SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES ACT OF 1934
Date of Report (Date of earliest event reported) November 10,1997
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AMCON DISTRIBUTING COMPANY
--------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 0-24708 47-0702918
- ------------------------------------------------------------------------------
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
10228 "L" Street, Omaha, NE 68127
---------------------------------
(Address of principal executive offices) (Zip Code)
(402) 331-3727
--------------
(Registrant's telephone number, including area code)
Not Applicable
--------------
(Former name or former address, if changed since last report)
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
AMCON Distributing Company ("AMCON"), a Delaware corporation, Food For Health
Company, Inc. ("FFH"), an Arizona corporation, FFH Holdings, Inc. ("Holdings")
a Delaware corporation and Prudential Venture Partners II L.P. ("Prudential")
are parties to a Stock Purchase Agreement dated November 3, 1997 (the "Stock
Purchase Agreement").
On November 10, 1997, upon terms set forth in the Stock Purchase Agreement,
AMCON completed its purchase of all of the outstanding stock of FFH for a
purchase price of $4.4 million. There are no material relationships between
AMCON, Holdings and Prudential and the purchase price was determined by arm's-
length negotiations. Funding for the acquisition was provided through
borrowings under a loan agreement with LaSalle National Bank (the "Loan").
The amount of the Loan was $4.5 million. Costs and expenses associated with
the acquisition will also be paid from the Loan proceeds. The Loan is secured
by the stock of FFH and a personal Guaranty from the Chairman of AMCON.
On November 18, 1997, AMCON issued a press release announcing that the
acquisition of FFH pursuant to the Stock Purchase Agreement had been
completed. The press release is filed herewith as an exhibit and incorporated
herein by reference.
ITEM 7. FINANCIAL STATEMENTS, PRO FORM FINANCIAL INFORMATION AND EXHIBITS
(a) Financial Statements of Business Acquired
FOOD FOR HEALTH CO., INC.
(A wholly-owned subsidiary of
FFH Holdings, Inc.)
Financial Statements
May 25, 1997 and May 26, 1996
(With Independent Auditors' Report Thereon)
Independent Auditors' Report
The Board of Directors
Food for Health Co., Inc.:
We have audited the accompanying balance sheets of Food for Health Co., Inc.
(a wholly-owned subsidiary of FFH Holdings, Inc.) as of May 25, 1997 and May
26, 1996, and the related statements of operations, shareholder's equity and
cash flows for the years then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Food for Health Co., Inc. as
of May 25, 1997 and May 26, 1996, and the results of its operations and its
cash flows for the years then ended, in conformity with generally accepted
accounting principles.
KPMG Peat Marwick LLP
June 27, 1997
FOOD FOR HEALTH CO., INC.
(A wholly-owned subsidiary of
FFH Holdings, Inc.)
Balance Sheets
May 25, 1997 and May 26, 1996
<TABLE>
<CAPTION>
Assets 1997 1996
----------- -----------
<S> <C> <C>
Current assets:
Cash $ 17,880 $ 13,441
Accounts receivable, net of allowance for
doubtful accounts and sales returns of
$287,029 in 1997 and $239,000 in 1996 2,814,829 2,264,718
Inventories (note 1) 3,957,827 4,000,120
Prepaid expenses 177,745 119,366
Other receivables 3,452 8,744
----------- -----------
Total current assets 6,971,733 6,406,389
----------- -----------
Equipment and leasehold improvements,
less accumulated depreciation and
amortization (notes 1, 3, 5 and 6) 745,177 850,858
Other assets 43,862 36,547
----------- -----------
$ 7,760,772 $ 7,293,794
=========== ===========
Liabilities and Shareholder's Equity
Current liabilities:
Revolving credit facility (note 4) $ 2,915,195 $ 2,830,200
Current portion of note payable (note 5) 70,000 92,791
Accounts payable 1,589,134 1,601,503
Accrued expenses 557,971 567,867
Other current liabilities 6,315 3,460
----------- -----------
Total current liabilities 5,138,615 5,095,821
----------- -----------
Deferred rent 431,856 434,437
Long-term portion of note payable (note 5) 110,833 180,833
Shareholder's equity:
Common stock, $1 par value; authorized
1,000,000 shares; issued and
outstanding 28,500 shares 28,500 28,500
Additional paid-in capital 2,426,090 2,471,090
Accumulated deficit (375,122) (916,887)
----------- -----------
Total shareholder's equity 2,079,468 1,582,703
Commitments (note 6)
----------- -----------
$ 7,760,772 $ 7,293,794
=========== ===========
</TABLE>
See accompanying notes to financial statements.
FOOD FOR HEALTH CO., INC.
(A wholly-owned subsidiary of
FFH Holdings, Inc.)
Statements of Operations
Years ended May 25, 1997 and May 26, 1996
<TABLE>
<CAPTION>
1997 1996
------------ ------------
<S> <C> <C>
Net sales $ 36,397,794 $ 34,848,248
Cost of sales 27,520,497 26,384,569
------------ ------------
Gross profit 8,877,297 8,463,679
------------ ------------
Operating expenses:
Delivery 2,583,737 2,444,835
Warehouse 2,629,158 2,613,917
Marketing 1,261,842 1,261,991
General and administrative 1,480,684 1,480,833
------------ ------------
7,955,421 7,801,576
------------ ------------
Income from operations 921,876 662,103
------------ ------------
Other income (expense):
Interest expense (382,004) (358,328)
Other, net 1,893 (79,298)
------------ ------------
(380,111) (437,626)
------------ ------------
Net income $ 541,765 $ 224,477
============ ============
</TABLE>
See accompanying notes to financial statements.
FOOD FOR HEALTH CO., INC.
(A wholly-owned subsidiary of
FFH Holdings, Inc.)
Statements of Shareholder's Equity
Years ended May 25, 1997 and May 26, 1996
<TABLE>
<CAPTION>
Common Stock Additional
-------------------- Paid-In Accumulated
Shares Amount Capital Deficit Total
--------- -------- ----------- ------------ -----------
<S> <C> <C> <C> <C> <C>
Balance,
May 28, 1995 28,500 $ 28,500 $ 2,516,090 $ (1,141,364) $ 1,403,226
Dividends to parent - - (45,000) - (45,000)
Net income - - - 224,477 224,477
--------- -------- ----------- ------------ -----------
Balance,
May 26, 1996 28,500 28,500 2,471,090 (916,887) 1,582,703
Dividends to parent - - (45,000) - (45,000)
Net income - - - 541,765 541,765
-------- -------- ----------- ------------ -----------
Balance,
May 25, 1997 28,500 $ 28,500 $ 2,426,090 $ (375,122) $ 2,079,468
========= ======== =========== ============ ===========
</TABLE>
See accompanying notes to financial statements.
FOOD FOR HEALTH CO., INC.
(A wholly-owned subsidiary of
FFH Holdings, Inc.)
Statements of Cash Flows
Years ended May 25, 1997 and May 26, 1996
<TABLE>
<CAPTION>
1997 1996
---------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 541,765 $ 224,477
Adjustments to reconcile net income
to net cash provided by (used in)
operating activities:
Depreciation and amortization 188,918 255,131
Provision for losses on doubtful
accounts and sales returns 48,029 20,101
Loss on disposal of equipment and
leasehold improvements 6,687 -
Changes in assets and liabilities:
(Increase) in accounts receivable (598,141) (359,486)
(Increase) decrease in inventories 42,293 (828,179)
(Increase) decrease in prepaid expenses
and other assets (65,694) 41,516
(Increase) decrease in other receivables 5,292 (3,660)
Increase (decrease) in accounts payable
and accrued expenses (22,265) 69,500
Increase (decrease) in other current
liabilities 2,855 (288)
Increase (decrease) in deferred rent (2,581) 88,283
---------- ----------
Total adjustments (394,607) (717,082)
---------- ----------
Net cash provided by (used in)
operating activities 147,158 (492,605)
---------- ----------
Cash flows from investing activities:
Purchases of equipment and leasehold
improvements (89,923) (45,381)
---------- ----------
Net cash used in investing
activities (89,923) (45,381)
---------- ----------
Cash flows from financing activities:
Net borrowings on revolving credit facility 84,995 689,615
Principal payments on note payable (70,000) (70,000)
Payments on capital lease obligation (22,791) (35,447)
Dividends to parent (45,000) (45,000)
---------- ----------
Net cash provided by (used in)
financing activities (52,796) 539,168
---------- ----------
Net increase in cash 4,439 1,182
Cash at beginning of year 13,441 12,259
---------- ----------
Cash at end of year $ 17,880 $ 13,441
========== ==========
Supplemental disclosure of cash flow information:
Cash paid during the year for interest $ 385,226 $ 356,732
========== ==========
</TABLE>
See accompanying notes to financial statements.
FOOD FOR HEALTH CO., INC.
(A wholly-owned subsidiary of
FFH Holdings, Inc.)
Notes to Financial Statements
May 25, 1997 and May 26, 1996
(1) Description of Business and Summary of Significant Accounting Policies
Description of Business
Food for Health Co., Inc. (the Company) is an Arizona Corporation which
operates as a wholesale distributor of health food and related products
throughout the southwestern and western states. The Company is a wholly-owned
subsidiary of FFH Holdings, Inc.(Holdings).
Summary of Significant Accounting Policies
Inventories
Inventories consist of merchandise purchased for resale and are stated at the
lower of cost or market using the first-in, first-out (FIFO) method.
Equipment and Leasehold Improvements
Equipment and leasehold improvements are stated at cost. Depreciation is
provided over the estimated useful lives of the assets using the straight-line
method. Leasehold improvements are amortized over the lesser of the lease
term or the estimated useful life of the related asset.
Impairment of Assets
The Company accounts for long-lived assets under Statement of Financial
Accounting Standards No. 121, Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed Of. The impairment of
goodwill and other long-lived assets would be recognized if the expected
future net cash flows (undiscounted and without interest charges) of the
related businesses are less than the carrying amounts of the assets. No
impairment existed in 1997 or 1996.
Fiscal Year-end
The Company operates under a 52/53 week period with its fiscal year-end
falling on the Sunday nearest May 31 which conforms with its parent's year-
end.
Income Taxes
Income taxes are accounted for under the asset and liability method. Deferred
tax assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying amounts
of existing assets and liabilities and their respective tax bases and
operating loss and tax credit carryforwards. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be
recovered or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the
enactment date.
The Company is included in the consolidated Federal and State tax returns
filed by its parent.
Use of Estimates
Management of the Company has made a number of estimates and assumptions
relating to the reporting of assets and liabilities and the disclosure of
contingent assets and liabilities to prepare these financial statements in
conformity with generally accepted accounting principles. Actual results
could differ from those estimates.
(2) Liquidity
The Company's financial statements have been presented on the basis that it is
a going concern, which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business. The Company has
net cash provided from operating activities of $153,710 for the year ended May
25, 1997. The Company's business plan calls for the generation of sales and
the use of the revolving credit facility, which provides for maximum
borrowings not to exceed the lesser of $6,000,000 or the sum of 85% of
eligible accounts receivable plus 50% of eligible inventory, both as defined
in the agreement. Management believes this will be adequate to provide the
Company with operating cash flow and to meet its current obligations and to
continue its existence.
(3) Equipment and Leasehold Improvements
The following is a summary of equipment and leasehold improvements,
at cost, less accumulated depreciation and amortization:
1997 1996
------------ ------------
Warehouse equipment $ 1,141,132 $ 1,124,525
Leasehold improvements 183,090 183,090
Computer equipment and software 452,651 422,736
Office equipment 425,125 445,747
Packaging equipment 4,562 4,562
Automotive equipment 33,254 9,781
------------ ------------
2,239,814 2,190,441
Less accumulated depreciation
and amortization (1,494,637) (1,339,583)
------------ ------------
$ 745,177 $ 850,858
============ ============
(4) Revolving Credit Facility
The Company has a revolving credit facility from a financial institution
providing for maximum borrowings not to exceed the lesser of $6,000,000 or the
sum of 85% of eligible accounts receivable plus 50% of eligible inventory,
both as defined in the agreement. Amounts outstanding under the facility bear
interest at the prime rate plus 1.25% which is payable monthly. The Company is
required to pay a commitment fee of .25% of the difference between $4,000,000
and the borrowings under the facility. The revolving credit facility expires
in February 1999 and is renewable under certain conditions.
Under the terms of the revolving credit facility, the Company is required to
maintain and is in compliance with certain working capital, net worth and
profit levels. Payment of dividends is restricted to certain reimbursement of
taxes, interest, and other administrative costs.
The indebtedness of the Company under this financing agreement is
guaranteed by Holdings. The borrowings are secured by virtually all the
assets of the Company.
(5) Note Payable
The Company's note payable consists of a $180,833 note to a financial
institution payable in equal monthly installments of $5,833 plus monthly
interest at the prime rate plus 1.25%. This note is secured by certain
warehouse equipment. The aggregate maturities of the note payable for each of
the three fiscal years subsequent to May 25, 1997 are as follows: 1998,
$70,000; 1999, $70,000; and 2000, $40,833.
(6) Leases
The Company has entered into various noncancellable operating leases for
warehouses, office space, computer equipment, delivery vehicles and other
automotive equipment for periods ranging from one to 15 years. The delivery
vehicle leases require minimum weekly rentals plus mileage charges, and each
contract under the lease may be terminated at each anniversary date with sixty
days notice. No contract may be terminated in the first year.
During the years ended May 25, 1997 and May 26, 1996, $1,392,999 and
$1,325,333 in rent expense for office and warehouse facilities, computer
equipment and delivery vehicles was charged to operations.
