EMPLOYMENT AGREEMENT
THIS AGREEMENT is made as of January 1, 1998 by and between AMCON Distributing
Company, a Delaware corporation (the "Company"), and Wm. ▇. ▇▇▇▇▇▇
("Executive").
The Company and Executive desire to enter into an Employment Agreement
(the "Agreement"). Accordingly, the Company and Executive agree as follows:
Section 1. Effective Date; Position; Term.
(a) This Agreement shall become effective on the date first set forth above
(the "Effective Date"). The Company shall employ Executive as Chairman of the
Board of Directors for a term (the "Employment Period") commencing on January
1, 1998 and continuing until December 31, 1999, unless sooner terminated
pursuant to Section 9 hereof, provided that the Employment Period
automatically shall be extended for an additional one-year period on December
31, 1998 and each December 31 thereafter, unless either the Company or
Executive delivers to the other a notice of nonextension at least ninety (90)
days prior to the scheduled automatic renewal date.
(b) The Board of Directors of the Company (the "Board"), in its discretion,
may modify the termination date of this Agreement and the effective renewal
dates hereof to coincide with the fiscal year of the Company. In that case,
January 1 and December 31 in the preceding sentence and wherever herein used
in the same context shall refer to the first and last day of the Company's
fiscal year. Such modification shall not cause the acceleration of the
termination date (including any automatic extension of that date) to any
earlier date.
(c) Notwithstanding the foregoing subsection (a), in the event that a Change
of Control occurs, the Employment Period automatically shall be extended
through the December 31 immediately following the second anniversary of the
effective date of the Change of Control. The Employment Period automatically
shall be extended for an additional one-year period on such December 31 and
each December 31 thereafter, unless either the Company or Executive delivers
to the other a notice of nonextension at least ninety (90) days prior to the
scheduled automatic renewal date. For purposes of this subsection (c), a
"Change of Control" shall have occurred if:
(i) any person, as such term is used in Section 13(d) and 14(d) of the
Exchange Act, other than Executive, becomes the beneficial owner (as defined
in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities
of the Company representing twenty percent (20%) or more of the combined
voting power of the Company's then outstanding securities;
(ii) during any period of not more than twenty-four (24) months,
individuals who at the beginning of such period constitute the Board, and any
new director whose election by the Board or nomination for election by the
Company's stockholders was approved by a vote of at least two-thirds of the
directors then still in office who either were directors at the beginning of
the period or whose election or nomination for election was previously so
approved, cease for any reason to constitute at least a majority thereof;
(iii) the Company's stockholders approve a merger or consolidation of
the Company with any other corporation, other than (A) a merger or
consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity ) more than sixty percent (60%) of the combined voting power
of the voting securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation, or (B) a merger or
consolidation effected to implement a recapitalization of the Company (or
similar transaction) in which no person acquires more than twenty percent
(20%) of the combined voting power of the Company's then outstanding
securities; or
(iv) the stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by the
Company of all or substantially all of its assets (or any transaction having a
similar effect).
Section 2. Position and Duties. During the Employment Period:
(a) Executive shall have the responsibilities, duties and authority normally
commensurate with the position of Chairman of the Board and Chief Executive
Officer. Such responsibilities and duties shall include overseeing the
performance of the president of the Company and of the chief executive
officers of all operating divisions and Subsidiaries (as defined below) of the
Company, strategic planning, mergers and acquisitions, maintaining the
Company's relationship with its stockholders, and (in coordination with the
efforts of the Chief Financial Officer) maintaining the Company's relationship
with the financial and investment community.
(b) Executive shall report to the Board and Executive shall perform
faithfully the executive duties assigned to him by the Board to the best of
his ability in a diligent, trustworthy, businesslike and efficient manner and
will devote his sufficient time and attention to the business and affairs of
the Company and its Subsidiaries and Affiliates in order to accomplish the
foregoing; provided, however, that Executive may serve as a director of other
corporations, as a consultant to other corporations, and on civic or
charitable boards or committees.
