ASSET PURCHASE AGREEMENT


         This Asset Purchase Agreement ("Agreement"),  dated October 4, 1996, is
entered into by and among  Smithway  Motor  Xpress,  Inc.,  an Iowa  corporation
("Smithway");  with respect to Section 7.5 only,  Smithway Motor Xpress Corp., a
Nevada  corporation;   and  Marquardt  Transportation,   Inc.,  a  South  Dakota
corporation ("Seller"); and with respect to Sections 4.3, 5.1, 5.5, 6.1, and 7.1
only, Ralph and Lucille Marquardt, individual residents of Yankton, South Dakota
and Seller's sole Shareholders (together, the "Shareholders").

                                    RECITALS

        1.        Shareholders  and  Seller  desire  to convey  the  Transferred
                  Assets  to  Smithway  and  Smithway  desires  to  acquire  the
                  Transferred Assets and assume certain obligations of Seller.

        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       "Adjustment   Amount"  means  the  dollar  amount  to  reflect
                  deficiencies in the condition of assets subject to Inspection.

        1.2       "Assigned  Leases"  means the  leases  relating  to the Leased
                  Tractors  and  Leased  Trailers  assigned  to and  assumed  by
                  Smithway under Section 2.2 hereof.

        1.3       "Assigned  Equipment  Financing"  means the lending  documents
                  relating to the Tractors and Trailers  assigned to and assumed
                  by Smithway under Section 2.2 hereof.

        1.4       "Benefit  Plans"  means all  contracts,  plans,  arrangements,
                  policies, and understandings providing for any compensation or
                  benefit other than base wages or salaries that are  maintained
                  by Seller or affect its employees or independent

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                  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  Seller's  business  of  providing truckload
                  transportation of freight.

        1.6       "Drivers"  means the employee and independent contractor truck
                  drivers that operate tractors in the Business.

        1.7       "Inspection"  means the inspection of Leased Tractors,  Leased
                  Trailers,  Tractors,  and  Trailers  conducted  by Smithway as
                  described in Section 2.13.

        1.8       "Inspection  Report"  means the  written  report  prepared  by
                  Smithway and presented to Seller which  identifies each Leased
                  Tractor, Leased Trailer,  Tractor,  Trailer, MCT, and headache
                  rack presented for Inspection and the Adjustment  Amount which
                  reflects the  calculation  in accordance  with Section 2.13 to
                  take into account  deficiencies from the required condition of
                  assets subject to Inspection.  Any broken glass or body damage
                  shall be evidenced by a photograph if available.

        1.9       "Judgment"  means  any  judgment,   order,  writ,  injunction,
                  decree, or award of any federal, state or provincial court, or
                  governmental agency.

        1.10      "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).

        1.11      "Leased Tractors" means the tractors identified on Exhibit A.

        1.12      "Leased Trailers" means the trailers identified in Exhibit A.

        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      "MCT's" means the Qualcomm mobile communication terminals.


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        1.15      "Miscellaneous  Equipment"  means  (i) each  set of  "headache
                  racks,"  which  includes  for the  purposes of this  Agreement
                  tarps, tie-downs,  chains, and any safety equipment; (ii) shop
                  and office  equipment;  (iii) supplies;  (iv)  forklifts;  (v)
                  parts, tires, and general inventory;  (vi) Seller's California
                  intrastate operating authority;  and (vii) other assets listed
                  or otherwise identified on Exhibit B.

        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  real  estate  and  any  and  all
                  improvements  thereon  presently owned by Seller and comprised
                  of an office  building,  maintenance  shop,  and  yard,  where
                  Seller has been  conducting  its  trucking  business,  as more
                  fully  described  in the lease  attached  hereto as  Exhibit C
                  ("Lease").

        1.19      "Specialized  Equipment"  means  the  trailers  identified  on
                  Exhibit  D.

        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, license,
                  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 Exhibit E to
                  be transferred to Smithway pursuant to Section 2.2 hereof.

        1.22      "Trailers" means the owned semi-trailers identified on Exhibit
                  F to be  transferred  to  Smithway  pursuant  to  Section  2.2
                  hereof.

        1.23      "Transferred  Assets" means the Trailers,  Tractors,  Assigned
                  Leases,  MCTs,   Miscellaneous   Equipment,   and  Specialized
                  Equipment,  as  well  as  driver  files,  tariffs,   equipment
                  maintenance  files,  extended  warranty  agreements,  customer
                  files,  and  other  business   records   associated  with  the
                  Business.  Notwithstanding the foregoing,  Seller shall retain
                  all of its logs,  corporate minute books,  corporate  records,
                  and tax  records,  but  will  provide  copies  of the  same to
                  Smithway on an as needed basis. Except as expressly identified
                  as a "Transferred Asset," all other assets owned by Seller are
                  being retained by Seller and are not being sold hereunder.




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                                    ARTICLE 2
                         Purchase, Sale, and Employment

        2.1       Purchase and Sale. As  hereinafter  provided,  Smithway  shall
                  purchase,  acquire,  and assume from Seller,  and Seller shall
                  sell, assign, and transfer to Smithway,  all right, title, and
                  interest of Seller in and to the Transferred Assets.

        2.2       Assignment  and  Assumption.  Seller shall assign and Smithway
                  shall  assume,  as of  January  1, 1997,  all  obligations  of
                  Seller, financial and otherwise, under the Assigned Leases and
                  Assigned  Equipment  Financing  on  the  following  terms  and
                  conditions:

                  A.       Assumption  Period.  For  the  period from Closing to
                           the  assumption  of leases on the Leased Tractors and
                           Leased  Trailers  and  assumption of the financing on
                           the  Tractors and Trailers on January 1, 1997 or such
                           later  date  as  shall  be required if the applicable
                           lenders  or  lessor  should not consent to assignment
                           (the "Assumption Period"), Smithway shall sublease or
                           lease,  as  appropriate,  the Leased Tractors, Leased
                           Trailers,  Tractors,  and  Trailers on the same terms
                           and  conditions  of  the Assigned Leases and Assigned
                           Equipment   Financing  and  be  responsible  for  all
                           operating  costs associated with the Leased Tractors,
                           Leased  Trailers,  Tractors,  and Trailers, including
                           but  not  limited  to  all state and federal road and
                           fuel  taxes  and  federal highway use taxes when due.
                           During  the  Assumption  Period,  Smithway  shall pay
                           directly   to   the   appropriate  lessor  or  lender
                           identified  on Exhibit A, D, or E, as appropriate, an
                           amount  equal  to  the  aggregate monthly payment due
                           under  the  Assigned  Leases  and  Assigned Equipment
                           Financing.  Smithway shall provide insurance coverage
                           as  provided  in  the  respective Assigned Leases and
                           Assigned  Equipment  Financing,  naming the lessee or
                           lender,  as  appropriate, and Seller as an additional
                           insured  thereunder,  and  providing evidence of such
                           coverage to Seller as of Closing.  Except as provided
                           herein,  Smithway  shall  perform  all  of  the other
                           terms,  conditions,  and  obligations of Seller under
                           the Assigned Leases and Assigned Equipment Financing.