Future minimum lease payments under noncancellable operating leases (with
initial or remaining lease terms in excess of one year) as of May 25, 1997
are:
Year ending May 31:
1998 $ 1,167,000
1999 1,161,779
2000 1,157,865
2001 934,633
2002 987,540
Thereafter 3,533,887
-----------
$ 8,942,704
===========
(7) Income Taxes
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at May 25,
1997 and May 26, 1996 are presented below:
1997 1996
---------- ----------
Deferred tax assets:
Accounts receivable, principally due
to allowance for doubtful accounts
and sales returns $ 114,812 $ 95,600
Inventories, principally due to
inventory reserve for obsolescence
and uniform capitalization adjustment 113,513 113,112
Rent leveling 175,268 175,159
Net operating loss carryforwards 292,993 547,252
Other 89,180 109,266
---------- ----------
Total gross deferred tax assets 785,766 1,040,389
Less valuation allowance (552,281) (802,781)
---------- ----------
Net deferred tax assets 233,485 237,608
---------- ----------
Deferred tax liabilities:
Equipment, principally due to
depreciation (207,709) (213,100)
Other (25,776) (24,508)
---------- ----------
Total gross deferred tax
liabilities (233,485) (237,608)
---------- ----------
Net deferred taxes $ - $ -
========== ==========
The decrease in the valuation allowance in 1997 and 1996 was $250,500 and
$143,413, respectively. Management has determined that a valuation allowance
is necessary since the Company has only had two years of taxable income and it
cannot be determined that it is more likely than not the deferred tax assets
will be realized by the Company.
Tax expense for income generated in 1997 has been offset by the utilization of
net operating loss carryforwards. Total income taxes differed from the
amounts computed by applying the U.S. Federal income tax rate of 34 percent in
1996 and 1995 to income before income taxes as follows:
1997 1996
---------- ----------
Computed expected tax expense $ 184,200 $ 76,322
(Increase) reduction in income taxes
resulting from:
State income taxes, net of Federal
benefit 27,088 11,224
Meals and entertainment disallowance 10,855 12,342
Officer life insurance premium 2,720 2,720
Net operating loss carryforward
utilized (224,863) (102,608)
---------- ----------
$ - $ -
========== ==========
At May 25, 1997, the Company has a tax net operating loss carryforward of
approximately $800,000 in accordance with its tax sharing agreement with its
parent which can be used to offset future taxable income. If not used to
offset future taxable income, this loss carryforward will begin to expire in
2006.
(8) Defined Contribution Plan
The Company has a defined contribution 401(k) tax deferred savings plan
covering all eligible employees. Company contributions to the Plan for
1997 and 1996 totaled $3,396 and $3,137, respectively, which represents
a match of 25% of a participant's contributions for the year. The Company's
matching contribution is limited to the lesser of 25% of a participant's
contribution up to a maximum participant's contribution of 3% or $400.
(9) Business and Credit Concentrations
One customer accounted for 10% and 15% of net sales for the years ended May
25, 1997 and May 26, 1996, respectively.
(b) Pro Forma Financial Information
AMCON Distributing Company
Pro Forma Condensed
Combined Balance Sheet
September 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
AMCON FFH Pro Forma Pro Forma
Historical Historical Adjustments Combined
----------- ---------- ------------ -----------
ASSETS
<S> <C> <C> <C> <C>
Current assets:
Cash $ 26,973 $ 3,500 $ - $ 30,473
Marketable securities 127,786 - - 127,786
Accounts receivable 10,788,979 2,796,410 - 13,585,389
Note and interest receivable
from officer 130,795 - - 130,795
Inventories 7,183,245 3,431,179 - 10.614.424
Deferred income taxes 119,017 - - 119,017
Other 84,616 178,306 - 262,922
----------- ----------- ----------- -----------
Total current assets 18,461,411 6,409,395 - 24,870,806
Fixed assets, net 3,608,891 710,267 200,000 (1) 4,519,158
Investments 560,250 - - 560,250
Other assets 866,749 8,656 2,243,629 (2) 3,119,034
----------- ----------- ----------- -----------
$23,497,301 $ 7,128,318 $ 2,443,629 $33,069,248
=========== =========== =========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $ 4,764,816 $ 1,358,699 $ - $ 6,123,515
Accrued expenses 906,282 353,795 130,000 (3) 1,390,077
Accrued wages, salaries
and bonuses 719,962 - - 719,962
Income taxes payable 579,802 - - 579,802
Current portion of
long-term debt 332,338 70,000 900,000 (4) 1,302,338
Revolving credit facility - 2,641,526 - 2,641,526
----------- ----------- ----------- -----------
Total current liabilities 7,303,200 4,424,020 1,030,000 12,757,220
----------- ----------- ----------- -----------
Deferred income taxes 195,458 - - 195,458
Deferred rent - 430,427 - 430,427
Long-term debt, less
current portion 8,790,524 87,500 3,600,000 (4) 12,478,024
Shareholders' equity:
Preferred stock - - - -
Common stock 24,500 28,500 (28,500)(5) 24,500
Additional paid-in capital 2,213,828 2,426,090 (2,426,090)(5) 2,213,828
Unrealized gain on investments
available-for-sale 237,503 - - 237,503
Retained earnings 4,732,603 (268,219) 268,219 (5) 4,732,603
----------- ----------- ----------- -----------
7,208,434 2,186,371 (2,186,371) 7,208,434
Less treasury stock (315) - - (315)
----------- ----------- ----------- -----------
Total shareholders' equity 7,208,119 2,186,371 (2,186,371) 7,208,119
----------- ----------- ----------- -----------
$23,497,301 $ 7,128,318 $ 2,443,629 $33,069,248
=========== =========== =========== ===========
</TABLE>
See accompanying notes to the Pro Forma Condensed Financial Statements.
AMCON Distributing Company
Pro Forma Condensed
Combined Statement of Income
for the year ended September 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
AMCON FFH Pro Forma Pro Forma
Historical Historical Adjustments Combined
------------- ------------ ------------- ------------
<S> <C> <C> <C> <C>
Sales $178,990,978 $ 37,073,791 $ - $216,064,769
Cost of sales 159,434,631 28,011,267 - 187,445,898
------------ ------------ ------------ ------------
Gross profit 19,556,347 9,062,524 - 28,618,871
Selling, general and administrative
expenses 15,883,969 7,851,450 - 23,735,419
Depreciation and amortization 868,744 188,918 139,117 (6) 1,196,779
------------ ------------ ------------ ------------
Income from operations 2,803,634 1,022,156 (139,117) 3,686,673
------------ ------------ ------------ ------------
Other expense (income):
Interest expense 867,327 367,322 315,850 (7) 1,550,499
Other income, net (1,352,733) (29,052) - (1,381,785)
------------ ------------ ------------ ------------
Income before income taxes 3,289,040 683,886 (454,967) 3,517,959
Income tax expense 1,348,506 - (140,159) (8) 1,208,347
------------ ------------ ------------ ------------
Net income attributable
to common shareholders $ 1,940,534 $ 683,886 $ (314,808) $ 2,309,612
============ ============ ============ ============
Earnings per common and common
equivalent share attributable
to common shareholders $0.79 $0.94
============ ============
Weighted average common and common
equivalent shares outstanding 2,452,927 2,452,927
============ ============
</TABLE>
See accompanying notes to the Pro Forma Financial Statements.
AMCON Distributing Company
Notes to Pro Forma Financial Information
Basis of Presentation:
The accompanying unaudited balance sheet and income statement give effect to
the purchase of all of the outstanding common stock of Food For Health
Company, Inc. ("FFH")as of September 30, 1997 and October 1, 1996,
respectively. The pro forma financial information are not necessarily
indicative of future results or the results that would have occurred had these
transactions actually occurred on October 1, 1996. It is suggested that this
financial information be read in conjunction with the Company's annual report
for the years ended September 30, 1997 and 1996, respectively. The historical
financial information for FFH is as of September 14, 1997 and the 52 weeks
ended September 14, 1997.
The acquisition of FFH will be accounted for under the purchase method of
accounting. Under this method of accounting, the purchase price will be
allocated to the assets acquired and liabilities assumed based on their
estimated fair values. It is the Company's intention to more fully evaluate
the acquired assets and, as a result, the allocation of the purchase price
among the tangible and intangible assets acquired may change.
Pro Forma Adjustments:
Pro forma adjustments to the historical financial information reflect
adjustments associated with recording fixed assets at their fair values and to
include all expenses associated with the acquisition of FFH. Pro forma
adjustments related to the income statement have been provided assuming the
acquisition was consummated on October 1, 1996. Pro forma adjustments are as
follows:
(1) To record fixed assets at their approximate fair values.
(2) To record goodwill and debt issue costs associated with the purchase of
FFH. The following is a summary of the adjustment to goodwill and other
intangibles:
Purchase price $4,400,000
Acquisition and debt financing costs 230,000
Increase in fair value of fixed assets (200,000)
Net assets acquired (2,186,371)
----------
Goodwill and other intangibles $2,243,629
==========
(3) To record liability for debt issue costs associated with the acquisition
of FFH.
(4) To record bank debt associated with the acquisition of FFH.
(5) To eliminate the equity of FFH.
(6) To record depreciation expense on fixed assets and amortization expense
for debt issue costs and goodwill related to the FFH acquisition.
Goodwill will be amortized over 25 years.
(7) To record additional interest expense associated with the debt incurred to
finance the purchase of FFH. The interest expense was calculated based on
the Company's current borrowing rate on this loan of 7.75%. A change of
1/8% in the interest rate would affect interest income by $5,095 for the
year ended September 30, 1997.
(8) To record the tax effect of the pro forma adjustments, except non-
deductible goodwill, at the marginal effective rate of 41%.
(c) Exhibits
The following items are filed as exhibits to this report:
EXHIBIT NO. DESCRIPTION
2.1 Stock Purchase Agreement, dated November 3, 1997,
by and among AMCON Distributing Company, Food For
Health Company, Inc., FFH Holdings, Inc. and
Prudential Venture Partners II L.P.
10.1 Loan agreement, dated November 10, 1997, between
AMCON Distributing Company and LaSalle National
Bank
10.2 Note, dated November 10, 1997, between AMCON
Distributing Company and LaSalle National Bank
99.1 Press release, dated November 18, 1997, issued
by AMCON Distributing Company
SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
AMCON DISTRIBUTING COMPANY
(Registrant)
Date: December 31, 1997 By : Michael D. James
-------------------------
Name: Michael D. James
Title: Treasurer & Chief Financial
Officer
EXHIBIT INDEX
-------------
Exhibit Description
2.1 Stock Purchase Agreement, dated November 3, 1997, by and
among AMCON Distributing Company, Food For Health Company,
Inc., FFH Holdings, Inc. and Prudential Venture
Partners II L.P.
10.1 Loan agreement, dated November 10, 1997, between
AMCON Distributing Company and LaSalle National
Bank
10.2 Note, dated November 10, 1997, between AMCON Distributing
Company and LaSalle National Bank
99.1 Press release. dated November 18, 1997, issued by AMCON
Distributing Company
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT ("Agreement") dated as of November 3, 1997
(the "Effective Date"), by and among Food For Health Co., Inc., an Arizona
corporation, having its principal office at 3655 West Washington Street,
Phoenix, Arizona 85009 ("Company"), AMCON Distributing Company, a Delaware
corporation, having its principal office at 10228 "L" Street, Omaha, Nebraska
68127-1027 ("Purchaser"), FFH Holdings, Inc., a Delaware corporation, sole
shareholder of the Company, having its principal office at 717 Fifth Avenue,
New York, New York 10022 (the "Shareholder") and Prudential Venture Partners
II, L.P., a New York limited partnership having its principal office at 717
Fifth Avenue, New York, New York 10022 (the "Principal Shareholder").
RECITALS:
A. Company is in the business of distributing food products to
retailers throughout the western United States.
B. Shareholder owns all of the issued and outstanding shares of
capital stock in Company.
C. Principal Shareholder owns a majority of the issued and
outstanding capital stock of Shareholder.
D. Purchaser desires to acquire the ongoing business of Company and
has agreed to purchase all of the issued and outstanding shares of capital
stock in Company from Shareholder subject to the terms and conditions of this
Agreement.
AGREEMENT:
In consideration of the mutual covenants and agreements hereinafter set
forth, the parties hereby agree as follows:
1. PURCHASE AND SALE OF STOCK. Subject to and upon the terms and
conditions set forth in this Agreement, the Shareholder will sell, transfer,
convey, assign and deliver to Purchaser, and Purchaser will purchase, at the
Closing hereunder, all of the outstanding stock of the Company (the "Shares"),
free and clear of all liabilities, obligations, liens and encumbrances.
2. PURCHASE PRICE. In consideration of the transfer and delivery of
the Shares by Shareholder to Purchaser, and in reliance upon the
representations and warranties made in this Agreement by Company and
Shareholder, Purchaser will pay to Shareholder at the Closing, by wire
transfer, a total purchase price of the sum of $4,400,000.00.
2.1. REIMBURSEMENT PAYMENT. As an accommodation to Purchaser,
Shareholder agrees that it will execute Form 8023-A and otherwise cooperate
with Purchaser in Purchaser's election to treat this transaction as a sale of
assets under I.R.C. Section 338(h)(10), conditioned upon and in consideration
for payment by Purchaser, simultaneously with Shareholder's execution of Form
8023-A, of an amount that is certified by Shareholder's and Purchaser's
accountants to be the additional tax burden imposed on Shareholder by any
taking authority from the election by Purchaser under I.R.C. Section
338(h)(10). In addition, if any taxing authority subsequently assesses any
additional taxes that increase the additional tax burden imposed on
Shareholder as a result of the I.R.C. Section 338(h)(10) election, Purchaser
shall indemnify Shareholder for such additional taxes (including any penalties
and interest). Purchaser agrees that no representative of Shareholder shall
have any authority to execute the Form 8023-A on behalf of Shareholder without
the consent of Derek Jones or Mark Rossi or their successors.
3. CLOSING. The Closing shall take place on the later to occur of
(i) 12:00 p.m. local time, on or before November 10, 1997, or (ii) such other
date as Purchaser and Company may agree at the offices of Lewis and Roca LLP,
40 North Central Avenue, Phoenix, Arizona 85004-4429, or such other time and
place as the parties may agree upon. The day on which the Closing actually
occurs shall be referred to herein as the "Closing Date".
4. SHAREHOLDER' OBLIGATIONS AT CLOSING; FURTHER ASSURANCES.
4.1 DELIVERIES. At the Closing, Company and Shareholder will
deliver to Purchaser:
4.1.1 duly endorsed, issued and executed stock
certificates representing the Shares, free and clear of all liens,
encumbrances and rights in favor of third parties, together with assignments
separate from certificates duly executed by the Shareholder;
4.1.2 the Shareholder's Certificate, Opinion of Seller's
Counsel and Opinion of Principal Shareholder's Counsel, described in Section
12 below; and
4.1.3 all other documents required to be delivered to
Purchaser under the provisions of this Agreement or otherwise necessary to
give effect to the transactions contemplated by this Agreement.
