EXHIBIT 4.3
AMCON DISTRIBUTING COMPANY
SECURITIES PURCHASE AGREEMENT
TO THE PURCHASER LISTED IN THE ATTACHED SCHEDULE A WHO IS A SIGNATORY
HERETO:
Ladies and Gentlemen:
AMCON DISTRIBUTING COMPANY, a Delaware corporation (the "Company" or
"AMCON"), agrees with you (sometimes referred to herein as the
"Purchaser") as follows:
SECTION 1. THE SECURITIES.
Section 1.1. Subject to the terms and conditions set forth herein,
the Company will issue and sell 100,000 shares of its Series A
Convertible Preferred Stock with the terms set forth on the
Certificate of Designations attached hereto as Exhibit A (the
"Preferred Stock").
Section 1.2. Certain capitalized terms used in this Agreement are
defined in Schedule B; references to a "Schedule" or an "Exhibit" are,
unless otherwise specified, to a Schedule or an Exhibit attached to
this Agreement. The Preferred Stock and the shares of Company common
stock issuable upon conversion of the Preferred Stock (the "Conversion
Shares") are sometimes referred to collectively herein as the
"Securities."
SECTION 2. SALE AND PURCHASE OF NOTES.
Subject to the terms and conditions of this Agreement, the Company
will issue and sell to you and you will purchase from the Company
concurrently with the execution of this Agreement the number of shares
of Preferred Stock specified opposite your name in Schedule A at a
purchase price equal to the product of such number of shares times $25
per share. Contemporaneously with entering into this Agreement, the
Company is entering into a separate Securities Purchase Agreement (the
"Other Agreement") identical with this Agreement with the other
purchaser named in Schedule A (the "Other Purchaser"), providing for
the sale at such Closing to the Other Purchaser of the number of
shares of Preferred Stock specified opposite the name of such Other
Purchaser in Schedule A. Your obligation hereunder, and the
obligations of the Other Purchaser under the Other Agreement, are
several and not joint obligations, and you shall have no obligation
under any Other Agreement and no liability to any Person for the
performance or nonperformance by any Other Purchaser thereunder.
SECTION 3. CLOSING.
(a) Concurrently with the execution of this Agreement and delivery
by you to the Company of immediately available funds in the amount of
the purchase price therefor by wire transfer for the account of the
Company previously furnished to you, the Company will deliver to you a
certificate evidencing your ownership of the number of shares of
Preferred Stock set forth opposite your name in Schedule A, dated the
date hereof (collectively, referred to as the "Closing").
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to you that:
Section 4.1. Organization; Power and Authority. The Company is a
corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware. The Company has the
corporate power and authority to conduct its business as it is now
conducted, to execute and deliver this Agreement and the Other
Agreement, and to perform the provisions hereof and thereof.
Section 4.2. Authorization, Etc. This Agreement and the Other
Agreement have been duly authorized by all necessary corporate action
on the part of the Company, and this Agreement constitutes a legal,
valid and binding obligation of the Company enforceable against the
Company in accordance with its terms, except as such enforceability
may be limited by (a) applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and (b) general principles
of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law). The issuance and sale of shares of
Preferred Stock and the Conversion Shares have been authorized by all
requisite corporate action, and upon such issuance and sale shall
constitute validly issued, fully paid, nonassessable shares of
outstanding Preferred Stock or Common Stock, as the case may be, of
the Company.
Section 4.3. Capitalization.
(a) The authorized equity securities of the Company consist of
15,000,000 shares of AMCON Common Stock, $0.01 par value per share
("Company Common Stock"), and 1,000,000 shares of preferred stock,
$0.01 par value per share ("AMCON Preferred Stock"). As of the date
hereof, (i) 3,169,154 shares of Company Common Stock were issued and
outstanding, (ii) stock options to purchase an aggregate of 311,650
shares of Company Common Stock were issued and outstanding (the
"Company Stock Options"), (iii) no shares of Company Common Stock were
held in its treasury and (iv) no shares of AMCON Preferred Stock were
issued and outstanding. All outstanding shares of capital stock of
the Company have been duly authorized and validly issued and are fully
paid and nonassessable.
(b) As of the date hereof, except (I) as set forth in Schedule
4.3, (ii) as set forth in this Section 4.3 there are no outstanding
(x) shares of capital stock or other voting securities of the Company,
(y) securities of the Company convertible into or exchangeable for
shares of capital stock or voting securities of the Company, or (z)
options or other rights to acquire from the Company, and no obligation
of the Company to issue, any capital stock, voting securities or
securities convertible into or exchangeable for capital stock or
voting securities of the Company (the items in clauses (x), (y) and
(z) being referred to collectively as the "AMCON Securities"). There
are no outstanding obligations of the Company or any Subsidiary of the
Company to repurchase, redeem or otherwise acquire any AMCON
Securities. Except as set forth on Schedule 4.3, there are no
outstanding contractual obligations of the Company to provide funds
to, or make any investment (in the form of a loan, capital
contribution or otherwise) in, any other Person other than in the
ordinary course of business consistent with past practice. There are
no stockholder agreements, voting trusts or other agreements or
understandings to which the Company is a party, or of which the
Company is aware, relating to voting, registration or disposition of
any shares of capital stock of the Company or granting to any person
or group of persons the right to elect, or to designate or nominate
for election, a director to the board of directors of the Company.
Section 4.4. AMCON SEC Documents.
(a) AMCON has made available to the Purchasers the AMCON SEC
Documents. AMCON has timely filed all reports, filings, registration
statements and other documents required to be filed by it with the SEC
since October 1, 2002. No Subsidiary of AMCON is required to file any
form, report, registration statement or prospectus or other document
with the SEC.
(b) As of its filing date, each AMCON SEC Document complied as
to form in all material respects with the applicable requirements of
the Securities Act and/or the Exchange Act, as the case may be and the
rules and regulations thereunder.
(c) No AMCON SEC Document contained, as of its filing date, any
untrue statement of a material fact or omitted to state any material
fact necessary in order to make the statements made therein, in the
light of the circumstances under which they were made, not misleading.
No AMCON SEC Document, as amended or supplemented, if applicable,
filed pursuant to the Securities Act contained, as of the date such
document or amendment became effective, any untrue statement of a
material fact or omitted to state any material fact required to be
stated therein or necessary to make the statements therein not
misleading.
(d) Each of the consolidated balance sheet of AMCON included in
or incorporated by reference into the AMCON SEC Documents (including
the related notes and schedules) fairly present the consolidated
financial position of AMCON and its Subsidiaries as of its date
(subject, in the case of unaudited statements, to normal year-end
audit adjustments which are not reasonably expected to be material in
amount or effect), and each of the consolidated statements of income,
retained earnings and cash flows of AMCON included in or incorporated
by reference into AMCON SEC Documents (including any related notes and
schedules) fairly present the results of operations, retained earnings
or cash flows, as the case may be, of AMCON and its Subsidiaries for
the periods set forth therein (subject, in the case of unaudited
statements, to normal year-end audit adjustments which are not
reasonably expected to be material in amount or effect). The
financial statements of AMCON, including the notes thereto, included
in or incorporated by reference into the AMCON SEC Documents comply as
to form in all material respects with applicable accounting
requirements and with the published rules and regulations of the SEC
with respect thereto, and have been prepared in accordance with GAAP
(except as may be indicated in the notes thereto). Since October 1,
2002, there has been no material change in AMCON's accounting methods
or principles except as described in the notes to such AMCON financial
statements.
Section 4.5. Absence of Certain Changes and Events. Except as set
forth on Schedule 4.5, since December 31, 2003, (a) AMCON has suffered
no Material Adverse Effect; (b) AMCON has conducted its business only
in the Ordinary Course of Business; and (c) AMCON has entered into no
transactions that would be required to be disclosed by AMCON in its
Form 10-K for the year ended September 30, 2004.
Section 4.6. Compliance with Laws, Other Instruments, Etc. The
execution, delivery and performance by the Company of this Agreement
will not (a) contravene, result in any breach of, or constitute a
default under, or result in the creation of any Lien in respect of any
property of the Company or any Subsidiary under, any indenture,
mortgage, deed of trust, loan, purchase or credit agreement, lease,
corporate charter or bylaws, or any other agreement or instrument to
which the Company or any Subsidiary is bound or by which the Company
or any Subsidiary or any of their respective properties may be bound
or affected, (b) conflict with or result in a breach of any of the
terms, conditions or provisions of any order, judgment, decree, or
ruling of any court, arbitrator or Governmental Authority applicable
to the Company or any Subsidiary or (c) violate any provision of any
statute or other rule or regulation of any Governmental Authority
applicable to the Company or any Subsidiary.
Section 4.7. Governmental Authorizations, Etc. No consent,
approval or authorization of, or registration, filing or declaration
with, any Governmental Authority is required in connection with the
execution, delivery or performance by the Company of this Agreement.
Section 4.8. Litigation; Observance of Agreements, Statutes and
Orders.
(a) There are no actions, suits or proceedings pending or, to
the Knowledge of the Company, threatened against or affecting the
Company or any Subsidiary or any property of the Company or any
Subsidiary in any court or before any arbitrator of any kind or before
or by any Governmental Authority that, individually or in the
aggregate, could reasonably be expected to have a Material Adverse
Effect.
(b) Neither the Company nor any Subsidiary is in default under
any term of any agreement or instrument to which it is a party or by
which it is bound, or any order, judgment, decree or ruling of any
court, arbitrator or Governmental Authority or is in violation of any
applicable law, ordinance, rule or regulation of any Governmental
Authority, which default or violation, individually or in the
aggregate, could reasonably be expected to have a Material Adverse
Effect.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER.
You represent and warrant to the Company that:
Section 5.1. Authorization, Etc. This Agreement has been duly
authorized by all necessary action, and this Agreement constitutes a
legal, valid and binding obligation of the Purchaser enforceable
against the Purchaser in accordance with its terms, except as such
enforceability may be limited by (a) applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
the enforcement of creditors' rights generally and (b) general
principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
Section 5.2. Purchase Entirely for Own Account. This Agreement is
made with the Purchaser in reliance upon the Purchaser's
representation to the Company, which by the Purchaser's execution of
this Agreement, the Purchaser hereby confirms, that the Securities to
be acquired by the Purchaser will be acquired for investment for the
Purchaser's own account, not as a nominee or agent, and not with a
view to the resale or distribution of any part thereof, and that the
Purchaser has no present intention of selling, granting any
participation in, or otherwise distributing the same. By executing
this Agreement, the Purchaser further represents that the Purchaser
does not presently have any contract, undertaking, agreement or
arrangement with any person to sell, transfer or grant participations
to such person or to any third person, with respect to any of the
Securities. The Purchaser has not been formed for the specific
purpose of acquiring the Securities.
Section 5.3 Disclosure of Information. The Purchaser has had an
opportunity to discuss the Company's business, management, financial
affairs and the terms and conditions of the offering of the Securities
with the Company's management, the Company has responded to such
questions to the full satisfaction of the Purchasers, and the
Purchaser has had an opportunity to review the Company's facilities.
Section 5.4. Restricted Securities. The Purchaser understands
that the Securities have not been, and will not be, registered under
the Securities Act, by reason of a specific exemption from the
registration provisions of the Securities Act which depends upon,
among other things, the bona fide nature of the investment intent and
the accuracy of the Purchaser's representations as expressed herein.
