Exhibit 10.18
SHAREHOLDERS AGREEMENT
THIS SHAREHOLDERS AGREEMENT (this "Agreement") is made as of June 17,
2004, by and among TSL Acquisition Corp., a Delaware corporation (the
"Company"), AMCON Distributing Company, a Delaware corporation ("AMCON"), and
Trinity Springs Ltd., an Idaho corporation ("Trinity"). AMCON and Trinity
are hereinafter sometimes referred to collectively as "Shareholders" or
individually as a "Shareholder."
R E C I T A L S
A. AMCON, Trinity and the Company are all parties to that certain Asset
Purchase Agreement, dated April 24, 2004, and as amended on June 17, 2004
(the "Purchase Agreement").
B. AMCON owns 94,440 shares of Company Common Stock and Trinity owns
16,666 shares of Company Common Stock, which shares represent all of the
issued and outstanding Company Common Stock.
C. The Shareholders and the Company have determined that it is in the
best interests of the Shareholders and the Company that management of the
Company be conducted in an orderly manner as hereinafter provided.
D. The Shareholders desire to provide for the rights and obligations
set forth herein.
NOW, THEREFORE, the Shareholders and the Company agree as follows:
1. Definitions. As used in this Agreement, the following terms shall
have the following meanings:
"Affiliated Organic Change" shall have the meaning set forth in
Section 6.2.
"Agreement" shall have the meaning assigned to such term in the
introductory paragraph of this Agreement.
"AMCON" shall have the meaning assigned to such term in the
introductory paragraph of this Agreement.
"AMCON Common Stock" shall mean the shares of common stock, par
value $.01 per share, of AMCON.
"AMCON Indemnitee" shall have the meaning assigned to such term in
Section 5.10(b).
"Business Day" shall mean any day excluding (i) Saturday, (ii)
Sunday, (iii) any day which is a legal holiday in the State of Idaho, and
(iv) any day on which banking institutions located in such state are
generally not open for the conduct of regular business.
"Capital Stock Holder" shall have the meaning assigned to such term
in Section 7.2(b).
"Company" shall have the meaning assigned to such term in the
introductory paragraph of this Agreement.
"Company Common Stock" shall mean the shares of common stock, par
value $.01 per share, of the Company.
"Demand Registration" shall have the meaning assigned to such term
in Section 7.1(a).
"Effective Time" shall have the meaning assigned to such term in
Section 5.2.
"Exchange" shall have the meaning assigned to such term in
Section 5.1.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
"Exchange Period" shall have the meaning assigned to such term in
Section 5.1.
"Exchange Ratio" shall have the meaning assigned to such term in
Section 5.1.
"Involuntary Transfer" shall mean any Transfer (or proposed
Transfer) of Company Common Stock (1) pursuant to the exercise of remedies by
the secured lender under a pledge, mortgage or other encumbrance of Company
Common Stock granted by a Trinity Shareholder to secure a debt or other
obligation, (2) pursuant to a bankruptcy or insolvency proceeding of Trinity
Shareholder, (3) pursuant to a judicial order, legal process, execution,
attachment or garnishment, or (4) pursuant to the dissolution, winding-up,
termination of, or liquidating distribution by, Trinity on or before the
first anniversary of this Agreement or by any other Trinity Shareholder at
any time.
"Losses" shall have the meaning assigned to such term in
Section 7.10(a).
"Net Book Value" shall mean the net book value of the Company
determined in accordance with generally accepted accounting principles using
the Company's unaudited (or audited if available) financial statements as of
the end of the annual period last completed immediately preceding the date on
which the option to purchase under Section 8.2(b) arises hereunder, which
statements shall be prepared in accordance with generally accepted accounting
principles.
"Organic Change" shall mean any recapitalization, reorganization,
reclassification, consolidation, merger, sale of all or substantially all of
AMCON's or the Company's assets or other transaction, which in each case is
effected in such a manner that holders of AMCON Common Stock or Company
Common Stock, as the case may be, are entitled to receive (either directly or
upon subsequent liquidation) securities or assets with respect to or in
exchange for AMCON Common Stock or Company Common Stock, as the case may be.
"Person" shall mean and include natural persons, corporations,
limited liability companies, limited partnerships, general partnerships,
joint stock companies, joint ventures, associations, companies, trusts,
banks, trust companies, land trusts, business trusts or other organizations,
whether or not legal entities, and governments and agencies and political
subdivisions thereof and their respective permitted successors and assigns
(or in the case of a governmental Person, the successor functional equivalent
of such Person).
"Piggyback Registration" shall have the meaning assigned to such
term in Section 7.2(a).
"Prospective Purchaser" shall have the meaning assigned to such term
in Section 8.2(a).
"Prospective Sale" shall have the meaning assigned to such term in
Section 8.2(a).
The terms "register," "registered," and "registration" shall mean a
registration effected by the preparation and filing of a Registration
Statement in compliance with the Securities Act, and the declaration or
ordering of effectiveness of such Registration Statement by the SEC.
"Purchase Agreement" shall have the meaning set forth in the
Recitals.
"Registrable Shares" shall mean (i) any shares of AMCON Common Stock
acquired by Trinity in the Exchange; and (ii) any AMCON Common Stock or other
equity securities issued or issuable with respect to the securities referred
to in clause (i) by way of a stock dividend or stock split or in connection
with a combination of shares, recapitalization, merger, consolidation or
other reorganization; provided, however, that Registrable Shares shall not
include any securities (a) registered and sold pursuant to the Securities
Act, (b) sold to the public pursuant to Rule 144 promulgated under the
Securities Act (together with any successor rule, "Rule 144") or (c) held by
Trinity in any case, provided such securities may be sold immediately under
Rule 144 without registration.
"Registration Expenses" shall mean all expenses incident to AMCON's
performance of or compliance with Section 7 of this Agreement, including
without limitation all (i) registration, qualification and filing fees; (ii)
fees and expenses of compliance with securities or blue sky laws (including
reasonable fees and disbursements of counsel in connection with blue sky
qualifications of any Registrable Shares being registered); (iii) printing
expenses, messenger, telephone and delivery expenses; (iv) internal expenses
of AMCON (including, without limitation, all salaries and expenses of
officers or employees of AMCON performing legal or accounting duties); (v)
fees and disbursements of counsel for AMCON and customary fees and expenses
for independent certified public accountants retained by AMCON (including the
expenses of any comfort letters or costs associated with the delivery by
independent certified public accountants of comfort letters customarily
requested by underwriters); (vi) fees and expenses of listing any Registrable
Shares on any securities exchange on which the securities are then listed;
and (vii) fees and disbursements of underwriters customarily paid by issuers
or sellers of securities, but excluding any Selling Expenses.
"Registration Rights" shall mean the rights of Trinity to cause
AMCON to register the Registrable Shares pursuant to Section 7 following the
exchange by Trinity of Company Common Stock for AMCON Common Stock pursuant
to Section 5.
"Registration Statement" shall mean any registration statement or
similar document that covers any of the Registrable Shares pursuant to the
provisions of this Agreement, including the prospectus or preliminary
prospectus included therein, all amendments and supplements to such
Registration Statement, including post-effective amendments, all exhibits to
such Registration Statement and all material incorporated by reference in
such Registration Statement.
