THIRD AMENDMENT TO
CREDIT AGREEMENT
This THIRD AMENDMENT TO CREDIT AGREEMENT (this "Agreement") is entered into
as of October 30, 1998, by and between Smithway Motor Xpress, Inc. ("Borrower"),
Smithway Motor Xpress Corp. as Guarantor (the "Guarantor") and LaSalle National
Bank, as Lender (the "Lender").
W I T N E S S E T H:
WHEREAS, the Borrower and the Guarantor entered into a Credit Agreement dated
as of September 3, 1997, a First Amendment to Credit Agreement dated as of March
1, 1998 and a Second Amendment to Credit Agreement dated as of March 15, 1998;
and
WHEREAS, the Borrower has requested to borrower additional funds from the
Lender and the Lender is willing to do so on the following terms and conditions;
and
WHEREAS, certain additional modifications are required to the Agreement;
NOW, THEREFORE, in consideration of the mutual agreements, provisions and
covenants contained herein, the parties agree as follows:
1. Unless otherwise stated herein, all of the capitalized terms contained in
this document shall have the same meanings as contained in the Agreement.
2. The first sentence of Section 1.1(a) is hereby deleted and in lieu
thereof is inserted the following:
The Lender agrees, on the terms and conditions hereinafter set
forth, to make Loans to the Borrower (each such Loan, a
"Revolving Loan") from time to time on any Business Day during
the period from the Closing Date to the Revolving Termination
Date, in an aggregate amount not to exceed at any time
outstanding the Revolving Commitment; provided, however, that,
after giving effect to any Borrowing of Revolving Loans, the
aggregate principal amount of all outstanding Revolving Loans
shall not exceed the Maximum Revolving Loan Balance. The
"Maximum Revolving Loan Balance" will be the lesser of the sum
of the Borrowing Base in effect from time to time plus the
face amount of all Letters of Credit outstanding from time to
time, or the Revolving Commitment then in effect. If at any
time the Revolving Loans exceed the Maximum Revolving Loan
Balance, Revolving Loans must be repaid immediately in an
amount sufficient to eliminate any excess.
42
3. Section 1.2 is hereby deleted and in lieu thereof is inserted
the following:
The Revolving Loans made by the Lender shall be evidenced by a
single Revolving Note payable to the order of the Lender in an amount
equal to $40,000,000 executed by the Borrower, in substantially the
form of Exhibit A hereto.
4. Section 1.8 of the Agreement is hereby deleted and in lieu thereof is
inserted the following:
The Borrower shall pay to the Lender a letter of credit fee
equal, payable quarterly in advance, on the outstanding face amount of
any outstanding Letters of Credit issued by the Lender. If the ratio of
Indebtedness to Tangible Net Worth is less than 2.5:1, the annual fee
rate shall be 1/2% per annum; if the ratio of Indebtedness to Tangible
Net Worth is equal to or greater than 2.5:1 but less than 3.0:1, the
annual fee rate shall be 1% per annum, and; if the ratio of
Indebtedness to Tangible Net Worth is equal to or greater than 3.0:1,
the annual fee rate shall be 1.25% per annum. Notwithstanding anything
to the contrary herein contained, the letter of credit fee shall be 1%
per annum until the December 31, 1998 financial statements are
delivered to Lender.
5. Section 1.9(a) is hereby deleted and in lieu thereof is inserted the
following:
All computations of fees and interest payable under this
Agreement shall be made on the basis of a 365-day year and actual days
elapsed. Interest and fees shall accrue during each period during which
interest or such fees are computed from the first day thereof to the
last day thereof.
6. Section 1.11 is hereby deleted and in lieu thereof is inserted the
following:
Borrower shall pay Lender an annual fee, payable quarterly,
multiplied by the difference between the Commitment and (i) the average
daily amount of Loans outstanding hereunder for such quarterly period,
plus (ii) the average daily amount of Letters of Credit outstanding
hereunder for such quarterly period. If the ratio of Indebtedness to
Tangible Net Worth is less than 3.0:1, the annual fee rate shall be
.25% per annum, and; if the ratio of Indebtedness to Tangible Net Worth
is equal to or greater than 3.0:1, the annual fee rate shall be .375%
per annum. The annual fee shall be .25% until the December 31, 1998
financial statement is delivered to Lender.
