Exhibit 2.1
--------------------------------------
ASSET PURCHASE AGREEMENT
--------------------------------------
This Asset Purchase Agreement ("Agreement"), dated February 20, 1998, is
entered into by and among Smithway Motor Xpress, Inc., an Iowa corporation
("Smithway"); East West Motor Express, Inc., a South Dakota corporation (the
"Company"); and Xxxxxx and Xxxxx Xxxxxxxx, individual residents of Rapid City,
South Dakota and the Company's two shareholders, (individually, a "Shareholder"
and together the "Shareholders").
RECITALS
1. Shareholders and the Company desire to convey the Transferred
Assets to Smithway and Smithway desires to acquire the
Transferred Assets and assume certain obligations of the Company.
2. The parties propose to reduce to written form their agreement as
to the terms and conditions which shall govern the transaction
contemplated herein.
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:
ARTICLE 1
Definitions
In addition to the capitalized terms defined elsewhere herein, the
following terms, when capitalized, shall have the meanings ascribed to them
below:
1.1 "Assigned Equipment Financing" means the lending documents and
obligations thereunder relating to the Tractors, Trailers, and other vehicles
set forth on attached Schedule 1.1, which shall be assigned to and assumed by
Smithway under Section 2.5 hereof.
1.2 "Assignment and Assumption Agreement" means the agreement to be
executed by the Company and Smithway pursuant to Section 2.5, in substantially
the form attached as Exhibit A.
1.3 "Assumed Liabilities" means the obligations of the Company (a) under
the Assigned Equipment Financing in the aggregate amounts set forth in the
payoff letters relating to all of such financing and set forth on Schedule 1.3;
(b) under certain Equipment Master Leases between the Company and Trans Lease,
Inc. for certain Highway Master units; and (c) for vacation and sick leave owed
or accrued for the Company's employees.
1.4 "Benefit Plans" means all contracts, plans, arrangements, policies,
and understandings providing for any compensation or benefit (as set forth on
Schedule 1.4) other than base wages or salaries that are maintained by the
Company or affect its employees or independent contractors, regardless of
whether defined as an "employee benefit plan" under ERISA or subject to any
provision of ERISA, including, without limitation: all pension, profit-sharing,
retirement, thrift, 401(K), and other similar plans and arrangements (defined
benefit and defined contribution); all health and welfare, disability, insurance
(including self-insurance), workers' compensation, supplemental unemployment,
severance, vacation, and similar plans and arrangements; and all bonus, stock
option, incentive compensation, stock appreciation rights, phantom stock,
overtime guaranty, employment contract, employee handbook, and other similar
plan or arrangement.
1.5 "Business" means the Company's business of providing transportation
of freight.
1.6 "Drivers" means the employee and independent contractor truck
drivers that operate tractors in the Business.
1.7 "Excluded Assets" means all of the Company's assets other than the
Transferred Assets, including but not limited to current assets, accounts
receivable, and escrows set forth on the Company's balance sheet at Closing,
together with the Retained Vehicles.
1.8 "Excluded Liabilities" means every liability of every kind and
character whatsoever other than the Assumed Liabilities.
1.9 "Goodwill Amount" has the meaning ascribed in Section 2.2(d).
1.10 "Inventory" means the assets set forth as inventory on the Company's
balance sheet as of the date of Closing.
1.11 "Judgment" means any judgment, order, writ, injunction, decree, or
award of any federal, state, or provincial court, or governmental agency.
1.12 "Law" means any federal, state, or local constitution, law,
ordinance, or governmental order, rule, or regulation (including, without
limitation, those relating to environmental, energy, safety, health, zoning,
antidiscrimination, antitrust, and wage and hour matters).
1.13 "Lien" means any mortgage, lien, pledge, security interest,
conditional sale agreement, charge, claim, right, condition, restriction, or
other encumbrance or defect of title of any nature whatsoever (including,
without limitation, any assessment, charge, or other type of notice which is
levied or given by any governmental authority and for which a lien could be
filed).
1.14 "Miscellaneous Equipment" means (i) each set of "headache racks,"
tarps, tie-downs, chains, tool boxes, any safety equipment, spare tires, and all
other items associated with each Tractor and Trailer; (ii) shop and office
equipment; (iii) forklifts; (iv) Highway Master mobile communications terminals;
and (v) all other assets set forth on the Company's balance
2
sheet under "property and equipment"at Closing except organizational costs and
the Retained Vehicles.
1.15 "Prepaid Assets" means the prepaid assets of the Company appearing
on the Company's balance sheet as of the date of Closing that are identified as
usable by Smithway and shall include the Company's 1998 decals, 1998 bingo
stamps, 1998 IRP license fees, or highway use tax (collectively, the
"Licenses").
1.16 "Permits" means all permits, licenses, franchises, and other
approvals required by Law.
1.17 "Proceeding" means any litigation, arbitration, investigation,
proceeding, notice of violation, order, claim, citation, complaint, review, or
penalty assessment, in each case whether formal or informal, administrative,
civil, or criminal, at law or in equity.
1.18 "Property" shall mean the approximately 12.5 acres of real estate
and any and all improvements thereon presently owned by D & D Investments
L.L.C., of which each Shareholder is a 50% member, and comprised of an office
building, maintenance shop, and yard, where the Company has been conducting the
Business, as more fully described in the real estate purchase agreement attached
hereto as Exhibit B ("Purchase Agreement").
1.19 "Retained Vehicles" means the 1997 Tahoe and 1994 Ford King Cab
Pick-up owned by the Company and used by Xxxxx and Xxxxxx, respectively.
1.20 "Taxes" means all taxes, charges, fees, levies, or other assessments
of whatever kind or nature, including, without limitation, all net income, gross
income, gross receipts, sales, use, ad valorem, transfer, franchise, profits,
withholding, payroll, employment, excise, estimated, severance, stamp, occupancy
or property taxes, customs duties, fees, assessments, or charges of any kind
whatsoever (together with any interest and any penalties, additions to tax or
additional amounts) imposed by any taxing authority (domestic or foreign).
1.21 "Tractors" means the owned tractors identified on Schedule 1.21,
which include all tractors reflected on the Company's balance sheet as of the
date of Closing.
1.22 "Trailers" means the owned semi-trailers identified on Schedule
1.22, which includes all trailers reflected on the Company's balance sheet as of
the date of Closing.
1.23 "Transferred Assets" means the Trailers, Tractors, Miscellaneous
Equipment, Inventory, and Prepaid Assets, as well as the name "East West Motor
Express," all telephone and fax numbers, employee and Driver files, tariffs,
logs, equipment maintenance files, extended warranty agreements, customer files,
rights under contracts included in the Assumed Liabilities, rights of the
Company to receive Tractors and Trailers on order and rebates (as more
specifically set forth in Section 5.8), business records, and goodwill
associated with the Business.
3
ARTICLE 2
Purchase, Sale, and Employment
2.1 Purchase and Sale. As hereinafter provided, Smithway shall purchase,
acquire, and assume from the Company, and the Company shall sell, assign, and
transfer to Smithway, all right, title, and interest in and to the Transferred
Assets for the consideration specified in this Article 2.
