Exhibit 4.3
AMCON DISTRIBUTING COMPANY
SECURITIES PURCHASE AGREEMENT
This Securities Purchase Agreement ("Agreement") as of the 3rd day of March,
2006 by and between AMCON DISTRIBUTING COMPANY, a Delaware corporation (the
"Company" or "AMCON") and Draupnir Capital, LLC, a Delaware limited liability
company (the "Purchaser").
WHEREAS, the Company desires to issue and sell to Purchaser, and Purchaser
desires to purchase from the Company, certain Securities (as defined below)
of the Company; and
WHEREAS, the Company and Purchaser desire to set forth certain matters and
procedures relating to the structure, governance, financing and management of
the Company and its Subsidiaries.
NOW, THEREFORE, the parties hereto AGREE as follows:
SECTION 1. THE SECURITIES.
Section 1.1. Subject to the terms and conditions set forth herein, the
Company will issue and sell 80,000 shares of its Series C Convertible
Preferred Stock with the terms set forth on the Certificate of Designations
("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 PREFERRED STOCK.
Subject to the terms and conditions of this Agreement, the Company will
issue and sell to Purchaser and Purchaser will purchase from the Company
concurrently with the execution of this Agreement the number of shares of
Preferred Stock specified in Schedule A at a purchase price equal to the
product of such number of shares times $25 per share.
SECTION 3. CLOSING.
(a) Concurrently with the execution of this Agreement and delivery by
Purchaser 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 Purchaser, the Company will deliver to Purchaser a
certificate evidencing Purchaser's ownership of the number of shares of
Preferred Stock set forth opposite its 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 Purchaser that:
Section 4.1. Organization; Power and Authority. The Company and each
of its Subsidiaries are corporations duly organized, validly existing and in
good standing under the laws of the State of Delaware and their respective
jurisdictions of organization. The Company and each of its Subsidiaries has
the corporate power and authority to conduct their businesses as they are now
conducted, and the Company has the corporate power and authority to execute
and deliver this Agreement, and to perform the provisions hereof.
Section 4.2. Authorization, Etc. This Agreement has 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) 527,062 shares
of Company Common Stock were issued and outstanding, (ii) 100,000 shares of
Company Series A Convertible Preferred Stock were issued and outstanding;
(iii) 80,000 shares of Company Series B Convertible Preferred Stock were
issued and outstanding; (iv) stock options to purchase an aggregate of 36,029
shares of Company Common Stock were issued and outstanding (the "Company
Stock Options") and (v) no shares of Company Common Stock were held in its
treasury. 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,
or (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
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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 Purchaser 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 and no Subsidiary of AMCON is required to file any form,
report, registration statement or prospectus or other document with the SEC;
provided, however, that AMCON has not filed a Form 10-K or 10-Q since the 10-
K for the fiscal year ended September 24, 2004 and the 10-Q for the quarter
ended June 30, 2005
(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 presents 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
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notes and schedules) fairly presents 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 consolidated financial statements of
AMCON and its Subsidiaries, 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 June 30, 2005, (a) AMCON has suffered no
Material Adverse Effect and there is no condition, event, fact or
circumstance that, individually or in the aggregate, could reasonably be
expected to have a 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, 2005.
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, certificate of designation, 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) Except as set forth in Schedule 4.8, 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.
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(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.
Purchaser represents and warrants 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, except with respect to Conversion Shares as
provided in Section 6.3 hereof, will not be, registered under the Securities
Act, and may not be offered or sold except 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
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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.
Section 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. The office 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.
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SECTION 6. AGREEMENTS RESPECTING SECURITIES LAWS.
Section 6.1. Limitations on Resale. Purchaser agrees that it will not
sell, assign or transfer any of the Securities at any time in violation of
the Securities Act and acknowledges that it is taking unregistered
securities, it must continue to bear the economic risk of its 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 it realizes 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. It recognizes
that the Company is not assuming any obligation to register the Securities,
except to the extent expressly set forth herein. Purchaser agrees 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 it and upon any transfer to any assignee.
Section 6.2. Transfer of Restrictions. The Securities may not be
transferred except to an Affiliate or 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 Purchaser.
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) Purchaser prior to its filing or other
submission. Purchaser 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
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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:
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(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 the
date on which all Conversion Shares covered by the Registration Statement
have been sold (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 6.3(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 Purchaser's request, the Company shall furnish to
Purchaser (if Purchaser's Securities are included in the Registration
Statement) (x) promptly after the same is prepared and publicly distributed,
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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
Purchaser 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 Purchaser 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 Purchaser as Purchaser 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,
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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 Purchaser if Purchaser's 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 Purchaser as Purchaser may reasonably request).