The Purchaser understands that the Securities are "restricted
securities" under applicable U.S. federal and state securities laws
and that, pursuant to these laws, the Purchaser must hold the
Securities indefinitely unless they are registered with the Securities
and Exchange Commission and qualified by state authorities, or an
exemption from such registration and qualification requirements is
available. The Purchaser acknowledges that the Company has no
obligation to register or qualify the Securities for resale except as
set forth in this Agreement. The Purchaser further acknowledges that
if an exemption from registration or qualification is available, it
may be conditioned on various requirements including, but not limited
to, the time and manner of sale, the holding period for the
Securities, and on requirements relating to the Company which are
outside of the Purchaser's control, and which the Company is under no
obligation and may not be able to satisfy.
Sections 5.5. Legends. The Purchaser understands that the
Securities and any securities issued in respect of or exchange for the
Securities, may bear one or all of the following legends:
(a) The shares represented by this certificate have not been
registered under the Securities Act of 1933, as amended (the "Act"),
or any state securities laws. These shares have been acquired for
investment and not with a view to distribution or resale, and may not
be sold, pledged, hypothecated, donated or otherwise transferred,
whether or not for consideration, without an effective registration
statement under the Act, and any applicable state securities laws, or
an opinion of counsel satisfactory to the Corporation that such
registration is not required with respect to the proposed disposition
thereof and that such disposition will not cause the loss of the
exemption upon which the Corporation relied in selling such shares to
the original purchaser.
(b) Any legend required by the securities laws of any state to
the extent such laws are applicable to the Securities represented by
the certificate so legended.
Section 5.6. Accredited Investor. The Purchaser is an "accredited
investor" as defined in Rule 501(a) of Regulation D promulgated under
the Securities Act.
Section 5.7. No General Solicitation. Neither the Purchaser, nor,
if applicable, any of its officers, directors, employees, agents,
stockholders or partners, has either directly or indirectly, including
through a broker or finder (a) engaged in any general solicitation, or
(b) published any advertisement in connection with the offer and sale
of the Securities.
Section 5.8. Residence. If the Purchaser is an individual, then
the Purchaser resides in the state or province identified in the
address of the Purchaser set forth on Schedule A; if the Purchaser is
a partnership, corporation, limited liability company or other entity,
then the office or offices of the Purchaser in which its principal
place of business is located at the address or addresses of the
Purchaser set forth on Schedule A.
SECTION 6. AGREEMENTS RESPECTING SECURITIES LAWS.
Section 6.1. Limitations on Resale. You agree that you will not
sell, assign or transfer any of the Securities at any time in
violation of the Securities Act and acknowledge that you are taking
unregistered securities, you must continue to bear the economic risk
of your investment for an indefinite period of time because of the
fact that the Securities have not been registered under the Securities
Act or any applicable state securities laws, and you realize that the
Securities cannot be sold unless subsequently registered under the
Securities Act, and any applicable state securities laws, or an
exemption from such registration is available. You recognize that the
Company is not assuming any obligation to register the Securities,
except to the extent expressly set forth herein. You agree that
appropriate legends reflecting the status of the Securities under the
Securities Act, and any applicable state securities laws, may be
placed on the face of the certificates for such Securities at the time
of their issuance to you and upon any transfer to any assignee of you.
Section 6.2. Transfer of Restrictions. The Securities may not be
transferred except in a transaction which is in compliance with the
Securities Act and applicable state securities laws. Except as
hereinafter provided with respect to registration of the Securities,
it shall be a condition to any such transfer that the Company shall be
furnished with an opinion of counsel to the holder of such Securities,
satisfactory to the Company, to the effect that the proposed transfer
would be in compliance with the Securities Act and applicable state
securities laws and that such transfer would not cause the loss of the
exemption from such registration relied upon by the Company originally
selling the securities to you.
Section 6.3. Registration of Conversion Shares.
(a) The Company shall use its commercially reasonable efforts
to prepare and file with the Securities and Exchange Commission (the
"SEC") as soon as practicable, but in no event later than 180 days
following the Closing (the "Filing Date"), a registration statement
(the "Registration Statement") and such other documents as may be
necessary in the opinion of counsel for the Company on such form of
Registration Statement as is then available to effect a registration
respecting the sale by the holders of the Conversion Shares. The
Registration Statement filed hereunder, to the extent allowable under
the Securities Act and the Rules promulgated thereunder (including
Rule 416), shall state that such Registration Statement also covers
such indeterminate number of additional shares of Company Common Stock
as may become issuable upon conversion of the Preferred Stock to
prevent dilution resulting from stock splits, stock dividends or
similar transactions. The Registration Statement (and each amendment
or supplement thereto) shall be provided to (and subject to the
approval of, which shall not be unreasonably withheld) you prior to
its filing or other submission. You and the other holders of
Conversion Shares who are eligible to sell Conversion Shares under
such Registration Statement, together with their affiliates, are
hereafter referred to as "Offering Holders." The Company will include
in such Registration Statement (I) the information required under the
Securities Act to be so included concerning the Offering Holders (and
each Offering Holder hereby agrees to promptly provide any such
information to the Company), including any changes in such information
that may be provided by the Offering Holders in writing to the Company
from time to time, and (ii) a section entitled "Plan of Distribution"
that describes the various procedures that may be used by the Offering
Holders in the sale of their Conversion Shares.
(b) The Company shall use its commercially reasonable efforts
to have the Registration Statement to be declared effective as soon as
reasonably practicable after such filing.
(c) Notwithstanding the foregoing provisions of this Section
6.3, the Company may voluntarily suspend the effectiveness of any such
Registration Statement for a limited time, which in no event shall be
longer than 60 days in any three-month period and no longer than 90
days in any twelve month period, if the Company has been advised in
writing by counsel or underwriters to the Company that the offering
pursuant to the Registration Statement would materially adversely
affect, or would be improper in view of, or improper without
disclosure in a prospectus of a proposed financing, reorganization,
recapitalization, merger, consolidation, or similar transaction
involving the Company or if a required post-effective amendment has
not been declared effective by the SEC or any state securities law
regulator. The Company shall notify all Offering Holders to such
effect, and, upon receipt of such notice, each such Offering Holder
shall immediately discontinue any sales pursuant to such Registration
Statement until such Offering Holder has received copies of a
supplemented or amended prospectus or until such Offering Holder is
advised in writing by the Company that the then current prospectus may
be used and has received copies of any additional or supplemental
filings that are incorporated or deemed incorporated by reference in
such prospectus.
(d) If any event occurs that would cause any such Registration
Statement to contain a material misstatement or omission or not to be
effective and usable during the period that such Registration
Statement is required to be effective and usable, the Company shall
promptly notify the Offering Holders of such event and, if requested,
the Offering Holders shall immediately cease making offers and return
all prospectuses to the Company. The Company shall promptly file an
amendment to the Registration Statement to correct such misstatement
or omission and use its commercially reasonable efforts to cause such
amendment to be declared effective as soon as practicable thereafter.
The Company shall promptly provide the Offering Holders with revised
prospectuses and, following receipt of the revised prospectuses, the
Offering Holders shall be free to resume making offers.
(e) In connection with the registration of the Conversion
Shares pursuant to the Registration Statement, the Company shall have
the following obligations:
(i) The Company shall respond promptly to any and all
comments made by the staff of the SEC to the Registration Statement,
and shall submit to the SEC, before the close of business on the
business day immediately following the business day on which the
Company learns (either by telephone or in writing) that no review of
the Registration Statement will be made by the SEC or that the staff
of the SEC has no further comments on such Registration Statement, as
the case may be, a request for acceleration of the effectiveness of
the Registration Statement to a time and date as soon as practicable.
Subject to Section 6.3(c), the Company shall keep the Registration
Statement effective pursuant to Rule 415 at all times until such date
as is the earlier of (x) two (2) years following the Closing, (y) the
date on which all Conversion Shares covered by the Registration
Statement have been sold and (z) the date on which all of the
Conversion Shares covered by the Registration Statement may be
immediately sold to the public without registration or restriction
pursuant to Rule 144(k) under the Securities Act or any successor
provision (the "Registration Period"), which Registration Statement
(including any amendments or supplements thereto and prospectuses
contained therein and all documents incorporated by reference therein)
(A) shall comply in all material respects with the requirements of the
Securities Act and the rules and regulations of the SEC promulgated
thereunder and (B) shall not contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein, or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The
financial statements of the Company included in the Registration
Statement or incorporated by reference therein (x) shall comply as to
form in all material respects with the applicable accounting
requirements and the published rules and regulations of the SEC
applicable with respect thereto, (y) shall be prepared in accordance
with GAAP (except as may be otherwise indicated in such financial
statements or the notes thereto or, in the case of unaudited interim
statements, to the extent they may not include footnotes or may be
condensed on summary statements) and (z) fairly present in all
material respects the consolidated financial position of the Company
and its consolidated subsidiaries as of the dates thereof and the
consolidated results of their operations and cash flows for the
periods then ended (subject, in the case of unaudited statements, to
year-end adjustments).
(ii) The Company shall (x) prepare and file with the SEC
such amendments (including post-effective amendments) and supplements
to the Registration Statement and the prospectus used in connection
with the Registration Statement as may be necessary to keep the
Registration Statement effective at all times during the Registration
Period (subject to any suspensions of the effectiveness of the
Registration Statement due to delays in post-effective amendments
being declared effective by the SEC as provided in Section 7.3(c)),
and (y) during the Registration Period, comply with the provisions of
the Securities Act with respect to the disposition of all Securities
covered by the Registration Statement until such time as all of such
Securities have been disposed of in accordance with the intended
methods of disposition by the seller or sellers thereof as set forth
in such Registration Statement.
(iii) Upon your request, the Company shall furnish to you
(if your Securities are included in the Registration Statement) (x)
promptly after the same is prepared and publicly distributed, filed
with the SEC or received by the Company, as applicable, one copy of
the Registration Statement and any amendment thereto, each preliminary
prospectus and prospectus and each amendment or supplement thereto,
and each letter written by or on behalf of the Company to the SEC or
the staff of the SEC (including, without limitation, any request to
accelerate the effectiveness of the Registration Statement or
amendment thereto), and each item of correspondence from the SEC or
the staff of the SEC, in each case relating to the Registration
Statement (other than any portion thereof that contains information
for which the Company has sought confidential treatment), (y) on the
date of effectiveness of the Registration Statement or any amendment
thereto, a notice stating that the Registration Statement or amendment
has been declared effective, and (z) such number of copies of a
prospectus, including a preliminary prospectus, all amendments and
supplements thereto as you may reasonably request.