                  B.       Assignment;  Release.   During the Assumption Period,
                           the  parties  shall  use their best efforts to obtain
                           all  consents  required  to  effectively  assign  and
                           convey  the  Assigned  Leases  and Assigned Equipment
                           Financing   to   Smithway,   such  assignment  to  be
                           effective  January  1,  1997.  Smithway shall use its
                           best  efforts  to  ensure that such assignments shall
                           result  in the release of Seller and the Shareholders
                           from  any and all liability under the Assigned Leases
                           and Assigned Equipment Financing,  if unsuccessful in
                           obtaining  such  releases,  Smithway hereby agrees to
                           indemnify,  defend,  and hold harmless Seller and the
                           Shareholders  from  any and all loss, damage, cost or
                           expense  (including reasonable attorney fees) arising
                           under  the  Assigned  Leases  and  Assigned Equipment
                           Financing.   If Smithway is unable to arrange for the
                           release  of  Seller  or  the  Shareholders  from  all
                           obligations under an Assigned

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                           Lease or Assigned Equipment Financing, Smithway shall
                           pay all amounts due thereunder,  but only if there is
                           no prepayment penalty or other detriment.

                  C.       Leased  Tractors  and Leased Trailers.  Regardless of
                           whether assignment is obtained under Section  2.2.B.,
                           Smithway shall operate the Leased Tractors and Leased
                           Trailers  from  Closing  until  the  applicable lease
                           expires  and  return  the  Leased Tractors and Leased
                           Trailers  in accordance with the terms and conditions
                           of the Assigned Lease.  Smithway shall be responsible
                           for returning the Leased Tractors and Leased Trailers
                           to  "turn-in" condition as provided in the applicable
                           Assigned   Lease   (or   paying   any   penalty   for
                           noncompliance).

                  D.       Tractors   and   Trailers.    Regardless  of  whether
                           assignment   is   obtained   under   Section  2.2.B.,
                           Smithway shall operate the Tractors and Trailers from
                           Closing  in  accordance with the terms and conditions
                           of the Assigned Equipment Financing.

                  E.       On  the  Closing Date, Smithway shall pay to Seller a
                           one-time  sum  of $20,000.00 in consideration for the
                           transitional  use,  for  a  period of 30 days, of the
                           tractors  and trailers owned by Seller and not a part
                           of  the  Leased  Tractors, Leased Trailers, Tractors,
                           and Trailers.  Said nonacquired tractors and trailers
                           shall  herein  be  referred  to  as  the "Nonacquired
                           Tractors"  and  "Nonacquired Trailers," respectively,
                           and  together  as the "Nonacquired Trucks."  Smithway
                           agrees to transition out of the Nonacquired Trucks in
                           an  orderly  manner and shall not send out any of the
                           Nonacquired Trucks that have come back to the Yankton
                           terminal.    Smithway  shall  route  all  Nonacquired
                           Tractors,  except where such Nonacquired Tractors are
                           located  in  California  and  such  tractors shall be
                           routed on the same schedule to the Stockton terminal,
                           back  to  the  Yankton  terminal  and  return them to
                           Seller  within  30  days  after Closing at Smithway's
                           cost.   Smithway  agrees  to  use its best efforts to
                           route   as   many  of  the  Nonacquired  Trailers  as
                           practicable  to  the Yankton terminal and return them
                           to  Seller within 30 days after Closing at Smithway's
                           expense.    After   such  30  days,  Seller  and  the
                           Shareholders  will  be  responsible for returning the
                           Nonacquired  Trailers,  at  their  own  expense.   If
                           Smithway  wants  to  lease, purchase or assume any of
                           the  Nonacquired  Trailers,  it  may  negotiate  such
                           lease,  purchase  or  assumption  with the Seller and
                           Shareholders.  Smithway  shall not be required in any
                           event  to  run  bobtail  or  incur  deadhead miles to
                           retrieve  or  deliver Nonacquired Trailers.  Smithway
                           agrees  to  use  its best efforts to route the twelve
                           (or  more)  tractors identified by Ralph Marquardt at
                           Closing  as "priority tractors" to Yankton as soon as
                           reasonably  practicable  (with  a target of less than
                           one  week from Closing).  From and after the Closing,
                           Smithway  shall (i) provide insurance coverage on all
                           of  the Nonacquired Trucks that it is using, and (ii)
                           be  responsible  for  all  operating costs associated
                           with  the Nonacquired Trucks until the earlier of (x)
                           such  time  as such trucks have been taken out of use
                           and returned to the Yankton terminal or (y) the date
                           thirty days after the

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                           Closing  Date.   Smithway  shall  not  assume  or  be
                           responsible  for any  lease  or  financing  payments.
                           Seller   shall  remain   responsible   for  all  such
                           payments. Smithway shall be responsible for returning
                           the Nonacquired  Trucks in the condition they were in
                           on the date of Closing with the exception of ordinary
                           wear. All of Smithway's  obligations  hereunder shall
                           cease on the date thirty days after Closing.

         2.3      Proration of Liability.  Except as otherwise  provided in this
                  Agreement,  any liability with respect to the operation of the
                  Leased Tractors,  Leased Trailers,  Tractors, or Trailers that
                  arises  from  facts  or  events  that  span all or part of the
                  Assumption  Period  and a  period  prior to  Closing  shall be
                  prorated  based upon the relative  responsibility  of Smithway
                  and Seller for the  liability  accrued  during the  Assumption
                  Period.  As an  example,  in case  of a fuel  tax  audit  that
                  results  in  liability   for  a  period  which   includes  the
                  Assumption  Period,  Smithway  shall be  liable  for an amount
                  equal  to  the  ratio  of  the  amount  of  fuel  used  in the
                  Assumption  Period  bears to the total  amount of fuel used in
                  the audit period,  and Seller shall be liable for the balance.
                  All (i) lease payments on the Assigned  Leases,  (ii) payments
                  on  the  Assigned  Equipment  Financing,  (iii)  rent  on  the
                  California Property (both to the landlord and from subtenants)
                  (iv) property taxes on the Property and the other  Transferred
                  Assets,  and (v)  similar  items  shall be  prorated as of the
                  Closing.

        2.4       Payment. Smithway shall pay to Seller the aggregate amount due
                  under  Sections  2.2.E.,  2.5,  2.6,  2.7,  and 2.8,  less the
                  aggregate of all then known Adjustment  Amounts, at Closing in
                  the form of a Smithway  check.  Smithway  shall pay the amount
                  due under  Section  2.9 as stated  therein.  To the extent any
                  Leased Tractor,  Tractor,  Trailer,  MCT, or headache rack has
                  not been inspected  prior to Closing,  the  Adjustment  Amount
                  with  respect to such item shall be offset  against  remaining
                  payments  due to  Seller  or Ralph  Marquardt  under any other
                  provision  of  this  Agreement,  the  Lease,  or any  document
                  executed in connection with this Agreement.

        2.5       Licenses.  Smithway  shall pay Seller  $_______ for the unused
                  portion of the Tractor and Leased Tractor vehicle licenses and
                  permits (such amount equal to twenty-five percent (25%) of the
                  annual license and permit fee).