(c) For purposes of this Agreement, "Subsidiary" shall mean any corporation
or other entity of which securities having a majority of the voting power in
electing directors or comparable management are, at the time of determination,
owned by the Company, directly or through one or more Subsidiaries.
(d) For purposes of this Agreement, "Affiliate" of any particular person
means any other person controlling, controlled by or under common control with
such particular person.
Section 3. Base Salary.
As compensation for his services hereunder, the Company shall pay to Executive
during the Employment Period a base salary (the "Base Salary") in the amount
of Three Hundred Fifty Thousand Dollars ($350,000) per year. Base Salary
shall be payable in accordance with the Company's customary pay practices for
executive compensation. Executive's Base Salary shall be reviewed at least
annually and may be increased at the discretion of the Board. The term "Base
Salary" as used in this Agreement shall refer to such annual salary as
increased. In addition, the Company shall provide Executive with an
automobile allowance in an amount to be determined by the Compensation
Committee of the Board.
Section 4. Bonus.
In addition to the Base Salary, Executive shall be eligible to receive an
annual bonus based on Executive's performance and the Company's operating
results during such year payable at such time or times during or following
each year as shall be determined by the Compensation Committee of the Board in
its sole discretion. The Compensation Committee, in its sole discretion, may
establish plans or formulas from time to time to be used in the determination
of management bonuses.
Section 5. Participation in Employee Benefit Plans.
Executive will be entitled to participate in all Company salaried employee
benefit plans and programs (whether now or hereinafter in effect), subject to
the terms and conditions of each such employee benefit plan or program and to
the extent commensurate with his position as a key executive officer of the
Company.
Section 6. Other Benefits.
(a) Vacation. As of the first day of each calendar year in the Employment
Period, Executive shall be entitled to a maximum of four weeks' paid vacation
for such year.
(b) Insurance. The Company shall provide Executive with (i) health,
hospitalization, dental and major medical insurance (including dependent
coverage), (ii) disability insurance providing benefits of sixty percent (60%)
of Base Salary but in any event a minimum benefit of $100,000 per year,
payments to begin no later than six months after the occurrence of a Total and
Permanent Disability (as defined below), (iii) split dollar life insurance in
a total face amount equal to $1,500,000, and (iv) whole life insurance in the
face amount of $100,000.
Section 7. Business Expenses.
The Company shall reimburse Executive for all reasonable expenses incurred by
him in the course of performing his duties under this Agreement which are
consistent with the Company's policies in effect from time to time with
respect to travel, entertainment and other business expenses, subject to the
Company's requirements with respect to reporting and documentation of such
expenses.
Section 8. Stock Options and Option Shares.
Executive shall be eligible to participate in the Company's 1994 Stock Option
Plan or such other similar plan as may be in effect from time to time.
Section 9. Termination of Employment.
(a) Events of Involuntary Termination and Severance Payments.
(i) In the event that during the Employment Period Executive should
become Totally and Permanently Disabled, the Company (acting by resolution of
the Board) may elect to terminate the Employment Period by written notice to
Executive and Executive shall be entitled to receive full compensation
pursuant to Section 3 at his then Base Salary rate for a period of six (6)
months following the date of such notice.
(ii) In the event of Executive's death during the Employment Period, his
personal representative shall be entitled to receive any compensation pursuant
to Sections 3, 4 and 6(a) which is accrued and unpaid as of the date of his
death plus six (6) months of salary.
(iii) In the event that during the Employment Period Executive should
commit Serious Misconduct (as defined in subsection 9(c)(ii) below), the
Company (acting by resolution of the Board) may elect to terminate the
Employment Period by providing written notice to Executive. In such case,
Executive shall be entitled to receive any compensation pursuant to Sections
3, 4 and 6(a) which is accrued and unpaid as of the Termination Date (as
defined in subsection 9(c)(iii) below).