2.2 Purchase Price Calculation. The Purchase Price for the Transferred
Assets shall be an amount equal to the sum of the amounts set forth in
paragraphs 2.2(a) - (g) as follows:
(a) Seven Million Five Hundred Thousand Dollars ($7,500,000),
representing the price for the Tractors, Trailers, and Miscellaneous
Equipment; plus (b) The net book value of the Prepaid Assets at
Closing; plus
(c) The net book value of Inventory at Closing; plus
(d) The amount paid for the goodwill relating to the Business
(the "Goodwill Amount"), which shall be equal to Two Million Two
Hundred Twenty-Nine Thousand Dollars ($2,229,000) plus two percent
(2%) of the amount by which gross revenue generated by trucks based at
the Black Hawk terminal exceeds $31,340,000 during calendar year 1998;
minus
(e) The dollar amount of the Assigned Equipment Financing assumed
or paid off by Smithway at Closing; minus
(f) The dollar amount of accrued vacation and sick leave
liability on the Company's balance sheet at Closing, which Smithway
agrees to assume and provide to employees; minus
(g) $39,638, representing the depreciated book value of the
Retained Vehicles.
2.3 Payment of Purchase Price. In exchange for the Transferred
Assets, Smithway shall pay the Purchase Price as follows:
(a) At Closing, Smithway shall pay the Purchase Price, other than
the Goodwill Amount, to the Company in cash by check or wire transfer of
immediately available funds.
(b) At Closing, Smithway also shall pay $975,000 of the Goodwill
Amount to the Company in cash by check or wire transfer of immediately
available funds.
(c) Smithway shall pay the remainder of the Goodwill Amount to
the Shareholders as follows:
4
(i) On each of June 30, 1998, September 30, 1998, December
31, 1998, and March 31, 1999, Smithway shall deliver a check in
the amount of $156,750;
(ii) On each of June 30, 1999, September 30, 1999,
December 31, 1999, and March 31, 2000, Smithway shall deliver a
check in the amount of one-half of one percent (.5%) of calendar
year 1998 gross revenue generated from trucks based at the Black
Hawk terminal; notwithstanding the foregoing, the minimum
quarterly payment shall be $156,750.
2.4 Property Purchase. At Closing, Smithway shall purchase the Property
from the Shareholders pursuant to the Purchase Agreement.
2.5 Assumed Liabilities. At Closing, Smithway shall assume the Assumed
Liabilities pursuant to the Assignment and Assumption Agreement. Smithway shall
use its best effort to ensure the Shareholders are released as guarantors under
the Assumed Liabilities.
2.6 Excluded Assets and Liabilities. Smithway is not purchasing, and the
Company shall retain, the Excluded Assets. Smithway is not assuming and shall
not be deemed to have assumed, any liabilities or obligations of the Company of
any kind or nature whatsoever, except for the Assumed Liabilities. The Company
shall remain responsible for all Excluded Liabilities.
2.7 Allocation of Purchase Price. The parties agree to allocate the
Purchase Price and all other costs that are capable of being capitalized among
the Transferred Assets for tax purposes in accordance with the allocation
schedule attached hereto as Schedule 2.7.
ARTICLE 3
Closing and Post-Closing
3.1 Closing Meeting. The closing of the transactions contemplated by this
Agreement (the "Closing") shall occur at 5:00 p.m., February 27, 1998, at the
office of Smithway, or at such other time and place as the parties may mutually
agree.
3.2 Closing Deliveries. At the Closing, the parties shall deliver to each
other the various instruments, certificates, and documents as required under
this Agreement, and take the other actions specified herein. With respect to the
titles to all of the Tractors and Trailers (the "Titles"), the Company shall
deliver such Titles, free and clear of all Liens and duly endorsed for transfer,
to Smithway. The foregoing notwithstanding, in lieu of delivering Titles for
Tractors and Trailers, securing the Assigned Equipment Financing that are held
by the respective lenders, the Company may deliver executed payoff letters from
such lenders in a form acceptable to Smithway stating that, upon receipt of the
payoff amount referenced therein, they shall deliver the applicable Titles to
Smithway, together with an appropriate lien release, and that no other liens are
noted on such Titles.
3.3 Effect of Closing. Effective at the conclusion of the Closing, Smithway
shall become the owner of all Transferred Assets, and shall have assumed the
Assumed Liabilities. As
5
to any loads that have been dispatched by the Company using the Tractors and
Trailers prior to the conclusion of the Closing but not yet delivered ("Loads
In-Transit") Smithway shall trip-lease the applicable Tractors and Trailers back
to the Company pursuant to a trip-lease agreement in substantially the form
attached as Exhibit C. The Company shall xxxx and receive all revenue from all
Loads In-Transit and shall pay all expenses relating to Loads In-Transit. In
addition, the Company shall insure and be responsible for all Losses arising out
of its use of Transferred Assets in delivering Loads In-Transit until such time
as the final delivery stop has been made, and all cargo is unloaded.
3.4 Determination of Closing Values; Adjustment.
(a) The parties recognize that the net book values of Inventory
and Prepaid Assets and the amount of accrued and owed vacation and sick
leave determined as of the date of Closing may not be available at
Closing. To the extent any such amounts are not available as of the date
of Closing, in calculating the Purchase Price for Closing, the parties
shall use the applicable amounts at the most recent available date.
(b) As soon as reasonably practicable following the Closing, and
prior to June 30, 1998, the parties shall conduct an inventory or other
assessment of the Inventory and Prepaid Assets and the accrued vacation
and sick leave and shall derive adjusted amounts for such items. If the
adjusted amounts result in an increase in the Purchase Price, Smithway
shall promptly pay the amount of the increase to the Company. If the
adjusted amounts result in a decrease in the Purchase Price, the Company
shall promptly pay the amount of the decrease to Smithway.
3.5 Transitional Expense Reimbursement. Smithway shall reimburse Company
for transitional expenses incurred by the Company for fuel, driver expenses
advanced, payroll, settlements with owner/operators, Transferred Asset
maintenance expenses and other expenses incurred after the Closing for the
benefit of Smithway; provided, however, such transitional expenses are incurred
at the direction of or with the consent of Smithway. Upon incurring any such
expense, Company shall present evidence of the expense to Smithway. In no event
shall a transitional expense be reimbursed if incurred by Company after April
30, 1998.
ARTICLE 4
Representations and Warranties
4.1 General Statement. The parties hereto make the representations and
warranties to each other as set forth in this Article 4. The survival of all
such representations and warranties shall be in accordance with Section 8.3
hereof. All representations and warranties of the parties are made subject to
the exceptions which are noted in the respective schedules attached hereto (the
"Schedules"). Copies of all documents referenced in the Schedules shall be
attached thereto or delivered separately.
