EXHIBIT 10.19
July 7, 2004
Smithway Motor Xpress, Inc.
0000 Xxxxx Xxxxxx
Xxxx Xxxxx, Xxxx 00000
And
East West Motor Express, Inc.
0000 XX Xxxxx
Xxxxx Xxxx, Xxxxx Xxxxxx 00000
RE: TWELFTH AMENDMENT TO AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
Gentlemen:
SMITHWAY MOTOR XPRESS, INC., an Iowa corporation ("SMITHWAY INC.") and
EAST WEST MOTOR EXPRESS, INC., a South Dakota corporation ("EAST WEST")
(Smithway Inc. and East West each a "BORROWER" and collectively the "BORROWERS")
and LASALLE BANK NATIONAL ASSOCIATION, a national banking association ("LENDER")
have entered into that certain Amended and Restated Loan and Security Agreement
dated December 28, 2001 (the "SECURITY AGREEMENT"). From time to time
thereafter, Borrowers and Lender may have executed various amendments (each an
"AMENDMENT" and collectively the "AMENDMENTS") to the Security Agreement (the
Security Agreement and the Amendments hereinafter are referred to, collectively,
as the "AGREEMENT"). Borrowers and Lender now desire to further amend the
Agreement as provided herein, subject to the terms and conditions hereinafter
set forth.
NOW, THEREFORE, in consideration of the foregoing recitals, the mutual
covenants and agreements set forth herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:
1. The Agreement hereby is amended as follows:
Smithway Motor Xpress, Inc.
East West Motor Express, Inc.
July 7, 2004
Page 2
(a) The definitions of "BUSINESS DAY", "MAXIMUM LOAN LIMIT" and "PRIME
RATE LOANS" set forth in Paragraph 1 of the Agreement are deleted in their
entirety and the following are substituted in their place:
"BUSINESS DAY" shall mean any day other than a Saturday, a Sunday or
(i) with respect to all matters, determinations, fundings and
payments in connection with LIBOR Rate Loans, any day on which banks
in London, England or Chicago, Illinois are required or permitted to
close, and (ii) with respect to all other matters, any day that
banks in Chicago, Illinois are permitted or required to close.
"MAXIMUM LOAN LIMIT" shall mean Twenty Million and No/100 Dollars
($20,000,000.00).
"PRIME RATE LOANS" shall mean the Loans bearing interest at the
Prime Rate plus the Prime Margin, as set forth in Paragraph 4 of the
Agreement.
(b) Paragraph 1 of the Agreement is amended to add the following
definitions:
"INTEREST PERIOD" shall have the meaning specified in Paragraph 4 of
the Agreement hereto.
"LIBOR RATE" shall mean with respect to any LIBOR Rate Loan for any
Interest Period, a rate per annum equal to the offered rate for
deposits in United States dollars for a period equal to such
Interest Period as it appears on Telerate Service page 3750 as of
11:00 a.m. (London time) two Business Days prior to the first day of
such Interest Period. " TELERATE SERVICE PAGE 3750" means the
display designated as "Page 3750" on the Telerate Service (or such
other page as may replace page 3750 of that service or such other
service as may be nominated by the British Bankers' Association as
the vendor for the purpose of displaying British Bankers'
Association interest settlement rates for United States dollar
deposits).
"LIBOR RATE LOANS" shall mean the Loans bearing interest at the
LIBOR Rate plus the LIBOR Margin, as set forth in Paragraph 4 of the
Agreement.
Smithway Motor Xpress, Inc.
East West Motor Express, Inc.
July 7, 2004
Page 3
"TAX" shall mean in relation to any LIBOR Rate Loans and the
applicable LIBOR Rate, any tax, levy, impost, duty, deduction,
withholding or charges of whatever nature required (i) to be paid by
Bank and/or (ii) to be withheld or deducted from any payment
otherwise required hereby to be made by Borrower to Bank; provided,
that the term "Tax" shall not include any taxes imposed upon the net
income of Bank.
(c) Subparagraph 8(a) of the Agreement is deleted in its entirety and the
following is substituted in its place:
(a) Borrower shall direct all of its Account Debtors to make all
payments on the Accounts directly to a post office box (the
"LOCK BOX") designated by, and under the exclusive control of,
Bank or another financial institution acceptable to Bank.