7. There is hereby added to Section 3.1 hereof, the following:
(m) Security Agreement. A Security Agreement executed by
Borrower, East West, and JHT, Inc.,each in form
and substance acceptable to Lender.
(n) Corporate Resolution. A corporate resolution authorizing the
loan transaction and the pledging of collateral to Lender.
(o) Opinion of Counsel. An opinion ofcounsel in form acceptable
to Lender.
8. The following new section 5.15 is hereby added to the Agreement:
5.15 Consolidation of JHT. The Borrower covenants and agrees,
by February 28, 1999, JHT, Inc. shall be merged into Borrower or East
West.
9. Section 6.3 of the Agreement is deleted in its entirety and in lieu
thereof is inserted the following:
Borrower, without the prior written consent of Lender, shall
not purchase or acquire, or make any commitment therefore, any capital
stock, equity interest or other securities of, or any interest in, any
Person, or acquire substantially all of assets of any Person or Persons
which, in the aggregate, in any fiscal year exceeds $15,000,000 in
total consideration.
10. Section 6.6 of the Agreement is hereby deleted and in lieu thereof
is inserted the following:
The Borrower shall not permit its consolidated Tangible Net
Worth for any fiscal quarter to be less than $28,000,000, plus 50% of
the Consolidated Net Income for each fiscal year hereafter commencing
the fiscal year ending December 31, 1999.
43
11. Section 6.7 of the Agreement is hereby deleted and in lieu thereof is
inserted the following:
The Borrower shall not permit its Leverage Ratio, as
determined as of each fiscal quarter for the twelve month period ending
on such date, to be greater than 3.0:1.
12. Section 6.8 of the Agreement is hereby deleted and in lieu thereof is
inserted the following:
The Borrower shall not at any time during any fiscal quarter
permit its ratio of total consolidated liabilities (as determined in
accordance with GAAP) to consolidated Tangible Net Worth to be greater
than 3.25:1
. 13. Section 6.9 of the Agreement is hereby deleted and in lieu thereof
is inserted the following:
The Borrower shall not incur Indebtedness in excess of
$70,000,000.
14. The following new section 6.13 is hereby added to the Agreement:
6.13 Interest Coverage. The ratio of Consolidated Net Income
before deduction for interest and taxes to actual interest expense,
calculated at the end of each fiscal quarter hereafter for the
immediate twelve month period then ending, shall not be less than 2.25
to 1.00.
15. The following Section 6.2(g) is added to the Agreement:
(g) Liens granted to the Lender.
16. The term "Aggregate Commitment" appearing in Section 9.1 hereof is
hereby deleted and in lieu thereof is inserted the following:
"Aggregate Commitment" means the combined Commitments of the
Lender, which shall initially be in the amount of $40,000,000, as such
amount may be reduced from time to time pursuant to this Agreement.
17. The term "Applicable Margin" appearing in Section 9.1 hereof is
hereby deleted and in lieu thereof is inserted the following:
"Applicable Margin" means with respect to Prime Rate Revolving
Loans and with respect to LIBOR Rate Revolving Loans, the rates
contained in the chart below based upon the ratio of Obligations to
Tangible Net Worth as of the end of each fiscal quarter hereafter (for
the immediate following fiscal quarter). Notwithstanding anything to
the contrary contained herein contained, the rate contained in Tier IV
should be used until the December 31, 1998 financial statements are
delivered to Lender.
