-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, D+vmQ6FD8BnaGMzxQgnCBBMlaLbO80PzOX84eNXjQaXAlFsoZZzMrabfzEjaOlOR 3lpmwEWQDkw96cYLjM8TtA== 0000928465-01-500029.txt : 20010719 0000928465-01-500029.hdr.sgml : 20010719 ACCESSION NUMBER: 0000928465-01-500029 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 6 FILED AS OF DATE: 20010718 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: HAWAIIAN NATURAL WATER CO INC CENTRAL INDEX KEY: 0001025787 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-GROCERIES & RELATED PRODUCTS [5140] IRS NUMBER: 990314848 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: SEC FILE NUMBER: 005-54551 FILM NUMBER: 1683598 BUSINESS ADDRESS: STREET 1: 248 MOKAUCA ST STREET 2: SUITE 201 CITY: HONOLULU STATE: HI ZIP: 96819 BUSINESS PHONE: 8088324550 MAIL ADDRESS: STREET 1: 248 WOKAUEA ST CITY: HONOLULU STATE: HI ZIP: 96819 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: AMCON DISTRIBUTING CO CENTRAL INDEX KEY: 0000928465 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-GROCERIES & GENERAL LINE [5141] IRS NUMBER: 470702918 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: 10228 L ST STREET 2: POST OFFICE BOX 241230 CITY: OMAHA STATE: NE ZIP: 68127 BUSINESS PHONE: 4023313727 MAIL ADDRESS: STREET 1: 10228 L STREET STREET 2: POST OFFICE 241230 CITY: OMAHA STATE: NE ZIP: 68127 SC 13D/A 1 hnwc13da.txt SCHEDULE 13D/A SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 13D/A Under the Securities Exchange Act of 1934 (Amendment No. 1) HAWAIIAN NATURAL WATER COMPANY, INC. ------------------------------------------------------- (Name of Issuer) Common Stock ------------------------------------------------------- (Title of Class of Securities) ------------------------------------------------------- (CUSIP Number of Class of Securities) Michael D. James Chief Financial Officer AMCON Distributing Company 10228 "L" Street Omaha, Nebraska 68127 (402)331-3727 ------------------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) Copies to: John A. Granda, Esq. Stinson, Mag & Fizzell, P.C. 1201 Walnut Street Kansas City, Missouri 64106 (816) 842-8600 June 21, 2001 ------------------------------------------------------- (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of Sections 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box. / / NOTE: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Rule 240.13d-7 for other parties to whom copies are to be sent. * The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). (Continued on following page(s)) (1) NAME OF REPORTING PERSONS: I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS AMCON Distributing Company; IRS No. 47-070298 (2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions) (a) (b) (3) SEC USE ONLY (4) SOURCE OF FUNDS (See Instructions): WC (5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e): / / (6) CITIZENSHIP OR PLACE OF ORGANIZATION: Delaware NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH (7) SOLE VOTING POWER 2,000,000 (8) SHARED VOTING POWER (9) SOLE DISPOSITIVE POWER 2,000,000 (10) SHARED DISPOSITIVE POWER (11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON: 2,000,000 (12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (See Instructions): /x/ (13) PERCENT OF CLASS REPRESENTED TO AMOUNT IN ROW (11): 21.7% (14) TYPE OF REPORTING PERSON (See Instructions): CO PURPOSE OF AMENDMENT The purpose of this Amendment No. 1 to the Schedule 13D originally filed July 2, 2001 is to file the documents listed in Item 7, as exhibits. ITEM 1. SECURITY AND ISSUER. This Schedule 13D/A relates to Common Stock, no par value, of the issuer, Hawaiian Natural Water Company, Inc., a Hawaii corporation ("Hawaiian Natural"). The address of Hawaiian Natural's executive office is 98-746 Kuahao Place, Pearl City, Hawaii 96814. ITEM 2. IDENTITY AND BACKGROUND. (a) - (c) This Schedule 13D/A is by AMCON Distributing Company, a Delaware corporation ("AMCON"). The name, business, present principal occupation or employment, and the name, principal business and address of any corporation or other organization in which such employment is conducted are set forth in Appendix A to this Schedule 13D/A which is incorporated herein by reference. The address of AMCON's principal office is 10228 "L" Street, Omaha, Nebraska 68127. AMCON, together with its subsidiaries, are principally in the businesses of wholesale distribution of approximately 24,000 different consumer products through eight distribution centers and the retail sale of health food through AMCON's 14 stores. (d) During the last five years, neither AMCON nor, to the best of AMCON's knowledge, any of its executive officers or directors, has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors). (e) During the last five years, neither AMCON nor, to the best of AMCON's knowledge, any of its executive officers or directors was a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. (f) AMCON is a Delaware corporation. Each of its executive officers and directors is a citizen of the United States. ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION. The funds used to purchase the Common Stock of Hawaiian Natural were obtained from AMCON's working capital. ITEM 4. PURPOSE OF TRANSACTION. In November 2000, AMCON entered into a merger agreement with Hawaiian Natural, pursuant to which Hawaiian Natural would be merged with and into, and thereby become, a wholly-owned subsidiary of AMCON. The merger consideration values the entire common equity interest in Hawaiian Natural at $2,865,348, payable in common stock of AMCON, which will be priced no lower than $6.00 and no greater than $8.00 per share based on a 20 trading day measuring period ending three trading days before the date of the stockholders of Hawaiian Natural vote on the merger. As a result, AMCON will issue an aggregate of not less than 358,168 nor more than 477,558 shares, representing between 11.6% and 14.9% of AMCON's outstanding shares after giving effect to the merger. Hawaiian Natural optionholders and warrantholders would also receive comparable options and warrants of AMCON but with the exercise price and number of shares covered thereby being adjusted to reflect the exchange ratio. AMCON has provided Hawaiian Natural with certain interim financing pending the consummation of the merger. AMCON loaned Hawaiian Natural $350,000 in September 2000 and $400,000 in October 2000, which loans are evidenced by promissory notes, bearing interest at the rate of 10% per annum, due on September 30, 2001 and are secured by substantially all of Hawaiian Natural's assets (collectively the $750,000 Notes"). In February 2001, AMCON invested $300,000 in Hawaiian Natural through the purchase of 750,000 shares of Hawaiian Natural's common stock at a purchase price of $0.40 per share. On June 21, 2001, AMCON loaned Hawaiian Natural an additional $500,000, which loan is evidenced by a promissory note bearing interest at the rate of 10% per annum, due on September 30, 2001, and which is also secured by substantially all of Hawaiian Natural's assets (the "$500,000 Note"). In the event that the merger agreement is terminated for any reason or Hawaiian Natural defaults on its obligations under the $750,000 Notes or the $500,000 Note, AMCON will be entitled to convert all of those notes into Series C Convertible Preferred Stock which, among other things, would entitle AMCON to elect a majority of Hawaiian Natural's Board of Directors. The $750,000 notes are also convertible upon 61 days' advance notice into Hawaiian Natural's common stock at the same exchange ratio as in the merger. The $500,000 Note is convertible at any time at AMCON's election into Hawaiian Natural's common stock at a conversion ratio of $0.40 per share. The 750,000 shares purchased in February 2001 and the 1,250,000 shares receivable by AMCON upon conversion of the $500,000 Note will participate in the consideration to be received by Hawaiian Natural stockholders in the merger (the "Merger Consideration"). Any shares receivable by AMCON upon conversion of the $750,000 Notes will not participate in the merger consideration. Except for replacing Hawaiian Natural's Board of Directors with AMCON nominees following the merger, providing necessary working capital following the merger, and as otherwise described above, neither AMCON nor to the best of AMCON's knowledge, any of its executive officers or directors have any plans or proposals relating to the purchase of additional Hawaiian Natural securities, extraordinary transactions with Hawaiian Natural, a sale of a material amount of assets of Hawaiian Natural, any change in the capitalization or dividend policy of Hawaiian Natural, changing the business or corporate structure of Hawaiian Natural, or changing Hawaiian Natural's articles of incorporation or bylaws. The shares of Hawaiian Natural will not be publicly traded or registered under the Exchange Act after the merger but the AMCON shares to be issued in the merger will be listed on AMEX. The merger is expected to qualify as a tax-free reorganization and to be recorded on the AMCON's books using the purchase method of accounting. The merger is subject to various conditions, including the effectiveness of a registration statement covering the shares to be issued in the merger, the listing of such shares on AMEX and approval of the stockholders of Hawaiian Natural. All of Hawaiian Natural's officers and directors and any of their affiliated entities that own shares of Hawaiian Natural's common stock (constituting approximately 40% of the currently outstanding shares) have agreed to vote their shares in favor of the merger. It is expected that the merger will be consummated on or before September 30, 2001. ITEM 5. INTEREST IN SECURITIES OF THE ISSUER. (a) AMCON is the beneficial owner of 2,000,000 shares of Hawaiian Natural's common stock, which, as described in Item 4 above, consist of 750,000 shares purchased from Hawaiian Natural in February 2001 and 1,250,000 shares receivable upon conversion of the $500,000 Note. These 2,000,000 shares represent approximately 21.7% OF Hawaiian Natural's outstanding shares of common stock based on a total of 7,935,982 outstanding Hawaiian Natural shares as of June 21, 2001. The above total excludes approximately 1,875,000 shares estimated to be receivable upon conversion of the 750,000 Notes described in Item 4 above because AMCON disclaims beneficial ownership of those shares since those Notes are not convertible within 60 days and those shares are excluded from participating in the merger consideration. To the best of AMCON's knowledge, none of its executive officers or directors beneficially own any common stock of Hawaiian Natural. (b) AMCON possesses the sole power to dispose of all of the 2,000,000 shares referenced in Item 2(a) above. (c) AMCON acquired the $500,000 Note, which is convertible into 1,250,000 shares of Hawaiian Natural's common stock, on June 21, 2001. (d) and (e) Not applicable. ITEM 6. CONTRACTS, ARRANGEMENTS UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO THE ISSUER'S SECURITIES. The response to Item 4 of this Schedule 13D is incorporated herein by reference. ITEM 7. MATERIAL TO BE FILED AS EXHIBITS. Item 7 is hereby amended to file the following documents as exhibits. (1) Fourth Amended and Restated Agreement and Plan of Merger between AMCON and Hawaiian Natural. (2) 10% Secured Convertible Note due September 30, 2001 in the principal amount of $350,000. (3) 10% Secured Convertible Note due September 30, 2001 in the principal amount of $400,000. (4) 10% Secured Convertible Note due September 30, 2001 in the principal amount of $500,000. (5) Stockholders Agreement between AMCON, Andrew Merger Sub, Inc. and certain stockholders of Hawaiian Natural. SIGNATURE After reasonable inquiry and to the best of my knowledge and belief on behalf of AMCON, as Secretary, Treasurer and Chief Financial Officer of AMCON, I certify that the information set forth in this statement is true, complete and correct. Dated: July 18, 2001. AMCON Distributing Company By: /s/ Michael D. James Name: Michael D. James Title: Secretary, Treasurer and Chief Financial Officer Appendix A Directors and Executive Officers of AMCON Distributing Company
Business and Address Name and Position Principal at which Principal with AMCON Occupation Occupation is Conducted - ----------------- ------------------ ------------------------- William F. Wright, Chairman of the Board and * Director CEO of AMCON Jerry Fleming, President of The Healthy * Director and Executive Edge Inc., a subsidiary Officer of AMCON William R. Hopper, Attorney and Consultant Of Counsel to law firm of Director Rehm and Bennett Suite 200, 1327 "H" Street Lincoln, NE 68542 J. Tony Howard, President of Nebraska Beer and Wine Distributor Director Distributing Company 13619 Industrial Road Omaha, NE 68137 Allen D. Petersen, Chairman and CEO of Tool manufacturer Director American Tool Companies, 2800 Higgins Road, Suite 835 Inc. Hoffman Estates, IL 60195 Kathleen M. Evans, President of AMCON * Director and Executive Officer Timothy R. Pestotnik, Attorney Partner at law firm of Luce, Director Forward Hamilton & Scripps, LLP 600 West Broadway, Suite 2600 San Diego, CA 92101 Michael D. James, Secretary, Treasurer and Executive Officer Chief Financial Officer * - ----------------------- * The business address of each AMCON executive officer is set forth under Item 2(b) above.