4.2 Representations and Warranties of Smithway. Smithway represents and
warrants to the Company and the Shareholders, as of the date hereof and as of
the Closing, as follows:
6
(a) Corporate Status. Smithway is a corporation, duly organized,
validly existing, and in good standing under the laws of the State of
Iowa with all requisite power and authority to carry on its respective
business. Smithway is a wholly owned subsidiary of Smithway Motor Xpress
Corp. ("SMXC"), a publicly traded corporation listed on the Nasdaq
National Market System.
(b) Authority; Validity. Smithway has full right, power, and
authority to execute and deliver this Agreement, and to consummate and
perform the transactions contemplated hereby. The execution and delivery
of this Agreement and any other contract or agreement contemplated
hereunder by Smithway and the consummation and performance of the
transactions contemplated hereby have been duly and validly authorized
by all necessary corporate and other proceedings. This Agreement has
been duly executed and delivered by Smithway and constitutes a legal,
valid, and binding obligation enforceable against Smithway in accordance
with its terms.
(c) Noncontravention; Consents. The execution and delivery of
this Agreement (and every other contract or agreement contemplated
hereby) by Smithway does not, and the performance of this Agreement (and
every other contract or agreement contemplated hereby) by Smithway will
not, violate, conflict with, or result in the breach of any term,
condition, or provision of: (i) any existing Law to which it is subject,
(ii) any Judgment which is applicable, (iii) the articles of
incorporation or other charter documents or bylaws of Smithway, or (iv)
any contract to which Smithway is a party or by which Smithway is
otherwise bound. No authorization, approval, or consent of, and no
registration, filing, or notice to, any governmental authority or any
other party to any contract is required in connection with the
execution, delivery, and performance of this Agreement by Smithway.
4.3 Representations and Warranties of the Company and Shareholders.
Shareholders and the Company, jointly and severally, represent and warrant to
Smithway, as of the date hereof and as of the Closing as follows:
(a) Corporate Status. The Company is a corporation, duly
organized, validly existing, and in good standing under the laws of the
State of South Dakota, with all requisite power and authority to carry
on its business. The Company conducts its business only under its own
name and has no subsidiaries and no entities affiliated through common
ownership or otherwise that conduct any business related to that
conducted by the Company.
(b) Authority; Validity. The Company has full right, power, and
authority to execute and deliver this Agreement, and to consummate and
perform the transactions contemplated hereby. The execution and delivery
of this Agreement by the Company and the consummation and performance by
it of the transactions contemplated hereby have been duly and validly
authorized by all necessary corporate and other proceedings. This
Agreement has been duly executed and delivered by the Company and the
Shareholders and constitutes the legal, valid, and binding obligation of
each, enforceable against each in accordance with its terms.
7
(c) Noncontravention; Consents. The execution and delivery of
this Agreement (and every other contract or agreement contemplated
hereby) by the Company and the Shareholders does not, and the
performance of this Agreement (and every other contract or agreement
contemplated hereby) by the Company and the Shareholders will not,
violate, conflict with, or result in the breach of any term, condition,
or provision of: (i) any existing Law to which the Company or either
Shareholder is subject; (ii) any Judgment which is applicable to the
Company or either Shareholder; (iii) the articles of incorporation or
other charter documents or bylaws of the Company; or (iv) any contract
to which the Company or either Shareholder is a party or by which any is
otherwise bound. No authorization, approval, or consent of, and no
registration, filing, or notice to any governmental authority or other
party to any contract is required in connection with the execution,
delivery, and performance of this Agreement by the Company and
Shareholders.
(d) Financial Statements. The Company and the Shareholders have
delivered to Smithway the annual, audited financial statements of the
Company as of December 31, 1997, 1996, and 1995 together with the
unaudited financial statements as of and for the period ended January
31, 1998 (collectively, the "Historical Financial Statements"). The
Historical Financial Statements, including all balance sheets and
statements of income, cash flows, and retained earnings, and all notes
thereto, have been prepared in accordance with GAAP, present fairly the
financial condition and results of operations of the Company for all
periods reflected therein, are correct and complete, and are consistent
with the books and records of the Company, which books and records are
correct and complete.
(e) Absence of Changes or Events. Except as disclosed on Schedule
4.3(e)., since December 31, 1997 the Company has not: (i) sold,
assigned, or transferred or agreed to sell, assign, or transfer any of
the Transferred Assets or any interest therein;
(ii) created, incurred, assumed, or guaranteed any
indebtedness for money borrowed or any other indebtedness or
obligation of any nature (absolute or contingent), that involves
the mortgage, pledge, or placement of any Lien on any of the
Transferred Assets, or agreed to do any of the foregoing;
(iii) granted, entered into, or agreed to grant or enter
into any agreement or policy with any Driver or other employee
that grants severance or termination pay, increases compensation,
increases benefits under any current Benefit Plan, or creates any
continuing employment relationship;
(iv) experienced any labor unrest or union organizing
activity;
(v) suffered any material adverse change in its Business,
other than such changes as affect all truckload carriers
generally;
8
(vi) amended, terminated, or entered into any agreement
relating to the Transferred Assets; or
(vii) suffered any damage, destruction, or loss, whether
or not covered by insurance, which would have a material adverse
affect on the Business or the Transferred Assets.
(f) Title and Condition of Assets.
(i) The Company has good and valid title to the
Transferred Assets, in each case, free and clear of all Liens,
except Liens disclosed on Schedule 4.3.(f)(i) The Company is the
lessee under a lease with Highway Master, Inc. and no party other
than Highway Master, Inc. has any other interest in or Lien on
such lease. The Company is the borrower under the Assigned
Equipment Financing and no other party other than the respective
lender thereunder has any other interest in or Lien on the
Assigned Equipment Financing. Except as disclosed on Schedule
4.3.(f)(i), there are no agreements or similar understanding that
limit sale of the Property or the purpose for which the Property
may be used;
(ii) The Miscellaneous Equipment are in good repair and
condition and adequate for the ordinary course of operation of
the Company's business as presently conducted.
(iii) All Tractors, Trailers, and Personal Equipment, as
hereinafter defined, are in good operating condition and repair
and meet all U.S. Department of Transportation ("DOT")
requirements. There are no late fees, penalties, or other amounts
owing under the Assigned Equipment Financing, other than any
current monthly payment that is not yet due. The Assigned
Equipment Financing may be prepaid without penalty at any time.
All Tractors, Trailers and Personal Equipment have at least 50%
wear remaining on all tires and brakes and no body damage in
excess of $250 per unit, and all Tractors and Personal Equipment
have (a) no seat tears or broken or cracked glass, (b) all air
conditioners and heaters in good repair and condition, and (c)
tire chains and all required safety equipment.
(iv) All Inventory is usable and not obsolete.
9
(g) Tax Matters. With respect to Taxes:
(i) The Company and the Shareholders have filed, within
the time and in the manner prescribed by Law, all returns,
declarations, reports, estimates, information returns, and
statements (the "Returns") required to be filed by them,
including all such Returns with respect to the Business and the
Transferred Assets, and all such Returns are true, correct, and
complete in all material respects. The Company and Shareholders
have within the time and in the manner prescribed by Law, paid
and hereafter will continue, within the time and in the manner
prescribed by Law, to pay all Taxes that relate to the Business
and the Transferred Assets for periods prior to Closing. There
are no Liens for Taxes upon the Transferred Assets.