44
Indebtedness to Tangible Tier I Tier II
Net Worth Less than 1.0 1.0 to 1.99
----------------------------------------------------------------
LIBOR Rate 75 basis points 100 basis points
Prime Rate negative 100 basis negative 100 basis
points points
Indebtedness to Tangible Tier III Tier IV
Net Worth 2.0 to 2.49 2.5 to 2.99
--------------------------------------------------------------
LIBOR Rate 125 basis points 150 basis points
Prime Rate negative 100 basis negative 50 basis
points points
Indebtedness to Tangible Tier V
Net Worth 3.0 or greater
-----------------------------------------------------
Libor Rate 175 basis points
Prime Rate 0 basis points
18. The term "Borrowing Base" appearing in Section 9.1 hereof is hereby
deleted and in lieu thereof is inserted the following:
"Borrowing Base" means an amount as of any time of
determination equal to the sum of: (a) eighty five percent (85%) of the
aggregate amount of the Borrower's East West's and JHT's then existing
Eligible Accounts, plus (b) seventy five percent (75%) of the aggregate
net book value of the Borrower's, East West's, and JHT's trucks and
trailers, the certificates of title of which list Lender as the first
lienholder (the "Pledged Trucks"); provided, however, that until
February 1, 1999, the borrowing base shall include all of Borrower's,
East West's and JHT's trucks and trailers which each identifies as
being pledged to Lender notwithstanding the fact that Lender does not
yet appear as a lienholder on the applicable certificate of title. Net
book value is defined as the depreciated book value of all of the
Pledged Trucks.
19. The term "EBITDA" appearing in Section 9.1 hereof is hereby deleted
and in lieu thereof is inserted the following:
"EBITDA" means, for any period, for the Guarantor and its
Subsidiaries on a consolidated basis, determined in accordance with
GAAP, the sum of (a) the Consolidated Net Income (or net loss) for such
period plus (b) all amounts deducted from net income (or net loss) for
such period for depreciation or amortization, plus (c) interest expense
deducted from net income (or net loss) for such period, plus (d) all
accrued taxes on or measured by income to the extent included in the
determination of such net income (or loss). In addition, EBITDA for the
applicable period shall include the net income plus interest charges,
depreciation, amortization and tax payment of any entity for which the
Guarantor has acquired 100% of the capital stock, or substantially all
of the assets, business or other ownership interest of which were
acquired by the Guarantor or any consolidated Subsidiary during such
period.
20. The term "Revolving Commitment" appearing in Section 9.1 hereof is
hereby deleted and in lieu thereof is inserted the following:
"Revolving Commitment" means the combined Revolving Commitment
of the Lender, which shall be equal to $40,000,000. Notwithstanding
anything to the contrary contained herein, the Revolving Commitment may
be irrevocably and permanently reduced by the Borrower seven (7) days
after Lender's receipt of written notice from the Borrower of such
reduction, provided, that the Revolving Commitment may not be reduced
below $25,000,000.
45
21. The term "Tangible Net Worth" appearing in Section 9.1 hereof is
hereby deleted and in lieu thereof is inserted the following:
"Tangible Net Worth" means the consolidated Stockholders'
Equity of Guarantor and its Subsidiaries, determined in accordance with
GAAP, minus (i) general intangible assets, including, but not limited
to, goodwill, covenants not to compete, notes receivable, capital
investments in any Person and amounts due from affiliates not included
in the Borrower's consolidated group and officers, and (ii) amounts due
from employees, drivers and owner/operators to the extent such amounts
exceeds $3,000,000.
22. Borrower shall pay 50% of the legal fees incurred in connection with
the preparation of this Agreement and the documents and instruments
referred to herein, and shall pay 100% of all out of pocket costs
incurred by the Lender or its attorneys.
23. Lender hereby consents to the purchase by Borrower of the assets of JHT,
Inc (and related entities) for an amount not to exceed $15,000,000 in
total consideration, provided that such purchase shall close by November
30, 1998.
24. Borrower expressly acknowledges and agrees that all collateral, security
interests, liens, pledges, and mortgages heretofore, under this
Amendment,or hereafter granted to Lender, including, without limitation,
such collateral, security interests, liens, pledges and mortgages
granted under the Agreement,and all other supplements to the Agreement,
extend to and cover all of the obligations of Borrower to Lender, now
existing or hereafter arising including, without limitation, those
upon the terms set forth in such agreements, all of which security
interests, liens, pledges, and mortgages are hereby ratified,
reaffirmed, confirmed and approved.
25. Borrower represents and warrants to Lender that (i) it has all necessary
power and authority to execute and deliver this Amendment and perform
its obligations hereunder, (ii) this Amendment and the Agreement, as
amended hereby, constitute the legal, valid and binding obligations
of Borrower and are enforceable against Borrower in accordance with
their terms, and (iii) all representations and warranties of Borrower
contained in the Agreement, as amended, and all other agreements,
instruments and other writings relating thereto, are true, correct and
complete as of the date hereof.