EX-1 2 hnwc4thamend.txt FOURTH AMENDED AND RESTATED PLAN OF MERGER FOURTH AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER dated as of June 21, 2001 among AMCON DISTRIBUTING COMPANY AMCON MERGER SUB, INC. and HAWAIIAN NATURAL WATER COMPANY, INC. FOURTH AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER FOURTH AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER, dated as of June 21, 2001 (the "Agreement"), by and among AMCON Distributing Company, a Delaware corporation ("AMCON"), AMCON Merger Sub, Inc., a Delaware corporation and a wholly-owned subsidiary of AMCON ("Merger Sub"), and Hawaiian Natural Water Company, Inc., a Hawaii corporation ("HNWC"). RECITALS: WHEREAS, the Boards of Directors of AMCON and HNWC deem it advisable and in the best interests of each corporation and its respective stockholders that AMCON and HNWC engage in a business combination which shall be effected by the terms of this Agreement through the merger as outlined below; WHEREAS, the respective Boards of Directors of HNWC, Merger Sub and AMCON have each (i) determined that the merger of HNWC with and into Merger Sub (the "Merger") is fair to, and in the best interests of, their respective companies and stockholders, (ii) have approved and declared the advisability of this Agreement and (ii) have approved the Merger, and (iii) in the case of HNWC, has recommended the approval and adoption of this Agreement, this Merger and the transactions contemplated hereby by its stockholders; WHEREAS, for Federal income tax purposes, it is intended that the Merger shall qualify as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (a "368 Reorganization"), and the regulations promulgated thereunder; WHEREAS, simultaneously with the execution and delivery of this Agreement, AMCON has entered into an agreement (the "Stockholders Agreement" in the form attached as Exhibit A hereto) with certain stockholders of HNWC pursuant to which such HNWC stockholders have agreed to vote the shares of HNWC Common Stock owned by them in favor of the Merger under certain circumstances, which agreement is accompanied by irrevocable proxies to vote such shares in accordance therewith. NOW, THEREFORE, in consideration of the premises, which are incorporated into and made part of this Agreement, and of the mutual representations, warranties, covenants, agreements and conditions set forth herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows: ARTICLE I DEFINITIONS For purposes of this Agreement, the capitalized terms used in this Agreement shall have the meanings specified or referred to in Appendix I hereto which is incorporated herein by reference. ARTICLE II THE MERGER Section 2.1 Effects of the Merger. (a) The Surviving Corporation. Upon the terms and subject to the conditions of this Agreement and in accordance with the Hawaii Business Corporation Act (the "Hawaii Law"), and the Delaware General Corporation Law of the State of Delaware (the "Delaware Law"), at the Effective Time (as defined below), HNWC shall be merged with and into Merger Sub. As a result of the Merger, the separate corporate existence of HNWC shall cease and Merger Sub shall continue as the surviving corporation in the Merger (the "Surviving Corporation"). (b) Effective Time. As soon as practicable after the Closing of the Merger, the Articles of Merger for the Merger in substantially the form attached hereto as Exhibit B, prepared and executed in accordance with the relevant provisions of the Hawaii Law, shall be filed with the Secretary of State of Hawaii, and the Certificate of Merger for the Merger, in substantially the form attached hereto as Exhibit C, prepared and executed in accordance with the relevant provisions of the Delaware Law, shall be filed with the Secretary of State of Delaware. The parties hereto agree to take all such further actions as may be required by law to make the Merger effective. The Merger shall become effective in accordance with the terms of this Agreement, the Articles of Merger and the Certificate of Merger at the time and date contemplated therein (such time and date being referred to herein as the "Effective Time"). (c) The Closing. The Closing of the Merger and transactions contemplated by this Agreement will take place at 10:00 a.m., west coast time, on a date mutually agreed upon by the parties hereto, which shall be no later than the third Business Day following the date on which all of the conditions to the obligations of the parties hereunder set forth in Article VIII hereof have been satisfied or waived. The place of Closing shall be at such place as may be mutually agreed upon by the parties hereto. (d) Effects of the Merger. At and after the Effective Time, the Merger will have the effects set forth in the Delaware Law and Hawaii Law. Without limiting the generality of the foregoing, and subject thereto, at the Effective Time all the property, rights, privileges, powers and franchises of Merger Sub and HNWC shall be vested in the Surviving Corporation, and all debts, liabilities and duties of Merger Sub and HNWC shall become the debts, liabilities and duties of the Surviving Corporation. In addition, the Merger shall have the following effects: (i) Articles of Incorporation. The Certificate of Incorporation of Merger Sub as in effect immediately prior to the Effective Time (as set forth in Exhibit D hereto) shall be the Certificate of Incorporation of the Surviving Corporation. (ii) Bylaws. The Bylaws of Merger Sub as in effect immediately prior to the Effective Time (as set forth in Exhibit E hereto) shall be the Bylaws of the Surviving Corporation. (iii) Board of Directors. At the Effective Time, the Board of Directors of the Surviving Corporation shall be as listed on Exhibit F hereto. (iv) Management. At the Effective Time, the principal officers of the Surviving Corporation at the Effective Time shall be as listed on Exhibit G. Section 2.2 Effect of the Merger on HNWC Capital Stock. Subject to the provisions of this Article II, at the Effective Time, by virtue of the Merger and without any action on the part of the parties hereto or their respective stockholders: (a) Common Merger Consideration. Each share of HNWC Common Stock outstanding immediately prior to the Effective Time shall be converted into and become a right to receive a fractional share of AMCON Common Stock equal to the product of the Common Exchange Ratio times one share of HNWC Common Stock, which stock, together with any cash in lieu of fractional shares of AMCON Common Stock to be paid pursuant to Section 2.4 of this Agreement, are referred to herein as (the "Common Merger Consideration"), (i) except for shares of HNWC Common Stock held by persons who object to the Merger and comply with all provisions of the Hawaii Law concerning the right of such holders to dissent from the Merger and demand appraisal for their shares ("Common Dissenters' Shares") which shall be cancelled and shall cease to exist and as to which consideration shall be paid solely in accordance with Section 2.6 of this Agreement, (ii) except for shares of HNWC Common Stock held by HNWC as treasury stock which shall be cancelled without payment of any consideration therefor and shall cease to exist, and (iii) except for shares of HNWC Common Stock owned by AMCON or Merger Sub immediately prior to the Effective Time, other than the 2,000,000 shares of HNWC Common Stock acquired from HNWC by AMCON and issued on or after February 1, 2001 (the "Non-Excluded Shares", which 2,000,000 Non-Excluded Shares include 1,250,000 shares of HNWC Common Stock which will be received by AMCON upon the conversion of the 10% Secured Convertible Note dated June 21, 2001 in the principal amount of $500,000 issued by HNWC to AMCON (the "$500,000 Convertible Note")), all of which shares, other than the Non-Excluded Shares, shall be cancelled without payment of any consideration therefor and shall cease to exist and the Non- Excluded Shares shall be converted into the Common Merger Consideration. The shares of HNWC Common Stock referred to in clauses in (i), (ii) and (iii) of this Section 2.2(a) as being excluded from the conversion into Common Merger Consideration (which does not encompass the Non-Excluded Shares) are sometimes referred to collectively in this Agreement as the "Excluded Shares". Fractions of a share determined pursuant to this Section 2.2(a) shall be rounded to three decimal places. (b) Common Exchange Ratio. The Common Exchange Ratio shall be equal to the quotient of (i) the quotient of (x) $2,865,348, divided by (y) the Average AMCON Stock Price, divided by (ii) the number of shares of HNWC Common Stock outstanding immediately prior to the Effective Time (excluding the Excluded Shares). Notwithstanding the foregoing, (i) if the Average AMCON Stock Price is greater than $8.00, then the Average AMCON Stock Price shall be deemed to be $8.00 and thus the Common Exchange Ratio shall be the quotient of (A) 358,168, divided by (B) the number of shares of HNWC Common Stock outstanding immediately prior to the Effective Time (excluding the Excluded Shares), or (ii) if the Average AMCON Stock Price is less than $6.00, then the Average AMCON Stock Price shall be deemed to be $6.00 and thus the Common Exchange Ratio shall be the quotient of (C) 477,558, divided by (D) the number of shares of HNWC Common Stock outstanding immediately prior to the Effective Time (excluding the Excluded Shares). The Common Exchange Ratio determined pursuant to this Section 2.2(b) shall be rounded to three decimal places. (c) Certificates. At the Effective Time, each certificate theretofore representing shares of HNWC Common Stock ("Common Certificates"), except for the Excluded Shares, shall, without any action on the part of AMCON, HNWC, Merger Sub or the holder thereof, represent, and shall be deemed to represent from and after the Effective Time, the number of shares of AMCON Common Stock as determined in accordance with Sections 2.2(a) and (b) above and shall cease to represent any rights in any shares of capital stock of HNWC. At the Effective Time, each holder of a Common Certificate which, prior to the Effective Time, represented shares of HNWC Common Stock (except for Common Dissenters' Shares), shall cease to have any rights with respect to any shares of HNWC capital stock. In accordance herewith, former holders of HNWC Common Stock (except for the Excluded Shares) shall, from and after the Effective Time, be deemed from and after the Effective Time to be holders of the shares of AMCON Common Stock into which such shares of HNWC Common Stock have been converted in accordance with Section 2.2(a) and (b) hereof. Section 2.3 Merger Sub Common Stock. Each share of common stock of Merger Sub outstanding and each share held in treasury immediately prior to the Effective Time shall be converted into and become one share of AMCON Common Stock. Section 2.4 Fractional Shares. No fraction of a share of AMCON Common Stock shall be issued in connection with the conversion of HNWC Common Stock in the Merger and the distribution of AMCON Common Stock in respect thereof, but in lieu of such fraction, the Exchange Agent shall make a cash payment (without interest and subject to the payment of any applicable withholding Taxes) equal to the same fraction of the market value of a full share of AMCON Common Stock, computed on the basis of the mean of the high and low sales prices of AMCON Common Stock as reported on the American Stock Exchange ("AMEX") on the first full day on which AMCON Common Stock is traded on the AMEX after the Effective Time (all such fractions of share of AMCON Common Stock are referred to herein as "Fractional Shares"). Section 2.5 Stock Options, Warrants and Other Stock Related Rights. (a) On or prior to the Effective Time, HNWC will take all action necessary such that each stock option, warrant or other stock related right prior to the Effective Time and which remains outstanding immediately prior to the Effective Time shall cease to represent a right with respect to shares of HNWC Common Stock and shall be converted, at the Effective Time, into a right, on the same terms and conditions as were applicable under such stock option, warrant or other stock related right (but taking into account any changes thereto), with respect to that number of shares of AMCON Common Stock determined by multiplying the number of shares of HNWC Common Stock subject to such stock option, warrant or other stock related right, as applicable, by the Common Exchange Ratio, rounded, if necessary, to the nearest whole share of AMCON Common Stock, at a price per share (rounded to the nearest one-hundredth of a cent) equal to the per-share exercise price specified in such stock option, warrant or stock related right, as applicable, divided by the Common Exchange Ratio; provided, however, that in the case of any stock option to which Section 421 of the Code applies by reason of its qualification under Section 422 of the Code, the option price, the number of shares subject to such option and the terms and conditions of exercise of such option shall be determined in a manner consistent with the requirements of Section 424(a) of the Code. (b) As soon as practicable after the Effective Time, AMCON shall deliver to the holders of stock options, warrants or other stock related rights appropriate notices setting forth such holders' rights pursuant to the applicable documents and instruments (except that there shall be no acceleration in the vesting or exercisability of such option, warrants or stock related rights by reason of this Agreement, the Merger or the other matters contemplated by this Agreement) and the agreements evidencing the grants of such stock options, warrants or other stock related rights shall continue in effect on the same terms and conditions (subject to the adjustments required by this Section 2.5 after giving effect to the Merger). To the extent permitted by law, AMCON shall comply with the terms of the HNWC Employee Plans and shall take such reasonable steps as are necessary or required