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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) APRIL 19, 2000
KNIGHT TRANSPORTATION, INC.
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(Exact name or registrant as specified in its charter)
Arizona 86-0649974
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
5601 W. Buckeye Road, Phoenix, Arizona 85043
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(Address of Principal Executive Offices, including Zip Code)
Registrant's telephone number, including area code (602) 269-2000
NOT APPLICABLE
(Former name or former address, if changed since last report)
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ITEM 1. CHANGES IN CONTROL OF REGISTRANT.
Not applicable.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On March 19, 2000, Knight Transportation, Inc. ("Knight" or the "Company")
purchased all of the outstanding capital stock of John Fayard Freight, Inc.
d/b/a/ Fastway Systems ("Fastway"). Fastway is a privately-held company
headquartered in Gulfport, Mississippi, which operates primarily as a
short-to-medium haul truckload carrier in the Southeast and Gulf Coast regions
of the United States. Prior to the acquisition, Fastway also operated a local
warehousing, moving and storage business in the Gulfport and Mobile, Alabama
areas. Contemporaneously with the transaction, Fastway redeemed a portion of its
capital stock and distributed all of its real estate and improvements, as well
as the assets and certain liabilities associated with its warehousing, moving
and storage business, to its former sole stockholder, John R. Fayard, Jr.
("Fayard").
Fastway's assets consisted of approximately 222 tractors and 588 trailers,
as well as cash, accounts receivable, and other miscellaneous assets. In
addition, Fastway retained certain short and long term debt relating to revenue
equipment. Knight intends to continue operating the Fastway assets in its
truckload business.
As consideration for the acquisition, Knight paid Fayard $4,000,000 in cash
and issued 228,788 shares of Knight's unregistered and restricted common stock.
Knight has agreed to register the common stock issued to Fayard in the event
Knight files a registration statement for its common stock, other than stock
issued through employee benefit plans or dividend reinvestment programs. The
common stock issued by Knight were treasury shares which resulted from the
Company's repurchase of its common stock during 1999. Subject to a floor
limitation of $10.00 per share on the value of such shares when issued, Knight
may issue up to 105,000 additional shares of stock to Fayard and pay up to
$1,155,000 in cash bonuses to certain current full time employees of Fayard if
the operations of Fastway reach certain performance targets over the two years
following closing. Knight also agreed to employ Mr. Fayard for three years
following the closing as President of Fastway, and Mr. Fayard agreed not to
compete for five years following his last day of employment.
Knight used funds available under its line of credit with Wells Fargo Bank,
N.A. to fund the cash portion of the purchase price. The purchase consideration
was determined through arm's length negotiation between representatives of
Knight and Mr. Fayard and his representatives. Prior to the close of the
transaction, there was no material relationship between Mr. Fayard and Knight or
any of its affiliates, any director or officer of Knight, or any associate of
any such director of officer.
The terms of Knight's acquisition of Fastway are more fully described in
the Stock Purchase Agreement and related acquisition documents, copies of which
are attached hereto as Exhibit 2.1 through 2.5. The preceding discussion of the
transaction between Knight and Fastway is qualified in its entirety by reference
to Exhibits 2.1 through 2.5 of this report. Knight's press release announcing
the acquisition is attached hereto as Exhibit 99.
ITEM 3. BANKRUPTCY OR RECEIVERSHIP.
Not applicable.
ITEM 4. CHANGE IN REGISTRANT'S CERTIFYING ACCOUNTANT.
Not applicable.
ITEM 5. OTHER EVENTS.
Not applicable.
ITEM 6. RESIGNATION OF REGISTRANT'S DIRECTORS.
Not applicable.
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ITEM 7. FINANCIAL STATEMENTS, PROFORMA FINANCIAL INFORMATION AND EXHIBITS.
Neither financial statements nor proforma financial information is required
to be furnished herewith because Fastway does not constitute a "significant
subsidiary" under Regulation SX, promulgated pursuant to the Securities and
Exchange Act of 1934.
(a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED. Not applicable.
(b) PROFORMA FINANCIAL INFORMATION. Not applicable.
(c) EXHIBITS.
Exhibit 2.1 Stock Purchase Agreement dated April 19, 2000,
between John R. Fayard, Jr. and John Fayard Fast
Freight, Inc. *
Exhibit 2.2 Securities Purchase and Registration Agreement
(Piggyback Registration Rights) dated April 19, 2000,
between Knight and John R. Fayard, Jr.
Exhibit 2.3 Employment Agreement dated April 19, 2000,
between John R. Fayard, Jr. and John Fayard Fast
Freight, Inc.
Exhibit 2.4 Lease for Gulfport, Mississippi property dated
April 19, 2000, between John R. Fayard, Jr. and John
Fayard Fast Freight, Inc.
Exhibit 2.5 Lease for Mobile, Alabama property dated April 19,
2000, between John R. Fayard, Jr. and John Fayard
Fast Freight, Inc.
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* All of the schedules and certain of the exhibits to the Stock Purchase
Agreement have been omitted. The Company hereby agrees to furnish
supplementally to the Commission a copy of any schedule or exhibit omitted
upon the Commissioner's request.
ITEM 8. CHANGE IN FISCAL YEAR.
Not applicable.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
KNIGHT TRANSPORTATION, INC.
Dated: May 4, 2000 /s/ Clark Jenkins
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Clark Jenkins
Executive Vice-President, Secretary, and
Chief Financial Officer
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement") is made and entered into as
of April 19, 2000, by and among Knight Transportation, Inc., an Arizona
corporation ("Buyer"); John R. Fayard, Jr., a resident of Mississippi (the
"Stockholder"); and John Fayard Fast Freight, Inc., a Mississippi corporation
(the "Company").
RECITALS
1. The Stockholder owns all of the issued and outstanding capital stock of
the Company, consisting of 1,000 shares of common stock, no par value per share
(the "Common Stock").
2. The Buyer proposes to acquire 100% of the Company's issued and
outstanding Common Stock.
3. The parties desire that the transaction be accomplished as stated
herein, in accordance with their respective representations, warranties, and
agreements, subject to the conditions contained herein.
AGREEMENTS
NOW, THEREFORE, in consideration of the covenants, representations,
warranties, and agreements herein contained, and for other good and valuable
consideration, the parties agree as follows:
ARTICLE I
Definitions
For the purposes of this Agreement, unless otherwise provided, the
following terms, when capitalized, shall have the meanings ascribed to them
below:
1.1 "Adjusted Closing Stockholder's Equity" means the stockholder's equity
reflected on the Audited Closing Balance Sheet with increases and reductions, as
applicable to reflect the following:
(i) the distribution of the Redemption Assets and Liabilities and
redemption of shares of the Company's Common Stock from the
Stockholder in accordance with Section 2.3 hereof;
(ii) the repayment of all amounts owed to the Company by the
Stockholder and to the Stockholder by the Company;
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(iii) all Restricted Payments made after March 31, 2000, or which
are not reserved for and reflected on the face of the balance sheet
included in the Most Recent Financial Statements;
(iv) all of the other adjustments referenced in this agreement,
including but not limited to, those in Section 5.14, 5.17, and 5.19;
(v) any other entries required to reflect transactions outside
the Ordinary Course of Business between January 1, 2000, and the
Closing; and
(vi) a reduction of $155,000 to reflect the cash transfer to the
Redeemed Business prior to March 31, 2000.
1.2 "Affiliate" means any person or entity controlling, controlled by, or
under common control with another person or entity, including, but not limited
to, the following: all officers, directors, and persons owning 10% or more of
the equity interests of an entity.
1.3 "Accounting Firm" has the meaning ascribed in Section 2.7(f).
1.4 "Audited Closing Balance Sheet" has the meaning ascribed in Section
2.7(a).
1.5 "Authority" means each and every federal, state, local, and foreign
judicial, governmental, quasi-governmental, or regulatory agency, official, or
department; every arbitrator, mediator, and other similar official; and every
other entity to whose jurisdiction or decision making authority a party has
submitted.
1.6 "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 the Company or affect its employees or
independent 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), ESOP, 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 plans or arrangements.
1.7 "Bill of Sale" has the meaning ascribed in Section 2.3(a).
1.8 "Bonus Recipients" has the meaning ascribed in Section 2.5(h).
1.9 "Buyer Group" has the meaning ascribed in Section 7.1.
1.10 "Closing" and "Closing Date" have the meanings ascribed in
Section 3.1.
1.11 "Code" means the Internal Revenue Code of 1986, as amended, or any
successor federal tax law.
1.12 "Commission" means the United States Securities and Exchange
Commission.
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1.13 "Company Retained Debt" has the meaning ascribed in Section 2.3(b),
and is listed on Part 2.3(b) of the Disclosure Exhibit.
1.14 "Competitive Business" has the meaning ascribed in Section 5.9(c).
1.15 "Contract" means any mortgage, note, indenture, agreement, contract,
commitment, lease, plan, license, permit, insurance policy or binder,
authorization, or other instrument, document, or understanding, oral or written,
including in each case, all amendments, modifications, waivers, supplements, and
consents relating thereto.
1.16 "Damages" means any and all losses, Liabilities, claims, damages,
deficiencies, obligations, fines, payments, Taxes, Liens, costs and expenses,
matured or unmatured, absolute or contingent, accrued or unaccrued, liquidated
or unliquidated, known or unknown, whenever arising and whether or not resulting
from a third-party claim, including, without limitation, the costs and expenses
of any and all Proceedings or other legal matters; all amounts paid in
connection with any demands, assessments, judgments, settlements, and
compromises relating thereto; interest and penalties recovered by a third party
with respect thereto; out-of-pocket expenses and reasonable attorneys',
accountants', and other experts' fees and expenses reasonably incurred in
investigating, preparing, or defending against any such Proceedings or other
legal matters or in asserting, preserving, or enforcing a party's rights
hereunder; and any losses that may result from the granting of injunctive relief
as a result of any such Proceedings or other legal matters.
1.17 "Deeds" has the meaning ascribed in Section 2.3(a).
1.18 "Disclosure Exhibit" means the document attached hereto as Exhibit A.
1.19 "Disputed Statement" has the meaning ascribed in Section 2.7(e).
1.20 "Disputed Tax Matters" has the meaning ascribed in Section 2.8.
1.21 "Earn-Out" has the meaning ascribed in Section 2.5.
1.22 "EBITDAR" has the meaning ascribed in Section 2.7(d).
1.23 "Employment Agreement" has the meaning ascribed in Section 5.11.
1.24 "Environmental Laws" has the meaning ascribed in Section 4.3(u).
1.25 "Final Statement" has the meaning ascribed in Section 2.7(e).
1.26 "First Year Bonus" has the meaning ascribed in Section 2.5(h).
1.27 "First Year Target" has the meaning ascribed in Section 2.5(a).
1.28 "First Year Value" has the meaning ascribed in Section 2.5(d).
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1.29 "GAAP" means generally accepted accounting principles, consistently
applied throughout all periods, provided, that interim, unaudited financial
statements lack footnotes and other presentation items.
1.30 "Historical Financial Statements" has the meaning ascribed in Section
4.3(f).
1.31 "HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976 or any successor law, and regulations and rules issued pursuant to that Act
or any successor law.
1.32 "Indemnifying Party" has the meaning ascribed in Section 7.3(a).
1.33 "Indemnitee" has the meaning ascribed in Section 7.3(a).
1.34 "Judgment" means any judgment, order, writ, injunction, decree, award,
or settlement of any Proceeding.
1.35 "Law" means any constitution, statute, Judgment, law, ordinance, rule,
regulation, or other pronouncement by any Authority (including, without
limitation, the following types: environmental, energy, safety, health, zoning,
antidiscrimination, antitrust, employment, transportation, Tax, and employee
benefit (including ERISA)).
1.36 "Lease" has the meaning ascribed in Section 5.12.
1.37 "Liability" means any and all debts, liabilities, obligations, and
commitments, whether known or unknown, asserted or unasserted, fixed, absolute,
or contingent, matured or unmatured, accrued or unaccrued, liquidated or
unliquidated, due or to become due, whenever or however arising (including,
without limitation, whether arising out of any Contract or tort based on
negligence, strict liability, or otherwise) and whether or not the same would be
required by GAAP to be reflected as a liability in financial statements or
disclosed in the notes thereto.
1.38 "Lien" means any reservation, restriction, right of way, charge,
claim, community property interest, condition, equitable interest, easement,
encumbrance, option, lien, pledge, charge, hypothecation, assignment, deposit
arrangement, security interest (preference, priority or other security agreement
or preferential arrangement of any kind), mortgage, deed of trust, retention of
title agreement, right of first refusal, right of first offer, preemptive right,
or other restriction or granting of any rights of any kind (including any
restriction on, or right granted with respect to, the use, voting, transfer,
receipt of income, or exercise of any other attribute of ownership), or
statutory lien (including, without limitation, any assessment, charge, or other
type of notice which is levied or given by any Authority and for which a lien
could be filed).
1.39 "Maximum Value" has the meaning ascribed in Section 2.5(d).
1.40 "Most Recent Financial Statements" means the financial statements
(including balance sheet and statements of income, cash flows, and retained
earnings, as applicable) of the Company at and for the period ending on the
month-end immediately preceding the Closing.
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1.41 "Noncompete Parties" has the meaning ascribed in Section 5.9(a).
1.42 "Notice of Disagreement" has the meaning ascribed in Section 2.7(e).
1.43 "Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity and
frequency).
1.44 "Outside Target" has the meaning ascribed in Section 2.5(d).
1.45 "Permits" has the meaning ascribed in Section 4.4(l).
1.46 "Permitted Businesses" has the meaning ascribed in Section 5.9.
1.47 "person" has the meaning ascribed in Section 8.11.
1.48 "Proceeding" means any action, suit, litigation, arbitration,
investigation, hearing, notice of violation, order, claim, citation, charge,
demand, complaint, review, or penalty assessment, in each case whether formal or
informal, administrative, civil or criminal, at law or in equity, and whether or
not in front of any Authority.
1.49 "Purchase Price" has the meaning ascribed in Section 2.2.
1.50 "Purchased Shares" has the meaning ascribed in Section 2.1.
1.51 "Real Estate" means the real estate and improvements thereon, and all
rights and appurtenances thereto, currently owned by the Company, all as legally
described on Exhibit B.
1.52 "Redeemed Business" means the warehousing and storage business,
offsite storage business, the household goods moving and storage business, and
the record storage, retrieval and management business operated by the Company.
1.53 "Redemption Assets and Liabilities" means the assets and liabilities
listed on attached Exhibit C. Exhibit C also contains a list of the employees of
the Company who are and will become employees of the Redeemed Business at
Closing.
1.54 "Release" has the meaning ascribed in Section 5.7.
1.55 "Restricted Payment" shall mean with respect to the Stockholder or any
Affiliate or relative of the Stockholder (i) any dividend or other distribution
on the Common Stock; (ii) any payment (other than regularly scheduled wage or
lease payments in the Ordinary Course of Business); (iii) any acquisition of
Common Stock, other than as contemplated under this Agreement with respect to
the Redeemed Business; (iv) any transaction that was not disclosed to Buyer on
the Disclosure Exhibit and was inconsistent with the Company's Ordinary Course
of Business as it existed prior to December 31, 1999; (v) any transaction not
pursuant to the reasonable requirements of the business of the Company; or (vi)
any transaction on terms less favorable to the Company than would be obtained in
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a comparable arm's-length transaction with a person not the Stockholder or an
Affiliate of the Stockholder.
1.56 "Rights" means all patents, trademarks, copyrights, franchises,
licenses, permits, easements, computer software programs, rights (including,
without limitation, rights to trade secrets and proprietary information and
know-how), certificates, approvals, and other authorizations including those
issued by or filed with any Authority, and any applications for any of the
foregoing.
1.57 "Second Year Bonus" has the meaning ascribed in Section 2.5(h).
1.58 "Second Year Maximum" has the meaning ascribed in Section 2.5(d).
1.59 "Second Year Target" has the meaning ascribed in Section 2.5(b).
1.60 "Second Year Value" has the meaning ascribed in Section 2.5(d).
1.61 "Securities Agreement" has the meaning ascribed in Section 2.2(a).
1.62 "Seller Group" has the meaning ascribed in Section 7.2.
1.63 "Spousal Consent" has the meaning ascribed in Section 5.10.
1.64 "Tax Return" means any return, declaration, report, claim for refund,
or information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
1.65 "Taxes" shall mean all taxes, charges, duties, fees, levies, charges,
or other assessments of whatever kind or nature, and any interest, penalty, or
other addition thereto, including, without limitation, those relating to taxable
income, gross income, gross receipts, sales, use, ad valorem, transfer,
franchise, profits, license, motor vehicles, motor vehicle registration,
withholding, payroll, employment, excise, estimated, severance, stamp,
occupancy, real or personal property, customs, social security, medicare,
unemployment, disability, value added, unclaimed property, alternative or add-on
minimum, or any other imposed by any Authority.
1.66 "Third-Party Claim" has the meaning ascribed in Section 7.3(a).
1.67 "Threshold" has the meaning ascribed in Section 7.4(b).
1.68 "Transfer Agent Letter" has the meaning ascribed in Section 3.4.
1.69 "Unpaid Bonus" has the meaning ascribed in Section 2.5(h).
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ARTICLE II
Stock Purchase and Sale
2.1 Transfer of Common Stock. Subject to the terms and conditions of this
Agreement, at the Closing, the Stockholder shall sell, convey, transfer, assign,
and deliver to Buyer, and Buyer shall acquire, 100% of the issued and
outstanding Common Stock that is not redeemed under Section 2.3 (the "Purchased
Shares") free and clear of all Liens.
2.2 Purchase Price. (a) In consideration for the transfer of the Purchased
Shares, Buyer agrees to pay the following (the "Purchase Price"):
(i) 228,788 shares of Buyer's common stock, issued in accordance
with the Securities Purchase and Registration Agreement attached as
Exhibit D (the "Securities Agreement"); plus
(ii) Four Million Dollars ($4,000,000); plus or minus
(iii) the amount by which the Adjusted Closing Stockholder's
Equity is greater than (increasing the Purchase Price) or less than
(decreasing the Purchase Price) the sum of $350,000; plus
(iv) an amount, up to $64,000, of accounts receivable from
Kimberly-Clark that had been written off as uncollectible in 1999, to
the extent such amounts are collected in calendar 2000 (it being
understood that any such amounts collected shall be paid over to the
Stockholder promptly after collection under this subsection as an
adjustment to December 31, 1999 pro forma net worth and shall not be
included in the EBITDAR calculation under Sections 2.5 and 2.7(d));
plus or minus
(v) all other adjustments provided for in connection with this
Agreement.
(b) The Purchase Price shall be subject to final adjustment under
Section 2.7(c) pursuant to the Final Statement of the Audited Closing
Balance Sheet and Adjusted Closing Stockholder's Equity.
(c) For purposes of calculating the Purchase Price at Closing, the
parties shall use the March 31, 2000, Stockholder's equity and pro forma
adjustments, as set forth on Part 2.2(c) of the Disclosure Exhibit. Thus
for purposes of the payment of the cash portion of the Purchase Price at
Closing, the Adjusted Closing Stockholder's Equity shall be assumed to be
$_________________.
(d) To the extent the is Adjusted Closing Stockholder's Equity is less
than $350,000 or more than $350,000, the difference shall be an adjustment
to the cash portion of the Purchase Price. If necessary to adjust the
portion of the Purchase Price payable in stock, such adjustment shall be
made on the basis of $16.50 per share.
(e) A calculation of the Purchase Price payable at Closing is included
in Part 2.2(e) of the Disclosure Exhibit.
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2.3 Redemption.
(a) At Closing, the Company shall redeem 600 shares of the Common
Stock from the Stockholder in exchange for transferring to Stockholder, all
of the Company's right, title, and interest in and to, and Stockholders
acceptance and assumption of, the Redemption Assets and Liabilities. The
Company shall deliver the Bill of Sale, Assignment and Assumption attached
as Exhibit E (the "Bill of Sale"), Deeds generally in the form of Exhibit F
(the "Deeds"), and such other documents as may be reasonably required to
transfer the Redemption Assets and Liabilities to the Stockholder. The
Stockholder shall provide the Buyer with a reasonable, fair market
valuation of the Redemption Assets and Liabilities and any supporting
materials, including real estate appraisals, within forty-five (45) days
after Closing. Subject to the procedures set forth in Section 2.8, the
valuation supplied by Stockholder shall be presumed to be correct for
purposes of preparing the short period tax return referenced therein.
(b) Effective as of the Closing, the Stockholder hereby assumes, and
agrees to pay, perform, and discharge, all Liabilities of, or in any way
relating to, the Redeemed Business, whether arising before or after
Closing, including liabilities for accounts payable and accrued expenses,
but not including the indebtedness for borrowed money listed on Part 2.3(b)
of the Disclosure Exhibit (the "Company Retained Debt"), which shall remain
an obligation of the Company.
(c) Effective as of the Closing, the Stockholder shall hire the
employees of the Company listed on Exhibit C and be responsible for all of
their accrued vacation, employee benefits, and other compensation,
including all compensation due since the most recent pay day. The
Stockholder represents that the employees listed on Exhibit C are employed
by the Company primarily in the Redeemed Business, and that employment of
such employees by the Stockholder (directly or through any entity formed to
operate the Redeemed Business) will not adversely affect the business of
the Company.
(d) The Stockholder shall pay, perform, and discharge, and be
responsible for, all Liabilities for Taxes that relate in any manner to the
redemption and distribution described in this Section 2.3.
2.4 Release of Stockholder. Subject to the provisions in this Section 2.4,
as soon as practicable after the Closing, the Buyer shall (a) pay in full the
principal amount and current period accrued interest on the mortgage with
Peoples Bank that is secured by the Redemption Assets (which shall occur in any
event within two (2) business days of receiving a payoff statement) ; and (b)
obtain a release of the Stockholder as a guarantor of all of the other Company
Retained Debt. In order to obtain a release of Stockholders' guaranties, the
Buyer shall offer its guaranty. If that does not suffice with respect to any
such obligation, within 60 days after Stockholder's request, Buyer shall retire
such obligation in full; provided, that Stockholder shall be responsible for any
prepayment or similar penalty resulting from the early retirement of such
obligation. Regardless of whether the obligation is paid off, Buyer hereby
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indemnifies, defends, and holds the Stockholder harmless against any liability
under any guaranties of the Company Retained Debt.
2.5 Earn-Out Adjustment. As additional consideration for the Purchased
Shares, and subject to the adjustment set forth in Section 2.5(h), the Buyer
shall issue additional shares of its common stock to the Stockholder, in
accordance herewith, if, and to the extent, the Company's operations generate
the levels of EBITDAR during the time periods indicated below (this shall be
referred to as the "Earn-Out").
(a) First Year Earn-Out. If the Company generates EBITDAR of at least
$10,536,000 plus $30,425 for each weighted average tractor in excess of 240
operated by the Company during the twelve-month period from April 1, 2000,
through March 31, 2001 (the "First Year Target"), the Buyer shall issue to
the Stockholder 15,000 shares of its common stock. In addition, if the
Company generates EBITDAR that is greater than the First Year Target, then
the Buyer shall issue an additional number of shares between 1 and 30,000
that is equal to one share for each $13.33 by which EBITDAR exceeds the
First Year Target, up to a maximum of 30,000 such shares.
(b) Second Year Earn-Out.
(i) If the Company generates EBITDAR of at least $11,982,000 plus
$30,425 for each weighted average tractor in excess of 263 operated by
the Company during the twelve-month period from April 1, 2001, through
March 31, 2002 (the "Second Year Target"), the Buyer shall issue to
the Stockholder 30,000 shares of its common stock. In addition, if the
Company generates EBITDAR that is greater than the Second Year Target,
then the Buyer shall issue an additional number of shares between 1
and 30,000 that is equal to one share for each $13.33 by which EBITDAR
exceeds the Second Year Target, up to a maximum of 30,000 such shares.
(ii) The Second Year Earn Out shall be increased by the number of
shares equal to the Unpaid Bonus (as defined in Section 2.5(h))
divided by $16.50.
(c) The aggregate number of shares that could be issued in the
Earn-Out is 105,000 (45,000 in respect of the first year earn-out and
60,000 in respect of the second year earn-out), plus any shares issued in
respect of the Unpaid Bonus.
