AMCON DISTRIBUTING COMPANY SECURITIES PURCHASE AGREEMENT
EXHIBIT 1
Securities Purchase Agreement, dated as of March 3, 2006, by and between AMCON Distributing Company
and Draupnir Capital, LLC
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AMCON DISTRIBUTING COMPANY
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.
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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 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,
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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 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,
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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.
(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
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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 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
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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.
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
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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 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.
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(d) If any event occurs that would cause any such Registration Statement to
contain a material misstatement or omission or not to be effective and usable
during the period that such Registration Statement is required to be
effective and usable, the Company shall promptly notify the Offering Holders
of such event and, if requested, the Offering Holders shall immediately cease
making offers and return all prospectuses to the Company. The Company shall
promptly file an amendment to the Registration Statement to correct such
misstatement or omission and use its commercially reasonable efforts to cause
such amendment to be declared effective as soon as practicable thereafter.
The Company shall promptly provide the Offering Holders with revised
prospectuses and, following receipt of the revised prospectuses, the Offering
Holders shall be free to resume making offers.
(e) In connection with the registration of the Conversion Shares pursuant to
the Registration Statement, the Company shall have the following obligations:
(i) The Company shall respond promptly to any and all comments made by
the staff of the SEC to the Registration Statement, and shall submit
to the SEC, before the close of business on the business day
immediately following the business day on which the Company learns
(either by telephone or in writing) that no review of the Registration
Statement will be made by the SEC or that the staff of the SEC has no
further comments on such Registration Statement, as the case may be, a
request for acceleration of the effectiveness of the Registration
Statement to a time and date as soon as practicable. Subject to
Section 6.3(c), the Company shall keep the Registration Statement
effective pursuant to Rule 415 at all times until 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
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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, 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
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(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, 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)
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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 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
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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 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
13
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 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.
14
(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.
(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. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, 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 ▇▇▇▇▇▇ ▇. ▇▇▇▇▇.
15
(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
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,
16
(b) If to the Company, to the Company at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ to the attention of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, 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) 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.
17
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 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 ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ as Chairman, ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 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. ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ 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. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ 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. ▇▇. ▇▇▇▇▇ 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.
18
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 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.
[signature page to follow]
19
IN WITNESS WHEREOF, this Agreement has been executed as of the date first above written.
| AMCON DISTRIBUTING COMPANY |
||||
| By: | /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ | |||
| ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ | ||||
| President | ||||
| DRAUPNIR CAPITAL, LLC | ||
By:
|
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ | |
| ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ | ||
| Chief Executive Officer | ||
20
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 |
21
EXHIBIT A (to Securities Purchase Agreement)
CERTIFICATE OF DESIGNATIONS, PREFERENCES
AND RIGHTS OF SERIES C CONVERTIBLE PREFERRED STOCK
OF
AMCON DISTRIBUTING COMPANY
AND RIGHTS OF SERIES C CONVERTIBLE PREFERRED STOCK
OF
AMCON DISTRIBUTING COMPANY
Pursuant to Sections 103(f) and 151 of the General Corporation Law
of the State of Delaware
of the State of Delaware
The undersigned, AMCON Distributing Company, a Delaware corporation (the “Corporation”), does
hereby adopt the following Certificate of Designations, Preferences and Rights of Series C
Convertible Preferred Stock:
AMCON Distributing Company, a corporation organized and existing under the laws of the State
of Delaware (the “Corporation”), does hereby certify that, pursuant to authority conferred upon the
Board of Directors of the Corporation by its Certificate of Incorporation (the “Certificate of
Incorporation”) and pursuant to the provisions of Section 151 of the General Corporation Law of the
State of Delaware, the following resolution was duly approved and adopted by the Board of Directors
of the Corporation:
RESOLVED, that pursuant to the authority vested in the Board of Directors of the Corporation
by Article IV of the Certificate of Incorporation, there is hereby created and authorized out of
the authorized but unissued shares of the capital stock of the Corporation, 80,000 shares of a
series of preferred stock to be designated Series C Convertible Preferred Stock, par value $.01 per
share (the “Series C Preferred Stock”), of which the preferences and relative and other rights, and
the qualifications, limitations or restrictions thereof, shall be (in addition to those set forth
in the Certificate of Incorporation) as follows:
Section 1. Certain Definitions. Unless the context otherwise requires, when used
herein the following terms shall have the meanings indicated:
“Authorization Trigger Date” shall have the meaning set forth in Section 5(m).
“Change of Control of the Corporation” means any of the following: (A) the making of a tender
or exchange offer by any person or entity or group of associated persons or entities (within the meaning of Section 13(d)(3) or 14(d)(2) of
the Securities Exchange Act of 1934) (a “Person”) (other than the Corporation or its subsidiaries)
for shares of Common Stock pursuant to which purchases are made of securities representing at least
fifty percent (50%) of the total combined voting power of the then issued and outstanding Voting
Stock of the Corporation; (B) the merger or consolidation of the Corporation with, or the sale or
disposition of all or substantially all of the assets of the Corporation to, any Person other than
(a) a merger or consolidation which would result in the Voting Stock of the Corporation outstanding
immediately prior thereto continuing to represent (either by remaining outstanding or by being
converted into Voting Stock of the surviving or parent entity) fifty percent (50%) or more of the
total combined voting power of the Voting Stock of the Corporation or such surviving or parent
entity outstanding immediately after such merger or consolidation; or (b) a merger or consolidation
effected to implement a recapitalization of the
22
Corporation (or similar transaction) in which no
Person is or becomes the beneficial owner, directly or indirectly (as determined under Rule 13d-3
promulgated under the Securities Exchange Act of 1934), of securities representing fifty percent
(50%) or more of the total combined voting power of the Voting Stock of the Corporation outstanding
immediately after such merger or consolidation; (C) if, at any time within a two-year period
following the acquisition by any Person of direct or indirect beneficial ownership (as determined
under Rule 13d-3 promulgated under the Securities Exchange Act of 1934), in the aggregate, of
securities of the Corporation representing forty percent (40%) or more of the total combined voting
power of the then issued and outstanding Voting Stock of the Corporation, the persons who at the
time of such acquisition constitute the Board of Directors cease for any reason whatsoever to
constitute a majority of the Board of Directors; (D) the acquisition of direct or indirect
beneficial ownership (as determined under Rule 13d-3 promulgated under the Securities Exchange Act
of 1934), in the aggregate, of securities of the Corporation representing fifty percent (50%) or
more of the outstanding Voting Stock of the Corporation by any person or group of persons acting in
concert; or (E) the approval by the shareholders of the Corporation of any plan or proposal for the
complete liquidation or dissolution of the Corporation or for the sale of all or substantially all
of the assets of the Corporation.