by, and subject to the provisions of, such HNWC Employee Plans, to have the stock options which qualified as incentive stock options prior to the Effective Time continue to qualify as incentive stock options of AMCON after the Effective Time. (c) AMCON shall take all corporate action necessary to reserve for issuance a sufficient number of shares of AMCON Common Stock for delivery upon exercise of stock options, warrants or other stock related rights in accordance with this Section 2.5. Section 2.6 Appraisal Rights. Notwithstanding Section 2.2, shares of HNWC Common Stock outstanding immediately prior to the Effective Time and held by a holder other than AMCON or Merger Sub who has not voted in favor of the Merger or consented thereto in writing and who has demanded appraisal for such shares of HNWC Common Stock in accordance with the Hawaii Law shall not be converted into the Merger Consideration unless such holder fails to perfect or withdraws or otherwise loses his right to appraisal. If after the Effective Time such holder fails to perfect or withdraws or loses his right to appraisal, such shares of HNWC Common Stock shall be treated as if they had been converted as of the Effective Time into the Merger Consideration. HNWC shall give the Surviving Corporation and AMCON prompt notice of any demands received by HNWC for appraisal of shares of HNWC Common Stock, and the Surviving Corporation and AMCON shall have the right to participate in all negotiations and proceedings with respect to such demands. HNWC shall not, except with the prior written consent of the Surviving Corporation and AMCON, make any payment with respect to, or settle or offer to settle, any such demands. Section 2.7 Affiliates. Notwithstanding anything to the contrary herein, to the fullest extent permitted by law, no certificates representing shares of AMCON Common Stock or cash shall be delivered to a Person who may be deemed an "affiliate" of HNWC in accordance with Section 7.8 hereof for purposes of Rule 145 under the Securities Act, until such Person has executed and delivered a HNWC Affiliate Agreement (as defined in Section 7.8) pursuant to Section 7.8. Section 2.8 Exchange Fund. Prior to the Effective Time, AMCON shall appoint a commercial bank or trust company reasonably acceptable to HNWC having net capital of not less than $50,000,000, or a subsidiary thereof, to act as exchange agent hereunder for the purpose of exchanging Common Certificates representing the Merger Consideration (the "Exchange Agent"). At or prior to the Effective Time, AMCON shall deposit with the Exchange Agent, in trust for the benefit of holders of Common Certificates which immediately prior to the Effective Time represented outstanding shares of HNWC Common Stock whose shares will be converted into shares of AMCON Common Stock at the Effective Time, certificates representing the AMCON Common Stock issued pursuant to Section 2.2 upon conversion of outstanding shares of HNWC Common Stock. AMCON agrees to make available to the Exchange Agent from time to time as needed, cash sufficient to pay cash in lieu of fractional shares pursuant to Section 2.4 and any dividends and other distributions pursuant to Section 2.10. Any cash and certificates representing AMCON Common Stock deposited with the Exchange Agent shall hereinafter be referred to as the "Exchange Fund." Section 2.9 Exchange Procedures. As soon as reasonably practicable after the Effective Time, AMCON shall cause the Exchange Agent to mail to each holder of a Common Certificate (i) a letter of transmittal which shall specify that delivery shall be effected, and risk of loss and title to the Common Certificates shall pass, only upon delivery of the Common Certificates to the Exchange Agent, and which letter shall be in customary form and have such other provisions as AMCON may reasonably specify and (ii) instructions for effecting the surrender of such Common Certificates in exchange for the certificates representing the applicable Merger Consideration. Upon surrender of a Common Certificate to the Exchange Agent together with such letter of transmittal, duly executed and completed in accordance with the instructions thereto, and such other documents as may reasonably be required by the Exchange Agent, the holder of such Common Certificate shall be entitled to receive in exchange therefor (A) certificates representing one or more shares of AMCON Common Stock representing, in the aggregate, the whole number of shares into which such holder's shares of HNWC Common Stock have been converted pursuant to Section 2.2 (after taking into account all shares of HNWC Common Stock then held by such holder), and (B) a check in the amount equal to the cash that such holder has the right to receive in lieu of any fractional shares of AMCON Common Stock pursuant to Section 2.4 and dividends and other distributions pursuant to Section 2.10. No interest will be paid or will accrue on any cash payable pursuant to Section 2.4 or Section 2.10. In the event of a transfer of ownership of HNWC Common Stock which is not registered in the transfer records of HNWC, certificates representing one or more shares of AMCON Common Stock representing, in the aggregate, the proper number of shares of AMCON Common Stock, a check in the proper amount of cash in lieu of any fractional shares of AMCON Common Stock pursuant to Section 2.4 and any dividends or other distributions to which such holder is entitled pursuant to Section 2.10, may be issued with respect to such HNWC Common Stock to such a transferee if the Common Certificate which formerly represented such shares is presented to the Exchange Agent, accompanied by all documents required to evidence and effect such transfer and to evidence that any applicable stock transfer taxes have been paid. Section 2.10 Distributions with Respect to Unexchanged Common Certificates. No dividends or other distributions declared or made with respect to shares of AMCON Common Stock with a record date after the Effective Time shall be paid to the holder of any unsurrendered Common Certificate with respect to the certificate representing shares of AMCON Common Stock that such holder would be entitled to receive upon surrender of such Common Certificate and no cash payment in lieu of fractional shares of AMCON Common Stock shall be paid to any such holder pursuant to Section 2.4 until such holder shall surrender such Common Certificate in accordance with Section 2.9. Subject to the effect of applicable laws, following surrender of any such Common Certificate, there shall be paid to such holder of shares of AMCON Common Stock issuable in exchange therefor, without interest, (a) promptly after the time of such surrender, the amount of any cash payable in lieu of fractional shares of AMCON Common Stock to which such holder is entitled pursuant to Section 2.4 and the amount of dividends or other distributions with a record date after the Effective Time theretofore paid with respect to such whole shares of AMCON Common Stock and (b) at the appropriate payment date, the amount of dividends or other distributions with a record date after the Effective Time but prior to such surrender and a payment date subsequent to such surrender payable with respect to such shares of AMCON Common Stock. Section 2.11 No Further Ownership Rights in HNWC Common Stock. All shares of AMCON Common Stock and cash paid upon conversion of shares of HNWC Common Stock in accordance with the terms of Article II (including any cash paid pursuant to Section 2.4 or Section 2.10) shall be deemed to have been issued or paid in full satisfaction of all rights pertaining to the shares of HNWC Common Stock. Section 2.12 Termination of Exchange Fund. Any portion of the Exchange Fund which remains undistributed to the holders of Common Certificates for six months after the Effective Time shall be delivered to AMCON or otherwise on the instruction of AMCON, and any holders of the Common Certificates who have not theretofore complied with this Article II shall thereafter look only to AMCON for the certificates representing the Merger Consideration with respect to the shares of HNWC Common Stock formerly represented thereby to which such holders are entitled pursuant to Section 2.2, any cash in lieu of fractional shares of AMCON Common Stock to which such holders are entitled pursuant to Section 2.4 and any dividends or distributions with respect to shares of AMCON Common Stock to which such holders are entitled pursuant to Section 2.10. Any such portion of the Exchange Fund remaining unclaimed by holders of Common Certificates which, prior to the Effective Time, represented shares of HNWC Common Stock five years after the Effective Time (or such earlier date immediately prior to such time as such amounts would otherwise escheat to or become property of any Governmental Entity) shall, to the extent permitted by law, become the property of AMCON free and clear of any claims or interest of any Person previously entitled thereto. Section 2.13 No Liability. None of AMCON, the Surviving Corporation or the Exchange Agent shall be liable to any Person in respect of any Merger Consideration from the Exchange Fund delivered to a public official pursuant to any applicable abandoned property, escheat or similar law. Section 2.14 Investment of the Exchange Fund. The Exchange Agent shall invest any cash included in the Exchange Fund as directed by AMCON on a daily basis. Any interest and other income resulting from such investments shall promptly be paid to AMCON. Section 2.15 Lost Common Certificates. If any Common Certificate shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the Person claiming such Common Certificate to be lost, stolen or destroyed and, if required by AMCON, the posting by such Person of a bond in such reasonable amount as AMCON may direct as indemnity against any claim that may be made against it with respect to such Common Certificate, the Exchange Agent will deliver in exchange for such lost, stolen or destroyed Common Certificate a certificate representing the applicable Merger Consideration with respect to the shares of HNWC Common Stock, any cash in lieu of fractional shares of AMCON Common Stock, and unpaid dividends and distributions on shares of AMCON Common Stock issued in respect thereof, pursuant to this Agreement. Section 2.16 Withholding Rights. Each of the Surviving Corporation and AMCON shall be entitled to deduct and withhold from the consideration otherwise payable pursuant to this Agreement to any holder of Common Certificates which, prior to the Effective Time, represented shares of HNWC Common Stock, such amounts as it is required to deduct and withhold with respect to the making of such payment under the Code and the rules and regulations promulgated thereunder, or any provision of state, local or foreign tax law. To the extent that amounts are so withheld by the Surviving Corporation or AMCON, as the case may be, such withheld amounts shall be treated for all purposes of this Agreement as having been paid to the holder of the shares of HNWC Common Stock in respect of which such deduction and withholding was made by the Surviving Corporation or AMCON, as the case may be. Section 2.17 Further Assurances. At and after the Effective Time, the officers and directors of the Surviving Corporation will be authorized to execute and deliver, in the name and on behalf of HNWC or Merger Sub, any deeds, bills of sale, assignments or assurances and to take and do, in the name and on behalf of HNWC or Merger Sub, any other actions and things to vest, perfect or confirm of record or otherwise in the Surviving Corporation any and all right, title and interest in, to and under any of the rights, properties or assets acquired or to be acquired by the Surviving Corporation as a result of, or in connection with, the Merger. Section 2.18 Stock Transfer Books. The stock transfer books of HNWC shall be closed immediately upon the Effective Time and there shall be no further registration of transfers of shares of HNWC Common Stock thereafter on the records of HNWC. On or after the Effective Time, any Common Certificates presented to the Exchange Agent or AMCON for any reason shall be exchanged for certificates representing the Merger Consideration with respect to the shares of HNWC Common Stock formerly represented thereby, any cash in lieu of fractional shares of AMCON Common Stock to which the holders thereof are entitled pursuant to Section 2.4 and any dividends or other distributions to which the holders thereof are entitled pursuant to Section 2.10. ARTICLE III REPRESENTATIONS AND WARRANTIES OF AMCON Except as disclosed in (i) the AMCON Disclosure Schedule dated the date hereof (each section or subsection of which Disclosure Schedule qualifies the correspondingly numbered representation, warranty or covenant to the extent specified therein) or (ii) the AMCON SEC Documents filed prior to the date hereof, AMCON represents and warrants to HNWC that, as of the date hereof (except for representations and warranties that address matters only as of a specific date, in which case such representations are true and correct on and as of such specific date): Section 3.1 Corporate Existence and Power. AMCON is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware, and has all corporate powers required to carry on its business as now conducted. AMCON is duly qualified to do business as a foreign corporation and is in good standing in each jurisdiction where the character of the property owned or leased by it or the nature of its activities makes such qualification necessary, except where the failure to be so qualified, individually or in the aggregate, would not be reasonably likely to