SECURITIES PURCHASE
AND
REGISTRATION AGREEMENT
(PIGGYBACK AND DEMAND REGISTRATION RIGHTS)
PARTIES:
This Agreement is made and entered by and between KNIGHT TRANSPORTATION,
INC., an Arizona corporation (the "Company"), and ACTION DELIVERY SERVICE, a
Texas corporation ("ADS"), ACTION WAREHOUSE SERVICES, a Texas corporation
("AWS") and ▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇, husband and wife ("▇▇▇▇▇"). ADS,
AWS and ▇▇▇▇▇ are hereinafter referred to as "Sellers" or the "Shareholders."
EFFECTIVE DATE:
This Agreement is entered into and is effective as of March 13, 1999 (the
"Effective Date").
RECITALS:
Sellers have agreed to sell to the Company certain of Sellers' assets
pursuant to an Asset Purchase and Sale Agreement dated as of March 15, 1999 (the
"Asset Purchase Agreement"). In consideration of Sellers' sale of the assets to
the Company, the Company has agreed to deliver to Sellers 97,561 shares of the
Company's Common Stock, par value $0.01 per share (the "Shares").
The Company is a publicly reporting company under Section 12(g) of the
Securities Exchange Act of 1934 and its Shares are traded on the NASDAQ National
Market.
Each Seller is a sophisticated person and has had access to all publicly
available information concerning the Company.
The Company and the Sellers wish to set forth the terms pursuant to which
Sellers are accepting the Shares and wish to provide for certain registration
rights which accrue to Sellers with respect to the Shares and which the Company
hereby ▇▇▇▇▇ ▇▇▇▇▇▇▇.
AGREEMENT:
NOW, THEREFORE, the parties agree, as follows:
Section 1. Information Provided to Sellers. The Sellers have 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 Sellers have had an opportunity to ask questions and receive
answers concerning the Company, its organization, business and prospects. The
Sellers are familiar with the Company, its business, properties and financial
condition. Sellers acknowledge that information concerning the Company is
available publicly, through the SEC, through various Internet sources and
brokerage houses. Each of the Sellers represents that it 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 it has had an
opportunity to fully analyze and evaluate the risks of proceeding with the
transaction contemplated by the Asset Purchase Agreement, and that it is fully
capable of evaluating the risks and merits of the transaction and has consulted
with its professional and financial advisors regarding the transactions
contemplated by the Asset Purchase Agreement. Sellers and their advisors have
substantial experience in evaluating businesses such as the Company. Each of
Sellers agree 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 or sale of the Shares is effected under SEC Rule 144.
Seller understands that a legend to that effect will be placed on the Shares.
Each of Sellers represents and warrants that in accepting the Shares as
consideration under the Asset Purchase Agreement, the Sellers have relied solely
upon the public information about the Company and that the Company has made no
other representations or warranties to Sellers, other than are set forth in the
Asset Purchase Agreement. Sellers acknowledge that the Shares delivered by Buyer
have not been registered with the SEC, and that the Company's only obligation to
register such shares is set forth in this Registration Agreement.
Section 2. Registration Under The Securities Act of 1933.
(a) Piggyback Rights. If the Company files a registration statement
under the Act, which relates to a current offering of equity securities of the
Company (except in connection with 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 Shareholders, include, subject to any underwriter requirements or
cutbacks, all or part of the Shares owned by such Shareholders under the
registration statement so as to permit the public sale of the Shares by the
Shareholders in compliance with the Act. The Company shall give written notice
to the Shareholders of its intention to file a registration statement under the
Act relating to an offering of its equity securities not less than sixty (60)
days prior to the filing of such registration statement with the SEC or any
successor in interest. The Shareholders' written request to the Company that all
or a portion of their Shares be included in the registration statement, if made
not later than thirty (30) days prior to the date specified in the notice as the
date on which the Company intends to file its registration statement, shall
allow the Shareholders to register all or part of their Shares under such
registration statement. Neither the Company's delivery of notice nor delivery of
a request by
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any Shareholder 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 Shareholders, except in that event the Company
shall pay all expenses of the registration statement incurred through the date
the registration statement is withdrawn. 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
Shareholders shall be solely responsible for any underwriter discounts on any
Shares sold by the Shareholders pursuant to any registration statement filed by
the Company and for the Shareholders' pro rata share of any underwriter
expenses. A Shareholder who exercises his rights under this Agreement is
sometimes referred to herein as a "Selling Shareholder."
