EXHIBIT D TO
STOCK PURCHASE AGREEMENT
SECURITIES PURCHASE
AND
REGISTRATION AGREEMENT
(PIGGYBACK REGISTRATION RIGHTS)
This Agreement is made and entered as of April 19, 2000 by and between
Knight Transportation, Inc., an Arizona corporation (the "Company"), and John R.
Fayard, Jr., a resident of Mississippi (the "Stockholder").
RECITALS
The Stockholder has agreed to sell to the Company the outstanding stock of
John Fayard Fast Freight, Inc., a Mississippi corporation, pursuant to the Stock
Purchase Agreement dated April 19, 2000 (the "Purchase Agreement"). In
consideration of Stockholder's sale of his stock to the Company, the Company has
agreed to deliver to Stockholder certain shares of the Company's common stock,
par value $0.01 per share and additional "earn-out" shares of common stock to
the extent earned under the Purchase Agreement (the "Shares").
The Company is a publicly reporting company under Section 12(g) of the
Securities Exchange Act of 1934 (the "Exchange Act") and its shares of common
stock are traded on the NASDAQ National Market.
The Stockholder is a sophisticated person, and he, his investment banker,
and tax counsel have had access to all publicly available information concerning
the Company.
The Company and the Stockholder wish to set forth the terms pursuant to
which the Stockholder is accepting the Shares and wish to provide for certain
registration rights which accrue to the Stockholder with respect to the Shares
and which the Company hereby grants the Stockholder.
AGREEMENT
NOW, THEREFORE, the parties agree, as follows:
Section 1. INFORMATION PROVIDED TO STOCKHOLDER. The Stockholder has
received from the Company copies of (i) its most recent reports filed with the
Securities and Exchange Commission ("SEC") on Form 10-K and the quarterly
reports filed by the Company with the SEC on Form 10-Q, and the Company's most
recent Information Statement. The Stockholder has had an opportunity to ask
questions and receive answers concerning the Company, its organization,
business, and prospects. The Stockholder is familiar with the Company, its
business, properties and financial condition. The Stockholder acknowledges that
information concerning the Company is available publicly, through the SEC,
through various Internet sources and brokerage houses. The Stockholder
represents that he is an "accredited investor" (as defined in Section 2(15) of
the Securities Act of 1933 (the "Act") and Rule 501 of Regulation D promulgated
thereunder, and that he has had an opportunity to fully analyze and evaluate the
risks of proceeding with the transaction contemplated by the Purchase Agreement,
and that he is fully capable of evaluating the risks and merits of the
transaction and has consulted with his professional and financial advisors
regarding the transactions contemplated by the Purchase Agreement. The
Stockholder and his advisors have substantial experience in evaluating
businesses such as the Company. The Stockholder agrees that the Shares are
acquired for investment only and will not be sold or distributed, unless
registered in accordance with applicable law or unless an exemption from
registration is available, in the opinion of counsel acceptable to the Company.
The Stockholder understands that a legend to that effect will be placed on the
Shares. The Stockholder represents and warrants that in accepting the Shares as
consideration under the Purchase Agreement, he has relied solely upon the public
information about the Company and that the Company has made no other
representations or warranties to him, other than as set forth in the Purchase
Agreement. The Stockholder acknowledges that the Shares delivered by the Company
have not been registered with the SEC, and that the Company's only obligation to
register such shares is set forth in this Agreement.
Section 2. REGISTRATION UNDER THE ACT.