(iv) In the event that the Company delivers to Executive a notice of
nonextension no later than ninety (90) days prior to a scheduled automatic
renewal date, Executive shall be entitled to receive certain payments (the
"Severance Payments") following termination of employment in an aggregate
amount equal to his current Base Salary plus an amount, as set by the Board,
that is equal to or greater than Executive's previous year's bonus, so long as
the total amount payable does not exceed 299% of Executive's then current
Base Salary. The Severance Payments shall be paid in twelve (12) monthly
installments at the end of each of the twelve (12) calendar months immediately
following the month in which the Termination Date occurs.
(v) In the event that during the Employment Period Executive is
discharged for any reason other than those circumstances as described in
Section 9 subsections (i) - (iv), Executive shall be entitled to receive
Severance Payments in an amount that is the greater of (A) the compensation
due under Sections 3 and 6(a) for that portion of the Employment Period
remaining between the Termination Date and the scheduled automatic renewal
date, plus an amount, as set by the Board, equal to or greater than
Executive's previous year's bonus or (B) Executive's then current annual Base
Salary plus an amount, as set by the Board, equal to or greater than
Executive's previous year's bonus. The total amount payable under either (A)
or (B) may not exceed 299% of Executive's then current Base Salary.
If the amount of Severance Payment due is the amount provided in (A) in the
preceding paragraph, a monthly payment amount shall be derived by dividing the
total amount due by the months remaining in the Employment Period. Payment is
to be made at the end of each calendar month, beginning with the month
immediately following the month in which the Termination Date occurs and
continuing until the scheduled automatic renewal date of the Employment
Period.
If the amount of Severance Payment due is the amount provided in (B) in the
preceding paragraph, payment shall be made in twelve (12) monthly installments
at the end of each of the twelve (12) calendar months immediately following
the month in which the Termination date occurs.
(b) Events of Voluntary Termination.
(i) In the event that Executive delivers to the Company a notice of
nonextension at least ninety (90) days prior to the scheduled automatic
renewal date, Executive shall be entitled to receive all compensation pursuant
to Sections 3, 4 and 6(a) that is accrued and unpaid as of the Termination
Date.
(ii) In the event that during the Employment Period Executive resigns,
other than as described in subsection (i) above, Executive shall be entitled
to that portion of compensation pursuant to Sections 3 and 6(a) that is
accrued and unpaid as of the Termination Date, and any amount of bonus that
was accrued in the prior year but has not been paid as of the Termination
Date. Any bonus which would otherwise be payable for the year in which the
Termination Date occurs shall be forfeited.
(c) Definition of Certain Terms.
(i) "Totally and Permanently Disabled" means such physical or mental
condition of Executive as is determined by the Board in its sole discretion to
be expected to continue indefinitely and which renders him incapable of
performing any substantial portion of the services contemplated hereby (as
confirmed by competent medical evidence).
(ii) "Serious Misconduct" means embezzlement or misappropriation of
corporate funds, other acts of dishonesty, significant activities materially
harmful to the reputation of the Company, commission of a felony, willful
refusal to perform or substantial disregard of the duties properly assigned by
the Board, significant violation on any statutory or common law duty of
loyalty to the Company or a material violation of Section 11 or 12 below.
(iii) "Termination Date" means the date on which Executive's employment
with the Company and its Subsidiaries is terminated, whether on account of
death, disability, resignation or discharge.
(d) Effect of Breach of Noncompetition Provisions. In the event Executive
breaches or otherwise fails to comply with the provisions of Section 11 or 12
below, then, in addition to any other remedies provided herein or at law or in
equity, the Company shall not have any further obligation to make any
additional Severance Payments. Termination of such Severance Payments
pursuant to the preceding sentence shall not relieve Executive's obligations
pursuant to Section 11 or 12 below.
(e) Effect of Breach of Monetary Obligations. In the event that the Company
breaches or otherwise fails to fulfill any of its monetary obligations under
this Agreement for whatever reason, Executive shall not be bound by Section 12
below. The event described in the preceding sentence shall not relieve
Executive's obligations under Section 11.
Section 10. Assignment and Succession.
(a) The rights and obligations of the Company under this Agreement shall
inure to the benefit of and be binding upon its respective successors and
assigns, and Executive's rights and obligations hereunder shall inure to the
benefit of and be binding upon his successors and permitted assigns, whether
so expressed or not.