        2.6       Miscellaneous Equipment.  Smithway shall pay Seller the amount
                  set  forth   opposite   each   item  on   Exhibit  B  for  the
                  Miscellaneous  Equipment,   plus  the  sum  of  $100  for  the
                  California intrastate authority; provided, the headache racks,
                  as defined in 1.14(i),  shall be the lesser of (i) $1,800/unit
                  or (ii)  the  book  value on the  depreciation  schedule;  and
                  further  provided  that Smithway  shall pay for parts,  tires,
                  supplies,  and  general  inventory  at cost  (not  to  include
                  out-dated or items non-usable to Smithway).


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        2.7       MCT's.  Smithway shall pay Seller  $2,500/unit for seventy-two
                  (72) MCT's; provided, that Smithway shall not pay anything for
                  MCT's installed in a Tractor or Leased Tractor and included in
                  the payments  under Assigned  Equipment  Financing or Assigned
                  Tractor Leases applicable to such tractor. All Leased Tractors
                  and Tractors shall have MCT's  installed and  operational  and
                  such  terminals  shall be  included  in the  seventy-two  (72)
                  MCT's. All other MCT's shall have the necessary wiring to make
                  the  terminal   operational   without  additional  expense  to
                  Smithway,   other  than  installation  costs.  Smithway  shall
                  receive a $50 credit  toward the  purchase  price for each MCT
                  without wiring.

        2.8       Specialized Equipment. Smithway shall purchase the Specialized
                  Equipment for an aggregate $471,000, payable by Smithway check
                  at Closing. Each trailer included in the Specialized Equipment
                  shall  have 50% tread  depth and 50% brake wear  remaining  at
                  Closing.

        2.9       Business.  Smithway shall pay Seller $648,000 (adjusted as set
                  forth below) for the goodwill  associated  with the  Business,
                  including  the value of  ongoing  shipper,  Driver,  and other
                  business relationships.  Payment shall be made as follows: (a)
                  at Closing,  Smithway  shall  deliver a check in the amount of
                  $448,000;  and (b) on the date six months  following  Closing,
                  Smithway  shall deliver a check in the amount of $200,000 (the
                  "Base Amount") adjusted as follows:  (i) for each Tractor that
                  Seller removes from the  transaction so that Smithway does not
                  assume  the  Assigned  Equipment  Financing  related  thereto,
                  $4,000 shall be added to the Base Amount  (provided,  however,
                  that the ten 1996 Volvos scheduled for September deliver shall
                  not be  eligible  for  removal);  (ii) for each  Recruited  or
                  Retained  Driver  below 120 at the date six  months  following
                  Closing,  the Base Amount shall be reduced  $1,667;  and (iii)
                  for each  Recruited  or Retained  Driver above 120 at the date
                  six  months  following  Closing,  the  Base  Amount  shall  be
                  increased  by $2,500.  For the  purpose of this  Section  2.9,
                  "Recruited  or  Retained  Driver"  shall  mean  (i)  a  Driver
                  operating  for  Seller at  Closing  and at the  relevant  date
                  operating  for  Smithway,  (ii) a  Driver  recruited  by Ralph
                  Marquardt  after the Closing and operating for Smithway at the
                  relevant  date, or (iii) a Driver  recruited by Smithway after
                  the Closing  and based at the Yankton or Stockton  terminal at
                  the relevant date.

        2.10      Yankton  Lease.  Smithway shall lease the Property from Seller
                  for four  years at a monthly  rental of  $2,000,  triple  net,
                  pursuant to the Lease. The Lease shall provide Smithway with a
                  right of first refusal on any sale of the Property  during the
                  Lease term or  expiration  thereof.  Smithway and Seller shall
                  share  equally  the  cost  of a  Phase  I  site  environmental
                  assessment of the Property. Said Phase I Site Assessment shall
                  be  completed  prior to  closing.  If the  results of the site
                  assessment indicate that remediation is required or additional
                  assessment is required, Smithway may at its

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                  option (i) elect not to proceed to closing or (ii) may require
                  Seller at Seller's expense to remediate  pursuant to the South
                  Dakota   Department  of  Environment  and  Natural   Resources
                  Standards  and  Guidelines,  in such event  Seller  shall hold
                  Smithway  harmless from any  contamination  existing  prior to
                  closing.  If additional  assessments or remediation are needed
                  for events on the Property  arising  after  Closing,  Smithway
                  shall  bear  the  cost  of  such  additional   assessments  or
                  remediation.

        2.11      California Lease.  Smithway shall assume from Seller the lease
                  of the property located in Stockton,  California  ("California
                  Property").  Such lease is attached as Exhibit F. Smithway and
                  Seller shall share equally the cost of a Phase I environmental
                  site assessment of the California Property.  Said Phase I Site
                  Assessment shall be completed prior to Closing. If the results
                  of the site assessment  indicate that  remediation is required
                  or that additional assessment is required, Smithway may at its
                  option (i) elect to  sublease  the  California  Property  from
                  Seller for the  balance of the  original  lease term under the
                  California   lease,   (ii)  may  simply  proceed  to  take  an
                  assignment of said lease, or (iii) may elect not to proceed to
                  Closing.  In any event,  Seller shall hold  Smithway  harmless
                  from and against any  liability  arising  from the presence of
                  contamination at the California  Property during the time that
                  Seller  has  been  in   possession   thereof.   If  additional
                  assessments  or  remediation  are  needed  for  events  on the
                  California Property arising after Closing, Smithway shall bear
                  the cost of such additional assessments or remediation.

        2.12      Marquardt  Consulting  Services.  Ralph  Marquardt  agrees  to
                  provide  consulting  services to Smithway,  as an  independent
                  contractor,  for a period  of six  months  following  Closing.
                  Marquardt  shall provide  transition  services as requested by
                  Smithway including driver recruitment and retention, and shall
                  receive  $31,000,  payable  $5,167  monthly.   Smithway  shall
                  provide Marquardt with an office at the Yankton terminal while
                  he is providing services.