Borrower shall establish an account (the "LOCK BOX ACCOUNT")
in Borrower's name with Bank or such other financial
institution acceptable to Bank, into which all payments
received in the Lock Box shall be deposited, and into which
Borrower will immediately deposit all payments received by
Borrower for Accounts in the identical form in which such
payments were received, whether by cash or check. If Borrower,
any Affiliate or Subsidiary, or any shareholder, officer,
director, employee or agent of Borrower or any Affiliate or
Subsidiary, or any other Person acting for or in concert with
Borrower shall receive any monies, checks, notes, drafts or
other payments relating to or as proceeds of Accounts or other
Collateral, Borrower and each such Person shall receive all
such items in trust for, and as the sole and exclusive
property of, Bank and, immediately upon receipt thereof, shall
remit the same (or cause the same to be remitted) in kind to
the Lock Box Account. If the Lock Box Account is not
established with Bank, the financial institution with which
the Lock Box Account is established shall acknowledge and
agree, in a manner satisfactory to Bank, that the amounts on
deposit in such Lock Box Account are the sole and exclusive
property of Bank, that such financial institution has no right
to setoff against the Lock Box Account or against any other
account maintained by such financial institution into which
the contents of the Lock Box Account are transferred, and that
such financial institution shall wire, or otherwise transfer
in immediately available funds in a manner satisfactory to
Bank, funds deposited in the Lock Box Account on a daily basis
as such
Smithway Motor Xpress, Inc.
East West Motor Express, Inc.
July 7, 2004
Page 4
funds are collected. Borrower agrees that all payments made to
such Lock Box Account or otherwise received by Bank, whether
in respect of the Accounts or as proceeds of other Collateral
or otherwise, will be applied on account of the Liabilities in
accordance with the terms of this Agreement; provided, that so
long as no Event of Default has occurred, payments received by
Bank shall not be applied to the unmatured portion of the
LIBOR Rate Loans, but shall be held in an interest bearing
cash collateral account maintained by Bank until the earlier
of (i) the last day of the Interest Period applicable to such
LIBOR Rate Loan and (ii) the occurrence of an Event of
Default; provided further, that so long as no Event of Default
has occurred, the immediately available funds held in such
interest bearing cash collateral account may be disbursed, at
Borrower's discretion, to Borrower so long as after giving
effect to such disbursement, Borrower's availability under
Paragraph 1 of Exhibit A of the Agreement at such time equals
or exceeds the outstanding Liabilities at such time. If the
Lock Box Account is established with Bank, Borrower agrees to
pay all fees, costs and expenses which Bank incurs in
connection with opening and maintaining the Lock Box Account
and depositing for collection by Bank any check or other item
of payment received by Bank on account of the Liabilities. All
of such fees, costs and expenses shall constitute Loans
hereunder, shall be payable to Bank by Borrower upon demand,
and, until paid, shall bear interest at the highest rate then
applicable to Loans hereunder. All checks, drafts, instruments
and other items of payment or proceeds of Collateral shall be
endorsed by Borrower to Bank, and, if that endorsement of any
such item shall not be made for any reason, Bank is hereby
irrevocably authorized to endorse the same on Borrower's
behalf. For the purpose of this paragraph, Borrower
irrevocably hereby makes, constitutes and appoints Bank (and
all Persons designated by Bank for that purpose) as Borrower's
true and lawful attorney and agent-in-fact (i) to endorse
Borrower's name upon said items of payment and/or proceeds of
Collateral and upon any Chattel Paper, document, instrument,
invoice or similar document or agreement relating to any
Account of Borrower or goods pertaining thereto; (ii) to take
control in any manner of any item of payment or proceeds
thereof; and (iii) to have access to any lock box or postal
box into which any of
Smithway Motor Xpress, Inc.
East West Motor Express, Inc.
July 7, 2004
Page 5
Borrower's mail is deposited, and open and process all mail
addressed to Borrower and deposited therein.