(iv) The Company shall use its commercially reasonable
efforts to (x) register and qualify the Conversion Shares covered by
the Registration Statement under such other securities or "blue sky"
laws of such jurisdictions in the United States as each Offering
Holder reasonably requests, (y) prepare and file in those
jurisdictions such amendments (including post-effective amendments)
and supplements to such registrations and qualifications and take such
other actions as may be necessary to maintain such registrations and
qualifications in effect at all times during the Registration Period
(subject to Section 6.3(c)), and (z) take all other actions reasonably
necessary or advisable to qualify such Conversion Shares for sale in
such jurisdictions; provided, however, that the Company shall not be
required in connection therewith or as a condition thereto to (A)
qualify to do business in any jurisdiction where it would not
otherwise be required to qualify but for this clause (iv), (B) subject
itself to general taxation in any such jurisdiction, (C) file a
general consent to service of process in any such jurisdiction, (D)
provide any undertakings that cause the Company undue expense or
burden, or (E) make any change in its Certificate of Incorporation or
Bylaws, which in each case the Board of Directors of the Company
determines to be contrary to the best interests of the Company and its
stockholders.
(v) As promptly as practicable after becoming aware of such
event, the Company shall (x) notify you by telephone and facsimile of
the happening of any event, as a result of which the prospectus
included in the Registration Statement, as then in effect, includes an
untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, and (y) promptly prepare a supplement or amendment to such
Registration Statement to correct such untrue statement or omission,
and deliver such number of copies of such supplement or amendment to
you as you may reasonably request.
(vi) The Company shall use its commercially reasonable
efforts (i) to prevent the issuance of any stop order or other
suspension of effectiveness of any Registration Statement and, if such
an order is issued, to obtain the withdrawal of such order at the
earliest practicable moment (including in each case by amending or
supplementing the Registration Statement), and (ii) to notify you if
your Conversion Shares are being sold under such Registration
Statement (or, in the event of an underwritten offering, the managing
underwriters) of the issuance of such order and the resolution thereof
(and if the Registration Statement is supplemented or amended, deliver
such number of copies of such supplement or amendment to you as you
may reasonably request).
(vii) The Company shall hold in confidence and not make any
disclosure of information concerning you that is provided to the
Company unless (v) disclosure of such information is necessary to
comply with federal or state securities laws, (w) the disclosure of
such information is necessary to avoid or correct a misstatement or
omission in the Registration Statement, (x) the release of such
information is ordered pursuant to a subpoena or other order from a
court or governmental body of competent jurisdiction, (y) such
information has been made generally available to the public other than
by disclosure in violation of this or any other agreement, or (z) you
consent to the form and content of any such disclosure. The Company
shall, upon learning that disclosure of any information concerning you
is sought in or by a court or governmental body of competent
jurisdiction or through other means, give prompt notice to you prior
to making such disclosure, and cooperate with you, at your expense, in
taking appropriate action to prevent disclosure of, or to obtain a
protective order for, such information.
(viii) At your request, the Company shall prepare and file
with the SEC at the expense of the Offering Holder making such request
such amendments (including post-effective amendments) and supplements
to the Registration Statement required to be filed hereunder and the
prospectus used in connection with the Registration Statement as may
be necessary in order to change the plan of distribution set forth in
the Registration Statement.
(ix) The Company shall comply with all applicable laws
related to the Registration Statement and offering and sale of
securities and all applicable rules and regulations of Governmental
Authorities in connection therewith (including, without limitation,
the Securities Act and the Exchange Act and the rules and regulations
thereunder promulgated by the SEC).
(f) Except as provided below in this Section 6.3, the expenses
incurred by the Company in connection with action taken by the Company
to comply with this Section 6, including, without limitation, all
registration and filing fees, printing and delivery expenses,
accounting fees, fees and disbursements of counsel to the Company,
consultant and expert fees, premiums for liability insurance, if the
Company chooses to obtain such insurance, obtained in connection with
a registration statement filed to effect such compliance and all
expenses, including counsel fees, of complying with any state
securities laws, shall be paid by the Company. All fees and
disbursements of any underwriter, counsel, experts, or consultants
employed by you shall be borne by you. The Company shall not be
obligated in any way in connection with any registration pursuant to
this Section 6 for any selling commissions or discounts payable by you
to any underwriter or broker of securities to be sold by you. You
agree to pay all expenses required to be borne by you.
(g) In the event of any registration of Conversion Shares
pursuant to this Section 6.3, the Company will indemnify and hold
harmless each Offering Holder, its officers, directors and each
underwriter of such securities, and any person who controls such
Offering Holder or underwriter within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, against (A) all
claims, actions, losses, damages, liabilities and expenses, joint or
several, to which any of such persons may become subject under the
Securities Act or otherwise, insofar as such losses, claims, damages,
liabilities or actions arise out of or are based upon any untrue
statement of any material fact contained in any registration statement
under which such securities were registered under the Securities Act,
any preliminary prospectus or final prospectus contained therein, or
any amendment or supplement thereof, or arise out of or are based upon
the omission to state therein a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, or (B) any
violation or alleged violation by the Company of the Securities Act,
the Exchange Act or any other law (including, without limitation, any
state securities law), rule or regulation relating to the offer or
sale of the Offering Shares (the matters in the foregoing clauses (A)
and (B), collectively, "Violations") and will reimburse such Offering
Holder, its officers, directors and each underwriter of such
securities, and each such controlling person or entity for any legal
and any other expenses reasonably incurred by such Offering Holder,
such underwriter, or such controlling person or entity in connection
with investigating or defending any such loss, claim, damage,
liability, or action; provided, however, that the Company will not be
liable in any such case to the extent that any such loss, claim,
damage, liability or action arises directly out of or is based
primarily upon an untrue statement or omission made in said
registration statement, said preliminary prospectus or said
prospectus, or said amendment of supplement in reliance upon and in
conformity with written information furnished to the Company by such
Offering Holder or such underwriter specifically for use in the
preparation thereof; and provided, further however, that the Company
will not be liable in any such case to the extent that any such loss,
claim, damage or liability or action arises directly out of or is
based primarily upon an untrue statement or omission made in any
preliminary prospectus or final prospectus if (I) such Offering Holder
failed to send or deliver a copy of the final prospectus or prospectus
supplement with or prior to the delivery of written confirmation of
the sale of the Offering Shares, and (ii) the final prospectus or
prospectus supplement would have corrected such untrue statement or
omission.
(h) At any time when a prospectus relating to the Offering is
required to be delivered under the Securities Act, the Company will
notify you of the happening of any event, upon the notification or
awareness of such event by an executive officer of the Company, as a
result of which the prospectus included in such registration
statement, as then in effect, includes an untrue statement of material
fact or omits to state a material fact required to be stated therein
or necessary to make the statements therein not misleading in light of
the circumstances then existing.
(i) In the event you are an Offering Holder, you agree to
indemnify and hold harmless the Company, its officers, directors and
any person who controls the Company within the meaning of Section 15
of the Securities Act, against any losses, claims, damages,
liabilities, or actions, joint or several, to which the Company, its
officers, directors, or such controlling person or entity may become
subject under the Securities Act or otherwise, insofar as such losses,
claims, damages, liabilities, or actions (i) arise out of or are based
upon any untrue statement of any material fact contained in any
registration statement under which such securities were registered
under the Securities Act, any preliminary prospectus or final
prospectus contained therein, or any amendment or supplement thereto,
or arise out of or are based upon the omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading, in each case to the extent and only
to the extent that any such loss, claim, damage, liability, or action
arises out of or is based upon an untrue statement or omission made in
said registration statement, said preliminary prospectus or said
prospectus or said amendment or supplement in reliance upon and in
conformity with written information furnished to the Company by you or
any affiliate (as defined in the Securities Act) of you specifically
for use in the preparation thereof or (ii) result from your failure to
deliver a copy of the final prospectus and any amendment or supplement
thereto to each purchaser.
(j) Any party entitled to indemnification hereunder will (I)
give prompt written notice to the indemnifying party of any claim with
respect to which it seeks indemnification and (ii) unless in such
indemnified party's reasonable judgment a conflict of interest between
such indemnified and indemnifying parties may exist with respect to
such claim, permit such indemnifying party to assume the defense of
such claim with counsel reasonably satisfactory to the indemnified
party. If such defense is assumed, the indemnifying party will not be
subject to any liability for any settlement made by the indemnified
party without its consent (which consent may not be unreasonably
withheld). An indemnifying party who is not entitled to, or elects
not to, assume the defense of a claim will not be obligated to pay the
fees and expenses of more than one counsel for all parties indemnified
by such indemnifying party with respect to such claim, unless in the
reasonable judgment of any indemnified party a conflict of interest
may exist between such indemnified party and any other of such
indemnified parties with respect to such claim.
(k) To the extent any indemnification by an indemnifying party
is prohibited or limited by law, the indemnifying party shall make the
maximum contribution with respect to any amounts for which it would
otherwise be liable to the fullest extent permitted by law as is
appropriate to reflect the relative fault of the indemnifying party,
on the one hand, and the indemnified party, on the other hand, with
respect to the violation giving rise to the applicable claim;
provided, however, that (a) no contribution shall be made under
circumstances where the maker would not have been liable for
indemnification under the fault standards set forth in Section 6(g) or
6(i), as applicable, (b) no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any seller of
Conversion Shares who was not guilty of such fraudulent
misrepresentation, and (c) contribution (together with any
indemnification or other obligations under this Agreement) by any
seller of the Securities shall be limited in amount to the amount of
proceeds received by such seller from the sale of such Conversion
Shares.
(l) With a view to making available to you the benefits of Rule
144 promulgated under the Securities Act, the Company agrees that it
will use its commercially reasonable efforts to maintain registration
of its Common Stock under Section 12 or 15 of the Securities and
Exchange Act of 1934, as amended (the "Exchange Act"), and to file
with the SEC in a timely manner all reports and other documents
required to be filed by an issuer of securities registered under the
Exchange Act so as to maintain the availability of Rule 144. Upon
your request, the Company will deliver to you a written statement as
to whether it has complied with the reporting requirements of Rule
144, and such other information in the possession of the Company as
may be reasonably requested to permit you to sell Securities under
Rule 144 without registration.
(m) The Company agrees to cooperate with you to facilitate the
timely preparation and delivery of certificates representing
Conversion Shares to be sold by you pursuant to the Registration
Statement, which certificates shall be free, to the extent permitted
by applicable law and this Agreement, of all restrictive legends, and
to enable such Conversion Shares to be in such denominations and
registered in such names as you may request at least two (2) Business
Days prior to any sale of Conversion Shares. In connection therewith,
the Company shall within three (3) Business Days after the
effectiveness of the Registration Statement cause an opinion of
counsel to be delivered to and maintained with its transfer agent,
together with any other authorizations, certificates and directions
required by the transfer agent, which authorize and direct the
transfer agent to issue such Conversion Shares without legend upon
sale by you of such Conversion Shares under the Registration
Statement.
(n) You agree that you will, and that you will cause your
counsel and other advisors that are provided with such information to,
hold in confidence any non-public information received as a result of
the Company complying with its obligations under this Section 6.3
until such time as the non-public information is publicly disclosed.
(o) The Company agrees to list on the American Stock Exchange
(or such other securities exchange or market on which the Common Stock
may be traded) the Conversion Shares.
SECTION 7. AMENDMENT AND WAIVER.
This Agreement may be amended, and the observance of any term hereof
may be waived (either retroactively or prospectively), with (and only
with) the written consent of the Company and you and the Other
Purchasers.
SECTION 8. NOTICES.