(ii) Except for the audit for the 1995 tax year, for which
a closure letter has not been received, the Company and the
Shareholders have not received notice of, nor is either under
audit by any tax authority, nor has a deficiency for any Taxes
been proposed, asserted, or assessed against them. There are no
outstanding waivers or comparable consents regarding the
application of the statute of limitations with respect to any Tax
or Return that have been given by the Company or Shareholders.
(iii) The Company 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.
(h) Litigation. Except as set forth in Schedule 4.3.(h), there is
no action, suit, or Proceeding pending or threatened against the
Company, the Business, or the Transferred Assets.
(i) Insurance. The Company maintains such insurance coverage on
the Transferred Assets, its Business, Drivers, and employees, which
insurance covers liabilities and risks prudently insured against by
similar businesses, and the Tractors and Trailers which complies in all
respects with the Assigned Equipment Financing. All such insurance
policies will be maintained through Closing.
(j) Contracts and Commitments. Except for contracts with
independent contractor Drivers that relate to the provision of equipment
by such Drivers, Schedule 4.3(j) contains a complete list and
description of all contracts, involving, directly or indirectly, the
Business or the Transferred Assets, including any financing arrangement
involving the Tractors, Trailers, or independent contractor Drivers.
Except as otherwise described, each contract disclosed pursuant to this
Section 4.3.(j) is a valid and binding agreement of the parties thereto,
is in full force and effect, and no party thereto is in material breach
thereunder. Contracts with customers are not required to be listed on
10
Schedule 4.3(j), and no representation is made as to the assignability
of any such customer contract.
(k) Drivers; Employees.
(i) The Company is not a party to any collective
bargaining agreement relating to its employees, including
employee Drivers, nor does any such agreement determine the terms
and conditions of employment of any such employee or employee
Driver. In the past five years there has not been any labor
unrest or union organizing activity involving the Company.
(ii) The Company is 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, or other similar payment to employees or
independent contractors of the Company as a result of the
consummation of this Agreement.
(iii) Schedule 4.3.(k)(iii) identifies each of the
Company's Benefit Plans, copies of which, amended to date, have
been furnished to Smithway. No Benefit Plan is a multi-employer
or a defined benefit plan, and neither the Company nor any
predecessor or affiliate has ever been a party to or sponsored a
multi-employer or defined benefit plan. The Company and all
Benefit Plan fiduciaries have fully complied with their
obligations with respect to all Benefit Plans; there has been no
prohibited transaction with respect to any Benefit Plan; each
Benefit Plan that is intended to be qualified under Section
401(a) of the Code is so qualified; each trust created under any
Benefit Plan is exempt from tax under Section 501(a) of the Code
and has been exempt from tax from creation; and the Company has
received determination letters from the Internal Revenue Service
for each such Benefit Plan. Each Benefit Plan has been maintained
in compliance with its terms and all applicable Laws. All
payments and contributions due or accrued under each Benefit
Plan, determined in accordance with such plans and prior funding
and accrual practices, have been paid, including a Company
contribution of $ 25,144.09 during 1997 to the 401(k) plan. The
"plan year" of each Benefit Plan is the calendar year. The
Company has no current or projected liability with respect to
post-employment or post-retirement welfare benefits for former or
retired employees.
(iv) The Company maintains files on all Drivers, and each
Driver and file meets all DOT requirements.
(l) WARN Act Notice and Liability. The facility located in Black
Hawk, South Dakota is the Company's only employment site. The Company
has taken no action in respect to employees of the Company that would
require notice or create liability under the Worker Adjustment and
Retraining Notification Act ("WARN Act"), or any state counterpart.
11
(m) Compliance With Laws; Permits. The Company has owned, leased,
and used all of its properties and assets (including the Transferred
Assets), and has conducted its Business, in compliance in all respects
with all applicable Laws. Neither the Company nor either Shareholder has
been charged with any violation of Law. No Proceeding is pending or
threatened by any governmental authority with respect to any violation
of Law by the Company or either Shareholder. No Judgment is unsatisfied
against the Company or either Shareholder, and the Company is not
subject to any stipulation, order, consent, or decree arising from an
action before any governmental authority. The Company possesses all
permits, licenses, franchises, and other approvals of governmental
authorities (collectively, "Permits") required to operate its business,
such Permits are in full force and effect, any applications for renewal
have been duly filed on a timely basis, no Proceeding is pending or
threatened to revoke or limit any Permit, and the Company is operating
in compliance with all Permits.
(n) Environment, Health, and Safety.
(i) The Company and any predecessors and affiliates have
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. Without limiting the generality of the preceding
sentence, the Company and any predecessors and affiliates have
obtained and been in compliance with all of the terms and
conditions of all Permits which are required under, and has
complied with all other limitations, restrictions, conditions,
standards, prohibitions, requirements, obligations, schedules,
and timetables which are contained in, all Environmental Laws.
(ii) The Company does not have any liability (and neither
the Company nor any predecessor or affiliate 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 in any manner that could form the basis for any present
or future action, suit, Proceeding, hearing, investigation,
charge, complaint, claim, or demand against the Company 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.
12
(iii) All properties and equipment used in the Business of
the Company and any predecessors and affiliates have been free of
asbestos, PCB's, methylene chloride, trichloroethylene,
1,2-transdichloroethylene, dioxins, dibenzofurans, and other
extremely hazardous substances as defined by Law.
(iv) Any fuel storage tanks located at properties owned or
used by the Company in its Business, including the Property,
comply in all respects with applicable Laws, do not leak, are
registered with the appropriate state agency (and all required
actions in connection therewith have been taken) in the manner
permitting the Company to take advantage of any state liability
limitation, insurance, or similar program relating to fuel
storage tanks, and such tanks are not scheduled for removal in
the next five years.
(o) No Untrue Statement or Omissions of Material Fact. The
representations, warranties, and covenants contained in this Agreement
and the Schedules and exhibits hereto and in any document delivered in
connection herewith, appended to this Agreement, do not contain any
untrue statement of a material fact and do not omit to state any fact
necessary to make any statement herein or therein not misleading or
necessary to a correct presentation of all material aspects of the
Business, the Transferred Assets, and the matters contemplated under
this Agreement.
ARTICLE 5
Covenants and Agreements
5.1 Conduct of Business Pending the Closing. From the date hereof to the
Closing:
(a) The Company shall carry on its business diligently and
substantially in the same manner as heretofore and shall not make or
institute any unusual or novel method of purchase, sale, lease,
management, accounting, or operation, and the Company and the
Shareholders will use their best efforts to preserve the assets,
goodwill, and value of the Company's business, including keeping the
Company's present management intact, keeping available the Company's
present employees and independent contractors, and preserving the
present relationships with its suppliers and customers and others having
business relations with it.
(b) The Company and the Shareholders shall not, without the prior
written consent of Smithway take, or permit to be taken, any action
which would render untrue any representation or warranty contained in
Section 4.3.