“Common Stock” means shares of the common stock, par value $.01 per share, of the Corporation.
“Conversion Date” shall have the meaning set forth in Section 5(b).
“Conversion Price” at any time of determination, shall mean the conversion price determined
pursuant to Section 5(c).
“Conversion Shares” shall mean shares of Common Stock issuable upon conversion of the Series C
Preferred Stock pursuant to Section 5.
“Corporate Change” shall have the meaning set forth in Section 5(j).
“Current Market Price” shall have the meaning set forth in Section 5(i).
“Delivery Period” shall have the meaning set forth in Section 5(d).
“Dividend Payment Date” shall have the meaning set forth in Section 2(a).
“Dividend Period” shall have the meaning set forth in Section 2(a).
“DTC” means the Depository Trust Company.
“DTC Transfer” shall have the meaning set forth in Section 5(f).
“Final Redemption Date” shall have the meaning set forth in Section 4(d).
“Issue Date” shall mean the date the shares of Series C Preferred Stock in question are issued
by the Corporation.
“Junior Stock” means the Common Stock and any other class or series of securities of the
Corporation (i) not entitled to receive any distributions unless all distributions required to have
been paid or declared and set apart for payment on the Series C Preferred Stock shall have been so
paid or
23
declared and set apart for payment, (ii) not entitled to receive any assets upon the
liquidation, dissolution or winding up of the affairs of the Corporation until the Series C
Preferred Stock shall have received the entire amount to which such shares are entitled upon such
liquidation, dissolution or winding up, and (iii) not entitled to redemption until the Series C
Preferred Stock shall have been redeemed in full.
“Liquidation Preference” shall mean $25.00 per share of the Series C Preferred Stock.
“Parity Stock” means, (i) shares of Series A Preferred Stock, (ii) shares of Series B
Preferred Stock, (iii) any class or series of securities of the Corporation entitled to receive
payment of dividends on a parity with the Series C Preferred Stock and (iv) any class or series of
securities of the Corporation entitled to receive assets upon the liquidation, dissolution or
winding up of the affairs of the Corporation on a parity with the Series C Preferred Stock.
“Redemption Agent” shall have the meaning set forth in Section 4(c).
“Redemption Amount” shall have the meaning set forth in Section 6(b).
“Redemption Announcement” shall have the meaning set forth in Section 6(a).
“Redemption Date” shall have the meaning set forth in Section 4(b).
“Redemption Event” shall have the meaning set forth in Section 6(a).
“Redemption Notice” shall have the meaning set forth in Section 6(a).
“Redemption Price” shall mean the per share price to be paid upon redemption of the
Series C Preferred Stock, which shall equal (a)
for the period from
|
March 4, 2008 to March 3, |
2009, 112% of the Liquidation Preference, (b) for
the period from
|
March 4, 2009 to March 3, |
2010, 111% of the Liquidation Preference, (c) for
the period from
|
March 4, 2010 to March 3, |
2011, 110% of the Liquidation Preference, (d) for
the period from
|
March 4, 2011 to March 3, |
2012, 109% of the Liquidation Preference, (e) for
the period from
|
March 4, 2012 to March 3, |
2013, 108% of the Liquidation Preference, (f) for
the period from
|
March 4, 2013 to March 3, |
2014, 107% of the Liquidation Preference, (g) for
the period from
|
March 4, 2014 to March 3, |
2015, 106% of the Liquidation Preference, (h) for
the period from
|
March 4, 2015 to March 3, |
2016, 105% of the Liquidation Preference, (i) for
the period from
|
March 4, 2016 to March 3, |
2017, 104% of the Liquidation Preference, (j) for
the period from
|
March 4, 2017 to March 3, |
2018, 103% of the Liquidation Preference, (k) for
the period from
|
March 4, 2018 to March 3, |
2019, 102% of the Liquidation Preference, (l) for
the period from
|
March 4, 2019 to March 3, |
| 2020, 101% of the Liquidation Preference, and (m) after March 4, 2020, the Liquidation Preference, plus in each case accrued and unpaid dividends to and including the Redemption Date. | |
“Reserved Amount” shall have the meaning set forth in Section 5(m).
“Senior Stock” means any (i) class or series of securities of the Corporation ranking senior
to the Series C Preferred Stock in respect of the right to receive payment of distributions and
(ii) any class or series of securities of the Corporation ranking senior to the Series C Preferred
Stock in respect of the right to receive assets upon the liquidation, dissolution or winding up of
the affairs of the Corporation.
24
“Voluntary Conversion Notice” shall have the meaning set forth in Section 5(a).
“Voting Stock of the Corporation” means shares of stock of the Corporation of any class that
votes generally in the election of directors.
“▇▇▇▇▇▇ Family” means ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ (Chairman of the Board and Chief Executive Officer of the
Corporation at the date of this Certificate of Designation), any lineal ascendant or descendant
(including by way of adoption) of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, any spouse of any of the foregoing persons, any
trust established by any of the foregoing persons and any corporation, partnership, limited
liability company or other entity that is controlled, directly or indirectly, by one or more of the
foregoing persons or trusts.
Section 2. Dividends.
(a) Subject to the prior preferences and other rights of any Senior Stock, the holders of the
Series C Preferred Stock shall be entitled to receive, out of funds legally available for that
purpose, cash dividends in an amount equal to 6% per annum of the Liquidation Preference per share
calculated on the basis of a 365-day year. Such dividends shall be payable only in cash, shall be cumulative from the Issue Date and shall be payable in arrears, when, as and if
declared by the Board of Directors, on March 31, June 30, September 30 and December 31 of each year
(each such date being herein referred to as a “Dividend
Payment Date”), commencing on March 31,
2006 The period between consecutive Dividend Payment Dates shall hereinafter be referred to as a
“Dividend Period.” For purposes hereof, the rights of holders of the Series C Preferred Stock to
payment of such dividends shall rank pari passu with any other shares of Parity Stock then
outstanding.
