EXHIBIT 2.5
NONCOMPETE, NONSOLICITATION AND NONDISCLOSURE AGREEMENT
THIS NONCOMPETE, NONSOLICITATION AND NONDISCLOSURE AGREEMENT (this
"Agreement") is entered into as of February 8, 2001 by MERCHANTS
WHOLESALE INC., an Illinois corporation ("Seller"), ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
AND ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, residents of the State of Illinois and the sole
shareholders of Seller (the "Shareholders and, with Seller, the
"Selling Parties") and AMCON DISTRIBUTING COMPANY, a Delaware
corporation ("Buyer") pursuant to that certain Asset Purchase
Agreement, dated as of February 8, 2001, by and between Buyer and the
Selling Parties (the "Asset Purchase Agreement") and that certain
Purchase and Sale Agreement, also dated February 8, 2001, between
Buyer and the Shareholders relating to certain real property (the"
Real Estate Purchase Agreement"). Capitalized terms used herein but
not otherwise defined herein shall have the meanings ascribed to them
in the Asset Purchase Agreement and the Real Estate Purchase
Agreement.
For good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, and as an inducement to Buyer to
purchase the Assets from Seller pursuant to the Asset Purchase
Agreement and the Property from the Shareholders pursuant to the Real
Estate Purchase Agreement, the parties hereto, intending to be bound,
hereby agree as follows:
Section 1. CONSIDERATION.
(a) In consideration for the agreements of the Selling Parties
made herein, Buyer agrees to pay to the Selling Parties a total of
$500,000, which shall be payable in five (5) annual installments of
$100,000 each. The first installment payment will be due on the first
anniversary of the closing date for the transactions described in the
Asset Purchase Agreement and Real Estate Purchase Agreement (the
"Closing Date") and subsequent installments will be due on the next
four anniversaries of the Closing Date (or if such anniversary is not
a business day, on the following business day). Payments will be made
to such of the Selling Parties as they shall instruct the Buyer in
writing prior to any date upon which a payment is due. In the absence
of any such instruction, such payments will be made in equal amounts
to each of the Selling Parties.
(b) In addition to the cash consideration described in
paragraph (a), the Selling Parties each acknowledge (i) that it or
they will receive direct or indirect financial and other benefits from
the purchase of the Purchased Assets by Buyer pursuant to the Asset
Purchase Agreement and from the purchase of the Property from the
Shareholders pursuant to the Real Estate Purchase Agreement and
(ii) that this Agreement is an integral part of the Asset Purchase
Agreement and the Real Estate Purchase Agreement and is necessary to
protect the business interests of Buyer and to protect the value of
the Purchased Assets and the Property, including, without limitation,
the goodwill or similar intangible assets purchased by Buyer.
Section 2. TERM. The term of this Agreement shall be for a
period of five years from the Closing Date unless otherwise specified
(the "Term").
Section 3. GEOGRAPHICAL LIMITATION. The prohibited activities
of this Agreement shall apply to the States of Iowa, Illinois,
Minnesota, Wisconsin, Indiana, Ohio, Kentucky, Tennessee, Kansas,
Missouri, Arkansas, Oklahoma, North Dakota, South Dakota, Nebraska,
Montana, Wyoming and Colorado (the "Restricted Area").
Section 4. RESTRICTION AGAINST COMPETITION. During the Term,
the Selling Parties each individually agree that it or they shall not,
directly or indirectly, as principal, agent, representative,
subsidiary, shareholder, consultant or in any other capacity engage in
or assist any other person or entity in engaging in the business of
wholesale distribution of the types of products generally sold by the
Buyer to its customers (the "Wholesale Distribution Business") within
the Restricted Area; provided, however, that Buyer acknowledges and
agrees that the Selling Parties and their affiliates also currently
(i) are engaged in a wholesale novelty business through Lansing's
Novelty, Inc., and (ii) are engaged in the manufacturing and wholesale
distribution business of cigarettes sold under the name of "▇▇▇
▇▇▇▇▇▇," some or all of which business activity is conducted by T & M
Tobacco, Inc., within the Restricted Area (collectively, "Selling
Parties' Excluded Business Activities"), and Buyer further
acknowledges and agrees that the continuation by Selling Parties or
their affiliates of the Selling Parties' Excluded Business Activities
within and outside of the Restricted Area during the Term does not
constitute, and will not be deemed to be, a violation of this
Agreement.
Section 5. RESTRICTION AGAINST SOLICITATION. During the Term,
each Selling Party agrees that it shall not, directly or indirectly,
as principal, agent, representative, subsidiary, shareholder,
consultant or in any other capacity, engage in or assist any other
person or entity in the solicitation of (a) any customers or clients
of the Buyer within the Restricted Area for purposes of selling or
providing products to such customers or clients of the type or nature
which are provided generally by the Buyer in connection with the
Wholesale Distribution Business to any of its customers or clients or
(b) any employees of the Buyer (including any former employee of any
of the Selling Parties). Notwithstanding the above, Buyer further
acknowledges and agrees that the continuation by Selling Parties or
their affiliates of the Selling Parties' Excluded Business Activities
within and outside of the Restricted Area during the Term does not
constitute, and will not be deemed to be, a violation of this Section.
Section 6. RESTRICTION AGAINST DISCLOSURE. During the Term,
each Selling Party agrees that it shall not, directly or indirectly,
as principal, agent, representative, subcontractor, subsidiary,
shareholder, consultant or otherwise or in any other capacity disclose
any confidential or proprietary information or trade secrets regarding
any or all of the Wholesale Distribution Business conducted by Seller
prior to the Closing Date (including, without limitation, any pricing
arrangements and customer lists), except such information as is
publicly available at the time of disclosure (other than information
directly or indirectly disclosed in violation of this Section 6).