have an AMCON Material Adverse Effect. AMCON has heretofore made available to HNWC true and complete copies of AMCON's certificate of incorporation and bylaws as currently in effect. Section 3.2 Corporate Authorization. The execution, delivery and performance by AMCON of this Agreement and the consummation by AMCON of the transactions contemplated hereby are within AMCON's corporate powers and, as of the date hereof, have been duly authorized by all necessary corporate action. Assuming that this Agreement constitutes the valid and binding obligation of HNWC, this Agreement constitutes, as of the date hereof, a valid and binding agreement of AMCON, enforceable in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium and similar laws, now or hereafter in effect, relating to or affecting creditors' rights and remedies generally and to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). Section 3.3 Governmental Authorization. The execution, delivery and performance by AMCON of this Agreement and the consummation by AMCON of the transactions contemplated hereby require no action by or in respect of, or filing with, any Governmental Entity other than (a) the filing of (i) Articles of Merger in accordance with the Hawaii Law, (ii) a Certificate of Merger in accordance with the Delaware Law, and (iii) appropriate documents with the relevant authorities of other states or jurisdictions in which AMCON or any AMCON Subsidiary is qualified to do business; (b) compliance with any applicable requirements of the Securities Act and the Exchange Act; (c) such as may be required under any applicable state securities or blue sky laws; and (d) such other consents, approvals, actions, orders, authorizations, registrations, declarations and filings that, if not obtained or made, would not, individually or in the aggregate, (x) be reasonably likely to have an AMCON Material Adverse Effect or (assuming for this purpose that the Effective Time had occurred) a Surviving Corporation Material Adverse Effect, or (y) prevent or materially impair the ability of AMCON to consummate the transactions contemplated by this Agreement. Section 3.4 Non-Contravention. The execution, delivery and performance by AMCON of this Agreement and the consummation by AMCON of the transactions contemplated hereby do not and will not (a) contravene or conflict with AMCON's certificate of incorporation or bylaws, (b) assuming compliance with the matters referred to in Section 3.3, contravene or conflict with or constitute a violation of any provision of any law, regulation, judgment, injunction, order or decree binding upon or applicable to AMCON or any AMCON Subsidiary, (c) constitute a default under or give rise to a right of termination, cancellation or acceleration of any right or obligation of AMCON or any AMCON Subsidiary or to a loss of any benefit or status to which AMCON or any AMCON Subsidiary is entitled under any provision of any agreement, contract or other instrument binding upon AMCON or any AMCON Subsidiary or any license, franchise, permit or other similar authorization held by AMCON or any AMCON Subsidiary, or (d) result in the creation or imposition of any Lien on any asset of AMCON or any AMCON Subsidiary other than, in the case of each of (b), (c) and (d), any such items that would not, individually or in the aggregate (x) be reasonably likely to have an AMCON Material Adverse Effect or (y) prevent or materially impair the ability of AMCON to consummate the transactions contemplated by this Agreement. Section 3.5 Capitalization. (a) The authorized capital stock of AMCON consists of 15,000,000 shares of AMCON Common Stock, $0.01 per value per share, and 1,000,000 shares of preferred stock, $0.01 par value per share, of AMCON ("AMCON Preferred Stock"). At the close of business on September 30, 2000, (i) 2,737,551 shares of AMCON Common Stock were issued and outstanding, (ii) stock options ("AMCON Stock Options") to purchase an aggregate of 389,620 shares of AMCON Common Stock were issued and outstanding (of which options to purchase an aggregate of 188,166 shares of AMCON Common Stock were exercisable), (iii) no shares of AMCON Common Stock were held in its treasury and (iii) no shares of AMCON Preferred Stock were issued and outstanding. All outstanding shares of capital stock of AMCON have been duly authorized and validly issued and are fully paid and nonassessable. (b) As of the date hereof, except (i) as set forth in this Section 3.5, and (ii) for changes since March 31, 2001, resulting from the exercise of stock options outstanding on such date, there are no outstanding (x) shares of capital stock or other voting securities of AMCON, (y) securities of AMCON convertible into or exchangeable for shares of capital stock or voting securities of AMCON, or (z) options or other rights to acquire from AMCON, and no obligation of AMCON to issue, any capital stock, voting securities or securities convertible into or exchangeable for capital stock or voting securities of AMCON (the items in clauses (x), (y) and (z) being referred to collectively as the "AMCON Securities"). There are no outstanding obligations of AMCON or any AMCON Subsidiary to repurchase, redeem or otherwise acquire any AMCON Securities. There are no outstanding contractual obligations of AMCON to provide funds to, or make any investment (in the form of a loan, capital contribution or otherwise) in, any other Person other than in the ordinary course of business consistent with past practice. There are no stockholder agreements, voting trusts or other agreements or understandings to which AMCON is a party, or of which AMCON is aware, relating to voting, registration or disposition of any shares of capital stock of AMCON or granting to any person or group of persons the right to elect, or to designate or nominate for election, a director to the board of directors of AMCON. Section 3.6 Subsidiaries. (a) Each Significant Subsidiary of AMCON is a corporation duly incorporated or an entity duly organized, and is validly existing and in good standing under the laws of its jurisdiction of incorporation or organization, has all powers and authority and all material governmental licenses, authorizations, consents and approvals required to carry on its business as now conducted and is duly qualified to do business as a foreign entity and is in good standing in each jurisdiction where the character of the property owned or leased by it or the nature of its activities makes such qualification necessary, in each case with such exceptions as, individually or in the aggregate, would not be reasonably likely to have, an AMCON Material Adverse Effect. (b) All of the outstanding shares of capital stock of, or other ownership interest in, each AMCON Subsidiary has been validly issued and is fully paid and nonassessable. All of the outstanding capital stock of, or other ownership interest in, each of AMCON's Subsidiaries, is owned, directly or indirectly, by AMCON, is owned free and clear of any Lien and free of any other limitation or restriction (including any limitation or restriction on the right to vote, sell or otherwise dispose of such capital stock or other ownership interests) with such exceptions as, individually or in the aggregate, would not be reasonably likely to have, an AMCON Material Adverse Effect. There are no outstanding (i) securities of AMCON or any of the AMCON Subsidiaries convertible into or exchangeable or exercisable for shares of capital stock or other voting securities or ownership interests in any of the AMCON Subsidiaries, (ii) options, warrants or other rights to acquire from AMCON or any of the AMCON Subsidiaries, and no other obligation of AMCON or any of the AMCON Subsidiaries to issue, any capital stock, voting securities or other ownership interests in, or any securities convertible into or exchangeable or exercisable for any capital stock, voting securities or ownership interests in, any of the AMCON Subsidiaries or (iii) obligations of AMCON or any of the AMCON Subsidiaries to repurchase, redeem or otherwise acquire any outstanding securities of any of the AMCON Subsidiaries or any capital stock of, or other ownership interests in, any of the AMCON Subsidiaries. Section 3.7 AMCON SEC Documents. (a) AMCON has made available to HNWC the AMCON SEC Documents. AMCON has filed all reports, filings, registration statements and other documents required to be filed by it with the SEC since September 30, 1997. No AMCON Subsidiary is required to file any form, report, registration statement or prospectus or other document with the SEC. (b) As of its filing date, each AMCON SEC Document complied as to form in all material respects with the applicable requirements of the Securities Act and/or the Exchange Act, as the case may be. (c) No AMCON SEC Document filed pursuant to the Exchange Act contained, as of its filing date, any untrue statement of a material fact or omitted to state any material fact necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading. No AMCON SEC Document, as amended or supplemented, if applicable, filed pursuant to the Securities Act contained, as of the date such document or amendment became effective, any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary to make the statements therein not misleading. Section 3.8 Financial Statements; No Material Undisclosed Liabilities. (a) The audited consolidated financial statements of AMCON included in the AMCON 10-K fairly present in all material respects, in conformity with GAAP consistently applied (except as may be indicated in the notes thereto), the consolidated financial position of AMCON and its consolidated Subsidiaries as of the dates thereof and their consolidated results of operations, consolidated cash flows and changes in stockholders' equity for the periods then ended (subject to normal year-end adjustments in the case of any unaudited interim financial statements). (b) There are no liabilities of AMCON or any AMCON Subsidiary of any kind whatsoever, whether accrued, contingent, absolute, determined, determinable or otherwise, in each case, that are required by GAAP to be set forth on a consolidated balance sheet of AMCON, other than: (i) liabilities or obligations disclosed or provided for in the AMCON Balance Sheet or disclosed in the notes thereto; (ii) liabilities or obligations under this Agreement or incurred in connection with the transactions contemplated hereby; (iii) current liabilities incurred in the ordinary course of business since September 30, 2000; and (iv) other liabilities or obligations that individually or in the aggregate, would not be reasonably likely to have an AMCON Material Adverse Effect. (c) AMCON and the AMCON Subsidiaries keep proper accounting records in which all material assets and liabilities, and all material transactions, of AMCON and the AMCON Subsidiaries are recorded in conformity with GAAP. No part of AMCON's or any AMCON Subsidiary's accounting system or records, or access thereto, is under the control of a Person who is not an employee of AMCON or such Subsidiary. Section 3.9 Information to be Supplied. (a) The information to be supplied by AMCON expressly for inclusion or incorporation by reference in the Proxy Statement/Prospectus will (i) in the case of the Registration Statement, at the time it becomes effective, not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein not misleading and (ii) in the case of the remainder of the Proxy Statement/Prospectus, at the time of the mailing thereof, and at the time of the Special Meeting, not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading. The Proxy Statement/Prospectus will comply (with respect to information relating to AMCON) as to form in all material respects with the provisions of the Securities Act and the Exchange Act. (b) Notwithstanding the foregoing, AMCON makes no representation or warranty with respect to any statements made or incorporated by reference in the Proxy Statement/Prospectus based on information supplied by HNWC. Section 3.10 Absence of Certain Changes. Since September 30, 2000, except as otherwise expressly contemplated by this Agreement, AMCON and the AMCON Subsidiaries have conducted their business in the ordinary course consistent with past practice and there has not been (a) any damage, destruction or other casualty loss (whether or not covered by insurance) affecting the business or assets of AMCON or any AMCON Subsidiary that, individually or in the aggregate, has had or would be reasonably likely to have an AMCON Material Adverse Effect, (b) any action, event, occurrence, development or state of circumstances or facts that, individually or in the aggregate, has had or would be reasonably likely to have an AMCON Material Adverse Effect or (c) any incurrence, assumption or guarantee by AMCON of any material indebtedness for borrowed money other than in the ordinary course and in amounts and on terms consistent with past practices. Section 3.11 Litigation. Section 3.11 of the AMCON Disclosure Schedule contains a list and description of each action, suit, investigation, arbitration or proceeding pending against, or to the Knowledge of AMCON threatened against, AMCON or any AMCON Subsidiary or any of their respective assets or properties before any arbitrator or Governmental Entity. None of such actions, suits, investigations, arbitrations or proceedings, individually or in the aggregate, would be reasonably likely to have, an AMCON Material Adverse Effect. There are no outstanding judgments, decrees, injunctions, awards or orders against AMCON that would be reasonably likely to have, individually or in the aggregate, an AMCON Material Adverse Effect. Section 3.12 Taxes. (a) All Tax returns, statements, reports