All notices and communications provided for hereunder shall be in
writing and sent (a) by facsimile if the sender on the same day sends
a confirming copy of such notice by a recognized overnight delivery
service (charges prepaid), or (b) by registered or certified mail with
return receipt requested (postage prepaid), or (c) by a recognized
overnight delivery service (with charges prepaid). Any such notice
must be sent:
(a) If to you or your nominee, to you or it at the address
specified for such communications in Schedule A, or at such other
address as you or it shall have specified to the Company in writing,
(b) If to any other holder of any Securities, to such holder at
such address as such other holder shall have specified to the Company
in writing, or
(c) If to the Company, to the Company at 0000 Xxxxxxxxx Xxxx,
Xxxxx, Xxxxxxxx 00000 to the attention of Xxxxxxx X. Xxxxx, or at such
other address as the Company shall have specified to you in writing.
Notices under this Section 8 will be deemed given only when actually
received.
SECTION 9. CONFIDENTIAL INFORMATION.
For the purposes of this Section 9, "Confidential Information" means
information delivered to you by or on behalf of the Company or any
Subsidiary in connection with the transactions contemplated by or
otherwise pursuant to this Agreement that is proprietary in nature;
provided that such term does not include information that (a) was
publicly known or otherwise known to you prior to the time of such
disclosure, (b) subsequently becomes publicly known through no act or
omission by you or any Person acting on your behalf, or (c) otherwise
becomes known to you other than through disclosure by the Company or
any Subsidiary. You will maintain the confidentiality of such
Confidential Information in accordance with procedures adopted by you
in good faith to protect confidential information of third parties
delivered to you; provided that you may deliver or disclose
Confidential Information to (i) your directors, trustees, officers,
employees, agents, attorneys and affiliates (to the extent such
disclosure reasonably relates to the administration of your investment
in the Preferred Stock), (ii) your financial advisors and other
professional advisors who agree to hold confidential the Confidential
Information substantially in accordance with the terms of this Section
9, (iii) any other holder of any Securities, (iv) any Institutional
Investor to which you sell or offer to sell such Securities or any
part thereof or any participation therein (if such Person has agreed
in writing prior to its receipt of such Confidential Information to be
bound by the provisions of this Section 9), (v) any Person from which
you offer to purchase any security of the Company (if such Person has
agreed in writing prior to its receipt of such Confidential
Information to be bound by the provisions of this Section 9), (vi) any
federal or state regulatory authority having jurisdiction over you,
(vii) the National Association of Insurance Commissioners or any
similar organization, or any nationally recognized rating agency that
requires access to information about your investment portfolio or
(viii) any other Person to which such delivery or disclosure may be
necessary or appropriate (w) to effect compliance with any law, rule,
regulation or order applicable to you, (x) in response to any subpoena
or other legal process, or (y) in connection with any litigation to
which you are a party, to the extent you may reasonably determine such
delivery and disclosure to be necessary or appropriate in the
enforcement or for the protection of the rights and remedies under
this Agreement or as a holder of Securities. On reasonable request by
the Company in connection with the delivery to any holder of
Securities of information required to be delivered to such holder
under this Agreement or requested by such holder, such holder will
enter into an agreement with the Company embodying the provisions of
this Section 9.
SECTION 10. MISCELLANEOUS.
Section 10.1. Successors and Assigns. All covenants and other
agreements contained in this Agreement by or on behalf of any of the
parties hereto bind and inure to the benefit of their respective
successors and assigns (including, without limitation, any subsequent
holder of Preferred Stock or Conversion Shares) whether so expressed
or not.
Section 10.2. Severability. Any provision of this Agreement
that is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof,
and any such prohibition or unenforceability in any jurisdiction shall
(to the full extent permitted by law) not invalidate or render
unenforceable such provision in any other jurisdiction.
Section 10.3 Construction. Each covenant contained herein
shall be construed (absent express provision to the contrary) as being
independent of each other covenant contained herein, so that
compliance with any one covenant shall not (absent such an express
contrary provision) be deemed to excuse compliance with any other
covenant. Where any provision herein refers to action to be taken by
any Person, or which such Person is prohibited from taking, such
provision shall be applicable whether such action is taken directly or
indirectly by such Person.
Section 10.4. Counterparts. This Agreement may be executed in
any number of counterparts, each of which shall be an original but all
of which together shall constitute one instrument. Each counterpart
may consist of a number of copies hereof, each signed by less than
all, but together signed by all, of the parties hereto.
Section 10.5. Governing Law. This Agreement shall be construed
and enforced in accordance with, and the rights of the parties shall
be governed by, the law of the State of Delaware, excluding choice-of-
law principles of the law of such State that would require the
application of the laws of a jurisdiction other than such State.
If you are in agreement with the foregoing, please sign where
indicated on Schedule A and return this Agreement to the Company,
whereupon the foregoing shall become a binding agreement between you
and the Company, dated as of June 17, 2004.
Very truly yours,
AMCON DISTRIBUTING COMPANY
By: Xxxxxxxx X. Xxxxx, President
----------------------------
Xxxxxxxx X. Xxxxx, President
Exhibit A Form of Certificate of Designations regarding Series
2004 Preferred Stock
Schedule A List of Purchasers
Schedule B Definitions of Capitalized Terms
Schedule 4.3 Outstanding Contractual Obligations
Schedule 4.5 Certain Changes and Events
EXHIBIT A (to Securities Purchase Agreement)
EXHIBIT 3.4
SECOND CORRECTED CERTIFICATE OF DESIGNATIONS, PREFERENCES
AND RIGHTS OF SERIES A CONVERTIBLE PREFERRED STOCK
OF
AMCON DISTRIBUTING COMPANY
Pursuant to Sections 103(f) and 151 of the General Corporation Law
of the State of Delaware
The undersigned, AMCON Distributing Company, a Delaware corporation (the
"Corporation"), does hereby adopt the following Corrected Certificate of
Designations, Preferences and Rights of Series A Convertible Preferred
Stock:
I. The Certificate of Designations, Preferences and Rights of Series A
Convertible Preferred Stock was filed by the Secretary of State of
Delaware on June 17, 2004, a Corrected Certificate of Designations,
Preferences and Rights of Series A Convertible Preferred Stock
("Certificate of Designations"), was filed by the Secretary of State of
Delaware on June 18, 2004, and said Certificate of Designations requires a
second correction as permitted by subsection (f) of Section 103 of the
General Corporation Law of the State of Delaware.
II. The inaccuracy or defect of said Certificate of Designations is as
follows:
Section 1, Certain Definitions, "Redemption Price," was intended, with
respect to the time periods set forth in subparagraphs (a) through (l), to
represent the sum of the Liquidation Preference, plus the respective
percentages of the Liquidation Preference specified in subparagraphs (a)
through (l), together with accrued and unpaid dividends to and including
the Redemption Date.
III. The entire Certificate of Designations is corrected to read as
follows:
AMCON Distributing Company, a corporation organized and existing under the
laws of the State of Delaware (the "Corporation"), does hereby certify
that, pursuant to authority conferred upon the Board of Directors of the
Corporation by its Certificate of Incorporation (the "Certificate of
Incorporation") and pursuant to the provisions of Section 151 of the
General Corporation Law of the State of Delaware, the following resolution
was duly approved and adopted by the Board of Directors of the
Corporation:
RESOLVED, that pursuant to the authority vested in the Board of Directors
of the Corporation by Article IV of the Certificate of Incorporation,
there is hereby created and authorized out of the authorized but unissued
shares of the capital stock of the Corporation, 100,000 shares of a series
of preferred stock to be designated Series A Convertible Preferred Stock,
par value $.01 per share (the "Series A Preferred Stock"), of which the
preferences and relative and other rights, and the qualifications,
limitations or restrictions thereof, shall be (in addition to those set
forth in the Certificate of Incorporation) as follows:
Section 1. Certain Definitions.
Unless the context otherwise requires, when used herein the following
terms shall have the meanings indicated:
"Authorization Trigger Date" shall have the meaning set forth in Section
5(m).
"Change of Control of the Corporation" means any of the following: (A)
the making of a tender or exchange offer by any person or entity or group
of associated persons or entities (within the meaning of Section 13(d)(3)
or 14(d)(2) of the Securities Exchange Act of 1934) (a "Person") (other
than the Corporation or its subsidiaries) for shares of Common Stock
pursuant to which purchases are made of securities representing at least
fifty percent (50%) of the total combined voting power of the then issued
and outstanding Voting Stock of the Corporation; (B) the merger or
consolidation of the Corporation with, or the sale or disposition of all
or substantially all of the assets of the Corporation, to any Person other
than (a) a merger or consolidation which would result in the Voting Stock
of the Corporation outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into
Voting Stock of the surviving or parent entity) fifty percent (50%) or
more of the combined voting power of the Voting Stock of the Corporation
or such surviving or parent entity outstanding immediately after such
merger or consolidation; or (b) a merger or consolidation effected to
implement a recapitalization of the Corporation (or similar transaction)
in which no Person is or becomes the beneficial owner, directly or
indirectly (as determined under Rule 13d-3 promulgated under the
Securities Exchange Act of 1934), of securities representing fifty percent
(50%) or more of the combined voting power of the Voting Stock of the
Corporation; (C) if; at any time within a two-year period following the
acquisition by any Person of direct or indirect beneficial ownership (as
determined under Rule 13d-3 promulgated under the Securities Exchange Act
of 1934), in the aggregate, of securities of the Corporation representing
forty percent (40%) or more of the total combined voting power of the then
issued and outstanding Voting Stock of the Corporation, the persons who at
the time of such acquisition constitute the Board of Directors cease for
any reason whatsoever to constitute a majority of the Board of Directors;
(D) the acquisition of direct or indirect beneficial ownership (as
determined under Rule 13d-3 promulgated under the Securities Exchange Act
of 1934), in the aggregate, of securities of the Corporation representing
fifty percent (50%) or more of the outstanding Voting Stock of the
Corporation by any person or group of persons acting in concert; or (E)
the approval by the shareholders of the Corporation of any plan or
proposal for the complete liquidation or dissolution of the Corporation or
for the sale of all or substantially all of the assets of the Corporation.
"Common Stock" means shares of the common stock, par value $.01 per share,
of the Corporation.
"Conversion Date" shall have the meaning set forth in Section 5(b).
"Conversion Price" at any time of determination, shall mean the conversion
price determined pursuant to Section 5(c).
"Corporate Change" shall have the meaning set forth in Section 5(j).
"Current Market Price" shall have the meaning set forth in Section 5(i).
"Delivery Period" shall have the meaning set forth in Section 5(d).
"Dividend Payment Date" shall have the meaning set forth in Section 2(a).
"Dividend Period" shall have the meaning set forth in Section 2(a).
"DTC" means the Depository Trust Company.
"DTC Transfer" shall have the meaning set forth in Section 5(f).
"Final Redemption Date" shall have the meaning set forth in Section 4(d).
"Issue Date" shall mean the date the shares of Series A Preferred Stock in
question are issued by the Corporation.
"Junior Stock" means the Common Stock and any other class or series of
securities of the Corporation (i) not entitled to receive any
distributions unless all distributions required to have been paid or
declared and set apart for payment on the Series A Preferred Stock shall
have been so paid or declared and set apart for payment, (ii) not entitled
to receive any assets upon the liquidation, dissolution or winding up of
the affairs of the Corporation until the Series A Preferred Stock shall
have received the entire amount to which such shares are entitled upon
such liquidation, dissolution or winding up, and (iii) not entitled to
redemption until the Series A Preferred Stock shall have been redeemed in
full.