(b) Dividends on any shares of Series C Preferred Stock shall accrue (whether or not declared
and whether or not there shall be funds legally available for the payment of dividends) on and from
the Issue Date. No interest shall be payable with respect to any dividends that are in arrears.
(c) Each such dividend shall be paid to the holders of record of the Series C Preferred Stock
as their names appear on the share register of the Corporation on the corresponding Record Date.
As used above, the term “Record Date” for any Dividend Period means the date that is fifteen (15)
days prior to the Dividend Payment Date for such Dividend Period, or such other record date
designated by the Board of Directors of the Corporation with respect to the dividend payable on
such respective Dividend Payment Date. Dividends on account of arrears for any past Dividend
Periods may be declared and paid, together with any accrued but unpaid dividends thereon to and
including the date of payment, at any time, without reference to any Dividend Payment Date, to
holders of record on such date, not exceeding 50 days preceding the payment date thereof, as may be
fixed by the Board of Directors.
(d) Whenever dividends payable on shares of Series C Preferred Stock shall not have been paid
in full, in an aggregate amount equal to two full quarterly dividends on such shares of Series C
Preferred Stock then outstanding, the number of directors then constituting the Board of Directors
of the Corporation shall automatically be increased by one, and the holders of such shares of
Series C Preferred Stock shall have, in addition to the right to elect one director pursuant to
25
Section 7, the exclusive and special right, voting separately as a class, to elect the director to
fill such newly created directorship; provided, however, that in no event shall the holders of such
shares of Series C Preferred Stock voting separately as a class as aforesaid have the right to
elect more than one director pursuant to this Section 2(d). Whenever such right of the holders of
such shares of Series C Preferred Stock shall have vested, such right may be exercised initially either at a special
meeting of such shareholders, which special meeting shall be called by the Board of Directors of
the Corporation, or at any annual meeting of shareholders, and thereafter at annual meetings of
shareholders. The right of the holders of such shares of Series C Preferred Stock, voting
separately as a class to elect a member of the Board of Directors of the Corporation as aforesaid,
shall continue until such time as all dividends accumulated on such shares of Series C Preferred
Stock to the Dividend Payment Date next preceding the date of any such determination have been paid
in full, or declared and set apart in trust for payment, at which time the special rights of the
holders of such shares of Series C Preferred Stock to vote separately as a class for the election
of a director shall terminate (subject to revesting in the event of each and every subsequent
failure to make dividend payments in an aggregate amount equal to two full quarterly dividends as
above provided), and the number of directors constituting the Board of Directors shall be
automatically reduced.
(e) So long as any shares of the Series C Preferred Stock are outstanding, the Corporation
shall not, directly or indirectly, declare, pay or set apart for payment any dividends or other
distributions on Junior Stock (other than dividends or distributions paid in shares of, or options,
warrants or rights to subscribe for or purchase shares of, Junior Stock) or redeem or otherwise
acquire any Junior Stock for any consideration (including any moneys to be paid to or made
available for a sinking fund for the redemption of any shares of any such stock), except by
conversion into or exchange for Junior Stock, unless in each case the full cumulative dividends on
all outstanding shares of the Series C Preferred Stock and any other Parity Securities have been
paid or set apart for payment for all past and current Dividend Periods with respect to the Series
C Preferred Stock and all past and current dividend periods with respect to such Parity Securities.
Section 3. Distributions Upon Liquidation, Dissolution or Winding Up. In the event of
any voluntary or involuntary liquidation, dissolution or other winding up of the affairs of the
Corporation, subject to the prior preferences and other rights of any Senior Stock, but before any
distribution or payment shall be made to the holders of Junior Stock, the holders of the Series C
Preferred Stock shall be entitled to be paid the Liquidation Preference of all outstanding shares
of the Series C Preferred Stock as of the date of such liquidation or dissolution or such other
winding up, plus any accrued but unpaid dividends, if any, to such date, and no more. The
Corporation shall make such payment in cash. If such payment shall have been made in full to the holders of the
Series C Preferred Stock, and if payment shall have been made in full to the holders of any Senior
Stock and Parity Stock of all amounts to which such holders shall be entitled, the remaining assets
and funds of the Corporation shall be distributed among the holders of Junior Stock, according to
their respective shares and priorities. If, upon any such liquidation, dissolution or other
winding up of the affairs of the Corporation, the net assets of the Corporation distributable among
the holders of all outstanding shares of the Series C Preferred Stock and of any Parity Stock shall
be insufficient to permit the payment in full to such holders of the preferential amounts to which
they are entitled, then the entire net assets of the Corporation remaining after the distributions
to holders of any Senior Stock of the full amounts to which they may be entitled shall be
distributed among the holders of the Series C Preferred Stock and of any Parity Stock ratably in
proportion to the full amounts to which they would otherwise be respectively entitled. Neither the
consolidation or merger of the Corporation into or with another corporation or corporations, nor
the sale of all or substantially all of
26
the assets of the Corporation to another corporation or
corporations shall be deemed a liquidation, dissolution or winding up of the affairs of the
Corporation within the meaning of this Section 3.
Section 4. Optional Redemption by the Corporation.
(a) The Series C Preferred Stock shall not be redeemed in whole or in part on or prior to
March 3, 2008, except as provided in Section 6 hereof. After March 3, 2008, the
Corporation may, at its option, redeem in cash at any time, in whole or in part, the Series C
Preferred Stock at the Redemption Price per share. If less than all the outstanding shares of
Series C Preferred Stock are to be redeemed pursuant to this Section 4, the shares to be redeemed
shall be determined by lot or in such other manner as the Board of Directors of the Corporation may
prescribe and which it deems appropriate.