4.2 OTHER ACTION. At any time and from time to time either
prior to or after the Closing, at Purchaser's request and without further
consideration, the Company and Shareholder will execute and deliver such other
instruments of sale, transfer, assignment and confirmation and take such
action as Purchaser may reasonably deem necessary or desirable in order to
more effectively convey to Purchaser, and to confirm Purchaser's title to, the
Shares, to put Purchaser in actual possession and operating control thereof
and of the business of Company and to assist Purchaser in exercising all
rights with respect thereto, provided that if Purchaser requires any
representative of Principal Shareholder to travel to Phoenix after the Closing
pursuant to this section in furtherance of obligations of Principal
Shareholder not agreed to prior to the Closing Date, Purchaser shall reimburse
the reasonable travel expenses of such representative.
5. REPRESENTATIONS AND WARRANTIES BY COMPANY AND SHAREHOLDER.
5.1 SHAREHOLDER OWNERSHIP OF SHARES. Shareholder represents and
warrants that: (a) it is the lawful record and beneficial owner of all of the
Shares of the Company's capital stock, with absolute right to sell them and
with full title thereto, free and clear of any liens, claims, encumbrances or
restrictions of any kind; (b) all of the Shares are validly issued and
outstanding, fully paid and nonassessable; there are no undisclosed interests,
present or future, in the Shares, nor does it know of any assertion of such an
interest, or of any facts or circumstances which would give any person any
such present or future interest or entitle any person to assert such an
interest; (c) there are no provisions of any contract, indenture, agreement or
other instrument to which Shareholder is a party or to which the Shares are
subject which would prevent, limit, or condition the sale or transfer of the
Shares to the Purchaser; (d) neither the execution, delivery nor performance
of this Agreement by Company or Shareholder will, with or without the giving
of notice or the passage of time, or both, conflict with, result in a default,
right to accelerate or loss of rights under, or result in the creation of any
lien, charge or encumbrance pursuant to, any provision of any law, rule or
regulation or any order, judgment or decree to which Shareholder is a party or
by which it may be bound or affected; (e) Shareholder has the full power and
authority to enter into this Agreement, to make the representations,
warranties and covenants contained herein and to carry out the transactions
contemplated hereby, and all proceedings required to be taken by Shareholder
to authorize the execution, delivery and performance of this Agreement and the
agreements relating hereto have been properly taken, and this Agreement
constitutes the valid and binding agreement of Shareholder; and (f) neither
the execution and the delivery of this Agreement, nor the consummation of the
transactions contemplated hereby, will (A) violate any constitution, statute,
regulation, rule, injunction, judgment, order, decree, ruling, charge, or
other restriction of any government, governmental agency, or court to which
the Shareholder is subject or, any provision of its charter or bylaws or (B)
conflict with or result in a breach of, constitute a default under, result in
the acceleration of, create in any party the right to accelerate, terminate,
modify, or cancel, or require any notice under any agreement, contract, lease,
license, instrument, or other arrangement to which Shareholder is a party or
by which it is bound or to which any of its assets is subject.
5.2 COMPANY ORGANIZATION, STANDING AND QUALIFICATION. Company
represents and warrants that Company is a corporation duly organized, validly
existing and in good standing under the laws of Arizona; Company has full
corporate power and authority to enter into this Agreement and the related
agreements referred to herein and to carry out the transactions contemplated
by this Agreement. Purchaser has been provided with true and complete copies
of Company's Articles of Incorporation and all amendments thereto and the
Bylaws of Company as presently in effect, certified as true and correct by
Company's Secretary.
5.3 NO FRAUDULENT WRITTEN INFORMATION PROVIDED BY SHAREHOLDER.
Shareholder represents and warrants that, to the best of the Shareholder's
knowledge, the written factual information provided by Shareholder to
Purchaser regarding the Company is free of intentional fraudulent
misrepresentation.
5.4 NO FRAUDULENT WRITTEN INFORMATION PROVIDED BY COMPANY.
Company represents and warrants that, to the best of Company's knowledge, the
written factual information provided by Company to Purchaser regarding the
Company is free of intentional fraudulent misrepresentation.
5.5 NO KNOWINGLY INACCURATE WRITTEN INFORMATION PROVIDED BY
SHAREHOLDER. Shareholder represents and warrants that, to the best of
Shareholder's knowledge, the written factual information provided by
Shareholder to Purchaser is not inaccurate in any material respect. The
representations and warranties of this subsection 5.5 shall survive for 60
days after the Closing.
5.6 NO KNOWINGLY INACCURATE WRITTEN INFORMATION PROVIDED BY
COMPANY. Company represents and warrants that, to the best of Company's
knowledge, the written factual information provided by Company to Purchaser is
not inaccurate in any material respect.
5.7 NO SHAREHOLDER KNOWLEDGE OF UNDISCLOSED MATERIAL ADVERSE
MATTERS. Shareholder represents and warrants that Shareholder is not aware of
any information that has not been disclosed to Purchaser that would have a
material adverse effect upon the Company, other than information generally
known in the industry. The representations and warranties of this subsection
5.7 shall survive for 60 days after the Closing.
5.8 NO COMPANY KNOWLEDGE OF UNDISCLOSED MATERIAL ADVERSE
MATTERS. Company represents and warrants that Company is not aware of any
information that has been disclosed to Purchaser that would have a material
adverse effect upon the Company, other than information generally known in the
industry.
5.9 BROKER'S FEES. Company represents and warrants that Company
is not obligated to pay any broker's or other finder's fees to any third party
in connection with the transactions contemplated by this Agreement.
6. REPRESENTATIONS AND WARRANTIES BY PURCHASER. Purchaser represents
and warrants to the Shareholder as follows:
6.1 ORGANIZATION. Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has full power and authority to enter into this Agreement and the related
agreements referred to herein and to carry out the transactions contemplated
by this Agreement and to carry on its business as now being conducted and to
own, lease or operate its properties.
6.2 AUTHORIZATION AND APPROVAL OF AGREEMENT. All proceedings or
actions required to be taken by Purchaser relating to the execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby shall have been taken at or prior to the Closing.
6.3 EXECUTION, DELIVERY AND PERFORMANCE OF AGREEMENT. Neither
the execution, delivery nor performance of this Agreement by Purchaser will,
with or without the giving of notice or the passage of time, or both, conflict
with, result in a default, right to accelerate or loss of rights under, or
result in the creation of any lien, charge or encumbrance pursuant to, any
provision of Purchaser's Certificate of Incorporation or Bylaws or any
franchise, mortgage, deed of trust, lease, license, agreement, understanding,
law, ordinance, rule or regulation or any order, judgment or decree to which
Purchaser is a party or by which it may be bound or affected except for
breaches of agreements that will not affect Shareholder's right to receive
payment of the Purchase Price and will not have a material adverse effect upon
the transaction contemplated by this Agreement. Purchaser has full power and
authority to enter into this Agreement and to carry out the transactions
contemplated hereby, and all proceedings required to be taken by Purchaser to
authorize the execution, delivery and performance of this Agreement and the
agreements relating hereto have been properly taken and this Agreement
constitutes a valid and binding obligation of Purchaser.
6.4 LITIGATION. There is no legal action, suit, arbitration,
governmental investigation or other legal or administrative proceeding, nor
any order, decree or judgment in progress, pending or in effect, or to the
knowledge of Purchaser threatened, against or relating to Purchaser in
connection with or relating to the transactions contemplated by this
Agreement, and Purchaser does not know or have any reason to be aware of any
basis for the same.
6.5 BROKER'S FEES. Purchaser is not obligated to pay any
broker's or other finder's fees to any third party in connection with the
transactions contemplated by this Agreement.
7. CONDUCT OF BUSINESS PRIOR TO CLOSING.
7.1 CONSENTS AND APPROVALS. After the execution of this
Agreement and prior to the Closing, Purchaser, Shareholder and Company shall
undertake to use their best efforts to obtain as quickly as reasonably
possible all approvals necessary for the transactions contemplated by this
Agreement from all necessary regulatory authorities (the "Regulatory
Authorities"), Shareholder and other parties, and to comply with all
applicable laws which may be applicable to the transactions contemplated by
this Agreement.
7.2 CONDUCT OF BUSINESS IN ORDINARY COURSE. Prior to the
Closing, Company and Shareholder shall conduct the business and affairs of
Company only in the ordinary course of business and consistent with its prior
practice and shall maintain, keep and preserve its assets and properties in
good condition and repair and maintain insurance thereon in accordance with
present practices, and Company and Shareholder will use their best efforts (i)
to preserve the business and organization of Company intact, (ii) to keep
available to Purchaser the services of Company's present officers, employees,
agents and independent contractors, (iii) to preserve for the benefit of
Purchaser the goodwill of Company's suppliers, customers, landlords and others
having business relations with it, and (iv) to use reasonable efforts in
obtaining the consent of any party whose consent may be required by reason of
the transactions contemplated hereby. Without limiting the generality of the
foregoing, prior to the Closing Company will not, without Purchaser's prior
written approval:
7.2.1 change its Articles of Incorporation or Bylaws or
merge or consolidate or obligate itself to do so with or into any other
entity;
7.2.2 enter into any contract, agreement, commitment or
other understanding or arrangement except in the ordinary course of business
or as contemplated by this Agreement; or
7.2.3 perform, take any action or incur or permit to exist
any of the acts, transactions, events or occurrences of the type described in
this Agreement which would have been inconsistent with the representations and
warranties set forth therein had the same occurred prior to the date hereof.
7.3 NOTICE OF CHANGES. Company shall give Purchaser prompt
written notice of any change in any of the information contained in the
representations and warranties made in Section 5 or elsewhere in this
Agreement or the Schedules referred to herein which occurs prior to the
Closing.
7.4 NO MATERIAL CHANGES IN BUSINESS. Company shall, and
Shareholder will cause Company to, consult with Purchaser with respect to
material changes in the conduct of the business of the Company; provided,
however, that nothing contained in this Section 7.4 shall require Company to
take or fail to take any action that, in Company's reasonable and commercially
prudent judgment, is likely to give rise to a substantial penalty or a claim
for damages by any third party against Company, or is likely to result in
losses to Company, or is otherwise likely to prejudice in any material respect
or interfere with the conduct of Company's business and operations in the
ordinary course consistent with prior practice, or is likely to result in a
breach by Company of any of its representations, warranties or covenants
contained in this Agreement (unless any such breach is first waived in writing
by Purchaser).
7.5 NO ENCUMBRANCES. From the date of this Agreement, Company
and the Shareholder shall take no action that would encumber or restrict the
Shares or their sale or transfer, except any action by Company to enforce its
rights hereunder.
7.6 NO OPTIONS. From the date of this Agreement, Company and
the Shareholder shall not grant any options or other rights or interests in
the Shares.
7.7 NO ACQUISITION. Prior to the day after the deadline by
which the Closing is to occur under this Agreement, neither the Company nor
Shareholder will cause or permit any representative of them to (i) solicit,
initiate, or encourage the submission of any proposal or offer from any person
relating to the acquisition of any capital stock or other voting securities,
or any portion of the assets, of the Company (including any acquisition
structured as a merger, consolidation, or share exchange) or (ii) participate
in any discussion or negotiations regarding, furnish any information with
respect to, assist or participate in, or facilitate in any other manner any
effort or attempt by any Person to do or seek any of the foregoing. Neither
the Company, Shareholder nor Principal Shareholder will vote in favor of any
such acquisition, whether structured as a merger, consolidation, or share
exchange or otherwise. The Company will notify Purchaser immediately if any
person makes any proposal, offer, inquiry, or contact with respect to any of
the foregoing.
7.8 ACCESS. Company and Shareholder will permit and cause each
of the representatives of Purchaser to have full access to all premises,
properties, personnel, books, records (including Tax records), contracts, and
documents of or pertaining to Company.
7.9 FEES AND BONUSES RELATING TO TRANSACTION. Any broker's,
legal and other fees relating to the transaction contemplated by this
Agreement, other than legal and accounting fees of Purchaser's attorneys and
accountants, shall be paid either by Shareholder or by Principal Shareholder
and shall not be paid by Company, provided that bonuses to employees of
Company may be paid in amounts determined by Shareholder, either at the normal
payroll before Closing or on the Closing Date, as long as Shareholder pays to
Purchaser immediately at Closing an amount equal to such bonuses, payroll and
other taxes, interest charges on debt incurred to pay such bonuses, and all
other expenses related to such bonuses (collectively, "Bonus Costs") and as
long as Bonus Costs are booked as a receivable from Shareholder for the period
ending November 9, 1997.
8. INVESTIGATION, CONFIDENTIALITY AND EXCLUSIVITY.
8.1 INVESTIGATIONS. Subject to the restrictions of Section 8.2,
Company consents to Purchaser commencing a due diligence investigation of the
operations and financial status of Company. Upon reasonable notice and during
regular business hours, Company will give Purchaser and Purchaser's attorneys,
accountants and other representatives full access to Company's officers,
directors, employees, independent contractors, counsel, and independent
accountants and all properties, documents, contracts, books and records of
Company and will furnish Purchaser with copies of such documents (certified by
Company's officers if so requested) and with such information with respect to
the affairs of Company (all of which are collectively referred to as
"Information") as Purchaser may reasonably request from time to time,
including without limitation all books and records, references and customer
contracts. Purchaser may rely upon the Information without independently
verifying it, and Purchaser does not assume responsibility for its accuracy or
completeness, whether or not Purchaser independently verifies the Information.
Any such furnishing of such Information to Purchaser or any investigation by
Purchaser shall not affect Purchaser's right to rely on any representations
and warranties made in this Agreement or in connection herewith or pursuant
hereto. Subject to the restrictions of Section 8.2, Purchaser shall provide
to Company all information reasonably necessary to permit Company to evaluate
Purchaser's ability to perform under this Agreement.