(b) Executive acknowledges that the services to be rendered by him hereunder
are unique and personal. Accordingly, Executive may not pledge or assign any
of his rights or delegate any of his duties or obligations under this
Agreement without the express prior written consent of the Company.
(c) The Company may not assign its interest in or obligations under this
Agreement without the prior written consent of Executive.
Section 11. Confidential Information.
Executive acknowledges that the information, observations and data obtained by
him during the course of his performance under this Agreement concerning the
business or affairs of the Company and its Subsidiaries is the property of the
Company or such Subsidiary, as the case may be. Therefore, during the
Employment Period and at all times thereafter, Executive will not directly or
indirectly use, divulge, furnish or make accessible to any unauthorized person
or use for his own account any confidential or proprietary information or
trade secrets of the Company or any of its Subsidiaries without the Board's
prior written consent except and to the extent required by law (and upon
prompt written notice of such requirement to the Company and such Subsidiary)
or any of such information, observations or data without the Board's prior
written consent unless and to the extent that the aforementioned matters
become generally known to and available for use by the public other than as a
result of Executive's acts or omissions to act. In the event Executive shall
be required by law to make any disclosure as set forth above, Executive shall
promptly notify the Company and such Subsidiary in writing of the basis for
and the extent of the required disclosure and shall cooperate with the Company
and such Subsidiary to preserve in full the confidentiality of all
intellectual property, trade secrets, confidential information and other
proprietary rights of the Company and such Subsidiary. Executive agrees to
deliver to the Company at the termination of his employment, or at any other
time upon written request by the Company, all memoranda, notes, plans,
records, reports and other documents relating to the business of the Company
and its Subsidiaries which he may then possess or have under his control.
Section 12. Covenant Not To Compete.
(a) Executive agrees that during the Employment Period, and for one year
after the Termination Date (the "Noncompete Period"), he will neither directly
nor indirectly engage in, have any interest in, own, manage, operate, control,
be connected with as a stockholder, joint venture, officer, employee, partner
or consultant or invest or participate in a business competing with any of the
businesses then conducted (or, to the knowledge of Executive, planned to be
conducted within one year) by the Company or any of its successors or then
Subsidiaries, within any geographical area in which the Company or its
Subsidiaries engage or plan within one year to engage in any such businesses.
During the Noncompete Period, Executive shall not directly or indirectly
through another entity:
(i) Induce or attempt to induce any employee of the Company or any
Subsidiary to leave the employ of the Company or such Subsidiary, or in any
way interfere with the relationship between the Company or any Subsidiary and
any employee thereof, or
(ii) Induce or attempt to induce any customer, supplier, licensee or
other business relation of the Company or any Subsidiary to cease doing
business with the Company or such Subsidiary, or in any way interfere with the
relationship between any such customer, supplier, licensee or business
relation and the Company or any Subsidiary.
(b) Nothing contained in this Section 12 shall prevent Executive from owning
an interest in any corporation or other business entity, whether public or
private, provided such corporation or other business entity is not competing
directly or indirectly with the Company or its subsidiaries as described in
Section 12. Nothing contained herein shall prevent Executive from serving as
a paid consultant to other companies or serving as a member of the Board of
Directors of other corporations.
(c) If, under the circumstances existing at the time of enforcement of this
Section 12, the period, scope of geographic area described in this Section 12
shall be found or held by a court of competent jurisdiction to be
unreasonable, the parties hereto agree that the maximum period, scope or
geographic area reasonable under the circumstances shall be substituted for
the stated period, scope or geographic area.
(d) The parties hereto agree that, in the event of the breach of Section 11
or this Section 12 by Executive, monetary damages alone would not be an
adequate remedy to the Company and its Subsidiaries for the injury that would
result from such breach, and that the Company and its Subsidiaries shall be
entitled, at any time after such breach, to immediately obtain injunctive
relief prohibiting any further breach of this Agreement. Executive further
agrees that any such injunctive relief obtained by the Company of any of its
Subsidiaries shall be in addition to monetary damages.