"Reverse Stock Split" shall mean the one-for-six reverse stock split
described in AMCON's proxy statement dated March 3, 2004 which will become
effective on or about May 11, 2004, if stockholder approval thereof is
obtained.
"SEC" shall mean the Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder.
"Selling Expenses" shall mean all underwriting discounts, selling
commissions, and stock transfer taxes applicable to the securities registered
by Trinity and any fees of counsel to Trinity.
"Selling Shareholder" shall have the meaning assigned to such term
in Section 8.2(a).
"Shares" shall mean in all cases, except where the context clearly
requires otherwise, all shares of Company Common Stock owned by the
Shareholders.
"Shareholder" shall have the meaning assigned to such term in the
introductory paragraph of this Agreement.
"Shareholder Indemnitee" shall have the meaning assigned to such
term in Section 7.10(a).
"Tag Along Offer" shall have the meaning assigned to such term in
Section 8.3(a).
"Tag Along Offer Period" shall have the meaning assigned to such
term in Section 8.3(c).
"Third-Party Claim" shall have the meaning assigned to such term in
Section 7.10(c).
"Transfer" means a sale, assignment, conveyance, gift, exchange,
disposition or other transfer, whether voluntary or involuntary, by operation
of law or otherwise; provided, however, that a pledge or hypothecation shall
not be considered a Transfer, but the exercise of remedies thereunder by the
secured lender shall be an Involuntary Transfer.
"Trinity" shall have the meaning assigned to such term in the
introductory paragraph of this Agreement.
"Trinity Shareholder(s)" shall mean Trinity and its permitted
transferees.
2. Contribution. AMCON agrees to contribute, or has previously
contributed, $500,000 to the Company in exchange for AMCON'S 94,400 shares of
Company Common Stock, representing eighty-five percent (85%) of the
outstanding capital stock of the Company (the "Initial Contribution"). The
Initial Contribution shall represent the purchase price for such shares and
shall not be considered debt.
3. Management of the Company.
3.1. Composition of the Board. One (1) director shall be designated
for nomination by the Board of Directors exclusively by the Board of
Directors of Trinity, unless Trinty liquidates or dissolves, in which event,
the nomination shall be made by a majority-in-interest of the Trinity
Shareholder(s), who shall initially be Xxxxxx Xxxx. All of the remaining
directors shall be designated for nomination by the Board of Directors
exclusively by AMCON.
3.2. Agreement to Vote Shares. At any annual or special
stockholders' meeting called for the purpose of electing members of the Board
of Directors of the Company, and whenever stockholders act by written consent
with respect to the election of members of the Board of Directors of the
Company, each of the Shareholders agrees to vote all of the Shares held or
controlled by such Shareholder having voting rights with respect to the
election of directors, and the Company agrees to take any and all actions
necessary, to cause:
a. the election as directors of the Company of the
individuals designated by AMCON for nomination by the Board of Directors; and
b. the election as a director of the Company of the
individual designated by Trinity in accordance with the terms of Section 3.1
above, who shall initially be Xxxxxx Xxxx.
3.3. Removal and Vacancy of Directors. In the event either AMCON or
Trinity (through its Board of Directors or a majority-in-interest of its
stockholders upon the liquidation or dissolution of Trinity) wishes to remove
a director who has been elected as its own nominee to the Board of Directors
of the Company, the other Shareholder(s) shall vote for or consent to such
removal. In the event a vacancy in the office of a director is caused by
death, resignation, retirement or removal of a director, the vacancy shall be
filled by appointing or electing the nominee of the Shareholder(s) whose
nominee is so deceased, resigned, retired or removed.
3.4. Required Votes; Location of Meetings. Except as otherwise
provided in this Agreement, the Certificate of Incorporation or Bylaws of the
Company, or applicable law, all actions by the Board shall be accomplished by
the vote of at least a simple majority of the Board members present at a duly
called meeting or by written unanimous consent. All meetings of the Board of
Directors shall take place at a location determined by AMCON.
3.5. Reimbursable Expenses. The Company shall bear all reasonable
travel and related expenses incurred by each Director to attend any meetings
of the Board of Directors.
4. Financing the Company.
4.1. Consent Rights for Additional Equity Financings. The Company
represents and warrants that as of the date of this Agreement and after
AMCON's payment of the Initial Contribution and the issuance of shares of
Company Common Stock in exchange thereof, the authorized capital stock of the
Company consists of 200,000 shares of Company Common Stock, of which 111,106
shares are issued and outstanding, 94,400 of which are owned by AMCON and
16,666 of which are owned by Trinity. There are no outstanding options,
warrants or other rights to subscribe for or acquire shares of capital stock
of the Company. All additional funds that are required for the operation of
the Company shall be in the form of non-convertible borrowings from either
unaffiliated third parties or AMCON and the Company shall be prohibited from
issuing any additional equity securities, or any other security convertible
into equity securities, unless AMCON and Trinity (through its Board of
Directors or the holders of a majority of the shares of Company Common Stock
owned by the Trinity Shareholder(s) if Trinity dissolves or liquidates)
approve such other form of financing and/or stock issuance.
4.2. AMCON Guarantee Fee. If AMCON guarantees any indebtedness of
the Company owed to a Person unaffiliated with AMCON, AMCON shall be entitled
to receive from the Company an annual guarantee fee in an amount equal to
1.5% (150 basis points) of the average principal amount of the guaranteed
indebtedness that is outstanding throughout such calendar year. Such fee
shall be payable to AMCON by the Company in quarterly installments within
twenty (20) days after the end of each calendar quarter after the date a
guarantee is executed by AMCON until such time as no amount is being
guaranteed by AMCON. The Company and Trinity agree that AMCON is under no
obligation to guarantee any indebtedness of the Company.
4.3. Limitation on Interest Rates Charged by AMCON. If AMCON or
any affiliate of AMCON agrees to loan any funds to the Company, the interest
rate on any such loan shall not exceed the weighted average interest rate
then being charged on AMCON's indebtedness for borrowed money owed to
unaffiliated third parties, plus 1.5% (150 basis points). The Company and
Trinity agree that AMCON is under no obligation to loan any funds to the
Company.
5. Exchange Right.
5.1. Exchange. At any time after the date hereof, (the "Exchange
Period"), Trinity (but not any subsequent transferee) shall have the right to
exchange all, but not less than all, of the Company Common Stock then owned
by it for AMCON Common Stock (the "Exchange"). Such right of Exchange shall
be terminated with respect to any shares of Company Common Stock that are
Transferred by Trinity. Subject to adjustment as provided in Section 5.3,
upon Trinity's exercise of the Exchange, each share of Company Common Stock
shall be exchanged for one (1) share of AMCON Common Stock (the "Exchange
Ratio"). The one-for-one Exchange Ratio has been agreed after giving effect
to the Reverse Stock Split. No fractional shares of AMCON Common Stock shall
be issued; the total number of shares of AMCON Common Stock to be issued in
the Exchange shall be rounded to the nearest whole number of shares.
5.2. Exchange Procedure.
a. The Exchange shall be deemed to have occurred when AMCON
has received all of the following items (the "Effective Time"):
i. a completed Exchange Agreement, in the form of Exhibit
A hereto, executed by Trinity and dated the actual date of execution thereof;
and
ii. the certificate representing the Company Common Stock
being exchanged, duly endorsed, or accompanied by a duly executed stock
power, for transfer to AMCON.
b. The certificate for the shares of AMCON Common Stock being
issued in the Exchange shall be delivered by AMCON to Trinity within 5
Business Days after the Effective Time.
c. The shares of AMCON Common Stock issuable in connection
with the Exchange shall be deemed to have been issued to Trinity at the
Effective Time, and Trinity shall be deemed for all purposes to have become
the record holder of such shares of AMCON Common Stock at the Effective Time.
