SECOND AMENDMENT TO
ASSET PURCHASE AGREEMENT
This Second Amendment to Asset Purchase Agreement (the "Amendment") is
made as of December 12, 1996, by and among Smithway Motor Xpress, Inc., an Iowa
corporation ("Smithway"); Smithway Motor Xpress Corp., a Nevada corporation;
Xxxxxxxxx Transportation, Inc., a South Dakota corporation ("Seller"); and Xxxxx
and Xxxxxxx Xxxxxxxxx, individual residents of Yankton, South Dakota and
Seller's sole Shareholders (together, the "Shareholders").
RECITALS
The parties previously entered into that certain Asset Purchase
Agreement dated October 4, 1996, (the "Main Agreement") and a First Amendment to
Asset Purchase Agreement dated October 24, 1996 (the "First Amendment"). Certain
events have transpired since the execution of the Main Agreement and First
Amendment that the parties wish to reflect in writing.
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:
1. Amendment of Main Agreement and First Amendment. The provisions of
this Amendment shall supplement and amend the Main Agreement and First Amendment
as specifically stated herein. Except as stated herein, the Main Agreement and
First Amendment shall continue in full force and effect. Capitalized terms used
herein and not otherwise defined herein shall have the meanings ascribed in the
Main Agreement and First Amendment.
2. California Lease. On the date hereof, Seller shall assign to
Smithway, and Smithway shall accept from Seller, an assignment of the lease
attached as Exhibit G to the Main Agreement (the "California Lease") and all
rights to payments from subtenants, and Smithway shall agree to pay, perform,
and discharge all obligations under the California Lease from and after the date
hereof. Rent payable by Smithway under the California Lease shall be prorated
from October 26, 1996, to November 1, 1996, resulting in a $967 payment by
Smithway to Seller. For the additional soil samplings that were required in the
Stockton Phase I Environmental Assessment, Seller and Smithway each shall pay
half of the $1,226.50 fee assessed for the soil samplings. Smithway shall pay
the entire amount due for the additional soil samplings and $613 will be
deducted from the Escrowed Funds, as hereinafter defined, released to Seller.
3. Inventory. Pursuant to Section 2.6 of the Main Agreement Smithway was to
pay cost for parts, tires, supplies, and general inventory (not to include items
out-dated and non-usable to Smithway). Pursuant to the First Amendment, such
amount was subject to adjustment from a physical count of such inventory.
Smithway has conducted an inspection and tagging of the inventory and determined
the amount that is not out-dated and non-usable. At closing, Smithway deposited
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in escrow with Davenport, Evans, Xxxxxxx & Xxxxx, X.X. ("Escrow Agent"),
the amount of $369,313 (the "Escrowed Funds"), including $179,663.12 as an
estimated amount for the parts and tire inventory. The parties hereby agree to
deductions of $40,975 and $51,686 for the parts and tire inventory,
respectively, from the $179,663.12 estimated amount. The parties further agree
that $92,661 shall be deducted from the remaining Escrowed Funds and returned to
Smithway to effect the parts and tire inventory adjustment previously described.
4. Goodwill Payment. Smithway heretofore has paid Seller $448,000
pursuant to Section 2.9 of the Main Agreement. The Main Agreement provided for a
payment of $200,000 on April 25, 1997, adjusted upward or downward based upon
the number of drivers then based in Yankton. The parties hereby agree to
eliminate such adjustment and alter the payment schedule to provide that
Smithway shall pay Seller $100,000 on the date hereof and deliver Seller a
promissory note due April 25, 1997, in the amount of $100,000. Accordingly,
Section 2.9 of the Main Agreement is deleted in its entirety and replaced with
new Section 2.9, which shall read as follows:
2.9 Business. Smithway shall pay Seller $648,000 for the
goodwill associated with the Business, including the
value of ongoing shipper, Driver, and other business
relationships. Payment shall be made as follows: (a)
at Closing, Smithway paid $448,000 to Xxxxxxxxx, and
(b) on December 12, 1996, Smithway shall deliver to
Seller a check in the amount of $100,000 and a
promissory note due April 25, 1997, in the amount of
$100,000.