8.2 CONFIDENTIALITY. Shareholder, Company and Purchaser agree
to keep the existence and terms of this Agreement confidential and to keep
confidential all information and communications concerning this Agreement,
including the fact that any meetings or discussions between Purchaser and
Company took place or were scheduled to take place, except to the extent
necessary or appropriate in preparation for or otherwise in connection with
any applicable franchise regulations. The parties contemplate that by virtue
of this Agreement, each may come into possession of the other's confidential
financial and other business information, and each party agrees that it shall
keep such information confidential and shall not engage in any activities
which would or could violate the Confidentiality and Non-Disclosure Agreement,
a copy of which is attached to this Agreement as Exhibit 8.2, and an original
of which has been signed by each party prior to or contemporaneously with its
execution and delivery of this Agreement. Each party shall make no disclosure
regarding any other party to this Agreement to any person or entity unless it
shall have first obtained and delivered to such other party, as applicable,
such person's or entity's signature on an original of the attached
Confidentiality and Non-Disclosure Agreement and also obtained such other
party's written approval for such disclosure.
8.3 PRESS RELEASES. Any public announcement of the pendency of
the transactions embodied in this Agreement shall be made only upon receiving
the prior written consent from all parties as to the necessity for the
announcement and the text to be used.
8.4 DISPOSITION OF PROPERTY UPON TERMINATION. Upon expiration
or earlier termination of this Agreement for any reason, each party shall
deliver to the other all tangible forms of confidential information, trade
secrets and other proprietary property of the other parties which is in its
possession or control, and shall certify to the other parties in writing that
it has no other such property in its possession or control, and that it has no
knowledge of the possession by others of any such property of the other
parties previously in its possession or control.
9. DIRECTOR AND SHAREHOLDER AUTHORIZATIONS.
9.1 BY COMPANY. At or prior to the Closing, Company will
deliver to Purchaser a copy of the resolutions of the Board of Directors and
the resolutions or consents of the Shareholder of Company, together with any
and all required resolutions or consents of shareholders of Shareholder,
approving the execution and delivery of this Agreement and the consummation of
all of the transactions contemplated hereby, duly certified by an officer of
Company.
9.2 BY PURCHASER. At or prior to Closing, Purchaser will
deliver of Shareholder a copy of the resolutions or consents of the Board of
Directors of Purchaser, together with any and all resolutions or consents of
shareholders of Purchaser, approving the execution and delivery of this
Agreement and the consummation of all of the transactions contemplated hereby,
duly certified by an officer of Purchaser.
10. MATERIALITY. Unless otherwise stated with respect to a specific
provision in this Agreement, the parties agree that materiality shall be
interpreted so as to exclude any single matter involving less than $60,000 and
matters involving less than $120,000 in the aggregate.
11. CONDITIONS TO EACH PARTY'S PERFORMANCE. Any provision of this
Agreement to the contrary notwithstanding, no party shall be under any
obligation to close the transactions contemplated by this Agreement unless the
following conditions shall be satisfied on or prior to the Closing Date:
11.1 APPROVAL OF AGREEMENT. The Board of Directors and
shareholders of Purchaser and the Board of Directors and shareholders of
Company shall have approved of this Agreement and related documents.
11.2 338(H)(10) ELECTION. Purchaser shall use good faith
efforts to provide to Shareholder's accountants all information reasonably
necessary to permit Shareholder's accountants to determine the incremental tax
liability to Shareholder as a result of Purchaser's election under I.R.C.
338(h)(10) (including without limitation all allocations of purchase price
among assets necessary for such determination). Shareholder shall use good
faith efforts to permit Purchaser's accountants to participate in the
determination of the incremental tax liability and to cause its accountants to
share with Purchaser's accountants the basis for their determination of such
incremental tax liability. Shareholder shall file a request for prompt
assessment under I.R.C. Section 6501(c) at the time of the filing of its final
income tax returns.
12. CONDITIONS PRECEDENT TO PURCHASER'S OBLIGATIONS. All obligations
of Purchaser hereunder are subject, at the option of Purchaser, to the
fulfillment of each of the following conditions at or prior to the Closing,
and Company and Shareholder shall exert their best efforts to cause each such
condition to be so fulfilled on or prior to the Closing Date, or such other
date as Purchaser and Company may agree.
12.1 REPRESENTATIONS. All representations and warranties of
Company and the Shareholder contained herein or in any document delivered
pursuant hereto shall be true and correct in all material respects when made
and shall be deemed to have been made again at and as of the date of the
Closing, and shall then be true and correct in all material respects except
for changes in the ordinary course of business after the date hereof in
conformity with the covenants and agreements contained herein.
12.2 COVENANTS. All covenants, agreements and obligations
required by the terms of this Agreement to be performed by Company or by
Shareholder at or before the Closing shall have been duly and properly
performed in all material respects, and all documents required to be delivered
to Purchaser at or prior to the Closing shall have been so delivered.
12.3 DILIGENCE. Purchaser shall have completed its due
diligence by November 7, 1997 with results satisfactory to Purchaser, provided
that Purchaser shall also be satisfied with the results of due diligence with
respect to any material events or developments arising subsequent to November
7, 1997 and prior to Closing.
12.4 INTERIM FINANCIAL STATEMENTS. Purchaser shall be provided
by Company with an unaudited balance sheet of Company as at the month prior to
Closing for the period then ended.
12.5 CERTIFICATE. There shall be delivered to Purchaser a
certificate executed by the President and Secretary of Company and by each
Shareholder, individually, dated the date of the Closing, certifying that the
conditions set forth in this Section 12 have been fulfilled.
12.6 GOOD STANDING. There shall be delivered to Purchaser a
certificate issued by the Arizona Corporate Commission attesting to the
corporate existence and good standing of Company in the state of Arizona.
12.7 CONGRESS FINANCIAL CONSENT. Either there shall be
delivered to Purchaser written confirmation from Congress Financial in form
acceptable to Purchaser, that Purchaser shall be entitled, without penalty,
expense or any adverse effect, to purchase the Shares pursuant to this
Agreement, or Purchaser shall have waived this condition by prepaying or
otherwise discharging (at its sole expense) all obligations of Company and
Shareholder to Congress relating to the Company's business.
12.8 OPINION. Purchaser shall have received an opinion of
Company's counsel (substantially in the form attached) and an opinion of
Principal Shareholder's Counsel (relating to valid existence authorization and
lack of conflicts), dated the date of the Closing, in form and substance
satisfactory to counsel for Purchaser.
13. CONDITIONS PRECEDENT TO COMPANY'S AND SHAREHOLDER' OBLIGATIONS.
All obligations of Company and Shareholder at the Closing are subject, at the
option of Company, to the fulfillment of each of the following conditions at
or prior to the Closing, and Purchaser shall exert its best efforts to cause
each such condition to be so fulfilled:
13.1 REPRESENTATIONS. All representations and warranties of
Purchaser contained herein or in any document delivered pursuant hereto shall
be true and correct in all material respects when made and as of the Closing.
13.2 COVENANTS. All obligations required by the terms of this
Agreement to be performed by Purchaser at or before the Closing shall have
been duly and properly performed in all material respects.
13.3 CERTIFICATE. There shall be delivered to Shareholder a
certificate executed by an officer of the Purchaser, dated the date of the
Closing, certifying that the conditions set forth in this Section 13 have been
fulfilled.
13.4 CONGRESS FINANCIAL CONSENT. Purchaser shall at its
election have assumed or discharged all of Shareholder's obligation to
Congress Financial and there shall have been delivered to Shareholder written
confirmation from Congress Financial in form acceptable to Shareholder, either
that Purchaser shall be entitled, without penalty, expense or any adverse
effect, to effect the transactions contemplated by this Agreement, and that
Shareholder shall be released at Closing from all obligations to Congress,
whether under its guarantee or otherwise, or that Purchaser has prepaid or
otherwise discharged (at its sole expense) all obligations of Company and
Shareholder to Congress relating to the Company's business.
13.5 OPINION. Company shall have received an opinion of
Purchaser's counsel, dated the date of the Closing in form and substance
satisfactory to counsel for Company.
13.6 PURCHASE PRICE. Shareholder shall have received at Closing
payment of the Purchase Price in accordance with Section 2.
14. NOTICES. Any and all notices, offers, demands or other
communications required or permitted to be given under any of the provisions
of this Agreement shall be in writing and shall be deemed to have been duly
given when personally delivered or on the tenth business day after mailed by
first class registered or certified United States mail, return receipt
requested, addressed to the parties at the addresses set forth above (or at
such other address as any party may specify by notice to all other parties
given as aforesaid). Copies of any notice sent to Company, Shareholder or
Principal Shareholder must be sent to: Scott DeWald, Esq., Lewis and Roca
LLP, 40 North Central Avenue, Phoenix, Arizona 85004 and Frederick Tanne,
Esq., Kirkland & Ellis, Citicorp Center, 153 East 53rd Street, New York, New
York 10022. Copies of any notice sent to Purchaser must be sent to: Dean
Roeper, Esq., Teel, Palmer & Roeper, 600 "B" Street, Suite 2100, San Diego,
California 92101.
15. LEGAL AND OTHER COSTS.
15.1 DEFAULTS. In the event that any party (the "Defaulting
Party") defaults in his, her or its obligations under this Agreement and, as a
result thereof, the other party (the "Non-Defaulting Party") seeks to legally
enforce his, her or its rights hereunder against the Defaulting Party, then,
in addition to all damages and other remedies to which the Non-Defaulting
Party is entitled by reason of such default, the Defaulting Party shall
promptly pay to the Non-Defaulting Party an amount equal to all costs and
expenses (including reasonable attorneys' fees and costs) paid or incurred by
the Non-Defaulting Party in connection with such enforcement.
15.2 EXPENSES. Each party shall be solely responsible for its
respective expenses incurred in regard to the negotiation and drafting of this
Agreement as well as the obligations to be undertaken by the respective
parties in accordance with this Agreement and the proposed transactions
described herein, provided, however, that no fees or costs relating to this
transaction, including legal fees, accountants' fees and broker's fees, shall
be paid by Company or out of assets owned by the Company, but shall instead be
paid either by Shareholder or Principal Shareholder.
16. MISCELLANEOUS.
16.1 This writing constitutes the entire agreement of the
parties with respect to the subject matter hereof and may not be modified,
amended or terminated except by a written agreement specifically referring to
this Agreement signed by all of the parties hereto.
16.2 No waiver of any breach or default hereunder shall be
considered valid unless in writing and signed by the party giving such waiver,
and no such waiver shall be deemed a waiver of any subsequent breach or
default of the same or similar nature.
16.3 This Agreement shall be binding upon and inure to the
benefit of each party hereto, its, his or her successors, assigns, heirs and
personal representatives.
16.4 The paragraph headings contained herein are for the
purposes of convenience only and are not intended to define or limit the
contents of said paragraphs.
16.5 Each party hereto shall cooperate, shall take such further
action and shall execute and deliver such further documents as may be
reasonably requested by any other party in order to carry out the provisions
and purposes of this Agreement.
16.6 Shareholder will pay all sales, transfer and documentary
taxes, if any, payable in connection with the sale, conveyances, assignments,
transfers and deliveries to be made to Purchaser hereunder.
16.7 This Agreement may be executed in one or more counterparts,
all of which taken together shall be deemed one original.
16.8 This Agreement and all amendments thereof shall be governed
by and construed in accordance with the laws in force in the State of Arizona.
Venue for any litigation arising thereunder shall lie in the state and federal
courts situated in either Maricopa County, Arizona or San Diego County,
California.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed as of the day and year first above written.
FOOD FOR HEALTH, CO., INC., an Arizona corporation
By: Jerry Fleming
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Jerry Fleming, President
By: Michael Shandler
-------------------------------------
Michael Shandler, Assistant Secretary
AMCON DISTRIBUTING COMPANY, a Delaware corporation
By: William F. Wright
-------------------------------------
Mr. William Wright
Its: Chairman of the Board of Directors
FFH HOLDINGS, INC., a Delaware corporation
By: Derek Jones
-------------------------------------
Derek Jones, Chairman
By: Jerry Fleming
-------------------------------------
Jerry Fleming, President
PRUDENTIAL VENTURE PARTNERS II, L.P.
By: Prudential Equity Investors, Inc.
-------------------------------------
Its General Partner
By: Cornerstone Equity Investors, L.L.C.
-------------------------------------
Its Investment Advisor
By: Derek Jones
-------------------------------------
Derek Jones, Managing Director
LOAN AGREEMENT
THIS LOAN AGREEMENT (this "Agreement") is dated as of November 10, 1997
by and between AMCON DISTRIBUTING COMPANY, a Delaware corporation ("Borrower")
and LASALLE NATIONAL BANK, a national banking association ("Lender").
RECITALS
A. Borrower is acquiring all of the outstanding and issued stock (the
"Stock") in Food For Health Co., Inc., an Arizona corporation ("FFH"), and
after such acquisition, FFH will be a wholly owned subsidiary of Borrower.
B. Borrower has requested that Lender advance a loan to Borrower in the
amount of Four Million Five Hundred Thousand and No/100 Dollars
($4,500,000.00) for the purchase price of and other approved closing costs
related to the acquisition of the Stock.
C. Lender has agreed to advance such loan to Borrower under the terms
contained herein.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, Borrower and Lender agree as
follows:
1. AGREEMENT TO LEND. Subject to the terms of this Agreement, Lender
shall make and Borrower shall accept, a loan (the "Loan") in the original
principal amount of Four Million Five Hundred Thousand and No/100 Dollars
($4,500,000.00) to be used by Borrower solely for the purpose of purchasing
the Stock and paying related closing costs approved in advance by Lender. The
Loan is evidenced by a note (the "Note") dated of even date herewith made by
the Borrower to Lender in the amount of the Loan. The Loan shall bear
interest and be due and payable as set forth in the Note.
2. CONDITIONS PRECEDENT TO DISBURSEMENT OF THE LOAN. The following are
conditions precedent to the disbursement of the Loan and shall be complied
with to the satisfaction of Lender. All documents referred to below shall be
in form and substance satisfactory to Lender.
(a) Borrower shall have executed and delivered, or shall have
caused to be executed and delivered, the following documents (collectively,
together with this Agreement, the "Loan Documents"):
(i) the Note;
(ii) a Guaranty (the "Guaranty") executed by William F.