Nothing contained in this Agreement shall be construed as conferring upon
Trinity any rights whatsoever as a shareholder of AMCON prior to the
Effective Time. No dividends shall be payable or accrued in respect of the
AMCON Common Stock issuable in connection with the Exchange until the
Effective Time.
d. The issuance of the certificate for the AMCON Common Stock
in connection with the Exchange shall be made without charge to Trinity for
any issue or transfer tax or other incidental expense in respect of the
issuance of such certificate, all of which taxes and expenses shall be paid
by AMCON, and such certificate shall be issued in the name of Trinity. Each
share of AMCON Common Stock issuable in connection with the Exchange shall be
fully paid and nonassessable and free from all taxes, liens and charges.
e. AMCON shall at all times reserve and keep available out of
its authorized but unissued shares of AMCON Common Stock solely for the
purpose of issuance in connection with the Exchange, the number of shares of
AMCON Common Stock issuable in connection with the Exchange.
5.3. Adjustment of Exchange Ratio. The Exchange Ratio is subject
to adjustment from time to time as follows:
a. Subdivision or Combination. If AMCON or the Company at any
time subdivides (by any share split, dividend or otherwise) or combines (by
reverse share split or otherwise) the AMCON Common Stock or Company Common
Stock, respectively, into a greater or smaller amount of shares, the Exchange
Ratio in effect immediately prior to such subdivision or combination shall be
proportionately adjusted.
b. Reorganization, Reclassification, Consolidation, Merger or
Sale. Prior to the consummation of any Organic Change involving AMCON, AMCON
shall make lawful and adequate provision (in form and substance reasonably
satisfactory to Trinity) to ensure that Trinity shall thereafter have the
right to acquire and receive, in lieu of or in addition to (as the case may
be) the AMCON Common Stock immediately theretofore acquirable and receivable
upon Exchange of its Company Common Stock, such securities or assets as may
be issued or payable with respect to or in exchange for the amount of AMCON
Common Stock immediately theretofore acquirable and receivable upon exchange
of such Company Common Stock had such Organic Change not taken place. Prior
to the consummation of any Organic Change involving the Company, AMCON and
the Company shall make lawful and adequate provision (in form and substance
reasonably satisfactory to Trinity) to ensure that Trinity shall thereafter
have the right to acquire and receive in exchange for the securities or
assets as may be issued or payable with respect to or in exchange for the
Company Common Stock held by it immediately prior to the Organic Change, the
amount of AMCON Common Stock immediately theretofore acquirable and
receivable upon Exchange of its Company Common Stock had such Organic Change
not taken place.
c. No Avoidance. Neither AMCON nor the Company will, by
charter amendment or by reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities, or any other voluntary
action, avoid or seek to avoid the observance or performance of any terms of
this Section 5, but will at all times in good faith assist in the carrying
out of all such terms and in the taking of all such action as may be
necessary or appropriate in order to protect the rights of Trinity against
impairment.
d. Certificates of Adjustment. In each case of an adjustment
or readjustment of the Exchange Ratio, AMCON, at its expense, will furnish
Trinity with a certificate, signed by AMCON's Chief Financial Officer or
Treasurer, showing such adjustment or readjustment and stating in detail the
facts upon which such adjustment or readjustment is based.
6. Organic Change of the Company. In addition to the rights provided
to Trinity in Section 5.3(b):
6.1. Prohibition. Neither AMCON nor the Company will cause an
Organic Change of the Company to occur on or before the third anniversary of
the date of this Agreement, unless such Organic Change has been approved by
(i) the Board of Directors of Trinity, if prior to the distribution of all of
the Shares (or the shares of AMCON Common Stock into which the Shares have
been Exchanged), or (ii) a majority of the Trinity Shareholders if after such
distribution. Additionally, neither AMCON nor the Company will cause an
Organic Change of the Company to occur unless the successor entity agrees to
assume the Buyer's obligations contained in Section 11.1 of the Purchase
Agreement, subject however, to the "Buyer's Termination Right" set forth in
Section 11.1 of the Purchase Agreement (which right may be assigned to or
exercised by such successor entity).
6.2. Appraisal Rights. In the event of an Organic Change between
the Company, on the one hand, and AMCON and/or an affiliate of AMCON, on the
other hand, (an "Affiliated Organic Change"), each of Trinity and/or each
Trinity Shareholder (or any successor), as the case may be, shall have the
right to have its Company Common Stock appraised to determine its fair market
value as of the date of such Organic Change. Such appraisal will be prepared
by a single qualified independent appraiser that is mutually approved by the
Company and Trinity (through its Board of Directors or a majority of the
Trinity Shareholders upon dissolution or liquidation or Trinity) electing
such appraisal right.
6.3. Option. Upon the consummation of an Affiliated Organic Change,
each Trinity Shareholder shall be entitled to receive the consideration that
it is entitled to receive in connection with such Affiliated Organic Change
(as finally determined pursuant to the appraisal process set forth in Section
6.2) in either (a) cash or (b) capital stock or other ownership interests of
the surviving entity. If a Trinity Shareholder elects to receive an
ownership interest in the surviving entity, its rights under this Agreement,
including, without limitation, its right to convert its ownership interest
into AMCON Common Stock, shall survive such conversion and the surviving
entity shall agree to be bound by the terms and conditions set forth in this
Agreement as if it were the Company.
6.4. No Avoidance. Neither AMCON nor the Company will, by charter
amendment or by reorganization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities, or any other voluntary action,
avoid or seek to avoid the observance or performance of any terms of this
Section 6, but will at all times in good faith assist in the carrying out of
all such terms and in the taking of all such action as may be necessary or
appropriate in order to protect the rights of Trinity against impairment.
7. Registration Rights.
7.1. Demand Registration.
a. If any time after the Effective Time, AMCON shall receive
a written request from Trinity that AMCON file a Registration Statement
covering the registration of the amount of Registrable Shares specified in
the written request of Trinity (a "Demand Registration"), then AMCON shall
use its commercially reasonable efforts to effect, as soon as practicable,
the registration of such Registrable Shares and shall include in such
registration all Registrable Shares specified in such notice.
b. If Trinity intends to distribute the Registrable Shares
covered by its request by means of an underwritten public offering, it shall
so advise AMCON as a part of its request made pursuant to Section 7.1(a). All
Persons proposing to sell Registrable Shares or additional securities through
such underwriting (including AMCON as provided in this Section 7.1(b) and any
other holder of securities permitted to participate in such registration
pursuant to this Section 7.1(b)) shall enter into an underwriting agreement
in customary form with the underwriter or underwriters selected by AMCON for
such underwriting (which underwriters shall be reasonably acceptable to
Trinity), upon the terms and conditions agreed upon between AMCON and such
underwriter(s). Notwithstanding any other provision of this Section 7.1(b),
if the underwriter(s) advise AMCON in writing that marketing or other factors
require that less than 100% of the Registrable Shares requested by Trinity
and any additional securities to be included by AMCON (or others) be included
in the underwriting, then AMCON shall so advise Trinity, and the amount of
securities (including Registrable Shares) that will be included in the
underwriting shall be so reduced as follows: first, the securities to be
registered by holders other than AMCON and Trinity, pro rata, based upon the
aggregate holdings of each investor, second, the securities to be registered
by AMCON, and lastly the Registrable Shares to be registered by the Trinity
Stockholders. Subject to the preceding sentence, AMCON may include
securities for its own account (or for the account of other holders) in such
registration if the underwriter(s) so agree and to the extent that, in the
opinion of such underwriter(s), the inclusion of such additional amount will
not adversely affect the offering of the Registrable Shares included in such
registration.