(d) Subparagraph 8(c) of the Agreement is deleted in its entirety and the
following is substituted in its place:
(c) For purposes of calculating interest, Bank shall, within two
(2) Business Days after receipt by Bank at its office in
Chicago, Illinois of (i) checks and (ii) cash or other
immediately available funds from collections of items of
payment and Proceeds of any Collateral, apply the whole or any
part of such collections or Proceeds against the Liabilities
in such order as Bank shall determine in its sole discretion.
For purposes of determining the amount of Loans available for
borrowing purposes, (i) checks and (ii) cash or other
immediately available funds from collections of items of
payment and Proceeds of any Collateral shall be applied in
whole or in part against the Liabilities, in such order as
Bank shall determine in its sole discretion, on the day of
receipt, subject to actual collection.
(e) Paragraph 4(a) of the Agreement is deleted in its entirety and the
following is substituted in its place:
(a) INTEREST RATE: Subject to the terms and conditions set forth
below, the Loans shall bear interest at the per annum rate of
interest of the Prime Rate plus the Prime Margin set forth
below or at the LIBOR Rate plus the LIBOR Margin set forth
below, at Borrower's option, based on the following matrix.
Initially, the Loans shall bear interest as reflected in Level
II of the matrix through December 31, 2004, with the first
test upon the submission by Borrower of fiscal year end 2004
audited financial statements (and shall be tested quarterly on
a rolling twelve (12) month basis by Bank thereafter) and, if
applicable, reset by Bank.
Smithway Motor Xpress, Inc.
East West Motor Express, Inc.
July 7, 2004
Page 6
REVOLVING LOANS TERM LOANS
-------------------------- ----------
FUNDED DEBT LIBOR PRIME LIBOR
LEVEL TO EBITDA PRIME MARGIN MARGIN MARGIN MARGIN
----- ------------------ ------------ ------- ---------- -------
I >or= 3.5 50 BPS 300 BPS 50 BPS 350 BPS
II >or= 2.5 AND < 3.5 25 BPS 275 BPS 25 BPS 325 BPS
III >or= 1.5 AND < 2.5 25 BPS 250 BPS 25 BPS 300 BPS
IV < 1.5 0 BPS 225 BPS 25 BPS 275 BPS
"EBITDA" shall mean with respect to any period, Borrower's net income
after taxes for such period (excluding any after-tax gains or losses on
the sale of assets, other than the sale of Inventory in the ordinary
course of business) and excluding other after-tax extraordinary gains or
losses) plus interest expense, income tax expense, depreciation and
amortization for such period, plus or minus any other non-cash charges or
gains which have been subtracted or added in calculating net income after
taxes for such period.
"Funded Debt" shall mean, with respect to any period, all Debt of Borrower
for borrowed money, whether or not evidenced by bonds, debentures, notes
or similar instruments.
"Prime Rate" means the publicly announced prime rate of LaSalle Bank
National Association (which is not intended to be LaSalle Bank National
Association's lowest or most favorable rate in effect at any time) (the
"Prime Rate") in effect from time to time, said rate of interest to
increase or decrease by an amount equal to each increase or decrease in
the Prime Rate effective on the effective date of each such change in the
Prime Rate; and
"Interest Period" shall mean any continuous period of thirty (30), sixty
(60) or ninety (90) days, as selected from time to time by Borrower by
irrevocable notice (in writing, by telex, telegram or cable) given to Bank
not less than two (2) Business Days prior to the first day of each
respective Interest Period; provided that: (i) each such period occurring
after such initial period shall commence on the day on which the
immediately preceding period expires; (ii) the final Interest Period shall
be
Smithway Motor Xpress, Inc.
East West Motor Express, Inc.
July 7, 2004
Page 7
such that its expiration occurs on or before the end of the Original Term
or any Renewal Term; and (iii) if for any reason Borrower shall fail to
timely select a period, then such Loans shall continue as, or revert to,
Prime Rate Loans. Interest shall be payable on the last Business Day of
each month and on the date of any payment hereon by Borrower.
Upon the occurrence of an Event of Default, the Loans shall bear interest
at the rate of two percent (2.0%) per annum in excess of the interest rate
otherwise payable thereon, which interest shall be payable on demand. All
interest shall be calculated on the basis of a 365-day year.