Wright ("Guarantor") in favor of Lender guaranteeing, inter alia, full
repayment of the Note;
(iii) a Pledge Agreement (the "Pledge Agreement") made by
Borrower in favor of Lender pledging, inter alia, as security for the Loan,
the Stock in FFH (the collateral granted as security for the Loan under the
Pledge Agreement is referred to herein as the "Collateral"); and
(iv) such other documentation as Lender shall require to
perfect its rights under the foregoing documents or otherwise in connection
with the Loan.
(b) Lender shall have received a commitment fee from Borrower of
$22,500.00, which commitment fee shall be fully earned as of the date hereof;
(c) Lender shall have received satisfactory financial statements
of Borrower prepared in accordance with generally accepted accounting
principles, and of Guarantor, prepared consistently.
(d) Lender shall have received satisfactory evidence that the
Collateral is not otherwise pledged or encumbered.
(e) Lender shall have received all other documents, information
and all other items reasonably required by Lender to effectuate the Loan
transaction.
3. COVENANTS, WARRANTIES AND REPRESENTATIONS.
(a) Until the Loan is paid and satisfied in full, Borrower agrees
and covenants with the Lender:
(i) Borrower will maintain its corporate existence; comply
with all statutes, rules, orders and regulations the non-compliance with which
would have an adverse affect on Borrower's existence or Borrower's ability to
perform hereunder and under the Loan Documents; and not, without the prior
written consent of Lender, consolidate with or merge into any other
corporation. Borrower will not permit the authorization or issuance of any
additional shares of any kind in Borrower or any other ownership interests in
Borrower without the prior written consent of Lender, other than permitted in
Borrower's Employee Stock Option Plan.
(ii) Borrower will maintain FFH's corporate existence;
comply with all statutes, rules, orders and regulations the non-compliance
with which would have an adverse affect on FFH's existence; and not, without
the prior written consent of Lender, consolidate with or merge FFH into any
other corporation, including, without limitation, into Borrower. Borrower
will not permit the authorization or issuance of any shares (other than the
Stock) of any kind in FFH or any other ownership interests in FFH without the
prior written consent of Lender.
(iii) Borrower will protect, defend (with counsel
satisfactory to Lender), indemnify and hold Lender harmless from and against
any and all claims, losses, costs, liabilities and damages (including, without
limitation, reasonable attorneys' fees and court costs) arising in connection
with the Loan or the Collateral. Borrower's obligations under this Section 3
(a) (iii) shall survive the termination of this Agreement and the repayment of
the Loan.
(iv) Borrower will not cause or permit the sale, lease,
transfer, assignment, mortgage or other disposition of all or any portion of,
or any interest, direct or indirect, in any of Borrower's or FFH's assets,
including, without limitation, the Collateral, including any sale, transfer or
pledge of all or any shares of stock in Borrower, except for (A) transactions
in the ordinary course of Borrower's business; (B) the liens created by
existing security interests in favor of Norwest Bank, NA and Core States Bank,
NA (the "Prior Liens"); and (C) the lien created by the Loan Documents.
(v) Except for the security interest and liens granted to
Lender pursuant to the Loan Documents, and except for the Prior Liens and
except for purchase money security interests incurred in the ordinary course
of business (but not replacements or renewals of the Prior Liens), Borrower
will not suffer or permit any of Borrower's or FFH's assets, including,
without limitation, the Collateral, to be encumbered by any security interest,
liens, encumbrances or claims of any person or entity, any junior encumbrances
as security for any debt or other obligation or any other liability. Any such
encumbrance or assignment without the prior express written consent of the
Lender shall be null and void.
(vi) Borrower will execute and deliver or cause to be
executed and delivered to Lender now and at any time or times hereafter at the
request of Lender all notices, reports, acceptances, receipts, consents,
waivers, affidavits, certificates and other agreements, instruments and
documents which Lender may reasonably request in form and substance
satisfactory to Lender. Borrower will do such further acts and things which
Lender may reasonably request (A) to perfect and maintain perfected the liens
and security interests granted or to be granted pursuant to this Agreement and
the other Loan Documents, and (B) to consummate all transactions contemplated
hereunder and thereunder.
(vii) Borrower will not suffer or permit to be made any
withdrawal of any portion of the capital of Borrower or any distribution of
its assets. Borrower will not create or incur any indebtedness for borrowed
money other than under existing loans from Norwest Bank, N.A. or its
affiliates and Core States Bank, or become liable as a surety, guarantor,
accommodation endorser, or otherwise, for or upon the obligation of any other
person, firm or corporation.
(viii) Borrower shall provide Lender with annual, audited
financial statements of both Borrower and FFH within 90 days after the end of
the fiscal year of each respective company.
(ix) Borrower shall comply with the covenants contained in
Exhibit A attached hereto and incorporated herein.
(b) In order to induce Lender to advance the Loan to Borrower,
Borrower hereby represents and warrants to Lender:
(i) Borrower is a corporation duly organized and validly
existing under the laws of the State of Delaware. Borrower is the owner of
the Collateral, free of all liens, claims and encumbrances except for the
liens and security interests created pursuant to this Agreement and the Prior
Liens.
(ii) FFH is a corporation duly organized and validly
existing under the laws of the State of Arizona. The Stock constitutes all of
the outstanding and issued shares of any kind of FFH. There are no other
ownership interests in FFH.
(iii) All requisite action on the part of Borrower has been
taken to authorize the execution and delivery of this Agreement and the other
Loan Documents. This Agreement and the other Loan Documents are the legal,
valid and binding obligations of the Borrower and the Guarantor, as the case
may be, enforceable in accordance with their terms. The Pledge Agreement
creates a first perfected lien on the Collateral, subject to no other claims,
encumbrances or liens.
(iv) The execution and delivery of the Loan Documents and
performance of the obligations thereunder by Borrower and Guarantor,
respectively, will not violate any agreement or instrument creating or
governing any of them, or to which any of them is a party or by which it is
bound or any statute, rule or regulation, or any judgment, decree or order of
any court or agency binding on any of them. Other than such consent as
required by Norwest Bank, N.A., no consent or approval of the holder of any
indebtedness or obligation of Borrower and Guarantor, respectively, or any
governmental authority (whether foreign or domestic) is necessary in
connection with the execution and delivery of any of the Loan Documents, or
the transactions contemplated hereby.
(v) Borrower has performed, or has caused to be performed,
all obligations required to be performed by Borrower under all contracts,
agreements, leases or other commitments to which it is a party in connection
with the Collateral, and no default, or event which upon notice or lapse of
time or both would create a default, has occurred and is continuing
thereunder. There is no action, suit or proceeding pending or, to the best
knowledge of Borrower threatened, against Borrower or Guarantor which would
(i) seek to enjoin the transactions contemplated by the Loan Documents or (ii)
if decided adversely to Borrower, or the Guarantor, have a material adverse
effect on the financial condition thereof.
(vi) Borrower has filed, or has caused to be filed, all
returns and reports required by any law or regulation to be filed by Borrower
and has paid all taxes, duties and charges due on the basis of such returns
and reports; and paid all real estate taxes, special assessments and other
charges and impositions against any of its properties.
(vii) The proceeds of the Loan will be used solely for the
purchase of the Stock and the payment of related closing costs approved in
advance by Lender.
(viii) Neither this Agreement, nor any written statement,
document or financial statement delivered in connection with the Agreement or
any disbursement of the Loan contains any untrue statement of a material fact
nor omits a material fact necessary to make the statements contained herein or
therein not misleading. No material adverse change has occurred in the
financial condition of Borrower since the dates of any financial statements
submitted to Lender relating to Borrower.
(ix) Borrower is in compliance with all applicable statutes,
regulations and orders of, and all applicable restrictions imposed by, all
government bodies in respect of the conduct of its business and the ownership
and use of its property or assets.
(c) All representations and warranties contained in this Section 3
will remain true and correct at all times until the Loan is repaid in full.
4. EVENTS OF DEFAULT. The term "Event of Default," wherever used in
this Agreement, shall mean any one or more of the following events:
(a) If Borrower shall fail to pay when due any payment of
principal or interest under this Agreement or the Note whether on the Maturity
Date (as defined in the Note) or otherwise or any other payment required by
the terms of this Agreement or any of the other Loan Documents; or
(b) If Borrower shall fail to keep, perform or observe any other
covenant, condition or agreement on the part of Borrower in this Agreement,
and such failure shall continue for fifteen (15) days following the delivery
of notice to Borrower of such failure; provided, however, if such failure is
of the kind or nature that (in Lender's reasonable judgment) is curable but is
not capable of being cured within fifteen (15) days, and provided, further,
that Borrower has promptly commenced and is diligently proceeding to cure and
as long as the continuation of such default without cure does not materially
or adversely affect Lender's security interest in the Collateral or Borrower's
ability to repay the Loan, then if such default is not cured within forty-five
(45) days following the delivery of such notice; or
(c) If an Event of Default shall occur under any of the other Loan
Documents and the same is not cured within such cure, grace or other period,
if any, provided in such Loan Document; or
(d) The untruth of any warranty or representation made herein, in
any other Loan Documents, or in any affidavit or certificate executed by
Borrower in connection with the Loan or the disbursement thereof; or
(e) The appointment of a receiver, trustee or conservator of
Borrower, the Collateral, Guarantor or Borrower's business;
(f) If a material adverse change occurs in the financial condition
of Borrower; or
(g) If Borrower fails, for a period of twenty (20) days, to
procure the dismissal or other disposition to Lender's satisfaction of any
proceedings which might affect the validity or priority of the Loan Documents
or other security for the Loan or which could, in Lender's opinion, materially
affect Borrower's ability to perform its obligations under this Agreement;
provided, however, if such dismissal or other disposition is capable of being
procured but not within twenty (20) days and provided further, that Borrower
has promptly commenced and is diligently proceeding to procure such dismissal
or other disposition, then if such dismissal or other disposition is not
procured within ninety (90) days following institution of any such
proceedings; or
(h) If any governmental or regulatory authority (whether foreign
or domestic) takes or institutes any action, which in Lender's determination,
will materially adversely affect Borrower's ability to perform its obligations
hereunder or Lender's security interest in the Collateral; or
(i) If Borrower or Guarantor shall commence a voluntary case or
other proceeding seeking liquidation, reorganization or other relief with
respect to itself or themselves, respectively, or its or their debts under any
bankruptcy, insolvency or other similar law now or hereafter in effect, or
seeking the appointment of a trustee, receiver, liquidator, custodian or other
similar official of it or any substantial part of its or their respective
assets, or shall consent to any such relief, or to the appointment of or
taking possession by any such official in any involuntary case or other
proceeding commenced against it or them, respectively, or shall make a general
assignment for the benefit of creditors, or shall fail generally to pay its
debts as they become due, or shall take any corporate action to authorize any
of the foregoing; or
(j) If Borrower or Guarantor shall suffer the commencement of an
involuntary case or other proceeding seeking liquidation, reorganization or
other relief with respect to itself or themselves, respectively, or its or
their debts under any bankruptcy, insolvency or other similar law now or
hereafter in effect, or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any substantial part
of its or their respective assets, and such involuntary case or other
proceeding shall not be controverted by appropriate proceedings within thirty
(30) days or shall remain undismissed and unstayed for a period of sixty (60)
days; or
(k) If Borrower or Guarantor shall suffer the entry of an order
for relief or be adjudicated a bankrupt or insolvent under the bankruptcy,
insolvency or similar laws of any competent jurisdiction; or
(l) If any final non-appealable judgment or judgments for the
payment of money in excess of $250,000.00 individually or in the aggregate
shall be rendered against Borrower and Borrower shall not have satisfied the
same or caused execution thereof to be stayed within thirty (30) days; or
(m) Guarantor shall cease to own and/or control with power to
directly vote more than 25% of the issued and outstanding stock of Borrower;
or
(n) Borrower shall cease to own and control with power to directly
vote 100% of the issued and outstanding stock of FFH; or
(o) Additional shares (of any kind) or other ownership interests
in FFH, other than the Stock, are authorized or issued.
5. REMEDIES. Upon the occurrence of any Event of Default, without
limitation of any remedies Lender may have at law or in equity and in
accordance with the terms of any of the Loan Documents, Lender may pursue any
one or more of the following remedies first, concurrently or successively with
each other and with any other available remedies, it being the intent hereof
that none of such remedies will be to the exclusion of any others:
(a) Declare the Loan to be immediately due and payable by
acceleration of the Note or otherwise; or
(b) Foreclose the Pledge Agreement or other security agreements
and exercise any other rights and remedies contained in this Agreement and the
other Loan Documents; or
(c) Enter into sale agreements with respect to the Collateral in
the name of Borrower and generally take such action as Borrower might do as if
Lender were the absolute owner of the Collateral; or
(d) Exercise, without demand or notice, a right of set off against
all monies, securities and other property of Borrower or Guarantor, now or
hereafter in the possession of or on deposit with Lender.
6. LENDER'S RIGHT TO CURE. If Borrower fails to perform any obligation
of Borrower under any of the Loan Documents, or if any Event of Default occurs
hereunder, Lender may, without additional notice, but will not be obligated
to, perform such obligation or cure such failure or Event of Default, and all
amounts expended in so doing and all costs and expenses paid or incurred by
Lender in connection therewith, and all other amounts advanced by Lender in
connection with preserving any security for the Loan or pursuant to the Loan
Documents, will constitute additional advances of the Loan, will be secured by
the Loan Documents and all other liens and security interests granted pursuant
to this Agreement and the other Loan Documents, shall be payable upon demand
and will bear interest from the date advanced until paid at the interest rate
set forth in the Note after maturity or an Event of Default.
7. MISCELLANEOUS.
(a) LOAN EXPENSES. Borrower shall pay all expenses, charges, costs
and fees incurred in connection with the Loan or pursuant to the Loan
Documents, including without limitation, all recording fees and charges,
insurance premiums, legal fees and disbursements of Lender's special counsel,
printing, photostating and duplicating expenses, escrow fees, fees of experts
engaged by Lender, deposits, all such costs, expenses, charges and fees to be
paid by Borrower to Lender upon demand or may be paid by Lender at any time by
disbursement of proceeds of the Loan. All such costs, expenses, charges and
fees shall be payable by Borrower regardless of whether there shall be any
disbursements of the Loan.