c. Trinity will be entitled to request pursuant to this
Section 7.1 two (2) Demand Registrations. A Demand Registration shall not be
counted for purposes of this Section 7.1 unless such Registration Statement
has been ordered declared effective by the SEC. Trinity shall have the right
to cancel any Demand Registration when, in its discretion, market conditions
are unfavorable to an offering pursuant to such Demand Registration;
provided, subject to the proviso in Section 7.6, such cancelled Demand
Registration will be counted for purposes of this Section 7.1(c), unless the
Registration Expenses are paid by Trinity.
7.2. Piggyback Registration.
a. If AMCON shall determine to register any AMCON Common
Stock for its own account, other than: (i) a registration relating solely to
employee benefit plans or (ii) a registration relating solely to a
transaction pursuant to Rule 145 promulgated under the Securities Act (a
"Piggyback Registration"), AMCON will (A) promptly give to Trinity at least
20 days written notice thereof; and (B) include in such registration (and any
related qualification under blue sky laws or other compliance), and in any
underwriting involved therein, all the Registrable Shares specified in a
written request or requests by Trinity, made within 5 days after receipt of
such written notice from AMCON.
b. Notwithstanding any other provision of this Section 7.2,
if the managing underwriter (or AMCON, if the Piggyback Registration is not
being underwritten) determines in good faith that marketing factors require a
limitation of the number of shares to be registered, the managing underwriter
(or AMCON, if the Piggyback Registration is not being underwritten) may limit
the number of Registrable Shares of Trinity to be included in the
registration and underwriting. In the event that the number of Registrable
Shares or other securities are to be limited, AMCON shall notify Trinity in
writing (and any other holder of capital stock of AMCON entitled to include
securities in such underwriting (a "Capital Stock Holder")), of the amount of
Registrable Shares or other securities to be included in the registration and
underwriting based on the following order of priority: (A) first, the
securities proposed by AMCON to be sold for its own account; and (B) second,
the Registrable Securities of Trinity and the securities of any Capital Stock
Holder requested to be included in such registration and underwriting, in
proportion, as nearly as practicable, to the respective amounts of securities
requested by each such Person to be included in the Piggyback Registration.
c. AMCON shall not be required to include any Registrable
Shares in such underwriting unless Trinity enters into an underwriting
agreement with the underwriter(s) selected by AMCON in customary form, and
upon terms and conditions agreed upon between AMCON and such underwriter(s)
(except as to monetary obligations of Trinity not contemplated by
Section 7.6).
7.3. Registration Procedure. Whenever required under this Agreement
to effect the registration of any Registrable Shares, AMCON shall use its
commercially reasonable efforts to do the following as promptly as
practicable:
a. prepare and file with the SEC a Registration Statement
with respect to such Registrable Shares and cause such Registration Statement
to become effective, and, upon the request of Trinity, keep such Registration
Statement effective for up to one hundred eighty (180) days or such shorter
period as shall be required to sell all of the Registrable Shares covered by
such Registration Statement;
b. prepare and file with the SEC such amendments, post-
effective amendments and supplements to such Registration Statement and the
prospectus used in connection with such Registration Statement as may be
necessary to comply with the provisions of the Securities Act with respect to
the disposition of all Registrable Shares covered by such Registration
Statement;
c. furnish to the Trinity, without charge, such number of
copies of a prospectus, including a preliminary prospectus, and any
amendments or supplements thereto as Trinity may reasonably request;
d. register and qualify the Registrable Shares covered by
such Registration Statement under such other securities or blue sky laws of
such jurisdictions as shall be reasonably requested by Trinity; provided,
however, that AMCON shall not be required to qualify to do business, file a
general consent to service of process or subject itself to taxation in any
such states or jurisdictions where it would not otherwise be required to so
qualify to do business or consent to service of process or subject itself to
taxation;
e. cooperate with Trinity and the underwriters, if any,
participating in the disposition of such Registrable Shares and their
respective counsel in connection with any filings required to be made with
the National Association of Securities Dealers, Inc.;
f. in the event of any underwritten public offering, enter
into and perform its obligations under an underwriting agreement, in usual
and customary form, with the underwriter(s) of such offering, in accordance
with such terms and conditions as AMCON and the underwriter(s) may agree.
Trinity shall also enter into and perform its obligations under such an
agreement;
g. notify Trinity, at any time when a prospectus relating to
a Registration Statement covering Registrable Shares is required to be
delivered under the Securities Act, of the occurrence of any event as a
result of which the prospectus included in such 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 not misleading in the light of the circumstances then
existing; provided that Trinity first agrees to maintain the confidentiality
of, and not to trade on, such information until such time as AMCON's counsel
has advised that public disclosure has been made and a reasonable waiting
period thereafter has elapsed; and
h. in the case of an underwritten public offering, furnish,
at the request of Trinity, on the date that such Registrable Shares are
delivered to the underwriters for sale in connection with a registration
pursuant to this Agreement, (i) an opinion of counsel representing AMCON for
the purposes of such registration, and (ii) a letter addressed to the
underwriters from independent certified public accountants of AMCON, in each
case to be dated such date and to be in form and substance as is customarily
given by counsel or independent certified public accountants, as the case may
be, to underwriters in an underwritten public offering.
7.4. Right to Withdraw Registration.
a. Notwithstanding anything herein to the contrary, AMCON may
delay, suspend or withdraw any registration or qualification of Registrable
Shares required pursuant to Section 7.1 for a reasonable period of time if
AMCON in good faith determines that any such registration would adversely
affect an offering or contemplated offering of any securities of AMCON or any
other contemplated material corporate event; provided that such delay shall
not exceed ninety (90) days and shall only be exercised once in each twelve
month period.
b. Trinity agrees that, upon receipt of any notice from AMCON
of the occurrence of any event of the kind described in Section 7.4(a),
Trinity shall forthwith discontinue disposition of Registrable Shares
pursuant to the then current prospectus until the earliest of the following
events: (i) Trinity is advised in writing by AMCON that a new Registration
Statement covering the reoffer of Registrable Shares has become effective
under the Securities Act, (ii) Trinity receives copies of a supplemented or
amended prospectus contemplated by this Section 7, or (iii) until Trinity is
advised in writing by AMCON that the use of the then current prospectus may
be resumed. AMCON shall use its commercially reasonable efforts to limit the
duration of any discontinuance of disposition of Registrable Shares pursuant
to this paragraph.
c. AMCON shall have the right to terminate or withdraw any
registration initiated by it under Section 7.2 prior to the effectiveness of
such registration whether or not Trinity has elected to include securities in
such registration.