(f) Subparagraph 4(b)(iv) of the Agreement is deleted in its entirety and
the following is substituted in its place:
(iv) AMENDMENT FEE: Borrowers shall pay to Lender an amendment fee
of One Thousand and No/100 Dollars ($1,000.00), which fee
shall be fully earned and payable upon execution of this
Amendment.
(g) The following subparagraph is hereby added to the end of Paragraph 4
of the Agreement:
4.1 OTHER LIBOR PROVISIONS:
(a) Subject to the provisions of this Agreement, Borrower
shall have the option (i) as of any date, to convert all
or any part of the Prime Rate Loans to, or request that
new Loans be made as, LIBOR Rate Loans of various
Interest Periods, (ii) as of the last day of any
Interest Period, to continue all or any portion of the
relevant LIBOR Rate Loans as LIBOR Rate Loans; (iii) as
of the last day of any Interest Period, to convert all
or any portion of the LIBOR Rate Loans to Prime Rate
Loans; and (iv) at any time, to request new Loans as
Prime Rate Loans; provided, that Loans may not be
continued as or converted to LIBOR Rate Loans, if the
continuation or conversion thereof would violate the
provisions of subparagraphs 4.1(b) and 4.1(c) of this
Agreement or if an Event of Default has occurred.
(b) Bank's determination of LIBOR as provided above shall be
conclusive, absent manifest error. Furthermore, if Bank
determines, in good faith (which determination shall be
conclusive, absent manifest error), prior to the
commencement of any Interest
Smithway Motor Xpress, Inc.
East West Motor Express, Inc.
July 7, 2004
Page 8
Period that (i) U.S. Dollar deposits of sufficient
amount and maturity for funding the Loans are not
available to Bank in the London Interbank Eurodollar
market in the ordinary course of business, or (ii) by
reason of circumstances affecting the London Interbank
Eurodollar market, adequate and fair means do not exist
for ascertaining the rate of interest to be applicable
to the Loans requested by Borrower to be LIBOR Rate
Loans or the Loans bearing interest at the rates set
forth in Paragraph 4 of this Agreement shall not
represent the effective pricing to Bank for U.S. Dollar
deposits of a comparable amount for the relevant period
(such as for example, but not limited to, official
reserve requirements required by Regulation D to the
extent not given effect in determining the rate), Bank
shall promptly notify Borrower and (x) all existing
LIBOR Rate Loans shall convert to Prime Rate Loans upon
the end of the applicable Interest Period, and (y) no
additional LIBOR Rate Loans shall be made until such
circumstances are cured.
(c) If, after the date hereof, the introduction of, or any
change in any applicable law, treaty, rule, regulation
or guideline or in the interpretation or administration
thereof by any governmental authority or any central
bank or other fiscal, monetary or other authority having
jurisdiction over Bank or its lending offices (a
"Regulatory Change"), shall, in the opinion of counsel
to Bank, make it unlawful for Bank to make or maintain
LIBOR Rate Loans, then Bank shall promptly notify
Borrower and (i) the LIBOR Rate Loans shall immediately
convert to Prime Rate Loans on the last Business Day of
the then existing Interest Period or on such earlier
date as required by law and (ii) no additional LIBOR
Rate Loans shall be made until such circumstance is
cured.
(d) If, for any reason, a LIBOR Rate Loan is paid prior to
the last Business Day of any Interest Period or if a
LIBOR Rate Loan does not occur on a date specified by
Borrower in its request (other than as a result of a
default by Bank), Borrower agrees to indemnify Bank
against any loss (including any loss on redeployment
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East West Motor Express, Inc.
July 7, 2004
Page 9
of the deposits or other funds acquired by Bank to fund
or maintain such LIBOR Rate Loan) cost or expense
incurred by Bank as a result of such prepayment.