(a) If the Company files a registration statement under the Act, which
relates to a current offering of securities of the class then represented by the
Shares (except in connection with any acquisition, or an offering of the
Company's equity securities to its employees pursuant to any employee benefit or
any stock option plan, or any dividend reinvestment plan maintained by the
Company), such registration statement and the prospectus included therein shall,
at the written request of the Stockholder, include, subject to any underwriter
requirements or cutbacks, all or part of the Shares owned by the Stockholder
under the registration statement so as to permit the public sale of the Shares
by the Stockholder in compliance with the Act. The Company shall give written
notice to the Stockholder of its intention to file a registration statement
under the Act relating to an offering of its equity securities not less than
thirty (30) days prior to the filing of such registration statement with the SEC
or any successor in interest (or such shorter period if 30-days' notice is
impracticable). The Stockholder's written request to the Company that all or a
portion of his Shares be included in the registration statement, if made not
later than twenty (20) days prior to the date specified in the notice as the
date on which the Company intends to file its registration statement (or, in any
event, within five (5) days after receiving notice), shall allow the Stockholder
to register all or part of his Shares under such registration statement. Neither
the Company's delivery of notice nor delivery of a request by the Stockholder
for registration shall in any way obligate the Company to file such registration
statement and, notwithstanding the filing of such registration statement, the
Company may, at any time prior to the effective date thereof, determine not to
offer the securities to which such registration statement relates, without
liability to the Stockholder. The Company shall pay the entire cost of any
registration of Shares to which this Section 2(a) applies, including without
limitation, attorneys' fees, accounting fees, filing fees and printing costs,
but excluding any underwriter's discount; provided, however, that the
Stockholder shall be solely responsible for any underwriter discounts on any
Shares sold by the Stockholder pursuant to any registration statement filed by
the Company. A Stockholder who exercises his rights under this Agreement is
sometimes referred to herein as a "Selling Stockholder."
2
(b) If any Shares registered under this Agreement are offered through an
underwriter, each Selling Stockholder and the Company agrees (i) to execute any
underwriting agreement requested by the underwriter, (ii) furnish any indemnity
in the customary form required by the underwriter, (iii) furnish any information
required by the underwriter, and (iv) take any other action reasonably necessary
to satisfy the underwriting conditions or to cause the registration statement to
become effective. The rights of any Selling Stockholder under this Agreement
shall be subject to and limited by the terms and conditions of any indemnity
agreement and any other conditions the underwriter may impose. The failure of a
Selling Stockholder to comply with the provision of this Section 2(b) shall
relieve the Company of the obligation to register the Shares as provided by this
Agreement.
Section 3. COMPLIANCE WITH LAW. Any registration statement filed by the
Company pursuant to the Act shall comply in all respects with the Act and all
rules and regulations of the SEC applicable to such registration statement. At
such time as any registration statement (or notice) becomes effective, the
Company shall supply to the Selling Stockholder and to any person or underwriter
acting on his behalf, sufficient copies of the prospectus used in connection
with the registration statement for the Selling Stockholder to sell publicly the
registered Shares. With respect to any registration of Shares subject to this
Agreement, the Company, at its expense, agrees to qualify or register the Shares
in any state in which the Selling Stockholder requests that the Shares be
qualified or registered, to the extent that the Company is reasonably able to do
so, and the Company shall maintain such qualification or registration in effect
for so long as the registration statement is in effect.
Section 4. SELLING STOCKHOLDER'S CONSENT AND OBLIGATION TO FURNISH
INFORMATION. The Selling Stockholder shall promptly provide to the Company such
consents and information as may be reasonably required by the Company in order
to perform its obligations under Section 2 hereof. It shall be a condition
precedent to the obligations of the Company to take any action pursuant to
Section 2(a), 2(b), 7(a), or 7(b) that the Selling Stockholder shall furnish to
the Company such information regarding the Selling Stockholder and the Shares
held by him, and the intended method of disposition of such securities as shall
be required to effect the registration of the Shares.
Section 5. "MARKET STAND-OFF" AGREEMENT. The Selling Stockholder agrees
that he will not, to the extent requested by the Company and any underwriter,
sell or otherwise transfer or dispose of any Shares (other than Shares being
registered in such offering) for up to that period of time following the
effective date of a registration statement of the Company filed under the Act as
is requested by the managing underwriter(s) of such offering. The Company agrees
that any lock-up agreement obtained by the underwriter with respect to the
Selling Stockholder will be no longer than any similar agreement applicable to
the Company or its affiliates in connection with any shares of the Company
registered by the Company pursuant to such registration statement. The Selling
Stockholder agrees to execute any lock-up agreement required by the managing
underwriter.
