EXHIBIT 10.13
AMCON DISTRIBUTING COMPANY
NONQUALIFIED STOCK OPTION AGREEMENT
THIS AGREEMENT ("Agreement"), is made and entered as of December 12,
2006 (the "Granting Date"), by and between AMCON Distributing Company,
a Delaware corporation (the "Company"), and Xxxxxxxxxxx X. Xxxxxx (the
"Optionee").
RECITALS
A. The Optionee is the Chief Executive Officer of the Company and the
Company wants to grant the Optionee options to purchase shares of
common stock of the Company (the "Common Stock") with respect to the
Optionee's employment with the Company in order to more fully align
the interests of the Optionee with the interests of the Company's
stockholders as well as provide additional incentive for the Optionee
to promote the success of its business through sharing in the future
growth of such business.
B. The Compensation Committee of the Board of Directors of the
Company (the "Compensation Committee") has granted the Optionee an
option to purchase shares of Common Stock on the terms and conditions
set forth in this Agreement, which option is subject to and contingent
upon obtaining the stockholder approval contemplated by Section 1
hereof at the next Annual Meeting of Stockholders, and if such
stockholder approval is not obtained, this option shall automatically
terminate.
C. This Agreement is granted to the Optionee, and the shares issuable
upon exercise of the option shall be issued, in reliance on the
exemption from registration provided by Section 4(2) of the Securities
Act of 1933, as amended (the "Securities Act") and Regulation D
thereunder.
AGREEMENT
In consideration of the mutual promises and covenants herein contained
and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto do hereby agree
as follows:
1. GRANT OF OPTION.
(a) The Company hereby grants to the Optionee as a matter of separate
inducement in connection with the Optionee's employment, but not in
lieu of any salary or other compensation for the Optionee's services,
the option (the "Option") to purchase from the Company, at the times
and on the terms and conditions hereinafter set forth, all or part of
an aggregate of 25,000 shares of Common Stock at the purchase price of
$18.00 per share, which represents the closing trading price of the
Company's Common Stock on the American Stock Exchange ("AMEX") on the
day immediately prior to the Granting Date. Notwithstanding any other
provision of this Agreement, in order to satisfy the requirements of
Section 711 of the AMEX Company Guide, the Option granted under this
Agreement shall be automatically terminated in the event that it is
submitted for approval by the holders of a majority of the shares of
common stock of the Company voting (the "Requisite Stockholder
Approval") at the next Annual Meeting of Stockholders of the Company
that is held after the date hereof and the Requisite Stockholder
Approval is not obtained at such meeting.
(b) Exercises of this Option may be honored by issuing authorized and
unissued shares of Common Stock or, at the election of the Company, by
transferring shares of Common Stock which may at the time be held by
the Company as treasury shares.
(c) The Option granted hereunder is a non-qualified stock option and
is not an incentive stock option within the meaning of Section 422 of
the Internal Revenue Code of 1986, as amended, from time to time (the
"Code").
2. TERMS OF OPTION. The Option granted hereunder may be exercised
from time to time by the Optionee by giving written notice of exercise
to the Company specifying the number of shares to be purchased, and by
payment of the purchase price therefor by either (i) cash or check to
the order of the Company, or (ii) shares of stock of the Company
having a fair market value equal to the purchase price on the exercise
date, subject, however, to the following restrictions:
(a) Notwithstanding any provision of this Agreement to the contrary,
the Option may not be exercised after the tenth anniversary of the
date of this Agreement (the "Expiration Date").