7.5. Obligation of Trinity to Furnish Information. It shall be a
condition precedent to the obligations of AMCON to take any action pursuant
to this Agreement with respect to any Registrable Shares that Trinity furnish
to AMCON such information regarding itself, the Registrable Shares held by
it, and the intended method of disposition of such Registrable Shares as
shall be required to effect the registration of Trinity's Registrable Shares
7.6. Registration Expenses. All Registration Expenses shall be
borne by AMCON. All Selling Expenses relating to securities registered by
Trinity pursuant to Section 7 shall be borne by Trinity. Notwithstanding the
foregoing, if a registration does not become effective due to the withdrawal
of Registrable Shares as permitted by Section 7.1(c), then, at Trinity's
option, either (A) Trinity shall reimburse AMCON for Registration Expenses
incurred in complying with the request or (B) the aborted registration shall
be treated as having been declared or ordered effective for purposes of
Section 7.1(c); provided, however, that if at the time of such withdrawal of
Registrable Shares, Trinity has learned of a material adverse change in the
condition, business or prospects of AMCON from that known to Trinity at the
time of its request or AMCON is otherwise unable to effect and maintain the
registration of Trinity's Registrable Shares as provided in this Agreement,
then Trinity shall not be required to pay any of such Registration Expenses
and the aborted registration shall not be treated as having been declared or
ordered effective for purposes of Section 7.1(c).
7.7. Delay of Registration. Trinity shall not have any right to
obtain or seek an injunction restraining or otherwise delaying any such
registration as the result of any controversy that might arise with respect
to the interpretation or implementation of this Section 7.
7.8. Market Stand-Off Agreement. With respect to any Demand
Registration or Piggyback Registration, Trinity agrees not to effect any
public sale or distribution of Registrable Shares (except as part of such
Piggyback Registration or Demand Registration), including a sale pursuant to
Rule 144, during the fifteen (15) Business Days prior to, and during the 90-
day period beginning on, the effective date of any such registration
statement, unless Trinity receives AMCON's prior written consent to such
public sale or distribution. AMCON agrees to provide such consent unless
AMCON determines in good faith that any such sale or distribution would
adversely affect the offering or contemplated offering of Registrable Shares
pursuant to such Demand Registration or Piggyback Registration. Trinity
agrees that AMCON may instruct its transfer agent to place stop-transfer
notations in its records to enforce the provisions of this Section 7.8. This
Section 7.8 shall supersede any conflicting provisions of this Agreement.
7.9. Termination of Registration Rights. All rights and duties
provided for in this Section 7 shall terminate on the earlier to occur of (a)
three years after the Effective Time or (b) at such time as all Registrable
Shares held by Trinity may be sold under Rule 144 of the Securities Act in a
six (6) month period.
7.10. Indemnification.
a. Indemnification by AMCON. In the event any Registrable
Shares are included in a Registration Statement pursuant to this Agreement,
AMCON hereby agrees to indemnify and hold harmless each of Trinity, its
directors and officers and each person, if any, who "controls" (within the
meaning of the Securities Act) Trinity (the "Shareholder Indemnitees")
against all losses, claims, damages, or liabilities, joint or several, or
actions in respect thereof ("Losses") to which such Shareholder Indemnitees
may become subject under the Securities Act, or otherwise, insofar as such
Losses arise out of, or are based upon, any untrue statement or alleged
untrue statement of any material fact contained in such Registration
Statement, any related preliminary prospectus, or any related prospectus or
any amendment or supplement thereto, or arise out of, or are based upon, the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading,
and will reimburse such Shareholder Indemnitees for any legal or other
expenses reasonably incurred by it or them in connection with investigating
or defending any such Losses; provided, however, that AMCON will not be so
liable to the extent that any such Losses arise out of, or are based upon, an
untrue statement or alleged untrue statement of a material fact or an
omission or alleged omission to state a material fact in such Registration
Statement, such preliminary prospectus, or such prospectus, or any such
amendment or supplement thereto in reliance upon, and in conformity with,
written information furnished to AMCON by or on behalf of Trinity or an
underwriter specifically for use therein; provided further, that AMCON shall
not be liable, and this indemnification agreement shall not apply, to the
extent that any such Losses are solely attributable to the failure of Trinity
(or an underwriter or agent acting on its behalf) to deliver a final
prospectus (or amendment or supplement thereto) that corrects a material
misstatement or omission contained in the preliminary prospectus (or final
prospectus).
b. Indemnification by Trinity. With respect to written
information furnished to AMCON in connection with any registration pursuant
to the terms of this Agreement by or on behalf of Trinity specifically for
use in a Registration Statement, any related preliminary prospectus, or any
related prospectus or any supplement or amendment thereto, Trinity shall
indemnify and hold harmless AMCON, its directors and officers and each
person, if any, who "controls" (within the meaning of the Securities Act)
AMCON (the "AMCON Indemnitees") against any Losses to which such AMCON
Indemnitees may become subject under the Securities Act, or otherwise,
insofar as such Losses arise out of, or are based upon, any untrue statement
or alleged untrue statement of any material fact contained in such
Registration Statement, such preliminary prospectus, or such prospectus, or
any such amendment or supplement thereto that relates to the written
information furnished to AMCON by Trinity and is included in such document,
or arise out of, or are based upon, the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make
the statements therein not misleading that relates to the written
information furnished to AMCON by Trinity or that should have been furnished
to AMCON by Trinity to be included in such document; and Trinity shall
reimburse such AMCON Indemnitees for any legal or other expenses reasonably
incurred by it or them in connection with investigating or defending any such
Losses, in each case to the extent, but only to the extent, that the same
arises out of, or is based upon, an untrue statement or alleged untrue
statement of a material fact or an omission or alleged omission to state a
material fact in such Registration Statement, such preliminary prospectus, or
such prospectus or any such amendment or supplement thereto in reliance upon,
and in conformity with, written information furnished to AMCON by or on
behalf of Trinity specifically for use therein. In no event shall the
liability of Trinity hereunder be greater in amount than the dollar amount of
the proceeds received by Trinity upon the sale of the Registrable Shares
giving rise to such indemnification obligation.