(vii) The Company shall hold in confidence and not make any
disclosure of information concerning Purchaser 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) Purchaser consents to the form and content of any such disclosure.
The Company shall, upon learning that disclosure of any information
concerning Purchaser is sought in or by a court or governmental body of
competent jurisdiction or through other means, give prompt notice to
Purchaser prior to making such disclosure, and cooperate with Purchaser, at
Purchaser's expense, in taking appropriate action to prevent disclosure of,
or to obtain a protective order for, such information.
(viii) At Purchaser's request, the Company shall prepare and
file with the SEC at the Purchaser's expense 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, fees and disbursements of counsel to
Purchaser, 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. The Company shall not be obligated in any way in
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connection with any registration pursuant to this Section 6 for any selling
commissions or discounts payable by Purchaser to any underwriter or broker of
securities to be sold by Purchaser. Purchaser agrees to pay all expenses
required to be borne by Purchaser.
(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 to such
Offering Holder 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
12
Purchaser 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 Purchaser is an Offering Holder, Purchaser agrees 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 Purchaser or any affiliate (as defined in the Securities Act) of
Purchaser specifically for use in the preparation thereof or (ii) result from
Purchaser's 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 (selected by Purchaser)
for Purchaser and for all other 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
13
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 Purchaser 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 Purchaser's request, the Company will deliver to Purchaser 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 Purchaser to sell Securities
under Rule 144 without registration.
(m) The Company agrees to cooperate with Purchaser to facilitate the
timely preparation and delivery of certificates representing Conversion
Shares to be sold by Purchaser 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 Purchaser
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 Purchaser of such
Conversion Shares under the Registration Statement.
(n) Purchaser agrees that it will, and that it will cause its 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.
14
(p) The registration rights under this Section 6 shall automatically
transfer to successor owners of Preferred Stock and Conversion Shares.
SECTION 7. NOMINEE TO BOARD OF DIRECTORS
(a) If, assuming conversion of all shares of Preferred Stock, the
Purchaser and its Affiliates beneficially own (determined in accordance with
Rule 13d-3 under the Exchange Act) shares of Company Common Stock which
represent five percent (5%) or more of the outstanding shares of Company
Common Stock ("Ownership Amount") as of the record date for the applicable
meeting at which directors are to be elected, the Purchaser shall have the
right to nominate for election one director to serve on the Company's Board
of directors. Such director shall be in addition to, and not in lieu of,
Messrs. Xxxxx X. Xxxxxxxx and Xxxxxxxxxxx X. Xxxxxx, who shall continue, with
their consent, to be nominated to the Company's Board of Directors, with the
Company also taking the actions with respect to them described in Section
7(b) below to cause their election. Further, on March 21, 2006, the Company
shall take such action to cause the additional director to be elected to the
Company's Board of Directors by the filling of a vacancy through an increase
in the size of the Board or otherwise. The initial additional director shall
be Xxxxxx X. Xxxxx.
(b) For so long as Purchaser is entitled to nominate an additional
director to serve on the Board of Directors of the Company under the
provisions of Section 7(a), the Company shall, (i) in connection with any
vote or meeting of stockholders of the Company at which directors are to be
elected, nominate the nominee of the Purchaser and (ii) use its reasonable
best efforts to cause his or her election to the Board of Directors of the
Company by the holders of the Common Stock, including (A) nominating such
nominee, (B) including the nominee in the Company's proxy statement, (C)
recommending a vote for such nominee, (D) casting votes pursuant to proxies
given to the Company in favor of such nominee and (E) taking or causing to be
taken, all other actions and doing, or causing to be done, all other things
necessary (in the reasonable opinion of the Purchaser) to give effect to the
provisions of Section 7(a) above, as applicable. All persons nominated to the
Board of Directors of the Company by the Purchaser pursuant to Section 7(a)
shall receive the same compensation and benefits (including equity-based
compensation) that are provided to the other non-executive members of the
Board of Directors of the Company. In addition, for so long as the
provisions of Section 7(a) remain in effect, the Company shall maintain
policies of directors and officers liability insurance, with financially
sound and reputable insurers, having terms that are customary for companies
similarly situated.
(c) The provisions of Section 7(a) relating to the right to elect the
additional director are intended to operate in conjunction with the
provisions contained in Section 2(d) and Section 7 of the Series C Preferred
Certificate of Designation, such that, if the holder of Series C Preferred
Shares is entitled to elect one or more directors pursuant to said Section
15
2(d) or Section 7 of the Series C Preferred Certificate of Designation, the
Purchaser shall not be entitled to nominate the additional director pursuant
to Section 7(a) during such period that the holder of Series C Preferred
Shares is entitled to do so pursuant to the Certificate of Designation.