(c) The Company and Shareholders agree not to solicit or respond
to competing bids or to conduct negotiations with any other party
following execution of this Agreement, until March 31, 1998.
13
5.2 Access. The Company shall give the officers, employees, counsel,
accountants, and other authorized representatives of Smithway free and full
access to and the right to inspect, during normal business hours or other
agreeable times upon advance notice, all of the premises, properties, assets,
records, contracts, and other documents relating to the Business and shall
permit them to consult with the Company's officers, employees, accountants,
counsel, agents, customers, and other persons having business dealings with the
Company or knowledge of its business, operations, assets, liabilities, actual or
potential litigation and claims, properties, and prospects; provided, that such
investigation shall not unreasonably interfere with the Business. Furthermore,
the Company shall promptly provide to Smithway (and their representatives) all
such reports, surveys, documents, and copies of documents, records, and
information with respect to the Business and copies of any working papers
relating thereto as they shall from time to time reasonably request.
5.3 Publicity and Filings. The parties agree that Smithway shall be
authorized to issue such press releases or file such documents with the
Securities and Exchange Commission, Nasdaq, and other agencies as recommended by
Smithway's counsel. The parties acknowledge that Smithway shall announce the
existence of this Agreement only after all parties hereto have executed this
Agreement, or as it otherwise deems necessary to comply with its obligations
under the federal and state securities laws and Nasdaq rules and regulations.
5.4 Equipment Registration. The Company shall not renew the licenses or
registrations of, or purchase new license plates for, any of the Tractors or
Trailers or any new tractors or trailers on order for delivery between the date
hereof and the Closing.
5.5 Non-competition.
(a) The parties have negotiated the non-competition provisions of
this Agreement as an integral part of the transaction. The Company and
the Shareholders acknowledge that Smithway is willing to pay the
Purchase Price and proceed with the transaction because of the Company's
customer relationships, growth potential, and other prospects, and that
such prospects would be severely and irreparably harmed by competition
from the Company and the Shareholders. The Company and the Shareholders
further acknowledge that Smithway would not have entered into this
Agreement without the non-competition provisions contained herein. The
Company and the Shareholders willingly agree to the non-competition
provisions of Section 5.5 hereof as consideration for the Purchase Price
and agree that the non-competition provisions are reasonable and are
necessary to induce Smithway to enter into this Agreement.
(b) From and after the later of the termination of their
employment by Smithway or the Closing, for a period of five years, the
Company and the Shareholders agree that they will not, directly or
indirectly,
(i) except in the course of the Shareholders' employment
by Smithway, engage or invest in, own, manage, operate, finance,
control, or participate in the ownership, management, operation,
financing, or control of, be employed by,
14
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;
(ii) whether for their own account or for the account of
any other person, at any time after the Closing solicit business
of the same or similar type being carried on by the Company or
Smithway, from any person that is or was a customer of the
Company or Smithway;
(iii) whether for their own account or the account of any
other person 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 owner-operator
of the Company or Smithway or in any manner induce or attempt to
induce any employee or owner-operator of the Company or Smithway
to terminate his or her employment or contract with Smithway; or
at any time interfere with Smithway's relationship with any
person, including any person who at any time was an employee,
contractor, supplier, or customer of the Company or Smithway; or
(iv) at any time after Closing, disparage Smithway or any
of its shareholders, directors, officers, employees, or agents.
(c) For purposes of this Agreement, "Competitive Business" shall
mean the interstate and/or intrastate transportation of freight,
including truckload and less-than-truckload carriage, intermodal
service, and brokerage, logistics, agent, consolidation, or other
freight-related operations. Competitive Business shall include, but not
be limited to, dry van, temperature-controlled van, and flatbed
operations. The foregoing notwithstanding, (1) the Shareholders and the
Company shall be entitled to operate up to an aggregate of five (5)
trucks in the bulk transport of commodities in trailers other than
flatbeds or vans and (2) Xxxxx Xxxxxxxx shall be entitled, upon prior
written consent of Xxxxxxx X. Xxxxx or G. Xxxxx Xxxxx, to provide
consulting services to a Competitive Business. The services provided by
Xxxxx Xxxxxxxx shall be on the terms specified in the written consent of
Xx. Xxxxx or Xx. Xxxxx.
(d) If any covenant in Section 5.5 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 public policy, will be effective, binding, and
enforceable against the Company and the Shareholders.
(e) The Company and the Shareholders acknowledge that the injury
that would be suffered by Smithway as a result of a breach of the
provisions of this Section 5.5 would be irreparable and that even the
award of monetary damages for such breach would be an inadequate remedy.
Consequently, Smithway shall have the right, in addition to any other
15
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 Smithway shall not be obligated to post bond or
other security in seeking such relief. Without limiting Smithway's
rights under this Section 5.5 or any other remedies of Smithway, if any
of the Company or the Shareholders breaches any of the provisions of
Section 5.5, Smithway will have the right to cease making further
payments on the Goodwill Amount otherwise due to them.
5.6 Operation in Ordinary Course. From and after the Closing until May
31, 1998, to the extent consistent with sound operating practices and Smithway's
employment policies, Smithway shall use its best efforts to operate the Business
in substantially the same manner and with substantially the same employees as
operated by the Company prior to Closing. It is understood that employee
benefits shall be as offered to other Smithway employees, computer systems may
be integrated, and insurance, financing, and other purchased items may be
purchased according to Smithway's practices and buying power.
5.7 Name Change. Prior to the Closing (if requested by Smithway) or in
any event within five (5) days after the Closing, the Company shall change its
corporate name to a name that does not include the words "East West" (unless
approved by Smithway) or "trucking", "transport", "transportation", "motor",
"freight", "cargo", "express", "xpress", or any similar word connoting the
trucking business.
5.8 Equipment on Order; Rebates.
(a) The Company currently has an order with the equipment
manufacturer for twenty (20) Peterbilt tractors, which may be accepted,
canceled, or changed. The Company hereby assigns its right to those
tractors to Smithway and authorizes Smithway to deal with the
manufacturer in canceling, accepting, changing specifications, or
otherwise managing the order. Smithway hereby agrees to pay for any of
such tractors it accepts and indemnify the Company against any liability
that it may have with respect to such tractors. The foregoing
notwithstanding, if the Closing does not occur, the right to receive
such tractors (if not canceled) and the responsibility for all
obligations shall automatically revert to the Company, and in such event
the Company shall indemnify Smithway against any liability in respect of
such tractors. If such tractors are delivered to Smithway and the
Closing does not occur, Smithway shall transfer such tractors to the
Company and the Company shall pay Smithway the original cost plus all
other costs incurred by Smithway.
(b) The Company has ready for delivery from the respective
dealers three (3) Kenworth tractors, including one four-axle tractor;
and ten (10) Wabash 53-foot dry van trailers. Smithway shall purchase
and take delivery of such tractors and trailers in its name or the name
of its designee. If the Closing does not occur, Smithway shall transfer
such tractors and trailers to the Company and the Company shall pay
Smithway for the original cost plus any other costs incurred by
Smithway.