Section 6. REPORTS. In connection with any registration of its Shares, the
Company at all times will comply with the Act and will file such reports and
disclosures as may be required by the Act or any rules or regulations
promulgated thereunder. If the Company is subject to the Exchange Act, the
3
Company agrees to file timely all reports required by the Exchange Act. If the
Company is a listed company on NASDAQ or any national securities exchange, the
Company shall file all reports necessary to maintain such listing.
Section 7. INDEMNIFICATION.
(a) COMPANY. The Company agrees to indemnify and hold harmless the Selling
Stockholder and any underwriter, to the extent applicable, and any person who,
within the meaning of the Act (or the Exchange Act), controls any of such
persons (hereafter, individually and collectively, the "Selling Group") for,
from, and against any losses, claims, damages, or liabilities, joint and
several, to which the Selling Group, or any of them, may become subject under
the Act, the Exchange Act, or otherwise, insofar as such losses, claims,
damages, or liabilities (or actions in respect thereof) arise out of or are
based upon any untrue statement or alleged untrue statement of any material fact
contained in a registration statement, or the prospectus which is a part
thereof, or any amendment or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact necessary
to be stated therein to make the statements therein not misleading; and will
reimburse the Selling Group and each of them for any legal or other expenses and
costs reasonably incurred by them in connection with the investigation or
defense of any such loss, claim, damage, liability, or action; provided,
however, that the Company will not be liable under this Section 7(a) if any such
loss, claim, damage, or liability arises solely out of or is based solely on an
untrue statement or alleged untrue statement or omission or alleged omission
made in the registration statement or the prospectus or any amendment or
supplement thereto in reliance upon and in conformity with written information
furnished to the Company by or on behalf of the Selling Group or any of them. A
member of the Selling Group who is treated as a control person under the Act or
the Exchange Act shall be covered by and included within the indemnity provided
by this Section 7(a) for all losses, claims, damages, and liabilities asserted
in connection with the registration statement, notice or the sale of the Shares,
whether or not based on Section 15 of the Act or Section 20 of the Exchange Act.
The indemnity obligation provided herein is in addition to any liability or
obligation which the Company may otherwise have to the Selling Group or any of
them or which may exist at common law or under any applicable statute.
(b) SELLING GROUP. Each member of the Selling Group, severally, but not
jointly, will indemnify and hold harmless the Company, each of its directors,
each of its officers who signs the registration statement, and any person who
controls the Company within the meaning of the Act (or the Exchange Act) for,
from, and against any losses, claims, damages, or liabilities to which the
Company or any such director or officer or controlling person may become subject
under the Act, the Exchange Act, or otherwise, if such losses, claims, damages,
or liabilities (or actions in respect thereof) arise solely out of or are based
solely on any untrue or alleged untrue statement of a material fact contained in
the registration statement, the prospectus, or any amendment or supplement
thereto, or arise out of or are based upon the omission or alleged omission to
state therein a material fact necessary to be stated therein to make the
statements therein not misleading, in each case if, and only if, such untrue
statement or alleged untrue statement or omission or alleged omission was made
in the registration statement, the prospectus, or such amendment or supplement
in reliance upon and in conformity with written information concerning such
member of the Selling Group furnished to the Company by or on behalf of such
member of the Selling Group for use in the registration statement and the
4
prospectus or any amendment or supplement thereto, and will reimburse any legal
or other expense reasonably incurred by the Company or such director or officer
or controlling person in connection with investigating or defending any such
loss, claim, damage, liability, or action. This indemnity obligation provided
hereunder is in addition to any other liability or obligation which the Selling
Group or each member of the Selling Group separately may otherwise have to the
Company or which may exist at common law or under any applicable statute.