and forms (collectively, the "AMCON Returns") required to be filed with any taxing authority by, or with respect to, AMCON and the AMCON Subsidiaries have been filed in substantial compliance with all applicable laws. (b) AMCON and the AMCON Subsidiaries have timely paid all Taxes shown as due and payable on the AMCON Returns that have been so filed, and all other Taxes not subject to reporting obligations, and, as of the time of filing, the AMCON Returns correctly reflected the facts regarding the income, business, assets, operations, activities and the status of AMCON and the AMCON Subsidiaries (other than Taxes that are being contested in good faith and for which adequate reserves are reflected on the AMCON Balance Sheet). (c) AMCON and the AMCON Subsidiaries have made provision for all Taxes payable by them for which no AMCON Return has yet been filed. (d) The charges, accruals and reserves for Taxes with respect to AMCON and the AMCON Subsidiaries reflected on the AMCON Balance Sheet are adequate under GAAP to cover the tax liabilities accruing through the date thereof. (e) There is no action, suit, proceeding, audit or claim now proposed or pending against or with respect to AMCON or any of the AMCON Subsidiaries in respect of any Tax that would be reasonably likely to have an AMCON Material Adverse Effect. (f) Neither AMCON nor any of the AMCON Subsidiaries has been a member of an affiliated, consolidated, combined or unitary group other than one of which AMCON was the common parent. (g) Neither AMCON nor any of the AMCON Subsidiaries holds any asset subject to a consent under Section 341(f) of the Code. Section 3.13 Employee Benefits. (a) Section 3.13(a) of the AMCON Disclosure Schedule contains a correct and complete list identifying each material "employee benefit plan", as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974 ("ERISA"), each employment, severance or similar contract, plan, arrangement or policy and each other plan or arrangement (written or oral) providing for compensation, bonuses, profit-sharing, stock option or other stock related rights or other forms of incentive or deferred compensation, vacation benefits, insurance coverage (including any self-insured arrangements), health or medical benefits, disability benefits, workers' compensation, supplemental unemployment benefits, severance benefits and post-employment or retirement benefits (including compensation, pension, health, medical or life insurance benefits) that is maintained, administered or contributed to by AMCON or any ERISA Affiliate (as defined below) of AMCON and covers any employee or former employee of AMCON or any AMCON Subsidiary. Copies of such plans (and, if applicable, related trust agreements) and all amendments thereto and written interpretations thereof have been furnished, or will be made available upon request, to HNWC together with the most recent annual report (Form 5500 including, if applicable, Schedule B thereto) and summary plan description prepared in connection with any such plan. Such plans are referred to collectively herein as the "AMCON Employee Plans". For purposes of this Section 3.13, "ERISA Affiliate" of any Person means any other Person which, together with such Person, would be treated as a single employer under Section 414 of the Code. (b) No AMCON Employee Plan is now or at any time has been subject to Part 3, Subtitle B of Title I or ERISA or Title IV of ERISA. At no time has AMCON or any of its ERISA Affiliates contributed to, or been required to contribute to, any "multiemployer plan," as defined in Section 3(37) or ERISA (a "Multiemployer Plan"), and neither AMCON nor any of its ERISA Affiliates has, or ever has had, any liability (contingent or otherwise) relating to the withdrawal or partial withdrawal from a multiemployer Plan. To the Knowledge of AMCON, nothing has been done or omitted to be done and no transaction or holding of any asset under or in connection with any AMCON Employee Plan has occurred that will make AMCON or any AMCON Subsidiary, or any officer or director of AMCON or any AMCON Subsidiary, subject to any liability under Title I of ERISA or liable for any tax pursuant to Section 4975 of the Code (assuming the taxable period of any such transaction expired as of the date hereof) that would be reasonably likely to have an AMCON Material Adverse Effect. (c) Each AMCON Employee Plan that is intended to be qualified under Section 401(a) of the Code now meets, and at all time since its inception have met, the requirements for such qualification, and each trust forming a part thereof is now, and at all times since its inception has been, exempt from tax pursuant to Section 501(a) of the Code. Each such plan has received a determination letter from the Internal Revenue Service to the effect that such plan is qualified and its related trust is exempt from federal income taxes. AMCON has furnished, or will make available upon request, to HNWC copies of the most recent Internal Revenue Service determination letters with respect to each such AMCON Employee Plan. Each AMCON Employee Plan has been maintained and administered in substantial compliance with its terms (except that in any case in which any AMCON Employee Plan is currently required to comply with a provision of ERISA or of the Code, but is not yet required to be amended to reflect such provision, such plan has been maintained and administered in accordance with the provision) and with the requirements prescribed by any and all statutes, orders, rules and regulations, including but not limited to ERISA and the Code, which are applicable to such AMCON Employee Plan. All material reports, returns and similar documents with respect to each AMCON Employee Plan required to be filed with any government agency or distributed to any AMCON Employee Plan participant have been duly timely filed and distributed. (d) There is no contract, agreement, plan or arrangement that, as a result of the Merger, would be reasonably likely to obligate AMCON to make any payment of any amount that would not be deductible pursuant to the terms of Section 162(m) or Section 280G of the Code. (e) Except as disclosed in writing to HNWC prior to the date hereof, there has been no amendment to, written interpretation or announcement (whether or not written) relating to, or change in employee participation or coverage under, any AMCON Employee Plan that would increase materially the expense of maintaining such AMCON Employee Plan above the level of the expense incurred in respect thereof for the fiscal year ended September 30, 2000. (f) No AMCON Employee Plan promises or provides post-retirement medical, life insurance or other benefits due now or in the future to current, former or retired employees of AMCON or any Subsidiary. Section 3.14 Compliance with Laws; Licenses, Permits and Registrations. (a) Neither AMCON nor any AMCON Subsidiary is in violation of, or has violated, any applicable provisions of any laws, statutes, ordinances, regulations, judgments, injunctions, orders or consent decrees, except for any such violations that, individually or in the aggregate, would not be reasonably likely to have an AMCON Material Adverse Effect. (b) Each of AMCON and the AMCON Subsidiaries has all permits, licenses, approvals, authorizations of and registrations with and under all federal, state, local and foreign laws, and from all Governmental Entities required by AMCON and the AMCON Subsidiaries to carry on their respective businesses as currently conducted, except where the failure to have any such permits, licenses, approvals, authorizations or registrations, individually or in the aggregate, would not be reasonably likely to have an AMCON Material Adverse Effect. Section 3.15 Title to Properties. (a) AMCON and each AMCON Subsidiary have good and marketable title to, or valid leasehold interests in, all their properties and assets except for such as are no longer used or useful in the conduct of their businesses or as have been disposed of in the ordinary course of business and except for defects in title, easements, restrictive covenants and similar Liens, encumbrances or impediments that do not materially interfere with the ability of AMCON and its Subsidiaries to use their respective assets and conduct their businesses, as currently used or conducted. All such assets and properties, other than assets and properties in which AMCON or any AMCON Subsidiary has leasehold interests, are free and clear of all Liens, except for Liens that, in the aggregate, do not and will not materially interfere with the ability of AMCON and the AMCON Subsidiaries to use their respective assets and conduct their businesses, as currently conducted. (b) AMCON and each AMCON Subsidiary (i) are in substantial compliance with the terms of all leases to which they are a party and under which they are in occupancy, and all such leases are in full force and effect and (ii) enjoy peaceful and undisturbed possession under all such leases. Section 3.16 Intellectual Property. (a) AMCON and the AMCON Subsidiaries own or have a valid license to use (i) all fictional business names, trading names, registered and unregistered trademarks, service marks, domain names and applications (collectively, "Marks"); (ii) all patents, patent applications, and inventions and discoveries that may be patentable (collectively, "Patents"); (iii) all copyrights in both published works and unpublished works (collectively, "Copyrights"); (iv) all rights in mask works (collectively, "Rights in Mask Works"); and (v) all know-how, trade secrets, confidential information, customer lists, software, technical information, data, process technology, plans, drawings, and blue prints (collectively, "Trade Secrets"); necessary to (x) carry on the business of AMCON as currently conducted or as proposed to be conducted by the Surviving Corporation, to (y) make, have made, use, distribute and sell all products currently sold by AMCON and all products in development. (b) There are no outstanding and, to AMCON's Knowledge, no Threatened disputes or disagreements with respect to any agreement to which AMCON or an AMCON subsidiary is a party, relating to any of AMCON's Marks, Patents, Copyrights, Rights in Mask Works, or Trade Secrets (collectively, "AMCON Intellectual Property"). (c) AMCON is the owner of all right, title, and interest in and to the AMCON Intellectual Property, free and clear of all liens, security interests, charges, encumbrances, equities, and other adverse claims. (d) All former and current employees of AMCON have executed written contracts with AMCON that assign to AMCON all rights to any inventions, improvements, discoveries, or information relating to the business of AMCON. To AMCON's knowledge, no employee of AMCON has entered into any contract that restricts or limits in any way the scope or type of work in which the employee may be engaged or requires the employee to transfer, assign, or disclose information concerning his work to anyone other than AMCON. (e) All of the Patents are currently in compliance in all material respects with formal legal requirements (including payment of filing, examination, and maintenance fees and proofs of working or use), are valid and enforceable, and are not subject to any maintenance fees or taxes or actions. (f) No Patent has been or is now involved in any interference, reissue, reexamination, or opposition proceeding. To AMCON's Knowledge, there is no potentially interfering patent or patent application of any third party. (g) No Patent is infringed or, to AMCON's Knowledge, has been challenged or threatened in any way. To AMCON's Knowledge, none of the products manufactured and sold or proposed to be sold, nor any process or know-how used, by AMCON infringes or is alleged to infringe any Patent or other proprietary right of any other Person. (h) AMCON is not required to make any payments to any third parties in connection with its use of AMCON Intellectual Property. (i) All products made, used, or sold under the Patents have been marked with the proper patent notice. Section 3.17 Environmental Matters. (a) With such exceptions as, individually or in the aggregate, would not be reasonably likely to have an AMCON Material Adverse Effect, (i) no written notice, notification, demand, request for information, citation, summons, complaint or order has been received by, and no investigation, action, claim, suit, proceeding or review is pending or threatened by any Person against AMCON or any AMCON Subsidiary with respect to any applicable Environmental Law and (ii) AMCON and the AMCON Subsidiaries are and have been in compliance with all applicable Environmental Laws. (b) For purposes of this Section 3.17 and Section 4.16, the term "Environmental Laws" means any federal, state, local and foreign statutes, laws (including, without limitation, common law), judicial decisions, regulations, ordinances, rules, judgments, orders, codes, injunctions, permits or governmental agreements relating to human health and safety, the environment or to pollutants, contaminants, wastes, or chemicals, hazardous substances, hazardous materials or hazardous wastes as any of those terms is regulated or defined by Environmental Laws. Section 3.18 Finders' Fees; Opinions of Financial Advisor. There is no investment banker, broker, finder or other intermediary that has been retained by, or is authorized to act on behalf of, AMCON or any AMCON Subsidiary who might be entitled to any fee or commission from HNWC or any of its Affiliates upon consummation of the transactions contemplated by this Agreement. Section 3.19 Board Approval; Required Vote. (a) As of the date hereof, this Agreement and the transactions contemplated