        2.13      Inspection;  Adjustment.  From the period  commencing with the
                  execution of this  Agreement and  continuing  until all Leased
                  Tractors,  Leased  Trailers,  Tractors,  Trailers,  MCT's  and
                  Miscellaneous  Equipment have been inspected as provided below
                  (even if after Closing),  Seller and Smithway shall direct all
                  Leased Tractors,  Leased Trailers,  Tractors,  and Trailers to
                  the  Yankton or Stockton  terminal  of Seller,  the Fort Dodge
                  terminal of Smithway,  or any Kenworth or Freightliner  dealer
                  for physical inspection (the "Inspection")  either prior to or
                  within  three  (3)  business  days  after  the  Closing.   The
                  Inspection  shall  cover the  condition  and  include  amounts
                  required  to return  the items to  satisfactory  condition  as
                  follows:


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<PAGE>



                  A.       as to Leased Tractors:

                           (i)      the  amount  required  to return  the Leased
                                    Tractors  to  turn-in  condition  under  the
                                    applicable  Assigned  Lease in terms of body
                                    damage,  general road worthiness,  and other
                                    maintenance   or  repair   related   turn-in
                                    requirements   under  the  applicable  lease
                                    (generally,  no broken  glass,  $250 or less
                                    body  damage,   and  meeting  DOT  operating
                                    specifications,   but  in   each   case   as
                                    specifically provided in the lease);

                           (ii)     the amount of any penalty  associated with a
                                    violation of turn-in tread depth on tires or
                                    if no penalty is specified, to provide tires
                                    with at least 50% tread depth; and

                           (iii)    the   amount   of   excess  mileage  penalty
                                    attributable   to   Seller.     The   Leased
                                    Tractor's mileage shall be compared with the
                                    total  miles permitted without penalty under
                                    the   applicable   lease,  with  such  total
                                    mileage   being   prorated  to  reflect  the
                                    percentage of the lease term attributable to
                                    Seller  from lease inception to Closing.  If
                                    the  mileage  exceeds  the  miles  allowable
                                    under  the  proportion  of  the  lease  term
                                    served  prior  to  Closing ("excess miles"),
                                    Seller  shall  be  liable  for the number of
                                    excess  miles  multiplied  by the applicable
                                    lease  penalty  per mile.  For example, if a
                                    lease  permits  360,000 total miles during a
                                    three-year  term  and Seller has run 240,000
                                    miles    during   the   first   18   months,
                                    Shareholders  or  Seller would be liable for
                                    any  penalty attributable to up to the first
                                    60,000  excess  miles  (240,000 mileage less
                                    the 180,000 prorated allowable miles as of
                                    Closing).

                  B.       as to Tractors:

                           (i)      the amount  required to return the  Tractors
                                    to good operating condition in terms of body
                                    damage,  general road worthiness,  and other
                                    maintenance  or repair,  including no broken
                                    glass,  $250 or less body damage,  no engine
                                    or drive train repair required,  and meeting
                                    DOT operating specifications; and

                           (ii)     the amount  required to restore the Tractors
                                    to  50%   tread   depth  on  tires  and  50%
                                    remaining life on brakes.

                  C.       as to Trailers:  each of the Trailers  shall,  at the
                           time  of  the  Inspection,  be  in  good  repair  and
                           condition,   adequate   for  the  normal   course  of
                           operating a trucking business,  shall have a straight
                           frame and at least 50% wear  remaining  on brakes and
                           50% tread depth on all tires,  shall have body damage
                           less   than   $250  per  unit   (excluding   normally
                           acceptable  damage to bumpers or rub rail), and shall
                           meet  Department  of   Transportation   standards  of
                           road-worthiness.


                                        9

<PAGE>



                  D.       as  to  Leased  Trailers: each of the Leased Trailers
                           shall,  at  the time of Inspection, be in good repair
                           and  condition,  adequate  for  the  normal course of
                           operating  a  trucking  business  and  shall  have  a
                           straight  frame  and shall include adjustment for (i)
                           the  amount  to return the Leased Trailers to turn-in
                           condition  under  the  applicable  Assigned  Lease in
                           terms  of  body damage, general road worthiness, wear
                           on  brakes,  and wear on tires, and other maintenance
                           or  repair  related  turn-in  requirements  under the
                           applicable  Lease; and (ii) the amount of any penalty
                           associated with a violation of turn-in tread depth on
                           tires or if no penalty is specified, to provide tires
                           with at least 50% tread depth.

                  E.       as to Miscellaneous Equipment:  the MCTs and headache
                           racks   shall   be   in  good  operating  repair  and
                           condition,   suitable   for   continued  use  in  the
                           Business.   Smithway  may test any of the MCTs within
                           72  hours  of  delivery  of  said MCTs to the Yankton
                           terminal and, if any malfunctions exist, Seller shall
                           either make necessary repairs or shall repurchase any
                           non-operational  MCTs.   After  such 72-hours period,
                           however,  Smithway shall be deemed as having accepted
                           such  MCTs  in  their  "as  is" condition.  All other
                           Miscellaneous  Equipment  shall  not  be  subject  to
                           warranty  as  to condition because Smithway is buying
                           only  the  items  it  elects to purchase at an agreed
                           price and is purchasing such items "as is."

                  F.       Smithway shall provide the results of each Inspection
                           to  Seller  by means  of an  Inspection  Report.  The
                           Adjustment  Amount reflected on the Inspection Report
                           shall be calculated  as provided  above and presented
                           to Seller for approval. In the event that Seller, for
                           any reason,  does not approve the Adjustment  Amount,
                           Seller shall have the following options:

                           (i)      Seller  may, at Seller's expense, repair the
                                    Leased  Tractor,  Leased  Trailer,  Tractor,
                                    Trailer, or other item to bring it up to the
                                    foregoing standards;

                           (ii)     Seller may pay Smithway the amount  required
                                    to  repair  such  Leased   Tractor,   Leased
                                    Trailer,  Tractor, Trailer, or other item to
                                    bring it up to the standard; or

                           (iii)    Seller  may elect not to sell or assign  any
                                    such   Leased   Tractor,   Leased   Trailer,
                                    Tractor, Trailer, or other item and Smithway
                                    shall  not pay  for or  assume  an  Assigned
                                    Lease or  Assigned  Equipment  Financing  in
                                    connection with such item.

        2.14      Excluded  Assets and  Liabilities.  Smithway is not purchasing
                  any assets  other than as  specified  herein.  Smithway is not
                  assuming  and  shall  not  be  deemed  to  have  assumed,  any
                  liabilities  or  obligations  of  Seller of any kind or nature
                  whatsoever, except as expressly provided in Section 2.2 hereof
                  with  respect to the Assigned  Leases and  Assigned  Equipment
                  Financing and pursuant to Sections 2.15 and 2.16

                                       10

<PAGE>



                  with  respect to accrued  vacation  and sick leave and Volvos,
                  respectively.   Without   limiting  the   generality   of  the
                  foregoing,  it is hereby agreed that Smithway is not assuming,
                  and shall not be deemed to have  assumed,  any  liability  and
                  shall  not  have any  obligation  for or with  respect  to any
                  liability  or  obligation  of Seller (i) for any  advances  or
                  receivables for Drivers,  provided Smithway will assist Seller
                  in collecting on such advances or  receivables  and forwarding
                  collected sums to Seller, or (ii) for any notes,  liabilities,
                  or obligations to the Shareholders.

        2.15      Vacation and Sick Leave.   At Closing, Seller shall pay to all
                  of  its employees the accrued vacation and personal leave owed
                  to such employees by Seller.

        2.16      Volvos.  Smithway  shall assume  Seller's  obligation  to take
                  delivery of ten (10) 1996  model-year  Volvo tractors that are
                  awaiting  delivery at Sioux  Falls  Kenworth.  Smithway  shall
                  arrange  for  and be  responsible  for all  financing  of such
                  tractors.  Seller and the  Shareholders  represent and warrant
                  that  the  entire  purchase  price  of each of such  tractors,
                  including all delivery charges,  dealer  preparation,  federal
                  excise tax,  and other  amounts  payable for or in  connection
                  with such tractors is less than $62,500.