(d) Anything to the contrary notwithstanding, the maximum value of the
shares issued in respect of the Earn-Out (the "Maximum Value") shall be
$2,520,000 (plus $24.00 for each share issued to the Stockholder in respect
of the Unpaid Bonus); provided, however, that if during the period of the
Second Year Earn-Out the Company generates EBITDAR that exceeds the Second
Year Target by at least $1,400,000 (the "Outside Target"), then the Maximum
Value shall be increased to $3,120,000 (plus $24.00 for each share issued
to the Stockholder in respect of the Unpaid Bonus) (it being understood
that there shall not be any proration of the Maximum Value between
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$2,520,000 (plus $24.00 for each share issued to the Stockholder in respect
of the Unpaid Bonus) and $3,120,000 (plus $24.00 for each share issued to
the Stockholder in respect of the Unpaid Bonus) for partial achievement of
the Outside Target). For purposes of this paragraph, the value of the
shares shall be determined by the average closing price of the Buyer's
common stock on the thirty (30) trading days prior to the date on which the
shares were issued. Whether the Maximum Value has been reached shall be
determined as follows: For the First Year Earn-Out, the number of shares
earned under Section 2.5(a) shall be multiplied by the share price
determined according to the immediately preceding sentence, with the
product being referred to as the "First Year Value." If the First Year
Value is less than $2,520,000 (plus $24.00 for each share issued to the
Stockholder in respect of the Unpaid Bonus), then all of the shares that
were earned under the First Year Earn-Out shall be issued to the
Stockholder. If the First Year Value is greater than $2,520,000 (plus
$24.00 for each share issued to the Stockholder in respect of the Unpaid
Bonus), then the number of shares issued in respect of the First Year
Earn-Out shall be reduced until the First Year Value is equal to $2,520,000
(plus $24.00 for each share issued to the Stockholder in respect of the
Unpaid Bonus), rounded to the nearest whole share and the Earn-Out shall
terminate altogether. For the Second Year Earn-Out, the number of shares
earned under Section 2.5(b) shall be multiplied by the share price
determined according to this Section 2.5(d), with the product being
referred to as the "Second Year Value." Prior to issuing any shares in
respect of the Second Year Earn-Out, (unless terminated pursuant to the
preceding sentence) the First Year Value shall be subtracted from the
Maximum Value, with the difference being known as the "Second Year
Maximum." If the Second Year Value is equal to or less than the Second Year
Maximum, then all of the shares that were earned under the Second Year
Earn-Out shall be issued to the Stockholder. If the Second Year Value is
greater than the Second Year Maximum, then the number of shares issued
shall be reduced until the Second Year Value is equal to the Second Year
Maximum, rounded to the nearest whole share.
(e) For purposes of this Section 2.5 and Section 2.7, references to
the Company shall include its successor division if it is not retained as a
separate corporation after Closing. The Buyer and the Company agree to
maintain sufficient accounting systems, procedures and controls to properly
account for the revenue and expenses of the Company (or its successor
division) after the Closing for the purpose of determining EBITDAR during
the period of the Earn-Out Adjustment..
(f) In the event of any stock split, reverse stock split, stock
dividend, merger, recapitalization, reorganization, or similar transaction
involving a proportionate change in the Buyer's outstanding common stock,
if appropriate given the context of such event, the number of shares
issuable under the Earn-Out shall be adjusted reasonably and
proportionately to reflect such event, with the Board of Directors of Buyer
to determine, in its reasonable discretion, the appropriate adjustment, if
any. The maximum value stated in Section 2.5(d) shall not be adjusted.
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To the extent earned, the shares issued in respect of the Earn-Out shall be
issued by the Buyer to the Stockholder within ten (10) days after the
issuance of the Buyer's consolidated audit report by its independent public
accountants or, to the extent a Notice of Disagreement is filed, within ten
(10) days after delivery of a Final Statement.
(h) (i) If the Company achieves the First Year Target, the Company
shall be obligated to pay an amount (the "First Year Bonus") equal
to $165,000 plus $0.825 for each dollar by which EBITDAR for such year
exceeds the First Year Target, up a maximum First Year Bonus of
$495,000, to the persons identified by the Stockholder in writing at
Closing (the "Bonus Recipients"), as set forth below.
(ii) In addition to the First Year Bonus, if the Company achieves
the Second Year Target, the Company shall be obligated to pay an
amount (the "Second Year Bonus") equal to $330,000 plus $0.825 for
each dollar by which EBITDAR for such year exceeds the Second Year
Target, up to a maximum Second Year Bonus of $660,000, to the Bonus
Recipients as set forth below.
(iii) The First Year Bonus and the Second Year Bonus shall be
paid to the Bonus Recipients who are at the payment date, and have
been from Closing through such date, continuously employed as
full-time employees of the Company. The First Year Bonus and Second
Year Bonus shall be paid to the recipients in four quarterly
installments beginning on the date ten (10) days following delivery of
the Final Statement with respect to the Second Year Earn Out and on
the same date each third month following until paid in full.
(iv) If any part of the First Year Bonus or Second Year Bonus
shall go unpaid, such amount (the "Unpaid Bonus") shall be delivered
to the Stockholder in accordance with Section 2.5(b)(ii) and the
Company and its Affiliates shall have no further obligation with
respect to either bonus amount.
(v) The First Year Bonus and Second Year Bonus shall not be
included as expenses in the calculation of EBITDAR.
2.6 Stock Price Floor. If, during the ninety (90) days following the third
anniversary of the Closing Date, the average closing price of Buyer's common
stock during any two-week period is lower than $10.00 per share, subject to
appropriate adjustment in the event of an event described in Section 2.5(f), at
the Stockholder's request, Buyer shall, at its option, either (a) pay to the
Stockholder within ten (10) days an amount equal to the difference between
$10.00 per share and the average closing price during the ninety (90) day
measuring period; or (b) be entitled to repurchase all shares of common stock of
Buyer issued under this Agreement and still held by Buyer. The price paid by the
Buyer for the shares would be $10.00 per share, subject to appropriate
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adjustment in the event of an event described in Section 2.5(f). The Buyer would
pay for the shares in cash within thirty (30) days following the Stockholder's
request. If the Buyer exercises its purchase option, the Stockholder must tender
certificates representing all of the shares subject to the Stockholder's
request, free and clear of Liens.
2.7 Accounting Procedures.
(a) As soon as practicable, but in any event within 45 days after
Closing, the Company shall prepare an audited balance sheet as of the
Closing Date (the "Audited Closing Balance Sheet"), with the audit report
being given by Horne CPA Group or Arthur Andersen LLP, as selected by
Buyer. If the Stockholder selects Arthur Andersen, representatives of Horne
CPA Group shall be entitled to participate at the Stockholder's election,
and if Horne CPA Group is selected to give the audit report,
representatives of Arthur Andersen LLP shall be entitled to participate at
the Buyer's election, in each case being given access to work papers,
personnel, and draft statements, as well as the opportunity to provide
input into the draft and final Audited Closing Balance Sheet.
(b) Contemporaneously with the preparation of the Audited Closing
Balance Sheet, the Company and the accountants, as provided above, shall
calculate the Adjusted Closing Stockholder's Equity.
(c) Upon completion and acceptance by the parties of a Final Statement
of the Audited Closing Balance Sheet and the Adjusted Closing Stockholder's
Equity, the parties shall make appropriate final adjustments to the
Purchase Price based on any differences between the assumed Adjusted
Closing Stockholder's Equity of $229,000 assumed for Closing and the actual
Adjusted Closing Stockholder's Equity as determined pursuant to this
Section 27. All amounts due between the Buyer and Stockholder as a result
on the aforesaid adjustments to the Purchase Price shall be settled at that
time. Any amount owed under this paragraph shall bear interest from the
date due until the date of payment at the rate of ten percent (10%) per
annum.
(d) For purposes of determining whether, and the extent to which, the
Earn-Out has been achieved, the Buyer shall prepare a calculation of
EBITDAR (as defined below) contemporaneously with the preparation of the
audit and such EBITDAR calculation shall be delivered promptly to the
Stockholder. The calculation of EBITDAR shall start with the consolidating
financial information for the Company used in Buyer's financial statements
for the four calendar quarters ending March 31, 2001 and 2002,
respectively. The consolidating income statement for the Company shall be
prepared in accordance with GAAP, applied in the same manner used in the
Buyer's consolidated, audited financial statements for such periods. For
purposes of this Agreement, EBITDAR shall be determined as follows
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("EBITDAR"): the Company's operating income, plus depreciation expense,
plus capitalized revenue equipment lease amortization expense, plus revenue
equipment operating lease rental expense (but not including payments to
owner-operators or under short-term rentals). For purposes of calculating
EBITDAR, neither the transaction expenses nor the amortization of goodwill
associated with this transaction (nor the transaction expenses or
amortization of goodwill associated with any subsequent acquisition
transaction by Buyer or the Company) shall be included, notwithstanding the
requirements of "push-down" accounting or the Buyer's accounting methods.
To the extent not already reflected in the consolidating income statement,
the Company's operating income shall reflect (x) any costs savings that
were attributable to efficiencies generated by Buyer; and (y) an overhead
allocation for any function formerly performed by the Company but which
after Closing is being performed all or in part by the Buyer or one of its
Affiliates other than the Company; provided, that the amount of the
overhead calculation shall not exceed the percentage of revenue
attributable to such function in the Company's 1999 income statement
included in the Historical Financial Statements. It is understood that any
gain or loss on sale of revenue equipment is included in operating income.
(e) The Audited Closing Balance Sheet, Adjusted Closing Stockholder's
Equity and each calculation of EBITDAR will be deemed to be final, binding,
and conclusive (a "Final Statement") for all purposes on the 10th business
day after delivery unless Stockholder or the Buyer, as the case may be,
delivers to the other a written notice of its disagreement (a "Notice of
Disagreement") prior to such date specifying in reasonable detail the
nature of such party's objections to the item in question (the "Disputed
Statement"). Buyer will cause its employees to assist the Stockholder in
the preparation of a Notice of Disagreement; provided such assistance will
not interfere with the normal work duties of such employees. To be
assertable in a Notice of Disagreement, an objection must specify the
objectionable line items in reasonable detail and may also allege
mathematical errors. If a Notice of Disagreement is delivered to Buyer
within such 10-day period, then the Disputed Statement (adjusted, if
necessary) will be deemed to be a Final Statement for all purposes on the
earlier of (x) the date the Buyer and the Stockholder resolve in writing
all differences they have with respect to the Disputed Statement or (y) the
date the disputed matters are resolved in writing by the Accounting Firm.
In the event that disputed matters are resolved by the Accounting Firm, the
Final Statement will consist of the applicable amounts from the Disputed
Statement (or amounts otherwise agreed to in writing by the Buyer and the
Stockholder) as to items that have not been submitted for resolution to the
Accounting Firm, and the amounts determined by the Accounting Firm as to
items that were submitted for resolution by the Accounting Firm.
(f) During the 10 business days following the delivery of a Notice of
Disagreement, the Buyer and the Stockholder will seek in good faith to
resolve any differences they may have with respect to matters specified in
the Notice of Disagreement and such discussions will be deemed to be for
settlement purposes. If, at the end of such 10-day period, the Buyer and
the Stockholder have not reached agreement on such matters, the Buyer and
the Stockholder will jointly engage a "Big Five" accounting firm other than
Arthur Andersen LLP (the "Accounting Firm") to resolve the matters which
remain in dispute. In connection with such engagement, each of the Buyer
and the Stockholder agrees to execute, if requested by the Accounting Firm,
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a reasonable engagement letter including customary indemnities. Promptly
after such engagement of the Accounting Firm, the Buyer or the Stockholder
will provide the Accounting Firm with a copy of this Agreement, the
Disputed Statement, the Notice of Disagreement, and any statement either
party may wish to make in support of its position. The Accounting Firm will
have the authority to request in writing such additional written
submissions as it deems appropriate; provided, however, that a copy of any
such submission will be provided to the other party at the same time as it
is provided to the Accounting Firm. No party hereto will communicate (nor
permit any of its subsidiaries or Affiliates to communicate) with the
Accounting Firm without providing the other party a reasonable opportunity
to participate in such communication with the Accounting Firm (other than
with respect to written submissions in response to the written request of
the Accounting Firm). The Accounting Firm will have 20 business days to
review the documents provided to it pursuant to this Section 2.7(f). Within
such 20-day period, the Accounting Firm will furnish simultaneously to both
parties its written determination with respect to each of the adjustments
in dispute submitted to it for resolution. The Accounting Firm will resolve
the differences regarding the Disputed Statement based solely on the
information provided by the Buyer and the Stockholder pursuant to the terms
of this Agreement (and not independent review). The Accounting Firm's
authority will be limited to resolving disputes with respect to whether the
Disputed Statement was prepared in accordance with the Agreement with
respect to the individual items in dispute (it being understood that the
Accounting Firm will have no authority to make any adjustments to any
financial statements or amounts other than the amounts that are in
dispute). In resolving any disputed item, the Accounting Firm may not
assign a value to such item greater than the greatest value for such items
asserted by either party or less than the smallest value for such item
asserted by either party. The decision of the Accounting Firm will be, for
all purposes, conclusive, non-appealable, final, and binding upon the
parties hereto. The fees of the Accounting Firm will be borne by the Buyer
and the Stockholder in the same proportion that the dollar amount of
disputed items lost by a party bears to the total dollar amount in dispute
resolved by the Accounting Firm. Each party will bear the fees, costs, and
expenses of its own accountants and all of its other expenses in connection
with matters contemplated by this Section 2.7.
2.8 Tax Returns. The Company's tax return for the year ended December 31,
1999, shall be prepared by the Horne CPA Group, subject to a 10-day review and
approval process by Buyer and its accountants and the Company's tax return for
the short period from January 1, 2000, to the Closing Date shall be prepared by
a firm selected by Buyer. In the case of each return, both Buyer and Stockholder
shall have the right to review and approve or request modifications to the
returns for a period of fifteen (15) days after being furnished a copy of the
return. If any items in a return are disputed, the Buyer and Stockholder will,
for an additional ten (10) days, seek in good faith to resolve any differences
they may have with respect to the tax return. If, at the end of such 10-day
period, the Buyer and the Stockholder have not reached agreement on the return
an Accounting Firm will jointly be engaged to resolve the matters which remain
in dispute ("Disputed Tax Matters"). In connection with such engagement, each of
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<PAGE>
the Buyer and the Stockholder agrees to execute, if requested by the Accounting
Firm, a reasonable engagement letter including customary indemnities. Promptly
after such engagement of the Accounting Firm, the Buyer or the Stockholder will
provide the Accounting Firm with a copy of this Agreement, the tax return,
relevant supporting documentation, and any statement either party may wish to
make in support of its position on the Disputed Tax Matters. The Accounting Firm
will have the authority to request in writing such additional written
submissions as it deems appropriate; provided, however, that a copy of any such
submission will be provided to the other party at the same time as it is
provided to the Accounting Firm. No party hereto will communicate (nor permit
any of its subsidiaries or Affiliates to communicate) with the Accounting Firm
without providing the other party a reasonable opportunity to participate in
such communication with the Accounting Firm (other than with respect to written
submissions in response to the written request of the Accounting Firm). The
Accounting Firm will have 20 business days to review the documents provided to
it pursuant to this Section 2.8. Within such 20-day period, the Accounting Firm
will furnish simultaneously to both parties its written determination with
respect to the Disputed Tax Matters. The Accounting Firm will resolve the
differences regarding the Disputed Tax Matters based solely on the information
provided by Buyer and the Stockholder pursuant to the terms of this Agreement
(and not independent review). The Accounting Firm's authority will be limited to
resolving the Disputed Tax Matters. In resolving any disputed item, the
Accounting Firm may not assign a value to such item greater than the greatest
value for such items asserted by either party or less than the smallest value
for such item asserted by either party. The decision of the Accounting Firm will
be, for all purposes, conclusive, non-appealable, final, and binding upon the
parties hereto. The fees of the Accounting Firm will be borne by the Buyer and
the Stockholder in the same proportion that the dollar amount of disputed items
lost by a party bears to the total dollar amount in dispute resolved by the
Accounting Firm. Each party will bear the fees, costs, and expenses of its own
accountants and all of its other expenses in connection with matters
contemplated by this Section 2.8. If the Internal Revenue Service or any state
counterpart audits either of the tax returns referenced in this Section 2.8, the
Stockholder shall be entitled to have a representative participate in such audit
process; provided that the Buyer and the Company shall not be required to take
any action that could result in a waiver of any attorney-client or similar
privilege.
ARTICLE III
Closing
3.1 Date. The closing of the transactions contemplated by this Agreement
(the "Closing") shall take place at the offices of Newton and Hoff, L.L.P, 2019
23rd Avenue, Gulfport, Mississippi 39502 on the date two business days following
the satisfaction of all of the conditions precedent to the obligations of the
parties as set forth in Article VI or such other date as the parties may
mutually determine (the "Closing Date"). The transactions contemplated herein
shall be effective as of 12:01 a.m. on the Closing Date which shall be the
Effective Date and Time.
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3.2 Delivery of Certificates. At the Closing, (i) the Company and the
Stockholder shall deliver to Buyer the various certificates, stock instruments,
and documents referred to in Section 6.1; and (ii) Buyer shall deliver to the
Stockholder the various certificates, instruments, and documents referred to in
Section 6.2. The parties shall take all such other actions necessary or
advisable to implement the transactions contemplated by this Agreement (provided
that no party shall be required to waive any condition to closing or other
right, hereunder or otherwise).
3.3 Delivery of Stock. At the Closing, the Stockholder shall deliver to
Buyer certificates representing all shares of Common Stock, duly endorsed in
blank (or accompanied by duly executed stock powers in blank).
3.4. Delivery of Purchase Price. At the Closing, the Buyer shall deliver to
the Stockholder the cash component of the Purchase Price by check or wire
transfer of immediately available funds; provided that $250,000 of such amount
shall be placed in escrow with a mutually agreed escrow agent until the date
fifteen (15) days after the date on which a Final Statement of the Pro Forma
1999 Balance Sheet is delivered in order to secure the Buyer's right to any
adjustment under Section 2.7(c) and any claims for indemnification made by Buyer
prior to such date. The escrow account shall bear interest and the Stockholder
shall receive all interest accrued thereon. The stock component of the Purchase
Price shall be evidenced by the delivery of an irrevocable instruction letter to
the Company's transfer agent in substantially the form attached as Exhibit H
(the "Transfer Agent Letter") authorizing the issuance to the Stockholder of the
number of shares set forth in Section 2.2(a)(i).
ARTICLE IV
Representations and Warranties
4.1 General Statement. The parties hereto represent and warrant to each
other that the statements contained in this Article IV are correct and complete
as of the date of this Agreement and shall be correct and complete as of the
Closing Date (as though made then and as though the Closing Date were
substituted for the date of this Agreement). The survival of all such
representations and warranties shall be in accordance with Section 8.3 hereof.
Unless otherwise specified herein or on the Disclosure Exhibit, all
representations and warranties of the parties are made subject to the exceptions
which are noted in the Disclosure Exhibit. Copies of all documents referenced in
the Disclosure Exhibit shall be attached thereto or delivered separately.
4.2 Representations and Warranties of Buyer. Buyer represents and warrants
to the Stockholder that:
(a) Corporate Status. Buyer is a corporation, duly organized, validly
existing, and in good standing under the laws of the State of Arizona, with
all requisite power and authority to carry on its business.
(b) Authority. Buyer 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 every
other Contract contemplated hereunder by Buyer and the consummation and
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performance of the transactions contemplated hereby and thereby have been
duly and validly authorized by all necessary corporate and other
proceedings. This Agreement has been duly executed and delivered by Buyer
and constitutes the legal, valid, and binding obligation of Buyer,
enforceable against Buyer in accordance with its terms. Anything to the
contrary notwithstanding, the representations and warranties of this
Section 4.2(b) are subject to receipt of Board approval under Section
6.1(k).
(c) Validity of Contemplated Transaction. The execution and delivery
of this Agreement by Buyer does not, and the performance of this Agreement
by Buyer will not (i) violate or conflict with any existing Law or any
Judgment which is applicable to Buyer or (ii) conflict with, result in a
breach of, constitute a default under, result in the acceleration of,
create in any person the right to accelerate, terminate, modify, or cancel,
or require any notice under the articles of incorporation or other charter
documents, bylaws, or any securities of Buyer or any Contract to which
Buyer is a party or by which it is otherwise bound. No authorization,
approval, or consent of, and no registration, filing, or notice to any
Authority or any other party to any Contract is required in connection with
the execution, delivery, and performance of this Agreement by Buyer.
(d) Brokers or Finders. Buyer and its officers and agents have
incurred no Liability for brokerage or finders' fees or agents' commissions
or other similar payment in connection with this Agreement.
(e) Buyer and the Stockholder agree that the Buyer has relied solely
upon the terms and conditions of this Agreement, including the Exhibits
hereto in determining whether to consummate this Agreement, and Buyer
acknowledges (in reliance upon the Stockholder's representation in Section
4.3(z)) that the information herein updates any information previously
supplied to the Buyer and its representatives.
4.3 Representations and Warranties of the Stockholder. The Stockholder
represents and warrants to Buyer that:
(a) Corporate Status. The Company is a corporation, duly organized,
validly existing, and in good standing under the laws of the State of
Mississippi, with all requisite power, authority, and Permits to carry on
its business as it has been and is now being conducted and to own, lease,
and operate its properties used in connection therewith. Except as set
forth on Part 4.3(a) of the Disclosure Exhibit, the Company is duly
qualified to do business and in good standing as a foreign corporation in
each jurisdiction where the character of its properties or the nature of
its business requires it to be so qualified. The Company conducts business
only under its own name. The Company has no subsidiaries and no entities
affiliated through common ownership or otherwise that conduct any business
related to that which they conduct.
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(b) Capitalization. The entire authorized capital stock of the Company
consists of 5,000 shares of Common Stock, of which 1,000 shares are issued
and outstanding and owned by the Stockholder. The Company does not have any
stockholders or issued and outstanding stock, whether voting or non-voting,
common or preferred, other than the Stockholder and the aforesaid shares
owned by the Stockholder. The Stockholder is the record and beneficial
owner of the Common Stock, free and clear of all Liens. All of such shares
have been duly authorized and validly issued, are fully paid and
non-assessable, and are free of all adverse claims. None of the Common
Stock was issued in violation of the Securities Act of 1933 or any other
Law. There are no outstanding or authorized (i) options, warrants, purchase
rights, subscription rights, conversion rights, exchange rights, or other
Contracts or commitments that could require the Company (or any successor,
parent, or acquiror of the Company) to issue, sell, or otherwise cause to
become outstanding any capital stock or other securities or obligations;
(ii) stock appreciation, phantom stock, profit participation, or similar
rights; or (iii) voting trusts, proxies, rights of first refusal,
registration rights, transfer restrictions, or other Contracts relating to
the capital stock or other securities or obligations of the Company.
(c) Officers; Directors; Bank Accounts; Powers of Attorney. Part
4.3(c) of the Disclosure Exhibit lists all directors and officers of the
Company; all bank accounts, lock boxes, safe deposit boxes, and borrowing
authority of the Company, specifying with respect to each, the name and
address of the bank or other financial institution and the account number
and all persons having signing authority or authority to withdraw therefrom
or thereon; and all persons having power of attorney, authority as an
agent, or other authority to act on behalf of the Company.
(d) Authority. The Company and the Stockholder, as appropriate, have
full right, power, and authority to execute and deliver this Agreement and
every other Contract contemplated hereunder and to consummate and perform
the transactions contemplated hereby. The execution and delivery of this
Agreement and every other Contract contemplated hereunder by the Company
and the Stockholder and the consummation and performance of the
transactions contemplated hereby and thereby have been duly and validly
authorized by all necessary corporate and other proceedings. This Agreement
has been duly executed and delivered by the Company and the Stockholder and
constitutes the legal, valid, and binding obligation of each, enforceable
against each, in accordance with its terms.
(e) Validity of Contemplated Transactions. The execution and delivery
of this Agreement and every other Contract contemplated hereby by the
Company and the Stockholder do not, and the performance of this Agreement
and every other Contract contemplated hereby by the Company and the
Stockholder will not, (i) violate or conflict with any existing Law or any
Judgment which is applicable to the Company or the Stockholder; or (ii)
conflict with, result in a breach of, constitute a default under, result in
acceleration of, create in any person the right to accelerate, terminate,
modify, or cancel, or require any notice under the articles of
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incorporation or other charter documents, bylaws, or any securities of the
Company or any Contract to which the Company or the Stockholder is a party
or by which either is otherwise bound. Except under the HSR Act, and as
listed on Part 4.3(e) of the Disclosure Exhibit, no authorization,
approval, or consent of, and no registration, filing, or notice to any
Authority or other party to any Contract is required in connection with the
execution, delivery, and performance of this Agreement by the Company or
the Stockholder.
(f) Financial Information.
(i) The Company has delivered to Buyer the annual, audited
financial statements (including balance sheets and statements of
income, cash flows, and retained earnings) of the Company at and for
the years ended December 31, 1997, 1998, and 1999 as well as the
internal financial statements of the Company at and for the period
ended March 31, 2000 (collectively, the "Historical Financial
Statements"). The Historical Financial Statements and all notes
thereto (A) are (and the Most Recent Financial Statements will be)
true, correct, and complete, (B) have been (and the Most Recent
Financial Statements will be) prepared in accordance with GAAP, (C)
present (and the Most Recent Financial Statements will present) fairly
the financial condition and results of operations, changes in
stockholder's equity and cash flows of the Company at and for all
periods reflected therein, and (D) are (and the Most Recent Financial
Statements will be) consistent with the books and records of the
Company, which books and records are correct and complete. Copies of
the Historical Financial Statements and Most Recent Financial
Statements are attached as Part 4.3(f) of the Disclosure Exhibit.
Anything to the contrary notwithstanding, interim financial statements
do not include statements of cash flows or stockholder's equity or
footnotes.
(ii) All accounts receivable of whatever nature of the Company
represent valid obligations arising from sales actually made or
services actually performed in the Ordinary Course of Business. All
accounts receivable reflected on the balance sheets included in the
Historical Financial Statements are, and all accounts receivable
reflected on the Audited Closing Balance Sheet shall be, collectible
net of the reserves shown thereon. There is no contest, claim, or
right of set-off, other than returns in the Ordinary Course of
Business, under any Contract with any obligor of an accounts
receivable relating to the amount or validity of such accounts
receivable.
(iii) The Company's Adjusted Closing Stockholder's Equity shall
be at least equal to the Company's earnings between January 1, 2000,
and Closing, and in no event shall be less than zero.$350,000.
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(iv) All reserves accrued for liabilities on the Company's
December 31, 1999, Balance Sheet included in the Historical Financial
Statements are, and shall be, adequate to cover the full amount of the
associated liabilities as such liabilities come due.