(c) CLAIMS. Promptly after receipt by an indemnified party under this
Section 7(c) of notice of the commencement of any action or the initiation of
any proceeding (including, without limitation, arbitration), the indemnified
party will, if a claim in respect thereof is to be made against any indemnifying
party under this Section 7(c), notify the indemnifying party in writing of the
commencement thereof; but the failure to notify the indemnifying party will not
relieve it from any liability which it may have to any indemnified party
otherwise than under this Section 7(c), unless failure to notify prejudices or
causes material harm to the indemnifying party. In case any such action is
brought against any indemnified party and such indemnified party notifies any
indemnifying party of the commencement thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it may wish, jointly
with any other indemnifying party similarly notified, assume the defense thereof
with counsel who shall be reasonably satisfactory to such indemnified party and,
after notice from the indemnifying party to such indemnified party of its
election to so assume the defense thereof, the indemnifying party will not be
liable to such indemnified party under this Section 7(c) for any legal or other
expenses subsequently incurred by such indemnified party in connection with the
defense thereof other than reasonable costs of investigation. In any such
action, any indemnified party shall have the right to retain his own counsel,
but the fees and expenses of such counsel shall be at the expense of such
indemnified party unless (i) the indemnifying party and the indemnified party
shall have mutually agreed to the retention of such counsel, or (ii) the named
parties to any such proceeding (including any impleaded parties) include both
the indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing or conflicting interests between them. The indemnifying party shall
not be liable for any settlement of any proceeding or claim effected without its
written consent, but if settled with such consent or if there is a final
judgment for the plaintiff, the indemnifying party agrees to indemnify the
indemnified party for, from and against any loss or liability by reason of such
settlement or judgment. The indemnified party shall cooperate fully in the
defense of any claim subject to indemnification hereunder and shall, without
limiting this duty of cooperation, make himself available for pretrial
investigation and preparation, depositions, and interviews by the indemnifying
party's legal counsel.
(d) ENFORCEABILITY. If the indemnification provided in Sections 7(a), 7(b),
and 7(c) is, for any reason, other than as specified in such subparagraphs, held
by a court to be unavailable and the Company (or its directors, officers who
sign the registration statement, and any person who controls the Company within
the meaning of the Act or Exchange Act), the Selling Group, or any member
thereof has been required to pay damages as a result of a determination by a
court that the preliminary prospectus, registration statement, the prospectus,
or any amendment or supplement thereto contains an untrue statement of a
material fact or omits to state a material fact necessary to be stated therein
to make the statements therein not misleading, then the Company shall contribute
to the damages paid by the Selling Group or any member thereof, and the Selling
Group shall contribute to the damages paid by the Company (or its directors,
officers who sign the registration statement, and any person who controls the
5
Company within the meaning of the Act or Exchange Act), but in each case only to
the extent that such damages arise out of or are based upon such untrue
statement or omission, in such proportion as is appropriate to reflect the
relative fault of the Company (or its directors, officers who sign the
registration statement, and any person who controls the Company within the
meaning of the Act or Exchange Act), the Selling Group, or any member thereof in
connection with the statements or omissions which resulted in such damages, as
well as any other relevant equitable considerations. The relative fault shall be
determined by reference to, among other things, whether the untrue statement of
a material fact or the omission to state a material fact relates to information
supplied by the Company, the Selling Group, or any member thereof, and the
parties' relative intent, knowledge, access to information, and opportunity to
correct or prevent such untrue statement or omission. For purposes of this
Section 7(d), the term "damages" shall include any legal and other expenses
reasonably incurred by the Company (or its directors, officers who sign the
registration statement, and any person who controls the Company within the
meaning of the Act or Exchange Act), the Selling Group, or any member thereof in
connection with investigating and defending any action or claim which is the
subject of the contribution provisions of this Section 7(d). No person adjudged
guilty of fraudulent misrepresentation within the meaning of Section 11 of the
Act shall be entitled to contribution from any person who was not adjudged
guilty of such fraudulent misrepresentation.