hereby have been approved by AMCON's Board of Directors. (b) No votes of the holders of any class or series of capital stock of AMCON is required by law, rule, regulation or rule of the American Stock Exchange to approve and adopt this Agreement and/or any of the other transactions contemplated hereby, including the Merger. Section 3.20 Tax Treatment. Neither AMCON nor any of its Affiliates has taken or agreed to take, or will take, any action or is aware of any fact or circumstance that would prevent or impede the Merger from qualifying as a 368 Reorganization. Section 3.21 Certain Agreements. None of AMCON, any AMCON Subsidiary or any of their respective Affiliates (i) are parties to or otherwise bound by any agreement or arrangement that limits or otherwise restricts AMCON, any AMCON Subsidiary, the Surviving Corporation or any of their respective Affiliates from engaging or competing in any line of business or in any locations, which agreement or arrangement is material to the business of AMCON and the AMCON Subsidiaries or would be material to the business of the Surviving Corporation (assuming the Merger has taken place), in either case taken as a whole and (ii) except in the ordinary course of business, have amended, modified or terminated any material contract, agreement or arrangement of AMCON or any AMCON Subsidiary or otherwise waived, released or assigned any material rights, claims or benefits of AMCON or any AMCON Subsidiary thereunder. Section 3.22 Employment Agreements. There exists (i) no union, guild or collective bargaining agreement to which AMCON or any AMCON Subsidiary is a party, (ii) no employment, consulting or severance agreement between AMCON or any Subsidiary of AMCON and any Person (except for consulting agreements that individually, and in the aggregate, are not material to AMCON), and (iii) no employment, consulting, severance or indemnification agreement or other agreement or plan to which AMCON or any AMCON Subsidiary is a party that would be altered or result in any bonus, golden parachute, severance or other payment or obligation to any Person, or result in any acceleration of the time of payment or in the provision or vesting of any benefits, as a result of the execution or performance of this Agreement or as a result of the Merger or the other transactions contemplated hereby. Section 3.23 Transactions With Directors, Officers and Affiliates. Except for any of the following matters which would not be required to be disclosed pursuant to Item 402 or Item 404 of Regulation S-K of the U.S. Securities and Exchange Commission (the "Commission"), since September 30, 2000, there have been no transactions between AMCON or any of its Subsidiaries and any director, officer, employee, stockholder or Affiliate of AMCON or any of its Subsidiaries, including, without limitation, loans, guarantees or pledges to, by or for AMCON or any of AMCON's Subsidiaries from, to, by or for any of such Persons. Since September 30, 2000, none of the officers or directors of AMCON or any of its Subsidiaries, and no spouse or relative of any of such Persons, has been a director or officer of, or has had any material direct or indirect interest in, any Person which during such period has been a supplier, customer or sales agent of AMCON or any of its Subsidiaries or has competed with or been engaged in any business of the kind being conducted by AMCON or any of its Subsidiaries. Section 3.24 Material Contracts. Schedule 3.24 delivered to HNWC by AMCON prior to the execution of this Agreement lists all material contracts and agreements to which, as of the date hereof, AMCON or any AMCON Subsidiary is a party or by which AMCON or any AMCON Subsidiary is bound or under which AMCON or any AMCON Subsidiary has or may acquire any rights, which were not filed prior to the date hereof as exhibits to AMCON SEC Documents, which involve or relate to (i) obligations of AMCON or any AMCON Subsidiary for borrowed money or other indebtedness where the amount of such obligations exceeds $6,000,000 individually, (ii) the lease by AMCON or any AMCON Subsidiary, as lessee or lessor, of real property for rent of more than $6,000,000 per annum, (iii) the purchase or sale of goods (other than raw material to be purchased by AMCON on terms that are customary and consistent with the past practice of AMCON and in amounts and at prices substantially consistent with past practices of AMCON) or services with an aggregate minimum purchase price of more than $6,000,000 per annum, (iv) rights to manufacture and/or distribute any product which accounted for more than $45,000,000 of the consolidated revenues of AMCON and its Subsidiaries during the fiscal year ended September 30, 2000 or under which AMCON or any AMCON Subsidiary received or paid license or other fees in excess of $1,000,000 during any year, (v) the purchase or sale of assets or properties not in the ordinary course of business having a purchase price in excess of $6,000,000, (vi) the right (whether or not currently exercisable) to use, license (including any "in-license" or "outlicense"), sublicense or otherwise exploit any intellectual property right or other proprietary asset of AMCON or of any of Subsidiary of AMCON or any other Person which, is material to AMCON; (vii) any material collaboration or joint venture or similar arrangement; (viii) the restriction on the right or ability of AMCON or any Subsidiary of AMCON (A) to compete with any other Person, (B) to acquire any product or other asset or any services from any other Person, (C) to solicit, hire or retain any Person as an employee, consultant or independent contractor, (D) to develop, sell, supply, distribute, offer, support or service any product or any technology or other asset to or for any other Person, (E) to perform services for any other Person, or (F) to transact business or deal in any other manner with any other Person; (ix) any currency hedging; or (x) individual capital expenditures or commitments in excess of $6,000,000. All such contracts and agreements are duly and validly executed by AMCON or such AMCON Subsidiary, and are in full force and effect in all material respects. Neither AMCON nor any of its Subsidiaries has violated or breached, or committed any default under, any contract or agreement, and, to the knowledge of AMCON, no other Person has violated or breached, or committed any default under, any contract or agreement, which violation, breach or default (alone or in combination with other violations, breaches or defaults under such contract or agreement or under other contracts or agreements) has had or may reasonably be expected to have an AMCON Material Adverse Effect. No event has occurred which, after notice or the passage of time or both, would constitute a default by AMCON or any Subsidiary of AMCON under any contract or agreement or give any Person the right to (A) declare a default or exercise any remedy under any contract or agreement, (B) receive or require a rebate, chargeback, penalty or change in delivery schedule under any contract or agreement, (C) accelerate the maturity or performance of any contract or agreement, or (D) cancel, terminate or modify any contract or agreement, in each case which, together with all other events of the types referred to in clauses (A), (B), (C) and (D) of this sentence has had or may reasonably be expected to have an AMCON Material Adverse Effect. All such contracts and agreements will continue, after the Effective Time, to be binding in all material respects in accordance with their respective terms until their respective expiration dates. Section 3.25 Insurance. AMCON has made available to HNWC a summary of all material insurance policies and all material self insurance programs and arrangements relating to the business, assets and operations of AMCON and its Subsidiaries. Each of such insurance policies is in full force and effect. Since September 30, 2000, neither AMCON nor any of its Subsidiaries has received any notice or other communication regarding any actual or possible (i) cancellation or invalidation of any material insurance policy, (ii) refusal of any coverage or rejection of any material claim under any insurance policy, or (iii) material adjustment in the amount of the premiums payable with respect to any insurance policy. There is no pending workers' compensation or other claim under or based upon any insurance policy of AMCON or any of its Subsidiaries other than claims incurred in the ordinary course of business. ARTICLE IV REPRESENTATIONS AND WARRANTIES OF HNWC Except as disclosed in the (i) HNWC Disclosure Schedule delivered to AMCON dated the date hereof (each section or subsection of which Disclosure Schedule qualifies the correspondingly numbered representation, warranty or covenant to the extent specified therein), or (ii) the HNWC SEC Documents filed prior to the date hereof, HNWC represents and warrants to AMCON that, as of the date hereof (except for representations and warranties that address matters only as of a specific date, in which case such representations are true and correct on and as of such specific date): Section 4.1 Corporate Existence and Power. HNWC is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Hawaii, and has all corporate powers required to carry on its business as now conducted. HNWC is duly qualified to do business as a foreign corporation and is in good standing in each jurisdiction where the character of the property owned or leased by it or the nature of its activities makes such qualification necessary, except where the failure to be so qualified, individually or in the aggregate, would not be reasonably likely to have a HNWC Material Adverse Effect. HNWC has heretofore made available to AMCON true and complete copies of HNWC's articles of incorporation and bylaws as currently in effect. Section 4.2 Corporate Authorization. The execution, delivery and performance by HNWC of this Agreement and the consummation by HNWC of the transactions contemplated hereby are within HNWC's corporate powers and, except for the HNWC Stockholder Approval (as defined herein), have been duly authorized by all necessary corporate action. Assuming that this Agreement constitutes the valid and binding obligation of AMCON, this Agreement constitutes a valid and binding agreement of HNWC, enforceable in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium and similar laws, now or hereafter in effect, relating to or affecting creditors' rights and remedies generally and to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). Section 4.3 Governmental Authorization. The execution, delivery and performance by HNWC of this Agreement and the consummation by HNWC of the transactions contemplated hereby require no action by or in respect of, or filing with, any Governmental Entity other than (a) the filing of (i) the Articles of Merger in accordance with the Hawaii Law, (ii) the Certificate of Merger in accordance with the Delaware Law, and (iii) appropriate documents with the relevant authorities of other states or jurisdictions in which HNWC or any HNWC Subsidiary is qualified to do business; (b) compliance with any applicable requirements of the Securities Act and the Exchange Act; (c) such as may be required under any applicable state securities or blue sky laws; and (d) such other consents, approvals, actions, orders, authorizations, registrations, declarations and filings that, if not obtained or made, would not, individually or in the aggregate, (x) be reasonably likely to have a HNWC Material Adverse Effect or (assuming for this purpose that the Effective Time had occurred) a Surviving Corporation Material Adverse Effect, or (y) prevent or materially impair the ability of HNWC to consummate the transactions contemplated by this Agreement. Section 4.4 Non-Contravention. The execution, delivery and performance by HNWC of this Agreement and the consummation by HNWC of the transactions contemplated hereby do not and will not (a) contravene or conflict with HNWC's articles of incorporation or bylaws, (b) assuming compliance with the matters referred to in Section 4.3, contravene or conflict with or constitute a violation of any provision of any law, regulation, judgment, injunction, order or decree binding upon or applicable to HNWC, (c) constitute a default under or give rise to a right of termination, cancellation or acceleration of any right or obligation of HNWC or any HNWC Subsidiary or to a loss of any benefit or status to which HNWC is entitled under any provision of any agreement, contract or other instrument binding upon HNWC or any HNWC Subsidiary or any license, franchise, permit or other similar authorization held by HNWC, or (d) result in the creation or imposition of any Lien on any asset of HNWC other than, in the case of each of (b), (c) and (d), any such items that would not, individually or in the aggregate (x) be reasonably likely to have a HNWC Material Adverse Effect or (y) prevent or materially impair the ability of HNWC to consummate the transactions contemplated by this Agreement. Section 4.5 Capitalization. (a) The authorized capital stock of HNWC consists of 20,000,000 shares of HNWC Common Stock and 5,000,000 shares of HNWC Preferred Stock (of which 1,250 shares of HNWC Series A Convertible Preferred Stock were authorized and 250 shares of HNWC Series B Convertible Preferred Stock were authorized and 750,000 shares of HNWC Series C Preferred Stock were authorized). At the close of business on the date hereof, (i) 7,935,982 shares of HNWC Common Stock were issued and outstanding, (ii) stock options ("HNWC Stock Options") to purchase an aggregate of 683,926 shares of HNWC Common Stock were issued and outstanding (of which