5. Inspections and Return of Xxxxxxxxx Equipment. Pursuant to Section
2.13 of the Main Agreement, the parties conducted certain Inspections of
Tractors, Leased Tractors, Trailers, and Leased Trailers. The parties hereby
agree that the Adjustment Amount is $33,286, representing $8,271 for brake and
tire wear to the Tractors, Leased Tractors, Trailers, and Leased Trailers
purchased or assumed by Smithway and $25,015 for mileage penalties. Accordingly,
the sum of $33,286 shall be deducted from the Escrowed Funds and returned to
Smithway in settlement of the Adjustment Amount. In addition, Smithway hereby
agrees to relinquish its claim for $13,025, in body damage to the Tractors,
Leased Tractors, Trailers, and Leased Trailers purchased or assumed by Smithway
and, in exchange, Seller and Shareholders hereby accept all Nonacquired Tractors
and Trailers returned or to be returned to them by Smithway "as is" and waive,
release, and relinquish all rights to a claim for damages regarding the
condition of such returned tractors and trailers.
6. Damage to Tractor Struck in Yankton Yard. Smithway shall pay the
agreed cost of parts and labor incurred in connection with damage to the
driver's side of the tractor struck in the Yankton yard ($2,094) and Seller
shall pay the agreed cost of parts and labor incurred for damage to the opposite
side of the tractor ($1,681), such agreed costs being those depicted in
parentheses. The parties agree that $2,094 shall be paid to Seller by Smithway
and Seller shall be obligated to pay any repair costs on such tractor struck in
the Yankton yard.
7. Repair Expenses. Smithway shall pay the repair and towing expense on
tractor #314 in the amount of $1,412. Seller shall pay the $654 in repair
expense for the tractor driver shaft that broke while under a Xxxxxxxxx load.
Smithway previously paid this amount and $654 shall be deducted from the
Escrowed Funds and returned to Smithway.
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8. Headache Racks. Smithway shall forgive any deficiencies in the number,
or portions thereof, of headache racks delivered by Seller and no amount shall
be deducted from any sums paid to Seller. Any uncounted portions of the headache
racks that are in the possession of Smithway on the date hereof shall be the
property of Smithway.
9. Equipment Rental and Return. Smithway shall pay Seller the sum of
$8,000 for (a) use of Nonacquired Trucks beyond the 30-day allowed period, (b)
use of Nonacquired Trucks that were taken from the Yankton or Stockton terminal
after being brought to such terminal, and (c) any late return of the priority
tractors to Yankton. Seller agrees that all Nonacquired Tractors have been
returned to Seller. Seller shall pick up seven dry vans from Fort Dodge, Iowa,
Smithway shall not be required to return such vans to Seller, and Smithway shall
deliver on or prior to December 19, 1996 the one remaining dry van to Yankton or
Sioux City, as instructed by Xxxxx Xxxxxxxxx.
10. Consulting Services of Xxxxx Xxxxxxxxx. Smithway shall continue to
pay Xxxxx Xxxxxxxxx the consulting fee as provided in Section 2.12 of the Main
Agreement and shall rent an office for Xxxxx Xxxxxxxxx in Yankton through
January 31, 1997. Except for the purposes and at the times provided in the
Yankton lease entered into between the parties and the auction provided in the
First Amendment, Xxxxx Xxxxxxxxx shall not enter the Yankton terminal or the
premises on which it is located, and shall instruct Xxxx Xxxxxxxxx to refrain
from entering the Yankton terminal and premises.
11. Forklifts. Smithway shall not purchase either of the forklifts at the
Yankton terminal. Smithway previously paid Seller $7,500 for one forklift and
such amount shall be deducted from the Escrowed Funds and be returned to
Smithway.
12. Yankton Terminal Rent. The first sentence of Section 2.10 of the Main
Agreement shall be deleted in its entirety and replaced with the following
sentence, which shall read as follows:
2.10 Yankton Lease. Smithway shall lease the Property from
Seller for four years at a monthly rental of $2,000,
triple net, pursuant to the Lease; provided, however,
the Yankton terminal rent payable by Smithway shall
be prorated from October 26, 1996 to November 1,
1996, resulting in a $387 payment by Smithway to
Seller.
The remaining language of Section 2.10 of the Main Agreement shall read as
stated in the Main Agreement.
13. Phone Service at Yankton Terminal. Seller and Shareholders agree to
continue the present phone service, with the existing phone number, at the
Yankton terminal through January 31, 1997, at which time the phone number may be
transferred as Xxxxx Xxxxxxxxx desires. Although the phone service may be
switched to Smithway's account prior to January 31, 1997, the phone number or
any other aspects of the phone service will not be modified by Seller or
Shareholders in any manner. Seller and Shareholders acknowledge that the harm to
Smithway's business would be irreparable if there were a disruption, for any
period of time, in the phone service at the Yankton terminal by reason of a
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modification, cancellation, or change in the phone service or number before
Smithway is ready to change the phone service and number on January 31, 1997.