(b) Subject to Sections 7 of this Agreement, the Option is
exercisable only in the following maximum amounts: (i) no portion of
this Option may be exercised before the first anniversary of the
Granting Date, (ii) up to one-third of this Option (8,333.33 shares)
may be exercised after the first anniversary of the Granting Date,
(iii) up to two-thirds of this Option (16,666.66 shares) may be
exercised after the second anniversary of the Granting Date and (vi)
all of this Option may be exercised after the third anniversary of the
Granting Date. Notwithstanding the above sentence, but subject to
Section 7 of this Agreement, if there is a Change of Control of the
Company and the surviving, continuing, successor or purchasing
corporation, partnership, limited liability company, association,
trust, or other entity does not agree to assume the Option or replace
the Option with an option, then this Option will become fully
exercisable. For purposes of this Section 2(b), a "Change of Control"
means any of the following:
(i) 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
(the "Exchange Act")) (a "Person") (other than the Company 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 Company;
(ii) the merger or consolidation of the Company with, or the sale or
disposition of all or substantially all of the assets of the Company
to, any Person other than (A) a merger or consolidation which would
result in the voting stock of the Company 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 total combined voting power
of the voting stock of the Company 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 Company (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 total
combined voting power of the Voting Stock of the Corporation
outstanding immediately after such merger or consolidation;
(iii) 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 Exchange Act),
in the aggregate, of securities of the Company representing forty
percent (40%) or more of the total combined voting power of the then
issued and outstanding voting stock of the Company, 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;
(iv) the acquisition of direct or indirect beneficial ownership (as
determined under Rule 13d-3 promulgated under the Exchange Act), in
the aggregate, of securities of the Corporation representing fifty
percent (50%) or more of the outstanding voting stock of the Company
by any person or group of persons acting in concert; or
(v) the approval by the shareholders of the Company of any plan or
proposal for the complete liquidation or dissolution of the Company or
for the sale of all or substantially all of the assets of the
Company.
3. EFFECT OF TERMINATION OF SERVICE, DEATH, DISABILITY OR VOLUNTARY
RESIGNATION.
(a) Termination/Removal for Cause. If the Optionee ceases to be an
employee due to the termination of the Optionee's employment for Cause
(as defined below), the Option will expire immediately and will
thereafter be void for all purposes. For purposes of this Agreement,
"Cause" means any act or failure to act by the Optionee that
constitutes willful misconduct or gross negligence.
(b) To the extent exercisable in accordance with Section 2, the
Option granted herein will remain exercisable for the following
periods of time after an Optionee ceases to be an employee on account
of the Optionee's death, disability, voluntary resignation or on
account of having been terminated as an employee without Cause (as
defined above). In no event may the Option be exercised after the
Expiration Date.
(i) Death. If the Optionee dies while he is an Employee, the Option,
to the extent exercisable, may be exercised by the Optionee's
beneficiaries entitled to do so within twelve months following the
date of the Optionee's death.
(ii) Disability. If the Optionee becomes disabled while he is an
Employee, the Option, to the extent exercisable, may be exercised by
the Optionee within twelve months following the date of the Optionee's
disability.
(iii) Termination Without Cause or Voluntary Resignation. If the
Optionee ceases to be an Employee due to (A) the Optionee's voluntary
resignation, or (B) the termination of the Optionee's employment
without Cause (as defined above), the Option may be exercised by the
Optionee within three months following the date of the Optionee's
termination of employment.
4. NOT AN EMPLOYMENT CONTRACT. Nothing herein contained is to be
construed as requiring the Company or any affiliate of the Company to
employ the Optionee for any specific period.
5. NONASSIGNABILITY. Except as otherwise herein provided, the Option
herein granted and the rights and privileges conferred hereby may not
be transferred, assigned, pledged or hypothecated in any way (whether
by operation of law or otherwise) and may not be subject to execution,
attachment, or similar process. Upon any attempt to transfer, assign,
pledge, hypothecate or otherwise dispose of the Option herein granted,
or of any right or privilege conferred hereby, or upon the levy of any
attachment or similar process upon the rights and privileges conferred
hereby, contrary to the provisions hereof, the Option and the rights
and privileges conferred hereby will immediately become null and void.