options to purchase an aggregate of 624,226 shares of HNWC Common Stock were exercisable), (iii) warrants ("HNWC Warrants") to purchase an aggregate of 4,862,899 shares of HNWC Common Stock were issued and outstanding (of which warrants to purchase an aggregate of 4,862,899 shares of HNWC Common Stock were exercisable), (iv) no shares of HNWC Preferred Stock were issued and outstanding, and (v) there were no stock options and warrants to purchase shares of HNWC Preferred Stock issued and outstanding. All outstanding shares of capital stock of HNWC have been duly authorized and validly issued and are fully paid and nonassessable. (b) As of the date hereof, except (i) as set forth in this Section 4.5, (ii) for changes since March 31, 2001, resulting from the exercise of stock options outstanding on such date and (iii) the issuance of the $500,000 Convertible Note to AMCON, there are no outstanding (x) shares of capital stock or other voting securities of HNWC, (y) securities of HNWC convertible into or exchangeable for shares of capital stock or voting securities of HNWC, or (z) options or other rights to acquire from HNWC, and no obligation of HNWC to issue, any capital stock, voting securities or securities convertible into or exchangeable for capital stock or voting securities of HNWC (the items in clauses (x), (y) and (z) being referred to collectively as the "HNWC Securities"). There are no outstanding obligations of HNWC or any HNWC Subsidiary to repurchase, redeem or otherwise acquire any HNWC Securities other than 100 shares of its Series B Convertible Preferred Stock. There are no outstanding contractual obligations of HNWC to provide funds to, or make any investment (in the form of a loan, capital contribution or otherwise) in, any other Person. There are no stockholder agreements, voting trusts or other agreements or understandings to which HNWC is a party, or of which HNWC is aware, relating to voting, registration or disposition of any shares of capital stock of HNWC or granting to any person or group of persons the right to elect, or to designate or nominate for election, a director to the board of directors of HNWC, except for the Stockholders Agreement attached hereto as Exhibit A. Section 4.6 Subsidiaries. HNWC does not have any subsidiaries and does not own or control, directly or indirectly, any stock or equity interest in any corporation or other Person. Section 4.7 HNWC SEC Documents. (a) HNWC has made available to AMCON the HNWC SEC Documents. HNWC has filed all reports, filings, registration statements and other documents required to be filed by it with the SEC since December 31, 1997. (b) As of its filing date, each HNWC SEC Document complied as to form in all material respects with the applicable requirements of the Securities Act and/or the Exchange Act, as the case may be. (c) No HNWC SEC Document filed pursuant to the Exchange Act contained, as of its filing date, any untrue statement of a material fact or omitted to state any material fact necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading. No HNWC SEC Document, as amended or supplemented, if applicable, filed pursuant to the Securities Act contained, as of the date such document or amendment became effective, any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary to make the statements therein not misleading. Section 4.8 Financial Statements; No Material Undisclosed Liabilities. (a) The audited HNWC financial statements and unaudited consolidated interim financial statements of HNWC included in the HNWC 10-KSB and the HNWC 10-QSB fairly present in all material respects, in conformity with GAAP consistently applied (except as may be indicated in the notes thereto and except that financial statements on Form 10QSB do not contain all GAAP notes to such financial statements), the financial position of HNWC as of the dates thereof and its results of operations, stockholders' equity and consolidated cash flows for the periods then ended (subject to normal year-end adjustments in the case of any unaudited interim financial statements). (b) There are no liabilities of HNWC of any kind whatsoever, whether accrued, contingent, absolute, determined, determinable or otherwise, in each case, that are required by GAAP to be set forth on a balance sheet of HNWC, other than: (i) liabilities or obligations disclosed or provided for in the HNWC Balance Sheet or disclosed in the notes there; (ii) liabilities or obligations under this Agreement or incurred in connection with the transactions contemplated hereby; (iii) current liabilities incurred in the ordinary course of business since December 31, 2000; and (iv) other liabilities or obligations that individually or in the aggregate, would not be reasonably likely to have a HNWC Material Adverse Effect. (c) HNWC keeps proper accounting records in which all material assets and liabilities, and all material transactions, of HNWC are recorded in conformity with GAAP. No part of HNWC's accounting system or records, or access thereto, is under the control of a Person who is not an employee of HNWC. Section 4.9 Information to be Supplied. (a) The information to be supplied by HNWC expressly for inclusion or incorporation by reference in the Proxy Statement/Prospectus will (i) in the case of the Registration Statement, at the time it becomes effective, not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein not misleading and (ii) in the case of the remainder of the Proxy Statement/Prospectus, at the time of the mailing thereof, and at the time of the Special Meeting, not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading. The Proxy Statement/Prospectus will comply (with respect to information relating to HNWC) as to form in all material respects with the provisions of the Securities Act and the Exchange Act. (b) Notwithstanding the foregoing, HNWC makes no representation or warranty with respect to any statements made or incorporated by reference in the Proxy Statement/Prospectus based on information supplied by AMCON. Section 4.10 Absence of Certain Changes. Since December 31, 1999, except as otherwise expressly contemplated by this Agreement, HNWC has conducted its business in the ordinary course consistent with past practice and there has not been (a) any damage, destruction or other casualty loss (whether or not covered by insurance) affecting the business or assets of HNWC that, individually or in the aggregate, has had or would be reasonably likely to have a HNWC Material Adverse Effect, (b) any action, event, occurrence, development or state of circumstances or facts that, individually or in the aggregate, has had or would be reasonably likely to have a HNWC Material Adverse Effect or (c) any incurrence, assumption or guarantee by HNWC of any material indebtedness for borrowed money other than in the ordinary course and in amounts and on terms consistent with past practices. Section 4.11 Litigation. Section 4.11 of the HNWC Disclosure Schedule contains a list of each action, suit, investigation, arbitration or proceeding pending against, or to the Knowledge of HNWC threatened against, HNWC or any of its respective assets or properties before any arbitrator or Governmental Entity. None of such actions, suits, investigations, arbitrations or proceedings, individually or in the aggregate, would be reasonably likely to have a HNWC Material Adverse Effect. There are no outstanding judgments, decrees, injunctions, awards or orders against HNWC that would be reasonably likely to have, individually or in the aggregate, a HNWC Material Adverse Effect. Section 4.12 Taxes. (a) All Tax returns, statements, reports and forms (collectively, the "HNWC Returns") required to be filed with any taxing authority by, or with respect to, HNWC and the HNWC Subsidiaries have been filed in substantial compliance with all applicable laws. (b) HNWC has timely paid all Taxes shown as due and payable on the HNWC Returns that have been so filed, and all other Taxes not subject to reporting obligations, and as of the time of filing, the HNWC Returns correctly reflected the facts regarding the income, business, assets, operations, activities and the status of HNWC and the HNWC Subsidiaries (other than Taxes that are being contested in good faith and for which adequate reserves are reflected on the HNWC Balance Sheet). (c) HNWC has made provision for all Taxes payable by them for which no HNWC Return has yet been filed. (d) The charges, accruals and reserves for Taxes with respect to HNWC reflected on the HNWC Balance Sheet are adequate under GAAP to cover the Tax liabilities accruing through the date thereof. (e) There is no action, suit, proceeding, audit or claim now proposed or pending against or with respect to HNWC in respect of any Tax that would be reasonably likely to have a HNWC Material Adverse Effect. (f) HNWC has not been a member of an affiliated, consolidated, combined or unitary group other than one of which HNWC was the common parent. (g) HNWC does not hold any asset subject to a consent under Section 341(f) of the Code. Section 4.13 Employee Benefits. (a) Section 4.13(a) of the HNWC Disclosure Schedule contains a correct and complete list identifying each material "employee benefit plan", as defined in Section 3(3) of ERISA, each employment, severance or similar contract, plan, arrangement or policy and each other plan or arrangement (written or oral) providing for compensation, bonuses, profit-sharing, stock option or other stock related rights or other forms of incentive or deferred compensation, vacation benefits, insurance coverage (including any self- insured arrangements), health or medical benefits, disability benefits, workers' compensation, supplemental unemployment benefits, severance benefits and post-employment or retirement benefits (including compensation, pension, health, medical or life insurance benefits) that is maintained, administered or contributed to by HNWC or any of its ERISA Affiliates and covers any employee or former employee of HNWC or any HNWC Subsidiary. Copies of such plans (and, if applicable, related trust agreements) and all amendments thereto and written interpretations thereof have been furnished, or will be made available upon request, to AMCON together with the most recent annual report (Form 5500 including, if applicable, Schedule B thereto) and summary plan description prepared in connection with any such plan. Such plans are referred to collectively herein as the "HNWC Employee Plans". For purposes of this Section 4.13, "ERISA Affiliate" of any Person means any other Person which, together with such Person, would be treated as a single employer under Section 414 of the Code. (b) No HNWC Employee Plan is now or at any time has been subject to Part 3, Subtitle B of Title I or ERISA or Title IV of ERISA. At no time has HNWC or any of its ERISA Affiliates contributed to, or been required to contribute to, any "multiemployer plan," as defined in Section 3(37) of ERISA (a "Multiemployer Plan"), and neither HNWC nor any of its ERISA Affiliates has, or ever has had, any liability (contingent or otherwise) relating to the withdrawal or partial withdrawal from a Multiemployer Plan. To the Knowledge of HNWC, no condition exists and no event has occurred that would be reasonably likely to constitute grounds for termination of any HNWC Employee Plan that is a Retirement Plan or, with respect to any HNWC Employee Plan that is a Multiemployer Plan, presents a material risk of a complete or partial withdrawal under Title IV of ERISA and neither HNWC nor any of its ERISA Affiliates has incurred any liability under Title IV of ERISA arising in connection with the termination of, or complete or partial withdrawal from, any plan covered or previously covered by Title IV of ERISA that would be reasonably likely to have a HNWC Material Adverse Effect. To the Knowledge of HNWC, nothing has been done or omitted to be done and no transaction or holding of any asset under or in connection with any HNWC Employee Plan has occurred that will make HNWC or any HNWC Subsidiary, or any officer or director of HNWC or any HNWC Subsidiary, subject to any liability under Title I of ERISA or liable for any tax pursuant to Section 4975 of the Code (assuming the taxable period of any such transaction expired as of the date hereof) that would be reasonably likely to have a HNWC Material Adverse Effect. (c) Each HNWC Employee Plan that is intended to be qualified under Section 401(a) of the Code now meets, and at all times since its inception have met, the requirements for such qualification, and each trust forming a part thereof is now, and at all times since its inception has been, exempt from tax pursuant to Section 501(a) of the Code. Each such plan has received a determination letter from the Internal Revenue Service to the effect that such plan is qualified and its related trust is exempt from federal income taxes. HNWC has furnished, or will make available upon request, to AMCON copies of the most recent Internal Revenue Service determination letters with respect to each such HNWC Employee Plan. Each HNWC Employee Plan has been maintained and administered in substantial compliance with its terms (except that in any case in which any HNWC Employee Plan is currently required to comply with a provision of ERISA or of the Code, but is not yet to be amended to reflect such provision, such plan has been maintained and administered in accordance with the provision) and with the requirements prescribed by any and all statutes, orders, rules and regulations, including but not limited to ERISA and the Code, which are applicable to such HNWC Employee Plan. All material reports, returns and similar documents with respect to each HNWC Employee