        2.17      Revenue  and  Expense Cutoff.  Seller shall retain all revenue
                  and  shall  pay  all expenses associated with loads dispatched
                  prior  to  12:01  a.m. on the Closing Date.  Smithway shall be
                  deemed  to  take possession of any equipment in transit at the
                  time  of  Closing  as  of  the  time the load is delivered and
                  unloaded.


                                    ARTICLE 3
                                     Closing

         The closing of the  transactions  contemplated  by this  Agreement (the
"Closing") shall occur at 10:00 a.m., October ___, 1996 (the "Closing Date"), at
the  office  of  Seller,  or at such  other  time and place as the  parties  may
mutually agree (which alternative date shall become the Closing Date).


                                    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  Seller and the Shareholders, as
                  follows:


                                       11

<PAGE>



                  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.

                  D.       Drivers.   As  to  all  Drivers  who  meet Smithway's
                           driver   standards,   Smithway   intends   to   offer
                           employment  to  such  individuals  and  pay  employee
                           Drivers  at  the  rate  per  mile  and the same other
                           benefits  as  received  by Smithway employee drivers,
                           subject  to  Smithway's eligibility schedules.  As to
                           independent  contractor Drivers, Smithway shall offer
                           its  standard  independent  contractor contract.  All
                           Drivers employed by Smithway shall receive credit for
                           their   length  of  service  with  Seller,  and  such
                           employees  shall  not be provided pay or benefits for
                           the  period  from  Closing  to six months thereafter,
                           which are less than those provided to such drivers by
                           Seller.   If  any employee drivers or owner operators
                           receive  a  reduction  in  pay  or  benefits and such
                           driver  quits  as  a  result thereof, Smithway agrees
                           that  there  shall  be  a  like  reduction in the 120
                           driver threshold established in Section 2.9.

                  E.       Broker.  Smithway has not contracted with or is aware
                           of any broker concerning the transaction contemplated
                           hereby except Ahern & Associates, Ltd.

                                       12

<PAGE>



        4.3       Representations  and  Warranties  of  Seller and Shareholders.
                  Shareholders  and  Seller,  jointly  and  severally, represent
                  and warrant to Smithway as follows:

                  A.       Corporate  Status.  Seller  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. Seller 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
                           Seller.

                  B.       Authority;  Validity.   Seller 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  Seller  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
                           Seller  and  the  Shareholders  and  constitutes  the
                           legal,   valid,   and  binding  obligation  of  each,
                           enforceable  against  each  in  accordance  with  its
                           terms.

                  C.       Noncontravention;   Consents.    The   execution  and
                           delivery  of this Agreement (and every other contract
                           or  agreement  contemplated hereby) by Seller and the
                           Shareholders  does  not,  and the performance of this
                           Agreement  (and  every  other  contract  or agreement
                           contemplated  hereby)  by Seller 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  Seller  or  either
                           Shareholder  is  subject;  (ii) any Judgment which is
                           applicable  to  Seller  or  either Shareholder; (iii)
                           the   articles  of  incorporation  or  other  charter
                           documents   or   bylaws   of   Seller,   which  is  a
                           corporation;  or  (iv) any material contract to which
                           Seller  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  Seller and the Shareholders.  Notwith-
                           standing  the  foregoing , approvals and consents may
                           generally  be  required  by all of Seller's equipment
                           leasing  companies,  equipment  financing  companies,
                           banks, and landlords.

                  D.       Financial   Statements.    Seller  has  delivered  to
                           Smithway  the annual, audited financial statements of
                           Seller  as  of  December 31, 1994, and 1995, together
                           with the unaudited financial statements as of and for
                           the  periods  ended  June  30,  and  July  31,  1996,
                           (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 Seller for all periods

                                       13

<PAGE>



                           reflected therein, are correct and complete,  and are
                           consistent  with the books  and  records  of  Seller,
                           which books and records are correct and complete.

                  E.       Absence of Changes or Events.  Except as disclosed on
                           Schedule 4.3.E., since July 31, 1996, Seller has not:

                           (i)      sold,  assigned, or transferred or agreed to
                                    sell,   assign,   or  transfer  any  of  the
                                    Leased   Tractors,   Leased   Trailers,   or
                                    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  Leased  Tractors,
                                    Leased Trailers,  or 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;

                           (vi)     amended,  terminated,  or  entered  into any
                                    agreement  relating to the Leased  Tractors,
                                    Leased   Trailers,   Property,    California
                                    Property,  Volvo  Tractors,  or  Transferred
                                    Assets; or

                           (vii)    suffered any damage,  destruction,  or loss,
                                    whether or not covered by  insurance,  which
                                    would have a  materially  adverse  effect on
                                    the Business or the Transferred Assets.

                  F.       Title and Condition of Assets.   The Leased Tractors,
                           Leased   Trailers,  Tractors,  Trailers,  Specialized
                           Equipment,  MCTs,  and Miscellaneous Equipment are in
                           good  repair  and  condition  and  adequate  for  the
                           ordinary  course of operation of Seller's business as
                           presently conducted.  Seller 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.   Seller  is  the  lessee  under the
                           Assigned   Leases   and   no  party  other  than  the
                           respective  lessors thereunder has any other interest
                           in  or  Lien  on the Assigned Leases (or the tractors
                           and trailers which are the subject thereof) except as
                           disclosed  on Schedule 4.3.F.  Seller is the borrower
                           under  the  Assigned Equipment Financing and no other
                           party other than the respective lender thereunder has

                                       14

<PAGE>



                           any  other  interest  in  or  Lien  on  the  Assigned
                           Equipment  Financing  except as disclosed on Schedule
                           4.3.F. Except as disclosed on Schedule 4.3.F.,  there
                           are no agreements or similar understanding that limit
                           leasing of the  Property or the purpose for which the
                           Property may be used.

                  G.       Tax Matters.  With respect to Taxes:

                           (i)      Seller  and  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 it, 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.    Seller  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  as set  forth  on  Schedule  4.3.G.,
                                    Seller and  Shareholders  have not  received
                                    notice of, nor is either  under  audit,  any
                                    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 Seller
                                    or Shareholders.

                           (iii)    Seller and 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 to
                           the  best  of  Seller's  knowledge threatened against
                           Seller  that,  if  adversely determined, could have a
                           materially  adverse  effect  on  the  Business or the
                           Transferred Assets.

                  I.       Insurance.  Seller maintains such insurance  coverage
                           on (i)  the  Transferred  Assets,  its  Business  and
                           employees,  which  insurance  covers  liabilities and
                           risks   prudently    insured   against   by   similar
                           businesses,  (ii)  the  Leased  Tractors  and  Leased
                           Trailers  which  complies  in all  respects  with the
                           Assigned Leases,  and (iii) the Tractors and Trailers
                           which  complies  in all  material  respects  with the
                           Assigned  Equipment  Financing.  All  such  insurance
                           policies will be maintained through Closing.