c. Conduct of Indemnification Proceedings. Promptly after
receipt by an indemnified party hereunder of notice of any claim or the
commencement of any action by a claimant not an indemnified party hereunder
("Third-Party Claim"), the indemnified party shall, if a claim for
indemnification in respect thereof is to be made by such indemnified party
against an indemnifying party, promptly notify such indemnifying party in
writing of such Third-Party Claim as soon as is reasonably practicable after
said claim is actually known to the indemnified party; provided, however,
that the right of an indemnified party to be indemnified hereunder in respect
of Third-Party Claims shall not be adversely affected by such indemnified
party's failure to notify the indemnifying party of such Third-Party Claim
unless, and then only to the extent that, an indemnifying party is actually
damaged or suffers any loss or incurs any additional expense as a result
thereof. If any such Third-Party Claim is brought against an indemnified
party, and it promptly notifies the indemnifying party thereof, the
indemnifying party shall be entitled to assume the defense thereof with
counsel selected by the indemnifying party and reasonably satisfactory to the
indemnified party. After the indemnifying party gives notice to the
indemnified party of its election to assume the defense of such Third-Party
Claim, (i) the indemnifying party shall not, except as provided below, be
liable to the indemnified party for any legal or other expense subsequently
incurred by the indemnified party in connection with the defense thereof,
(ii) the indemnifying party shall not be liable for the costs and expenses of
any settlement of such claim or action unless such settlement was effected
with the written consent of the indemnifying party or the indemnified party
waived any rights to indemnification hereunder in writing, in which case the
indemnified party may effect a settlement without such consent at its own
cost and expense, and (iii) the indemnified party shall be obligated to
cooperate with the indemnifying party in the investigation of such claim or
action; provided, however, that the indemnified party may employ their own
counsel to participate in the defense of a Third-Party Claim if they have
been advised by counsel in writing that, in the reasonable judgment of such
counsel, it is advisable for such indemnified party to be represented by
separate counsel due to the presence of a conflict of interest between such
indemnified party and the indemnifying party, and in such event the fees and
expenses of such separate counsel shall be paid by the indemnifying party;
provided further, that the indemnifying party shall not be liable for the
reasonable fees and expenses of more than one separate counsel at any time
for all such indemnified parties. An indemnifying party shall not, without
the prior written consent of the indemnified parties, settle, compromise or
consent to the entry of any judgment with respect to any pending or
threatened Third-Party Claim in respect of which indemnification may be
sought hereunder (whether or not the indemnified parties are actual or
potential parties to such Third-Party Claim) unless such settlement,
compromise or consent includes a release of such indemnified party reasonably
acceptable to such indemnified party from all liability arising out of such
Third-Party Claim, or unless the indemnifying party shall confirm in a
written agreement reasonably acceptable to such indemnified party that,
notwithstanding any federal, state or common law, such settlement, compromise
or consent shall not adversely affect the right of any indemnified party to
indemnification as provided in this Agreement.
d. Survival of Indemnification. The obligations under this
Section 7.10 shall survive the completion of any offering of Registrable
Shares in a Registration Statement pursuant to this Agreement, and otherwise.
8. Additional Rights and Obligations of the Trinity Shareholder(s).
8.1. Restrictions on Transfer.
a. Shareholders may not, directly or indirectly, Transfer any
Shares, except in compliance with the specific terms and provisions of this
Agreement allowing Transfer under certain situations.
b. Any Transfer of Shares permitted to be Transferred
pursuant to this Agreement shall be subject to the agreement by the
transferee of such Shares to be bound by all terms and conditions of this
Agreement. Any attempt to Transfer Shares in violation of this Agreement
shall be null and void and neither the Company nor any transfer agent shall
give any effect in the Company's stock records to such attempted Transfer.
c. Notwithstanding anything to the contrary contained herein,
(i) for a period of one year from the date hereof, Trinity shall not Transfer
any Shares owned by it to its shareholders, whether by dividend, liquidating
or other distribution or otherwise; (ii) after one year from the date hereof,
(A) Trinity shall be permitted to Transfer Shares to its shareholders,
whether by dividend, liquidating or other distribution or otherwise; and (B)
such shareholders shall be permitted to Transfer such Shares received by them
to their spouse, lineal descendents or trusts established for the benefit of
any of the foregoing, without complying with the right of first refusal
provisions contained in Section 8.2 hereof, either voluntarily or
involuntarily, provided however, that prior to making any Transfer permitted
in this clause (ii) such transferee must execute and deliver to the Company a
copy of this Agreement and agree to be bound by the terms hereof; and (iii)
subject only to the compliance with applicable securities laws and the
provisions of Section 10.9 of the Purchase Agreement, after the exercise of
the Exchange, the shares of AMCON Common Stock received by Trinity shall be
freely tradable and the provisions of Sections 8.1 and 8.2 shall be null and
void and of no further force and effect.
d. Even if otherwise permitted by this Agreement, no Transfer
of any Shares may be made at any time which, in the sole and exclusive
opinion of legal counsel for the Company, would in any way or manner violate
any applicable law and/or regulation, including but not limited to securities
laws and/or regulations. Prior to Transferring any Shares, the Shareholder
Transferring such interest must supply to the Company a legal opinion on
which the Company can rely stating that registration under applicable federal
or state securities laws is not required or that compliance is made with such
registration requirements. The Company, in its sole and exclusive
discretion, may waive the legal opinion requirement before a Transfer.
9. Right of First Refusal.
a. If any Trinity Shareholder may Transfer its Shares without
violating any of the restrictions contained elsewhere in this Agreement, then
such Trinity Shareholder who desires to Transfer any or all of its Shares
(hereinafter referred to for purposes of this Section as the "Selling
Shareholder") and has a prospective purchaser who has signed a written
contract to purchase (which contract must be subject to the options set forth
herein and comply with the conditions set forth herein) (which contract
and/or transaction is hereinafter referred to for purposes of this Section as
the "Prospective Sale" and which purchaser is hereinafter referred to for
purposes of this Section as the "Prospective Purchaser") may do so only after
giving AMCON an option to purchase the Selling Shareholder's Shares. AMCON's
option shall be upon the terms and conditions set forth herein and shall be
for the price and payment terms set forth in the Prospective Sale. The
Prospective Sale must be for a cash price but may contain payment terms. The
Selling Shareholder must give AMCON a written notice which sets forth the
true and complete identity of the Prospective Purchaser, the purchase price,
and the payment terms and which has attached a copy of the contract for the
Prospective Sale.
b. If any Shares owned by a Trinity Shareholder are presented
to the Company for Transfer following an Involuntary Transfer, then (i) such
presentation for Transfer shall be treated by the Company and AMCON as though
it were notice from the Trinity Shareholder of its intention to sell such
Shares at the price specified in the following sentence, (ii) AMCON shall
have the option to purchase such Shares as set forth in Section 8.2(c) and
(iii) such Trinity Shareholder shall be deemed a "Selling Shareholder". The
purchase price per Share shall be equal to the fair market value of such
Shares, as determined by mutual agreement between the Selling Shareholder and
AMCON. If the parties are unable to agree on such fair market value within
thirty (30) days after the proposed Involuntary Transfer such fair market
value will be conclusively determined by a qualified independent appraiser
selected in good faith by the Company. The fee for the independent appraiser
will be shared equally by the Company and the Selling Shareholder.
c. AMCON shall have 30 days after receipt of the written
notice in Section 8.2(a), or the deemed notice pursuant to Section 8.2(b), to
send a written notice to the Selling Shareholder (and the proposed transferee
in the event of an Involuntary Transfer) stating whether it is going to
exercise its option. If AMCON exercises the option, then AMCON shall
purchase the Selling Shareholder's Shares and the Selling Shareholder shall
sell its Shares for the price and upon the payment terms set forth in the
written notice in Section 8.2(a) or the deemed notice pursuant to
Section 8.2(b); provided, however, that in the event of an Involuntary
Transfer, the payment of the purchase price shall be paid to the proposed
transferee rather than the Selling Shareholder and upon payment to the
proposed transferee named in the request for transfer, neither the Company
nor AMCON shall be responsible to the Selling Shareholder for any excess of
the purchase price paid over the amount owed to such proposed transferee by
the Selling Shareholder or for any deficiency in the amount which the Selling
Shareholder owes to the proposed transferee. AMCON is not required to comply
with any other terms contained in the written contract for the Prospective
Sale. If AMCON does not respond to the written notice within such 30 days,
or waives such option, then it shall be deemed that the option has expired.
d. If AMCON does not purchase the Selling Shareholder's
Shares, then the Selling Shareholder may Transfer its Shares to the
Prospective Purchaser for the same price and upon the same payment terms set
forth in the notice and in the contract for the Prospective Sale, upon the
terms and conditions set forth in the Prospective Sale, at any time within 60
days after expiration of AMCON's option (or, in the case of an Involuntary
Transfer, the Company may register such Transfer); provided that: (i) the
transaction and the Prospective Purchaser (or the proposed transferee) comply
with all requirements set forth in this Agreement, including, but not limited
to, the requirements for a legal opinion, requiring execution of this
Agreement and the compliance with the tag-along and drag-along provisions of
Sections 8.3 and 8.5, if applicable; (ii) the transaction does not violate
any of the terms and/or provisions of this Agreement; (iii) the Prospective
Purchaser (or the proposed transferee) can legally own the Shares; and (iv)
the transaction does not violate any applicable laws or cause the Company to
be in violation of any applicable laws.
