November 10, 2003
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: Seventh 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.
November 10, 2003
Page 2
(a) The definition of "Maximum Loan Limit" set forth in Paragraph 1 of the
Agreement is deleted in its entirety and the following is substituted in its
place:
"Maximum Loan Limit" shall mean Twenty-Five Million and No/100 Dollars
($25,000,000.00).
(b) Subsection 2(a) of the Agreement is deleted in its entirety and the
following is substituted in its place:
2. LOANS.
(a) Revolving Loans.
Subject to the terms and conditions of this Agreement and the
Other Agreements, during the Original Term and any Renewal Term,
Lender shall, absent the occurrence of an Event of Default, make
revolving loans and advances to Borrowers' (the "Revolving
Loans") in an amount up to the sum of the following sublimits
(the "Revolving Loan Limit"):
(i) Up to eighty-five percent (85%), or such lesser percentage
as determined by Lender in its sole discretion determined in
good faith, of the face amount (less maximum discounts,
credits and allowances which may be taken by or granted to
Account Debtors in connection therewith in the ordinary
course of Borrowers' business) of Borrowers' Eligible
Accounts (consisting solely of Eligible Accounts other than
those set forth at subsection (ii) immediately below); plus
(ii) Up to eighty-five percent (85%), or such lesser percentage
as determined by Lender in its sole discretion determined in
good faith, of the face amount (less maximum discounts,
credits and allowances which may be taken by or granted to
Account Debtors in connection therewith in the ordinary
course of Borrowers' business) of Borrowers' Eligible
Smithway Motor Xpress, Inc.
East West Motor Express, Inc.
November 10, 2003
Page 3
Accounts (consisting solely of Accounts which are unbilled
for three (3) days or less) or Two Million Five Hundred
Thousand and No/100 Dollars ($2,500,000.00), whichever is
less; plus
(iii) Intentionally Omitted; minus
(iv) such reserves as Lender elects, in its sole discretion
determined in good faith to establish from time to time;
provided, that the Revolving Loan Limit shall in no event
exceed Twenty-Five Million and No/100 Dollars
($25,000,000.00) less the then-outstanding principal balance
of the Term Loans (the "Maximum Revolving Loan Limit")
except as such amount may be increased or, following the
occurrence of an Event of Default, decreased by Lender, in
its sole discretion.
The aggregate unpaid principal balance of the Revolving
Loans shall not at any time exceed the lesser of the (i)
Revolving Loan Limit minus the Letter of Credit Obligations
and (ii) the Maximum Revolving Loan Limit minus the Letter
of Credit Obligations. If at any time the outstanding
Revolving Loans exceeds either the Revolving Loan Limit or
the Maximum Revolving Loan Limit, in each case minus the
Letter of Credit Obligations, or any portion of the
Revolving Loans and Letter of Credit Obligations exceeds any
applicable sublimit within the Revolving Loan Limit,
Borrowers shall immediately, and without the necessity of
demand by Lender, pay to Lender such amount as may be
necessary to eliminate such excess and Lender shall apply
such payment to the Revolving Loans to eliminate such
excess.
Each Borrower hereby authorizes Lender, in its sole
discretion, to charge any of such Borrower's accounts or
advance Revolving Loans to make any payments of principal,
interest, fees,
Smithway Motor Xpress, Inc.
East West Motor Express, Inc.
November 10, 2003
Page 4
costs or expenses required to be made under this Agreement
or the Other Agreements.
A request for a Revolving Loan shall be made or shall
be deemed to be made, each in the following manner: the
Borrower requesting such Revolving Loan shall give Lender
same day notice, no later than 10:30 A.M. (Chicago time) for
such day, of its request for a Revolving Loan as a Prime
Rate Loan. In the event that a Borrower maintains a
controlled disbursement account at Lender, each check
presented for payment against such controlled disbursement
account and any other charge or request for payment against
such controlled disbursement account shall constitute a
request for a Revolving Loan as a Prime Rate Loan. As an
accommodation to Borrowers, Lender may permit telephone
requests for Revolving Loans and electronic transmittal of
instructions, authorizations, agreements or reports to
Lender by Borrowers. Unless a Borrower specifically directs
Lender in writing not to accept or act upon telephonic or
electronic communications from such Borrower, Lender shall
have no liability to Borrowers for any loss or damage
suffered by a Borrower as a result of Lender's honoring of
any requests, execution of any instructions, authorizations
or agreements or reliance on any reports communicated to it
telephonically or electronically and purporting to have been
sent to Lender by a Borrower and Lender shall have no duty
to verify the origin of any such communication or the
authority of the Person sending it.
