XXXXX FARGO BANK TERM NOTE
$8,073,889.28 Phoenix, Arizona
November 24, 1999
FOR VALUE RECEIVED, the undersigned KNIGHT TRANSPORTATION INC. (`Borrower")
promises to pay to the order of XXXXX FARGO BANK, NATIONAL ASSOCIATION (`Bank')
at its office at ARIZONA RCBO #00000, 000 XXXX XXXXXXXXXX, XXXXXXX, XX 00000, or
at such other place as the holder hereof may designate, in lawful money of the
United States of America and in immediately available funds, the principal sum
of $8,073,889.28, with interest thereon as set forth herein.
INTEREST:
(a) INTEREST. The outstanding principal balance of this Note shall bear
interest at the rate of 5.75000% per annum (computed on the basis of a 360-day
year, actual days elapsed.
(b) DEFAULT INTEREST. From and after the maturity date of this Note, or
such earlier date as all principal owing hereunder becomes due and payable by
acceleration or otherwise, the outstanding principal balance of this Note shall
bear interest until paid in full at an increased rate per annum (computed on the
basis of a 360-day year, actual days elapsed) equal to 4% above the rate of
interest from time to time applicable to this Note.
REPAYMENT AND PREPAYMENT:
(a) REPAYMENT. Principal and interest shall be payable on the 1ST day of
each MONTH in installments of $192,558.23 each, commencing DECEMBER 1, 1999, and
continuing up to and including SEPTEMBER 1, 2003, with a final installment
consisting of all remaining unpaid principal and accrued interest due and
payable in full on OCTOBER 1, 2003.
(b) APPLICATION OF PAYMENTS. Each payment made on this Note shall be
credited first, to any interest then due and second, to the outstanding
principal balance hereof.
(c) PREPAYMENT. Borrower may prepay principal on this Note at any time in
the minimum amount of $100,000.00; provided however, that if the outstanding
principal balance of this Note is less than said amount, the minimum prepayment
amount shall be the entire outstanding principal balance hereof. In
consideration of Bank providing this prepayment option to Borrower, or if this
Note shall become due and payable at any time prior to the maturity date hereof
by acceleration or otherwise, Borrower shall pay to Bank immediately upon demand
a fee which is the sum of the discounted monthly differences for each mono, from
the month of prepayment through the month in which this Note matures, calculated
as follows for each such month:
(i) DETERMINE the amount of interest which would have accrued each month on
the amount prepaid at the interest rate applicable to such amount had it
remained outstanding until the scheduled maturity date hereof.
(ii) SUBTRACT from the amount determined in U) above the amount of interest
which would have accrued for the same month on the amount prepaid for the
remaining term of this Note at the Money Market Funds Rate in effect on the date
of prepayment for new loans made for such term and in a principal amount equal
to the amount prepaid.
(iii) It the result obtained in (ii) for any month is greater than zero,
discount that difference by the Money Market Funds Rate used in (ii) above.
Each Borrower acknowledges that prepayment of such amount may result in Bank
incurring additional costs, expenses and/or liabilities, and that it is
difficult to ascertain the full extent of such costs, expenses and/or
liabilities. Each Borrower, therefore, agrees to pay the above-described
prepayment fee and agrees that said amount represents a reasonable estimate of
the prepayment costs, expenses and/or liabilities of Bank. If Borrower fails to
pay any prepayment fee when due, the amount of such prepayment fee shall
thereafter bear interest until paid at a rate per annum 2.000% above the Prime
Rate in effect from time to time (computed on the basis of a 360-day year,
actual days elapsed). The "Prime Rate" is a base rate that Bank from time to
time establishes and which serves as the basis upon which effective rates of
interest are calculated for those loans making reference thereto. Each change in
the rate of interest on any such past due prepayment fee shall become effective
on the date each Prime Rate change is announced within Bank.
The "Money Market Funds Rate" shall mean the rate per annum which Bank
estimates and quotes to its borrowers as the rate, adjusted for reserve
requirements, federal deposit insurance, and any other amount which Bank deems
appropriate, at which funds in the amount of a loan and for a period of time
comparable to the term of such loan are available for purchase in the money
market on the date such loan is made, with the understanding that the Money
Market Funds Rate is Bank's estimate only and that Bank is under no obligation
to actually purchase and/or match funds for any transaction. This rate is not
fixed by or related in any way to any rate Bank quotes or pays for deposits
accepted through its branch system.
All prepayments of principal shall be applied on the most remote principal
installment or installments then unpaid.
EVENTS OF DEFAULT:
This Note is made pursuant to and is subject to the terms and conditions of
that certain Credit Agreement between Borrower and Bank dated as of NOVEMBER 24,
1999, as amended from time to time (the "Credit Agreement"). Any default in the
payment or performance of any obligation under this Note, or any defined event
of default under the Credit Agreement, shall constitute an "Event of Default"
under this Note.
MISCELLANEOUS:
(a) REMEDIES. Upon the occurrence of any Event of Default as defined in the
Credit Agreement, the holder of this Note, at the holder's option, may declare
all sums of principal and interest outstanding hereunder to be immediately due
and payable without presentment, demand, notice of nonperformance, notice of
protest, protest or notice of dishonor, all of which are expressly waived by
each Borrower, and the obligation, if any, of the holder to extend any further
credit hereunder shall immediately cease and terminate. Each Borrower shall pay
to the holder immediately upon demand the full amount of all payments, advances,
charges, costs and expenses, including reasonable attorneys' fees (to include
outside counsel fees and all allocated costs of the holder's in-house counsel),
expended or incurred by the holder in connection with the enforcement of the
holder's rights and/or the collection of any amounts which become due to the
holder under this Note, and the prosecution or defense of any action in any way
related to this Note, including without limitation, any action for declaratory
relief, whether incurred at the trial or appellate level, in an arbitration
proceeding or otherwise, and including any of the foregoing incurred in
connection with any bankruptcy proceeding (including without limitation, any
adversary proceeding, contested matter or motion brought by Bank or any other
person) relating to any Borrower or any other person or entity.
(b) OBLIGATIONS JOINT AND SEVERAL. Should more than one person or entity
sign this Note as a Borrower, the obligations of each such Borrower shall be
joint and several
(c) GOVERNING LAW. This Note shall be governed by and construed in
accordance with the laws of the state of Arizona.
IN WITNESS WHEREOF, the undersigned has executed this Note as of the date
first written above.
KNIGHT TRANSPORTATION, INC.
By: /s/ Xxxxx Xxxxxxx
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Title: CFO
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