(b) Notice of redemption of the Series C Preferred Stock shall be sent by or on behalf of the
Corporation, by first class mail, postage prepaid, to the holders of record of the outstanding
shares of Series C Preferred Stock at their respective addresses as they shall appear on the
records of the Corporation, not less than 10 days nor more than 30 days prior to the date fixed for
redemption (the “Redemption Date”) (i) notifying such holders of the election of the Corporation to
redeem such shares and of the Redemption Date, (ii) stating the date on which the shares cease to be convertible (which date
shall be the same date as the Redemption Date) and the Conversion Price, (iii) the place or places
at which the shares called for redemption shall, upon presentation and surrender of the
certificates evidencing such shares, be redeemed, and the Redemption Price therefor, and (iv)
stating the name and address of any Redemption Agent selected by the Corporation in accordance with
Section 4(c) below, and the name and address of the Corporation’s transfer agent for the
Series C Preferred Stock. The Corporation may act as the transfer agent for the Series C Preferred
Stock.
(c) The Corporation may act as the redemption agent to redeem the Series C Preferred Stock.
The Corporation may also appoint as its agent for such purpose its transfer agent for Common Stock
or a bank or trust company in good standing, organized under the laws of the United States of
America or any jurisdiction thereof, and having capital, surplus and undivided profits aggregating
at least $100,000,000, and may appoint any one or more additional such agents which shall in each
case be a bank or trust company in good standing organized under the laws of the United States of
America or of any jurisdiction thereof, having an office or offices in The City of New York, New
York, or such other place as shall have been designated by the Corporation, and having capital,
surplus and undivided profits aggregating at least $100,000,000. The Corporation, its transfer
agent for Common Stock or such bank or trust company is hereinafter referred to as the “Redemption
Agent.” Following such appointment and prior to any redemption, the Corporation shall deliver to
the Redemption Agent irrevocable written instructions authorizing the Redemption Agent, on behalf
and at the expense of the Corporation, to cause notice of redemption to be duly mailed as herein
provided as soon as practicable after receipt of such irrevocable instructions and in accordance
with the above provisions. All funds necessary for the redemption shall be deposited with the
Redemption Agent in trust at least two business days prior to the Redemption Date, for the pro rata
benefit of the holders of the shares of Series C Preferred Stock so called for redemption, so as to
be and continue to be available therefor. Neither failure to mail any such notice to one or more
such holders nor any defect in any notice shall affect the sufficiency of the proceedings for
redemption as to other holders.
27
(d) If notice of redemption shall have been given as provided above, and the Corporation shall
not default in the payment of the Redemption Price, then each holder of shares called for
redemption shall be entitled to all preferences, relative and other rights accorded by this Certificate of Designation until and including the
Redemption Date. If the Corporation shall default in making payment or delivery as aforesaid on
the Redemption Date, then each holder of the shares called for redemption shall be entitled to all
preferences, relative and other rights accorded by this Certificate of Designation until and
including the date (the “Final Redemption Date”) when the Corporation makes payment or delivery as
aforesaid to the holders of the Series C Preferred Stock. From and after the Redemption Date or,
if the Corporation shall default in making payment or delivery as aforesaid, the Final Redemption
Date, the shares called for redemption shall no longer be deemed to be outstanding, and all rights
of the holders of such shares shall cease and terminate, except the right of the holders of such
shares, upon surrender of certificates therefor, to receipt of amounts to be paid hereunder. The
deposit of monies in trust with the Redemption Agent by the Corporation shall be irrevocable except
that the Corporation shall be entitled to receive from the Redemption Agent the interest or other
earnings, if any, earned on any monies so deposited in trust, and the holders of any shares
redeemed shall have no claim to such interest or other earnings, and any balance of monies so
deposited by the Corporation and unclaimed by the holders of the Series C Preferred Stock entitled
thereto at the expiration of two years from the Redemption Date or the Final Redemption Date, as
applicable, shall be repaid, together with any interest or other earnings thereon, to the
Corporation, and after any such repayment, the holders of the shares entitled to the funds so
repaid to the Corporation shall look only to the Corporation for such payment, without interest.
(e) In the event that the Series C Preferred Stock and any Parity Stock are each the subject
of redemption and the total amount of funds legally available for redemption is insufficient to
redeem both the Series C Preferred Stock and such Parity Stock, then the Series C Preferred Stock
and the shares of such Parity Stock shall be redeemed ratably based on the aggregate redemption
amount payable with respect to the shares of Series C Preferred Stock and the shares of the Parity
Stock then redeemable.
Section 5. Conversion Rights. The Series C Preferred Stock shall be convertible into
Common Stock as follows:
(a) Conversion at Holder’s Option. The holder of any shares of the Series C Preferred
Stock shall have the right at such holder’s option, at any time and from time to time following the Issue Date and without the payment of any additional
consideration, to convert any or all of such shares of the Series C Preferred Stock into fully paid
and nonassessable shares of Common Stock at the applicable Conversion Price (as provided in
Section 5(c) below) in effect on the Conversion Date (as provided in Section 5(d)
below) upon the terms hereinafter set forth. The holder of any shares of the Series C Preferred
Stock may exercise the conversion right specified in this Section 5(a) by surrendering or
causing to be surrendered to the Corporation or any transfer agent of the Corporation the
certificate or certificates representing the shares of the Series C Preferred Stock to be
converted, accompanied by written notice (the “Voluntary
Conversion Notice”) specifying the number
of such shares to be converted.
(b) Status as Stockholder. As of the close of business on the date when delivery of a
Voluntary Conversion Notice by a holder of Series C Preferred Stock is made to the Corporation (the
“Conversion Date”) (i) the shares covered thereby shall be deemed converted into shares of Common
Stock and (ii) the holder’s rights as a holder of such converted shares of Series C Preferred Stock
shall cease and terminate, excepting only the right to receive such Common Stock and to any
28
remedies provided herein or otherwise available at law or in equity to such holder because of a
failure by the Corporation to comply with the terms of this Certificate of Designation.
(c) Number of Shares. In the event of a conversion pursuant to Section 5(a)
above, each share of the Series C Preferred Stock so converted shall be converted into such number
of shares of Common Stock as is determined by dividing (x) $25 by (y) the Conversion Price in
effect on the Conversion Date. The initial Conversion Price shall be $13.62 per share of Common
Stock. Such initial Conversion Price shall be subject to adjustment in order to adjust the number
of shares of Common Stock into which the Series C Preferred Stock is convertible, as hereinafter
provided.