(v) The Company's indebtedness for borrowed money, net of cash
and cash equivalents, is not greater than the amount reflected on the
March 31, 2000 balance sheet included in the Historical
FinancialStatements [plus any debt incurred after such date for the
purchase of new revenue equipment for use by the Company after
Closing]. Statements.
(g) Absence of Undisclosed Liabilities. The Company has no liabilities
or obligations, accrued or unaccrued, contingent or absolute, liquidated or
unliquidated, and whether due or to become due, except for (i) liabilities
that are reflected and adequately accrued on the face of the balance sheet
included in the Most Recent Financial Statements, and (ii) liabilities
arising in the Ordinary Course of Business since such date (none of which
arises from or relates to any breach of contract or warranty, tort,
infringement, or violation of Law, or would have to be disclosed on any
Schedule to this Agreement). The Company is not directly or contingently
liable on any indebtedness of any person or entity (including without
limitation, Liability to purchase, to provide funds for payment, to supply
funds to or otherwise invest in or otherwise to assure any person or entity
against loss) whether as a result of the assumption, guaranty, or
endorsement of any debt or otherwise.
(h) Absence of Changes or Events. Except as disclosed on Part 4.3(h)
of the Disclosure Exhibit, or with respect to the transactions contemplated
under Article II of this Agreement, since December 31, 1999, there has not
been any adverse change in the business, operations, results of operations,
or future prospects of the Company. Without limiting the generality of the
foregoing, since that date, except as disclosed on Part 4.3(h) of the
Disclosure Exhibit, the Company has not:
(i) declared, set aside, or paid any dividend or made any other
distribution or payment in respect of its capital stock; redeemed,
purchased, or otherwise acquired any of its capital stock; issued any
capital stock or other securities; granted any stock option or right
to purchase shares of capital stock or any other securities of the
Company; issued any security convertible into capital stock; or
granted any registration rights concerning its securities;
(ii) discharged or satisfied any Lien or paid any material
liabilities, other than in the Ordinary Course of Business or failed
to pay or discharge any liabilities when due;
(iii) sold, assigned, or transferred or agreed to sell, assign,
or transfer any of its assets or any interest therein, other than
trades or disposals of assets in the Ordinary Course of Business for
which replacement assets of equal or greater value were purchased;
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(iv) created, incurred, assumed, or guaranteed any indebtedness
for money borrowed or any other indebtedness or obligation of any
nature (absolute or contingent) other than in the Ordinary Course of
Business, or mortgaged, pledged, or subjected to any Lien, any of its
assets, other than in the Ordinary Course of Business;
(v) acquired any substantial assets, properties, securities, or
interests of another person;
(vi) reduced or canceled any amounts owed to it other than in the
Ordinary Course of Business;
(vii) settled any claims against it other than in the Ordinary
Course of Business;
(viii) granted or entered into any agreement or policy with any
employee that grants severance or termination pay, increases
compensation, increases benefits under any current Benefit Plan, or
creates any continuing employment relationship;
(ix) experienced any labor unrest or union organizing activity;
(x) suffered any adverse change in its business other than
changes that affect the industry generally;
(xi) changed any of the accounting principles which it follows or
the methods of applying such principles;
(xii) amended, terminated, or entered into any Contract other
than in the Ordinary Course of Business;
(xiii) suffered to its assets any damage, destruction, or loss,
whether or not covered by insurance other than in the Ordinary Course
of Business;
(xiv) amended its articles of incorporation or bylaws or made any
changes in its authorized or issued capital stock or other securities;
(xv) directly or indirectly engaged in any transaction,
arrangement, or Contract with any Affiliate other than as disclosed
elsewhere in this Agreement;
(xvi) entered into any transactions outside the Ordinary Course
of Business; or
(xvii) agreed, whether orally or in writing, to do any of the
foregoing.
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(i) Asset Schedule. Part 4.3(i) of the Disclosure Exhibit sets forth
copies of the Company's financial book depreciation schedule and tax
depreciation schedule at March 31, 2000; (ii) all material assets acquired
or disposed of after March 31, 2000, other than those included in the
Redemption Assets and Liabilities; (iii) a list of all material leased
assets added or disposed of after December 31, 1999; and (iv) a list of all
Redeemed Assets. For purposes of this Section 4.3(i) "material" means
having a value of $5,000 or greater.
(j) Title and Condition of Assets. All of the Company's owned and
leased assets are in good repair and condition and adequate for the
ordinary course of operation of the Company's business as presently
conducted, and all leased assets are in compliance with any applicable
lease provisions. All inventory is usable and not obsolete. Neither the
Company nor the Stockholder has received notice from any Authority of a
Proceeding in the nature of condemnation or eminent domain relating to any
of the property which the Company owns, leases, or utilizes in its
operations, including the Real Estate. Except as set forth on Part 4.3(j)
of the Disclosure Exhibit, the Company possesses good and marketable title
to all of its owned assets and a valid leasehold interest in all leased
assets, free and clear of all Liens, except Liens for current taxes not yet
due and payable. The Company does not use any assets in its businesses
other than assets owned by it or assets leased under valid and continuing
leases that are identified on Part 4.3(o) of the Disclosure Exhibit. There
are no developments affecting any of the Company's properties or assets,
owned or leased, that might materially detract from the value of such
property or assets, interfere with any present or intended use of such
property or assets, or adversely affect the marketability of such property
or assets. There are no pending or threatened actions relating to any
change of the present zoning, building, or other land use Laws or of any
recorded restrictions that would affect the use of the Real Estate for a
trucking operation. All buildings, plants, and structures owned or used by
the Company lie wholly within the boundaries of the Real Estate and do not
encroach upon the property of, or otherwise conflict with the property
rights of, any other third party. Neither the use nor the occupancy of the
Real Estate is in violation of any building, zoning, flood plain,
environmental, or land use Laws or of any recorded restriction. The
buildings, plants, structures, and equipment owned or used by the Company
are structurally sound, are in good operating condition and repair, and are
adequate for the uses to which they are being put, and none of such
buildings, plants, structures, or equipment is in need of maintenance or
repairs except for ordinary, routine maintenance and repairs that are not
material in nature or cost. The buildings, plants, structures, and
equipment owned or used by the Company are sufficient for the continued
conduct of the Company's business after the Closing Date in substantially
the same manner as conducted prior to the Closing Date. After removal of
the Redemption Assets and Liabilities, the assets owned and leased by the
Company constitute all of the assets necessary and useful in the operation
of the Company's trucking business in a manner consistent with its trucking
business prior to Closing.
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(k) Additional Warranties Concerning Tractors and Trailers. All
tractors and trailers operated by the Company are in good operating
condition and repair, do not require any engine, drive train, or other
mechanical system repair, meet all Department of Transportation
requirements, and have been maintained in compliance with all applicable
manufacturers' specifications and warranties. All tractors and trailers
have been operated at all times in compliance with applicable leases or
other financing documents. All leased tractors and trailers satisfy the
"turn-in" requirements under applicable leases such that there would not be
any penalty, reconditioning fee, or other amount owed if such leased
tractors and trailers were returned at the Closing Date. Each leased
tractor (and if applicable, leased trailer) has been operated within the
mileage allowance of the applicable lease, prorated for the portion of the
lease period that has expired. There are no late fees, penalties, or other
amounts owing under any tractor or trailer lease or other financing
document, other than any current month payment that is not yet due. All
tractors that are owned or covered by leases are either financed under a
three-year walk-away lease or have a buyback commitment from the
manufacturer after three years for at least 50% of the original cost, such
that the manufacturer is obligated to repurchase the tractor at such price
without any further consideration from the Company. After removal of the
Redemption Assets and Liabilities at Closing, the Company will own 430
trailers and 129 tractors, lease under five-year (original term) operating
leases 158 trailers, and lease under three-year (original term) operating
leases 93 tractors.
(l) Tax Matters. With respect to Taxes:
(i) Except as set forth on Part 4.3(l) of the Disclosure Exhibit,
the Company has filed, within the time and in the manner prescribed by
law, all Tax Returns required to be filed under applicable Laws, and
all such Tax Returns are true, correct, and complete. The Company has
within the time and in the manner prescribed by Law, paid all Taxes
that are due and payable. The Company has delivered to Buyer correct
and complete copies of all federal income Tax Returns, examination
reports, and statements of deficiencies assessed against or agreed to
by the Company since January 1, 1995. The Company has established on
the December 31, 1999, Balance Sheet included in the Historical
Financial Statements and the balance sheet included in the Most Recent
Financial Statements reserves, charges, and accruals that are adequate
for the payment of all Taxes not yet due and payable that are
attributable to periods ending on such date. There are no Liens for
Taxes upon the assets of the Company except for Liens for Taxes not
yet due and payable.
(ii) None of the Tax Returns of the Company is presently under
audit by any Authority nor has a deficiency for any Taxes been
proposed, asserted, or assessed against the Company. The Company and
the Stockholder do not expect any Authority to assess any additional
Taxes for any period for which Tax Returns have been filed. There are
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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 or on behalf of the Company. There are
no Liens on any of the assets of the Company that arose in connection
with any failure (or alleged failure) to pay any Tax.
(iii) The Company and, if applicable, its agents and contracted
service providers, have complied in all respects with all applicable
Laws relating to the payment and withholding of Taxes and have, within
the time and in the manner prescribed by applicable Law, withheld,
collected, and paid over to the proper governmental authorities all
amounts required to be so withheld, collected, and paid over under all
applicable Laws.
(iv) None of the liabilities of the Company reflected on the
December 31, 1999, Balance Sheet included in the Historical Financial
Statements or the balance sheet included in the Most Recent Financial
Statements is an obligation to make a payment that will not be
deductible under Code ss.280G. The Company has disclosed on its
federal income Tax Returns all positions taken therein that could give
rise to a substantial understatement of federal income Tax within the
meaning of Code ss.6662. The Company is not a party to any Tax
allocation or sharing agreement. The Company (A) has not been a member
of an Affiliated Group filing a consolidated federal income Tax Return
or (B) has no Liability for the Taxes of any person (other than the
Company) under Code Reg. ss.1.1502-6 (or any similar provision of
state, local, or foreign law), as a transferee or successor, by
contract, or otherwise.
(m) Litigation. Except as set forth in Part 4.3(m) of the Disclosure
Exhibit, there is no Proceeding pending or threatened against the Company.
Neither the Company nor the Stockholder has reason to believe that any
Proceeding may be brought or threatened against the Company or the
Stockholder.
(n) Insurance; Bonds. Part 4.3(n) of the Disclosure Exhibit contains a
list of, and Buyer has been furnished true and complete copies of, all
insurance policies and fidelity bonds covering the Company's assets,
business, properties, operations, employees, officers, and directors, and
other matters for which the Company carries insurance and describes any
self-insurance arrangement by or affecting the Company, including any
reserves established thereunder, covering the period since January 1, 1993.
Except as set forth in Part 4.3(n) of the Disclosure Exhibit, there is no
claim by any insured pending under any of such policies or bonds as to
which coverage has been questioned, denied, or disputed by the underwriters
of such policies or bonds. All premiums payable under all such policies and
bonds have been paid, and the Company is otherwise in full compliance with
the terms and conditions of all such policies and bonds. As to all claims
that might be covered by such policies or bonds, the Company has promptly
and within any prescribed time period notified the insuring or bonding
party in the proper manner. Such policies of insurance and bonds (or other
policies and bonds providing substantially similar insurance coverage) have
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been in effect continuously since January 1, 1993, and remain in full force
and effect. Such policies of insurance and bonds are of the type and in
amounts customarily carried by persons conducting similar businesses and do
not exclude coverage for environmental, employment, or punitive damages.
Except as set forth in Part 4.3(n) of the Disclosure Exhibit, neither the
Company nor the Stockholder knows of any threatened termination of, or
premium increase with respect to, any of such policies or bonds. Except for
claims listed on Part 4.3(m) of the Disclosure Exhibit, the Company has not
given notice to the insurer of any claims that may be insured thereby.
(o) Material Contracts. Part 4.3(o) of the Disclosure Exhibit contains
a list of all material Contracts to which the Company is a party, including
but not limited to any Contract that is not by its terms cancelable on
notice of not longer than 30 days without Liability, or which, if
performed, would involve the payment by the Company of more than $25,000;
any Contract restricting or limiting the Company from carrying on its
business or competing in any line of business; any Contract involving a
joint venture, partnership, or other profit or loss sharing arrangement;
any Contract with the Stockholder, or any other Affiliate; any Contract
relating to indebtedness for borrowed money, deferred purchase price of
property, or the guaranty of the obligations of any person; any Contract
concerning leased assets used by the Company; any Contract respecting
Rights, Real Estate, or employees; any power of attorney or similar
instrument; any Contract between the Company and its ten largest customers;
and any other Contract not made in the Ordinary Course of Business. Each
Contract disclosed on the Disclosure Exhibit or required to be disclosed
pursuant to this Section 4.3(o) is a valid and binding agreement of the
parties thereto, is in full force and effect, no party thereto is in
default thereunder, and there exists no condition that with notice or lapse
of time or both would constitute a default thereunder.
(p) Employee Benefit Plans and Arrangements. Parts 4.3(p) of the
Disclosure Exhibit identifies each of the Company's Benefit Plans, copies
of which, amended to date, have been furnished to Buyer. No Benefit Plan is
a multi-employer or a defined benefit plan. Neither the Company, any
Affiliate, nor any predecessor of any has been a party to or sponsored a
multi-employer or defined benefit plan. The Company and all Benefit Plan
fiduciaries have fully complied with their obligations with respect to all
Benefit Plans and all duties under ERISA. There has been no prohibited
transaction (under Section 4975 of the Code or 406 of ERISA or otherwise)
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 and has been
since inception. 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. The Company has received determination letters from the Internal
Revenue Service for each such Benefit Plan at inception and after each
amendment. Each Benefit Plan has been maintained in compliance with its
terms and all applicable Laws. There has not been any event that would
threaten the tax-qualified status of any Benefit Plan. All payments and
contributions due or accrued under each Benefit Plan, determined in
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accordance with the terms of such plans and prior funding and accrual
practices, have been paid or are reflected as a liability on the December
31, 1999, Balance Sheet included in the Historical Financial Statements or,
if arising thereafter, on the balance sheet included in the Most Recent
Financial Statements. The "plan year" of each Benefit Plan is the calendar
year. The Company has no current or projected Liability with respect to
post-employment or post-retirement welfare benefits for former or retired
employees.
(q) Employees; Independent Contractors. Part 4.3(q) of the Disclosure
Exhibit sets forth a list of the names, employment status, location of
employment, and rates of compensation (including salaries, wages,
commissions, and bonuses) of all employees and all independent contractors
of the Company, each separately identified. The Company is not, nor has it
been in the past five years, a party to any collective bargaining agreement
relating to its employees, nor does any such agreement determine the terms
and conditions of employment of any employee. The Company is not a party to
any pending or threatened labor dispute and neither has it been the subject
of any attempt to unionize its employees. The Company has not experienced
any actual or threatened employee strike, or employee related work
stoppage, slowdown, or lockout. There are no agreements, plans, or policies
which would give rise to any severance, termination, change-in-control, or
other similar payment to the Company's employees as a result of the
consummation of the transactions contemplated hereunder. The Company has no
employment agreements, written or oral, with employees. The Company
maintains files on all employee and independent contractor truck drivers.
Each employee and independent contractor driver of the Company meets all
DOT requirements, and all driver files contain all required materials. All
independent contractors providing equipment and/or services to the Company
have been retained under valid contracts and qualify for independent
contractor status under all applicable Laws, including existing Internal
Revenue Service rules and interpretations. A copy of the form of contract
used for any independent contractor operators of rolling stock has been
delivered to Buyer. All such contracts are terminable by the Company upon
30 days' written notice. The Company has taken no action in respect of its
employees that would require notice or create Liability under the Worker
Adjustment and Retraining Notification Act, and the Company has no present
plans to take such action.
(r) Compliance with Labor Laws. Except for the non-compliance
disclosed in Part 4.3(r) of the Disclosure Exhibit, the Company has
complied in all material respects with all applicable Laws relating to the
employment of labor, including, but not limited to, Laws governing wages
and hours, collective bargaining, payment of Social Security, unemployment
and withholding taxes, equal employment opportunity, advancement of
minorities and women, or discrimination based on age or disability. The
Company is not liable for any wage or any tax arrearages or any penalties
or assessments for failure to pay timely Taxes or wages or to comply with
any employment related Laws. At the Closing Date, the employees of the
Company will be terminable at-will. The Company has not received notice
from any employee listed on Part 4.3(r) of the Disclosure Exhibit that such
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employee is terminating or intends to terminate employment with the
Company. The Company has not received notice that any employee who is a key
employee or critical to any operations of the Company is terminating or
intends to terminate his or her employment. There are no pending or
threatened actions, proceedings, or claims against the Company involving
allegations of unlawful employment discrimination or unlawful employment
practices of any type, including, without limitation, violation of any
employee health, safety, or payment laws. Except as specifically disclosed
on Part 4.3(r) of the Disclosure Exhibit, the Company has not received
written notice of any employee complaints or grievances or any alleged
violations of any labor, wage, or employment laws, including the Age
Discrimination in Employment Act, Occupational Health and Safety Act, Title
VII of the Civil Rights Act, Fair Labor Standards Act, any Civil Rights Act
adopted by the State of Mississippi, Americans with Disabilities Act, and
Family Medical Leave Act, as each is amended, from time to time.
(s) Unemployment Contributions. Except for those amounts due after
Closing, the Company has paid, or prior to the Closing will have timely
paid or adequately accrued all contributions required to be paid by the
Company to any unemployment compensation fund or other fund to which the
Company is required to contribute under the laws of the State of
Mississippi (and any other applicable state) with respect to periods
through Closing.
(t) Salaries and Employment Taxes. The Company has, and as of the
Closing will have, paid or adequately accrued all wages, salaries, bonuses,
vacation time, sick leave, other leave or time off, owner operator
settlements, per diems, commissions, and other amounts owed to employees or
independent contractors of the Company relating to periods through the
Closing, and has, and as of the Closing will have, withheld and paid over
to the proper Authorities all Taxes (including, without limitation, state
and federal income tax, Federal Insurance Contribution Act ("FICA") taxes,
federal unemployment tax, state unemployment tax, and franchise taxes)
required to be withheld or paid on a timely basis.
(u) Customer Relationships. Since September 30, 1999, the Company has
not experienced, and the Stockholder is not aware of any reason that would
reasonably be expected to result in the Company experiencing, a substantial
decrease in freight revenue from, any of its top twenty (20) customers
based upon revenue generated for the fiscal year ended December 31, 1999.
(v) Safety Rating. The Company has received and maintained a
"satisfactory" safety rating from the DOT. There is no investigation,
audit, or other Proceeding pending or threatened by the DOT. The Company
does not require or permit any violation ofhas operated in material
compliance with DOT regulations, including the safety fitnessregulations or
other DOT rules or regulations. The Company regularly and strictly enforces
applicable hours in service and other DOT requirements. The Company has
reported all accidents on a timely basis in compliance with applicable
Laws.
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(w) Rights. All Rights owned, licensed, or otherwise used by the
Company are listed on Part 4.3(w) of the Disclosure Exhibit. The Company
owns or uses such Rights under valid license in the operation of its
business. The Company's interest in each of such Rights, to the extent
possible, has been registered under applicable state and federal Laws. The
Company has not interfered with, infringed upon, misappropriated, or
otherwise come into conflict with any Rights of third parties. The Company
has not received any charge, complaint, demand, or notice alleging any such
interference, infringement, misappropriation, violation, or conflict
(including any claim that the Company must license or refrain from using
any Rights of third parties).
(x) Compliance With Laws; Permits. The Company has owned, leased, and
used all of its properties and assets, and has conducted its business, in
compliance in all respects with all applicable Laws. Neither the Company
nor the Stockholder has been charged with any violation of Law. No
Proceeding is pending or threatened by any Authority with respect to any
violation of Law by the Company or the Stockholder. No Judgment is
unsatisfied against the Company or the Stockholder. Neither the Company nor
the Stockholder is subject to any stipulation, order, consent, or decree
arising from an action before any Authority. The Company possesses all
permits, licenses, franchises, and other approvals of Authorities including
common and contract carrier and brokerage authority (collectively,
"Permits") required to operate its business, such Permits are in full force
and effect, any applications for renewal have been duly filed on a timely
basis, no Proceeding is pending or threatened to revoke or limit any
Permit, and each is operating in compliance with all Permits. To the
Stockholder's knowledge, there is no pending change in any applicable Law,
which, if accepted, would interfere with or have a material adverse effect
on the Company's operations or its assets.
(y) Environment, Health, and Safety.
(i) Each of the Company, its Affiliates, and any predecessors of
either have complied with all Laws concerning pollution or protection
of the environment, public health and safety, and 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"). No Proceeding has been filed or commenced
against the Company, its Affiliates, or any predecessor of either
alleging any failure to comply with any Environmental Laws. Without
limiting the generality of the preceding sentence, each of the
Company, its Affiliates, and any predecessors of either has 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
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limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules, and timetables which are
contained in, all Environmental Laws.
(ii) The Company has no any Liability (and neither the Company,
its Affiliates, nor any predecessor of either 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, operated, or used any property or facility in any manner that
could form the basis for any present or future Proceeding against the
Company 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) All properties and equipment used in the business of the
Company, its Affiliates, and any predecessors of either have been free
of asbestos, PCB's, methylene chloride, trichloroethylene,
1,2-transdichloroethylene, dioxins, dibenzofurans, and other extremely
hazardous substances as defined by any Law.
(iv) Any fuel or other storage tanks located at properties
presently or previously owned or used by the Company in its business,
including the Real Estate, comply in all respects with applicable
Laws, do not leak, are registered with the appropriate state agency
(and all required actions in connection therewith have been taken) in
the manner permitting the Company 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.
(v) The Company has delivered to Buyer true and complete copies
and results of any reports, studies, analyses, tests, or monitoring
concerning the Company or any property owned or used by the Company
concerning compliance with Environmental Laws.
(z) Disclosure. The representations and warranties of the Company and
the Stockholder contained in this Agreement and the contents of every
document delivered in connection herewith, 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 Company's business and
the matters contemplated under this Agreement. The information represented
or otherwise provided by the Stockholder under this Agreement is the most
current information available and updates any previous information supplied
to the Buyer and its representatives.
(aa) Brokers or Finders. The Company, the Stockholder, and their
agents and Affiliates have incurred no Liability for brokerage or finders'
fees or agents' commissions or other similar payment in connection with
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this Agreement, except for the fee owed Morgan Keegan & Company, Inc.,
which shall be paid by the Stockholder.
(bb) Prepayment of Indebtedness. All indebtedness of the Company may
be prepaid at any time without penalty.
(cc) Financial and Operating Information. The Company has provided to
Buyer operating information, including customer lists, rates charged
customers, miles per tractor, empty miles, and other information underlying
the financial statements as set forth in Part 4.3 (cc) of the Disclosure
Exhibit provided to Buyer.statements. All of such information is accurate
and fairly depicts the operations represented by such information.
(dd) No Reliance. Buyer and the Stockholder agree that the Stockholder
has relied solely upon the terms and conditions of this Agreement,
including the Exhibits hereto, in determining whether to consummate this
Agreement.
ARTICLE V
Covenants and Agreements
5.1 Conduct of Business Pending the Closing. The Company and the
Stockholder agree that from the date hereof to the Closing or earlier
termination of this Agreement:
(a) The Company 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. The Company and the Stockholder shall use their
best efforts to preserve the assets, goodwill, and value of the Company's
business, including keeping the Company's present management intact,
keeping available the Company's present employees, and preserving the
present relationships with suppliers, customers, landlords, creditors,
employees, agents, and others having business relations with the Company.
(b) The Company and the Stockholder shall not, without the prior
written consent of Buyer, take, or permit to be taken, any action which
would render untrue any representation or warranty contained in Sections
4.3(a)_(cc).
5.2 Access. The Company and the Stockholder shall give the officers,
employees, counsel, accountants, and other authorized representatives of Buyer
free and full access to and the right to inspect, at a time agreeable to the
Stockholder upon advance notice, all of the premises, properties, assets,
records, Contracts, and other documents relating to the Company's businesses and
shall permit them to consult with the Stockholder and, upon advance approval of
the Stockholder, employees of the Company and other persons having business
dealings with the Company or knowledge of its business, operations, assets,
liabilities, actual or potential litigation and claims, properties, and
prospects. Furthermore, the Company and the Stockholder shall promptly provide
to Buyer (and its representatives) all such reports, surveys, documents, and
copies of documents and records and information with respect to the business of
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the Company and copies of any working papers relating thereto as they shall from
time to time reasonably request.
5.3 Approval of Directors. Buyer shall submit for the required approval of
its directors all matters relating to the adoption and approval of this
Agreement, every other Contract contemplated hereby, and all related matters.
5.4 Approvals and Consents. Each party to this Agreement shall use its best
efforts to obtain (and assist the other in obtaining), as soon as reasonably
practicable, all Permits, authorizations, consents, and waivers from third
parties or Authorities necessary to consummate this Agreement and the
transactions contemplated hereby or thereby. The parties acknowledge that they
have filed the required pre-merger notification under the HSR Act and agree (x)
not to withdraw, and (y) to use reasonable efforts to pursue, such filing until
expiration or early termination of the waiting period.
5.5 Notification. Each party shall give prompt written notice to the others
of any development causing a breach of any of its own representations and
warranties or that would prevent the fulfillment of any of its covenants or
agreements contained in this Agreement or any document contemplated hereby.