16
(c) All rebates, purchase incentives, and like amounts from
equipment and component manufacturers and dealers that relate to
tractors and trailers covered by this Section 5.8 shall be payable to
Smithway and turned over to Smithway if received by or for the benefit
of the Company, the Shareholders, or any affiliate.
5.9 Personal Equipment. The Company and the Shareholders shall cause
Xxxxxxx Xxxxxx, Xxxxxx Xxxxxx, Xxxx Xxxxxxx, Xxxxx Xxxx, Xxxx Xxxxxxxx, and Xxx
Xxxxxx (the "Personal Equipment Owners") to convey titles to their respective
tractors and trailers listed on Schedule 5.9 (the "Personal Equipment") for the
prices indicated thereon to the Company pursuant to Bills of Sale executed by
each in substantially the form attached as Exhibit D-1 through D-6 (each, a
"Xxxx of Sale") at Closing.
5.10 Shareholders Employment. From and after the Closing, Smithway agrees
to employ the Shareholders at their current salary rate of $78,000 annually,
plus benefits provided other Smithway employees, until December 31, 1998, and
the Shareholders agree to provide transition services if and as requested by
Smithway. Such salary shall be payable by Smithway on the same frequency as wage
payments made to other employees. During the term of their respective employment
by Smithway, Smithway shall pay all fuel, insurance, and maintenance costs on
the Retained Vehicles (or any replacement) that are incurred in the scope of the
respective Shareholders employment by Smithway.
5.11 Xxxxxx Employment. Smithway shall offer Xxx Xxxxxx employment at a
salary of $3,000 monthly plus benefits provided other Smithway employees.
5.12 Owner-Operators. From and after the Closing, the Company shall serve
as a "fleet operator" of all independent contractors serving as owner-operators
of tractors and/or trailers to the Company as of Closing in accordance with the
Fleet Operator Agreement attached as Exhibit E (the "Fleet Operator Agreement").
5.13 Workers' Compensation Refund. As soon as practicable following
Closing, Smithway shall take whatever steps are necessary to (a) transfer all
employees of the Company to Smithway employees and (b) verify the same with the
South Dakota department or agency overseeing the workers' compensation refund
being retained by the Company.
5.14 Collection of Excluded Liabilities. Smithway shall use its best
efforts to assist the Company and the Shareholders in collecting receivables
owing the Company from employee and owner-operators, including, deducting
principal and interest from amounts paid such employees and owner-operators;
provided, written authorization for Smithway to make such deductions is
delivered to Smithway. Such receivables are Excluded Liabilities and Smithway is
not assuming such liabilities or obligations.
17
ARTICLE 6
Conditions to Closing
6.1 Conditions Precedent to the Obligations of Smithway. The obligation
of Smithway to consummate this Agreement is subject to the fulfillment of all of
the following conditions precedent (any of which may be waived in writing by
Smithway, in whole or in part) at or prior to the Closing Date:
(a) Representations and Warranties True as of Closing Date. The
representations and warranties of the Company and the Shareholders
contained in this Agreement or in any document delivered by such parties
pursuant to the provisions hereof shall be true in all material respects
at and as of the date of this Agreement and at and as of the Closing
Date with the same effect as though such representations and warranties
were made as of such date.
(b) Compliance with this Agreement. The Company and the
Shareholders shall have performed and complied in all material respects
with all agreements, covenants, and conditions required to be performed
or complied with by them under this Agreement. Each of the documents
required to be delivered hereunder and each of the covenants and
obligations hereunder must have been performed and complied with in all
respects.
(c) No Bar to Consummation of Transaction. There shall not exist
any injunction or decree by any federal, state, or provincial court
which prevents the consummation of this Agreement and there shall have
not been enacted any statute or regulation which would prevent the
consummation of this Agreement. All governmental consents and approvals
required for this Agreement shall have been obtained.
(d) Bring-Down Certificate. The Company and the Shareholders
shall have delivered to Smithway a duly signed certificate in
substantially the form attached as Exhibit F-1 to the effect that each
of the conditions in Sections 6.1(a)-(c) has been satisfied in all
respects.
(e) Opinion of Counsel. Counsel for the Company and the
Shareholders shall have delivered to Smithway its written opinion, dated
as of the Closing Date, substantially in the form attached as Exhibit
G-1 hereto.
(f) Other Agreements. The Company and the Shareholders, as
appropriate, shall have executed and delivered, or caused the
appropriate entity to execute and deliver, the Purchase Agreement, the
Trip Lease Agreement, the Assignment and Assumption Agreement, the Fleet
Operator Agreement, the Xxxx of Sale for the Transferred Assets in
substantially the form attached as Exhibit H, the Lease Agreement
attached as Exhibit I (the "Lease Agreement"), the Equipment Lease
attached as Exhibit J (the "Equipment Lease") and, such other documents
of transfer reasonably requested by Smithway, and each other document
required to be executed in connection with this Agreement.
18
(g) Adverse Change. There shall not have been any materially
adverse change in the Company's business or the condition of its assets.
(h) Completion of Due Diligence. Smithway shall have completed
its due diligence investigation of the business, assets, and liabilities
of the Company, and shall be satisfied, in its reasonable discretion,
with the results of such investigation.
(i) Titles. The Company shall have delivered (to the Agent or
Smithway, as appropriate) titles covering all Tractors, Trailers, and
vehicles included in the Miscellaneous Equipment free and clear of all
Liens other than Assigned Equipment Financing and duly endorsed for
transfer to Smithway or its designee; provided, that as to any Tractors,
Trailers, or Miscellaneous Equipment covered by Assigned Equipment
Financing which titles are held by the respective lenders, the Company
may deliver executed payoff letters in a form satisfactory to Smithway
indicating that the titles will be delivered to Smithway or its
designee, free of any Liens indicated thereon, immediately upon receipt
of the payoff amount.
(j) Board Approval. Smithway shall have received the approval of
the terms and conditions of this Agreement from the Board of Directors
of SMXC.
(k) Audit. Smithway shall have received a copy of the audited
financial statements of the Company, together with the unqualified
opinion of the Company's auditors, and such audit shall disclose
information satisfactory to Smithway.
(l) Personal Equipment. Each of the Personal Equipment Owners
shall have executed and delivered his respective Xxxx of Sale covering
the Personal Equipment owned by such person, and delivered titles to
such Personal Equipment free and clear of all Liens and duly endorsed
for transfer to Smithway or its designee.
6.2 Conditions Precedent to the Obligation of the Company and the
Shareholders. The obligations of the Company and the Shareholders to consummate
this Agreement are subject to the fulfillment of all of the following conditions
precedent (any of which may be waived in writing by the Company and the
Shareholders, in whole or in part) at or prior to the Closing:
(a) Representations and Warranties True as of the Closing Date.
The representations and warranties of Smithway contained in this
Agreement or in any document delivered by such parties pursuant to the
provisions hereof shall be true in all material respects at and as of
the Closing Date with the same effect as though such representations and
warranties were made as of such date.
(b) Compliance with Agreement. Smithway shall have performed and
complied in all material respects with all agreements, covenants, and
conditions required to be performed or complied with by it under this
Agreement.