SECTION 8. 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 Purchaser.
SECTION 9. 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 Purchaser, to Purchaser or it at the address specified for
such communications in Schedule A, or at such other address as Purchaser
shall have specified to the Company in writing,
(b) 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 Purchaser in writing. Notices under
this Section 9 will be deemed given only when actually received.
SECTION 10. CONFIDENTIAL INFORMATION.
For the purposes of this Section 10, "Confidential Information" means
information delivered to Purchaser 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 Purchaser prior to the time of such disclosure, (b) subsequently
becomes publicly known through no act or omission by Purchaser or any Person
acting on Purchaser's behalf, or (c) otherwise becomes known to Purchaser
other than through disclosure by the Company or any Subsidiary. Purchaser
will maintain the confidentiality of such Confidential Information in
accordance with procedures adopted by Purchaser in good faith to protect
confidential information of third parties delivered to Purchaser; provided
that Purchaser may deliver or disclose Confidential Information to (i)
Purchaser's directors, trustees, officers, employees, agents, attorneys and
affiliates (to the extent such disclosure reasonably relates to the
administration of Purchaser's investment in the Securities), (ii) Purchaser's
financial advisors and other professional advisors who agree to hold
confidential the Confidential Information substantially in accordance with
the terms of this Section 10, (iii) any other holder of any Securities, (iv)
16
any Institutional Investor to which Purchaser's sells 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 10), (v) any Person from which
Purchaser offers 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 10), (vi) any federal or state
regulatory authority having jurisdiction over Purchaser, (vii) the National
Association of Insurance Commissioners or any similar organization, or any
nationally recognized rating agency that requires access to information about
Purchaser's 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 Purchaser,
(x) in response to any subpoena or other legal process, or (y) in connection
with any litigation to which Purchaser is a party, to the extent Purchaser
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 10.
SECTION 11. OTHER AGREEMENTS
Section 11.1. Use of Proceeds. The entire $2,000,000 of proceeds
received by the Company from the sale of the Preferred Stock will be used
solely to pay down the existing secured credit facilities of AMCON from
LaSalle Bank National Association.
Section 11.2. Listing on Securities Exchange. The Company shall file an
additional listing application with the American Stock Exchange for the
listing of the Conversion Shares as soon as reasonably practicable.
Section 11.3. Execution of Loan Agreement. The Execution of this
Agreement will be timed to coincide with or be subsequent to the execution of
sixth amendment to Amended and Restated Loan and Security Agreement (the
"Loan Agreement") by and between, among others, the Company and LaSalle Bank
National Association, as agent, which Loan Agreement shall contain terms
satisfactory to Purchaser, including but not limit to, terms relating to
availability of over advances to AMCON, provisions permitting the payment of
dividends on the Preferred Stock, and other credit and liquidity issues. The
Loan Agreement will not be further amended without the consent of Purchaser
at any time during the period that Purchaser and its Affiliates beneficially
own (determined in accordance with Rule 13d-3 under the Exchange Act) the
Ownership Amount (the "Ownership Period").
Section 11.4. Corporate and Management Structure. The Company shall
implement a holding company structure (the "Structure") reasonably
satisfactory to Purchaser pursuant to which the Company's various businesses
17
will be owned by the Company (unless sold) but separated for management,
operations, certain financing and other purposes. The Structure shall be
functional immediately upon Closing, with the legal form (including, without
limitation, amendments to By-laws of the Company and its Subsidiaries
reasonably satisfactory to Purchaser to implement the Structure and the other
provisions of this Section 11.4) to follow as soon as practicable. Upon the
Closing, the Company shall also create a holding company Office of the
Chairman. Members of such Office will be Xxxxxxx X. Xxxxxx as Chairman,
Xxxxxxxxxxx X. Xxxxxx as Vice Chairman and a Chief Financial Officer to be
designated by Purchaser. Such members of the Office of the Chairman shall be
officers of the Company. From and after the Closing until such time
designated by Purchaser, the Office of the Chairman will be headquartered in
Chicago with Purchaser providing office space for a nominal consideration.