5.6 Exclusivity. Each of the Company and the Stockholder agree that unless
this Agreement is terminated pursuant to Section 8.1, the Company and the
Stockholder shall deal exclusively with Buyer, and neither the Company, the
Stockholder, nor any of their Affiliates, employees, representatives, or agents
will directly or indirectly:
(a) enter into any transaction with any person other than Buyer
relative to any disposition of the Company or any part thereof (whether by
merger, sale or exchange of shares, sale of assets, or otherwise);
(b) engage in any negotiations or discussions with any other person
regarding any disposition of the Company or any part thereof (whether by
merger, sale or exchange of shares, sale of assets, or otherwise);
(c) solicit or encourage submission of inquiries, proposals, or offers
from any other person relative to any potential disposition of the Company
or any part thereof (whether by merger, sale or exchange of shares, sale of
assets, or otherwise); or
(d) provide further information to any person other than Buyer
relating to any possible disposition of the Company or any part thereof
(whether by merger, sale or exchange of shares, sale of assets, or
otherwise).
Each of the Company and the Stockholder agrees that if the Company, the
Stockholder, or any Affiliate receives an offer or proposal relating to the
possible acquisition of the Company or any part thereof (whether by merger, sale
or exchange of shares, sale of assets, or otherwise), the Company and the
Stockholder shall immediately notify Buyer of said offer or proposal, the
identity of the party making the offer or proposal, and the specific terms of
the offer or proposal.
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5.7 Stockholder Liability. At the Closing, the Stockholder and his
Affiliates shall pay in full all obligations (including interest) owed by them
to the Company, regardless of whether such amounts are then due under applicable
documents evidencing such indebtedness or whether evidenced in writing at all.
All related party transactions after December 31, 1999, shall cease unless
approved by Buyer (it being understood that the continuation of the oral leases
of the Destin, Florida properties described on Part 4.3(o) of the Disclosure
Exhibit has been approved by Buyer). In addition, the Stockholder, individually
and on behalf of all his Affiliates, shall execute a full and final waiver and
release of any and all claims against the Company in substantially the form
attached hereto as Exhibit I (the "Release").
5.8 Best Efforts. Between the date of this Agreement and the Closing Date,
the parties shall use their best efforts to cause the conditions of Article VI
to be satisfied.
5.9 Non-Competition.
(a) The parties to this Section 5.9 include the Stockholder and his
spouse (together, the "Noncompete Parties"). The Noncompete Parties have
negotiated the non-competition provisions of this Agreement as an integral
part of the transaction. The Noncompete Parties acknowledge that the Buyer
is willing to pay the Purchase Price and proceed with the transaction
because of the Company's customer relationships, growth potential, and
other prospects, and that such prospects would be severely and irreparably
harmed by competition from the Noncompete Parties and/or their Affiliates.
The Noncompete Parties further acknowledge that the Buyer would not have
entered into this Agreement without the non-competition provisions
contained herein. The Noncompete Parties willingly agree to the
non-competition provisions of Section 5.9(b) hereof and agree that the
non-competition provisions are reasonable and are necessary to induce the
Buyer to enter into this Agreement.
(b) For a period of five (5) years following the later of (x) the
Closing or (y) the last day of the Stockholder's employment by the Company,
Buyer, or an Affiliate of either, the Noncompete Parties agree that they
will not, directly or indirectly, through any Affiliate or otherwise,
(i) except in the course of employment with Buyer or an
Affiliate, engage or invest in, own, manage, operate, finance,
control, or participate in the ownership, management, operation,
financing, or control of, be employed by, associated with, or in any
manner connected with, lend their name or any similar name to, lend
their credit to or render services or advice to, any Competitive
Business that engages in business in the United States; provided,
however, that any such person may purchase or otherwise acquire up to
(but not more than) one percent as an aggregate of all such purchases
and acquisitions of any class of securities of any enterprise (but
without otherwise participating in the activities of such enterprise)
if such securities are listed on any national or regional securities
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exchange or have been registered under Section 12(g) of the Securities
Exchange Act of 1934;
(ii) whether for their own account or for the account of any
other person, at any time after the Closing, solicit business of the
same or similar type being carried on by Buyer or any Affiliate, from
any person that is or was a customer of the Company, Buyer, or any
Affiliate, whether or not they had personal contact with such person
during and by reason of employment with the Company, Buyer, or an
Affiliate;
(iii) whether for their own account or the account of any other
person at any time after Closing solicit, employ, or otherwise engage
as an employee, independent contractor, or otherwise, any person who
is or was an employee or independent contractor of the Company, Buyer,
or an Affiliate, or in any manner induce or attempt to induce any
employee of the Company, Buyer, or an Affiliate to terminate his or
her employment with the Company, Buyer, or an Affiliate; or at any
time interfere with the Company's relationship with any person,
including any person who at any time was an employee, contractor,
supplier, or customer of the Company, Buyer, or an Affiliate
(provided, that (A) the Stockholder shall employ the persons who are
employed at Closing in the Redeemed Business as listed on Exhibit C
and (B) at any time after January 1, 2001, the Stockholder or any
Affiliate may employ any of C);the persons listed on Part 5.9(b)(iii)
of the Disclosure Exhibit in a business that does not violate the
other provisions hereof so long as the Buyer's CEO approves the
employment or the individual provides at least 180 days' notice of his
or her intent to accept such employment to the Buyers CEO); or
(iv) at any time after Closing, disparage the Company, Buyer, or
any Affiliate, or any of their shareholders, directors, officers,
employees, or agents.
(c) For purposes of this Agreement, "Competitive Business" shall mean
the interstate and/or intrastate transportation of freight, including
truckload and less-than-truckload carriage, intermodal service, and
brokerage, logistics, agent, consolidation, and other freight-related
operations. Competitive Business shall include, but not be limited to, dry
van, temperature-controlled van, and flatbed operations. Competitive
Business shall not include the Stockholder's continued operation of the
Redeemed Business if it involves a "Permitted Business", which includes
only (i) the movement of household goods and (ii) the movement of goods for
a customer of the Redeemed Business, involving freight being moved 150
miles or less and to or from a warehouse owned by the Redeemed Business, in
each case as limited by the next four sentences. In the household goods
operation, the Stockholder (directly or indirectly through the Redeemed
Business or otherwise) shall be permitted to operate up to ten (10) trucks.
In other permitted operations the Stockholder (directly or indirectly
through The operation in connection with the Redeemed Business may usethe
Redeemed Business or otherwise) shall be permitted to operate up to five
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(5) tractors without the consent of Buyer. The Stockholder/Redeemed
BusinessSuch non-household goods operation may increase up to ten (10)
tractors (and no further) without Buyer's consent; provided that the Buyer
is givesgiven the right of first refusal to haul the incremental loads. The
preceding three sentences notwithstanding the total number of tractors
operated by the Stockholder (directly or indirectly through the Redeemed
Business or otherwise) shall not exceed fifteen (15) without the Buyer's
consent. The Stockholder/Redeemed Business may not operate more than ten
(10) tractors without Buyer's consent. In no event shall the operation of a
Permitted Business violate Section 5.9(b)(ii) or (iii).
(d) If any covenant in Section 5.9 is held to be unreasonable,
arbitrary, or against public policy, such covenant will be considered to be
divisible with respect to scope, time, and geographic area, and such lesser
scope, time, or geographic area, or all of them, as a court of competent
jurisdiction may determine to be reasonable, not arbitrary, and not against
public policy, will be effective, binding, and enforceable against the
Noncompete Parties.
(e) The Noncompete Parties acknowledge that the injury that would be
suffered by Buyer as a result of a breach of the provisions of this Section
5.9 would be irreparable and that even the award of monetary damages for
such breach would be an inadequate remedy. Consequently, the Buyer shall
have the right, in addition to any other rights it may have, to obtain
injunctive relief to restrain any breach or threatened breach or otherwise
to specifically enforce any provision of this Agreement, and Buyer shall
not be obligated to post bond or other security in seeking such relief.
Without limiting Buyer's rights under this Section 5.9 or any other
remedies of Buyer, if any of the Noncompete Parties breaches any of the
provisions of Section 5.9, Buyer will have the right to offset against any
amounts owing Stockholder without notice.
(f) In the event (i) any person or group (as such terms are used under
Section 13(d) of the Securities Exchange Act of 1934) that does not include
one or more members of the Knight family obtains beneficial ownership of
more than 50% of the outstanding voting common stock of Buyer and no member
of the Knight family remains involved in the senior management of Buyer or
(ii) Buyer after Closing disposes of the truckload business of the Company
to any person that is not an Affiliate of Buyer in any sale, lease, merger,
or similar transaction and no member of the Knight family remains involved
in a management position with the disposed business, then, if not sooner
terminated hereunder, the restrictive covenants and agreements of the
Noncompete Parties contained in this Section 5.9 shall terminate on the
date two (2) years following the later of (x) the closing date of the
transaction giving rise to (i) or (ii) above, or (y) the Stockholder's last
day of employment with the disposed business.
5.10 Consent of Stockholder's Spouse. The Stockholder shall obtain from his
spouse a consent to the terms of this Agreement, including the non-competition
provisions of Section 5.9, waive any marital, community property, or other
beneficial interest in the Common Stock purchased by the Buyer hereunder,
release all claims against the Company arising prior to the Closing Date, and
irrevocably agree to be bound by this Agreement with respect to such interest,
all in the form of attached Exhibit J (the "Spousal Consent").
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5.11 Stockholder Employment. At Closing, the Company and the Stockholder
shall execute and deliver an Employment Agreement in substantially the form
attached hereto as Exhibit K (the "Employment Agreement"). The Employment
Agreement shall provide that the Stockholder is employed as President of the
Company and shall have responsibility and authority for the day-to-day operation
of the business of the Company, subject to oversight by the CEO and Board of
Directors.
5.12 Lease. At Closing, the Company and the Stockholder shall execute and
deliver a lease for the Company's Gulfport and Mobile locations that are
distributed to the Stockholder under Section 2.3 in substantially the form
attached hereto as Exhibits L-1 and L-2, respectively (the "Lease"). From and
after the Closing until the later of three years after Closing or the
termination of Stockholder's employment with the Company, Stockholder shall, and
shall cause his Affiliates to, permit Buyer and its Affiliates to park trailers
at Stockholder's Houston drop yard and conduct other incidental operations free
of any cost; provided that the number of trailers and activities are consistent
with the Company's use prior to Closing.
5.13 Other Agreements. At Closing, the Stockholder shall execute and
deliver the Securities Agreement. At Closing, the Buyer and Company, as
appropriate, shall execute and deliver the Bill of Sale, Deeds, Securities
Agreement, and Transfer Agent Letter.
5.14 Payment of Transaction Expenses. Each party to this Agreement shall
pay its own costs and expenses. With respect to all of Stockholder's and the
Company's costs, fees and expenses relating to the evaluation, negotiation,
documentation, and consummation of the transactions contemplated by this
Agreement, including the fees and expenses of attorneys, accountants, and other
financial professionals, and specifically including any amounts owed Morgan
Keegan & Company, Inc. and any other brokers or finders, either (a) the
Stockholder shall pay all of such amounts directly and the Company, Buyer, and
their Affiliates (other than Stockholder) shall have no liability therefor; or
(b) all such amounts paid by the Company shall be deemed adjustments in
calculating the Pro Forma 1999 Balance Sheet.
5.15 Business Relationships. Subject to cost and service considerations and
the overall business relationships of Buyer and its consolidated group, the
Buyer agrees to reasonably consider maintaining the Company's business
relationships with certain of its historical vendors for up the two years after
Closing.
5.16 Condominium Leases. At Closing, the Company shall execute leases with
John Fayard, Jr. and John Fayard, Sr. providing for month-to-month rental of
certain condominium units located in Destin, Florida, at the rate of $2,000 per
month and $1,500 per month, respectively, plus the payment of expenses which
have historically been paid by the Company. These leases shall be substantially
in the form attached hereto as Exhibits L-3 and L-4, respectively.
5.17 Key-Man Insurance. At least through December 31, 2002, absent mutual
agreement of the Stockholder and Buyer to the contrary, the Company shall
continue to pay the premiums of certain key-man life insurance as described in
Part 5.17(a) of the Disclosure Exhibit to this Agreement. Upon the death of one
of the covered individuals, the insurance proceeds from such coverage shall be
used first to repay the premiums advanced by the Company, with the balance being
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paid to such employee's designated beneficiary. Upon the termination of the
policy or the employment of any covered individual, the cash surrender value of
such insurance, if any, shall be retained by the Company. At any time prior to
December 31, 2002, any covered person shall have the option to purchase the
policy from the Company at its cash surrender value. The Stockholder and other
individuals listed on Part 5.17(b) of the Disclosure Exhibit shall purchase
their life insurance policies from the Company for the cash surrender value at
closing, and such transaction shall be paid for by a reduction in the pro forma
net worth of the Company. After closing, the purchasing individuals shall be
responsible for all obligations under the policies, and the Company shall have
no further obligations.
5.18 Use of Fayard Name. After Closing, the Buyer and the Company shall not
use the name "John Fayard" in any business other than businesses related to the
transportation industry. Buyer and the Company may continue to use the name
"John Fayard" in such businesses after Closing; provided, that if one of the
events described in Section 5.9(f) occurs, the use of the name John Fayard may
continue for one year and then, thereafter as to then-existing assets, but new
and replacement assets must cease references to "John Fayard". Stockholder shall
be entitled to use the name "John Fayard" in connection with his moving and
storage business.
5.19 Tractor and Trailer Inspections. Prior to Closing, Buyer and the
Company shall cooperate in inspecting as many of the Company's tractors and
trailers (owned and leased) as possible through physical inspection, maintenance
and other records, and any other practical means using the following standard:
no broken or cracked glass, $250 or less damage, all tires with at least 50%
tread depth, all brakes with at least 50% wear remaining, all mechanical systems
functioning properly, no engine or drive train damage, and any possible lease
turn-in requirements, including any mileage penalty that would be incurred if
the mileage to date would result in a penalty if increased proportionately for
the remaining lease term. The parties shall quantify the dollar amount required
to bring the inspected equipment into compliance with the above condition. The
dollar amount shall then be increased proportionately to reflect the same costs
for the uninspected portion of the fleet. The result shall then be and
adjustment to the Adjusted Closing Stockholder's Equity.
5.20 Health Insurance. It is the intention of the Buyer and the Company to
maintain the Company's existing health insurance coverage in place at least
through December 31, 2000. Buyer agrees to maintain such coverage in
substantially the form it exists at Closing unless continuing such coverage
would entail a significant disadvantage to Buyer and Buyer elects to change to
alternative coverage that is not less favorable than the coverage afforded
Buyer's employees generally after consultation with the Stockholder and
determining that the change in coverage cannot reasonably wait until January 1,
2001. Regardless of the health insurance coverage in effect, Buyer shall permit
employees of the Redeemed Business to continue under the plan until December 31,
2000 on the same basis as they participated prior to Closing to the extent such
participation is permitted by the plan documents and applicable law. The
Stockholder agrees, directly or indirectly, to cause the Company and Buyer to be
reimbursed promptly each month for all costs and expenses of every kind and
character borne by Buyer or the Company in connection with provision of coverage
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for such individuals to the extent such amounts have not been paid by the
Company prior to Closing or accrued on the Audited Closing Balance Sheet.
5.21 Telephone Numbers. The parties will cooperate during the period from
Closing until expiration of the original term of Stockholder's employment
agreement to transition in an orderly manner the local telephone numbers of the
Company in Gulfport and Mobile to the Redeemed Business. During the transition
period, the local number may be used also by the Company and all incoming calls
will be forwarded to the Company or the Redeemed Business, as appropriate. Not
later than the end of the transition period, the Company shall have established
and disseminated new local telephone numbers, and the Redeemed Business shall no
longer be obligated to accept and forward calls for the Company on the
transitional numbers. All toll-free numbers used in the Company's operation are,
and shall remain to Company's.
ARTICLE VI
Conditions To Closing
6.1 Conditions Precedent to the Obligations of Buyer. The obligation of
Buyer to consummate this Agreement is subject to the fulfillment of all of the
following conditions precedent (any of which may be waived in writing by Buyer,
in whole or in part) at or prior to the Closing Date.
(a) Representations and Warranties True as of the Closing Date. The
representations and warranties of the Company and the Stockholder contained
in this Agreement or in any document delivered by such parties pursuant to
the provisions hereof shall be true in all material respects as of the date
of this Agreement and at and as of the Closing Date with the same effect as
though such representations and warranties were made as of such date.
(b) Compliance with Agreements. The Company and the Stockholder shall
have performed and complied in all material respects with all agreements,
covenants, and conditions required to be performed or complied with by them
under this Agreement. Each of the documents required to be delivered
hereunder and each of the covenants and obligations hereunder must have
been performed and complied with in all respects.
(c) No Bar to Consummation of Transaction. There shall not exist any
Law or Judgment of any Authority which would prevent the consummation of
the transactions contemplated hereby or adversely affect the rights of
Buyer after consummation of said transactions. There shall be no pending or
threatened Proceeding that seeks to enjoin the transactions contemplated by
this Agreement. All consents and approvals from any Authority and any other
person required for the consummation of this Agreement shall have been
obtained.
(d) Bring-Down Certificate. The Company and the Stockholder shall have
delivered to Buyer a duly signed certificate to the effect that each of the
conditions in Sections 6.1(a)-(c) has been satisfied in all respects.
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(e) Opinion of Counsel. Counsel for the Company and the Stockholder
shall have delivered to Buyer its written opinion, dated as of the Closing
Date, covering matters such as the organization and existence of the
Company, the authorization, execution, binding nature, and enforceability
of this Agreement, the validity and freedom from Liens of the Purchased
Shares, the enforceability of the noncompetition provisions of Section 5.9,
and such other matters customarily addressed in transactions of this nature
in form and substance satisfactory to Buyer and its counsel.
(f) Stock Certificates; No Claim Regarding Stock Ownership or Sale
Proceeds. The Stockholder shall have delivered certificates representing
100% of the Company's outstanding Common Stock, duly endorsed for transfer
to Buyer (or, as to the shares being redeemed by the Company under Section
2.3, to the Company) or accompanied by stock powers duly executed in blank.
There must not have been made or threatened by any person any claim
asserting that such person (i) is the holder or the beneficial owner of, or
has the right to acquire or obtain beneficial ownership of, the Common
Stock or any ownership interest in the Company or (ii) is entitled to all
or any portion of the Purchase Price.
(g) Other Agreements. The Release, Spousal Consent, Lease, Employment
Agreement, Securities Agreement, and each other document required to be
executed by a party other than Buyer in connection with this Agreement
shall have been duly executed and delivered by the applicable parties
thereto.
(h) Adverse Change. There shall not have been any materially adverse
change in the Company's business or the condition of its assets.
(i) Completion of Due Diligence. Buyer shall have completed its due
diligence investigation of the business, assets, and liabilities of the
Company and shall be satisfied, in its sole discretion, with the results of
such investigation.
(j) Termination of Related Party Transactions. Prior to Closing, the
Stockholder shall have delivered to Buyer documents evidencing termination
of all transactions (including repayment of any receivables from
Stockholder, or any Affiliates of Stockholder) between the Company, any
person related to the Company, and any Affiliates of the foregoing in form
satisfactory to counsel for Buyer.
(k) Board Approval. Buyer shall have received the approval of the
terms and conditions of this Agreement from its Board of Directors.
6.2 Conditions Precedent to the Obligations of the Stockholder. The
obligation of the Stockholder to consummate this Agreement is subject to the
fulfillment of all of the following conditions precedent (any of which may be
waived in writing by the Stockholder, in whole or in part) at or prior to the
Closing.
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(a) Representations and Warranties True as of the Closing Date. The
representations and warranties of Buyer contained in this Agreement or in
any document delivered by Buyer pursuant to the provisions hereof shall be
true in all material respects at and as of the Closing Date with the same
effect as though such representations and warranties were made as of such
date.
(b) Compliance with Agreement. Buyer shall have performed and complied
in all material respects with all agreements, covenants, and conditions
required to be performed or complied with by it under this Agreement.
(c) No Bar to Consummation of Transaction. There shall not exist any
Law or Judgment of any Authority which would prevent the consummation of
the transactions contemplated hereby, nor any pending or threatened
litigation or other Proceeding that seeks to enjoin the transactions
contemplated by this Agreement. All consents and approvals from any
Authority and any other person required for the consummation of this
Agreement shall have been obtained.
(d) Bring-Down Certificate. Buyer shall have delivered to the Company
and the Stockholder a duly signed certificate to the effect that each of
the conditions in Sections 6.2(a)_(c) has been satisfied in all respects.
(e) Other Agreements. The Lease, Employment Agreement, Bill of Sale,
Deeds, Securities Agreement, Transfer Agent Letter, and each other document
required to be executed by Buyer in connection with this Agreement shall
have been duly executed and delivered by Buyer.
6.3 Conditions Precedent to the Obligations of all Parties. The obligations
of the Company, the Stockholder, and Buyer to consummate this Agreement are
subject to expiration or termination of the applicable waiting period under the
HSR Act.
ARTICLE VII
Indemnification
7.1 Indemnification by the Stockholder. Subject to the other provisions of
this Article 7, the Stockholder shall save, indemnify, defend, and hold harmless
Buyer, its Affiliates, and their respective partners, members, principals,
employees, directors, officers, stockholders, successors, assigns,
representatives, and agents (collectively, the "Buyer Group") from and against,
and pay or reimburse, as the case may be, the Buyer Group, and each of them,
for, any and all Damages, as incurred, suffered by Buyer or any other member of
the Buyer Group based upon, arising out of, or otherwise in any way relating to
or in respect of:
(a) the failure of any of the representations and warranties of the
Stockholder contained herein or in any other documents executed and
delivered in connection with this Agreement to have been true and correct
as of the date hereof and as of the Closing Date, it being understood that
to the extent that any of such representations and warranties were
expressly made as of a specified date the same shall apply only to the
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failure of such representations and warranties to be true and correct as of
such specified date;
(b) any breach or violation of any covenant or agreement of the
Stockholder contained herein or in any certificate or other document
delivered pursuant hereto;
(c) all Liabilities relating to the Redeemed Business, whether arising
before or after Closing, except for the Company Retained Debt;
(d) all Liabilities for Taxes that relate to the redemption and
distribution described in Section 2.3 or the Company's failure (if any) to
file Tax Returns in all states in which Tax Returns may have been due (net
of any refund obtained from states in which Taxes were overpaid);
(e) all Liabilities of the Company, determined as such amounts are
ultimately known and resolved, which exist at or as of the Closing Date or
which arise after the Closing Date but which are based upon or arise from
any act, omission, transaction, circumstance, state of facts, or other
condition which occurred or existed on or before the Closing Date, whether
or not then known, due or payable, except to the extent(A) such Liabilities
are adequately reflected or reserved against on the face of the Audited
Closing Balance Sheet (excluding any notes thereto) or (B) were thereto);
incurred after March 31, 2000, in the Ordinary Course of Business and in
conformity with the representations, warranties, and covenants contained in
this Agreement;
(f) the amount of any pre-tax loss suffered by the Company between
January 1, 2000, and the Closing Date;
(g)(f) any Liabilities of the Company arising from the warranties made
in the Deeds; and
(h)(g) the enforcement by the Buyer Group of their rights to be
indemnified, defended, and held harmless under this Agreement.
7.2 Indemnification by Buyer. Subject to the other provisions of this
Article 7, Buyer shall save, indemnify, defend, and hold harmless the
Stockholder and his heirs and assigns (collectively, the "Seller Group") from
and against, and pay or reimburse, as the case may be, the Seller Group for, any
and all Damages, as incurred, suffered by Stockholder or any other member of the
Seller Group based upon, arising out of, or otherwise in any way relating to or
in respect of:
(a) the failure of any of the representations and warranties of Buyer
contained herein or in any other documents executed and delivered in
connection with this Agreement to have been true and correct as of the date
hereof and as of the Closing Date, it being understood that to the extent
that any of such representations and warranties were expressly made as of a
specified date the same shall apply only to the failure of such
representations and warranties to be true and correct as of such specified
date;
(b) any breach or violation of any covenant or agreement of Buyer
contained herein or in any certificate or other document delivered pursuant
hereto;
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(c) the Company Retained Debt and other Liabilities of the Company
that do not relate to the Redeemed Business, to the extent reflected or
reserved against on the face of the Audited Closing Pro Forma 1999 Balance
Sheet; Balance Sheet (excluding any notes thereto);
(d) all Liabilities of the Company, which arise after the Closing Date
and are based upon or arise from any act, omission, transaction,
circumstance, or state of facts which first occurred after the Closing
Date;
(e) all Liabilities arising from the operations of Buyer either before
or after Closing; and
(f) the enforcement by the Seller Group of their rights to be
indemnified, defended, and held harmless under this Agreement.
7.3 Procedures for Indemnification.
(a) If a claim or demand is made against a person entitled to
indemnification under this Agreement (an "Indemnitee"), or an Indemnitee
shall otherwise learn of an assertion, by any person who is not a party to
this Agreement or an Affiliate hereto (a "Third-Party Claim") as to which a
party (the "Indemnifying Party") may be obligated to provide
indemnification pursuant to this Agreement, such Indemnitee will notify the
Indemnifying Party in writing of the Third-Party Claim (and specifying in
reasonable detail the factual basis for the Third-Party Claim and to the
extent known, the amount of the Third-Party Claim) within a reasonable
period of time after becoming aware of such Third Party Claim; provided;
however, that failure to give such notification will not affect the
indemnification provided hereunder except to the extent the Indemnifying
Party shall have been actually prejudiced as a result of such failure.