(e) If any Regulatory Change (whether or not having the
force of law) shall (i) impose, modify or deem
applicable any assessment, reserve, special deposit or
similar requirement against assets held by, or deposits
in or for the account of or loans by, or any other
acquisition of funds or disbursements by, Bank; (ii)
subject Bank or the LIBOR Rate Loans to any Tax or
change the basis of taxation of payments to Bank of
principal or interest due from Borrower to Bank
hereunder (other than a change in the taxation of the
overall net income of Bank); or (c) impose on Bank any
other condition regarding the LIBOR Rate Loans or Bank's
funding thereof, and Bank shall determine (which
determination shall be conclusive, absent any manifest
error) that the result of the foregoing is to increase
the cost to Bank of making or maintaining the LIBOR Rate
Loans or to reduce the amount of principal or interest
received by Bank hereunder, then Borrower shall pay to
Bank, on demand, such additional amounts as Bank shall,
from time to time, determine are sufficient to
compensate and indemnify Bank from such increased cost
or reduced amount.
(f) Bank shall receive payments of amounts of principal of
and interest with respect to the LIBOR Rate Loans free
and clear of, and without deduction for, any Taxes. If
(1) Bank shall be subject to any Tax in respect of any
LIBOR Rate Loans or any part thereof or, (2) Borrower
shall be required to withhold or deduct any Tax from any
such amount, the LIBOR Rate applicable to such LIBOR
Rate Loans shall be adjusted by Bank to reflect all
additional costs incurred by Bank in connection with the
payment by Bank or the withholding by Borrower of such
Tax and Borrower shall provide Bank with a statement
detailing the amount of any such Tax actually paid by
Borrower. Determination by Bank of the amount of such
costs shall be conclusive, absent manifest error. If
after any such adjustment any part of any Tax paid
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East West Motor Express, Inc.
July 7, 2004
Page 10
by Bank is subsequently recovered by Bank, Bank shall
reimburse Borrower to the extent of the amount so
recovered. A certificate of an officer of Bank setting
forth the amount of such recovery and the basis therefor
shall be conclusive, absent manifest error.
(g) Each request for LIBOR Rate Loans shall be in an amount
not less than Two Million and No/100 Dollars
($2,000,000.00), and in integral multiples of, Two
Million and No/100 Dollars ($2,000,000.00).
(h) Unless otherwise specified by Borrower, all Loans shall
be Prime Rate Loans.
(i) No more than four (4) Interest Periods may be in effect
with respect to outstanding LIBOR Rate Loans at any one
time.
2. This Amendment shall not become effective until fully executed by all
parties hereto.
3. Except as expressly amended hereby and by any other supplemental
documents or instruments executed by either party hereto in order to effectuate
the transactions contemplated hereby, the Agreement and Exhibit A thereto hereby
are ratified and confirmed by the parties hereto and remain in full force and
effect in accordance with the terms thereof.
LASALLE BANK NATIONAL ASSOCIATION
By /s/ XXXXX XXXXXXX
------------------------------------
Title Vice President
---------------------------------
ACKNOWLEDGED AND AGREED TO
this 7th day of July, 2004:
SMITHWAY MOTOR XPRESS, INC.
By /s/ G. XXXXX XXXXX
---------------------------------
G. XXXXX XXXXX
TITLE: PRESIDENT, CEO AND CHAIRMAN
Smithway Motor Xpress, Inc.
East West Motor Express, Inc.
November 11, 2004
Page 11
EAST WEST MOTOR EXPRESS, INC.
By /s/ G. XXXXX XXXXX
--------------------------------
G. XXXXX XXXXX
TITLE: PRESIDENT, CEO AND CHAIRMAN
Consented and agreed to by the following guarantor(s) of
the obligations of SMITHWAY MOTOR XPRESS, INC. and EAST
WEST MOTOR EXPRESS, INC. to LASALLE BANK NATIONAL
ASSOCIATION.
SMSD ACQUISITION CORP.
By /s/ G. XXXXX XXXXX
--------------------------------
G. XXXXX XXXXX
TITLE: PRESIDENT, CEO AND CHAIRMAN
DATE: July 7 2004
SMITHWAY MOTOR XPRESS CORP.
By /s/ G. XXXXX XXXXX
--------------------------------
G. XXXXX XXXXX
TITLE: PRESIDENT, CEO AND CHAIRMAN
DATE: July 7, 2004