(e) TERM. The agreements contained in Sections 7(a) through (d) shall
remain operative and in full force and effect regardless of (i) any
investigation made by or on behalf of the Selling Group or any of them, or by or
on behalf of the Company, any of its directors or officers, or any person
controlling the Company, and (ii) any termination of this Agreement. A successor
of the Selling Group, or any of them, or of the Company, or any director or
officer thereof, or any person controlling the Selling Group or the Company
shall be entitled to the benefits of the agreements contained in Sections 7(a)
through (e) herein.
Section 8. NOTICE. Any notices required or permitted to be given hereunder
shall be in writing and may be served personally or by mail; and if served shall
be addressed as follows:
If to the Company:
Knight Transportation, Inc.
Attn: Kevin P. Knight
Chief Executive Officer
5601 West Buckeye Road
Phoenix, Arizona 85043
Telephone: (602) 269-2000
Facsimile: (602) 269-8409
With a copy to:
Mark A. Scudder
Scudder Law Firm, P.C.
411 S. 13th Street, Suite 200
Lincoln, Nebraska 68508
Telephone: (402) 435-3223
Facsimile: (402) 435-4239
6
If to the Stockholder:
John R. Fayard, Jr.
P. O. Box 2939
Gulfport, Mississippi 39503
Telephone: ________________
Facsimile: _________________
With a copy to:
Frederick T. Hoff
Newton and Hoff, L.L.P.
2019 23rd Avenue
Gulfport, Mississippi 39502
Telephone: (228) 863-8827
Facsimile: (228) 868-6007
Any notice (or response to notice) given by mail shall be deemed given and
received if personally delivered by commercial courier or mail at the address as
specified above. Notice given personally shall be deemed given and received upon
delivery to the party to whom such notice is addressed. Any party may by written
notice to the other specify a different address for notice purposes.
Section 9. BINDING AGREEMENT, ASSIGNABILITY. This Agreement shall be
binding upon each of the parties hereto and the heirs, successors, and assigns
of each. The registration rights hereunder are assignable, but only in
connection with the sale or transfer of the Shares. The foregoing
notwithstanding, any pledgee (and any assignee or successor of such pledgee) of
all or part of the Shares shall have the same rights to require or obtain
registration of the Shares as the Stockholder who is the record owner of such
pledged Shares, and the pledgee of such Shares shall be deemed to be a third
party beneficiary of the Agreement who is entitled to enforce the terms and
conditions hereof to the same extent as if such pledgee were the Stockholder of
the Shares so pledged.
Section 10. ATTORNEYS' FEES. In the event any legal action or proceeding of
any nature (including arbitration) is brought by any party hereto to enforce its
rights hereunder, the prevailing party shall be entitled to attorneys' fees and
all costs and expenses, whether or not such costs and expenses are taxable. The
parties agree that failure to register the Shares as required hereunder may
cause irreparable harm to the party seeking registration; accordingly, the
parties agree that the remedy of specific performance is available to any
nonbreaching party hereunder.
Section 11. RECITALS. The recitals shall constitute part of this Agreement.
7
Section 12. DURATION. Seller's registration rights under this Agreement
shall terminate on the earlier of (i) the date all Shares subject to this
Agreement have been registered with the SEC, or (ii) the third anniversary of
the date of this Agreement.
Section 13. GOVERNING LAW. This Agreement shall be governed by and
construed under the laws of the State of Arizona.
EXECUTED as of the date first above written.
STOCKHOLDER: KNIGHT TRANSPORTATION, INC.,
AN ARIZONA CORPORATION
/s/ John R. Fayard, Jr. By: /s/ Clark A. Jenkins
- ------------------------------ ------------------------------------------
John R. Fayard, Jr. Clark A. Jenkins, Executive Vice President
8