(d) Mechanics of Conversion. The Corporation shall not be obligated to issue to any
holder certificates representing the shares of Common Stock issuable upon conversion unless
certificates representing the shares of Series C Preferred Stock, endorsed directly or through
stock powers to the Corporation or in blank and accompanied when appropriate with evidence of the
signatory’s authority, are delivered to the Corporation or any transfer agent of the Corporation.
If the certificate representing shares of Common Stock issuable upon conversion of shares of the
Series C Preferred Stock is to be issued in a name other than the name on the face of the certificate representing such
shares of the Series C Preferred Stock, such certificate shall be accompanied by such evidence of
the assignment and such evidence of the signatory’s authority with respect thereto as deemed
appropriate by the Corporation or its transfer agent and such certificate shall be endorsed
directly or through stock powers to the Corporation or in blank. Not less than five business days
after the Conversion Date (the “Delivery Period”), the Corporation shall issue and deliver to or
upon the written order of such holder a certificate or certificates for the number of full shares
of Common Stock to which such holder is entitled upon such conversion, and a check or cash with
respect to any fractional interest in a share of Common Stock, as provided in Section 5(e).
The person in whose name the certificate or certificates for Common Stock are to be issued shall
be deemed to have become a holder of record of such Common Stock on the applicable Conversion Date.
Upon conversion of only a portion of the number of shares covered by a certificate representing
shares of Series C Preferred Stock surrendered for conversion, the Corporation shall issue and
deliver to or upon the written order of the holder of the certificate so surrendered for
conversion, at the expense of the Corporation, a new certificate representing the number of shares
of the Series C Preferred Stock representing the unconverted portion of the certificate so
surrendered. The Corporation shall pay on any Conversion Date the accrued and unpaid dividends to
and including such date on all shares of Series C Preferred Stock to be so converted.
(e) Fractional Shares. No fractional shares of Common Stock or scrip shall be issued
upon conversion of shares of the Series C Preferred Stock. If more than one share of the Series C
Preferred Stock shall be surrendered for conversion at any one time by the same holder, the number
of full shares of Common Stock issuable upon conversion thereof shall be computed on the basis of
the aggregate number of shares of the Series C Preferred Stock so surrendered. Instead of any
fractional shares of Common Stock which would otherwise be issuable upon conversion of any shares
of the Series C Preferred Stock, the Corporation shall pay a cash adjustment in respect of such
fractional interest in an amount equal to that fractional interest of the then Current Market
Price.
(f) Delivery of Uncertificated Shares of Common Stock Upon Conversion.
Notwithstanding the provisions of Section 5(d), if the Corporation’s transfer agent is
participating in DTC’s Fast Automated Securities Transfer program, the Corporation shall cause its transfer agent to electronically
transmit the Common Stock issuable upon such conversion to the holder or the holder’s designee by
crediting the account of the holder or the holder’s designee, or its respective
29
nominee, with DTC
through its Deposit Withdrawal Agent Commission system (“DTC Transfer”). If the aforementioned
conditions to a DTC Transfer are not satisfied, the Corporation shall deliver in accordance with
Section 5(d) to the holder or the holder’s designee physical certificates representing the
Common Stock issuable upon such conversion.
(g) Conversion Disputes. In the case of any dispute with respect to a conversion, the
Corporation shall promptly issue such number of shares of Common Stock as are not disputed in
accordance with Section 5(d) or (f), as applicable. If such dispute involves the
calculation of the Conversion Price, and such dispute is not promptly resolved by discussion
between the relevant holder and the Corporation, the Corporation and the holder shall submit the
disputed calculations to an independent outside accountant. The accountant, at the Corporation’s
sole expense, shall promptly audit the calculations and notify the Corporation and the holder of
the results. The accountant’s calculation shall be deemed conclusive, absent manifest error. The
Corporation shall then issue the appropriate number of shares of Common Stock in accordance with
Section 5(d) or (f), as applicable.
(h) Conversion Price Adjustments. The Conversion Price shall be subject to adjustment
from time to time as follows:
| (i) | Stock Dividends, Subdivisions, Reclassifications or Combinations. If the Corporation shall (i) declare a dividend or make a distribution on its Common Stock in shares of its Common Stock, (ii) subdivide or reclassify the outstanding shares of Common Stock into a greater number of shares, (iii) combine or reclassify the outstanding Common Stock into a smaller number of shares, or (iv) take similar action, the Conversion Price in effect at the time of the record date for such dividend or distribution or the effective date of such subdivision, combination, reclassification or other similar action shall be proportionately adjusted so that the holder of any shares of Series C Preferred Stock surrendered for conversion after such date shall be entitled to receive the number of shares of Common Stock which such holder would have owned or been entitled to receive had such shares of Series C Preferred Stock been converted immediately prior to such date. Successive adjustments in the Conversion Price shall be made whenever any event specified above shall occur. | ||
| (ii) | Other Distributions. In case the Corporation shall fix a record date for the making of a distribution to all holders of shares of its Common Stock (i) of shares of any class other than its Common Stock or (ii) of evidences of indebtedness of the Corporation or any subsidiary or (iii) of assets (other than cash dividends), or (iv) of rights or warrants, in each case the Conversion Price in effect immediately prior thereto shall be adjusted to a price determined by multiplying the then current Conversion Price by a fraction, of which (1) the numerator shall be an amount equal to the difference resulting from (A) the Current Market Price as of such record date less (B) the fair market value (as determined by the Board of Directors of the Corporation, whose determination shall be conclusive) of said shares, evidences of indebtedness, assets, rights or warrants, as the case may be, to be so distributed, and (2) the denominator shall be the Current Market Price as of such record date. Such adjustment shall be made successively whenever such |
30
| a record date is fixed. In the event that such distribution is not so made, the Conversion Price then in effect shall be readjusted, effective as of the date when the Board of Directors determines not to distribute such shares, evidences of indebtedness, assets, rights or warrants, as the case may be, to the Conversion Price which would then be in effect if such record date had not been fixed. | |||
| (iii) | Rounding of Calculations; Minimum Adjustment. All calculations under this Section 5(h) shall be made to the nearest cent or to the nearest one hundredth (1/100th) of a share, as the case may be. Any provision of this Section 5 to the contrary notwithstanding, no adjustment in the Conversion Price shall be made if the amount of such adjustment would be less than $0.01; but any such amount shall be carried forward and an adjustment with respect thereto shall be made at the time of and together with any subsequent adjustment which, together with such amount and any other amount or amounts so carried forward, shall aggregate $0.01 of more. |
(i) Current Market Price. The “Current Market Price” at any date shall mean, in the
event the Common Stock is publicly traded, the average of the daily closing prices per share of
Common Stock for 30 consecutive trading days ending three trading days before such date (as
adjusted for any stock dividend, split, combination or reclassification that took effect during
such 30 trading day period). The closing price for each day shall be the last reported sale price
regular way or, in case no such reported sale takes place on such day, the average of the last
closing bid and asked prices regular way, in either case on the principal national securities
exchange on which the Common Stock is listed or admitted to trading, or if not listed or admitted
to trading on any national securities exchange, the closing sale price for such day reported by
Nasdaq, if the Common Stock is quoted on Nasdaq National Market, Nasdaq Small Cap or any comparable
system, or, if the Common Stock is not traded on Nasdaq or any comparable system, the average of
the closing bid and asked prices as furnished by two members of the National Association of
Securities Dealers, Inc. selected from time to time by the Corporation for that purpose. If the
Common Stock is not traded in such manner that the quotations referred to above are available for
the period required hereunder, Current Market Price per share of Common Stock shall be deemed to be
the fair value per share of Common Stock as determined in good faith by the Board of Directors of
the Corporation, irrespective of any accounting treatment.