"Liquidation Preference" shall mean $25.00 per share of the Series A
Preferred Stock.
"Parity Stock" means, (i) any class or series of securities of the
Corporation entitled to receive payment of dividends on a parity with the
Series A Preferred Stock and (ii) any class or series of securities of the
Corporation entitled to receive assets upon the liquidation, dissolution
or winding up of the affairs of the Corporation on a parity with the
Series A Preferred Stock.
"Redemption Agent" shall have the meaning set forth in Section 4(c).
"Redemption Amount" shall have the meaning set forth in Section 6(b).
"Redemption Announcement" shall have the meaning set forth in Section
6(a).
"Redemption Date" shall have the meaning set forth in Section 4(b).
"Redemption Event" shall have the meaning set forth in Section 6(a).
"Redemption Notice" shall have the meaning set forth in Section 6(a).
"Redemption Price" shall mean the per share price to be paid upon
redemption of the Series A Preferred Stock, which shall equal (a) for the
period from June 17, 2006 to June 16, 2007, 112% of the Liquidation
Preference, (b) for the period from June 17, 2007 to June 16, 2008, 111%
of the Liquidation Preference, (c) for the period from June 17, 2008 to
June 16, 2009, 110% of the Liquidation Preference, (d) for the period from
June 17, 2009 to June 16, 2010, 109% of the Liquidation Preference, (e)
for the period from June 17, 2010 to June 16, 2011, 108% of the
Liquidation Preference, (f) for the period from June 17, 2011 to June 16,
2012, 107% of the Liquidation Preference, (g) for the period from June 17,
2012 to June 16, 2013, 106% of the Liquidation Preference, (h) for the
period from June 17, 2013 to June 16, 2014, 105% of the Liquidation
Preference, (i) for the period from June 17, 2014 to June 16, 2015, 104%
of the Liquidation Preference, (j) for the period from June 17, 2015 to
June 16, 2016, 103% of the Liquidation Preference, (k) for the period from
June 17, 2016 to June 16, 2017, 102% of the Liquidation Preference, (l)
for the period from June 17, 2017 to June 16, 2018, 101% of the
Liquidation Preference, and (m) after June 16, 2018, the Liquidation
Preference, plus in each case accrued and unpaid dividends to and
including the Redemption Date.
"Reserved Amount" shall have the meaning set forth in Section 5(m).
"Senior Stock" means any (i) class or series of securities of the
Corporation ranking senior to the Series A Preferred Stock in respect of
the right to receive payment of distributions and (ii) any class or series
of securities of the Corporation ranking senior to the Series A Preferred
Stock in respect of the right to receive assets upon the liquidation,
dissolution or winding up of the affairs of the Corporation.
"Voluntary Conversion Notice" shall have the meaning set forth in Section
5(a).
"Voting Stock of the Corporation" means shares of stock of the Corporation
of any class that votes generally in the election of directors.
"Xxxxxx Family" means Xxxxxxx Xxxxxx (Chairman of the Board and Chief
Executive Officer of the Corporation at the date of this Certificate of
Designation), any lineal ascendant or descendant (including by way of
adoption) of Xxxxxxx Xxxxxx, any spouse of any of the foregoing persons,
any trust established by any of the foregoing persons and any corporation,
partnership, limited liability company or other entity that is controlled,
directly or indirectly, by one or more of the foregoing persons or trusts.
Section 2. Dividends.
a. Subject to the prior preferences and other rights of any Senior
Stock, the holders of the Series A Preferred Stock shall be entitled to
receive, out of funds legally available for that purpose, cash dividends
in an amount equal to 6.785% per annum of the Liquidation Preference per
share calculated on the basis of a 365-day year. Such dividends shall be
payable only in cash, shall be cumulative from their Issue Date and shall
be payable in arrears, when, as and if declared by the Board of Directors,
on March 31, June 30, September 30 and December 31 of each year (each such
date being herein referred to as a "Dividend Payment Date"), commencing on
June 30, 2004. The period between consecutive Dividend Payment Dates
shall hereinafter be referred to as a "Dividend Period."
b. Dividends on any shares of Series A Preferred Stock shall accrue
(whether or not declared and whether or not there shall be funds legally
available for the payment of dividends) on and from their Issue Date. No
interest shall be payable with respect to any dividends that are in
arrears.
c. Each such dividend shall be paid to the holders of record of the
Series A Preferred Stock as their names appear on the share register of
the Corporation on the corresponding Record Date. As used above, the term
"Record Date" for any Dividend Period means the date that is fifteen (15)
days prior to the Dividend Payment Date for such Dividend Period, or such
other record date designated by the Board of Directors of the Corporation
with respect to the dividend payable on such respective Dividend Payment
Date. Dividends on account of arrears for any past Dividend Periods may
be declared and paid, together with any accrued but unpaid dividends
thereon to and including the date of payment, at any time, without
reference to any Dividend Payment Date, to holders of record on such date,
not exceeding 50 days preceding the payment date thereof, as may be fixed
by the Board of Directors.
d. Whenever dividends payable on shares of Series A Preferred Stock
shall not have been paid in full, in an aggregate amount equal to two full
quarterly dividends on such shares of Series A Preferred Stock then
outstanding, the number of directors then constituting the Board of
Directors of the Corporation shall automatically be increased by two, and
the holders of such shares of Series A Preferred Stock shall have the
exclusive and special right, voting separately as a class with the holders
of shares of any one or more class or series of Parity Stock and upon
which like voting rights have been conferred and are exercisable, to elect
two directors of the Corporation to fill such newly created directorships;
provided, however, that in no event shall the holders of such shares of
Series A Preferred Stock voting separately as a class as aforesaid have
the right to elect more than two directors. Whenever such right of the
holders of such shares of Series A Preferred Stock shall have vested, such
right may be exercised initially either at a special meeting of such
shareholders, which special meeting shall be called by the Board of
Directors of the Corporation, or at any annual meeting of shareholders,
and thereafter at annual meetings of shareholders. The right of the
holders of such shares of Series A Preferred Stock, voting separately as a
class to elect members of the Board of Directors of the Corporation as
aforesaid, shall continue until such time as all dividends accumulated on
such shares of Series A Preferred Stock to the dividend payment date next
preceding the date of any such determination have been paid in full, or
declared and set apart in trust for payment, at which time the special
rights of the holders of such shares of Series A Preferred Stock to vote
separately as a class for the election of two directors shall terminate
(subject to revesting in the event of each and every subsequent failure to
make dividend payments in an aggregate amount equal to two full quarterly
dividends as above provided), and the number of directors constituting the
Board of Directors shall be automatically reduced.
e. So long as any shares of the Series A Preferred Stock are
outstanding, the Corporation shall not, directly or indirectly, declare,
pay or set apart for payment any dividends or other distributions on
Junior Stock (other than dividends or distributions paid in shares of, or
options, warrants or rights to subscribe for or purchase shares of, Junior
Stock) or redeem or otherwise acquire any Junior Stock for any
consideration (including any moneys to be paid to or made available for a
sinking fund for the redemption of any shares of any such stock), except
by conversion into or exchange for Junior Stock, unless in each case the
full cumulative dividends on all outstanding shares of the Series A
Preferred Stock and any other Parity Securities have been paid or set
apart for payment for all past and current Dividend Periods with respect
to the Series A Preferred Stock and all past and current dividend periods
with respect to such Parity Securities.
Section 3. Distributions Upon Liquidation, Dissolution or Winding Up.
In the event of any voluntary or involuntary liquidation, dissolution or
other winding up of the affairs of the Corporation, subject to the prior
preferences and other rights of any Senior Stock, but before any
distribution or payment shall be made to the holders of Junior Stock, the
holders of the Series A Preferred Stock shall be entitled to be paid the
Liquidation Preference of all outstanding shares of the Series A Preferred
Stock as of the date of such liquidation or dissolution or such other
winding up, plus any accrued but unpaid dividends, if any, to such date,
and no more. The Corporation shall make such payment in cash. If such
payment shall have been made in full to the holders of the Series A
Preferred Stock, and if payment shall have been made in full to the
holders of any Senior Stock and Parity Stock of all amounts to which such
holders shall be entitled, the remaining assets and funds of the
Corporation shall be distributed among the holders of Junior Stock,
according to their respective shares and priorities. If, upon any such
liquidation, dissolution or other winding up of the affairs of the
Corporation, the net assets of the Corporation distributable among the
holders of all outstanding shares of the Series A Preferred Stock and of
any Parity Stock shall be insufficient to permit the payment in full to
such holders of the preferential amounts to which they are entitled, then
the entire net assets of the Corporation remaining after the distributions
to holders of any Senior Stock of the full amounts to which they may be
entitled shall be distributed among the holders of the Series A Preferred
Stock and of any Parity Stock ratably in proportion to the full amounts to
which they would otherwise be respectively entitled. Neither the
consolidation or merger of the Corporation into or with another
corporation or corporations, nor the sale of all or substantially all of
the assets of the Corporation to another corporation or corporations shall
be deemed a liquidation, dissolution or winding up of the affairs of the
Corporation within the meaning of this Section 3.
Section 4. Optional Redemption by the Corporation.
a. The Series A Preferred Stock shall not be redeemed in whole or in
part on or prior to June 17, 2006, except as provided in Section 6 hereof.
After June 17, 2006, the Corporation may, at its option, redeem in cash at
any time, in whole or in part, the Series A Preferred Stock at the
Redemption Price per share. If less than all the outstanding shares of
Series A Preferred Stock are to be redeemed pursuant to this Section 4,
the shares to be redeemed shall be determined by lot or in such other
manner as the Board of Directors of the Corporation may prescribe and
which it deems appropriate.
b. Notice of redemption of the Series A Preferred Stock shall be sent
by or on behalf of the Corporation, by first class mail, postage prepaid,
to the holders of record of the outstanding shares of Series A Preferred
Stock at their respective addresses as they shall appear on the records of
the Corporation, not less than 10 days nor more than 30 days prior to the
date fixed for redemption (the "Redemption Date") (i) notifying such
holders of the election of the Corporation to redeem such shares and of
the Redemption Date, (ii) stating the date on which the shares cease to be
convertible (which date shall be the same date as the Redemption Date),
and the Conversion Price, (iii) the place or places at which the shares
called for redemption shall, upon presentation and surrender of the
certificates evidencing such shares, be redeemed, and the Redemption Price
therefor, and (iv) stating the name and address of any Redemption Agent
selected by the Corporation in accordance with Section 4(c) below, and the
name and address of the Corporation's transfer agent for the Series A
Preferred Stock. The Corporation may act as the transfer agent for the
Series A Preferred Stock.