Section 13. Remedies.
The parties hereto will be entitled to enforce their respective rights under
this Agreement specifically to recover damages by reason of any breach of this
Agreement and to exercise all other rights existing in their favor. The
parties hereto acknowledge and agree that money damages may not be an adequate
remedy for any breach of the provisions of this Agreement and that any party
hereto (and any original stockholder to the extent named as a third-party
beneficiary) may, in its sole discretion, apply to any court of law or equity
of competent jurisdiction for specific performance and/or injunctive relief
(without posting bond or other security) in order to enforce or prevent any
violation of the provisions of this Agreement.
Section 14. Attorney's Fees.
In the event any legal action is commenced by either party hereto, the
prevailing party shall be entitled to recover reasonable attorney's fees as
established by the court of jurisdiction, together with all cost of
litigation.
Section 15. Deferral of Payments.
Notwithstanding anything herein to the contrary, the Company may defer any
payment due under this Agreement to the earliest date upon which the payment
can be made and deducted by the Company in light of the provisions of Section
162(m) of the Internal Revenue Code.
Section 16. Entire Agreement.
This Agreement represents the entire agreement between the parties relating to
the subject matters covered hereby and shall supersede any prior
understandings, agreements or representations by or between the parties,
written or oral, which may have related to the subject matter hereof in any
way and shall not be amended or waived except in writing signed by the parties
hereto.
Section 17. Notices.
Any notice or request required or permitted to be given hereunder shall be in
writing and will be deemed to have been given:
(a) When delivered personally, sent by telecopy (with hard copy to follow) or
overnight express courier; or
(b) Five (5) days following mailing by certified or registered mail, postage
prepaid and return receipt requested, to the addresses below unless another
address is specified by such party in writing:
To the Company: AMCON Distributing Company
▇▇▇▇▇ ▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Chairman
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
To Executive: Wm. ▇. ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇, ▇▇ ▇▇▇▇▇
Section 18. Headings.
The article and section headings herein are for convenience of reference only
and shall not define or limit the provisions hereof.
Section 19. Applicable Law.
The corporate law of the State of Delaware will govern all questions
concerning the relative rights of the Company and its stockholders. All other
questions concerning the construction, validity and interpretation of this
Agreement shall be governed by the internal laws of the State of Nebraska.
Section 20. Severability.
Whenever possible, each provision of this Agreement will be interpreted in
such a manner as to be effective and valid under applicable law, but if any
provision of this Agreement is held prohibited by, invalid or unenforceable in
any respect under applicable law, such provision will be ineffective only to
the extent of such prohibition or invalidity, without invalidating the
remainder of such provision or the remaining provisions of this Agreement.
Section 21. Amendments and Waivers.
Any provision of this Agreement may be amended or waived only with the prior
written consent of the Company and Executive.
Section 22. No Strict Construction.
The language used in this Agreement will be deemed to be the language chosen
by the parties hereto to express their mutual intent, and no rule of strict
construction will be applied against any party hereto.
Section 23. Counterparts.
This Agreement may be executed in separate counterparts, each of which is
deemed to be an original and all of which taken together constitute one and
the same agreement.
Section 24. Executive Representations.
Executive hereby represents and warrants to the Company that (i) the
execution, delivery and performance of this Agreement by Executive does not
and will not conflict with, breach, violate or cause a default under any
contract, agreement, instrument, order, judgment or decree to which Executive
is a party or by which he is bound, (ii) Executive is not a party to or bound
by any employment agreement, noncompete agreement or confidentiality
agreement with any other person or entity and (iii) upon the execution and
delivery of this Agreement by the Company, this Agreement shall be the valid
and binding obligation of Executive, enforceable in accordance with its terms.
Section 25. Survival.
Sections 8,11 and 12 shall survive and continue in full force in accordance
with their terms notwithstanding any termination of the Employment Period.
IN WITNESS WHEREOF, the Company has caused this Agreement to be signed by its
duly authorized officer and Executive has signed this Agreement as of the date
first written above.
AMCON DISTRIBUTING COMPANY
By: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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President
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