
For additional information contact:
G. Larry Owens, Executive Vice President and
Chief Operating Officer
(515) 576-7418
This press release and statements made by the Company in reports to its
stockholders and public filings, as well as oral public statements by Company
representatives, may contain certain forward-looking information that 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 recessions or downturns in customers' business
cycles, excessive increases in capacity within truckload markets, decreased
demand for transportation services offered by the Company, rapid inflation and
fuel price increases, increases in interest rates, and the availability and
compensation of qualified drivers and owner-operators. Readers should review and
consider the various disclosures made by the Company in this press release and
in its reports to stockholders and periodic reports on forms 10-K and 10-Q.
<PAGE>