(b) If a Third-Party Claim is made against an Indemnitee and the
Indemnifying Party unconditionally and irrevocably acknowledges in writing
its obligation to indemnify the Indemnitee therefor, the Indemnifying Party
will be entitled, within twenty (20) days after receipt of written notice
from the Indemnitee of the commencement or assertion of any such
Third-Party Claim, to assume the defense thereof (at the expense of the
Indemnifying Party) with counsel selected by the Indemnifying Party and
reasonably satisfactory to the Indemnitee. Should the Indemnifying Party so
elect to assume the defense of a Third-Party Claim, the Indemnifying Party
will not be liable to the Indemnitee for any legal or other expenses
subsequently incurred by the Indemnitee in connection with the defense
thereof, provided that, if in any Indemnitee's reasonable judgment based on
advice of counsel a conflict of interest exists in respect to such claim,
such Indemnitee shall have the right to employ separate counsel to
represent such Indemnitee and in that event the reasonable fees and
expenses of such separate counsel shall be paid by such Indemnifying Party;
provided, further, that the Indemnifying Party shall only be responsible
for the reasonable fees and expenses of one separate counsel for such
Indemnitee. If the Indemnifying Party assumes the defense of any
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Third-Party Claim, the Indemnitee shall have the right to participate in
the defense thereof and to employ counsel, at its own expense, separate
from the counsel employed by the Indemnifying Party. The Indemnifying Party
shall be liable for the fees and expenses of counsel employed by the
Indemnitee if it does not expressly elect to assume the defense of any
Third-Party Claim within the 20-day period specified above (including
acknowledging its indemnification obligation as aforesaid). If the
Indemnifying Party assumes the defense of any Third-Party Claim, the
Indemnifying Party will promptly supply to the Indemnitee copies of all
correspondence and documents relating to or in connection with such
Third-Party Claim and keep the Indemnitee informed of developments relating
to or in connection with such Third-Party Claim, as may be reasonably
requested by the Indemnitee (including, without limitation, providing to
the Indemnitee on reasonable request updates and summaries as to the status
thereto). If the Indemnifying Party chooses to defend a Third-Party Claim,
all the Indemnitees shall reasonably cooperate with the Indemnifying Party
in the defense thereof (such cooperation to be at the expense, including
reasonable legal fees and expenses, of the Indemnifying Party). If the
Indemnifying Party does not elect to assume control of the defense of any
Third-Party Claim within the 20-day period set forth above, the Indemnitee
shall have the right to undertake the defense of the Third-Party Claim for
the account of the Indemnifying Party, subject to the right of the
Indemnifying Party, at its expense, to assume the defense of the
Third-Party Claim at any time prior to final determination thereof by
notifying the Indemnitee in writing of its election to so assume the
defense of such Third-Party Claim and unconditionally and irrevocably
acknowledging in writing its obligation to indemnify the Indemnitee
therefor.
(c) If the Indemnifying Party acknowledges in writing its obligation
to indemnify the Indemnitee for a Third-Party Claim, the Indemnitee will
agree to any settlement, compromise, or discharge of such Third-Party Claim
which the Indemnifying Party may recommend and which by its terms obligates
the Indemnifying Party to pay the full amount of Damages (whether through
settlement or otherwise) in connection with such Third-Party Claim and
unconditionally and irrevocably releases the Indemnitee completely from all
Liability in connection with such Third-Party Claim; provided, however,
that, without the Indemnitee's prior written consent, the Indemnifying
Party shall not consent to any settlement, compromise, or discharge
(including the consent to entry of any judgment), and the Indemnitee may
refuse to agree to any such settlement, compromise, or discharge (i) that
provides for injunctive or other nonmonetary relief affecting the
Indemnitee or (ii) that, in the reasonable opinion of the Indemnitee would
otherwise adversely affect the Indemnitee. If the Indemnifying Party
unconditionally and irrevocably acknowledges in writing its obligation to
indemnify the Indemnitee for a Third-Party Claim, the Indemnitee shall not
(unless required by law) admit any Liability with respect to, or settle,
compromise, or discharge, such Third-Party Claim without the Indemnifying
Party's prior written consent (which consent shall not be unreasonably
withheld).
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(d) Any claim on account of Damages which does not involve a
Third-Party Claim shall be asserted by reasonably prompt written notice
given by the Indemnitee to the Indemnifying Party from whom such
indemnification is sought. The failure by any Indemnitee to notify the
Indemnifying Party shall not relieve the Indemnifying Party from any
liability which it may have to such Indemnitee under this Agreement, except
to the extent that the Indemnifying Party shall have been actually
prejudiced by such failure. If the Indemnifying Party does not notify the
Indemnitee prior to the expiration of a 30-calendar-day period following
its receipt of such notice that the Indemnifying Party disputes its
liability to the Indemnitee under this Agreement, such claim specified by
the Indemnitee in such notice shall be conclusively deemed a liability of
the Indemnifying Party under this Agreement and the Indemnifying Party
shall pay the amount of such liability to the Indemnitee on demand or, in
the case of any notice in which the amount of the claim (or any portion
thereof) is estimated, on such later date when the amount of such claim (or
such portion thereof) becomes finally determined. During such
30-calendar-day period, the Indemnifying Party shall be entitled to make
any investigation of such claim that the Indemnifying Party deems
reasonably necessary or desirable and, in connection with such
investigation, the Indemnitee agrees to make available to the Indemnifying
Party and its authorized representatives the information relied upon by the
Indemnitee to substantiate such claim. If the Indemnifying Party has timely
disputed its liability with respect to such claim, as provided above, the
Indemnifying Party and the Indemnitee shall proceed in good faith to
negotiate a resolution of such dispute and, if not resolved through
negotiations by the 90th day after notice of such claim was given to the
Indemnifying Party, the Indemnifying Party and the Indemnitee will be free
to pursue such remedies as may be available to such parties under this
Agreement or under applicable Law.
7.4 Certain Limitations.
(a) No loss, Liability, damage, or deficiency shall constitute Damages
to any party to the extent of any insurance proceeds actually received by
such party with respect to such loss, Liability, damage, or deficiency
(after deducting reasonable costs and expenses incurred in connection with
recovery of such proceeds).
(b) No monetary amount shall be payable by the Stockholder to any
member of the Buyer Group with respect to the indemnification of any claims
pursuant to Section 7.1(a) until the aggregate amount of Damages actually
incurred by the Buyer Group with respect to such claims shall exceed on a
cumulative basis $75,000 (the "Threshold"), in which event the Stockholder
shall be responsible for all amounts in excess of the Threshold up to a
maximum indemnification equal to the consideration received by the
Stockholder under this Agreement.
(c) The Stockholder shall have no Liability under this Article 7 with
respect to a breach of a representation or warranty, any noncompliance with
or nonperformance of an agreement, obligation, or covenant under this
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Agreement, to the extent that Buyer has effected any adjustment to the
Purchase Price under Section 2.7 with respect to such breach,
noncompliance, or nonperformance, it being the intent of the parties to
avoid double recovery by Buyer or Buyer's Affiliates for such items of
Damages.
7.5 Termination of Indemnification Obligations. The obligations of each
party to indemnify, defend, and hold harmless the other party and other
Indemnitees pursuant to Sections 7.1(a) and 7.2(a) shall terminate when the
applicable representation or warranty expires pursuant to the terms of this
Agreement; provided, however, that such obligations to indemnify, defend, and
hold harmless shall not terminate with respect to any individual item as to
which the Indemnitee shall have, before the expiration of the applicable period,
made a claim by delivering a notice (stating in reasonable detail the basis of
such claim) to the Indemnifying Party. The obligations of each party to
indemnify, defend, and hold harmless the other party and the other Indemnitees
pursuant to the other provisions of Sections 7.1 and 7.2 shall continue after
the Closing without time limitation.
7.6 Other Matters.
(a) The parties acknowledge and agree that, except as set forth in
Article 8 and for claims of fraud or similar claims, the sole and exclusive
remedy with respect to any and all claims for indemnification relating to
the subject matter of this Agreement shall be pursuant to the
indemnification provisions set forth in this Article 7; provided, however,
that nothing in this Section 7.6(a) shall limit rights or remedies
expressly provided for in this Agreement or any other document executed and
delivered in connection herewith or rights or remedies which, as a matter
of applicable Law or public policy, cannot be limited or waived.
(b) In the event of payment in full by an Indemnifying Party to any
Indemnitee in connection with any Third-Party Claim, such Indemnifying
Party will be subrogated to and shall stand in the place of such Indemnitee
as to any events or circumstances in respect of which such Indemnitee may
have any right or claim relating to such Third-Party Claim against any
claimant or plaintiff asserting such Third-Party Claim or against any other
person. Such Indemnitee will cooperate with such Indemnifying Party in a
reasonable manner, and at the cost and expense of such Indemnifying Party,
in prosecuting any subrogated right or claim.
(c) The right to indemnification, payment of Damages, or other remedy
based upon a breach of representations, warranties, covenants, agreements,
or obligations will not be affected by any investigation conducted with
respect to, or knowledge acquired (or capable of being acquired) at any
time, whether before or after the execution and delivery of this Agreement
or the Closing Date, with respect to the accuracy or inaccuracy of or
compliance with any such representation, warranty, covenant, agreement, or
obligation.
(d) The waiver of any condition based on the accuracy of any
representation or warranty, or on the performance of or compliance with any
covenant, agreement, or obligation, will not affect the right to
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indemnification, payment of Damages, or other remedy based on such
representations, warranties, covenants, agreements, and obligations.
(e) In addition to all other remedies available under this Agreement,
the Buyer Group shall be entitled upon five (5) days' written notice to (i)
withhold and set-off payments due under the Lease, the Employment
Agreement, and shares to be issued under the Earn-Out if the Stockholder
fails to promptly pay any amount due the Buyer Group in respect of
indemnification hereunder; provided, that this right of immediate setoff
shall not apply to any individual claim valued at $100,000 or higher. Any
Earn-Out shares withheld shall be valued at the average closing price for
the thirty (30) trading days prior to the date of the written notice
referenced above.
(f) All amounts owed to the Seller Group or the Buyer Group, as the
case may be, for indemnification shall bear interest at the rate of ten
percent (10%) per annum from the date thirty (30) days after the claim is
made until paid.
(g) To the extent the Stockholder is obligated to indemnify the Buyer
because of any breach of the warranty contained in the penultimate sentence
of Section 4.3(k), because the Buyer or any Affiliate (including the
Company) is unable to obtain the buyback from the dealer or manufacturer
when the subject tractor has reached 36 months of use, at such time, the
Stockholder shall be entitled to purchase any tractor that gives rise to a
claim by Buyer for 50% of its original cost in full satisfaction of his
obligation to indemnify Buyer for such breach of warranty. It shall not be
a breach of the Stockholder's noncompetition obligations set forth in
Section 5.9 for him to thereafter sell or lease any such tractor on an
arm's-length basis to a third party so long as the Stockholder does not
take any other action that would violate his noncompetition obligations.
ARTICLE VIII
Miscellaneous
8.1 Termination.
(a) Termination of Agreement. The parties may terminate this Agreement
as provided below:
(i) The parties may terminate this Agreement by mutual written
consent at any time prior to the Closing;
(ii) Buyer may terminate this Agreement by giving written notice
to the Company and the Stockholder at any time prior to the Closing,
if it is not satisfied with the results of its continuing business,
legal, and accounting due diligence;
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(iii) Buyer may terminate this Agreement by giving written notice
to the Company and the Stockholder at any time prior to the Closing
(A) if the Company or the Stockholder has breached any representation,
warranty, or covenant contained in this Agreement in any material
respect, and the breach has continued after notice to the Company and
the Stockholder by Buyer without cure for a period of ten (10) days or
(B) if the Closing shall not have occurred on or before May 15, 2000,
by reason of the failure of any condition precedent under Section 6.1
hereof (unless the failure results primarily from Buyer breaching any
representation, warranty, or covenant contained in this Agreement);
and
(iv) The Company and the Stockholder may terminate this Agreement
by giving written notice to Buyer at any time prior to the Closing (A)
in the event Buyer has breached any representation, warranty, or
covenant contained in this Agreement in any material respect, and the
breach has continued after notice to Buyer without cure for a period
of ten (10) days, or (B) if the Closing shall not have occurred on or
before May 15, 2000, by reason of the failure of any condition
precedent under Section 6.2 hereof (unless the failure results
primarily from the Company or the Stockholder breaching any
representation, warranty, or covenant contained in this Agreement).
(b) Effect of Termination. Each party's right of termination under
Section 8.1 is in addition to any other rights it may have under this
Agreement or otherwise, and the exercise of the right of termination shall
not be an election of remedies. If this Agreement is terminated pursuant to
Section 8.1, all further obligations of the parties under this Agreement
shall terminate, except that the obligations of Section 8.2 shall survive.
However, if this Agreement is terminated by a party because of a breach of
the Agreement, of any type, by the other party, the non-defaulting party's
right to pursue all legal remedies will survive such termination
unimpaired.. In addition, the non-defaulting party shall be entitled to
collect its expenses incurred at any time in connection with pursuing or
consummating the Agreement and the transactions contemplated by the
Agreement, including, but not limited to, fees and expenses of business
brokers, legal counsel, accountants, and other facilitators and advisors.
8.2 Costs and Expenses; Fees. Except as provided in Section 8.1(b) with
respect to a breach of the Agreement, each party shall be solely responsible for
and bear all of its own respective expenses incurred at any time in connection
with pursuing or consummating the Agreement and the transactions contemplated by
the Agreement, including, but not limited to, fees and expenses of business
brokers, legal counsel, accountants, and other facilitators and advisors.
8.3 Survival of Representations and Warranties. The representations and
warranties of the Stockholder and the Buyer contained in this Agreement or in
any Contract delivered or in connection herewith shall survive the Closing for a
period of three years; provided, however, that representations and warranties of
the Stockholder relating to tax, environmental, and employee benefit plan
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matters shall survive until the date sixty (60) days after the expiration of the
applicable statutes of limitation.
8.4 Complete Agreement, etc.. All Exhibits referred to herein and the
Disclosure Exhibit 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, and 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. It shall not be amended or modified except by written instrument
duly executed by each of the parties hereto.
8.5 Assignment and Binding Effect. This Agreement shall not be assigned
prior to the Closing by any party hereto without the prior written consent of
the other parties and any assignment without consent shall be void; provided,
that Buyer may assign its rights hereunder to any subsidiary. 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. Nothing expressed or referred to in this Agreement will be
construed to give any person other than the parties to this Agreement any legal
or equitable right, remedy, or claim under or with respect to this Agreement or
any provision of this Agreement. This Agreement and all of its provisions and
conditions are for the sole and exclusive benefit of the parties to this
Agreement and their successors and assigns.
8.6 Waiver. Any term or provision of this Agreement may be waived at any
time by the party entitled to the benefit thereof by a written instrument duly
executed by such party.
8.7 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.
8.8 Notices. Any notice, request, demand, waiver, consent, approval, or
other communication which is required or permitted hereunder shall be in writing
and shall be deemed given only if delivered personally (including by nationally
recognized overnight courier service) or sent by telegram or by certified mail,
postage prepaid, and sent by telecopier as follows:
If to Buyer, to: Kevin P. Knight
Knight Transportation, Inc.
5601 West Buckeye Road
Phoenix, Arizona 85043
(602) 269-2000 Telephone
(602) 606-6504 Fax
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With a required copy to: Mark A. Scudder
Scudder Law Firm, P.C.
411 S. 13th Street, Suite 200
Lincoln, Nebraska 68508
(402) 435-3223 Telephone
(402) 435-4239 Fax
If to the Company (prior to John R. Fayard, Jr.
Closing) or the Stockholder, 19 Lawrence Place
to: Gulfport, Mississippi 39503
(228) 896-3533 Telephone
With a required copy to: Frederick T. Hoff
Newton and Hoff, L.L.P.
2019 23rd Avenue
Gulfport, Mississippi 39502
(228) 863-8827 Telephone
(228) 868-6007 Fax
or to such other address as the addressee shall 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, telegraphed, or deposited in the mail and
telecopied.
8.9 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.
8.10 Governing Law. This Agreement shall be governed by and interpreted and
enforced in accordance with the laws of the State of Arizona, without regard to
conflict-of-law principles.
8.11 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.
8.12 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
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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.
8.13 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.
8.14 Public Announcements. Buyer shall be entitled to issue a press release
announcing the execution of this Agreement and basic information concerning the
Company and the proposed transaction. Buyer shall submit the press release to
Stockholder in advance and shall make such changes as may be reasonably
requested; provided, that Buyer shall not be required to make changes contrary
to the advice of its counsel.
* * * * * * * * * * * * * * *
Signature Page Follows
* * * * * * * * * * * * * * *
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Signature Page to the Stock Purchase Agreement
among Knight Transportation, Inc., John Fayard Fast Freight, Inc.,
and John R. Fayard, Jr.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement on
the date first written.
KNIGHT TRANSPORTATION, INC., JOHN FAYARD FAST FREIGHT, INC.,
an Arizona corporation a Mississippi corporation
By: /s/ Clark A. Jenkins By: /s/ John R. Fayard, Jr.
------------------------------ ------------------------------------
Clark A. Jenkins John R. Fayard, Jr., President
Executive Vice President
By: /s/ John R. Fayard, Jr.
------------------------------------
John R. Fayard, Jr., Individually
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EXHIBIT LIST TO STOCK PURCHASE AGREEMENT
Exhibit A - Disclosure Exhibit
Part 2.2(c) - Preliminary Calculation of Adjusted Closing Stockholder's
Equity
Part 2.2(e) - Purchase Price
Part 2.3(b) - Company Retained Debt
Part 4.3(a) - Corporate Status
Part 4.3(c) - Officers; Directors; Bank Accounts; Powers of Attorney
Part 4.3(e) - Validity of Contemplated Transactions
Part 4.3(f)(i) - Financial Information
Part 4.3(h) - Absence of Changes or Events
Part 4.3(i) - Asset Schedule
Part 4.3(j) - Title and Condition of Assets
Part 4.3(l)(i) - Tax Matters
Part 4.3(m) - Litigation
Part 4.3(n) - Insurance; Bonds
Part 4.3(o) - Material Contracts
Part 4.3(p) - Employee Benefit Plans and Arrangements
Part 4.3(q) - Employees; Independent Contractors
Part 4.3(r) - Compliance With Labor Laws
Part 4.3(w) - Rights
Part 4.3(cc) - Financial and Operating Information
Part 5.17 - Key-Man Insurance
Exhibit B - Real Estate
Exhibit C - Redemption Assets and Liabilities; Employees of Redeemed Business
Exhibit D - Securities Purchase and Registration Agreement
Exhibit E - Bill of Sale, Assignment and Assumption
Exhibit F - Deeds
Exhibit G - Intentionally omitted
Exhibit H - Instruction Letter to Transfer Agent
Exhibit I - Release Exhibit J - Spousal Consent
Exhibit K - Employment Agreement
Exhibit L-1 - Lease (Gulfport)
Exhibit L-2 - Lease (Mobile)
Exhibit L-3 - John Fayard, Jr. Condominium Lease
Exhibit L-4 - John Fayard, Sr. Condominium Lease
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
<PAGE>
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."
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(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
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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
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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
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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
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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.
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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
EXHIBIT K TO
STOCK AGREEMENT PURCHASE
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into as of
April 19, 2000, by and between John Fayard Fast Freight, Inc., a Mississippi
corporation (the "Company"), and John R. Fayard, Jr. (the "Executive").
WHEREAS, the Company desires to employ the Executive as President and the
Executive is willing to render his services to the Company on the terms,
covenants, and conditions with respect to such employment as hereinafter set
forth;
NOW, THEREFORE, in consideration of the promises, terms, and conditions
hereof, the Company and the Executive agree as follows. Unless otherwise defined
herein, all capitalized terms shall have the meanings set forth in the Stock
Purchase Agreement dated April 19, 2000, among the Company, the Executive, and
Knight Transportation, Inc. (the "Stock Purchase Agreement")..
1. Employment. The Company employs the Executive and the Executive accepts
such employment with the Company upon the terms and conditions hereinafter set
forth. The Executive represents and warrants that neither the execution by him
of this Agreement nor the performance by him of his duties and obligations
hereunder will violate any agreement to which he is a party or by which he is
bound.
2. Term. The term of this Agreement shall be three (3) years and shall
commence on the date and year first above written and end on the third
anniversary of such date unless sooner terminated pursuant to Section 6 of this
Agreement.
3. Duties. The Executive is employed as President and shall render his
services at the principal business offices of the Company. As President of the
Company, the Executive has responsibility and authority for the day-to-day
operation of the business of the Company. The Executive shall report directly to
the Chief Executive Officer of the Company (the "CEO") and shall have such
authority and shall perform such duties as are customarily performed by one
holding the position of President, subject, however, to such limitations,
instructions, directions, and control as the CEO and Board of Directors may
specify from time to time in their sole discretion.
4. Exclusive Services. The Executive shall devote all necessary working
time, ability, and attention to the business of the Company during the term of
this Agreement in a manner consistent with the time, ability, and attention the
Executive devoted to the business of the Company in the year preceding the date
hereof. The Executive shall be bound by the noncompetition provisions of Section
5.9 (the "Noncompetition Obligations") of the Stock Purchase Agreement. Anything
to the contrary notwithstanding, the Executive may devote not more than five (5)
hours per week during business hours, meaning between 8:00 a.m. and 5:30 p.m.
Central Time, to the Redeemed Business, so long as such activity does not
interfere with the performance of his duties hereunder.
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5. Compensation. As compensation for his services in any capacity rendered
under this Agreement, the Executive shall be entitled to receive the following,
subject to Section 6 hereof:
a. Salary. During the term of this Agreement the Company shall pay the
Executive a salary at the rate of $16,667 per month (the "Salary"). The
Salary shall be payable in accordance with the ordinary payroll practices
of the Company.
b. Benefits. For so long as the Executive continues to perform his
duties on a full-time basis during the term of this Agreement, the
Executive shall be able to participate in any and all employee benefit
plans, including but not limited to health and medical insurance, bonus
plans, and retirement plan contributions, as may be in effect for other
employees of the Company that are deemed comparable employees by the CEO.
6. Termination. The Executive's employment hereunder may be terminated as
follows:
a. By the Executive or by the Company without Cause. The Executive may
terminate his employment at any time by giving thirty (30) days' prior
written notice of termination to the CEO, in which case all payments of
Salary, benefits, and any other amounts due hereunder shall cease as of the
Executive's final day of employment (except in the event of "Forced
Resignation," which is addressed below). If the Executive is terminated by
the Company without "Cause," as defined below, or resigns due to a "Forced
Resignation," the Executive shall receive for the remaining original term
of this Agreement payments equal to and at the same times as the Salary
described in Section 5.a but no other amount or benefit hereunder, and such
payments shall be made so long as he remains available to the Company to
provide consulting services as requested and does not violate the
Noncompetition Obligations. For purposes of this Agreement, "Forced
Resignation" shall mean (x) resignation following a material reduction in
the Executive's responsibilities from that stated herein (without the
Executive's consent) such that no reasonable person could be expected to
continue his employment, or (y) relocation of the Executive (without his
consent) to a place of business more than fifty (50) miles from the
Company's current headquarters; provided, that any resignation during the
first eighteen (18) months of this Agreement shall not be a Forced
Resignation.
b. By the Company with Cause. The CEO may, in his reasonable
discretion and judgment and upon written notice effective immediately,
terminate Executive's employment under this Agreement at any time for
"Cause." Cause shall mean:
i. If the Executive is convicted or pleads guilty or no contest
under any applicable criminal code or statute of (A) any felony or (B)
any misdemeanor which involves fraud or dishonesty against the Company
or any affiliated or successor entity or a sentence of confinement or
incarceration for longer than thirty (30) days;
ii. If the Executive breaches the Noncompetition Obligations;
iii. If the Executive breaches any fiduciary duty to the Company;
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iv. If the Executive materially and willfully fails or refuses to
carry out the lawful and reasonable directions of the CEO or Board of
Directors of the Company, following written warning; provided that
such directions must not support a Forced Resignation;
v. If the Executive engages in conduct so outrageous and
detrimental that the Company cannot reasonably continue to employ him;
or
vi. If the Executive himself violates or knowingly permits
employees or independent contractors of the Company to violate
applicable Laws regarding the business of the Company.
If the Executive's employment is terminated for Cause, the Executive shall
receive any Salary accrued to the date of such termination and shall not be
entitled to any compensation or other payment or benefit thereafter.
c. Physical or Mental Illness Incapacity. Executive's employment under
this Agreement shall be terminable by the Company as a result of the
Executive's incapacity due to physical or mental illness, on the earlier of
either: (i) the date when the Executive is eligible for coverage under any
long-term disability insurance plan then carried by the Company; or (ii)
the date when the Executive shall have been materially unable to perform
his duties hereunder for a period of three (3) consecutive months (unless
within ten (10) days after written notice to return is given, which may
occur at or after the end of such three (3) month period, Executive shall
have returned to the performance of his duties hereunder on a full-time
basis). In the event of termination under this Section, (i) the Executive's
Salary shall be paid through the date of termination of this Agreement; and
(ii) the rights and benefits of the Executive under employee benefit and
fringe benefit plans, and other programs of the Company shall be determined
in accordance with the terms and provisions of such plans and programs.
d. Death. Executive's employment under this Agreement shall terminate
as a result of the death of the Executive. In the event of termination
under this Section, the Executive's estate or his designated beneficiary or
beneficiaries shall be entitled to receive (i) the Executive's Salary paid
through the date of termination of this Agreement; and (ii) rights under
the benefit plans and programs of the Company determined in accordance with
the terms and provisions of such plans and programs.