19
(c) No Bar to Consummation of Transaction. There shall not exist
any injunction or decree by any federal, state, or provincial court
which prevents the consummation of this Agreement and there shall have
not been enacted any statute or regulation which would prevent the
consummation of this Agreement. All governmental consents and approvals
required for this Agreement shall have been obtained.
(d) Bring-Down Certificate. Smithway shall have delivered to the
Company and the Shareholders a duly signed certificate in substantially
the form attached as Exhibit F-2 to the effect that each of the
conditions in Sections 6.2(a)-(c) has been satisfied in all respects.
(e) Opinion of Counsel. Counsel for Smithway shall have delivered
to the Company and the Shareholders its written opinion, dated as of the
Closing Date, in substantially the form attached as Exhibit G-2 hereto.
(f) Other Agreements. Smithway shall have executed and delivered
the Purchase Agreement, the Trip Lease Agreement, the Assignment and
Assumption Agreement, the Lease Agreement, the Equipment Lease, the
Fleet Operator Agreement, and each other document required to be
executed in connection with this Agreement.
ARTICLE 7
Indemnification
7.1 Indemnification by the Company and the Shareholders. Subject to
Section 8.3, the Company and Shareholders, jointly and severally, shall
indemnify, defend, and hold harmless Smithway, SMXC, and their officers,
directors, stockholders, employees, agents, and representatives 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 fees and costs of investigation and defense, including
reasonable fees and expenses of attorneys and other experts (collectively,
"Losses") arising out of or otherwise in respect of:
(a) any misrepresentation, inaccuracy in, or breach of any
representation, warranty, covenant, or agreement of the Company or
Shareholders contained in this Agreement or any exhibit, or other
document or agreement executed in connection herewith;
(b) any third-party claims relating to the Business or the
Transferred Assets that are not expressly assumed by Smithway under this
Agreement and that do not arise from actions of Smithway after Closing;
(c) any third-party claims not relating to the Transferred Assets
or the Business that arise from actions of the Company or Shareholders,
regardless of whether such actions are before or after Closing;
20
(d) the Excluded Liabilities;
(e) any Losses arising from the Company's operation of certain
Transferred Assets after the Closing in accordance with Section 3.3; and
(f) any Losses arising from Smithway's collection of Excluded
Liabilities under Section 5.14 hereof.
7.2 Indemnification by Smithway. Smithway shall indemnify, defend, and
hold the Company and Shareholders harmless from and against any and all Losses
arising out of or otherwise in respect of:
(a) any misrepresentation, inaccuracy in, or breach of any
representation, warranty, covenant, or agreement of Smithway contained
in this Agreement or any exhibit, or other document executed in
connection herewith;
(b) any transaction or claim relating to the operation of
Smithway or the Transferred Assets, the factual basis of which
transaction or claim arose subsequent to the Closing, (including but not
limited to any Loss suffered by the Company as a result of the, Fleet
Operator Agreement, Personal Equipment, Lease Agreement, and Equipment
Lease); and
(c) the Assumed Liabilities.
7.3 Indemnification Procedures. A party seeking indemnification under
Section 7.1 or 7.2 (the "Indemnified Party") agrees to give prompt written
notice to the party against whom indemnification is sought (the "Indemnifying
Party") of the assertion of any claim or commencement of any Proceeding in
respect of which indemnification may be sought. The Indemnifying Party may, at
its expense, assume the defense of any claim or Proceeding in respect of which
indemnification is sought hereunder, and take all steps to settle or defeat any
such claims, and to employ counsel to contest any such claims; provided,
however, that the Indemnifying Party shall reasonably consider the advice of the
Indemnified Party as to the defense of such claims. The Indemnified Party shall
have the right to participate at its own expense in such defense, but the
control of such litigation or settlement shall remain with the Indemnifying
Party. The Indemnified Party shall provide all reasonable cooperation in
connection with any such defense. If a party from whom indemnification is sought
elects not to undertake the defense thereof or does not do so in a timely
fashion, the Indemnified Party shall be entitled to control the defense or
settlement of such claim or Proceeding and shall be entitled to indemnity with
respect thereto.
7.4 Set-Off. In addition to all other remedies available to Smithway
under this Agreement or by law, Smithway shall be entitled, upon written notice
to the Shareholders, to withhold and set-off payments of the Goodwill Amount
against Losses actually incurred by it. If such Losses are later determined to
be less than the amount withheld and set-off, Smithway shall promptly pay the
Shareholders the difference between the amount originally withheld and set-off
and the actual amount of the Loss.
21
ARTICLE 8
Miscellaneous
8.1 Termination.
(a) Termination of Agreement. The parties may terminate this
Agreement as provided below:
(i) The parties may terminate this Agreement by mutual
written consent at any time prior to the Closing;
(ii) Smithway may terminate this Agreement by giving
written notice to the Company and the Shareholders on or before
the Closing, if they are not reasonably satisfied with the
results of their continuing business, legal, and accounting due
diligence;
(iii) Smithway may terminate this Agreement by giving
written notice to the Company and the Shareholders at any time
prior to the Closing (a) if the Company or the Shareholders has
breached any representation, warranty, or covenant contained in
this Agreement and the breach has continued after notice to the
Company and the Shareholders by Smithway without cure for a
period of 10 days or (b) if the Closing shall not have occurred
on or before March 31, 1998, by reason of the failure of any
condition precedent under Section 6.1 hereof (unless the failure
results primarily from Smithway breaching any representation,
warranty, or covenant contained in this Agreement); and
(iv) The Company and the Shareholders may terminate this
Agreement by giving written notice to Smithway at any time prior
to the Closing (a) in the event Smithway has breached any
representation, warranty, or covenant contained in this
Agreement, and the breach has continued after notice to Smithway
by the Company and the Shareholders without cure for a period of
10 days, or (b) if the Closing shall not have occurred on or
before March 31, 1998, by reason of the failure of any condition
precedent under Section 6.2 hereof (unless the failure results
primarily from the Company or the Shareholders breaching any
representation, warranty, or covenant contained in this
Agreement).
(b) Effect of Termination. Each party's right of termination
under Section 8.1 is in addition to any other rights it may have under
this Agreement or otherwise, and the exercise of the right of
termination shall not be an election of remedies. If this Agreement is
terminated pursuant to Section 8.1, all further obligations of the
parties under this Agreement shall terminate, except that the
obligations of Section 8.2 shall survive. However, if this Agreement is
terminated by a party because of a breach of the Agreement, of any type,
by the other party, the non-defaulting party's right to pursue all legal
remedies will survive such termination unimpaired. In addition, the
non-defaulting party shall be entitled to collect its expenses incurred
at any time in connection with pursuing or consummating the Agreement
and the transactions contemplated by the Agreement,
22
including, but not limited to, fees and expenses of business brokers,
legal counsel, accountants, and other facilitators and advisors.