14. Services of Xxxx Post. Through January 31, 1997, Xxxx Post shall be
permitted to assist Xxxx Xxxxxxxxxx for a reasonable amount of time in gathering
documents necessary in the preparation of Seller's and Shareholders' tax
returns; provided, however, that only Xxxx Xxxxxxxxxx or his staff may call Mr.
Post and such calls and the assistance of Mr. Post shall not interfere with his
services to Smithway.
15. Miscellaneous.
a. Smithway shall pay Seller $37,736 for the G.E.
Capital title, California inventory, and California
air compressor and battery charger not previously
paid for by Smithway. Such payment shall be made by
the release of such amount of the Escrowed Funds to
Seller.
b. Revenue shall be split on the load from the East
Coast to Xxxxxx, Nevada for which Smithway equipment
was used for a portion of the load. Seller has
previously collected all of the revenue from the load
and shall pay Smithway $1,080 by deducting $1,080
from the Escrowed Funds and returning such amount to
Smithway.
c. Seller shall pay Smithway $17,015 for one missing
trailer. Such amount shall be paid by deducting it
from the Escrowed Funds and returning such amount to
Smithway.
d. Seller shall pay the cargo claim relating to a
particular Seller transported load on which a $2,270
cargo claim was incurred, and any other cargo claims
on Seller transported loads. The sum of $2,270 shall
be deducted from the Escrowed Funds and returned to
Smithway.
e. Seller owes approximately $5,500 in quarterly safety
bonuses that were due to drivers for the quarter
ended September 30, 1996. Smithway shall pay such
amount to the drivers, and $5,500 shall be deducted
from the Escrowed Funds and returned to Smithway.
Drivers are not entitled to safety bonuses unless in
the employ of Seller or Smithway at December 31,
1996. Xxxx Post shall determine if any safety bonus
amount is not payable to a driver because such driver
left Seller or Smithway before December 31, 1996, and
any such amount shall be paid to Seller by Smithway
within ten days of presentation to Smithway by Mr.
Post.
16. Direction to Escrow Agent. The parties hereby agree that the amount
of the Escrowed Fund is $132,000. The parties further agree that under the terms
of this Amendment, such amount shall be distributed $11,395 to Smithway and
$120,605 to Seller as set forth in the attached schedule, incorporated herein by
this reference. The parties hereby direct Escrow Agent to distribute the
Escrowed Fund in accordance with this Section 16 immediately.
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17. Counterparts. This Amendment can 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.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Amendment on the date first written.
XXXXXXXXX TRANSPORTATION, INC., SMITHWAY MOTOR XPRESS, INC.,
a South Dakota corporation an Iowa corporation
By: By:
Xxxxx Xxxxxxxxx, President Xxxxxxx X. Xxxxx, President
SMITHWAY MOTOR XPRESS CORP.,
Xxxxx Xxxxxxxxx, Individually a Nevada corporation
Xxxxxxx Xxxxxxxxx, Individually By:
Xxxxxxx X. Xxxxx, President
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SCHEDULE
Remaining Escrowed Funds: $ 132,000
=========
Deductions from payments to Seller:
Half of California soil samplings (613)
Adjustment for parts inventory (40,975)
Adjustment for tire inventory (51,686)
Adjustment Amount for brake and tire wear (8,271)
Adjustment Amount for mileage penalty (25,015)
Repair expense on tractor drive shaft under
Xxxxxxxxx load (654)
Returned forklift at Yankton terminal (7,500)
Revenue share on load from East Coast to
Xxxxxx, Nevada (1,080)
One missing trailer (17,015)
Seller cargo claim (2,270)
Quarterly safety bonus (5,500)
------------
Total deductions to Seller: $(160,579)
Balance to Seller after application of remaining Escrowed Funds: $ (28,579)
===========
Credits to Seller:
California lease prorate 967
Goodwill payment 100,000
Equipment rental and return 8,000
Damage to driver side of tractor struck
in Yankton yard 2,094
Yankton lease prorate 387
G.E. Title, California inventory, and California
air compressor and battery charger 37,736
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Total credits to Seller: $ 149,184
----------
Total Amount Owed Seller by Smithway: $ 120,605
==========
Amount from remaining Escrowed Funds to be Released to Seller: $ 120,605
Amount from remaining Escrowed Funds to be Released to Smithway: $ 11,395
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