7. Notices. Any notice, request, demand, waiver, consent, approval, or
other communication which is required or permitted hereunder shall be in writing
and shall be deemed given only if delivered personally (including by nationally
recognized overnight courier service) or sent by telegram or by certified mail,
postage prepaid, and sent by telecopier as follows:
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If to the Company: Kevin P. Knight
Knight Transportation, Inc.
5601 West Buckeye Road
Phoenix, AZ 85043
(602) 269-2000 Telephone
(602) 606-6504 Fax
With required copy to: Mark A. Scudder
Scudder Law Firm, P.C.
411 South 13th Street, Suite 200
Lincoln, NE 68508
(402) 435-3223 Telephone
(402) 435-4239 Fax
If to the Executive: John R. Fayard, Jr.
P. O. Box 2939
Gulfport, Mississippi 39503
__________________ Telephone
__________________ Fax
With required copy to: Frederick T. Hoff
Newton and Hoff, L.L.P.
2019 23rd Avenue
Gulfport, Mississippi 39502
(228) 863-8827 Telephone
(228) 868-6007 Fax
or to such other address as the addressee shall 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, telegraphed, or deposited in the mail and
telecopied.
8. Set-off. All payments due the Executive for Salary hereunder shall be
subject to the right of the Company to withhold such payments and offset them
against any amounts owed by the Executive to Knight Transportation, Inc., an
Arizona corporation, or any of its Affiliates under the Stock Purchase
Agreement. The Company shall give the Executive five (5) days' written notice of
any set-off.
9. General Provisions.
a. Law Governing. This Agreement shall be governed by and construed in
accordance with the laws of the State of Mississippi.
b. Invalid Provisions. If any provision of this Agreement is held to
be illegal, invalid, or unenforceable, such provision shall be fully
severable and this Agreement shall be construed and enforced as if such
illegal, invalid, or unenforceable provision had never comprised a part
hereof; and the remaining provisions hereof shall remain in full force and
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effect and shall not be affected by the illegal, invalid, or unenforceable
provision or by its severance therefrom. Furthermore, in lieu of such
illegal, invalid, or unenforceable provision there shall be added
automatically as a part of this Agreement a provision as similar in terms
to such illegal, invalid, or unenforceable provision as may be possible and
still be legal, valid, or enforceable.
c. Attorneys' Fees. If any action at law or in equity is brought to
enforce or interpret the provisions of this Agreement, the prevailing party
shall be entitled to recover reasonable attorneys' fees from the other
party. These fees shall be in addition to any other relief that may be
awarded.
d. Entire Agreement. This Agreement sets forth the entire
understanding of the parties and supersedes all prior agreements or
understandings, whether written or oral, with respect to the subject matter
hereof. No terms, conditions, or warranties, other than those contained
herein, and no amendments or modifications hereto shall be binding unless
made in writing and signed by the parties hereto.
e. Binding Effect. This Agreement shall extend to and be binding upon
and inure to the benefit of the parties hereto, their respective heirs,
representatives, successors, and assigns. This Agreement may not be
assigned by the Executive.
f. Waiver. The waiver by either party hereto of a breach of any term
or provision of this Agreement shall not operate or be construed as a
waiver of a subsequent breach of the same provision by any party or of the
breach of any other term or provision of this Agreement.
g. Titles. Titles of the sections herein are used solely for
convenience and shall not be used for interpretation or construing any
word, clause, paragraph, or provision of this Agreement.
h. Counterparts. This Agreement may be executed in two counterparts,
each of which shall be deemed an original, but which together shall
constitute one and the same instrument.
i. Contingency.. The terms and conditions of this Agreement are
expressly contingent upon the closing of the Stock Purchase Agreement.
IN WITNESS WHEREOF, the Company and the Executive have executed this
Agreement as of the date and year first above written.
EXECUTIVE JOHN FAYARD FAST FREIGHT, INC.,
a Mississippi corporation
/s/ John R. Fayard, Jr. By: /s/ John R. Fayard, Jr.
- ------------------------------------ ------------------------------------
John R. Fayard, Jr., individually John R. Fayard, Jr., President
EXHIBIT L-1
(GULFPORT)
LEASE
THIS LEASE (the "Lease") is made and entered into this 19th day of April,
2000, between John Fayard Moving & Warehousing, L.L.C., as landlord (the
"Landlord"), and John Fayard Fast Freight, Inc., a Mississippi corporation, as
tenant (the "Tenant").
1. DEMISE. In consideration of the undertakings of the parties contained
herein, Landlord leases to Tenant, and Tenant leases from Landlord, the Leased
Premises on the terms and conditions contained in this Lease.
2. PREMISES.
2.1 LEASED PREMISES. The Leased Premises comprise a portion of the
real property described on Exhibit "A" hereto (the "Property") consisting of:
the office building, maintenance shop, truck wash, fuel island,
and all loading, parking, drive and other exterior areas associated
with the terminal facility of Tenant (but not the warehouse space,
except to the extent of any Expansion Space).
2.2 COMMON AREAS. The loading, parking, drive, and other areas
exterior to the buildings shall be referred to as the "Common Areas."
2.3 LANDLORD'S LICENSE. The Landlord shall retain a non-exclusive
license during the Term of this Lease (as hereinafter defined) to use (x) the
Common Areas; and (y) the portion of the office building used by the employees
of Landlord's business at the Commencement Date, in each case to the extent such
areas are not required by Tenant for the operation of its business and subject
to the requirement that Landlord's activities do not interfere with the
operation of the Tenant's business, each as determined by Tenant in its
reasonable discretion. In the event John R. Fayard's employment is terminated by
Tenant and Landlord and Tenant cannot agree on continued usage of the Common
Areas, Tenant shall (a) continue to have a right of ingress and egress to and
from the Property and to load and unload at all warehouse locations on the
Property. Furthermore, in such instance, to the extent it does not interfere
with Tenant's operation of its business, the parties shall allocate the Common
Area to the left of the grassy area immediately left of the Property entrance to
Landlord and the remainder to Tenant; provided, that Tenant shall have the
paramount right to use the entirety of the Leased Premises if reasonably
necessary for the operation of its business. In any event, whether or not John
R. Fayard remains employed by Tenant, Tenant shall use its best efforts to keep
warehouse doors clear and space available for docking, loading, and unloading in
conjunction with Landlord's business.
<PAGE>
2.4 EXPANSION OPTION. At any time during the Primary Term of this
Lease, Tenant shall have the option, exercisable on sixty (60) days' written
notice to Landlord, to request Landlord to expand the Leased Premises to include
exclusive use of the space described on Exhibit "B" (the "Expansion Space"), and
Landlord, at its cost, shall provide mutually agreed improvements to such space.
Upon completion of the improvements for occupancy by Tenant, the Expansion Space
shall, without further action, become part of the Leased Premises, and the Rent
(as described in Section 4.1) shall be increased by the FMRV, as defined in
Section 4.2, of the Expansion Space.
3. TERM.
3.1 PRIMARY TERM. The term of this Lease shall be for the period April
19, 2000 (the "Commencement Date"), through April 18, 2005 (the "Primary Term"),
unless this Lease shall be earlier terminated as hereinafter provided.
3.2 EXTENSION TERMS. Tenant shall have the option to extend the
Primary Term for the extension periods set forth below (the "Extension Terms"),
upon the terms of this Lease, except as otherwise provided in Section 4.1(B):
(A) Extension Terms: two (2) five (5) year renewal options, from:
Option one: April 19, 2005, through April 18, 2010.
Option two: April 19, 2010, through April 18, 2015.
(B) Exercise Date: Tenant shall deliver to Landlord notice of its
election to so extend the Primary Term or the first Extension Term on
or before sixty days from the expiration of the Primary Term, or the
first Extension Term, respectively.
3.3 TERM OF THIS LEASE. The Primary Term and all Extension Terms
elected by Tenant sometimes shall be referred to collectively as the "Term of
this Lease;" provided, the Term of this Lease shall end upon the expiration or
termination of This Lease.
4. RENT.
4.1 MONTHLY RENT. During the Term of this Lease, Tenant shall pay rent
to Landlord at the address set forth in Section 27 in monthly installments (the
"Rent") as set forth in Subparagraphs (A) and (B) below. The first monthly
installment of Rent shall be payable on the Commencement Date, and on or before
the first business day of each calendar month thereafter. Rent for partial
months at the inception or termination of the Lease shall be prorated.
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(A) Primary Term: monthly installments of $15,000.
(B) Extension Terms:
Option One: monthly installments of $20,000.
Option Two: FMRV paid in monthly installments.
4.2 FAIR MARKET RENTAL VALUE DETERMINATIONS. For purposes of Section
2.2 and 4.1(B), fair market rental value ("FMRV") shall be as agreed to in good
faith by the Landlord and Tenant. If no agreement has been reached within 30
days of Landlord's receipt of Tenant's written notice of intent to occupy the
Expansion Space or exercise Option Two, respectively, then the FMRV shall be
determined by an independent and duly qualified appraiser mutually agreeable to
the Landlord and Tenant and the cost of such appraisal shall be borne equally by
the Landlord and the Tenant. If no agreement can be reached in choosing such an
appraiser, then the Landlord shall select an appraiser (the "Landlord
Appraiser") and the Tenant shall select an appraiser (the "Tenant Appraiser")
and such appraisers shall mutually agree upon the FMRV. Each party shall bear
the cost of its selected appraiser. If the Landlord Appraiser and the Tenant
Appraiser are unable to agree on the FMRV, then the Landlord Appraiser and the
Tenant Appraiser shall select a mutually agreeable independent and duly
qualified appraiser (the "Independent Appraiser"). The determination of the FMRV
by the Independent Appraiser shall be binding on the parties; provided, the FMRV
determined by the Independent Appraiser shall be within the FMRV range
established by the Landlord Appraiser and Tenant Appraiser. "Appraiser," as used
in this paragraph, shall include duly licensed real estate brokers.
5. REAL ESTATE TAXES AND ASSESSMENTS. During the Term of this Lease, the
Landlord shall be liable for a percentage of the real estate and property taxes
and special assessments that become due and payable with respect to the Property
each year during the Term of this Lease equal to the percentage represented by a
fraction, the numerator of which is the appraised value of the warehouse space
plus one-third of the value of all Common Areas, and the denominator of which is
the appraised value of the entire Property and improvements (the "Landlord's Tax
Percentage"). Upon receipt of a tax statement from the taxing authority, the
Landlord shall forward such statement, along with payment equal to the
Landlord's Tax Percentage multiplied by the total tax liability set forth in the
tax statement (the "Landlord's Tax Payment"), to the Tenant. Subject to
receiving the statement and the Landlord's Tax Payment from the Landlord, the
Tenant shall pay, prior to delinquency, directly to the taxing authority, the
entire amount of the tax liability set forth on the tax statement. The Tenant
shall provide Landlord proof of payment of such tax liability, prior to the
dates on which such payments would otherwise become delinquent. The Landlord
shall not be liable for any increase in the amount of real estate and property
taxes and special assessments levied on the Property because of improvements
made to the Leased Premises by the Tenant but shall be 100% liable for any
increase in the amount of real estate and property taxes and special assessments
levied on the Property because of improvements made to the Property by the
Landlord, and the Landlord's Tax Percentage shall be adjusted accordingly. The
Landlord shall be liable for 100% of the real estate taxes and special
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assessments attributable to the Property after the date this Lease is
terminated. The tax payments shall be prorated for any partial year during this
Lease.
6. UTILITIES. The Tenant shall pay all charges for all utilities,
including, but not limited to, gas, electricity, light, heat, power, water,
sewer, cable, and telephone ("utilities"), used or supplied upon or in
connection with the Leased Premises to which it is entitled to exclusive use and
one-half of such amounts for all other parts of the Leased Premises. The
Landlord shall pay for all utilities used or supplied upon or in connection with
that portion of the Property outside the Leased Premises and for one-half of the
utilities used or supplied upon or in connection with that portion of the Leased
Premises to which the Tenant is not entitled to exclusive use. It is the
intention of the parties that the foregoing apply to all utilities of any kind
and, accordingly, each shall pay its proportionate share of any utility charge
relating to or used in or at the Property, but which is not separately metered
thereto.
7. INTENTIONALLY OMITTED.
8. INTENTIONALLY OMITTED.
9. TENANT'S IMPROVEMENTS. Subject to obtaining Landlord's written consent
for structural improvements (not to be unreasonably withheld and which consent
has been given with respect to all items referred to on Exhibit "C"), Tenant, at
is sole cost and expense, shall have the right, but shall not be obligated,
prior to and during the Term of this Lease to improve, alter, and renovate the
Leased Premises in any manner that Tenant deems necessary or desirable to adapt
the same for the conduct of its business operations, including without
limitation, painting, decorating, redecorating, and installing partitions, floor
coverings, wall coverings, drop ceilings, light fixtures, and the work set forth
on Exhibit "C." Tenant shall perform all work described in this Section
according to the standards set forth in Section 19.1(B).
10. TRADE FIXTURES; PERSONAL PROPERTY. Tenant, at its sole cost and
expense, shall have the right, but not be obligated, to install, use, replace,
and remove its trade fixtures and personal property, such as, without
limitation, telephone, facsimile, and other communications equipment, machinery,
conveyor systems, modular docks, dock levelers, task lights, office furniture,
office trailers, and roof antennas. Upon the expiration or the earlier
termination of this Lease, Tenant shall have the right to remove such trade
fixtures and personal property from the Leased Premises, provided that Tenant
shall repair all damage to the Leased Premises resulting from such removal.
11. MAINTENANCE AND REPAIRS BY TENANT.
11.1 GENERAL MAINTENANCE AND REPAIR. The Tenant shall, at Tenant's
sole expense, keep the interior portions of the Leased Premises to which it is
entitled to exclusive use, including all windows, doors, and glass, in as good
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order and repair as it was on the Commencement Date, reasonable wear and tear
excepted. Tenant shall also maintain the portions of the Leased Premises to
which it is entitled to exclusive use in a clean and orderly condition, and
shall not cause the exterior of the buildings or any part of the real property
contained within the portions of the Leased Premises to which it is entitled to
exclusive use to become littered, disorderly, or unsightly in any manner.
11.2 TENANT'S SHARE OF COSTS RELATED TO MAINTENANCE AND REPAIR OF
COMMON AREAS. Landlord shall maintain and repair the Common Areas and keep them
in sufficient condition for operation of the Tenant's business. Tenant shall pay
to Landlord upon demand sixty-six and two-thirds percent (66 2/3%) of the direct
cost of operating and maintaining all Common Areas, including, without
limitation, all parking areas, access roads, sidewalks, landscaped space, and
other space contained in the Common Areas. Tenant shall make such payment within
thirty (30) days of Landlord's delivery to Tenant of an invoice therefor. The
"direct cost of operating and maintaining all Common Areas" shall not include
expenses that are capital in nature ("Capital Expenses"), and shall not include
any management fees ("Management Fees"; Capital Expenses and Management Fees,
together, "Excluded Expenses"). Excluded Expenses shall be the sole
responsibility of Landlord.
11.3 TENANT PERFORMING LANDLORD'S MAINTENANCE. If Landlord fails to
perform its maintenance and repair obligations within fifteen (15) days after
Tenant's delivery to Landlord of notice of the need therefor, then Tenant shall
have the right, upon delivery of three (3) business days' written notice to
Landlord, to perform or have performed all or part of such maintenance and
repairs, at the sole cost and expense of Landlord, and Landlord shall reimburse
Tenant for such costs and expenses within thirty (30) days after Tenant's
delivery to Landlord of an invoice therefor. If Landlord fails to pay within
thirty (30) days of receiving such invoice, Tenant may offset such costs and
expenses against any Rent and other amounts payable by Tenant under this Lease.
12. MAINTENANCE AND REPAIRS BY LANDLORD.
12.1 GENERAL MAINTENANCE AND REPAIR. The Landlord shall keep the
structural supports and exterior walls and roofs of the buildings contained
within the Leased Premises in good order and repair and shall be responsible for
the operation and maintenance of all Common Areas. The Landlord shall also
maintain in good order and repair all mechanical and utility systems serving the
Leased Premises, including without limitation, heating, ventilating, air
conditioning, lighting, electrical, plumbing, gas, water supply, sanitary sewers
and septic systems, exterior telephone and communication lines and circuits, and
underground or overhead electrical supply (sometimes collectively referred to
herein as the "Mechanical and Utility Systems").
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12.2 LANDLORD PERFORMING TENANT'S MAINTENANCE. If Tenant fails to
perform its maintenance and repair obligations within fifteen (15) days after
Landlord's delivery to Tenant of notice of the need therefor, then Landlord
shall have the right, upon delivery of three (3) business days' written notice
to Tenant, to perform or have performed all or part of such maintenance and
repairs, at the sole cost and expense of Tenant, and Tenant shall reimburse
Landlord for such costs and expenses within thirty (30) days after Landlord's
delivery to Tenant of an invoice therefor.
13. INSURANCE.
13.1 CASUALTY INSURANCE PROVIDED BY TENANT. At all times during the
Term of this Lease, Tenant, at its sole cost and expense, shall cause the Leased
Premises (including the Common Areas) to be fully and adequately insured with a
customary policy of fire and extended coverage insurance (including vandalism,
malicious mischief, and special extended perils or all risk) in an amount not
less than the full replacement cost of the Leased Premises, with a standard
inflation guard endorsement or, in the event the parties have agreed upon a
fixed amount of insurance, with a fixed amount endorsement. Such insurance
policy shall name the Landlord as an additional insured, as its interests may
appear.
13.2 CASUALTY INSURANCE PROVIDED BY LANDLORD. At all times during the
Term of this Lease, Landlord, at its sole cost and expense, shall cause that
portion of the Property outside the Leased Premises to be fully and adequately
insured with a customary policy of fire and extended coverage insurance
(including vandalism, malicious mischief, and special extended perils or all
risk) in an amount not less than the full replacement cost of the subject
Property, with a standard inflation guard endorsement or, in the event the
parties have agreed upon a fixed amount of insurance, with a fixed amount
endorsement. Such insurance policy shall name the Tenant as an additional
insured, as its interests may appear.
13.3 PUBLIC LIABILITY INSURANCE PROVIDED BY TENANT. At all times
during the Term of this Lease, Tenant shall maintain in full force and effect a
public liability insurance policy for the Leased Premises (including the Common
Areas) with coverage limits of $5,000,000 for bodily injury and $5,000,000 for
property damage. Such insurance policy shall name the Landlord as an additional
insured, as its interest may appear, and may be provided under Tenant's
insurance policies in effect from time to time.
13.4 PUBLIC LIABILITY INSURANCE PROVIDED BY LANDLORD. At all times
during the Term of this Lease, Landlord shall maintain in full force and effect
a public liability insurance policy for that portion of the Property outside the
Leased Premises (as well as the Common Areas) with coverage limits of $5,000,000
for bodily injury and $5,000,000 for property damage. Such insurance policy
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shall name the Tenant as an additional insured, as its interest may appear, and
may be provided under Landlord's insurance policies in effect from time to time.
13.5 CERTIFICATES. Any insuring party shall, upon request, provide an
insured party with adequate evidence of the continued existence of applicable
insurance coverage by certificate(s) of insurance. Each such certificate shall
contain an agreement by the insurer that such insurance coverage shall not be
modified or canceled without delivery of at least thirty (30) days' written
notice to the insured party.
14. MUTUAL SUBROGATION WAIVER. In the event that any portion of the
Property or Tenant's trade fixtures or personal property in the Leased Premises
shall be damaged or destroyed by fire, explosion, or other casualty required to
be insured against pursuant to Sections 13.1 and/or 13.2, whether or not such
damage or destruction is caused, or claimed to be caused, by the negligence or
misconduct of Landlord or Tenant, or any of their respective officers,
directors, employees, agents, affiliates, contractors, or invitees, neither
Landlord, Tenant, nor their respective insurance company(ies), shall have any
right of action, by way of subrogation or otherwise, against Tenant or Landlord,
or any of their respective officers, directors, employees, agents, affiliates,
contractors, or invitees, arising from such damage or destruction, and each
policy of insurance required pursuant to Sections 13.1 and 13.2 shall provide a
waiver and release by the insurer of any such right. Landlord and Tenant further
agree that during or after Tenant's occupancy of the Leased Premises, each will
indemnify and hold the other harmless from any claim against the other made by
way of subrogation by Landlord's or Tenant's fire and extended coverage
insurance carrier(s).
15. DAMAGE OR DESTRUCTION.
15.1 REPAIR AND RESTORATION. In the event the Leased Premises shall be
damaged or destroyed by fire, casualty, or other risk required to be insured
against pursuant to Section 13.1 or at law, Tenant, at its sole cost and
expense, shall promptly repair the damage or destruction and restore the Leased
Premises to substantially that condition existing immediately prior to such
damage or destruction. Unless terminated pursuant to Section 15.2, this Lease
shall remain in full force and effect, and Tenant's obligation to pay Rent shall
not be abated during the period of Tenant's repair and restoration efforts.
15.2 RIGHTS OF TERMINATION. If any portion of the Leased Premises
shall be rendered untenantable, in Tenant's reasonable judgment, for the use and
occupancy thereof by Tenant for the conduct of its business operations as a
result of any damage or destruction, or if Tenant reasonably anticipates that
the repair and restoration of any such damage or destruction shall not be
completed within sixty (60) days after the date of the damage or destruction,
then the Tenant may elect to terminate this Lease by delivery of written notice
to the Landlord within thirty (30) days after the date of such damage or
destruction. Upon delivery of a notice pursuant to this Section, this Lease
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shall terminate as of the date of the damage or destruction unless otherwise
provided in such notice, and Tenant shall have no further liabilities or
obligations under this Lease; provided, however, that Tenant shall remain liable
for payment of any Rent accrued as of the date of such termination and for the
prompt repair and restoration of the damage or destruction necessary to restore
the Leased Premises to substantially that condition existing immediately prior
to such damage or destruction.
16. EMINENT DOMAIN.
16.1 REPAIR AND RESTORATION. In the event that any portion of the
Leased Premises shall be taken or threatened to be taken under the power of
eminent domain, or settlement in lieu thereof, for any public or quasi-public
use, Landlord promptly shall deliver to Tenant notice thereof. Unless terminated
pursuant to Section 16.2, this Lease shall remain in full force and effect, and
Landlord, at its sole cost and expense, shall repair the damage and restore the
Leased Premises so as to constitute the remaining portion thereof a complete
architectural unit or units. If Tenant remains in occupancy of the Leased
Premises, Landlord shall conduct such repair and restoration efforts in a manner
so as not to interfere unreasonably with the use and occupancy of the Leased
Premises by Tenant for the conduct of its business operations. Until the
completion of Landlord's repair and restoration pursuant to this Section,
Tenant's obligation to pay Rent and other amounts payable by Tenant hereunder
shall be abated as of the date on which possession of the Leased Premises or
portion thereof shall be required by the public or quasi-public body in
proportion to the extent that the value of the Leased Premises for the use and
occupancy thereof by Tenant for the conduct of its business operations shall be
reduced, in Tenant's reasonable judgment.
16.2 RIGHTS OF TERMINATION. If, as a result of any of the events for
which notice is required to be given to Tenant under Section 16.1, the Leased
Premises no longer shall be fit and suitable for the use and occupancy thereof
by Tenant for the conduct of its business operations by reason of a material
reduction of any portion of the Leased Premises, Tenant may elect to terminate
this Lease by delivery of written notice to Landlord. In such event, this Lease
shall terminate effective as of the date of actual vacation of the Leased
Premises by Tenant; and thereupon Tenant shall have no further liabilities or
obligations hereunder other than to pay Rent accrued hereunder as of such date
of termination.
17. TENANT'S DEFAULT; LANDLORD'S REMEDIES.
17.1 TENANT DEFAULT. Each of the following events shall constitute a
default of this Lease by Tenant (a "Tenant Default"):
(A) the failure of Tenant to pay any Rent or other amount payable
by Tenant hereunder within five (5) days after the date on which
Tenant receives from Landlord notice specifically describing such
failure (provided, that failure to pay Rent in exercise of any right
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of offset to which Tenant or any of its affiliates shall be entitled
shall not constitute a default); and
(B) subject to cure by Landlord under Section 12.2, the failure
of Tenant to perform any other term, condition, covenant, or
obligation of this Lease on the part of Tenant to be performed within
thirty (30) days after the date on which Tenant receives from Landlord
notice specifically describing such failure; provided, however, that
if Tenant shall exercise in good faith diligent efforts within such
thirty (30) day period to cure the failure specified in the notice but
shall not be able to do so because of a cause or causes beyond the
control of Tenant, then any such failure shall not be considered a
Tenant Default so long as Tenant shall continue to exercise in good
faith such diligent efforts to cure such failure and shall do so
within a reasonable period of time.
17.2 LANDLORD'S REMEDIES. In the event of a Tenant Default, Landlord
shall have the following rights and remedies, which shall be exercisable three
(3) business days after the date on which Tenant receives from Landlord
additional notice by certified or registered mail with respect thereto:
(A) to enter upon the Leased Premises and again have, repossess,
and enjoy the same as if this Lease had not been made, and all terms,
conditions, covenants, and obligations of this Lease on the part of
Landlord to be performed shall cease and terminate, without prejudice,
however, to the right of Landlord to recover from Tenant all Rent
accrued hereunder as of the date of such entry by Landlord; and
(B) to relet the Leased Premises for the remainder of the then
existing Primary Term or Extension Term and to recover from Tenant any
deficiency, as it accrues, between the amount so obtained and Rent
payable by Tenant hereunder; provided, however, that Landlord shall be
obligated in such event to exercise in good faith diligent efforts to
mitigate its damages by reletting the Leased Premises for the highest
rent reasonably obtainable under the circumstances; and
(C) to pursue all other rights and remedies to which Landlord may
be entitled hereunder, at law or in equity.