                                       15

<PAGE>



                  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
                           Transferred    Assets,    including   any   financing
                           arrangement  involving  the  Leased  Tractors, Leased
                           Trailers,    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.

                  K.       Drivers; Employees.

                           (i)      Except  as set  forth  on  Schedule  4.3.K.,
                                    Seller  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.

                           (ii)     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  Seller  as a result  of the
                                    consummation of this Agreement.

                           (iii)    Schedule  4.3.K. identifies each of Seller'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 Seller nor
                                    any predecessor or affiliate has ever been a
                                    party  to  or  sponsored a multi-employer or
                                    defined   benefit  plan.    Seller  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
                                    Seller  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.   The "plan year"
                                    of  each  Benefit Plan is the calendar year.
                                    Seller has no current or projected liability
                                    with  respect  to  post -employment or post-
                                    retirement  welfare  benefits  for former or
                                    retired employees.



                                       16

<PAGE>



                  L.       WARN Act Notice and Liability.  The facility  located
                           in Yankton,  South Dakota is Seller's only employment
                           site with more than 50 employees. Seller has taken no
                           action in respect to  employees  of Seller that would
                           require notice or create  liability  under the Worker
                           Adjustment  and  Retraining  Notification  Act ("WARN
                           Act"), or any state counterpart.

                  M.       Compliance With Laws.   Seller has owned, leased, and
                           used all of its properties and assets involved in its
                           Business,   and   has   conducted  its  Business,  in
                           compliance   in   all   material  respects  with  all
                           applicable Laws.

                  N.       Environment, Health, and Safety.

                           (i)      Seller and affiliates have complied with all
                                    Laws  concerning  pollution or protection of
                                    the  environment,  public health and safety,
                                    or  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, Seller
                                    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)     Seller  does  not  have  any  liability (and
                                    neither Seller nor any 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  Seller  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.

                           (iii)    Any fuel storage tanks located at properties
                                    owned  or used by  Seller  in its  Business,
                                    including   the  Property   and   California
                                    Property,   comply  in  all  respects   with
                                    applicable Laws, do not leak, are

                                       17

<PAGE>



                                    registered with the appropriate state agency
                                    (and  all  required  actions  in  connection
                                    therewith  have been  taken)  in the  manner
                                    permitting  Seller 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.

                  P.       Broker.   Seller and Shareholders have not contracted
                           with  or  are  aware  of  any  broker  concerning the
                           transaction   contemplated   hereby  except  Ahern  &
                           Associates, Ltd.


                                    ARTICLE 5
                            Covenants and Agreements

        5.1       Conduct of Business Pending the Closing.  From the date hereof
                  to the Closing:

                  A.       Seller  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 Seller and the Share-
                           holders  will use their  best efforts to preserve the
                           assets,  goodwill,  and  value  of Seller's business,
                           including keeping Seller's present management intact,
                           keeping  available  Seller's  present  employees, and
                           preserving   the   present  relationships  with   its
                           suppliers  and  customers  and others having business
                           relations with it.

                  B.       Seller 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.

        5.2       Access.  Seller 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  upon  advance  notice,   all  of  the
                  premises,  properties,  assets, records,  contracts, and other
                  documents  relating to Seller's Business and shall permit them
                  to consult with  Seller's  officers,  employees,  accountants,
                  counsel, agents,  customers, and other persons having business
                  dealings with Seller or knowledge of its business, operations,
                  assets,  liabilities,   actual  or  potential  litigation  and
                  claims, properties, and prospects; provided, that such

                                       18

<PAGE>



                  investigation  shall not unreasonably  interfere with Seller's
                  business.   Furthermore,  Seller  shall  promptly  provide  to
                  Smithway  (and  their   representatives)   all  such  reports,
                  surveys,  documents,  and copies of documents  and 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. Smithway acknowledges and agrees that
                  all information regarding the Seller gathered pursuant to this
                  Section  5.2  is  confidential  to  Seller.  Smithway  further
                  acknowledges that Seller would be irreparably harmed if, after
                  having  such  access  to  Seller's  confidential  information,
                  Smithway  did not  proceed to  closing.  In  consideration  of
                  Seller making available to Smithway such books,  records,  and
                  files, Smithway agrees as follows:

                  A.       All  such  information provided to Smithway by Seller
                           shall  not  be  disclosed  by  Smithway  to any third
                           party.

                  B.       Smithway   will  disclose  such  information  to  its
                           officers,  directors,  and  agents only on a "need to
                           know" basis.

                  C.       Smithway shall use its best efforts and due diligence
                           to  prevent  the  dissemination  of  any  of Seller's
                           confidential   information   by   buyers,  directors,
                           officers, employees, or agents.

                  D.       Smithway agrees to indemnify and hold harmless Seller
                           from   any   damages,  loss,  costs,  or  liabilities
                           (including  legal fees and the cost of enforcing this
                           indemnity)  arising  out  of  or  resulting  from any
                           unauthorized  use  or  disclosure  of the information
                           gathered  in  Smithway's  negotiations  with  Seller.
                           Smithway  acknowledges  that  money  damages  will be
                           incalculable  and  an  insufficient  remedy  for  any
                           breach   of   this   Agreement  by  Smithway  or  its
                           representatives  and that any such breach would cause
                           Seller irreparable harm.   Accordingly, Smithway also
                           agrees that in the event of any breach hereof, Seller
                           shall be entitled, without the requirement of posting
                           a  bond  or  other  security,  to  equitable  relief,
                           including  without  limitation  injunctive relief and
                           specific performance.  Said remedies shall not be the
                           exclusive  remedies  for any breach of this Agreement
                           but  shall  be  in  addition  to  all of the remedies
                           available at law or in equity to the Seller.

        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.   Seller  shall not renew the licenses
                  or  registrations  of, or purchase new license plates for, any
                  of  the  Leased  Tractors,  Tractors, Trailers, or Specialized
                  Equipment between the date hereof and the Closing.

                                       19

<PAGE>



        5.5       Non-competition.

                  A.       During the three years following the Closing, neither
                           Shareholders  nor  any entity of which a Shareholders
                           directly  or  indirectly  owns more than 5% shall (i)
                           own,  operate,  manage,  be employed or retained as a
                           consultant  by,  or  in  any  other manner assist any
                           truckload carrier, broker, agent, intermodal company,
                           consolidator,   third-party  logistics  provider,  or
                           other company engaged in the business of transporting
                           or  arranging  for  the  transportation  of truckload
                           freight  that  conducts a competitive business in the
                           United  States; (ii) divert or solicit any person who
                           is or was a customer of Seller during such period; or
                           (iii) induce or influence any employee, agent, owner-
                           operator,  or other representative of Seller to leave
                           Seller  or engage in a competitive business.  For the
                           purposes  of  this  Agreement, "competitive business"
                           shall  mean  flatbed operations but shall not include
                           (i)  selling  or  leasing  the  Nonacquired Trucks to
                           third-parties  or  owner-operators of Seller (but the
                           sale  or lease to any employee driver of Seller shall
                           be  prohibited);  or  (ii)  owning  up  to  three (3)
                           tractors  used  to  haul  the  Shareholders' own farm
                           equipment  and  farm  commodities  from his own farm.
                           The  parties  deem the restrictions contained in this
                           Section   reasonable  and  necessary  to  secure  for
                           Smithway  the  benefits of employing Shareholders and
                           obtaining  for  the stockholders of SMXC the benefits
                           of  this Agreement.  However, if a court of competent
                           jurisdiction  determines  that  such restrictions are
                           unreasonable,  the  restrictions  shall be reduced by
                           the  court  to  a  reasonable  level  and enforced in
                           accordance therewith pursuant to Section 8.13 hereof.