c. The Corporation may act as the redemption agent to redeem the
Series A Preferred Stock. The Corporation may also appoint as its agent
for such purpose its transfer agent for Common Stock or a bank or trust
company in good standing, organized under the laws of the United States of
America or any jurisdiction thereof, and having capital, surplus and
undivided profits aggregating at least $100,000,000, and may appoint any
one or more additional such agents which shall in each case be a bank or
trust company in good standing organized under the laws of the United
States of America or of any jurisdiction thereof, having an office or
offices in The City of New York, New York, or such other place as shall
have been designated by the Corporation, and having capital, surplus and
undivided profits aggregating at least $100,000,000. The Corporation or
such bank or trust company is hereinafter referred to as the "Redemption
Agent." Following such appointment and prior to any redemption, the
Corporation shall deliver to the Redemption Agent irrevocable written
instructions authorizing the Redemption Agent, on behalf and at the
expense of the Corporation, to cause such notice of redemption to be duly
mailed as herein provided as soon as practicable after receipt of such
irrevocable instructions and in accordance with the above provisions. All
funds necessary for the redemption shall be deposited with the Redemption
Agent in trust at least two business days prior to the Redemption Date,
for the pro rata benefit of the holders of the shares of Series A
Preferred Stock so called for redemption, so as to be and continue to be
available therefor. Neither failure to mail any such notice to one or
more such holders nor any defect in any notice shall affect the
sufficiency of the proceedings for redemption as to other holders.
d. If notice of redemption shall have been given as provided above,
and the Corporation shall not default in the payment of the Redemption
Price, then each holder of shares called for redemption shall be entitled
to all preferences, relative and other rights accorded by this Certificate
of Designation until and including the Redemption Date. If the
Corporation shall default in making payment or delivery as aforesaid on
the Redemption Date, then each holder of the shares called for redemption
shall be entitled to all preferences, relative and other rights accorded
by this Certificate of Designation until and including the date (the
"Final Redemption Date") when the Corporation makes payment or delivery as
aforesaid to the holders of the Series A Preferred Stock. From and after
the Redemption Date or, if the Corporation shall default in making payment
or delivery as aforesaid, the Final Redemption Date, the shares called for
redemption shall no longer be deemed to be outstanding, and all rights of
the holders of such shares shall cease and terminate, except the right of
the holders of such shares, upon surrender of certificates therefor, to
receipt of amounts to be paid hereunder. The deposit of monies in trust
with the Redemption Agent by the Corporation shall be irrevocable except
that the Corporation shall be entitled to receive from the Redemption
Agent the interest or other earnings, if any, earned on any monies so
deposited in trust, and the holders of any shares redeemed shall have no
claim to such interest or other earnings, and any balance of monies so
deposited by the Corporation and unclaimed by the holders of the Series A
Preferred Stock entitled thereto at the expiration of two years from the
Redemption Date or the Final Redemption Date, as applicable, shall be
repaid, together with any interest or other earnings thereon, to the
Corporation, and after any such repayment, the holders of the shares
entitled to the funds so repaid to the Corporation shall look only to the
Corporation for such payment, without interest.
Section 5. Conversion Rights. The Series A Preferred Stock shall be
convertible into Common Stock as follows:
a. Conversion at Holder's Option. The holder of any shares of the
Series A Preferred Stock shall have the right at such holder's option, at
any time and from time to time at any time following the Issue Date and
without the payment of any additional consideration, to convert any or all
of such shares of the Series A Preferred Stock into fully paid and
nonassessable shares of Common Stock at the Applicable Conversion Price
(as provided in Section 5(c) below) in effect on the Conversion Date (as
provided in Section 5(d) below) upon the terms hereinafter set forth. The
holder of any shares of the Series A Preferred Stock may exercise the
conversion right specified in Section 5(a) by surrendering or causing to
be surrendered to the Corporation or any transfer agent of the Corporation
the certificate or certificates representing the shares of the Series A
Preferred Stock to be converted, accompanied by written notice (the
"Voluntary Conversion Notice") specifying the number of such shares to be
converted.
b. Status as Stockholder. As of the close of business on the date
when delivery of a Voluntary Conversion Notice by a holder of Series A
Preferred Stock is made to the Corporation (the "Conversion Date") (i) the
shares covered thereby shall be deemed converted into shares of Common
Stock and (ii) the holder's rights as a holder of such converted shares of
Series A Preferred Stock shall cease and terminate, excepting only the
right to receive such Common Stock and to any remedies provided herein or
otherwise available at law or in equity to such holder because of a
failure by the Corporation to comply with the terms of this Certificate of
Designation.
c. Number of Shares. In the event of a conversion pursuant to Section
5(a) above, each share of the Series A Preferred Stock so converted shall
be converted into such number of shares of Common Stock as is determined
by dividing (x) $25 by (y) the Conversion Price in effect on the
Conversion Date. The initial Conversion Price shall be $30.31 per share of
Common Stock. Such initial Conversion Price shall be subject to
adjustment in order to adjust the number of shares of Common Stock into
which the Series A Preferred Stock is convertible, as hereinafter
provided.
d. Mechanics of Conversion. The Corporation shall not be obligated to
issue to any holder certificates representing the shares of Common Stock
issuable upon conversion unless certificates representing the shares of
Series A Preferred Stock, endorsed directly or through stock powers to the
Corporation or in blank and accompanied when appropriate with evidence of
the signatory's authority, are delivered to the Corporation or any
transfer agent of the Corporation. If the certificate representing shares
of Common Stock issuable upon conversion of shares of the Series A
Preferred Stock is to be issued in a name other than the name on the face
of the certificate representing such shares of the Series A Preferred
Stock, such certificate shall be accompanied by such evidence of the
assignment and such evidence of the signatory's authority with respect
thereto as deemed appropriate by the Corporation or its transfer agent and
such certificate shall be endorsed directly or through stock powers to the
Corporation or in blank. Not less than five business days after the
Conversion Date (the "Delivery Period"), the Corporation shall issue and
deliver to or upon the written order of such holder a certificate or
certificates for the number of full shares of Common Stock to which such
holder is entitled upon such conversion, and a check or cash with respect
to any fractional interest in a share of Common Stock, as provided in
Section 5(e). The person in whose name the certificate or certificates
for Common Stock are to be issued shall be deemed to have become a holder
of record of such Common Stock on the applicable Conversion Date. Upon
conversion of only a portion of the number of shares covered by a
certificate representing shares of Series A Preferred Stock surrendered
for conversion, the Corporation shall issue and deliver to or upon the
written order of the holder of the certificate so surrendered for
conversion, at the expense of the Corporation, a new certificate
representing the number of shares of the Series A Preferred Stock
representing the unconverted portion of the certificate so surrendered.
The Corporation shall pay on any Conversion Date the accrued and unpaid
dividends to and including such date on all shares of Series A Preferred
Stock to be so converted.
e. Fractional Shares. No fractional shares of Common Stock or scrip
shall be issued upon conversion of shares of the Series A Preferred Stock.
If more than one share of the Series A Preferred Stock shall be
surrendered for conversion at any one time by the same holder, the number
of full shares of Common Stock issuable upon conversion thereof shall be
computed on the basis of the aggregate number of shares of the Series A
Preferred Stock so surrendered. Instead of any fractional shares of
Common Stock which would otherwise be issuable upon conversion of any
shares of the Series A Preferred Stock, the Corporation shall pay a cash
adjustment in respect of such fractional interest in an amount equal to
that fractional interest of the then Current Market Price.
f. Delivery of Uncertificated Shares of Common Stock Upon Conversion.
Notwithstanding the provisions of Section 5(d), if the Corporation's
transfer agent is participating in DTC's Fast Automated Securities
Transfer program, the Corporation shall cause its transfer agent to
electronically transmit the Common Stock issuable upon such conversion to
the holder or the holder's designee by crediting the account of the holder
or the holder's designee, or its respective nominee, with DTC through its
Deposit Withdrawal Agent Commission system ("DTC Transfer"). If the
aforementioned conditions to a DTC Transfer are not satisfied, the
Corporation shall deliver in accordance with Section 5(d) to the holder or
the holder's designee physical certificates representing the Common Stock
issuable upon such conversion.
g. Conversion Disputes. In the case of any dispute with respect to a
conversion, the Corporation shall promptly issue such number of shares of
Common Stock as are not disputed in accordance with Section 5(d) or (f),
as applicable. If such dispute involves the calculation of the Conversion
Price, and such dispute is not promptly resolved by discussion between the
relevant holder and the Corporation, the Corporation and the holder shall
submit the disputed calculations to an independent outside accountant.
The accountant, at the Corporation's sole expense, shall promptly audit
the calculations and notify the Corporation and the holder of the results.
The accountant's calculation shall be deemed conclusive, absent manifest
error. The Corporation shall then issue the appropriate number of shares
of Common Stock in accordance with Section 5(d) or (f), as applicable.
h. Conversion Price Adjustments. The Conversion Price shall be
subject to adjustment from time to time as follows:
i. Stock Dividends, Subdivisions, Reclassifications or
Combinations. If the Corporation shall (i) declare a dividend or make a
distribution on its Common Stock in shares of its Common Stock, (ii)
subdivide or reclassify the outstanding shares of Common Stock into a
greater number of shares, (iii) combine or reclassify the outstanding
Common Stock into a smaller number of shares, or (iv) take similar action,
the Conversion Price in effect at the time of the record date for such
dividend or distribution or the effective date of such subdivision,
combination, reclassification or other similar action shall be
proportionately adjusted so that the holder of any shares of Series A
Preferred Stock surrendered for conversion after such date shall be
entitled to receive the number of shares of Common Stock which he would
have owned or been entitled to receive had such shares of the Series A
Preferred Stock been converted immediately prior to such date. Successive
adjustments in the Conversion Price shall be made whenever any event
specified above shall occur.
ii. Other Distributions. In case the Corporation shall fix a
record date for the making of a distribution to all holders of shares of
its Common Stock (i) of shares of any class other than its Common Stock or
(ii) of evidences of indebtedness of the Corporation or any subsidiary or
(iii) of assets (other than cash dividends), or (iv) of rights or
warrants, in each case the Conversion Price in effect immediately prior
thereto shall be adjusted to a price determined by multiplying the then
current Conversion Price by a fraction, of which (1) the numerator shall
be an amount equal to the difference resulting from (A) the Current Market
Price as of such record date less (B) the fair market value (as determined
by the Board, whose determination shall be conclusive) of said shares or
evidences of indebtedness or assets or rights or warrants to be so
distributed, and (2) the denominator shall be the Current Market Price as
of such record date. Such adjustment shall be made successively whenever
such a record date is fixed. In the event that such distribution is not
so made, the Conversion Price then in effect shall be readjusted,
effective as of the date when the Board determines not to distribute such
shares, evidences of indebtedness, assets, rights or warrants, as the case
may be, to the Conversion Price which would then be in effect if such
record date had not been fixed.
iii. Rounding of Calculations; Minimum Adjustment. All
calculations under this Section 5(h) shall be made to the nearest cent or
to the nearest one hundredth (1/100th) of a share, as the case may be.