(b) Demand Rights. Upon written notice to the Company (the
"Registration Demand"), at any time beginning eleven (11) months after the
Effective Date and within the three (3) year(s) period following the Effective
Date hereof, given (i) by Sellers or (ii) by ▇▇▇▇▇ or at least two persons to
whom the Shares have been transferred from ADS, or AWS or ▇▇▇▇▇ (individually
and collectively, the "Selling Shareholders"), that such persons contemplate the
sale or transfer of all or part of the Shares under circumstances that may
require registration of such shares under the Act, the Company shall, at its own
expense, as promptly as possible after receipt of such Registration Demand, file
with the SEC a registration statement pursuant to Section 5 of the Act on the
appropriate registration form, with respect to the offer and sale (or other
disposition) of the Shares for which the Company shall have received such
Registration Demand. Within thirty (30) business days after receiving the
Registration Demand, the Company shall notify all the Selling Shareholders and
advise them that the Company is proceeding with the filing of a registration
statement (or notification) and the Company shall offer to include for
registration under such registration statement (or notification) the Shares of
those Selling Shareholders. The Company shall not be obligated to register the
Shares of any such Selling Shareholder unless such other Selling Shareholder
accepts the Company's offer of registration in writing within ten (10) days
after such offer is made. A Selling Shareholder shall make only one registration
demand in any calendar year. The Company shall take all action necessary to file
such registration statement and cause it to become effective within one hundred
twenty (120) days after receipt of said Registration Demand. Except as provided
below, the cost of such registration statement (including any attorneys' fees,
accounting fees and underwriters' fees) shall be borne solely by the Selling
Shareholders whose Shares are registered, on a pro rata basis in proportion to
the Shares owned by each Selling Shareholder, if the Company elects not to offer
any Shares for its own account pursuant to the registration statement or
notification; provided that if the Company includes any of its Shares in such
registration statement or notification, the Company shall pay all costs of such
registration, other than the underwriter's discount and any underwriter
expenses. Any provision of this Section 2 notwithstanding, if any registration
demand is made by ▇▇▇▇▇, the Company agrees to pay all costs of such
registration, without regard to whether the Company is registering Shares for
sale on its own account, but ▇▇▇▇▇ shall be responsible for any underwriter's
discount and underwriter's expenses.
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If only the Shares of the Selling Shareholders are included in such notification
or registration statement, no Shares of the Company shall be registered for a
period of 90 days following the date offering of the Shares is completed. Demand
registration rights under this Section 2(b) shall terminate on the day prior to
the third anniversary of the Effective Date.
(c) In each instance in which, pursuant to Section 2(a) or 2(b) of
this Section 2, the Company shall take any action to permit a public offering or
sale, or other distribution of the Shares, the Company shall:
(i) keep effective until the earlier of (A) the date all
registered Shares are sold or (B) two hundred and seventy (270) days
after the initial effective date of such registration statement (or
notification), and take such other action as may be necessary to keep
effective (and pay all expenses related to) such other registrations
and qualifications (including those required by the securities laws of
any state in which the Shares are offered or sold), and do any and all
other acts and things necessary to permit the public sale or other
disposition of the Shares by such Selling Shareholders.
(ii) indemnify and hold harmless each underwriter, within the
meaning of the Act, to the extent required by any underwriting
agreement or, if greater, to the extent required by this Agreement.
(iii) indemnify and hold harmless each Selling Shareholder to the
extent required in any underwriting agreement or, if greater, to the
extent provided in this Agreement.
(d) For purposes of this Section 2, the term "equity securities" means
any class or series of common or preferred stock of the Company.
(e) If any Shares registered under this Agreement are offered through
an underwriter, each Selling Shareholder and the Company each 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
Shareholder 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 Shareholder to comply with the
provision of this Section 2(e) shall relieve the Company of the obligation to
register the Shares as provided by this Agreement.
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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
Shareholders and to any person or underwriter acting on their behalf, sufficient
copies of the prospectus used in connection with the registration statement for
the Selling Shareholder 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 Shareholder 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 Shareholders' Consent and Obligation to Furnish
Information.
The Selling Shareholders 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 1 hereof. It shall be a condition
precedent to the obligations of the Company to take any action pursuant to
Section 2(a), 2(b), 2(c), 7(a) or 7(b) that the Selling Shareholders shall
furnish to the Company such information regarding the Selling Shareholders and
the Shares held by them, 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 Shareholders agree that they will not, to the extent requested
by the Company and an 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 Shareholders will be no longer than any
similar agreement applicable to the Company in connection with any Shares of the
Company registered by the Company pursuant to such registration statement. The
Selling Shareholders agree 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 Securities Exchange Act of 1934 (the "Exchange Act"),
the Company agrees to file timely all reports required by the
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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 any
Selling Shareholder 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, 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, liabilities, and expenses 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 hereof) 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
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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
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 reten tion 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, 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 state-
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ment, 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, 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, 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, the Selling Group, or any
member thereof in connection with investi gating 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: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Chief Executive Officer
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
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With a copy to:
Ryley, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, III
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
If to the Selling Shareholder:
▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
Attn: A. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
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 Selling Shareholder 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 a Selling
Shareholder of the Shares so pledged.
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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.
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 Effective 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 Effective Date first above written.
KNIGHT TRANSPORTATION, INC.,
an Arizona corporation
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Its: Chief Executive Officer
KNIGHT ACQUISITION CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Its: Chief Executive Officer
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ACTION DELIVERY SERVICE, a Texas
corporation
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇▇
Its: Chief Executive Officer
ACTION WAREHOUSE SERVICES, a Texas
corporation
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇▇
Its:
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/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇▇▇▇▇
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