18. LANDLORD'S DEFAULT; TENANT'S REMEDIES. Subject to cure by Tenant under
Section 11.3, the failure of Landlord to perform any term, condition, covenant,
or obligation of this Lease on the part of Landlord to be performed within
thirty (30) days after the date on which Landlord receives from Tenant notice
specifically describing such failure shall constitute a default of this Lease by
Landlord (a "Landlord Default"); provided, however, that if Landlord shall
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exercise in good faith diligent efforts within such thirty (30) day period to
cure the failure specified in the notice but shall not be able to do so because
of a cause or causes beyond the control of Landlord, then any such failure shall
not be considered a Landlord Default so long as Landlord shall continue to
exercise in good faith such diligent efforts to cure such failure and shall do
so within a reasonable period of time.
19. REPRESENTATIONS AND WARRANTIES.
19.1 COMPLIANCE WITH LAWS.
(A) Landlord represents and warrants that Landlord's Repairs
under Section 7, and its maintenance and repairs under Section 12
shall be done in a good and workmanlike manner and comply with all
laws, ordinances, and requirements, including, without limitation, the
procuring of all building and other permits, licenses, approvals, and
certificates of occupancy, and the observance of applicable building,
zoning, and other code requirements of governmental authorities with
competent jurisdiction. Landlord further represents and warrants that
the Property is currently zoned for the use intended by Tenant.
(B) Tenant represents and warrants that Tenant's Improvements
under Section 9, and its maintenance and repairs under Section 11
shall be done in a good and workmanlike manner and comply with all
laws, ordinances, and requirements, including, without limitation, the
procuring of all building and other permits, licenses, approvals, and
certificates of occupancy, and the observance of applicable building,
zoning, and other code requirements of governmental authorities with
competent jurisdiction. Tenant further represents and warrants that
its use and occupancy of the Leased Premises for the conduct of its
business operations shall comply with all applicable laws, ordinances,
and requirements of governmental authorities with competent
jurisdiction.
19.2 WARRANTY OF TITLE. Landlord represents and warrants that: (a)
Landlord is the fee simple owner of the Property with full authority to execute,
deliver, and perform this Lease; (b) as of the date of, and during the term of,
this Lease, no third party has or will have any rights to occupy or use any part
of the Property, including the Leased Premises, other than the right of Landlord
and its affiliates to occupy the portion of the Property not included in the
Leased Premises and the non-exclusive right to use the Common Areas and that
portion of the central office building not included in the Office Space; and (c)
as of the date of this Lease, no mortgage, deed of trust, or other lien, or
restriction encumbers the Leased Premises, except as set forth in Exhibit "D".
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19.3 BROKER'S COMMISSION. Landlord and Tenant each represents and
warrants for the benefit of the other that it has not dealt with any real estate
broker, finder, or agent in connection with this Lease.
19.4 HAZARDOUS AND TOXIC CONDITIONS.
(A) Landlord represents and warrants that the Property is in
compliance with all laws, ordinances, rules, or regulations ("Laws")
pertaining to environmental and occupational health and safety matters
("Environmental Laws"). No Environmental Constituent, as hereinafter
defined, is present on the Property other than as may be permitted by
Environmental Law. The term "Environmental Constituent" shall mean any
pollutant, contaminant, foreign substance, or hazardous substance, and
shall include but not be limited to, petroleum, petroleum products,
and substances identified or designated pursuant to federal and state
Environmental Laws, including the Comprehensive Environmental
Response, Compensation and Liability Act, 42 U.S.C. 9601, ET SEQ.
Landlord shall indemnify and hold harmless Tenant, its officers,
directors, employees, agents, and affiliates from and against any and
all claims, causes of action, suits, judgments, taxes, losses,
damages, deficiencies, obligations, costs, and expenses (including,
without limitation, reasonable attorneys' fees) arising out of or
otherwise in respect of (i) the presence, release, or threatened
release of any Environmental Constituent on, to, or from the Property
(including soils, groundwater, surface water, buildings, or other
structures) unless such presence, release, or threatened release was
caused by Tenant, or (ii) any misrepresentation, inaccuracy or breach
of this Section 19.4(A).
(B) Tenant represents and warrants that the Leased Premises will
be used in compliance with all Environmental Laws; no Environmental
Constituent will be used by Tenant or stored on the Leased Premises
other than as permitted by Environmental Law; and Tenant will not
discharge, release, or spill any Environmental Constituent in
violation of any Environmental Law. Tenant shall indemnify and hold
harmless Landlord, its officers, directors, employees, agents, and
affiliates from and against any and all claims, causes of action,
suits, judgments, taxes, losses, damages, deficiencies, obligations,
costs, and expenses (including, without limitation, reasonable
attorneys' fees) arising out of or otherwise in respect of (i) any
misrepresentation, inaccuracy or breach of this Section 19.4(B), or
(ii) any third-party claims relating to Environmental Constituents on
the Leased Premises arising during the Term of this Lease.
The indemnification provisions of this Section 19.4 shall be in
addition to and shall not be deemed to limit or to be limited by the
general mutual indemnification provided for in Section 21 of this
Lease.
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20. LANDLORD'S RIGHT OF ENTRY. Following reasonable notice to Tenant,
Landlord may enter upon the Leased Premises as often as Landlord may deem
reasonably necessary for the purposes of performing maintenance and repairs,
inspecting the Leased Premises, offering the Leased Premises for lease (but only
during the period that commences sixty (60) days prior to the expiration of the
then existing Primary Term or Extension Term) or offering the Property for sale.
Landlord's right of entry shall be exercised in a manner and at times such that
there shall be no unreasonable interference with the use and occupancy of the
Leased Premises by Tenant for the conduct of its business operations.
21. GENERAL MUTUAL INDEMNIFICATION. Each party (the "Indemnitor") agrees to
indemnify, defend, and hold the other party (the "Indemnitee") harmless from and
against any and all claims, causes of action, suits, judgments, taxes, losses,
damages, deficiencies, obligations, costs, and expenses (including, without
limitation, reasonable attorneys' fees) (collectively "Losses") arising out of
or otherwise in respect of: (a) any breach of any representation or warranty or
any covenant or agreement of the Indemnitor under this Lease; or (b) any injury
to, or death of, persons and/or any damage to, or destruction of, property, on
or about the Property and attributable to the negligence or misconduct of the
Indemnitor, or its officers, directors, employees, agents, affiliates,
contractors, or invitees, except for any such breach, any injury or death, or
any damage or destruction arising out of, or with respect to, the negligence or
misconduct of the Indemnitee, or any of its officers, directors, employees,
agents, affiliates, contractors or invitees, or as otherwise specifically
provided in this Lease; provided, however, that the indemnification obligation
created by this Section shall be expressly conditioned upon the Indemnitee (i)
delivering to the Indemnitor prompt notice of any event giving rise to such
indemnification obligation and (ii) providing the Indemnitor the opportunity to
defend itself from and against any Losses.
22. TRANSFERS.
22.1 ASSIGNMENT AND SUBLETTING. Except as provided in this Section,
Tenant shall not assign this Lease nor sublet any portion of the Leased
Premises, without the consent of Landlord, which consent shall not be
unreasonably withheld or delayed; provided, however, that Tenant shall have the
right, without the consent of Landlord, to assign this Lease or sublet any
portion of the Leased Premises to Knight Transportation, Inc. or any of
affiliates, or wholly-owned subsidiaries. Absent the written agreement of
Landlord, no assignment of this Lease or subletting of all or any portion of the
Leased Premises shall relieve Tenant of any of the terms, conditions, covenants,
or obligations of this Lease on the part of Tenant to be performed.
22.2 RIGHT OF FIRST REFUSAL. Tenant shall have a right of first
refusal with respect to purchasing the Property, or any portion thereof. The
right of first refusal being granted hereunder shall terminate upon the
expiration or termination of this Lease. In the event Landlord obtains a bona
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fide purchase offer for any portion of the Property that is acceptable to
Landlord, Landlord shall notify Tenant of the terms of said purchase offer and
Tenant shall then have thirty (30) business days within which to agree to
purchase the portion of the Property so offered, which purchase shall be on the
same terms as contained in such bona fide purchase offer. In the event Tenant
declines said right of first refusal or, in the event Tenant does not respond
within said thirty (30) business days, Landlord shall then be entitled to sell
the subject property to the offering party in strict compliance with the terms
of the offer. In the event the sale is not consummated within thirty (30) days
after the expiration of the thirty (30) day period, or the sale is upon terms
different from those included in the original offer, any sale shall be null and
void and the subject property shall again be subject to this right of first
refusal.
23. HOLDING OVER. If Tenant shall continue to occupy the Leased Premises
after the expiration of the Term of this Lease or the earlier termination of
this Lease, then Tenant shall be deemed to be occupying the Leased Premises as a
tenant from month-to-month, subject to the terms and conditions of this Lease as
they existed on such expiration or termination; provided, however, that either
party shall have the right to terminate such month-to-month tenancy upon
delivery of thirty (30) days' notice to the other.
24. QUIET ENJOYMENT.
24.1 LANDLORD'S COVENANT. Landlord covenants and agrees that Tenant
shall have the peaceful and quiet possession and enjoyment of the Leased
Premises for the conduct of its business operations during the Term of this
Lease, without hindrance by Landlord or any party whatsoever.
24.2 TENANT'S OPTION TO TERMINATE. Tenant, at its sole option and
discretion, shall have the right to terminate this Lease, effective six (6)
months after notice to Landlord, without further liability hereunder except for
Rent and other obligations accrued to the effective date of termination, in the
event that Landlord leases space in the Property to a third party tenant whose
work force is or becomes organized, whether in whole or part, by a union. Tenant
may exercise this option by giving the Landlord said notice not later than
thirty (30) days after Tenant first learns of the fact of organization by a
union.
25. SUBORDINATION AND ATTORNMENT. Tenant covenants and agrees, on the terms
and conditions provided in this Section, that this Lease shall be subordinate to
any institutional mortgage or deed of trust that now or hereafter shall encumber
the Leased Premises, provided that each mortgagee or beneficiary shall execute
and deliver to Tenant a non-disturbance, attornment, and subordination agreement
stating (in addition to other reasonable terms, if any) in substance that (i) if
Tenant is not in default hereunder, the right of possession of Tenant to the
Leased Premises shall not be affected or disturbed by any mortgagee in the
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exercise of any of its rights under a mortgage or the note secured thereby, and
any sale of the Leased Premises pursuant to the exercise of any rights and
remedies under a mortgage or otherwise shall be made subject to Tenant's right
to possession of the Leased Premises under this Lease; and (ii) Tenant shall
attorn to any mortgagee or purchaser at a foreclosure sale (a "Purchaser") upon
acquisition of title to the Leased Premises by a mortgagee or Purchaser and
notice to Tenant thereof, and this Lease shall continue in full force and effect
between Tenant and such mortgagee or Purchaser. Upon Tenant's receipt and
approval of such a non-disturbance/attornment agreement from a mortgagee or
beneficiary from time-to-time, Tenant covenants and agrees to attorn to such
mortgagee or beneficiary upon foreclosure.
26. SURRENDER OF LEASED PREMISES. Upon the expiration or earlier
termination of the Term of this Lease, Tenant shall deliver up and surrender the
Leased Premises to Landlord in as good order and condition as upon the
Commencement Date, subject to: (a) Tenant's improvements, alterations, and
renovations to the Leased Premises, including, without limitation, Tenant's
Improvements under Section 9; (b) normal wear and tear; (c) repairs and
restorations for which Tenant shall not be responsible hereunder; and (d)
Tenant's removal of its trade fixtures.
27. NOTICE. Any notice, request, demand, waiver, consent, approval, or
other communication that is required or permitted hereunder shall be in writing
and shall be deemed given only if delivered personally (including by nationally
recognized overnight courier service) or sent by telegram or by certified mail,
postage prepaid, and sent by telecopier as follows:
If to Tenant, to: Kevin P. Knight
Knight Transportation, Inc.
5601 West Buckeye Road
Phoenix, Arizona 85043
(602) 269-2000 Telephone
(602) 606-6504 Fax
If to Landlord, to: John R. Fayard, Jr.
P. O. Box 2939
Gulfport, Mississippi 39503
__________________ Telephone
__________________ Fax
or to such other address as the addressee shall 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, telegraphed, or deposited in the mail and
telecopied.
28. RECORDING. If Landlord or Tenant requests, the parties shall execute
and acknowledge a short form of lease for recording purposes, which short form
of lease shall be recorded at the expense of the party requesting the same,
which party shall pay any documentary transfer tax or other special tax or
assessment associated with, or triggered by, such recording.
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29. SIGNS. Tenant shall have exclusive sign rights with respect to the
Leased Premises' exterior and interior, and shall have the right to erect and
display signs on the Leased Premises and on such other areas of the Property as
Tenant reasonably may request, subject only to compliance with applicable laws,
ordinances, and requirements of governmental authorities with competent
jurisdiction.
30. MISCELLANEOUS.
30.1 ENTIRE AGREEMENT. This Lease contains the entire agreement
between the parties and no promise, representation, warranty, covenant,
agreement, or understanding not specifically set forth in this Lease shall be
binding upon either party.
30.2 AMENDMENTS. This Lease may not be amended, modified, or
supplemented in any manner without the prior written consent of the non-amending
party.
30.3 LAW GOVERNING. This Lease shall be construed and governed under
the laws of the State of Mississippi. In the event any provision of this Lease
is held invalid, illegal, or unenforceable in whole or in part, neither the
validity of the remaining part of such provision, nor the validity of any other
provision of this Lease, shall in any way be affected thereby.
30.4 BINDING EFFECT. This Lease shall be binding upon, and inure to
the benefit of, the parties and their respective heirs, executors,
administrators, personal and legal representatives, successors, and permitted
assigns.
30.5 COUNTERPARTS. This Lease may be executed in two or more
counterparts, each of which shall be deemed an original, but which together
shall constitute one and the same instrument.
30.6 WAIVER. The waiver by either party hereto of a breach of any term
or provision of this Lease shall not operate or be construed as a waiver of a
subsequent breach of the same provision by any party or of the breach of any
other term or provision of this Lease.
30.7 EXHIBITS. The exhibits attached hereto are incorporated herein by
this reference. In the event of any conflict between this Lease and an exhibit,
the Lease shall control.
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30.8 HEADINGS. Section headings herein are used solely for convenience
and shall not be used for interpretation or construing any word, clause,
paragraph, or provision of this Lease.
30.9 COOPERATION. The parties agree to obtain, execute, deliver, and
file such additional documents, instruments, and consents as may be reasonably
requested by either party, at the sole cost and expense of the requesting party,
in order to fully effectuate the terms and conditions of this Lease.
30.10 SURVIVAL. All representations and warranties in this Lease and
the general mutual indemnification provisions of Section 21 shall survive the
termination of this Lease.
IN WITNESS WHEREOF, the parties have caused this Lease to be duly executed
by each of their respective authorized representatives effective as of the date
first above written.
LANDLORD TENANT
JOHN FAYARD FAST FREIGHT, INC.,
a Mississippi corporation
/s/ John R. Fayard, Jr. By: /s/ John R. Fayard, Jr.
- ----------------------------------- --------------------------------
John R. Fayard, Jr., individually John R. Fayard, Jr., President
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EXHIBIT "A"
LEGAL DESCRIPTION OF PROPERTY
A parcel of land situated and being located in Lot 8, Unit Two, DEDEAUX
INDUSTRIAL PARK (Plat Book 36, page 2), Sections 14 and 15, Township 7 South,
Range 11 West, First Judicial District of Harrison County, Mississippi, and
being more particularly described as: Commencing at the northeast corner of Unit
1, DEDEAUX INDUSTRIAL PARK; thence run North 78 degrees 02 minutes East 51.51
feet along the southerly right-of-way of U. S. Interstate Highway #10 to a
concrete right-of-way monument; thence run North 80 degrees 02 minutes East
1015.61 feet along the southerly right-of-way of U. S. Interstate Highway #10 to
the northwest corner of Lot 8, Unit Two, DEDEAUX INDUSTRIAL PARK and the Point
of Beginning; thence run from said Point of Beginning, South 02 degrees 25
minutes West 400.3 feet along the west line of said Lot 8 to the southwest
corner of said Lot 8 and the north right-of-way of Fastway Lane; thence run
North 89 degrees 54 minutes East 921.4 feet along the south line of said Lot 8
and the north right-of-way of Fastway Lane and an extension thereof to the
southeast corner of said Lot 8; thence run North 01 degrees 15 minutes West
556.8 feet along the east line of said Lot 8 to the northeast corner of said Lot
8 and the southerly right-of-way of U. S. Interstate Highway #10; thence run
South 80 degrees 02 minutes West 360.0 feet along the southerly right-of-way of
U. S. Interstate Highway #10; thence run South 09 degrees 58 minutes East 50.0
feet; thence run South 80 degrees 02 minutes West 50.0 feet; thence run North 09
degrees 58 minutes West 50.0 feet to the southerly right-of-way of U. S.
Interstate Highway #10; thence run South 80 degrees 02 minutes West 503.2 feet
along the southerly right- of-way of U. S. Interstate Highway #10 to the
northwest corner of said Lot 8 and the Point of Beginning. Parcel contains 9.94
acres.
<PAGE>
EXHIBIT "B"
SITE PLAN
EXPANSION SPACE
First bay (approx. 20 feet) of
warehouse attached to office building.
<PAGE>
EXHIBIT "C"
TENANT'S IMPROVEMENTS
None
<PAGE>
EXHIBIT "D"
MORTGAGES/ENCUMBRANCES/RESTRICTIONS
LEASE
THIS LEASE (the "Lease") is made and entered into this 19 day of April,
2000, between John R. Fayard, Jr., as landlord (the "Landlord"), and John Fayard
Fast Freight, Inc., a Mississippi corporation, as tenant (the "Tenant").
1. Demise. In consideration of the undertakings of the parties contained
herein, Landlord leases to Tenant, and Tenant leases from Landlord, the Leased
Premises on the terms and conditions contained in this Lease.
2. Premises.
2.1 Leased Premises. The Leased Premises comprise a portion of the
real property described on Exhibit "A" hereto (the "Property") consisting of:
such portion of the office building as reasonably may be needed
by the Company in its trucking option and all loading, parking, drive
and other exterior areas associated with the facility (but not the
warehouse space).
2.2 Landlord's License. The Landlord shall retain a non-exclusive
license during the Term of this Lease (as hereinafter defined) to use the leased
premises provided that Landlord's activities do not interfere with the operation
of the Tenant's business as determined by Tenant in its reasonable discretion.
Tenant does not have any interest in the warehouse space on the property and
shall use its best efforts to keep warehouse doors clear and space available for
docking, loading, and unloading in conjunction with Landlord's business.
3. Term.
3.1 Primary Term. The term of this Lease shall be for the period April
19, 2000 (the "Commencement Date"), through April 18, 2005 (the "Primary Term"),
unless this Lease shall be earlier terminated as hereinafter provided.
3.2 Extension Terms. Tenant shall have the option to extend the
Primary Term for the extension periods set forth below (the "Extension Terms"),
upon the terms of this Lease, except as otherwise provided in Section 4.1(B):
(A) Extension Terms: two (2) five (5) year renewal options, from:
Option one: April 19, 2005, through April 18, 2010.
Option two: April 19, 2010, through April 18, 2015.
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(B) Exercise Date: Tenant shall deliver to Landlord notice of its
election to so extend the Primary Term or the first Extension Term on
or before sixty days from the expiration of the Primary Term, or the
first Extension Term, respectively.
3.3 Term of this Lease. The Primary Term and all Extension Terms
elected by Tenant sometimes shall be referred to collectively as the "Term of
this Lease;" provided, the Term of this Lease shall end upon the first to occur
of expiration or termination of this Lease, or the expiration or termination of
the Lease dated April 19, 2000 between Landlord and Tenant covering the
Gulfport, Mississippi property (the "Gulfport Lease").
4. Rent. There shall be no rent for the Leased Premises, as the rental
amount for the Gulfport Lease includes the rent for the Leased Premises
hereunder.
5. Real Estate Taxes and Assessments. During the Term of this Lease, the
Landlord shall be liable for two-thirds (66 2/3%) of the real estate and
property taxes and special assessments that become due and payable with respect
to the Property each year during the Term of this Lease (the "Landlord's Tax
Percentage"). Upon receipt of a tax statement from the taxing authority, the
Landlord shall forward such statement, along with payment equal to the
Landlord's Tax Percentage multiplied by the total tax liability set forth in the
tax statement (the "Landlord's Tax Payment"), to the Tenant. Subject to
receiving the statement and the Landlord's Tax Payment from the Landlord, the
Tenant shall pay, prior to delinquency, directly to the taxing authority, the
entire amount of the tax liability set forth on the tax statement. The Tenant
shall provide Landlord proof of payment of such tax liability, prior to the
dates on which such payments would otherwise become delinquent. The Landlord
shall not be liable for any increase in the amount of real estate and property
taxes and special assessments levied on the Property because of improvements
made to the Leased Premises by the Tenant but shall be 100% liable for any
increase in the amount of real estate and property taxes and special assessments
levied on the Property because of improvements made to the Property by the
Landlord, and the Landlord's Tax Percentage shall be adjusted accordingly. The
Landlord shall be liable for 100% of the real estate taxes and special
assessments attributable to the Property after the date this Lease is
terminated. The tax payments shall be prorated for any partial year during this
Lease.
6. Utilities. The Tenant shall pay all charges for all utilities,
including, but not limited to, gas, electricity, light, heat, power, water,
sewer, cable, and telephone ("utilities"), used or supplied upon or in
connection with the Leased Premises to which it is entitled to exclusive use and
one-half of such amounts for all other parts of the Leased Premises. The
Landlord shall pay for all utilities used or supplied upon or in connection with
that portion of the Property outside the Leased Premises and for one-half of the
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utilities used or supplied upon or in connection with that portion of the Leased
Premises to which the Tenant is not entitled to exclusive use. It is the
intention of the parties that the foregoing apply to all utilities of any kind
and, accordingly, each shall pay its proportionate share of any utility charge
relating to or used in or at the Property, but which is not separately metered
thereto.
7. Intentionally Omitted.
8. Intentionally Omitted.
9. Tenant's Improvements. Subject to obtaining Landlord's written consent
for structural improvements (not to be unreasonably withheld and which consent
has been given with respect to all items referred to on Exhibit "C"), Tenant, at
is sole cost and expense, shall have the right, but shall not be obligated,
prior to and during the Term of this Lease to improve, alter, and renovate the
Leased Premises in any manner that Tenant deems necessary or desirable to adapt
the same for the conduct of its business operations, including without
limitation, painting, decorating, redecorating, and installing partitions, floor
coverings, wall coverings, drop ceilings, light fixtures, and the work set forth
on Exhibit "C." Tenant shall perform all work described in this Section
according to the standards set forth in Section 19.1(B).
10. Trade Fixtures; Personal Property. Tenant, at its sole cost and
expense, shall have the right, but not be obligated, to install, use, replace,
and remove its trade fixtures and personal property, such as, without
limitation, telephone, facsimile, and other communications equipment, machinery,
conveyor systems, modular docks, dock levelers, task lights, office furniture,
office trailers, and roof antennas. Upon the expiration or the earlier
termination of this Lease, Tenant shall have the right to remove such trade
fixtures and personal property from the Leased Premises, provided that Tenant
shall repair all damage to the Leased Premises resulting from such removal.
11. Maintenance and Repairs.
11.1 General Maintenance and Repair. The Landlord shall, at Landlord's
sole expense, keep in as good order and repair as it was on the Commencement
Date, reasonable wear and tear excepted. Landlord shall also maintain the
property, including the Leased Premises in a clean and orderly condition, and
shall not cause the exterior of the buildings or any part of the Property to
become littered, disorderly, or unsightly in any manner.
11.2 Tenant Performing Landlord's Maintenance. If Landlord fails to
perform its maintenance and repair obligations within fifteen (15) days after
Tenant's delivery to Landlord of notice of the need therefor, then Tenant shall
have the right, upon delivery of three (3) business days' written notice to
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Landlord, to perform or have performed all or part of such maintenance and
repairs, at the sole cost and expense of Landlord, and Landlord shall reimburse
Tenant for such costs and expenses within thirty (30) days after Tenant's
delivery to Landlord of an invoice therefor. If Landlord fails to pay within
thirty (30) days of receiving such invoice, Tenant may offset such costs and
expenses against any Rent and other amounts payable by Tenant under this Lease.
12. Intentionally Omitted.
13. Insurance.
13.1 Casualty Insurance Provided by Tenant. At all times during the
Term of this Lease, Tenant, at its sole cost and expense, shall cause the Leased
Premises (including the Common Areas) to be fully and adequately insured with a
customary policy of fire and extended coverage insurance (including vandalism,
malicious mischief, and special extended perils or all risk) in an amount not
less than the full replacement cost of the Leased Premises, with a standard
inflation guard endorsement or, in the event the parties have agreed upon a
fixed amount of insurance, with a fixed amount endorsement. Such insurance
policy shall name the Landlord as an additional insured, as its interests may
appear.