(b) SEVERABILITY. If any term, restriction or covenant of this
Agreement is deemed illegal or unenforceable, all other terms restrictions and
covenants and the application thereof to all persons and circumstances subject
hereto will remain unaffected to the extent permitted by law; and if any
application of any term, restriction or covenant to any person or circumstance
is deemed illegal or unenforceable, the application of such term, restriction
or covenant to other persons and circumstances will remain unaffected to the
extent permitted by law.
(c) NOTICES. All notices, demands and other communications
hereunder to either party shall be in writing, and shall be delivered by
personal delivery, by overnight courier or by United States mail, registered
or certified, return receipt requested and postage prepaid. Such notices shall
be deemed to have been given when actually received or when refused if
personally delivered, on the day after deposit with a nationally recognized
overnight courier, or on the third business day after the deposit thereof in
the United States mail, if mailed, addressed as follows:
If to the Borrower: AMCON Distributing Company
10228 L Street
Omaha, Nebraska 68127
Attention: Kathleen M. Evans
with a copy to: William F. Wright
1431 Stratford Court
Del Mar, California 92014
If to the Lender: LaSalle National Bank
135 South LaSalle Street
Chicago, Illinois 60603
Attention: Mr. Mark A. Ryle
or to either party at such other address as such party may
designate for such purpose in a written notice duly given to the other party
as provided for herein.
(d) BINDING EFFECT; NO ASSIGNMENT BY BORROWER. This Agreement
shall be binding upon and inure to the benefit of the parties hereto and the
successors and assigns of Lender. The rights and obligations of Borrower under
this Agreement or the other Loan Documents shall not be assigned or
assignable, and any such purported assignment shall be void.
(e) TIME OF ESSENCE. Time is of the essence with respect to the
performance by Borrower of its obligations under this Agreement and the Loan
Documents.
(f) GOVERNING LAW. This Agreement is governed in all respects by
the internal laws of the State of Illinois.
(g) CONSTRUCTION. Whenever the context requires (i) the singular
form of any word shall include the plural form and vice versa, and (ii) any
gender used herein includes the feminine, masculine and neuter forms. Section
and other headings used in this Agreement are for convenience of reference
only and do not affect the meaning of the provisions which they precede.
(h) WAIVERS. No waiver of any provision of any of the Loan
Documents will be effective unless set forth in a writing signed by Lender,
and any such waiver will be effective only to the extent set forth therein.
Failure by Lender to insist upon full and prompt performance of any provision
of any of the Loan Documents, or to take any action in the event of a breach
of any such provision or an Event of Default, will not constitute a waiver of
any rights of Lender, and Lender may at any time thereafter exercise all
rights specified therein or provided by law with respect to such breach or
Event of Default.
(i) DEBTOR-CREDITOR RELATIONSHIP. Borrower and Lender hereby agree
that the relationship created under this Agreement is intended to be solely
that of debtor and creditor and agree to report the transaction as a loan in
all tax filings. No part of this Agreement shall be construed as creating at
any time, a partnership, joint venture or any other equity interest in the
Collateral for Lender. Furthermore, Lender and Borrower agree that they are
not, by execution and delivery of this Agreement and the Loan Documents,
creating or intending to create a partnership, joint venture or such other
equity interest. Each party hereto covenants that it shall not assert to any
third party or in any administrative or judicial proceeding that (i) the
relationship between Lender and Borrower is that of a partnership rather than
lender-borrower, or (ii) the Loan Documents are not in all respects
enforceable in accordance with their terms.
(j) JURY WAIVER. BORROWER AND LENDER ACKNOWLEDGE AND AGREE THAT
ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT, THE PLEDGE AGREEMENT OR
ANY OF THE OTHER LOAN DOCUMENTS OR WITH RESPECT TO THE TRANSACTIONS
CONTEMPLATED HEREIN AND THEREIN WOULD BE BASED UPON DIFFICULT AND COMPLEX
ISSUES. ACCORDINGLY, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW,
BORROWER AND LENDER HEREBY KNOWINGLY AND VOLUNTARILY MUTUALLY (A) WAIVE THE
RIGHT TO TRIAL BY JURY IN ANY CIVIL ACTION, CLAIM, COUNTERCLAIM, CROSS-CLAIM,
THIRD-PARTY CLAIM, DISPUTE, DEMAND, SUIT OR PROCEEDING ARISING OUT OF OR IN
ANY WAY CONNECTED WITH THIS AGREEMENT, THE NOTE, ANY OF THE OTHER LOAN
DOCUMENTS, OR THE LOAN EVIDENCED OR SECURED THEREBY, OR ANY RENEWAL, EXTENSION
OR MODIFICATION THEREOF, OR ANY CONDUCT OF ANY PARTY RELATING THERETO, AND (B)
AGREE THAT ANY SUCH ACTION, CLAIM, SUIT OR PROCEEDING SHALL BE TRIED BEFORE A
JUDGE AND NOT BEFORE A JURY.
(k) JURISDICTION. BORROWER AGREES THAT ALL ACTIONS OR PROCEEDINGS
ARISING DIRECTLY, INDIRECTLY OR OTHERWISE IN CONNECTION WITH, OUT OF, RELATED
TO OR FROM THIS AGREEMENT OR ANY OF THE LOAN DOCUMENTS SHALL BE LITIGATED, AT
LENDER'S SOLE DISCRETION AND ELECTION, IN THE CIRCUIT COURT OF COOK COUNTY,
ILLINOIS OR THE NORTHERN DISTRICT OF ILLINOIS. BORROWER HEREBY CONSENTS AND
SUBMITS IN ADVANCE TO THE JURISDICTION OF SUCH COURTS. BORROWER HEREBY
IRREVOCABLY APPOINTS AND DESIGNATES C T CORPORATION SYSTEM, WHOSE ADDRESS IS
BORROWER, C/O C T CORPORATION SYSTEM, 208 S. LASALLE STREET, CHICAGO, ILLINOIS
60604, AS ITS DULY AUTHORIZED AGENT FOR SERVICE OF LEGAL PROCESS AND AGREES
THAT SERVICE OF SUCH PROCESS UPON SUCH PARTY SHALL CONSTITUTE PERSONAL SERVICE
OF PROCESS UPON BORROWER. IN THE EVENT SERVICE IS UNDELIVERABLE BECAUSE SUCH
AGENT MOVES OR CEASES TO DO BUSINESS IN CHICAGO, ILLINOIS, BORROWER SHALL
WITHIN TEN (10) DAYS AFTER LENDER'S REQUEST, APPOINT A SUBSTITUTE AGENT (IN
CHICAGO, ILLINOIS) ON ITS BEHALF AND WITHIN SUCH PERIOD NOTIFY LENDER OF SUCH
APPOINTMENT. IF SUCH SUBSTITUTE AGENT IS NOT TIMELY APPOINTED, LENDER SHALL,
IN ITS SOLE DISCRETION, HAVE THE RIGHT TO DESIGNATE A SUBSTITUTE AGENT UPON
FIVE (5) DAYS NOTICE TO BORROWER. BORROWER HEREBY WAIVES ANY CLAIM THAT COOK
COUNTY, ILLINOIS OR THE NORTHERN DISTRICT OF ILLINOIS IS AN INCONVENIENT FORUM
OR AN IMPROPER FORUM BASED ON LACK OF VENUE. THE CHOICE OF FORUM FOR BORROWER
SET FORTH IN THIS SECTION SHALL NOT BE DEEMED TO PRECLUDE THE ENFORCEMENT BY
LENDER OF ANY ACTION TO ENFORCE THE SAME IN ANY OTHER APPROPRIATE
JURISDICTION, AND BORROWER HEREBY WAIVES THE RIGHT, IF ANY, TO COLLATERALLY
ATTACK ANY SUCH JUDGMENT OR ACTION.
IN WITNESS WHEREOF, the parties hereto have executed this Loan
Agreement on the date first above written.
LASALLE NATIONAL BANK, a national banking association
By: Mark A. Ryle
------------------------------------
Its: Vice President
------------------------------------
AMCON DISTRIBUTING COMPANY, a Delaware corporation
By: William F. Wright
------------------------------------
Name: William F. Wright
Its: Vice President
------------------------------------
EXHIBIT A TO LOAN AGREEMENT
This EXHIBIT A is attached to and forms an integral part of the Loan
Agreement to which it is attached. Capitalized terms defined in the Loan
Agreement and not otherwise defined in this EXHIBIT A shall have the same
meaning in this EXHIBIT A as in the Loan Agreement. Wherever possible this
EXHIBIT A and the Loan Agreement shall be construed so as to be consistent
with each other; however, if and to the extent that the terms of this EXHIBIT
A conflict or are inconsistent with the Loan Agreement, the terms of this
EXHIBIT A shall prevail.
1. Until the Loan is paid and satisfied in full, Borrower agrees and
covenants with the Lender:
(a) Borrower shall at all times maintain a Tangible Net Worth
equal to or in excess of $4,000,000.00. "Tangible Net Worth" shall mean, as
of any time the same is to be determined, an amount equal to shareholder's
equity in Borrower reflected on the most recent balance sheet and the most
recent audited financial statements of Borrower, both prepared in accordance
with generally accepted accounting principles consistently applied, less the
aggregate book value of all assets which would be classified as intangible
assets under generally accepted accounting principles, including, without
limitation, goodwill, patents, trademarks, trade names, copyrights, franchises
and deferred charges (including, without limitation, unamortized debt discount
and expense, organization and cost and deferred research and development
expense) and similar assets.
(b) The total of all debt incurred or to be paid by Borrower shall
in no event at any time exceed four (4) times the amount equal to
shareholder's equity in Borrower as reflected on the most recent balance sheet
and the most recent audited financial statement of Borrower, both prepared in
accordance with generally accepted accounting principles consistently applied.
(c) At all times the Debt Service Coverage Ratio shall not exceed
1.5 to 1. "Debt Service Coverage Ratio" shall mean for the period of which it
is to be determined, the ratio of Net Cash Flow to Debt Service. "Net Cash
Flow" shall mean the net income of Borrower as reflected on the most recent
financial statement of Borrower, prepared in accordance with generally
accepted accounting principles consistently applied, plus any depreciation
deducted from net income. "Debt Service" shall mean the amount obtained by
multiplying the principal amount then outstanding under the Note plus any
other amounts then due and owing under this Agreement by the constant derived
using a principal amortization schedule based on the remaining term of the
Loan and an interest rate equal to the highest Loan Rate (defined herein as
defined in the Note) applicable to any portion of the Loan then outstanding.
(d) Borrower shall not, without Lender's prior written consent,
cause or permit FFH to (i) distribute to Borrower assets of FFH; or (ii) pay
to Borrower, any officer of Borrower or FFH, or any shareholder of Borrower or
FFH, extraordinary distributions or extraordinary bonuses. Borrower shall
not, without Lender's prior written consent, (iii) distribute to FFH, assets
of Borrower, whether or not in the form of a loan; or (iv) pay to any officer
of Borrower or FFH or any shareholder of Borrower, dividends, extraordinary
distributions or extraordinary bonuses.
(e) The annual fixed charge ratio of Borrower shall in no event at
any time exceed 1.1 to 1.
NOTE
$4,500,000.00 November 10, 1997
FOR VALUE RECEIVED, AMCON DISTRIBUTING COMPANY, a Delaware corporation
("Maker"), hereby promises to pay to the order of LASALLE NATIONAL BANK, a
national banking association ("Lender"), the principal sum of FOUR MILLION
FIVE HUNDRED THOUSAND AND NO/100 DOLLARS ($4,500,000.00), at the place and in
the manner hereinafter provided, together with interest thereon at the rates
described below. Interest shall accrue on the balance of the principal
remaining from time to time under this Note during each calendar month
(whether full or partial) prior to the Maturity Date (as hereinafter defined)
at an annual rate (the "Loan Rate") set forth on the Rider to this Note
attached hereto.
1. LOAN RATE. The Loan Rate shall: (a) be computed on the basis of a
year consisting of 360 days; and (b) be charged for the actual number of days
within the period for which interest is being charged. Lender shall not be
required to give Maker any notice of a change in the Loan Rate.
2. PAYMENT SCHEDULE. Payments of principal and interest due under this
Note, if not sooner declared to be due in accordance with the provisions
hereof, shall be made as follows:
(a) Commencing on December 10, 1997 and on the 10th day of each
month thereafter through and including the month in which the Maturity Date
occurs (the "Payment Date"), a payment equal to the sum of $75,000.00 plus
accrued interest at the Loan Rate for the period commencing on the last
Payment Date and ending on the day prior to the then current Payment Date.
(b) The unpaid principal balance of this Note, if not sooner
declared to be due in accordance with the terms hereof, together with all
accrued and unpaid interest thereon, shall be due and payable in full on
November 10, 2002 (the "Maturity Date").
All payments and prepayments on account of the indebtedness evidenced by
this Note shall be first applied to accrued and unpaid interest on the unpaid
principal balance of this Note, secondly, to all other sums then due Lender
hereunder or under any of the Loan Documents, and the remainder, if any, to
the unpaid principal balance of this Note. Any allocation of payments to
interest and/or principal shall be made in such order and manner as Lender
shall determine in the exercise of its sole and absolute discretion. Any
prepayment on account of the indebtedness evidenced by this Note shall not
extend or postpone the due date of any subsequent monthly payment due
hereunder or any payment due under any of the Loan Documents.
3. PREPAYMENT. Maker may prepay all or any part of the principal
balance of this Note as provided in Section 2.1 of the Rider to this Note.
4. DEFAULT INTEREST. After maturity or the earlier acceleration of the
indebtedness evidenced by this Note, or if said indebtedness has not been
accelerated, during any period in which an Event of Default (as hereinafter
defined) exists under this Note or any of the Loan Documents, Maker shall pay
interest on the balance of principal remaining unpaid during any such period
at an annual rate equal to the Loan Rate, plus six percent (6%). The interest
accruing under this Section 4 shall be immediately due and payable by Maker to
the holder of this Note and shall be additional indebtedness evidenced by this
Note.