6. ADJUSTMENTS FOR STOCK DIVIDENDS, SPLITS, ETC. If before the
delivery to the Optionee by the Company of all the shares of the
Common Stock in respect of which this Option is hereby granted, the
Company has effected any stock dividend, stock split,
recapitalization, combination or reclassification of shares or other
similar transaction, then to the extent necessary to prevent dilution
or enlargement of the Optionee's rights hereunder:
(a) if there is a net increase in the number of outstanding shares of
Common Stock, the number of shares remaining subject to this Option
will be proportionately increased, and the cash consideration payable
per share will be proportionately reduced, and
(b) if there is a net reduction in the number of outstanding shares
of Common Stock, the number of shares remaining subject to this Option
will be proportionately reduced, and the cash consideration payable
per share will be proportionately increased.
7. ADJUSTMENTS FOR MERGERS, REORGANIZATIONS, ETC. If the Company
becomes a party to any corporate merger, consolidation, major
acquisition of property for stock, separation, reorganization or
liquidation, and the Company is not the surviving corporation in any
such transaction, the Company or it successor may make arrangements
which will be binding upon the Optionee for the (i) payment of cash
equal to the excess of the fair market value of the total number of
shares remaining subject to the Option less the exercise price for
such total number of shares; (ii) substitution of a new option for the
Option; or (iii) assumption of the Option.
8. RIGHTS OF OPTIONEE. The Optionee does not have any of the rights
or privileges of a stockholder of the Company in respect of any of the
shares issuable upon the exercise of this Option unless and until
certificates representing the shares shall have been issued and
delivered; except that the Company shall supply the Optionee with all
financial information and other reports which the Company furnished
its stockholders during the period any portion of this Option remains
outstanding.
9. NOTICE. Any notice required to be given under the terms of this
Agreement shall be addressed to the Company in care of its Chief
Financial Officer at its offices at: 0000 Xxxxxxxxx Xxxx, Xxxxx,
Xxxxxxxx 00000, with a telephone number of (000) 000-0000 and fax
number of (000) 000-0000, and any notice to be given to the Optionee
shall be addressed to the Optionee at the address given beneath the
Optionee's signature hereto. Either party hereto may from time to
time change the address to which notices are to be sent to such party
by giving written notice of such change to the other party. Any
notice hereunder shall be deemed to have been duly given if and when
addressed as aforesaid, registered and deposited, postage and registry
fee prepaid, in a post office regularly maintained by the United
States Government.
10. WITHHOLDING. The Optionee agrees to make appropriate
arrangements with the Company for satisfaction of any applicable
federal, state or local income tax withholding requirements or like
requirements, including the payment to the Company at the time of
exercise of an Option of all such taxes and requirements.
11. INVESTMENT INTENT.
(a) This Agreement is granted to, and the shares issuable upon
exercise of this Option will be issued to the Optionee, in reliance on
the exemption from registration provided in Section 4(2) of the
Securities Act and Regulation D promulgated thereunder. Any stock
certificates issued upon exercise of this Option may bear the
following legend and stop transfer instructions may be given to the
transfer agent for the Company's common stock that are consistent with
such legend:
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) The Company may, but in no event shall be required to, bear any
expenses of complying with the 1933 Act, other applicable securities
laws or the rules and regulations of any national securities exchange
or other regulatory authority in connection with the registration,
qualification, or transfer, as the case may be, of this Option or any
Common Stock acquired upon the exercise thereof. The foregoing
restrictions on the transfer of the Common Stock will be inoperative
if (i) the Company has been furnished with an opinion of counsel,
satisfactory to it, stating that the transfer will not involve any
violation of the Securities Act and other applicable securities laws
or (ii) the Common Stock has been duly registered in compliance with
the Securities Act and other applicable securities laws.
12. BINDING EFFECT. This Agreement binds, and, except as
specifically provided herein, inures to the benefit of the respective
heirs, legal representatives, successors and assigns, as applicable,
of the parties hereto.
13. GOVERNING LAW. This Agreement and the rights of all persons
claiming hereunder are to be construed and determined in accordance
with the laws of the State of Delaware.
This Nonqualified Stock Option Agreement is executed by the Company
and Optionee as of the date stated above in the introductory
paragraph.
AMCON DISTRIBUTING COMPANY
By: /s/ Xxxxxxx X. Xxxxxx, Chairman
/s/ Xxxxxxxxxxx X. Xxxxxx
Address:
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