13.2 Casualty Insurance Provided by Landlord. At all times during the
Term of this Lease, Landlord, at its sole cost and expense, shall cause that
portion of the Property outside the Leased Premises to be fully and adequately
insured with a customary policy of fire and extended coverage insurance
(including vandalism, malicious mischief, and special extended perils or all
risk) in an amount not less than the full replacement cost of the subject
Property, with a standard inflation guard endorsement or, in the event the
parties have agreed upon a fixed amount of insurance, with a fixed amount
endorsement. Such insurance policy shall name the Tenant as an additional
insured, as its interests may appear.
13.3 Public Liability Insurance Provided by Tenant. At all times
during the Term of this Lease, Tenant shall maintain in full force and effect a
public liability insurance policy for the Leased Premises (including the Common
Areas) with coverage limits of $5,000,000 for bodily injury and $5,000,000 for
property damage. Such insurance policy shall name the Landlord as an additional
insured, as its interest may appear, and may be provided under Tenant's
insurance policies in effect from time to time.
13.4 Public Liability Insurance Provided by Landlord. At all times
during the Term of this Lease, Landlord shall maintain in full force and effect
a public liability insurance policy for that portion of the Property outside the
Leased Premises (as well as the Common Areas) with coverage limits of $5,000,000
for bodily injury and $5,000,000 for property damage. Such insurance policy
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<PAGE>
shall name the Tenant as an additional insured, as its interest may appear, and
may be provided under Landlord's insurance policies in effect from time to time.
13.5 Certificates. Any insuring party shall, upon request, provide an
insured party with adequate evidence of the continued existence of applicable
insurance coverage by certificate(s) of insurance. Each such certificate shall
contain an agreement by the insurer that such insurance coverage shall not be
modified or canceled without delivery of at least thirty (30) days' written
notice to the insured party.
14. Mutual Subrogation Waiver. In the event that any portion of the
Property or Tenant's trade fixtures or personal property in the Leased Premises
shall be damaged or destroyed by fire, explosion, or other casualty required to
be insured against pursuant to Sections 13.1 and/or 13.2, whether or not such
damage or destruction is caused, or claimed to be caused, by the negligence or
misconduct of Landlord or Tenant, or any of their respective officers,
directors, employees, agents, affiliates, contractors, or invitees, neither
Landlord, Tenant, nor their respective insurance company(ies), shall have any
right of action, by way of subrogation or otherwise, against Tenant or Landlord,
or any of their respective officers, directors, employees, agents, affiliates,
contractors, or invitees, arising from such damage or destruction, and each
policy of insurance required pursuant to Sections 13.1 and 13.2 shall provide a
waiver and release by the insurer of any such right. Landlord and Tenant further
agree that during or after Tenant's occupancy of the Leased Premises, each will
indemnify and hold the other harmless from any claim against the other made by
way of subrogation by Landlord's or Tenant's fire and extended coverage
insurance carrier(s).
15. Damage or Destruction.
15.1 Repair and Restoration. In the event the Leased Premises shall be
damaged or destroyed by fire, casualty, or other risk required to be insured
against pursuant to Section 13.1 or at law, Tenant, at its sole cost and
expense, shall promptly repair the damage or destruction and restore the Leased
Premises to substantially that condition existing immediately prior to such
damage or destruction. Unless terminated pursuant to Section 15.2, this Lease
shall remain in full force and effect, and Tenant's obligation to pay Rent shall
not be abated during the period of Tenant's repair and restoration efforts.
15.2 Rights of Termination. If any portion of the Leased Premises
shall be rendered untenantable, in Tenant's reasonable judgment, for the use and
occupancy thereof by Tenant for the conduct of its business operations as a
result of any damage or destruction, or if Tenant reasonably anticipates that
the repair and restoration of any such damage or destruction shall not be
completed within sixty (60) days after the date of the damage or destruction,
then the Tenant may elect to terminate this Lease by delivery of written notice
to the Landlord within thirty (30) days after the date of such damage or
destruction. Upon delivery of a notice pursuant to this Section, this Lease
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shall terminate as of the date of the damage or destruction unless otherwise
provided in such notice, and Tenant shall have no further liabilities or
obligations under this Lease; provided, however, that Tenant shall remain liable
for payment of any Rent accrued as of the date of such termination and for the
prompt repair and restoration of the damage or destruction necessary to restore
the Leased Premises to substantially that condition existing immediately prior
to such damage or destruction.
16. Eminent Domain.
16.1 Repair and Restoration. In the event that any portion of the
Leased Premises shall be taken or threatened to be taken under the power of
eminent domain, or settlement in lieu thereof, for any public or quasi-public
use, Landlord promptly shall deliver to Tenant notice thereof. Unless terminated
pursuant to Section 16.2, this Lease shall remain in full force and effect, and
Landlord, at its sole cost and expense, shall repair the damage and restore the
Leased Premises so as to constitute the remaining portion thereof a complete
architectural unit or units. If Tenant remains in occupancy of the Leased
Premises, Landlord shall conduct such repair and restoration efforts in a manner
so as not to interfere unreasonably with the use and occupancy of the Leased
Premises by Tenant for the conduct of its business operations. Until the
completion of Landlord's repair and restoration pursuant to this Section,
Tenant's obligation to pay Rent and other amounts payable by Tenant hereunder
shall be abated as of the date on which possession of the Leased Premises or
portion thereof shall be required by the public or quasi-public body in
proportion to the extent that the value of the Leased Premises for the use and
occupancy thereof by Tenant for the conduct of its business operations shall be
reduced, in Tenant's reasonable judgment.
16.2 Rights of Termination. If, as a result of any of the events for
which notice is required to be given to Tenant under Section 16.1, the Leased
Premises no longer shall be fit and suitable for the use and occupancy thereof
by Tenant for the conduct of its business operations by reason of a material
reduction of any portion of the Leased Premises, Tenant may elect to terminate
this Lease by delivery of written notice to Landlord. In such event, this Lease
shall terminate effective as of the date of actual vacation of the Leased
Premises by Tenant; and thereupon Tenant shall have no further liabilities or
obligations hereunder other than to pay Rent accrued hereunder as of such date
of termination.
17. Tenant's Default; Landlord's Remedies.
17.1 Tenant Default. Each of the following events shall constitute a
default of this Lease by Tenant (a "Tenant Default"):
(A) the failure of Tenant to pay any Rent or other amount payable
by Tenant hereunder within five (5) days after the date on which
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Tenant receives from Landlord notice specifically describing such
failure (provided, that failure to pay Rent in exercise of any right
of offset to which Tenant or any of its affiliates shall be entitled
shall not constitute a default); and
(B) subject to cure by Landlord under Section 12.2, the failure
of Tenant to perform any other term, condition, covenant, or
obligation of this Lease on the part of Tenant to be performed within
thirty (30) days after the date on which Tenant receives from Landlord
notice specifically describing such failure; provided, however, that
if Tenant shall exercise in good faith diligent efforts within such
thirty (30) day period to cure the failure specified in the notice but
shall not be able to do so because of a cause or causes beyond the
control of Tenant, then any such failure shall not be considered a
Tenant Default so long as Tenant shall continue to exercise in good
faith such diligent efforts to cure such failure and shall do so
within a reasonable period of time.
17.2 Landlord's Remedies. In the event of a Tenant Default, Landlord
shall have the following rights and remedies, which shall be exercisable three
(3) business days after the date on which Tenant receives from Landlord
additional notice by certified or registered mail with respect thereto:
(A) to enter upon the Leased Premises and again have, repossess,
and enjoy the same as if this Lease had not been made, and all terms,
conditions, covenants, and obligations of this Lease on the part of
Landlord to be performed shall cease and terminate, without prejudice,
however, to the right of Landlord to recover from Tenant all Rent
accrued hereunder as of the date of such entry by Landlord; and
(B) to relet the Leased Premises for the remainder of the then
existing Primary Term or Extension Term and to recover from Tenant any
deficiency, as it accrues, between the amount so obtained and Rent
payable by Tenant hereunder; provided, however, that Landlord shall be
obligated in such event to exercise in good faith diligent efforts to
mitigate its damages by reletting the Leased Premises for the highest
rent reasonably obtainable under the circumstances; and
(C) to pursue all other rights and remedies to which Landlord may
be entitled hereunder, at law or in equity.
18. Landlord's Default; Tenant's Remedies. Subject to cure by Tenant under
Section 11.3, the failure of Landlord to perform any term, condition, covenant,
or obligation of this Lease on the part of Landlord to be performed within
thirty (30) days after the date on which Landlord receives from Tenant notice
specifically describing such failure shall constitute a default of this Lease by
Landlord (a "Landlord Default"); provided, however, that if Landlord shall
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exercise in good faith diligent efforts within such thirty (30) day period to
cure the failure specified in the notice but shall not be able to do so because
of a cause or causes beyond the control of Landlord, then any such failure shall
not be considered a Landlord Default so long as Landlord shall continue to
exercise in good faith such diligent efforts to cure such failure and shall do
so within a reasonable period of time.
19. Representations and Warranties.
19.1 Compliance with Laws.
(A) Landlord represents and warrants that Landlord's Repairs
under Section 7, and its maintenance and repairs under Section 12
shall be done in a good and workmanlike manner and comply with all
laws, ordinances, and requirements, including, without limitation, the
procuring of all building and other permits, licenses, approvals, and
certificates of occupancy, and the observance of applicable building,
zoning, and other code requirements of governmental authorities with
competent jurisdiction. Landlord further represents and warrants that
the Property is currently zoned for the use intended by Tenant.
(B) Tenant represents and warrants that Tenant's Improvements
under Section 9, and its maintenance and repairs under Section 11
shall be done in a good and workmanlike manner and comply with all
laws, ordinances, and requirements, including, without limitation, the
procuring of all building and other permits, licenses, approvals, and
certificates of occupancy, and the observance of applicable building,
zoning, and other code requirements of governmental authorities with
competent jurisdiction. Tenant further represents and warrants that
its use and occupancy of the Leased Premises for the conduct of its
business operations shall comply with all applicable laws, ordinances,
and requirements of governmental authorities with competent
jurisdiction.
19.2 Warranty of Title. Landlord represents and warrants that: (a)
Landlord is the fee simple owner of the Property with full authority to execute,
deliver, and perform this Lease; (b) as of the date of, and during the term of,
this Lease, no third party has or will have any rights to occupy or use any part
of the Property, including the Leased Premises, other than the right of Landlord
and its affiliates to occupy the portion of the Property not included in the
Leased Premises and the non-exclusive right to use the Common Areas and that
portion of the central office building not included in the Office Space; and (c)
as of the date of this Lease, no mortgage, deed of trust, or other lien, or
restriction encumbers the Leased Premises, except as set forth in Exhibit "D".
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19.3 Broker's Commission. Landlord and Tenant each represents and
warrants for the benefit of the other that it has not dealt with any real estate
broker, finder, or agent in connection with this Lease.
19.4 Hazardous and Toxic Conditions.
(A) Landlord represents and warrants that the Property is in
compliance with all laws, ordinances, rules, or regulations ("Laws")
pertaining to environmental and occupational health and safety matters
("Environmental Laws"). No Environmental Constituent, as hereinafter
defined, is present on the Property other than as may be permitted by
Environmental Law. The term "Environmental Constituent" shall mean any
pollutant, contaminant, foreign substance, or hazardous substance, and
shall include but not be limited to, petroleum, petroleum products,
and substances identified or designated pursuant to federal and state
Environmental Laws, including the Comprehensive Environmental
Response, Compensation and Liability Act, 42 U.S.C. 9601, et seq.
Landlord shall indemnify and hold harmless Tenant, its officers,
directors, employees, agents, and affiliates from and against any and
all claims, causes of action, suits, judgments, taxes, losses,
damages, deficiencies, obligations, costs, and expenses (including,
without limitation, reasonable attorneys' fees) arising out of or
otherwise in respect of (i) the presence, release, or threatened
release of any Environmental Constituent on, to, or from the Property
(including soils, groundwater, surface water, buildings, or other
structures) unless such presence, release, or threatened release was
caused by Tenant, or (ii) any misrepresentation, inaccuracy or breach
of this Section 19.4(A).
(B) Tenant represents and warrants that the Leased Premises will
be used in compliance with all Environmental Laws; no Environmental
Constituent will be used by Tenant or stored on the Leased Premises
other than as permitted by Environmental Law; and Tenant will not
discharge, release, or spill any Environmental Constituent in
violation of any Environmental Law. Tenant shall indemnify and hold
harmless Landlord, its officers, directors, employees, agents, and
affiliates from and against any and all claims, causes of action,
suits, judgments, taxes, losses, damages, deficiencies, obligations,
costs, and expenses (including, without limitation, reasonable
attorneys' fees) arising out of or otherwise in respect of (i) any
misrepresentation, inaccuracy or breach of this Section 19.4(B), or
(ii) any third-party claims relating to Environmental Constituents on
the Leased Premises arising during the Term of this Lease.
The indemnification provisions of this Section 19.4 shall be in addition to
and shall not be deemed to limit or to be limited by the general mutual
indemnification provided for in Section 21 of this Lease.
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20. Landlord's Right of Entry. Following reasonable notice to Tenant,
Landlord may enter upon the Leased Premises as often as Landlord may deem
reasonably necessary for the purposes of performing maintenance and repairs,
inspecting the Leased Premises, offering the Leased Premises for lease (but only
during the period that commences sixty (60) days prior to the expiration of the
then existing Primary Term or Extension Term) or offering the Property for sale.
Landlord's right of entry shall be exercised in a manner and at times such that
there shall be no unreasonable interference with the use and occupancy of the
Leased Premises by Tenant for the conduct of its business operations.
21. General Mutual Indemnification. Each party (the "Indemnitor") agrees to
indemnify, defend, and hold the other party (the "Indemnitee") harmless from and
against any and all claims, causes of action, suits, judgments, taxes, losses,
damages, deficiencies, obligations, costs, and expenses (including, without
limitation, reasonable attorneys' fees) (collectively "Losses") arising out of
or otherwise in respect of: (a) any breach of any representation or warranty or
any covenant or agreement of the Indemnitor under this Lease; or (b) any injury
to, or death of, persons and/or any damage to, or destruction of, property, on
or about the Property and attributable to the negligence or misconduct of the
Indemnitor, or its officers, directors, employees, agents, affiliates,
contractors, or invitees, except for any such breach, any injury or death, or
any damage or destruction arising out of, or with respect to, the negligence or
misconduct of the Indemnitee, or any of its officers, directors, employees,
agents, affiliates, contractors or invitees, or as otherwise specifically
provided in this Lease; provided, however, that the indemnification obligation
created by this Section shall be expressly conditioned upon the Indemnitee (i)
delivering to the Indemnitor prompt notice of any event giving rise to such
indemnification obligation and (ii) providing the Indemnitor the opportunity to
defend itself from and against any Losses.
22. Transfers.
22.1 Assignment and Subletting. Except as provided in this Section,
Tenant shall not assign this Lease nor sublet any portion of the Leased
Premises, without the consent of Landlord, which consent shall not be
unreasonably withheld or delayed; provided, however, that Tenant shall have the
right, without the consent of Landlord, to assign this Lease or sublet any
portion of the Leased Premises to Knight Transportation, Inc. or any of
affiliates, or wholly-owned subsidiaries. Absent the written agreement of
Landlord, no assignment of this Lease or subletting of all or any portion of the
Leased Premises shall relieve Tenant of any of the terms, conditions, covenants,
or obligations of this Lease on the part of Tenant to be performed.
22.2 Right of First Refusal. Tenant shall have a right of first
refusal with respect to purchasing the Property, or any portion thereof. The
right of first refusal being granted hereunder shall terminate upon the
expiration or termination of this Lease. In the event Landlord obtains a bona
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fide purchase offer for any portion of the Property that is acceptable to
Landlord, Landlord shall notify Tenant of the terms of said purchase offer and
Tenant shall then have thirty (30) business days within which to agree to
purchase the portion of the Property so offered, which purchase shall be on the
same terms as contained in such bona fide purchase offer. In the event Tenant
declines said right of first refusal or, in the event Tenant does not respond
within said thirty (30) business days, Landlord shall then be entitled to sell
the subject property to the offering party in strict compliance with the terms
of the offer. In the event the sale is not consummated within thirty (30) days
after the expiration of the thirty (30) day period, or the sale is upon terms
different from those included in the original offer, any sale shall be null and
void and the subject property shall again be subject to this right of first
refusal.
23. Holding Over. If Tenant shall continue to occupy the Leased Premises
after the expiration of the Term of this Lease or the earlier termination of
this Lease, then Tenant shall be deemed to be occupying the Leased Premises as a
tenant from month-to-month, subject to the terms and conditions of this Lease as
they existed on such expiration or termination; provided, however, that either
party shall have the right to terminate such month-to-month tenancy upon
delivery of thirty (30) days' notice to the other.
24. Quiet Enjoyment.
24.1 Landlord's Covenant. Landlord covenants and agrees that Tenant
shall have the peaceful and quiet possession and enjoyment of the Leased
Premises for the conduct of its business operations during the Term of this
Lease, without hindrance by Landlord or any party whatsoever.
24.2 Tenant's Option to Terminate. Tenant, at its sole option and
discretion, shall have the right to terminate this Lease, effective six (6)
months after notice to Landlord, without further liability hereunder except for
Rent and other obligations accrued to the effective date of termination, in the
event that Landlord leases space in the Property to a third party tenant whose
work force is or becomes organized, whether in whole or part, by a union. Tenant
may exercise this option by giving the Landlord said notice not later than
thirty (30) days after Tenant first learns of the fact of organization by a
union.
25. Subordination and Attornment. Tenant covenants and agrees, on the terms
and conditions provided in this Section, that this Lease shall be subordinate to
any institutional mortgage or deed of trust that now or hereafter shall encumber
the Leased Premises, provided that each mortgagee or beneficiary shall execute
and deliver to Tenant a non-disturbance, attornment, and subordination agreement
stating (in addition to other reasonable terms, if any) in substance that (i) if
Tenant is not in default hereunder, the right of possession of Tenant to the
Leased Premises shall not be affected or disturbed by any mortgagee in the
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exercise of any of its rights under a mortgage or the note secured thereby, and
any sale of the Leased Premises pursuant to the exercise of any rights and
remedies under a mortgage or otherwise shall be made subject to Tenant's right
to possession of the Leased Premises under this Lease; and (ii) Tenant shall
attorn to any mortgagee or purchaser at a foreclosure sale (a "Purchaser") upon
acquisition of title to the Leased Premises by a mortgagee or Purchaser and
notice to Tenant thereof, and this Lease shall continue in full force and effect
between Tenant and such mortgagee or Purchaser. Upon Tenant's receipt and
approval of such a non-disturbance/attornment agreement from a mortgagee or
beneficiary from time-to-time, Tenant covenants and agrees to attorn to such
mortgagee or beneficiary upon foreclosure.
26. Surrender of Leased Premises. Upon the expiration or earlier
termination of the Term of this Lease, Tenant shall deliver up and surrender the
Leased Premises to Landlord in as good order and condition as upon the
Commencement Date, subject to: (a) Tenant's improvements, alterations, and
renovations to the Leased Premises, including, without limitation, Tenant's
Improvements under Section 9; (b) normal wear and tear; (c) repairs and
restorations for which Tenant shall not be responsible hereunder; and (d)
Tenant's removal of its trade fixtures.
27. Notice. Any notice, request, demand, waiver, consent, approval, or
other communication that is required or permitted hereunder shall be in writing
and shall be deemed given only if delivered personally (including by nationally
recognized overnight courier service) or sent by telegram or by certified mail,
postage prepaid, and sent by telecopier as follows:
If to Tenant, to: Kevin P. Knight
Knight Transportation, Inc.
5601 West Buckeye Road
Phoenix, Arizona 85043
(602) 269-2000 Telephone
(602) 606-6504 Fax
If to Landlord, to: John R. Fayard, Jr.
19 Lawrence Place
Gulfport, Mississippi 39503
(228) 896-3533 Telephone
or to such other address as the addressee shall 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, telegraphed, or deposited in the mail and
telecopied.
28. Recording. If Landlord or Tenant requests, the parties shall execute
and acknowledge a short form of lease for recording purposes, which short form
of lease shall be recorded at the expense of the party requesting the same,
which party shall pay any documentary transfer tax or other special tax or
assessment associated with, or triggered by, such recording.
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29. Signs. Tenant shall have exclusive sign rights with respect to the
Leased Premises' exterior and interior, and shall have the right to erect and
display signs on the Leased Premises and on such other areas of the Property as
Tenant reasonably may request, subject only to compliance with applicable laws,
ordinances, and requirements of governmental authorities with competent
jurisdiction.
30. Miscellaneous.
30.1 Entire Agreement. This Lease contains the entire agreement
between the parties and no promise, representation, warranty, covenant,
agreement, or understanding not specifically set forth in this Lease shall be
binding upon either party.
30.2 Amendments. This Lease may not be amended, modified, or
supplemented in any manner without the prior written consent of the non-amending
party.
30.3 Law Governing. This Lease shall be construed and governed under
the laws of the State of Mississippi. In the event any provision of this Lease
is held invalid, illegal, or unenforceable in whole or in part, neither the
validity of the remaining part of such provision, nor the validity of any other
provision of this Lease, shall in any way be affected thereby.
30.4 Binding Effect. This Lease shall be binding upon, and inure to
the benefit of, the parties and their respective heirs, executors,
administrators, personal and legal representatives, successors, and permitted
assigns.
30.5 Counterparts. This Lease may be executed in two or more
counterparts, each of which shall be deemed an original, but which together
shall constitute one and the same instrument.
30.6 Waiver. The waiver by either party hereto of a breach of any term
or provision of this Lease shall not operate or be construed as a waiver of a
subsequent breach of the same provision by any party or of the breach of any
other term or provision of this Lease.
30.7 Exhibits. The exhibits attached hereto are incorporated herein by
this reference. In the event of any conflict between this Lease and an exhibit,
the Lease shall control.
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30.8 Headings. Section headings herein are used solely for convenience
and shall not be used for interpretation or construing any word, clause,
paragraph, or provision of this Lease.
30.9 Cooperation. The parties agree to obtain, execute, deliver, and
file such additional documents, instruments, and consents as may be reasonably
requested by either party, at the sole cost and expense of the requesting party,
in order to fully effectuate the terms and conditions of this Lease.
30.10 Survival. All representations and warranties in this Lease and
the general mutual indemnification provisions of Section 21 shall survive the
termination of this Lease.
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IN WITNESS WHEREOF, the parties have caused this Lease to be duly executed
by each of their respective authorized representatives effective as of the date
first above written.
LANDLORD TENANT
JOHN FAYARD FAST FREIGHT, INC.,
a Mississippi corporation
/s/ John R. Fayard, Jr. By: John R. Fayard, Jr.
- ---------------------------------- ------------------------------------
John R. Fayard, Jr., individually John R. Fayard, Jr., President
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EXHIBIT "A"
LEGAL DESCRIPTION OF PROPERTY
General Description:
6030 Rangeline Road
Mobile, Alabama 36582
Legal Description:
Lot A, Fayard Subdivision, as recorded in Map Book 74 at Page 71 in the
office of the Judge of Probate, Mobile County, Alabama.
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EXHIBIT "B"
SITE PLAN
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EXHIBIT "C"
TENANT'S IMPROVEMENTS
None
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EXHIBIT "D"
MORTGAGES/ENCUMBRANCES/RESTRICTIONS
1. Oil, gas and mineral rights as have previously been reserved by or conveyed
to others.
2. Easement granted Board of Water and Sewer Commissioners by Range Line -
Hamilton Land Company dated December 28, 1988 and recorded in Real Property
Book 3395 page 911.
3. Reservation of all oil, gas and other minerals, and all rights in
connection therewith, as contained in deed from The Lyon Company to W.S.
Mandrell dated December 8, 1941 and recorded in Deed Book 322 Page 125.
4. Easement granted Alabama Power Company by instrument recorded in Deed Book
435, Page 1.
5. Building setback line and drainage and utility line easements as shown on
the recorded plat of said subdivision.
6. Mitigation agreement by and between John Fayard Fast Freight, Inc. and
McGowin Properties, Inc. dated June 5, 1997 and recorded in Real Property
Book 4474, Page 1299.
COMPANY PRESS RELEASE
For Immediate Release
Phoenix, Arizona - April 20, 2000
Knight Transportation Announces Acquisition
Knight Transportation, Inc. (Nasdaq: KNGT - news) announced today that it has
acquired the truckload operations of John Fayard Fast Freight, Inc. d/b/a
Fastway Systems of Gulfport, Mississippi.
Chairman and CEO Kevin P. Knight stated, "We are very please to welcome
Fastway Systems into the Knight Transportation family. Fastway generated
approximately $30 million in truckload revenue during 1999, and has an operating
ratio in the mid-to-upper 80's. Fastway will continue its separate operation in
Gulfport, with John Fayard and his team remaining in charge. Fastway has an
excellent base of both employees and customers and has rates and length of haul
similar to ours. We expect the transaction to be immediately accretive to
Knight's earnings."
Terms of the transaction were not disclosed.
Knight Transportation, Inc. is a short to medium haul, dry van truckload
carrier primarily servicing the West, Midwest, South Central, and Southeast
Regions of the United States. The company transports general commodities,
including consumer goods, packaged foodstuffs, paper products, beverage
containers, and imported and exported commodities.
Contact:
Knight Transportation, Inc.
Kevin P. Knight, C.E.O. or Clark Jenkins, C.F.O. 602/269-2000