5. LATE PAYMENTS. In the event any payment of interest or principal
due hereunder or any other payment due under the Loan Documents is not made
within five (5) days after the date when any such payment is due in accordance
with the terms hereof or thereof, then, in addition to the payment of the
amount so due, Maker shall pay to Lender a "late charge" of four cents ($.04)
for each whole dollar so overdue to defray part of the cost of collection and
handling such late payment. Such late charge shall be in addition to and not
in lieu of fees and charges of any agents or attorneys which Lender is
entitled to employ upon the occurrence of a default hereunder. Maker agrees
that the damages to be sustained by the holder hereof for the detriment caused
by any late payment is extremely difficult and impractical to ascertain, and
that the amount of four cents ($.04) for each one dollar due is a reasonable
estimate of such damages, does not constitute interest, and is not a penalty.
6. PAYMENT TERMS. All payments of principal and interest hereunder
shall be paid in coin or currency which, at the time or times of payment, is
the legal tender for public and private debts in the United States of America
and shall be made at such place as Lender or the legal holder or holders of
this Note may from time to time appoint, and in the absence of such
appointment, then at the offices of Lender, 135 South LaSalle Street, Chicago,
Illinois 60603. Payment submitted in funds not available until collected
shall continue to bear interest until collected. If any payment hereunder
becomes due and payable on a Saturday, Sunday or legal holiday under the laws
of the State of Illinois, the due date thereof shall be extended to the next
succeeding business day, and interest shall be payable thereon at the then
applicable interest rate during such extension.
7. LOAN DOCUMENTS. Maker and Lender have entered into that certain
Loan Agreement of even date herewith (the "Loan Agreement") setting forth
certain terms and conditions under which Lender is willing to advance the
principal sum evidenced hereby to Maker. This Note is the note referred to in
the Loan Agreement as the "Note." This Note and any and all other
liabilities, obligations and indebtedness of Maker to Lender arising under
this Note and the Loan Documents, whether such liabilities, obligations or
indebtedness are now existing or hereafter created, direct or indirect,
absolute or contingent, joint or several, due or to become due, howsoever
created, arising or evidenced, and howsoever acquired by Lender, are secured,
inter alia, by (i) the Pledge Agreement of even date herewith made by Maker in
favor of Lender, and (ii) the Guaranty of even date herewith made by William
F. Wright (the "Guarantor") in favor of Lender. The Loan Agreement, said
security documents and all other documents and instruments securing this Note
or delivered to induce Lender to disburse the proceeds evidenced hereby are
hereinafter collectively referred to as the "Loan Documents". Reference is
hereby made to the Loan Documents (which are incorporated herein by reference
as fully and with the same effect as if set forth herein at length) for a
description of the collateral given thereunder, a statement of the rights,
remedies and security afforded thereby, and all other matters therein
contained.
8. EVENT OF DEFAULT. The occurrence of any one or more of the
following events shall constitute an "Event of Default" under this Note:
(a) the failure by Maker to pay when due any installment of
principal or interest or any other amount due to Lender under this Note, the
Loan Agreement or any of the other Loan Documents;
(b) the occurrence of any one or more "Event of Default" under the
Loan Agreement; or
(c) the occurrence of any one or more "Event of Default" under
any of the Loan Documents other than the Loan Agreement; or
(d) the sale, assignment, mortgage, pledge or other disposition of
all or any portion of the Collateral (defined herein as defined in the Loan
Agreement) or the transfer of any interest in the Collateral.
9. REMEDIES. At the election of the holder hereof, and without notice,
the principal balance remaining unpaid under this Note, and all unpaid
interest accrued thereon, shall be and become immediately due and payable in
full upon the occurrence of any Event of Default. Failure to exercise this
option shall not constitute a waiver of the right to exercise same in the
event of any subsequent Event of Default. No holder hereof shall, by any act
of omission or commission, be deemed to waive any of its rights, remedies or
powers hereunder or otherwise unless such waiver is in writing and signed by
the holder hereof, and then only to the extent specifically set forth therein.
The rights, remedies and powers of the holder hereof, as provided in this
Note, the Loan Agreement and all of the other Loan Documents, and under law
and in equity, are cumulative and concurrent, and may be pursued singly,
successively or together against Maker, the Collateral, the Guarantor, and any
other security given at any time to secure the repayment hereof, all at the
sole discretion of the holder hereof. Maker hereby expressly agrees that upon
the occurrence of any Event of Default under this Note, the undersigned will
pay to Lender, on demand, all costs of collection or enforcement of every
kind, including (but not limited to) all attorneys' fees, court costs, and
other costs and expenses of every kind incurred by Lender or the holder hereof
in connection with the protection or realization of any or all of the security
for this Note, whether or not any lawsuit is ever filed with respect thereto.
10. WAIVERS. Maker and all others who now or may at any time become
liable for all or any part of the obligations evidenced hereby, expressly
agree hereby to be jointly and severally bound, and jointly and severally:
(i) waive presentment and demand for payment, notices of nonpayment and of
dishonor, protest of dishonor, and notice of protest; (ii) waive any and all
notices in connection with the delivery and acceptance hereof and except to
the extent expressly provided to the contrary herein, waive all other notices
in connection with the performance, default or enforcement of the payment
hereof or hereunder; (iii) waive any and all lack of diligence and delays in
the enforcement of the payment hereof; (iv) agree that the liability of Maker
and any endorser or obligor shall be unconditional and without regard to the
liability of any other person or entity for the payment hereof, and shall not
in any manner be affected by any indulgence or forbearance granted or
consented to by Lender to any of them with respect hereto; (v) consent to any
and all extensions of time renewals, waivers or modifications that may be
granted by Lender with respect to the payment or other provisions hereof, and
to the release of any security at any time given for the payment hereof, or
any part thereof, with or without substitution, and to the release of any
person or entity liable for the payment hereof; and (vi) consent to the
addition of any and all other makers, endorsers, guarantors, and other
obligors for the payment hereof, and to the acceptance of any and all other
security for the payment hereof, and agree that the addition of any such
makers, endorsers, guarantors or other obligors, or security shall not affect
the liability of Maker and all others now liable for all or any part of the
obligations evidenced hereby.
11. USURY. The loan evidenced by this Note comes within the purview of
815 ILCS 205/4-1(a). Maker agrees that the obligation evidenced by this Note
is an exempted transaction under the Truth In Lending Act, 15 U.S.C., Section
1601, et seq. The proceeds of the loan evidenced by this Note will not be
used for the purchase of registered equity securities within the purview of
Regulation G issued by the Board of Governors of the Federal Reserve System.
12. MISCELLANEOUS.
(a) Time is of the essence hereof.
(b) This Note is governed and controlled as to validity,
enforcement, interpretation, construction, effect and in all other respects by
the statutes, laws and decisions of the State of Illinois. This Note may not
be changed or amended orally but only by an instrument in writing signed by
the party against whom enforcement of the change or amendment is sought.
(c) Lender shall in no event be construed for any purpose to be a
partner, joint venturer, agent or associate of Maker or of any lessee,
operator, concessionaire or licensee of Maker in the conduct of their
respective businesses, and by the execution of this Note, Maker agrees to
indemnify, defend, and hold Lender harmless from and against any and all
damages, costs, expenses and liabilities that may be incurred by Lender as a
result of a claim that Lender is such a partner, joint venturer, agent or
associate.
(d) This Note has been made and delivered at Chicago, Illinois and
all funds disbursed to or for the benefit of Maker will be disbursed in
Chicago, Illinois.
(e) The obligations and liabilities of each Maker under this Note
shall be joint and several and shall be binding upon and enforceable against
each Maker and their respective successors and assigns. This Note shall inure
to the benefit of and may be enforced by Lender, its successors and assigns.
(f) In the event one or more of the provisions contained in this
Note shall for any reason be held to be invalid, illegal or unenforceable in
any respect by a court of competent jurisdiction, such invalidity, illegality
or unenforceability shall not affect any other provision of this Note, and
this Note shall be construed as if such invalid, illegal or unenforceable
provision had never been contained herein.
(g) All notices, demands and other communications hereunder to
either party shall be in writing, and shall be delivered by personal delivery,
by overnight courier or by United States mail, registered or certified, return
receipt requested and postage prepaid. Such notices shall be deemed to have
been given when actually received or when refused if personally delivered, on
the day after deposit with a nationally recognized overnight courier, or on
the third business day after the deposit thereof in the United States mail, if
mailed, addressed as follows:
If to the Maker: AMCON Distributing Company
10228 L Street
Omaha, Nebraska 68127
Attention: Ms. Kathleen M. Evans
with a copy to: William F. Wright
1431 Stratford Court
Del Mar, California 92014
If to the Lender: LaSalle National Bank
135 South LaSalle Street
Chicago, Illinois 60603
Attention: Mr. Mark A. Ryle
or to either party at such other address as such party may designate for such
purpose in a written notice duly given to the other party as provided for
herein.
13. OFFSET. In addition to (and not in limitation of) any rights of
offset that the holder hereof may have under applicable law, upon the
occurrence of any Event of Default hereunder the holder hereof shall have the
right, immediately and without notice, to appropriate and apply to the payment
of this Note any and all balances, escrows, deposits, accounts or moneys of
the Maker then or thereafter with the holder hereof.
14. JURY WAIVER. MAKER AND LENDER ACKNOWLEDGE AND AGREE THAT ANY
CONTROVERSY WHICH MAY ARISE UNDER THIS NOTE, THE LOAN AGREEMENT OR ANY OF THE
OTHER LOAN DOCUMENTS OR WITH RESPECT TO THE TRANSACTIONS CONTEMPLATED HEREIN
AND THEREIN WOULD BE BASED UPON DIFFICULT AND COMPLEX ISSUES. ACCORDINGLY, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, MAKER AND LENDER, BY ITS
ACCEPTANCE OF THIS NOTE, HEREBY KNOWINGLY AND VOLUNTARILY MUTUALLY (A) WAIVE
THE RIGHT TO TRIAL BY JURY IN ANY CIVIL ACTION, CLAIM, COUNTERCLAIM, CROSS-
CLAIM, THIRD-PARTY CLAIM, DISPUTE, DEMAND, SUIT OR PROCEEDING ARISING OUT OF
OR IN ANY WAY CONNECTED WITH THIS NOTE, THE LOAN AGREEMENT ANY OF THE OTHER
LOAN DOCUMENTS, OR THE LOAN EVIDENCED OR SECURED THEREBY, OR ANY RENEWAL,
EXTENSION OR MODIFICATION THEREOF, OR ANY CONDUCT OF ANY PARTY RELATING
THERETO, AND (B) AGREE THAT ANY SUCH ACTION, CLAIM, SUIT OR PROCEEDING SHALL
BE TRIED BEFORE A JUDGE AND NOT BEFORE A JURY.
15. JURISDICTION. MAKER AGREES THAT ALL ACTIONS OR PROCEEDINGS ARISING
DIRECTLY, INDIRECTLY OR OTHERWISE IN CONNECTION WITH, OUT OF, RELATED TO OR
FROM THIS NOTE OR ANY OF THE LOAN DOCUMENTS SHALL BE LITIGATED, AT LENDER'S
SOLE DISCRETION AND ELECTION, IN THE CIRCUIT COURT OF COOK COUNTY, ILLINOIS OR
THE NORTHERN DISTRICT OF ILLINOIS. MAKER HEREBY CONSENTS AND SUBMITS IN
ADVANCE TO THE JURISDICTION OF SUCH COURTS. MAKER HEREBY IRREVOCABLY APPOINTS
AND DESIGNATES C T CORPORATION SYSTEM, WHOSE ADDRESS IS MAKER, C/O C T
CORPORATION SYSTEM, 208 S. LASALLE STREET, CHICAGO, ILLINOIS 60604, AS ITS
DULY AUTHORIZED AGENT FOR SERVICE OF LEGAL PROCESS AND AGREES THAT SERVICE OF
SUCH PROCESS UPON SUCH PARTY SHALL CONSTITUTE PERSONAL SERVICE OF PROCESS UPON
MAKER. IN THE EVENT SERVICE IS UNDELIVERABLE BECAUSE SUCH AGENT MOVES OR
CEASES TO DO BUSINESS IN CHICAGO, ILLINOIS, MAKER SHALL WITHIN TEN (10) DAYS
AFTER LENDER'S REQUEST, APPOINT A SUBSTITUTE AGENT (IN CHICAGO, ILLINOIS) ON
ITS BEHALF AND WITHIN SUCH PERIOD NOTIFY LENDER OF SUCH APPOINTMENT. IF SUCH
SUBSTITUTE AGENT IS NOT TIMELY APPOINTED, LENDER SHALL, IN ITS SOLE
DISCRETION, HAVE THE RIGHT TO DESIGNATE A SUBSTITUTE AGENT UPON FIVE (5) DAYS
NOTICE TO MAKER. MAKER HEREBY WAIVES ANY CLAIM THAT COOK COUNTY, ILLINOIS OR
THE NORTHERN DISTRICT OF ILLINOIS IS AN INCONVENIENT FORUM OR AN IMPROPER
FORUM BASED ON LACK OF VENUE. THE CHOICE OF FORUM FOR MAKER SET FORTH IN THIS
SECTION SHALL NOT BE DEEMED TO PRECLUDE THE ENFORCEMENT BY LENDER OF ANY
ACTION TO ENFORCE THE SAME IN ANY OTHER APPROPRIATE JURISDICTION, AND MAKER
HEREBY WAIVES THE RIGHT, IF ANY, TO COLLATERALLY ATTACK ANY SUCH JUDGMENT OR
ACTION.
IN WITNESS WHEREOF, Maker has executed this Note as of the day and year
first written above.
AMCON DISTRIBUTING COMPANY,
a Delaware corporation
By: William F. Wright
--------------------------
Name: William F. Wright
--------------------------
Title: Chairman
--------------------------
RIDER TO NOTE (Prime or LIBOR)
Dated as of November 10, 1997, executed by AMCON Distributing Company
("Maker") in favor of LaSalle National Bank ("Lender").