Any provision of this Section 5 to the contrary notwithstanding, no
adjustment in the Conversion Price shall be made if the amount of such
adjustment would be less than $0.01; but any such amount shall be carried
forward and an adjustment with respect thereto shall be made at the time
of and together with any subsequent adjustment which, together with such
amount and any other amount or amounts so carried forward, shall aggregate
$0.01 of more.
i. Current Market Price. The "Current Market Price" at any date shall
mean, in the event the Common Stock is publicly traded, the average of the
daily closing prices per share of Common Stock for 30 consecutive trading
days ending three trading days before such date (as adjusted for any stock
dividend, split, combination or reclassification that took effect during
such 30 trading day period). The closing price for each day shall be the
last reported sale price regular way or, in case no such reported sale
takes place on such day, the average of the last closing bid and asked
prices regular way, in either case on the principal national securities
exchange on which the Common Stock is listed or admitted to trading, or if
not listed or admitted to trading on any national securities exchange, the
closing sale price for such day reported by Nasdaq, if the Common Stock is
quoted on Nasdaq National Market, Nasdaq Small Cap or any comparable
system, or, if the Common Stock is not traded on Nasdaq or any comparable
system, the average of the closing bid and asked prices as furnished by
two members of the National Association of Securities Dealers, Inc.
selected from time to time by the Corporation for that purpose. If the
Common Stock is not traded in such manner that the quotations referred to
above are available for the period required hereunder, Current Market
Price per share of Common Stock shall be deemed to be the fair value per
share of Common Stock as determined in good faith by the Board of
Directors, irrespective of any accounting treatment.
j. Corporate Change. If there shall be (i) any reclassification or
change of the outstanding shares of Common Stock (other than an event
covered by Section 5(h) above or a change in par value, or from par value
to no par value, or from no par value to par value, or as a result of a
subdivision or combination), (ii) any consolidation or merger of the
Corporation with any other entity (other than a merger in which the
Corporation is the surviving or continuing entity, or (iii) any share
exchange or other transaction pursuant to which all of the outstanding
shares of Common Stock are converted into other securities or property
(each of (i) - (iii) above being a "Corporate Change"), then the holders
of Series A Preferred Stock shall thereafter have the right to receive
upon conversion, in lieu of the shares of Common Stock otherwise issuable,
such shares of stock, securities and/or other property as would have been
issued or payable in such Corporate Change with respect to or in exchange
for the number of shares of Common Stock which would have been issuable
upon conversion had such Corporate Change not taken place, and in any such
case, appropriate provisions (as determined by the Board of Directors in
good faith) shall be made with respect to the rights and interests of the
holders of the Series A Preferred Stock to the end that the economic value
of the shares of Series A Preferred Stock is not diminished by such
Corporate Change and that the provisions hereof (including, without
limitation, in the case of any such consolidation, merger or sale in which
the successor entity or purchasing entity is not the Corporation, an
immediate adjustment of the Conversion Price so that the Conversion Price
immediately after the Corporate Change reflects the same relative value as
compared to the value of the surviving entity's common stock that existed
between the Conversion Price and the value of the Corporation's Common
Stock immediately prior to such Corporate Change) shall thereafter be
applicable, as nearly as may be practicable in relation to any shares of
stock or securities thereafter deliverable upon the conversion thereof.
k. Costs. The Corporation shall pay all documentary, stamp, transfer
or other transactional taxes attributable to the issuance or delivery of
shares of Common Stock upon conversion of any shares of the Series A
Preferred Stock; provided that the Corporation shall not be required to
pay any such taxes or any federal or state income taxes or other taxes
which may be payable in respect of any transfer involved in the issuance
or delivery of any certificate for such shares in a name other than that
of the holder of the shares of the Series A Preferred Stock in respect of
which such shares are being issued.
l. No Impairment. The Corporation (i) will not permit the par value
of any shares of stock at the time receivable upon the conversion of the
Series A Preferred Stock to exceed the Conversion Price then in effect,
(ii) will take all such action as may be necessary or appropriate in order
that the Corporation may validly and legally issue fully paid and
nonassessable shares of Common Stock on the conversion of the Series A
Preferred Stock and (iii) will not issue any Common Stock or convertible
securities or take any action which results in an adjustment of the
Conversion Price if the total number of shares of Common Stock issuable
after such issuance or action upon the conversion or redemption of, or
payment of all outstanding dividends on, all of the then outstanding
shares of Series A Preferred Stock will exceed the total number of shares
of Common Stock then authorized by the Corporation's Certificate of
Incorporation and available for the purposes of issue upon such conversion
or redemption or payment of such dividend.
m. Reservation of Shares. The Corporation will at all times reserve
and keep available, out of its authorized and unissued Common Stock or any
other securities issuable upon conversion pursuant to Section 5(j) above
solely for the purposes of issuance upon conversion of Series A Preferred
Stock as herein provided, free from preemptive rights or any other actual
or contingent purchase rights or persons other than the holders of shares
of Series A Preferred Stock, such number of shares of Common Stock or such
other securities that shall be so issuable upon the conversion of all
outstanding shares of Series A Preferred Stock (the "Reserved Amount").
All shares of Common Stock and other securities that shall be so issuable
upon conversion of the Series A Preferred Stock shall, upon issue, be duly
and validly issued and fully paid and nonassessable. If the Reserved
Amount for any ten consecutive trading days (the last of such ten trading
days being the "Authorization Trigger Date") shall be less than one
hundred percent (100%) of the number of shares of Common Stock issuable
upon full conversion of the then outstanding shares of Series A Preferred
Stock, the Corporation shall immediately notify the holders of Series A
Preferred Stock of such occurrence and shall immediately commence action
(including, if necessary, seeking stockholder approval to authorize the
issuance of additional shares of Common Stock and other securities) to
increase the Reserved Amount to one hundred percent (100%) of the number
of shares of Common Stock and other securities then issuable upon full
conversion of all of the outstanding Series A Preferred Stock at the then
current Conversion Price. Each holder of Series A Preferred Stock, by
their acceptance thereof, agrees to vote in favor of any action necessary
to increase the number of authorized shares of Common Stock and other
securities. In the event the Corporation fails to so increase the
Reserved Amount within 120 days after an Authorization Trigger Date, each
holder of Series A Preferred Stock shall thereafter have the option,
exercisable in whole or in part at any time and from time to time, by
delivery of a Redemption Notice to the Corporation, to require the
Corporation to redeem for cash, at an amount per share equal to the
Redemption Price, a number of the holder's shares of Series A Preferred
Stock such that, after giving effect to such redemption, the then unissued
portion of such holder's Reserved Amount is at least equal to one hundred
percent (100%) of the total number of shares of Common Stock and other
securities issuable upon conversion of such holder's shares of Series A
Preferred Stock.
n. Notices of Record Date. In the event of any taking by the
Corporation of a record of the holders of Common Stock or any other
securities issuable upon conversion pursuant to Section 5(j) above for the
purpose of determining the holders thereof who are entitled to receive any
dividend (other than a cash dividend) or other distribution, any right or
warrant to subscribe for, purchase or otherwise acquire any shares of
stock or any class of any other securities or property, or to receive any
other right (including, without limitation, making a dividend or other
distribution of any rights under a stockholder rights plan (sometimes
known as a "poison pill" plan), whether now existing or hereafter
created), the Corporation shall mail to each holder of Series A Preferred
Stock, at least 20 days prior to the date specified therein, a notice
specifying the date on which any such record is to be taken for the
purpose of such dividend, distribution, right or warrant, and the amount
and character of such dividend, distribution, right or warrant.
Section 6. Redemption Due to Certain Events.
a. Redemption by Holder. In the event (each of the events described
in clauses (i)-(v) below after expiration of the applicable cure period
(if any) being a "Redemption Event"):
i. A Change of Control of the Corporation shall have occurred;
ii. The Xxxxxx Family ceases to beneficially own (as determined
under Rule 13d-3 promulgated under the Securities Exchange Act of 1934)
twenty percent (20%) or more of the outstanding Voting Stock of the
Corporation, computed on a fully diluted basis based on the then generally
accepted accounting principles;
iii. the Corporation shall make an assignment for the benefit of
creditors, or apply for or consent to the appointment of a receiver or
trustee for it or for a substantial part of its property or business, or
such a receiver or trustee shall otherwise be appointed; or
iv. bankruptcy, insolvency, reorganization or liquidation
proceedings or other proceedings for the relief of debtors shall be
instituted by or against the Corporation and if instituted against the
Corporation by a third party, shall not be dismissed within 120 days of
their initiation;
then, upon the occurrence of any such Redemption Event, each holder of
shares of Series A Preferred Stock shall thereafter have the option,
exercisable in whole or in part at any time and from time to time by
delivery of a written notice to such effect (a "Redemption Notice") to the
Corporation while such Redemption Event continues, to require the
Corporation to purchase for cash any or all of the then outstanding shares
of Series A Preferred Stock held by such holder for an amount per share
equal to the Redemption Amount in effect at the time of the redemption
hereunder. Upon the Corporation's receipt of any Redemption Notice
hereunder (other than during the three trading day period following the
Corporation's delivery of a Redemption Announcement to all of the holders
in response to the Corporation's initial receipt of a Redemption Notice
from a holder of Series A Preferred Stock), the Corporation shall within
two business days following such receipt deliver a written notice (a
"Redemption Announcement") to all holders of Series A Preferred Stock
stating the date upon which the Corporation received such Redemption
Notice and the amount of Series A Preferred Stock covered thereby. The
Corporation shall not redeem any shares of Series A Preferred Stock during
the three trading day period following the delivery of a required
Redemption Announcement hereunder. At any time and from time to time
during such three trading day period, each holder of Series A Preferred
Stock may request (either orally or in writing) information from the
Corporation with respect to the instant redemption (including, but not
limited to, the aggregate number of shares of Series A Preferred Stock
covered by Redemption Notices received by the Corporation) and the
Corporation shall furnish (either orally or in writing) as soon as
practicable such requested information to such requesting holder.
b. The "Redemption Amount" with respect to a share of Series A
Preferred Stock means an amount equal to the Liquidation Preference
(including accrued and unpaid dividends to and including the date the
Corporation makes payment of the Redemption Amount).
c. In the event the Corporation is not able to redeem all of the
shares of Series A Preferred Stock subject to Redemption Notices delivered
prior to the date upon which such redemption is to be effected, the
Corporation shall redeem shares of Series A Preferred Stock from each
holder pro rata, based on the total number of shares of Series A Preferred
Stock outstanding at the time of redemption included by such holder in all
Redemption Notices delivered prior to the date upon which such redemption
is to be effected relative to the total number of shares of Series A
Preferred Stock outstanding at the time of redemption included in all of
the Redemption Notices delivered prior to the date upon which such
redemption is to be effected.
Section 7. Voting. The holders of Series A Preferred Stock shall not be
entitled to any voting rights except as provided in Section 2(d) above and
as required by law.
Section 8. No Preemptive Rights. The holders of Series A Preferred Stock
shall, as such, have no preemptive right to purchase or otherwise acquire
shares of any class of stock or other securities of the Corporation, now
or hereafter authorized.
Section 9. Exclusion of Other Rights. Except as may otherwise be
required by law, the shares of Series A Preferred Stock shall not have any
preferences or relative, participating, optional or other special rights,
other than those specifically set forth in this Certificate of Designation
(as such may be amended from time to time) and in the Certificate of
Incorporation.
Section 10. Headings of Subdivisions. The headings of the various
subdivisions hereof are for convenience of reference only and shall not
affect the interpretation of any of the provisions hereof.