                  B.       The  existence  of any  claim or cause of  action  by
                           Shareholders against SMXC, whether predicated on this
                           Agreement  or  otherwise,   shall  not  constitute  a
                           defense  to  the  enforcement  by  Smithway  of  this
                           covenant.  It is expressly  agreed that the remedy at
                           law for the breach of any such covenant is inadequate
                           and  injunctive  relief shall be available to prevent
                           the breach or any threatened breach thereof.

        5.6       Volvos.   Seller  shall  not sign or agree to any financing on
                  the  ten  (10)  1996  Volvo tractors scheduled for delivery in
                  September without Smithway's consent.

        5.7       Insurance.  Effective  as of the  date of  Closing,  and for a
                  period of three  years  thereafter,  Smithway  agrees to cause
                  Seller and the Shareholders to be named as additional insureds
                  as to acts of Smithway after Closing under Smithway's  primary
                  and umbrella  public  liability  policies.  Smithway agrees to
                  provide  Seller with proof of coverage,  from time to time, as
                  reasonably requested by Seller.

        5.8       Driver Recruiting.   Subject  to Smithway's overall management
                  and  control,  Ralph  Marquardt  shall  be afforded reasonable
                  support and funding for recruiting and retaining Drivers after
                  the Closing.



                                       20

<PAGE>



                                    ARTICLE 6
                              Conditions to Closing

        6.1       Conditions   Precedent   for  all  Parties.   The   respective
                  obligations  of each party to effect this  Agreement  shall be
                  subject to the fulfillment of all of the following  conditions
                  precedent at or prior to Closing:

                  A.       Representations  and  Warranties  True as of Closing.
                           The  representations  and  warranties  of each  party
                           hereto  contained  in this  Agreement or in any list,
                           certificate,  or document  delivered by such party to
                           the other pursuant to the provisions  hereof shall be
                           true  in  all  material  respects  at  and  as of the
                           Closing   with  the  same   effect  as  though   such
                           representations  and warranties  were made as of such
                           date.

                  B.       Compliance  with this  Agreement.  Each party  hereto
                           shall have  performed  and  complied in all  material
                           respects   with  all   agreements,   covenants,   and
                           conditions  required to be performed or complied with
                           by such party under this Agreement.

                  C.       Closing  Certificates.   Each  corporate party hereto
                           shall  have  received  a  certificate from the other,
                           dated as of the Closing Date, and signed on behalf of
                           each  by  its  president,  and  Smithway  shall  have
                           received   the   certificate  of  Shareholders,  each
                           certifying  in  such  detail  as  the other party may
                           reasonably  request  that the conditions specified in
                           this Article 6 have been fulfilled.

                  D.       Opinion  of  Counsel.   Counsel  for each party shall
                           have   delivered  to  the  other  party  its  written
                           opinion,  dated as of the Closing Date, substantially
                           in the form of Exhibits H-1 and  H-2, respectively.

                  E.       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.

                  F.       Leases.   The  parties  shall have executed the Lease
                           and  received  consents to assignment of the Lease on
                           the  California  Property as well as the agreement of
                           subtenants  at  the  California  Property to continue
                           subleasing  portions  of  such property from Smithway
                           on terms comparable to those currently in place.


                                       21

<PAGE>



        6.2       Conditions  Precedent  to  the  Obligation  of  Smithway.   In
                  addition to the  requirements  of Section 6.1, the obligations
                  of  Smithway   under  this   Agreement   are  subject  to  the
                  fulfillment of all of the following conditions precedent at or
                  prior to Closing:

                  A.       Adverse  Changes.   There  shall  not  have  been any
                           materially  adverse  changes  in  the Business or the
                           condition of the Transferred Assets.  The Transferred
                           Assets  shall  not  have  suffered any destruction or
                           damage  by fire, accident or other casualty or Act of
                           God,  whether  or  not  covered  by  insurance, which
                           affects such equipment in a material and adverse way.

                  B.       Due Diligence.  Smithway shall have completed its due
                           diligence  investigation  of  Seller, and the various
                           information   provided  by  Seller,  and  shall  have
                           determined that there is no material violation of any
                           of  Seller's or the Shareholders' representations and
                           warranties  contained  herein,  that  there exists no
                           previously  undisclosed condition with respect to the
                           Business    that   is   materially   adverse.    This
                           investigation    shall   include   specifically   the
                           agreement   of  major  customers  of  Seller  to  use
                           Smithway  after  the  Closing  at least to the extent
                           such customers used Seller; provided, that Smithway's
                           service  is acceptable.  The parties acknowledge that
                           the   Schedules  to  this  Agreement  were  delivered
                           without adequate time for Smithway to investigate and
                           understand   the  full  nature  of  the  items  being
                           disclosed.    Accordingly,  the  disclosures  thereon
                           shall   not   be  considered  "previously  disclosed"
                           conditions,  and  Smithway  shall  be entitled to its
                           full   due   diligence  investigation  and  right  to
                           terminate  this  Agreement  without  liability if any
                           item   (or  the  aggregate  of  such  items)  on  the
                           Schedules  indicates  a  materially adverse condition
                           with respect to the Business.

                  C.       Seller  shall have obtained and filed releases of all
                           Liens  on  the  Leased Tractors, Leased Trailers, and
                           Transferred  Assets  except  the Liens imposed by the
                           Assigned  Leases  and Assignment Equipment Financing.
                           Notwithstanding  disclosure of a Lien on any Schedule
                           to   this   Agreement,   in  any  public  record,  or
                           otherwise,   at  Closing,  Seller  shall  convey,  by
                           appropriate  documents,  good  and valid title to the
                           Leased  Tractors,  Leased  Trailers,  and Transferred
                           Assets,  in each instance free and clear of all Liens
                           except  the  Liens imposed by the Assigned Leases and
                           Assigned Equipment Financing.



                                       22

<PAGE>



                                    ARTICLE 7
                                 Indemnification

        7.1       Indemnification  by Seller  and  Shareholders.  Seller and the
                  Shareholders,  jointly and severally, shall indemnify, defend,
                  and  hold  harmless   Smithway,   SMXC,  and  their  officers,
                  directors,     shareholders,     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, reasonable attorneys'
                  fees,  and costs)  arising out of or  otherwise in respect of:
                  (i) any  misrepresentation,  inaccuracy  in,  or breach of any
                  representation,  warranty, covenant, or agreement of Seller or
                  Shareholders  contained in this  Agreement or any Exhibit,  or
                  other document or agreement  executed in connection  herewith;
                  (ii) 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;  and (iii) any third-party  claims not
                  relating to the Transferred  Assets or the Business that arise
                  from actions of Seller or Shareholders,  regardless of whether
                  such actions are before or after Closing.