This Rider is attached to and forms an integral part of the above-
referenced Note. Capitalized terms defined in the Note and not otherwise
defined in this Rider shall have the same meaning in this Rider as in the
Note. Wherever possible this Rider and the Note shall be construed so as to
be consistent with each other; however, if and to the extent that the terms of
this Rider conflict or are inconsistent with the Note, the terms of this Rider
shall prevail.
1.1 LOAN RATE. The unpaid principal amount from time to time
outstanding hereunder shall bear interest at the following rates per year:
(a) The "PRIME-BASED RATE," which shall mean the Prime Rate (as
defined below). Changes in the Loan Rate resulting from a change in the Prime
Rate shall take effect on the date set forth in each announcement for a change
in the Prime Rate. "Prime Rate" means the rate per annum announced from time
to time by Lender called its prime rate, which may not at any time be the
lowest rate charged by the Lender; and/or
(b) "LIBOR," which shall mean that fixed rate of interest per
annum for deposits with maturity periods of one (1) month, two (2) months,
three (3) months or six (6) months (which maturity period Maker shall select
subject to the terms stated herein) in United States dollars offered to Lender
in or through the London or another offshore interbank market, as determined
by the Lender in its sole discretion, for or as of the borrowing date
requested by Maker, divided by one minus any applicable reserve requirement
(expressed as a decimal) on Eurodollar deposits of the same amount and
maturity as determined by Lender in its sole discretion, plus one and three
quarters percent (1.75%); and or
(c) "TREASURIES RATE," which shall mean that fixed rate of
interest per annum equal to the yield on a United States Treasury Security
issued as of the borrowing date requested by Maker with a maturity period of
either one (1) year or five (5) years (which maturity period Maker shall
select subject to the terms stated herein), plus two and one quarter percent
(2.25%).
1.2 RATE SELECTION. Maker shall select and change its selection of the
interest rate as among the Prime-Based Rate, LIBOR and Treasuries Rate to
apply to at least $100,000.00 and in integral multiples of $100,000.00
thereafter (or the remaining amount available hereunder) of any portion of the
outstanding principal balance hereunder, subject to the requirements herein
stated:
(a) At the time any advance is made;
(b) At the expiration of the particular LIBOR maturity period
selected for any portion of the outstanding principal balance then currently
bearing interest at the LIBOR Rate;
(c) At the expiration of the particular Treasuries Rate maturity
period selected for any portion of the outstanding principal balance then
currently bearing interest at the Treasuries Rate; and
(d) At any time for any portion of the outstanding principal
balance then currently bearing interest at the Prime-Based Rate.
1.3 RATE CHANGES AND NOTIFICATIONS.
(a) LIBOR.
(i) NOTIFICATION. If Maker wishes to borrow funds at LIBOR
or if Maker wishes to change the Loan Rate on any portion of the outstanding
principal balance hereunder, within the limits described above, from the
Prime-Based Rate or Treasuries Rate to LIBOR, it shall, not less than three
(3) banking days (the "Notice Date") prior to the banking day of the Lender
on which such rate is to take effect, give Lender written or telephonic notice
thereof, which shall be irrevocable. Such notice shall specify the portion of
the outstanding principal balance hereunder to which LIBOR is to apply, and,
in addition, the desired LIBOR maturity period (but not to exceed the Maturity
Date of this Note). Such notice shall be deemed void if the subject portion
of the outstanding principal balance hereunder is bearing interest at
Treasuries Rate and such Treasuries Rate maturity period will not expire on
the date the desired LIBOR maturity period is to begin. If any such
notification is not received before 10:00 AM Chicago time on the Notice Date,
at Lender's option, the borrowing or conversion may be delayed one (1) banking
day.
(ii) FAILURE TO NOTIFY. If Maker does not notify Lender at
the expiration of a selected maturity period with respect to any principal
outstanding at LIBOR, then in the absence of such notice Maker shall be deemed
to have elected to have such principal accrue interest after the respective
LIBOR maturity period at the Prime-Based Rate.
(b) TREASURIES RATE.
(i) NOTIFICATION. If Maker wishes to borrow funds at
Treasuries Rate or if Maker wishes to change the Loan Rate on any portion of
the outstanding principal balance hereunder, within the limits described
above, from the Prime-Based Rate or LIBOR to Treasuries Rate, it shall, not
less than three (3) banking days (the "Notice Date") prior to the banking day
of the Lender on which such rate is to take effect, give Lender written or
telephonic notice thereof, which shall be irrevocable. Such notice shall
specify the portion of the outstanding principal balance hereunder to which
Treasuries Rate is to apply, and, in addition, the desired Treasuries Rate
maturity period (but not to exceed the Maturity Date of this Note). Such
notice shall be deemed void if the subject portion of the outstanding
principal balance hereunder is bearing interest at LIBOR and such LIBOR
maturity period will not expire on the date the desired Treasuries Rate
maturity period is to begin. If any such notification is not received before
10:00 AM Chicago time on the Notice Date, at Lender's option, the borrowing or
conversion may be delayed one (1) banking day.
(ii) FAILURE TO NOTIFY. If Maker does not notify Lender at
the expiration of a selected maturity period with respect to any principal
outstanding at Treasuries Rate, then in the absence of such notice Maker shall
be deemed to have elected to have such principal accrue interest after the
respective Treasuries Rate maturity period at the Prime-Based Rate.
(c) PRIME-BASED RATE. If Maker wishes to borrow money at the
Prime-Based Rate, it shall notify Lender on the date of borrowing or
conversion; if any such notification is not received before 10:00 AM Chicago
time on a banking day of the Lender, at Lender's option the borrowing or
conversion may not be effected until the next banking day. If Maker does not
notify Lender as to its selection of the interest rate option with respect to
any new advance of principal, then in the absence of such notice Maker shall
be deemed to have elected to have such advance accrue interest at the Prime-
Based Rate.
1.4 INTEREST PAYMENT DATES. Accrued interest shall be paid in respect
of each portion of principal to which:
(a) The Prime-Based Rate applies as set forth in section 2(a) of
the Note; and
(b) LIBOR applies, at the end of each respective maturity period
(unless interest is payable monthly or quarterly as provided above), every
three months (unless interest is payable monthly or quarterly as provided
above), at maturity of this Note, and upon payment in full, whichever is
earlier or more frequent; and
(c) Treasuries Rate applies, at the end of each respective
maturity period (unless interest is payable monthly or quarterly as provided
above), every three months (unless interest is payable monthly or quarterly as
provided above), at maturity of this Note, and upon payment in full, whichever
is earlier or more frequent.
After maturity, interest shall be payable upon demand.
1.5 ADDITIONAL PROVISIONS WITH RESPECT TO LIBOR LOANS. The selection
by Maker of LIBOR and the maintenance of advances at such rate shall be
subject to the following additional terms and conditions:
(a) AVAILABILITY OF DEPOSITS AT A DETERMINABLE RATE. If, after
Maker has elected to borrow or maintain any advance of LIBOR, Lender notifies
Maker that:
(i) United States dollar deposits in the amount and for the
maturity requested are not available to Lender in the London interbank market,
or
(ii) Reasonable means do not exist for Lender to determine
LIBOR for the amount and maturity requested, all as determined by the Lender
in its sole discretion, then the principal subject or to be subject to LIBOR
shall accrue or shall continue to accrue interest at the Prime-Based Rate.
(b) PROHIBITION OF MAKING, MAINTAINING, OR REPAYMENT OF PRINCIPAL
AT LIBOR. If any treaty, statute, regulation, interpretation thereof, or any
directive, guideline, or otherwise by a central bank or fiscal authority
(whether or not having the force of law) shall either prohibit or extend the
time at which any principal subject to LIBOR may be purchased, maintained, or
repaid, then on and as of the date the prohibition becomes effective, the
principal subject to that prohibition shall continue at the Prime-Based Rate.
(c) PAYMENTS OF PRINCIPAL AND INTEREST TO BE NET OF ANY TAXES OR
COSTS. All payments of principal and interest shall be made net of any taxes
and costs incurred by Lender resulting from having principal outstanding
hereunder at LIBOR. Without limiting the generality of the preceding
obligation, illustrations of such taxes and costs are:
(i) Taxes (or the withholding of amounts for taxes) of any
nature whatsoever including income, excise, and interest equalization taxes
(other than income taxes imposed by the United States or any state thereof on
the income of Lender), as well as all levies, imposts, duties, or fees whether
now in existence or resulting from a change in, or promulgation of, any
treaty, statute, regulation, interpretation thereof, or any directive,
guidelines, or otherwise, by a central bank or fiscal authority (whether or
not having the force of law) or a change in the basis of, or time of payment
of, such taxes and other amounts resulting therefrom;
(ii) Any reserve or special deposit requirements against
assets or liabilities of, or deposits with or for the account of, Lender with
respect to principal outstanding at LIBOR (including those imposed under
Regulation D of the Federal Reserve Board) or resulting from a change in, or
the promulgation of, such requirements by treaty, statute, regulation,
interpretation thereof, or any directive, guideline, or otherwise by a central
bank or fiscal authority (whether or not having the force of law);
(iii) Any other costs resulting from compliance with
treaties, statutes, regulations, interpretations, or any directives or
guidelines, or otherwise by a central bank or fiscal authority (whether or not
having the force of law);
(iv) Any loss (including loss of anticipated profits) or
expense incurred by reason of the liquidation or re-employment of deposits
acquired by Lender to make advances or maintain principal outstanding at
LIBOR:
(A) As the result of any voluntary prepayment at a
date other than the maturity date selected for principal outstanding at LIBOR;
or
(B) As the result of a mandatory repayment at a date
other than the maturity date selected for principal outstanding at LIBOR as a
result of (1) Maker exceeding any applicable borrowing base, or (2) the
occurrence of an Event of Default and the acceleration of any portion of the
indebtedness hereunder; or
(C) As the result of a prohibition on making,
maintaining, or repaying principal outstanding at LIBOR.
If Lender incurs any such taxes of costs, Maker, upon demand in writing
specifying such taxes and costs, shall promptly pay them; save for manifest
error Lender's specification shall be presumptively deemed correct. All
advances made at LIBOR shall be conclusively deemed to have been funded by or
on behalf of Lender in the London interbank market by the purchase of deposits
corresponding in amount and maturity to the amount and interest periods
selected (or deemed to have been selected) by Maker under this Note.
2.1 PAYMENT AND PREPAYMENT. Maker may from time to time, upon at least
ten (10) days' prior written notice to Lender, prepay any principal bearing
interest at the Prime-Based Rate in whole or in part at any time and may
prepay any principal bearing interest at LIBOR or Treasuries Rate at the end
of the maturity period chosen or agreed to by Maker applicable to the advance
or portion of the advance being prepaid, without premium or penalty, provided
that any partial prepayment shall be in an aggregate principal amount of at
least $10,000.00. Any prepayment of an amount bearing interest at LIBOR at a
date other than the maturity date applicable to the advance or the portion of
the advance being prepaid shall be subject to the provisions of Section 1.5.
Any prepayment of an amount bearing interest at Treasuries Rate at a date
other than the maturity date applicable to the advance or the portion of the
advance being prepaid shall be subject to the provisions of Section 2.2. All
prepayments of principal shall include interest accrued to the date of
prepayment on the principal amount being prepaid.
2.2 YIELD MAINTENANCE PREPAYMENT PENALTY. Together with any prepayment
of an amount bearing interest at Treasuries Rate at a date other than the
maturity date applicable to the advance or the portion of the advance being
prepaid, Maker shall pay to Lender the Yield Maintenance Prepayment Penalty.
"Yield Maintenance Prepayment Penalty" shall be calculated as follows:
(a) At the time of the prepayment, Lender shall calculate the
Index Rate. The "Index Rate" shall equal the sum of (i) the yield on a United
States Treasury Security issued at the time of the prepayment with the closest
matching maturity date to the maturity date of the applicable portion of the
principal balance hereunder being prepaid, plus (ii) 2.25%.
(b) If the Index Rate is the same as or greater than the
Treasuries Rate then currently in effect on the portion of the principal
balance hereunder being prepaid, the Yield Maintenance Prepayment Penalty
shall be equal to zero.
(c) If the Index Rate is less than the Treasuries Rate then
currently in effect on the portion of the Loan being prepaid, the Yield
Maintenance Prepayment Penalty shall be equal to the following: (i) the
portion of the principal balance being prepaid, multiplied by (y) the
difference between the Treasuries Rate then currently in effect on the portion
of the principal balance being prepaid, and (z) the Index Rate, then (ii)
divide the amount calculated in clause (i) by 12, then (iii) multiply the
amount calculated in clause (ii) by the number of months (whether full or
partial months) remaining from the date of prepayment until the maturity date
of the applicable portion of the principal balance hereunder being prepaid.
AMCON DISTRIBUTING COMPANY,
a Delaware corporation
By: William F. Wright
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Name: William F. Wright
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Title: Chairman
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EXHIBIT 99.1
NEWS RELEASE
FOR FURTHER INFORMATION CONTACT:
William F. Wright FOR IMMEDIATE RELEASE
Tel 619-793-7711
Fax 619-793-1994
AMCON PURCHASES FOOD FOR HEALTH
Omaha, NE, November 18, 1997 -- AMCON Distributing Company (NASDAQ: DIST)
announced today that it has completed the purchase of all of the outstanding
stock of Food For Health Company, Inc. ("FFH") from Prudential Equity
Investors for an undisclosed amount of cash.
Food For Health is a leading distributor of health and natural foods to retail
stores throughout the western United States. In addition to branded products,
FFH also distributes two private label lines of bagged goods, primarily
grains, nuts and seeds. The two private label brands are Healthy Edge and
Nutri-Value . FFH's distribution facility and home office are located in
Phoenix, AZ. Annual sales of FFH were $36.4 million for its most recent
fiscal year ended May 1997.
William Wright, Chairman of AMCON, said "We are extremely excited about the
acquisition of this fine company. Management of the company has agreed to
remain in place. Food For Health fits nicely into our strategy to diversify
into new distribution businesses and product lines. Although each of our
companies will continue to operate separately, we see this acquisition as a
great growth opportunity which expands our combined service areas to include
most of the states west of the Mississippi River."
Omaha-based AMCON is a leading wholesale distributor of consumer products
through nine distribution centers in Kansas, Missouri, Nebraska, North Dakota,
South Dakota and Wyoming.
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