Section 11. Lost or Stolen Certificates. Upon receipt by the Corporation
of (i) evidence of the loss, theft, destruction or mutilation of any
certificates representing shares of Series A Preferred Stock, and (ii) (y)
in the case of loss, theft or destruction, an indemnity, bond and/or other
security reasonably satisfactory to the Corporation, or (z) in the case of
mutilation, the certificate(s) (surrendered for cancellation), the
Corporation shall execute and deliver new certificates representing shares
of Series A Preferred Stock of like tenor and date. However, the
Corporation shall not be obligated to reissue such lost, stolen, destroyed
or mutilated certificate(s) if the holder contemporaneously requests the
Corporation to convert such Series A Preferred Stock.
Section 12. Remedies Cumulative. The remedies provided in this
Certificate of Designation shall be cumulative and in addition to all
other remedies available under this Certificate of Designation, at law or
in equity (including a decree of specific performance and/or other
injunctive relief), and nothing herein shall limit a holder's right to
pursue actual damages for any failure by the Corporation to comply with
the terms of this Certificate of Designation. The Corporation
acknowledges that a breach by it of its obligations hereunder will cause
irreparable harm to the holders of Series A Preferred Stock and that the
remedy at law for any such breach may be inadequate. The Corporation
therefore agrees, in the event of any such breach or threatened breach,
that the holders of Series A Preferred Stock shall be entitled, in
addition to all other available remedies, to an injunction restraining any
breach, without the necessity of showing economic loss and without any
bond or other security being required.
Section 13. Waiver. Notwithstanding any provision in this Certificate of
Designation to the contrary, any provision contained herein and any right
of the holders of Series A Preferred Stock granted hereunder may be waived
as to all shares of Series A Preferred Stock (and the holders thereof)
upon the written consent of the holders of a majority of the Series A
Preferred Stock, unless a higher percentage is required by applicable law,
in which case the written consent of the holders of not less than such
higher percentage of shares of Series A Preferred Stock shall be required.
Section 14. Severability of Provisions. If any right, preference or
limitation of the Series A Preferred Stock set forth in this Certificate
of Designation (as such may be amended from time to time) is invalid,
unlawful or incapable of being enforced by reason of any rule of law or
public policy, all other rights, preferences and limitations set forth in
this Certificate of Designation (as so amended) which can be given effect
without the invalid, unlawful or unenforceable right, preference or
limitation shall, nevertheless, remain in full force and effect.
Section 15. Status of Reacquired Shares. Shares of Series A Preferred
Stock which have been issued and reacquired in any manner (including by
conversion) shall (upon compliance with any applicable provisions of the
laws of the State of Delaware) have the status of authorized and unissued
shares of Preferred Stock issuable in series undesignated as to Series A
Preferred Stock and may be redesignated and reissued.
IN WITNESS WHEREOF, this Corrected Certificate of Designations has been
duly executed by the undersigned this 5th day of August, 2004.
AMCON DISTRIBUTING COMPANY
By: Xxxxxxxx X. Xxxxx
-----------------------------
Name: Xxxxxxxx X. Xxxxx
Title: President
SCHEDULE A (to Securities Purchase Agreement)
INFORMATION RELATING TO PURCHASERS
Name and Address of Purchaser Number of Shares of
Preferred Stock
to be Purchased
Xxxxxxx X. Xxxxxx
0000 Xxxxxxxxx Xxxxx
X.X. Xxx 0000
Xxx Xxx, Xxxxxxxxxx 00000 40,000
Draupnir LLC
000 Xxxxx Xxxxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxx, Xxxxxxxx 00000 60,000
SCHEDULE B (to Securities Purchase Agreement)
DEFINED TERMS
As used herein, the following terms have the respective meanings set
forth below or set forth in the Section hereof following such term:
"Affiliate" means, at any time, and with respect to any Person, (a)
any other Person that at such time directly or indirectly through one or
more intermediaries Controls, or is Controlled by, or is under common
Control with, such first Person, and (b) any Person beneficially owning or
holding, directly or indirectly, 5% or more of any class of voting or
equity interests of the Company or any Subsidiary or any corporation of
which the Company and its Subsidiaries beneficially own or hold, in the
aggregate, directly or indirectly, 5% or more of any class of voting or
equity interests. As used in this definition, "Control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise. Unless the
context otherwise clearly requires, any reference to an "Affiliate" is a
reference to an Affiliate of the Company.
"AMCON SEC Documents" means all documents required to be filed with
the SEC by AMCON, including without limitation, (i) AMCON's annual report
on Form 10-K for its fiscal year ended September 30, 2003 (the "AMCON 10-
K"), (ii) AMCON's quarterly reports on Form 10-Q for its fiscal quarter
ended December 31, 2003, and (iii) all other reports, filings,
registration statements and other documents filed by it with the SEC since
September 30, 2003.
"Business Day" means any day other than a Saturday, a Sunday or a day
on which commercial banks in New York City, New York or Omaha, Nebraska
are required or authorized to be closed.
"Closing" is defined in Section 3.
"Company" means AMCON Distributing Company, a Delaware corporation.
"Confidential Information" is defined in Section 9.
"Conversion Shares " means the shares of Common Stock, par value $.01
per share, of the Company issuable upon conversion of the Preferred Stock.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"GAAP" means generally accepted accounting principles as practiced in
the United States.
"Governmental Authority" means:
(a)the government of
(i)the United States of America or any State or other
political subdivision thereof, or
(ii)any jurisdiction in which the Company or any Subsidiary
conducts all or any part of its business, or which asserts jurisdiction
over any properties of the Company or any Subsidiary, or
(b)any entity exercising executive, legislative, judicial,
regulatory or administrative functions of, or pertaining to, any such
government.
"Guaranty" means, with respect to any Person, any obligation (except
the endorsement in the ordinary course of business of negotiable
instruments for deposit or collection) of such Person guaranteeing or in
effect guaranteeing any Indebtedness, dividend or other obligation of any
other Person in any manner, whether directly or indirectly, including
(without limitation) obligations incurred through an agreement, contingent
or otherwise, by such Person:
(a) to purchase such Indebtedness or obligation or any property
constituting security therefor;
(b) to advance or supply funds (i) for the purchase or payment
of such Indebtedness or obligation, or (ii) to maintain any working
capital or other balance sheet condition or any income statement condition
of any other Person or otherwise to advance or make available funds for
the purchase or payment of such Indebtedness or obligation;
(c) to lease properties or to purchase properties or services
primarily for the purpose of assuring the owner of such Indebtedness or
obligation of the ability of any other Person to make payment of the
Indebtedness or obligation; or
(d) otherwise to assure the owner of such Indebtedness or
obligation against loss in respect thereof.
In any computation of the Indebtedness or other liabilities of the obligor
under any Guaranty, the Indebtedness or other obligations that are the
subject of such Guaranty shall be assumed to be direct obligations of such
obligor.
"Indebtedness" with respect to any Person means, at any time, without
duplication,
(a) its liabilities for borrowed money and its redemption
obligations in respect of mandatorily redeemable preferred stock;
(b)its liabilities for the deferred purchase price of property
acquired by such Person (excluding accounts payable arising in the
ordinary course of business but including all liabilities created or
arising under any conditional sale or other title retention agreement with
respect to any such property);
(c) all liabilities appearing on its balance sheet in accordance
with GAAP in respect of Capital Leases;
(d) all liabilities for borrowed money secured by any Lien with
respect to any property owned by such Person (whether or not it has
assumed or otherwise become liable for such liabilities);
(e)all its liabilities in respect of letters of credit or
instruments serving a similar function issued or accepted for its account
by banks and other financial institutions (whether or not representing
obligations for borrowed money); and
(f)any Guaranty of such Person with respect to liabilities of a
type described in any of clauses (a) through (e) hereof.
Indebtedness of any Person shall include all obligations of such Person of
the character described in clauses (a) through (f) to the extent such
Person remains legally liable in respect thereof notwithstanding that any
such obligation is deemed to be extinguished under GAAP.
"Knowledge"--an individual will be deemed to have Knowledge of a
particular fact or other matter if that individual is actually aware of
that fact or matter. A Person (other than an individual) will be deemed
to have Knowledge of a particular fact or other matter if any individual
who is serving as an officer of that Person has, or at any time had,
Knowledge of that fact or other matter.
"Lien" means, with respect to any Person, any mortgage, lien, pledge,
charge, security interest or other encumbrance, or any interest or title
of any vendor, lessor, lender or other secured party to or of such Person
under any conditional sale or other title retention agreement or Capital
Lease, upon or with respect to any property or asset of such Person
(including in the case of stock, stockholder agreements, voting trust
agreements and all similar arrangements).
"Material Adverse Effect" means a material adverse effect on (a) the
business, operations, affairs, financial condition, assets or properties
of the Company and its Subsidiaries taken as a whole, or (b) the ability
of the Company to perform its obligations under this Agreement, or (c) the
validity or enforceability of this Agreement.
"Other Agreement" is defined in Section 2.
"Other Purchaser" is defined in Section 2.
"Person" means an individual, partnership, corporation, limited
liability company, association, trust, unincorporated organization, or a
government or agency or political subdivision thereof.
"Preferred Stock" is defined in Section 1.
"Property" or "Properties" means, unless otherwise specifically
limited, real or personal property of any kind, tangible or intangible,
xxxxxx or inchoate.
"SEC" means the Securities and Exchange Commission.
"Securities" is defined in Section 1.2.
"Securities Act" means the Securities Act of 1933, as amended from
time to time.
"Subsidiary" means, as to any Person, any corporation, association or
other business entity in which such Person or one or more of its
Subsidiaries or such Person and one or more of its Subsidiaries owns
sufficient equity or voting interests to enable it or them (as a group)
ordinarily, in the absence of contingencies, to elect a majority of the
directors (or Persons performing similar functions) of such entity, and
any partnership or joint venture if more than a 50% interest in the
profits or capital thereof is owned by such Person or one or more of its
Subsidiaries or such Person and one or more of its Subsidiaries (unless
such partnership can and does ordinarily take major business actions
without the prior approval of such Person or one or more of its
Subsidiaries). Unless the context otherwise clearly requires, any
reference to a "Subsidiary" is a reference to a Subsidiary of the Company.
"Voting Stock" means securities of any class or classes, the holders
of which are ordinarily, in the absence of contingencies, entitled to
elect a majority of the corporate directors (or Persons performing similar
functions).
# # #
SCHEDULE 4.3 (to Securities Purchase Agreement)
OUTSTANDING CONTRACTUAL OBLIGATIONS
On June 17, 2004, AMCON completed the acquisition of substantially
all of the assets of Trinity Springs Ltd., which included real estate,
water rights and equipment. AMCON organized a newly formed, wholly-owned
subsidiary, which changed its name to Trinity Springs, Inc., to acquire
the assets from the selling entity. The acquisition consideration paid
by the subsidiary consisted of, among other things, (i) a royalty by
Trinity Springs, Inc. to the selling entity equal to the greater of 4% of
net sales of Trinity Springs, Inc. or $.03 per liter of water extracted
for commercial purposes from the source and (ii) 15% of the common stock
of Trinity Springs, Inc. The selling entity has the right to elect to
have the water royalty paid in up to 41,666 shares of AMCON common stock
valued on the basis of the average closing price for the 30 days preceding
the date of issuance. In addition, the selling entity can convert its 15%
of the common stock in Trinity Springs, Inc. into 16,666 shares of AMCON
common stock.
SCHEDULE 4.5 (to Securities Purchase Agreement)
CERTAIN CHANGES AND EVENT