8.3. Tag Along Sales.
a. Notwithstanding any other provision hereof, if at any time
AMCON desires to Transfer its Shares to an unaffiliated third party, AMCON
shall give notice to the Trinity Shareholder(s) of its intention to Transfer
any or all of its Shares to the buyer, and AMCON undertakes to procure that
the buyer shall make an offer (the "Tag Along Offer") to each of the Trinity
Shareholder(s). If AMCON fails to procure that the buyer makes an offer to
acquire Shares of the Trinity Shareholder(s) in accordance herewith, AMCON
shall be required to buy Shares from the Trinity Shareholder(s) in accordance
with the terms set out herein.
b. The Tag Along Offer shall be made on the same terms and
conditions as the offer made by the buyer to AMCON, including the price per
Share thereof, and shall identify the buyer.
c. The Tag Along Offer shall be sent to each Trinity
Shareholder and shall be open for acceptance for fifteen (15) Business Days
(the "Tag-Along Offer Period") from the date of receipt of the Tag Along
Offer. In the event that any Trinity Shareholder elects to accept the Tag
Along Offer, such Trinity Shareholder shall have the right to Transfer such
number of its Shares which is equal to the product of (i) the total number of
Shares to be sold to the buyer and (ii) a fraction, the numerator of which
shall equal the total number of Shares owned by the Trinity Shareholder , and
the denominator of which shall equal the total number of Shares owned by all
Shareholders proposing to sell Shares to such Buyer; provided that, if AMCON
proposes to sell all of its Shares to such buyer, the Tag Along Offer shall
be for all Shares owned by such Trinity Shareholder. If the buyer is willing
to purchase such additional Shares, the number of Shares to be sold by AMCON
and the Trinity Shareholder(s) accepting the Tag Along Offer shall be
proportionately increased.
d. If a Trinity Shareholder does not accept or reject the Tag
Along Offer within the period referred to in Section 8.3(c), then the Trinity
Shareholder shall be conclusively deemed to have rejected the Tag Along
Offer. Upon the consummation of the disposition of Shares to the buyer,
AMCON shall cause the buyer to remit the price of the Shares to be disposed
of by each Trinity Shareholder directly to such Trinity Shareholder. The
sale and purchase shall be completed at such time and place as the buyer and
AMCON shall agree prior to the expiry of the time limit referred to in
Section 8.3(f).
e. At the closing of such purchase and sale, each
participating Trinity Shareholder and AMCON shall deliver certificates for
the securities to be sold, duly endorsed for transfer (or accompanied by duly
executed stock powers), to the buyer in the manner and at the address
indicated in the Tag Along Offer, against delivery of the agreed purchase
price.
f. If AMCON and the buyer have not completed the sale and
purchase of the Shares within a further period of fifteen (15) Business Days
following notice of acceptance of the Tag Along Offer to AMCON, all
restrictions in this Section 8.3 shall again be in full force and effect.
8.4. Equal Treatment in Mergers, Consolidation and Sales of Assets.
If AMCON agrees to vote in favor of a merger or consolidation of the Company
with a third party, or a sale of all or substantially all of the assets of
the Company to a third party, the Trinity Shareholder(s) shall be entitled to
participate therein at the same price per Share received by AMCON and on the
same terms and conditions as AMCON. AMCON and each Trinity Shareholder
agrees not to exercise any dissenter's rights of appraisal with respect to
any such merger, consolidation or sale of assets.
8.5. Drag-Along Rights. If AMCON agrees to sell more than 50% of
the Company's fully diluted outstanding Shares to an unaffiliated third
party, or if AMCON agrees to vote in favor of a merger or consolidation with
an unaffiliated third party, or sell all or substantially all of the assets
of the Company to an unaffiliated third party, then, AMCON shall have the
right to require to be sold to such third party, or vote in favor thereof,
all of the outstanding Shares, including the Shares owned by the Trinity
Shareholder(s), at the same price and on the same terms and conditions as
apply to AMCON with respect thereto. AMCON shall provide the Trinity
Shareholder(s) written notice of the transactions described above, and the
terms and conditions related thereto, at least 10 days prior to the date of
consummation of such transaction. On the closing date, each Trinity
Shareholder shall deliver certificates for the Shares to be sold, duly
endorsed for transfer (or accompanied by duly executed stock powers), to the
purchaser in the manner and at the address indicated in the written notice,
against delivery of the agreed purchase price.
8.6. Legend. All Shares shall be imprinted with a legend in
substantially the following form:
"THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES ACTS, AND MAY NOT BE SOLD OR TRANSFERRED EXCEPT PURSUANT TO THE
REGISTRATION PROVISIONS OF SUCH ACTS OR AN EXEMPTION THEREFROM. THE SHARES
REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS ON
TRANSFER CONTAINED IN A CERTAIN SHAREHOLDERS AGREEMENT, BY AND AMONG THE
COMPANY AND THE HOLDER OF SUCH SHARES, COPIES OF WHICH ARE AVAILABLE AT THE
PRINCIPAL OFFICES OF THE COMPANY."
8.7. Financial Information of the Company. Trinity shall be
entitled to receive audited annual financial statements within ninety (90)
days of the end of each fiscal year and unaudited quarterly financial
statements within forty-five (45) days after the end of each fiscal quarter.
9. Termination.
9.1. Complete Termination. This Agreement and all restrictions on
Share Transfers created hereby shall terminate on the occurrence of any of
the following events:
a. The issuance of an order by a court of competent
jurisdiction declaring that the Company is bankrupt.
b. The dissolution of the Company.
c. AMCON becoming the owner of all of the Shares of the
Company which are then subject to this Agreement.
d. The execution of a written instrument by the Company,
AMCON and Trinity which terminates this Agreement.
9.2. Effect. The termination of this Agreement for any reason shall
not affect any right or remedy existing hereunder prior to the effective date
of its termination, except that upon termination of this Agreement, the
Trinity Shareholder(s) shall cause the resignation of its designee for
nomination to the Board of Directors and shall thereafter have no right
arising hereunder to nominate or elect members of the Board of Directors
Notwithstanding the foregoing, the obligations of the parties contained in
the last sentence of Section 6.1 hereof shall survive termination of this
Agreement.
10. General Provisions.
10.1. Governing Law. This Agreement shall be construed pursuant to
the laws of the State of Delaware.