Each Borrower hereby irrevocably authorizes Lender to
disburse the proceeds of each Revolving Loan requested by
such Borrower, or deemed to be requested by such Borrower,
as follows: the proceeds of each Revolving Loan requested
under Section 2(a) shall be disbursed by Lender in lawful
money of the United States of America in immediately
available funds, by wire transfer or Automated Clearing
House (ACH) transfer to such
Smithway Motor Xpress, Inc.
East West Motor Express, Inc.
November 10, 2003
Page 5
bank account as may be agreed upon by such Borrower and
Lender from time to time, or elsewhere if pursuant to a
written direction from such Borrower.
(c) Subsection 4(b)(iv) of the Agreement is deleted in its entirety and the
following is substituted in its place:
(iv) One-Time Amendment Fee: Borrowers shall pay to Lender a one-time
amendment fee of Ten Thousand and No/100 Dollars ($10,000.00),
which fee shall be fully earned and payable upon execution of
this Amendment.
(d) Section 10 of the Agreement is deleted in its entirety and the
following is substituted in its place:
10. TERMINATION: AUTOMATIC RENEWAL.
THIS AGREEMENT SHALL BE IN EFFECT UPON EXECUTION OF THIS
AMENDMENT UNTIL JANUARY 1, 2005 (THE "ORIGINAL TERM") AND SHALL
AUTOMATICALLY RENEW ITSELF FROM MONTH TO MONTH THEREAFTER (EACH
SUCH ONE-MONTH RENEWAL BEING REFERRED TO HEREIN AS A "RENEWAL
TERM") unless (A) THE DUE DATE OF THE LIABILITIES IS ACCELERATED
PURSUANT TO SECTION 16 HEREOF; OR (B) A BORROWER OR LENDER ELECTS
TO TERMINATE THIS AGREEMENT EFFECTIVE AT THE END OF THE ORIGINAL
TERM OR AT THE END OF ANY RENEWAL TERM BY GIVING THE OTHER PARTY
WRITTEN NOTICE OF SUCH ELECTION AT LEAST FIFTEEN (15) DAYS PRIOR
TO THE END OF THE ORIGINAL TERM OR THE THEN CURRENT RENEWAL TERM
IN WHICH CASE BORROWERS SHALL PAY ALL OF THE LIABILITIES IN FULL
ON THE LAST DAY OF SUCH TERM. If one or more of the events
specified in clauses (a) and (b) occurs, then (i) Lender shall
not make any additional Loans on or after the date identified as
the date on which the Liabilities are to be repaid; and (ii) this
Smithway Motor Xpress, Inc.
East West Motor Express, Inc.
November 10, 2003
Page 6
Agreement shall terminate on the date thereafter that the
Liabilities are paid in full. At such time as Borrowers have
repaid all of the Liabilities and this Agreement has terminated,
Borrowers shall deliver to Lender a release, in form and
substance satisfactory to Lender, of all obligations and
liabilities of Lender and its officers, directors, employees,
agents, parents, subsidiaries and affiliates to such Borrowers,
and if Borrowers are obtaining new financing from another lender,
Borrowers shall deliver such lender's indemnification of Lender,
in form and substance satisfactory to Lender, for checks which
Lender has credited to such Borrower's account, but which
subsequently are dishonored for any reason or for automatic
clearinghouse or wire transfers not yet posted to such Borrower's
account.
(e) Subsection 14(a) of the Agreement is deleted in its entirety and the
following is substituted in its place:
(a) Tangible Net Worth.