(j) Corporate Change. If there shall be (i) any reclassification or change of the
outstanding shares of Common Stock (other than an event covered by Section 5(h) above or a
change in par value, or from par value to no par value, or from no par value to par value, or as a
result of a subdivision or combination), (ii) any consolidation or merger of the Corporation with
any other entity (other than a merger in which the Corporation is the surviving or continuing
entity), or (iii) any share exchange or other transaction pursuant to which all of the outstanding
shares of Common Stock are converted into other securities or property (each of the events referred
to in clauses (i), (ii) and (iii) above being a “Corporate Change”), then the holders of Series C
Preferred Stock shall thereafter have the right to receive upon conversion, in lieu of the shares
of Common Stock otherwise issuable, such shares of stock, securities and/or other property as would
have been issued or payable in such Corporate Change with respect to or in exchange for the number
of shares of Common Stock which would have been issuable upon conversion had such Corporate Change
not taken place, and in any such case, appropriate provisions (as determined by the Board of
Directors in
31
good faith) shall be made with respect to the rights and interests of the holders of the
Series C Preferred Stock to the end that the economic value of the shares of Series C Preferred
Stock is not diminished by such Corporate Change and that the provisions hereof (including, without
limitation, in the case of any such consolidation, merger or sale in which the successor entity or
purchasing entity is not the Corporation, an immediate adjustment of the Conversion Price so that
the Conversion Price immediately after the Corporate Change reflects the same relative value as
compared to the value of the surviving entity’s common stock that existed between the Conversion
Price and the value of the Corporation’s Common Stock immediately prior to such Corporate Change)
shall thereafter be applicable, as nearly as may be practicable in relation to any shares of stock
or securities thereafter deliverable upon the conversion thereof.
(k) Costs. The Corporation shall pay all documentary, stamp, transfer or other
transactional taxes attributable to the issuance or delivery of shares of Common Stock upon
conversion of any shares of the Series C Preferred Stock; provided that the Corporation shall not
be required to pay any such taxes or any federal or state income taxes or other taxes which may be
payable in respect of any transfer involved in the issuance or delivery of any certificate for such
shares in a name other than that of the holder of the shares of the Series C Preferred Stock in
respect of which such shares are being issued.
(l) No Impairment. The Corporation (i) will not permit the par value of any shares of
stock at the time receivable upon the conversion of the Series C Preferred Stock to exceed the
Conversion Price then in effect, (ii) will take all such action as may be necessary or appropriate
in order that the Corporation may validly and legally issue fully paid and nonassessable shares of
Common Stock on the conversion of the Series C Preferred Stock and (iii) will not issue any Common
Stock or convertible securities or take any action which results in an adjustment of the Conversion
Price if the total number of shares of Common Stock issuable after such issuance or action upon the
conversion or redemption of, or payment of all outstanding dividends on, all of the then
outstanding shares of Series C Preferred Stock will exceed the total number of shares of Common
Stock then authorized by the Corporation’s Certificate of Incorporation and available for the
purposes of issuance upon such conversion or redemption or payment of such dividend.
(m) Reservation of Shares. The Corporation will at all times reserve and keep
available, out of its authorized and unissued Common Stock or any other securities issuable upon
conversion pursuant to Section 5(j) above solely for the purposes of issuance upon conversion of
Series C Preferred Stock as herein provided, free from preemptive rights or any other actual or
contingent purchase rights of persons other than the holders of shares of Series C Preferred
Stock, such number of shares of Common Stock or such other securities that shall be so issuable
upon the conversion of all outstanding shares of Series C Preferred Stock (the “Reserved Amount”).
All shares of Common Stock and other securities that shall be so issuable upon conversion of the
Series C Preferred Stock shall, upon issuance, be duly and validly issued and fully paid and
nonassessable. If the Reserved Amount for any ten consecutive trading days (the last of such ten
trading days being the “Authorization Trigger Date”) shall be less than one hundred percent (100%)
of the number of shares of Common Stock issuable upon full conversion of the then outstanding
shares of Series C Preferred Stock, the Corporation shall immediately notify the holders of Series
C Preferred Stock of such occurrence and shall immediately commence action (including, if
necessary, seeking stockholder approval to authorize the issuance of additional shares of Common
Stock and other securities) to increase the Reserved Amount to one hundred percent (100%) of the
number of shares of Common Stock and other securities then issuable upon full conversion of all of
the outstanding
32
Series C Preferred Stock at the then current Conversion Price. Each holder of
Series C Preferred Stock, by their acceptance thereof, agrees to vote in favor of any action
necessary to increase the number of authorized shares of Common Stock and other securities. In the
event the Corporation fails to so increase the Reserved Amount within 120 days after an
Authorization Trigger Date, each holder of Series C Preferred Stock shall thereafter have the
option, exercisable in whole or in part at any time and from time to time, by delivery of a
Redemption Notice to the Corporation, to require the Corporation to redeem for cash, at an amount
per share equal to the Redemption Price, a number of the holder’s shares of Series C Preferred
Stock such that, after giving effect to such redemption, the then unissued portion of such holder’s
Reserved Amount is at least equal to one hundred percent (100%) of the total number of shares of
Common Stock and other securities issuable upon conversion of such holder’s shares of Series C
Preferred Stock.