Xxxxxxxx X. Xxxxx, Xxxx X. Xxxxxxxxx and the new Chief Executive Officer of
Hawaiian Natural Water Co., Inc., a subsidiary of the Company ("Hawaiian
Springs") and their respective successors will report to the Office of the
Chairman. Xxxxxxx X. Xxxxx will continue as Chief Accounting Officer and
Chief SEC Compliance Officer of the Company and as Chief Financial Officer of
the convenience store distribution business. Xx. Xxxxx and his successor
will report to the office of the Chairman. Purchaser will provide interim
management support to Hawaiian Springs on a contract basis mutually agreed
upon until the new Chief Executive Officer of Hawaiian Springs is elected.
The Company shall use its reasonable best efforts (and cause its Subsidiaries
to use their respective reasonable best efforts) to fully implement and
comply with the foregoing provisions and rights of Purchaser; provided,
however, that anything in this Section 11.4 to the contrary notwithstanding,
nothing contained in this Section 11.4 shall: (i) limit the discretion of
the Board of Directors of the Company to elect or remove officers (or their
successors) of the Company, amend the By-laws of the Company or otherwise
manage the business and affairs of the Company; or (ii) create any employee
or other rights of officers or employees of the Company or its Subsidiaries
or modify or affect any employee or severance agreement.
Section 11.5. Payment of Counsel Fees. The Company agrees to reimburse
the Purchaser at the Closing for all reasonable fees and out-of-pocket
expenses of counsel to the Purchaser in connection with its representation of
Purchaser in the purchase of the Preferred Stock.
SECTION 12. MISCELLANEOUS.
Section 12.1. 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 12.2. Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective only to the extent of such prohibition or
unenforceability and without invalidating the remaining provisions hereof,
and any such prohibition or unenforceability in any jurisdiction shall (to
18
the full extent permitted by law) not invalidate or render unenforceable such
provision in any other jurisdiction.
Section 12.3. 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 12.4. 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 12.5. Governing Law; Costs. 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. In the event of a dispute
under this Agreement, the substantially prevailing party shall be entitled to
recover its costs and expenses, including attorneys' fees and expenses, from
the other party.
Section 12.6. Amendments and Waivers. This Agreement may only be
amended by an instrument in writing signed by the Company and Purchaser. Any
failure of any party to comply with any obligation, covenant, agreement,
condition or provision herein may be waived only by a written instrument
signed by the party granting such waiver and such waiver or failure to insist
upon strict compliance with such obligation, covenant, agreement, condition
or provision shall not operate as a waiver of, or estoppel with respect to,
any subsequent or other failure.
IN WITNESS WHEREOF, this Agreement has been executed as of the date first
above written.
AMCON DISTRIBUTING COMPANY
By: /s/ Xxxxxxxx X. Xxxxx
---------------------
Xxxxxxxx X. Xxxxx
President
DRAUPNIR CAPITAL, LLC
By: /s/ Xxxxxx X. Xxxxx
-------------------
Xxxxxx X. Xxxxx
Chief Executive Officer
19
Exhibit A Form of Certificate of Designations regarding
Series C Preferred Stock
Schedule A Description of number of shares of Securities purchased
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)
CERTIFICATE OF DESIGNATIONS
[Filed with this Report on Form 8-K as Exhibit 4.1]
-----------------------------------------------------------------------------
SCHEDULE A (to Securities Purchase Agreement)
DESCRIPTION OF NUMBER OF SHARES OF SECURITIES PURCHASED
Number of Shares of
Series C Preferred Stock
to be Purchased
------------------------
DRAUPNIR CAPITAL, LLC
000 Xxxxx Xxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxx X. Xxxxx
Chief Executive Officer Number of Shares: 80,000
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, 2004, as amended (the "AMCON 10-
K"), (ii) AMCON's quarterly reports on Form 10-Q for its fiscal quarters
ended December 31, 2004, as amended, March 31, 2005 and June 30, 2005 and
(iii) all other reports, filings, registration statements and other documents
filed by it with the SEC since September 30, 2004.
"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.
"Certificate of Designations" is defined in Section 1.
"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.
"Hawaiian Springs" is defined in Section 11.
"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 or should have been 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.
"Ownership Amount" is defined in Section 7.
"Ownership Period" is defined in Section 11.3.
"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.
"Structure" is defined in Section 11.4.
"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. The rights and
obligations described on this Schedule are subject to the imposition of a
possible rescission remedy as described in AMCON's SEC Documents.
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SCHEDULE 4.5 (to Securities Purchase Agreement)
CERTAIN CHANGES AND EVENTS
None, except as described in AMCON's SEC Documents.
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SCHEDULE 4.8 (to Securities Purchase Agreement)
LITIGATION
None, except as described in AMCON's SEC Documents.
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