8.2 Costs and Expenses; Fees. Except as provided in Section 8.1(b) with
respect to a breach of the Agreement, each party shall be solely responsible for
and bear all of its own respective expenses incurred at any time in connection
with pursuing or consummating the Agreement and the transactions contemplated by
the Agreement, including, but not limited to, fees and expenses of business
brokers, legal counsel, accountants, and other facilitators and advisors.
8.3 Survival of Representations, Warranties, Covenants, and Agreements.
The covenants, agreements, representations, and warranties of Smithway, the
Company, and the Shareholders contained in this Agreement or in any document
delivered or in connection herewith shall survive the Closing for a period of
three years; provided, however, (a) covenants, agreements, representations, and
warranties of the Company and the Shareholders relating to tax, environmental,
and Employee Benefit Plan matters shall survive until the expiration of the
applicable statutes of limitation; (b) the obligations of the Shareholders under
Section 5.5 shall survive for the period specified therein; and (c)
representations and warranties concerning the condition of assets in Section
4.3.(f), including representations and warranties as to the condition of the
Personal Equipment as contained therein, shall survive the Closing until April
30, 1998.
8.4 Complete Agreement, etc.. All exhibits and Schedules referred to
herein are intended to be and hereby are specifically made a part of this
Agreement. This Agreement sets forth the entire understanding of the parties
hereto with respect to the transactions contemplated hereby. It shall not be
amended or modified except by written instrument duly executed by each of the
parties hereto. Any and all previous agreements and understandings between or
among the parties regarding the subject matter hereof, whether written or oral,
are superseded by this Agreement.
8.5 Assignment and Binding Effect. This Agreement may not be assigned
prior to the Closing by any party hereto without the prior written consent of
the other parties; provided, that Smithway may assign its rights to another
subsidiary of SMXC if it desires. Subject to the foregoing, all of the terms and
provisions of this Agreement shall be binding upon and inure to the benefit of
and be enforceable by the successors and assigns of any party.
8.6 Waiver. Any term or provision of this Agreement may be waived at any
time by a written instrument duly executed by the party entitled to the benefit
thereof.
8.7 Attorneys' Fees. Should any party hereto breach any term of this
Agreement, the defaulting party shall pay to the non-defaulting party all
reasonable attorneys' fees and other costs and fees incurred by the
non-defaulting party in enforcing this Agreement, and such amounts shall be
included in any judgment obtained in enforcing this Agreement.
8.8 Time. Time is of the essence in connection with this Agreement and
each and every provision hereof. Any extension of time granted for the
performance of any duty under this Agreement shall not be considered an
extension of time for the performance of any other duty under this Agreement.
23
8.9 Notices. Any notice, request, demand, waiver, consent, approval, or
other communication required or permitted hereunder shall be in writing and
deemed given only if (a) delivered personally (including by nationally
recognized overnight courier); (b) sent by telecopier and confirmed by certified
mail, postage prepaid; or (c) sent by certified mail, postage prepaid, as
follows:
If to Smithway: With a required copy to:
Xx. Xxxxxxx X. Xxxxx, President Xxxx X. Xxxxxxx, Esq.
Smithway Motor Xpress, Inc. Xxxxxxx Law Firm, P.C.
0000 Xxxxx Xxxxxx 000 Xxxxx 00xx Xxxxxx, Xxxxx 000
Xxxx Xxxxx, Xxxx 00000 Xxxxxxx, Xxxxxxxx 00000
Telephone: 000-000-0000 Telephone: 000-000-0000
Fax: 000-000-0000 Fax: 000-000-0000
If to Shareholders or the Company: With a required copy to:
Xx. Xxxxx Xxxxxxxx Xxxxxxx Xxxxxxxxxx, Esq.
4009 Mountain Shadow Place Gunderson, Palmer, Xxxxxxxx & Xxxxxx, XXX
Xxxxx Xxxx, Xxxxx Xxxxxx 00000 American Memorial Life Building, 4th Floor
Telephone: 000-000-0000 000 Xx. Xxxxxxxx Xxxx
Fax: Xxxxx Xxxx, Xxxxx Xxxxxx 00000-0000
Telephone: 000-000-0000
Fax: 000-000-0000
or to such other address as the addressee may have specified in a notice duly
given to the sender as provided herein. Such notice, request, demand, waiver,
consent, approval, or other communication shall be deemed to have been given as
of the date first received.
8.10 Cooperation. Subject to the terms and conditions herein provided,
the parties hereto shall use their best efforts to take, or cause to be taken,
such action, to execute and deliver, or cause to be executed and delivered, such
additional documents and instruments and to do, or cause to be done, all things
necessary, proper, or advisable under the provisions of this Agreement and under
applicable law to consummate and make effective the transactions contemplated by
this Agreement. The Company and the Shareholders specifically agree that they
shall endorse, make new applications in Smithway's name, or take any other
action required to insure that titles to the Tractors, Trailers, and vehicles
included in the Miscellaneous Equipment are re-titled in the name of Smithway or
its designee.
8.11 Governing Law. This Agreement shall be governed by and interpreted and
enforced in accordance with the laws of the State of Iowa.
8.12 Headings, Gender, and Person. All section headings contained in this
Agreement are for convenience and reference only, do not form a part of this
Agreement, and shall not affect in any way the meaning or interpretation of this
Agreement. Words used herein, regardless of the
24
number and gender specifically used, shall be deemed and construed to include
any other number, singular or plural, and any other gender, masculine, feminine,
or neuter, as the context requires. Any reference to a "person" herein shall
include an individual, firm, corporation, partnership, trust, governmental
authority, or any other entity.
8.13 Severability. Any provision of this Agreement that is invalid or
unenforceable in any jurisdiction shall be ineffective to the extent of such
invalidity or unenforceability without invalidating or rendering unenforceable
the remaining provisions hereof, and any such invalidity or unenforceability in
any jurisdiction shall not invalidate or render unenforceable such provision in
any other jurisdiction.
8.14 No Third Party Beneficiary Rights. This Agreement is not intended to
and shall not be construed to give any person or entity other than the parties
signatory hereto any interest or rights (including, without limitation, any
third party beneficiary rights) with respect to or in connection with any
agreement or provision contained herein or contemplated hereby.
8.15 Counterparts. This Agreement 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 Agreement 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 Agreement or any counterpart hereof to
produce or account for any of the other counterparts.
* * * * * * * *
Signatures Follow on Next Page
25
* * * * * * * *
This is the signature page for the Asset Purchase Agreement among
Smithway Motor Xpress, Inc., East West Motor Express, Inc.,
and Xxxxxx and Xxxxx Xxxxxxxx
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
on the date first written.
EAST WEST MOTOR EXPRESS, INC., SMITHWAY MOTOR XPRESS, INC.,
a South Dakota corporation an Iowa corporation
By: /S/ XXXXXX XXXXXXXX By: /S/ G. XXXXX XXXXX
Xxxxxx Xxxxxxxx, President G. Xxxxx Xxxxx,
Executive Vice President and
Chief Financial Officer
/S/ XXXXXX XXXXXXXX
Xxxxxx Xxxxxxxx, Individually
/S/ XXXXX XXXXXXXX
Xxxxx Xxxxxxxx, Individually