10.2. Remedies for Breach. The Shares are unique chattels and each
party to this Agreement shall have the remedies which are available to it for
the violation of any of the terms of this Agreement, including, but not
limited to, the equitable remedies for specific performance and injunctive
relief.
10.3. Notices. All notices, requests, demands, and other
communications required or permitted under this Agreement shall be in writing
and shall be deemed to have been duly given and made upon being delivered
either in person or by nationally recognized courier or by fax delivery to
the party for whom it is intended, provided that a copy thereof is deposited,
postage prepaid, certified or registered mail, return receipt requested, in
the United States mail, bearing the address shown in this Section 10.3 for,
or such other address as may be designated in writing hereafter by, such
party:
If to the Company:
c/o AMCON Distributing Company
P. O. Xxx 000000
Xxxxx, XX 00000-0000
Attn: Chief Financial Officer
Fax: (402) 000- 0000
If to AMCON:
AMCON Distributing Company
P. O. Xxx 000000
Xxxxx, XX 00000-0000
Attn: Chief Financial Officer
Fax: (000) 000-0000
With a copy to:
Xxxxxxx Xxxxxxxx Xxxxxx LLP
0000 Xxxxx Xxxxxxxxx
Xxxxxx Xxxx, XX 00000
Attn: Xxxx X. Xxxxxx
Fax: (000) 000-0000
If to Trinity:
Trinity Springs Ltd.
000 0xx Xxxxxx X. #0X
X.X. Xxx 0000
Xxxxxxx, Xxxxx 00000
Attn: Chief Financial Officer
Fax: (000) 000-0000
With a copy to:
Xxxxxxx X. Xxxxxxx
Xxxxxxx Coie LLP
000 Xxxx Xxxxx Xxxxxx, Xxxxx 000
Xxxxx, Xxxxx 00000-0000
Fax: (000) 000-0000
10.4. Amendment. This Agreement may be amended or altered at any
time if the amendment or alteration is both ratified by the Board of
Directors of the Company and consented to in writing by AMCON and the holders
of a majority of the Shares then owned by the Trinity Shareholder(s).
10.5. Captions. The captions and headings to Sections of this
Agreement have been inserted for identification and reference purposes only
and shall not be used to construe the meaning or the interpretation of this
Agreement.
10.6. Binding Effect. This Agreement is binding upon and inures to
the benefit of the Company, its successors, assigns, and transferees, and to
the Shareholders and their respective successors and permitted assigns and
transferees; provided, however, that no successor, assignee or transferee of
Trinity shall have any rights under Sections 6 and 7.
10.7. Entire Agreement. This Agreement constitutes the full and
entire understanding and agreement between the parties with respect to the
subject matter hereof.
10.8. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
10.9. Severability. In the event that any provision of this
Agreement becomes or is declared by a court of competent jurisdiction to be
illegal, unenforceable or void, this Agreement shall continue in full force
and effect without said provision; provided that no such severability shall
be effective if it materially changes the economic benefit of this Agreement
to any party.
[Signature Page on Following Page]
IN WITNESS WHEREOF, the Company and the Shareholders have executed this
Shareholders Agreement on the day and year above written.
TSL ACQUISITION CORP.
By: Xxxxxxx X. Xxxxxx
------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Chairman of the Board and
Chief Executive Officer
SHAREHOLDERS:
TRINITY SPRINGS LTD.
By: Xxxx Xxxxxx
-----------------------------
Name: Xxxx Xxxxxx
Title: Chief Executive Officer
AMCON DISTRIBUTING COMPANY
By: Xxxxxxx X. Xxxxxx
-----------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Chairman of the Board and
Principal Executive Officer
EXHIBIT A
EXCHANGE AGREEMENT
To: AMCON Distributing Company Dated: , 200_
The undersigned, pursuant to the provisions set forth in Section 5 of
the Shareholders Agreement dated as of April 24, 2004 (the "Shareholders
Agreement"), by and among TSL Acquisition Corp., a Delaware corporation (the
"Company"), AMCON Distributing Company, a Delaware corporation ("AMCON") and
Trinity Springs Ltd., an Idaho corporation ("Trinity"), hereby agrees to
exchange ________ shares of Company Common Stock for _____ shares of AMCON
Common Stock. Terms defined in the Shareholders Agreement are used in this
Exchange Agreement as so defined in the Shareholders Agreement.
If, after taking into account the application of the integration
doctrine, counsel to AMCON is unable to give a written legal opinion to AMCON
that the proposed sale of AMCON Common Stock, as contemplated by this
Exchange Agreement, would qualify under Rule 505 of Regulation D under the
Securities Act (and any comparable exemption from registration under any
applicable state securities law, such as the Uniform Limited Offering
Exemption), then Trinity hereby represents and warrants that either (i) it is
an accredited investor (as defined in Rule 501(a) of Regulation D under the
Securities Act), or (ii) it, together with any purchaser representative it
may appoint pursuant to Regulation D, possesses the knowledge and experience
in financial and business matters as to be capable of evaluating the merits
and risks of its proposed investment in AMCON common stock.
In addition, the undersigned hereby represents and warrants to AMCON
that:
1. Its principal place of business is located in the State of Idaho.
2. It is acquiring the AMCON Common Stock for its own account and not
with a view to distribution (as that term is interpreted by the U. S.
Securities and Exchange Commission under Section 2(11) of the Securities
Act). It understands that the AMCON Common Stock will be subject to
restrictions on transfer and that the AMCON Common Stock may not be
registered under the Securities Act or any applicable state securities laws
by reason of a specified exemption from the registration provisions of the
Securities Act and applicable state securities laws, which may depend upon,
among other things, the accuracy of the representations and warranties
contained in this Exchange Agreement.
3. It hereby certifies that (i) no other person has any direct or
indirect beneficial interest in the AMCON Common Stock, (ii) it is not acting
as an underwriter (as that term is defined in Section 2(11) of the Securities
Act) or directly or indirectly participating in any underwriting of the AMCON
Common Stock, and (iii) it does not have any contract, undertaking,
agreement, arrangement or understanding with any person which is contrary to
the representations, warranties and agreements contained in this agreement.
4. It acknowledges that the shares being issued to it in exchange for
the Company Common Stock may not be sold, pledged, hypothecated, donated or
otherwise transferred, whether or not for consideration, without an effective
registration statement under the Securities Act and any applicable state
securities laws or an exemption therefrom.
5. The investment in the shares of AMCON Common Stock is subject to
financial risks. It represents that, prior to acquiring the shares, it has
been offered reasonable access to all financial and corporate records of
AMCON. It represents that either (i) it and its representatives have
examined such records to their satisfaction; or (ii) it has waived its right
to conduct such examination. It represents that it has had an opportunity to
ask questions of AMCON management reasonably related to the investment
decision contemplated by the exchange of Company Common Stock for AMCON
Common Stock, that all of its questions have been answered to its
satisfaction and that it does not require any further information or data
regarding AMCON.
6. It is aware that until such shares are registered under the
Securities Act, the certificate evidencing the shares will contain a
conspicuous legend referencing the transfer restrictions imposed by the
Securities Act and applicable state securities laws and this Exchange
Agreement and agrees that a stop transfer order may be placed on the transfer
books maintained with respect to the shares of AMCON Common Stock which gives
effect to the transfer restrictions described above.
TRINITY SPRINGS LTD.
By: ______________________________
Name: ___________________________
Title: ____________________________