26. The parties hereto acknowledge and agree that the terms and provisions
of this Amendment amend, add to and constitute a part of the Agreement.
Except as expressly modified and amended by the terms of this Amendment,
all of the other terms and conditions of the Credit Agreement, as
amended, and all documents executed in connection therewith or
referred to or incorporated therein remain in full force and effect and
are hereby ratified, reaffirmed, confirmed and approved.
27. If there is an express conflict between the terms of this Amendment and
the terms of the Agreement, or any of the other agreements or documents
executed in connection therewith or referred to or incorporated therein,
the terms of this Amendment shall govern and control.
28. This Amendment may be executed in one or more counterparts,each of which
shall be deemed to be an original.
29. This Amendment was executed an delivered in Chicago, Illinois and shall
be governed by and construed in accordance with the internal laws (as
opposed to conflicts of law provisions) of the State of Illinois.
46
IN WITNESS WHEREOF, this Agreement has been duly executed as of the day and
year specified at the beginning hereof.
SMITHWAY MOTOR XPRESS, INC., as Borrower
By: /s/G. Xxxxx Xxxxx
------------------------
Title: Executive Vice President & Chief Financial Officer
Address Notice:
X.X. Xxx 000
Xxxx Xxxxx, Xxxx 00000
Attn: G. Xxxxx Xxxxx
Facsimile: (000) 000-0000
Tel: (000) 000-0000
LASALLE NATIONAL BANK, as Lender
By: /s/Xxxxx Xxxxxx
------------------------
Title:Senior Vice President, Commericial Banking
Address notices and Lending Office::
000 X. XxXxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Xx. Xxxxx Xxxxxx
Facsimile: (000) 000-0000
Tel: (000) 000-0000
47
CONSENT AND RATIFICATION
The undersigned, pursuant to that certain Guaranty dated as of
September 3, 1997, is a guarantor of all of the obligations of the Borrower to
the Lender under the terms of the Credit Agreement dated as of September 3,
1997, as amended, and hereby consents to the Second Amendment to Credit
Agreement. Guarantor hereby reaffirms and ratifies his guaranty as if the same
were fully set forth herein.
SMITHWAY MOTOR XPRESS CORP, as Guarantor
By: /s/ G. Xxxxx Xxxxx
------------------------
Title :Executive Vice President & Chief Financial Officer
Address Notice:
X.X. Xxx 000
Xxxx Xxxxx, Xxxx 00000
Attn: G. Xxxxx Xxxxx
Facsimile: (000) 000-0000
Tel: (000) 000-0000
48
EXHIBIT A
AMENDED AND RESTATED NOTE
$40,000,000 as of , 1998
------------------------
Smithway Motor Xpress, Inc., an Iowa corporation (the
"Borrower"), promises to pay to the order of LaSalle National Bank (the
"Lender") the lesser of the principal sum of Forty Million Dollars ($40,000,000)
or the aggregate unpaid principal amount of all Loans made by the Lender to the
Borrower pursuant to Article II of the Credit Agreement (as the same may be
amended or modified, the "Agreement") hereinafter referred to, in immediately
available funds at the main office of LaSalle National Bank in Chicago,
Illinois, together with interest on the unpaid principal amount hereof at the
rates and on the dates set forth in the Agreement. The Borrower shall pay the
principal of and accrued and unpaid interest on the Loans in full on the
Revolving Termination Date.
The Lender shall record in accordance with its usual practice,
the date, amount and interest rate of each Loan and the date and amount of each
principal and interest payment hereunder.
This Note is issued pursuant to, and is entitled to the
benefits of, the Credit Agreement, dated as of September 3, 1997, between the
Borrower and Lender, to which Agreement, as it may be amended from time to time,
reference is hereby made for a statement of the terms and conditions governing
this Note, including the terms and conditions under which this Note may be
prepaid or its maturity date accelerated. Capitalized terms used herein and not
otherwise defined herein are used with the meanings attributed to them in the
Agreement.
SMITHWAY MOTOR XPRESS, INC.
By: _______________________
Print Name: G. Xxxxx Xxxxx
------------------------
Title: Executive Vice President & Chief Financial
Officer
49