The Consolidated Group's Tangible Net Worth shall not at any time
be less than the Minimum Tangible Net Worth; "Minimum Tangible
Net Worth" being defined for purposes of this subsection as
(i) $10,000,000.00 at all times from October 1, 2003 through
December 31, 2003; (ii) $9,500,000.00 at all times from January1,
2004 June 29, 2004; (iii) $9,750,000.00 at all times from June
30, 2004 through December 30, 2004; and (iv) $10,250,000.00 at
all times from December 31, 2004 and thereafter; and "Tangible
Net Worth" being defined for purposes of this subsection as the
Consolidated Group's shareholders' equity (including retained
earnings) less the book value of all intangible assets as
determined solely by Lender on a consistent basis plus the amount
of any LIFO reserve plus the amount of any debt subordinated to
Lender, all as determined under generally accepted accounting
principles applied
Smithway Motor Xpress, Inc.
East West Motor Express, Inc.
November 10, 2003
Page 7
on a basis consistent with the financial statement dated December
31, 2002 except as set forth herein;
(f) Subsection 14(c) of the Agreement is deleted in its entirety and the
following is substituted in its place:
(c) Fixed Charge Coverage Ratio. Borrower hereby covenants and agrees
not to permit the Ratio of EBITDA to Fixed Charges for each
period set forth below to be less than the amount set forth below
for such period:
|------------------------------------------------|-------------|
| Period | Amount |
|------------------------------------------------|-------------|
|As of October 1, 2003 through June 30, 2004 | .80 to 1.0 |
|------------------------------------------------|-------------|
|------------------------------------------------|-------------|
|As of July 1, 2004 through September 30, 2004 | .85 to 1.0 |
|------------------------------------------------|-------------|
|------------------------------------------------|-------------|
|October 1, 2004 through December 31, 2004 | .90 to 1.0 |
|------------------------------------------------|-------------|
|------------------------------------------------|-------------|
|January 1, 2005 and thereafter | 1.0 to 1.0 |
|------------------------------------------------|-------------|
|------------------------------------------------|-------------|
|Each twelve month period thereafter ending on | 1.0 to 1.0 |
|the last day of each of Borrower's fiscal months| |
|------------------------------------------------|-------------|
(g) Section 17 of the Agreement is amended to add the following provision:
17.1 OTHER PROVISIONS.
(a) Advances for Loans under this Agreement shall be subject to
Lender having determined that immediately after giving effect to
(A) the making of the Loans, including without limitation the
Term Loan and the Revolving Loans, if any, requested to be made,
(B) the issuance of Letters of Credit, if any, requested to be
made, (C) the payment of all fees due upon such date and (D) the
payment or reimbursement by Borrower to Lender for all
Smithway Motor Xpress, Inc.
East West Motor Express, Inc.
November 10, 2003
Page 8
closing costs and expenses incurred in connection with the
transactions contemplated, Borrower has Excess Availability of
not less than Five Hundred Thousand and No/100 Dollars
($500,000.00).
(e) Exhibit A of the Agreement is amended and restated as the First Amended
and Restated Exhibit A as attached hereto and made a part hereof.
2. This Amendment shall become binding when fully executed by all parties
hereto, and shall be effective September 30, 2003.
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 hereby is 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/ Xxxx Xxxxxxx
---------------------------------
Title: Sr VP
ACKNOWLEDGED AND AGREED TO
this 10th day of November, 2003:
SMITHWAY MOTOR XPRESS, INC.
By /s/ G. Xxxxx Xxxxx
------------------------------------
G. Xxxxx Xxxxx
Title: Executive Vice President & CFO
EAST WEST MOTOR EXPRESS, INC.
By /s/ G. Xxxxx Xxxxx
------------------------------------
G. Xxxxx Xxxxx
Title: Vice President
Smithway Motor Xpress, Inc.
East West Motor Express, Inc.
November 10, 2003
Page 9
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: Vice President
Date: November 10, 2003
Smithway Motor Xpress Corp.
By /s/ G. Xxxxx Xxxxx
------------------------------------
G. Xxxxx Xxxxx
Title: Vice President
Date: November 10, 2003