        7.2       Indemnification by Smithway. Smithway shall indemnify, defend,
                  and hold harmless Seller and  Shareholders and their officers,
                  directors,  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,  reasonable attorneys' fees, and costs) arising out
                  of or  otherwise  in respect  of:  (i) any  misrepresentation,
                  inaccuracy  in,  or breach  of any  representation,  warranty,
                  covenant,   or  agreement   of  Smithway   contained  in  this
                  Agreement;  (ii)  any  transaction  or claim  relating  to the
                  operation  of  Smithway,   the  Leased  Tractors,  the  Leased
                  Trailers or the Transferred Assets, the factual basis of which
                  transaction   or  claim  arose   subsequent   to  the  Closing
                  (including   but  not  limited  to   Smithway's   use  of  the
                  Nonacquired   Trucks,   Leased   Tractors,   Leased  Trailers,
                  Tractors,  and  Trailers);  and  (iii)  liabilities  under the
                  Assumed Tractor Leases and Assumed Equipment Financing.

        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

                                       23

<PAGE>



                  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       Maximum  Liability.  The maximum liability of the Shareholders
                  for  indemnification  shall  be  $600,000  in  total  (and not
                  $600,000 for each  Shareholder).  Further,  the  Shareholders'
                  obligations under the indemnification  section shall terminate
                  on that date  which is three  years  after the date of Closing
                  with  the  exception  of  liabilities   respecting  Taxes  and
                  environmental  issues.  With respect to Taxes, the obligations
                  of Shareholders under the  indemnification  shall terminate on
                  that date which is six months following the last date on which
                  a claim may be made under applicable  statutes of limitations.
                  With respect to environmental  issues,  the obligations of the
                  Shareholders under the indemnification shall terminate on that
                  date which is six years following the date of Closing.

        7.5       Guarantees.  Smithway Motor Xpress Corp, a Nevada corporation,
                  hereby  guarantees all liabilities of Smithway owing to Seller
                  or  Shareholders  and arising under this Agreement to the same
                  extent indemnification would be due and owing from Smithway.


                                    ARTICLE 8
                                  Miscellaneous

        8.1       Termination.  Anything  herein or  elsewhere  to the  contrary
                  notwithstanding,  this  Agreement  (and all  other  agreements
                  contemplated hereby) may be terminated by any party by written
                  notice of  termination to the other parties before the Closing
                  (a) at any time if the  representations and warranties made to
                  such party were  materially  incorrect  when made and have not
                  been cured by the Closing,  (b) any condition precedent to the
                  terminating  party's   obligations   hereunder  has  not  been
                  satisfied or waived prior to the Closing,  or (c) any court of
                  competent jurisdiction in the United States or any state shall
                  have  issued  an order,  judgment,  or  decree  (other  than a
                  temporary  restraining  order)  restraining,   enjoining,   or
                  otherwise prohibiting the transaction  contemplated hereby and
                  such order,  judgment,  or decree  shall have become final and
                  non-appealable.  This  Agreement  may  also be  terminated  by
                  mutual  consent  of  all  parties  hereto.  In  the  event  of
                  termination  of  this  Agreement  as  provided   above,   this
                  Agreement  shall  forthwith  become void and there shall be no
                  liability  on the part of any party  hereto;  provided  that a
                  party then in breach shall be liable for such breach.

        8.2       Costs  and  Expenses;   Brokers'  Fees.  Each  party  to  this
                  Agreement  shall bear its own expenses  incurred in connection
                  with the  negotiation  and execution of this Agreement and the
                  Closing.  Smithway shall pay the brokerage fee owed to Ahern &
                  Associates,  Ltd. Any party  through  which a broker or finder
                  claims  any fee,  commission,  or  payment  resulting  from or
                  arising out of the  negotiation or execution of this Agreement
                  or the consummation of the transactions contemplated

                                       24

<PAGE>



                  hereby  agrees  to  indemnify,  defend,  and  hold  the  other
                  harmless from and against any claim.

        8.3       Survival  of  Representations,   Warranties,   Covenants,  and
                  Agreements. The covenants,  agreements,  representations,  and
                  warranties of the parties  hereto  contained in this Agreement
                  or in any  certificate  or other  writing  delivered  pursuant
                  hereto  or  in  connection   herewith  shall  survive  and  be
                  enforceable following the Closing for a period of three years.
                  The  foregoing  notwithstanding,  all  covenants,  agreements,
                  representations, and warranties respecting Taxes shall survive
                  until the date six months  following  the last date on which a
                  claim may be made under applicable  statutes of limitation and
                  all  covenants,  agreements,  representations,  and warranties
                  respecting  environmental issues shall survive until six years
                  following the date of Closing.

        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  guaranties  performance  of  all  of  its  obligations
                  hereunder.  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.



                                       25

<PAGE>







        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
                  delivered  personally or sent by telecopier or certified mail,
                  postage prepaid, as follows:


If to Smithway:                        With a required copy to:
Mr. William G. Smith, President        Mark A. Scudder, Esq.
Smithway Motor Xpress, Inc.            Scudder Law Firm, P.C.
Rural Route #5                         411 South 13th Street, Suite 200
Fort Dodge, Iowa  50501                Lincoln, Nebraska  68508

If to Shareholders or Seller:          With a required copy to:
Mr. Ralph Marquardt                    Jonathan P. Brown, Esq.
P.O. Box 1040                          Davenport, Evans, Hurwitz & Smith, L.L.P.
Yankton, South Dakota  57078           513 South Main Avenue
                                       P.O. Box  1030
                                       Sioux Falls, South Dakota  57101-1030

                  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  so  personally  delivered,  deposited  in the  mail,  or
                  telecopied.

        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.

        8.11      Governing  Law.   This  Agreement  shall  be  governed  by and
                  interpreted  and  enforced  in accordance with the laws of the
                  State of South Dakota.


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        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 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.

        8.16      Approval of Exhibits and Schedules. The respective obligations
                  of each party is  conditioned  on all  parties  approving  the
                  exhibits  and  schedules,   despite  such  approval,  if  any,
                  occurring after signature of this agreement.



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         IN  WITNESS  WHEREOF,  the  parties  hereto  have  duly  executed  this
Agreement on the date first written.

MARQUARDT TRANSPORTATION, INC.,                SMITHWAY MOTOR XPRESS, INC.,
a South Dakota corporation                     an Iowa corporation

By:-------------------------------             By:------------------------------
         Ralph Marquardt, President              William G. Smith, President


With respect to Sections 4.3, 5.1, 5.5,
6.1, and 7.1 only,


------------------------------                 With respect to Section 7.5 only,
Ralph Marquardt, Individually                  SMITHWAY MOTOR XPRESS CORP.,
                                               a Nevada corporation

------------------------------
Lucille Marquardt, Individually                By:------------------------------
                                                  William G. Smith, President


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