(n) Notices of Record Date. In the event of any taking by the Corporation of a record
of the holders of Common Stock or any other securities issuable upon conversion pursuant to
Section 5(j) above for the purpose of determining the holders thereof who are entitled to
receive any dividend (other than a cash dividend) or other distribution, any right or warrant to
subscribe for, purchase or otherwise acquire any shares of stock or any class of any other
securities or property, or to receive any other right (including, without limitation, making a
dividend or other distribution of any rights under a stockholder rights plan (sometimes known as a
“poison pill” plan), whether now existing or hereafter created), the Corporation shall mail to each
holder of Series C Preferred Stock, at least 20 days prior to the date specified therein, a notice
specifying the date on which any such record is to be taken for the purpose of such dividend,
distribution, right or warrant, and the amount and character of such dividend, distribution, right
or warrant.
Section 6. Redemption Due to Certain Events.
(a) Redemption by Holder. In the event (each of the events described in clauses (i),
(ii), (iii) and (iv) below after expiration of the applicable cure period, if any, being a
“Redemption Event”):
| (i) | A Change of Control of the Corporation shall have occurred; | ||
| (ii) | The ▇▇▇▇▇▇ Family ceases to beneficially own (as determined under Rule 13d-3 promulgated under the Securities Exchange Act of 1934) twenty percent (20%) or more of the outstanding Voting Stock of the Corporation, computed on a fully diluted basis based on the then generally accepted accounting principles except that options to purchase Voting Stock shall be excluded from such computation; | ||
| (iii) | the Corporation shall make an assignment for the benefit of creditors, or apply for or consent to the appointment of a receiver or trustee for it or for a substantial part of its property or business, or such a receiver or trustee shall otherwise be appointed; or | ||
| (iv) | bankruptcy, insolvency, reorganization or liquidation proceedings or other proceedings for the relief of debtors shall be instituted by or against the Corporation and, if instituted against the Corporation by a third party, shall not be dismissed within 120 days of their initiation; |
33
then, upon the occurrence of any such Redemption Event, each holder of shares of Series C Preferred
Stock shall thereafter have the option, exercisable in whole or in part at any time and from time
to time by delivery of a written notice to such effect (a “Redemption Notice”) to the Corporation
while such Redemption Event continues, to require the Corporation to purchase for cash any or all
of the then outstanding shares of Series C Preferred Stock held by such holder for an amount per
share equal to the Redemption Amount in effect at the time of the redemption hereunder. Upon the
Corporation’s receipt of any Redemption Notice hereunder (other than during the three trading day
period following the Corporation’s delivery of a Redemption Announcement to all of the holders in
response to the Corporation’s initial receipt of a Redemption Notice from a holder of Series C
Preferred Stock), the Corporation shall within two business days following such receipt deliver a
written notice (a “Redemption Announcement”) to all holders of Series C Preferred Stock stating the
date upon which the Corporation received such Redemption Notice and the amount of Series C
Preferred Stock covered thereby. The Corporation shall not redeem any shares of Series C Preferred
Stock during the three trading day period following the delivery of a
required Redemption Announcement hereunder. At any time and from time to time during such three trading day period,
each holder of Series C Preferred Stock may request (either orally or in writing) information from
the Corporation with respect to the instant redemption (including, but not limited to, the
aggregate number of shares of Series C Preferred Stock covered by Redemption Notices received by
the Corporation) and the Corporation shall furnish (either orally or in writing) as soon as
practicable such requested information to such requesting holder.
(b) The “Redemption Amount” with respect to a share of Series C Preferred Stock means an
amount equal to the Liquidation Preference (including accrued and unpaid dividends to and including
the date the Corporation makes payment of the Redemption Amount).
(c) In the event that the Series C Preferred Stock and any Parity Stock are each the subject
of redemption and the total amount of funds legally available for redemption is insufficient to
redeem both the Series C Preferred Stock and such Parity Stock, then the Series C Preferred Stock
and the shares of such Parity Stock shall be redeemed ratably based on the aggregate redemption
amount payable with respect to the shares of Series C Preferred Stock and the shares of the Parity
Stock then redeemable.
(d) In the event the Corporation is not able to redeem all of the shares of Series C Preferred
Stock subject to Redemption Notices delivered prior to the date upon which such redemption is to be
effected, the Corporation shall redeem shares of Series C Preferred Stock from each holder pro
rata, based on the total number of shares of Series C Preferred Stock outstanding at the time of
redemption included by such holder in all Redemption Notices delivered prior to the date upon which
such redemption is to be effected relative to the total number of shares of Series C Preferred
Stock outstanding at the time of redemption included in all of the Redemption Notices delivered
prior to the date upon which such redemption is to be effected.
Section 7. Voting Right to Elect a Director. From and after March 21, 2006, the
holders of the Series C Preferred Stock, voting or consenting, as the case may be, separately as a
single class to the exclusion of all other classes and series of the Corporation’s capital stock
and with each share of Series C Preferred Stock entitled to one vote, shall be entitled to elect
one director to the Corporation’s Board of Directors (“Series C Director”). ▇▇▇▇▇▇ ▇.
▇▇▇▇▇ is hereby designated as the Series C Director elected by the holders of the Series C
Preferred and he shall continue to serve in that capacity until such time as he resigns, is removed
from office, dies or becomes disabled. The Series C Director may be removed at any time by vote or
written consent of the holders of a majority
34
of the outstanding shares of Series C Preferred Stock. If the
holders of the Series C Preferred Stock for any reason fail to elect a person to fill the
directorship to which they are otherwise entitled under this Section 7, such directorship shall
remain vacant until such time as the holders of the Series C Preferred Stock elect a director to
fill such directorship and such directorship shall not be filled by resolution or vote of the
Corporation’s Board of Directors or the Corporation’s other stockholders. Any vacancy occurring
because of the death, disability, resignation or removal of the Series C Director shall be filled
by the vote or written consent of the holders of a majority of the outstanding shares of Series C
Preferred Stock.