Section 7. REMEDIES. The Selling Parties each acknowledges that
compliance with the various restrictions in this Agreement is
necessary to protect the value of the business and goodwill purchased
by Buyer and that a breach of this Agreement will irreparably and
continually damage Buyer, for which money damages may not be adequate.
In the event of a breach of this Agreement, Buyer shall be entitled to
both a preliminary and permanent injunction or such other injunctive
or other legal or equitable relief as may be available to Buyer in
order to prevent any further or future violations of this Agreement.
Notwithstanding the foregoing, the assertion by Buyer of the right to
any such injunctive relief shall not preclude Buyer from asserting,
obtaining or enforcing any other rights or remedies available to Buyer
hereunder, at law or in equity.
Section 8. ATTORNEYS' FEES. In the event of a dispute regarding
this Agreement, the successful party shall be entitled to recover its
costs and expenses incurred in connection with such dispute,
including reasonable attorneys' fees and expenses. A successful
party shall be determined pursuant to a binding and final decree of a
court of competent jurisdiction, with all appeal periods having
expired or all appeals having been finally decided.
Section 9. ENFORCEMENT.
(a) Buyer shall have the right, in its sole discretion, to
determine whether to enforce this Agreement, which right shall be
subject at all times to Section 11 of this Agreement.
(b) In the event that Buyer exits Wholesale Distribution and the
business is not transferred to a successor that will run the business
in a similar manner to that of the Buyer, this Agreement shall
terminate in its entirety, and the restrictions contained herein will
be void and unenforceable.
Section 10. REPRESENTATIONS AND WARRANTIES OF THE SELLING
PARTIES. The Selling Parties hereby represent and warrant to Buyer
each and all of the following: (a) the Selling Parties have the
requisite power and authority to execute and deliver this Agreement
and to perform all of the obligations set forth herein; (b) this
Agreement constitutes a valid and binding obligation of the Selling
Parties enforceable against them in accordance with its terms; and
(c) the execution, delivery and performance of the obligations set
forth herein by the Selling Parties shall not, to the reasonable
knowledge of the Selling Parties, (i) constitute a breach or other
violation of the articles of incorporation and bylaws of the Seller,
(ii) will not result in the violation of any order, writ, judgment,
injunction or decree issued by any governmental or judicial body to
which any of the Selling Parties are bound or (iii) constitute a
breach, default or other violation of the provisions of any material
indenture, mortgage, loan agreement or other material contract to
which any of the Selling Parties is a party or otherwise bound.
Section 11. WAIVER OF RIGHTS. Any failure or delay of Buyer to
enforce any of its rights or obligations provided under this Agreement
shall not be construed as a waiver by Buyer of any past, present or
future violation or other breach of this Agreement, nor shall the
failure to enforce this Agreement constitute a waiver of any rights of
Buyer.
Section 12. ASSIGNMENT. Buyer may assign this Agreement, in its
entirety, to a party that is a successor to substantially all of the
Buyer's business in the Restricted Area without the consent of Selling
Party; provided, however, that Buyer shall use its reasonable best
efforts to provide each Selling Party with prior notice of any such
assignment, but in any event shall provide Seller with notice of the
assignment. This Agreement shall not be enforceable by any assignee
against any Selling Party unless and until such Selling Party receives
written notice of such assignment.
Section 13. NOTICES. Any notice required to be given hereunder
shall be sufficient, if in writing, by courier service (with proof of
service), hand delivery or certified or registered mail (return
receipt requested and first-class postage prepaid), addressed as
follows:
If to Buyer: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
President
AMCON Distributing Company.
▇▇▇▇▇ "▇" ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
with a copy to: ▇▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
If to Seller or the Shareholders: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
President
#▇ ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
with a copy to: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Westervelt, Johnson, ▇▇▇▇▇▇ &
▇▇▇▇▇▇
14th Floor, Associated Bank Plaza
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
or to such other address as any party shall specify by written notice
so given, and such notice shall be deemed to have been delivered as of
the date so personally delivered or mailed.
Section 14. GOVERNING LAW. This Agreement shall be subject to and
shall be governed by the laws of the State of Nebraska.
Section 15. COURT MODIFICATION FOR ENFORCEMENT; SEVERABILITY. In the
event a court determines that any provisions of this Agreement are
overbroad, excessive or unenforceable in any respect including but not
limited to the Term, the Restrictive Area, or the nature of the
restrictions, then in such an event the parties agree that the court
shall be permitted to modify this Agreement in order to make the
restrictions more narrow and to make this Agreement enforceable in
order to provide Buyer with the maximum restriction or restrictions
allowed by law. If any provision, paragraph or subparagraph of this
Agreement is adjudged by any court to be void or unenforceable, in
whole or in part, such an adjudication shall not be deemed to affect
the validity of the remainder of the Agreement, and all other
provisions, sections and subsections of this Agreement shall be
severable from every other provision, section or subsection and each
shall constitute a separate and distinct covenant with Buyer.
Section 16. COUNTERPARTS. This Agreement may be executed in
duplicate counterparts, each of which shall be deemed to be an
original, and all of which shall constitute the same agreement.
Section 17. HEADINGS. The headings in this Agreement are inserted
for convenience only and are not to be considered in construction of
this Agreement or the provisions of the various paragraphs.
IN WITNESS WHEREOF, the parties have executed this Agreement and
caused the same to be duly delivered on their behalf on the day and
year first written above.
AMCON DISTRIBUTING COMPANY
By: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, President
MERCHANTS WHOLESALE INC.
By: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
SHAREHOLDERS:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