Section 8. Rights Relating to Corporate and Management Structure. The Corporation
shall implement a holding company structure (the “Structure”) reasonably satisfactory to the
holders of a majority of the Series C Preferred Stock pursuant to which the Corporation’s various
businesses will be owned by the Corporation (unless sold) but separated for management, operations,
certain financing and other purposes. The Structure shall be functional immediately upon the Issue
Date, with the legal form (including, without limitation, amendments to By-laws of the Corporation
and its subsidiaries reasonably satisfactory to such holders to implement the Structure and the
other provisions of this Section 8) to follow as soon as practicable. Upon the Issue Date
the Corporation shall also create a holding company Office of the Chairman. Members of such Office
will be ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ as Chairman, ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ as Vice Chairman and a Chief Financial
Officer to be designated by the holders of a majority of the Series C Preferred Stock. Such
members of the Office of the Chairman will be officers of the Corporation. ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇
▇. ▇▇▇▇▇▇▇▇▇ and the new Chief Executive Officer of Hawaiian Natural Water Co., Inc., a subsidiary
of the Corporation (“Hawaiian Springs”) and their respective successors will report to the Office
of the Chairman. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ will continue as Chief Accounting Officer and Chief SEC
Compliance Officer of the Corporation and as Chief Financial Officer of the convenience store
distribution business. ▇▇. ▇▇▇▇▇ and his successor will report to the office of the Chairman. The
Corporation 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 the holders of a majority of the Series C Preferred Stock; provided, however, that
anything in this Section 8 to the contrary notwithstanding, nothing contained in this
Section 8 shall: (i) limit the discretion of the Board of Directors of the Corporation to
elect or remove officers (or their successors) of the Corporation, amend the By-laws of the
Corporation or otherwise manage the business and affairs of the Corporation; or (ii) create any
employee or other rights of officers or employees of the Corporation or its subsidiaries or modify
or affect any employee or severance agreement.
Section 9. Other Voting Rights. The holders of Series C Preferred Stock shall not be
entitled to any voting rights except as provided in Section 2(d) or Section 7,
above, and as required by law.
Section 10. No Preemptive Rights. The holders of Series C Preferred Stock shall, as
such, have no preemptive right to purchase or otherwise acquire shares of any class of stock or other securities of the Corporation, now or hereafter
authorized.
Section 11. Headings of Subdivisions. The headings of the various subdivisions hereof
are for convenience of reference only and shall not affect the interpretation of any of the
provisions hereof.
Section 12. Lost or Stolen Certificates. Upon receipt by the Corporation of (i)
evidence of the loss, theft, destruction or mutilation of any certificates representing shares of
Series C Preferred
35
Stock, and (ii) (y) in the case of loss, theft or destruction, an indemnity,
bond and/or other security reasonably satisfactory to the Corporation, or (z) in the case of
mutilation, the certificate(s) (surrendered for cancellation), the Corporation shall execute and
deliver new certificates representing shares of Series C Preferred Stock of like tenor and date.
However, the Corporation shall not be obligated to reissue such lost, stolen, destroyed or
mutilated certificate(s) if the holder contemporaneously requests the Corporation to convert such
Series C Preferred Stock.
Section 13. Remedies Cumulative. The remedies provided in this Certificate of
Designation shall be cumulative and in addition to all other remedies available under this
Certificate of Designation, at law or in equity (including a decree of specific performance and/or
other injunctive relief), and nothing herein shall limit a holder’s right to pursue actual damages
for any failure by the Corporation to comply with the terms of this Certificate of Designation.
The Corporation acknowledges that a breach by it of its obligations hereunder will cause
irreparable harm to the holders of Series C Preferred Stock and that the remedy at law for any such
breach may be inadequate. The Corporation therefore agrees, in the event of any such breach or
threatened breach, that the holders of Series C Preferred Stock shall be entitled, in addition to
all other available remedies, to an injunction restraining any breach, without the necessity of
showing economic loss and without any bond or other security being required.
Section 14. Waiver. Notwithstanding any provision in this Certificate of Designation
to the contrary, any provision contained herein and any right of the holders of Series C Preferred
Stock granted hereunder may be waived as to all shares of Series C Preferred Stock (and the holders
thereof) upon the written consent of the holders of a majority of the Series C Preferred Stock,
unless a higher percentage is required by applicable law, in which case the written consent of the
holders of not less than such higher percentage of shares of Series C Preferred Stock shall be
required.
Section 15. Severability of Provisions. If any right, preference or limitation of the
Series C Preferred Stock set forth in this Certificate of Designation (as such may be amended from
time to time) is invalid, unlawful or incapable of being enforced by reason of any rule of law or
public policy, all other rights, preferences and limitations set forth in this Certificate of
Designation (as so amended) which can be given effect without the invalid, unlawful or
unenforceable right, preference or limitation shall, nevertheless, remain in full force and effect.
Section 16. Status of Reacquired Shares. Shares of Series C Preferred Stock which
have been issued and reacquired in any manner (including by conversion) shall (upon compliance with
any applicable provisions of the laws of the State of Delaware) have the status of authorized and
unissued shares of Preferred Stock issuable in series undesignated as to Series C Preferred Stock
and may be redesignated and reissued.
36
IN WITNESS WHEREOF, this Certificate of Designations has been duly executed by the undersigned
this ___ day of March, 2006.
| AMCON DISTRIBUTING COMPANY |
||||
| By: | ||||
| Name: | ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ | |||
| Title: | Vice President and Chief Financial Officer | |||
37
SCHEDULE A (to Securities Purchase Agreement)
DESCRIPTION OF NUMBER OF SHARES OF SECURITIES PURCHASED
DESCRIPTION OF NUMBER OF SHARES OF SECURITIES PURCHASED
Number of Shares of
Series C Preferred Stock
to be Purchased
Series C Preferred Stock
to be Purchased
DRAUPNIR CAPITAL, LLC |
||
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ |
||
▇▇▇▇▇ ▇▇▇▇ |
||
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ |
||
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ |
||
Chief Executive Officer
|
Number of Shares: 80,000 |
38
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
39
(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;
40
(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, ▇▇▇▇▇▇ 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.
41
“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).
42