Plan required to be filed with any governmental agency or distributed to any HNWC Employee Plan participant have been duly timely filed and distributed. (d) There is no contract, agreement, plan or arrangement that, as a result of the Merger, would be reasonably likely to obligate HNWC to make any payment of any amount that would not be deductible pursuant to the terms of Section 162(m) or Section 280G of the Code. (e) Except as disclosed in writing to AMCON prior to the date hereof, there has been no amendment to, written interpretation or announcement (whether or not written) relating to, or change in employee participation or coverage under, any HNWC Employee Plan that would increase materially the expense of maintaining such HNWC Employee Plan above the level of the expense incurred in respect thereof for the fiscal year ended December 31, 1999. (f) No HNWC Employee Plan promises or provides post-retirement medical, life insurance or other benefits due now or in the future to current, former or retired employees of HNWC or any Subsidiary. Section 3.14 Compliance with Laws; Licenses, Permits and Registrations. (a) HNWC is not in violation of, nor has HNWC violated, any applicable provisions of any laws, statutes, ordinances, regulations, judgments, injunctions, orders or consent decrees, except for any such violations that, individually or in the aggregate, would not be reasonably likely to have a HNWC Material Adverse Effect. (b) HNWC has all permits, licenses, approvals, authorizations of and registrations with and under all federal, state, local and foreign laws, and from all Governmental Entities required by HNWC to carry on its business as currently conducted, except where the failure to have any such permits, licenses, approvals, authorizations or registrations, individually or in the aggregate, would not be reasonably likely to have a HNWC Material Adverse Effect. Section 4.15 Title to Properties. (a) HNWC has good and marketable title to, or valid leasehold interests in, and all necessary use permits with respect to, all its properties and assets, except for such as are no longer used or useful in the conduct of its business or as have been disposed of in the ordinary course of business and except for defects in title, easements, restrictive covenants and similar Liens, encumbrances or impediments that do not materially interfere with the ability of HNWC to conduct its business as currently conducted. All such assets and properties, other than assets and properties in which HNWC has leasehold interests, are free and clear of all Liens, except for Liens that do not and will not materially interfere with the ability of HNWC to conduct its business as currently conducted. (b) HNWC (i) is in substantial compliance with the terms of all leases and use permits to which it is a party or a beneficiary and under which it is in occupancy, and all such leases and use permits are in full force and effect and (ii) enjoys peaceful and undisturbed possession under all such leases and use permits. Section 4.16 Intellectual Property. (a) HNWC owns or has a valid license to use (i) all Marks; (ii) all Patents; (iii) all Copyrights; (iv) all Rights in Mask Works' and (v) all Trade Secrets; necessary to (x) carry on the business of HNWC as currently conducted or as proposed to be conducted by the Surviving Corporation, to (y) make, have made, use, distribute and sell all products currently sold by HNWC and all products in development. (b) There are no outstanding and, to HNWC's Knowledge, no threatened disputes or disagreements with respect to any agreement to which HNWC is a party, relating to any of HNWC's Marks, Patents, Copyrights, Rights in Mask Works, or Trade Secrets (collectively, "HNWC Intellectual Property"). (c) HNWC is the owner of all right, title, and interest in and to the HNWC Intellectual Property, free and clear of all liens, security interests, charges, encumbrances, equities, and other adverse claims. (d) All former and current employees of HNWC have executed written contracts with HNWC that assign to HNWC all rights to any inventions, improvements, discoveries, or information relating to the business of HNWC. To HNWC's knowledge, no employee of HNWC has entered into any contract that restricts or limits in any way the scope or type of work in which the employee may be engaged or requires the employee to transfer, assign, or disclose information concerning his work to anyone other than HNWC. (e) All of the Patents are currently in compliance with formal legal requirements (including payment of filing, examination, and maintenance fees and proofs of working or use), are valid and enforceable, and are not subject to any maintenance fees or taxes or actions. (f) No Patent has been or is now involved in any interference, reissue, reexamination, or opposition proceeding. To HNWC's Knowledge, there is no potentially interfering patent or patent application of any third party. (g) No Patent is infringed or, to HNWC's Knowledge, has been challenged or threatened in any way. To HNWC's knowledge, none of the products manufactured and sold or proposed to be sold, nor any process or know-how used, by HNWC infringes or is alleged to infringe any Patent or other proprietary right of any other Person. (h) HNWC is not required to make any payments to any third parties in connection with its use of the HNWC Intellectual Property. (i) All products made, used, or sold under the Patents have been marked with the proper patent notice. Section 4.17 Environmental Matters. With such exceptions as, individually or in the aggregate, would not be reasonably likely to have a HNWC Material Adverse Effect, (i) no written notice, notification, demand, request for information, citation, summons, complaint or order has been received by, and no investigation, action, claim, suit, proceeding or review is pending or threatened by any Person against, HNWC with respect to any applicable Environmental Law and (ii) HNWC is and has been in compliance with all applicable Environmental Laws. Section 4.18 Finders' Fees. There is no investment banker, broker, finder or other intermediary that has been retained by, or is authorized to act on behalf of, HNWC or who might be entitled to any fee or commission from AMCON or any of its Affiliates upon consummation of the transactions contemplated by this Agreement. Section 4.19 Required Vote and Waiver; Board Approval. (a) The only vote or waiver of rights of the holders of any class or series of capital stock of HNWC required by law, rule or regulation to approve and adopt this Agreement and/or any of the other transactions contemplated hereby, including the Merger (collectively, the "HNWC Stockholder Approval") is the affirmative vote of the holders of more than fifty percent of the outstanding shares of HNWC Common Stock in favor of the approval and adoption of this Agreement and approval of the Merger. (b) HNWC's Board of Directors has unanimously (i) determined and declared that this Agreement and the transactions contemplated hereby, including the Merger, are advisable and in the best interests of HNWC and its stockholders, (ii) approved and adopted this Agreement, the Merger and the other transactions contemplated hereby and (iii) resolved to recommend to such stockholders that they vote in favor of adopting and approving this Agreement and the Merger in accordance with the terms hereof at a special meeting of the stockholders of HNWC duly held for such purpose (the "HNWC Stockholders Meeting"). Section 4.20 State Takeover Statutes. HNWC has taken all actions required to be taken by it in order to exempt this Agreement and the transactions contemplated hereby from the provisions of all "control share acquisition," "business combination," "fair price" or other anti-takeover laws or regulations enacted under state or federal laws in the United States that might apply to this Agreement or any of the transactions contemplated hereby. Section 4.21 Tax Treatment. Neither HNWC nor any of its Affiliates has taken or agreed to take, or will take, any action or is aware of any fact or circumstance that would prevent or impede the Merger from qualifying as a 368 Reorganization. Section 4.22 Certain Agreements. Neither HNWC nor any of its Affiliates (i) are parties to or otherwise bound by any agreement or arrangement that limits or otherwise restricts HNWC, the Surviving Corporation or any of their respective Affiliates from engaging or competing in any line of business or in any locations, which agreement or arrangement is material to the business of HNWC or would be material to the business of the Surviving Corporation (assuming the Merger has taken place), in either case taken as a whole and (ii) except in the ordinary course of business, have amended, modified or terminated any material contract, agreement or arrangement of HNWC or any HNWC Subsidiary or otherwise waived, released or assigned any material rights, claims or benefits of HNWC or any HNWC Subsidiary thereunder. Section 4.23 Employment Agreements. There exists (i) no union, guild or collective bargaining agreement to which HNWC is a party, (ii) no employment, consulting or severance agreement between HNWC and any Person (except for consulting agreements that individually, and in the aggregate, are not material to HNWC), and (iii) no employment, consulting, severance or indemnification agreement or other agreement or plan to which HNWC is a party that would be altered or result in any bonus, golden parachute, severance or other payment or obligation to any Person, or result in any acceleration of the time of payment or in the provision or vesting of any benefits, as a result of the execution or performance of this Agreement or as a result of the Merger or the other transactions contemplated hereby. Section 4.24 Transactions With Directors, Officers and Affiliates. Except for any of the following matters which would not be required to be disclosed pursuant to Item 402 or Item 404 of Regulation S-K of the Commission (assuming HNWC was subject to such Items), since December 31, 1999, there have been no transactions between HNWC or any of its Subsidiaries and any director, officer, employee, stockholder or "Affiliate" (as identified pursuant to Section 7.8 hereof) of HNWC, including, without limitation, loans, guarantees or pledges to, by or for HNWC, from, to, by or for any of such Persons. Except for any of the following matters which would not be required to be disclosed pursuant to Item 402 or Item 404 of Regulation S-K of the Commission (assuming that HNWC was subject to such Items), since December 31, 1999, none of the officers or directors of HNWC, and no spouse or relative of any of such Persons, has been a director or officer of, or has had any material direct or indirect interest in, any Person which during such period has been a supplier, customer or sales agent of HNWC or has competed with or been engaged in any business of the kind being conducted by HNWC. Section 4.25 Material Contracts. Schedule 4.25 delivered to AMCON by HNWC prior to the execution of this Agreement lists all material contracts and agreements and use permits to which, as of the date hereof, HNWC is a party or by which is bound or under which HNWC has or may acquire any rights, which involve or relate to (i) obligations of HNWC for borrowed money or other indebtedness where the amount of such obligations exceeds $50,000 individually, (ii) the lease by HNWC, as lessee or lessor, of real property for rent of more than $25,000 per annum, (iii) the purchase or sale of goods (other than raw material to be purchased by HNWC on terms that are customary and consistent with the past practice of HNWC and in amounts and at prices substantially consistent with past practices of HNWC) or services with an aggregate minimum purchase price of more than $25,000 per annum, (iv) rights to manufacture and/or distribute any product which accounted for more than $25,000 of the consolidated revenues of HNWC during the fiscal year ended December 31, 1999 or under which HNWC received or paid license or other fees in excess of $25,000 during any year, (v) the purchase or sale of assets or properties not in the ordinary course of business having a purchase price in excess of $25,000, (vi) the right (whether or not currently exercisable) to use, license (including any "in-license" or "outlicense"), sublicense or otherwise exploit any intellectual property right or other proprietary asset of HNWC or any other Person which, when considered together with all such other rights, is material to HNWC; (vii) any material collaboration or joint venture or similar arrangement; (viii) the restriction on the right or ability of HNWC (A) to compete with any other Person, (B) to acquire any product or other asset or any services from any other Person, (C) to solicit, hire or retain any Person as an employee, consultant or independent contractor, (D) to develop, sell, supply, distribute, offer, support or service any product or any technology or other asset to or for any other Person, (E) to perform services for any other Person, or (F) to transact business or deal in any other manner with any other Person; (ix) any currency hedging; (x) individual capital expenditures or commitments in excess of $25,000; or (xi) any license, lease, permit or other right to use any water used by HNWC in its bottling operations. All such contracts and agreements and permits are duly and validly executed by HNWC, the other party thereto and all Governmental Entities, as the case may be, and are in full force and effect in all material respects. HNWC has not violated or breached, or committed any default under, any contract or agreement or permit, and, to the knowledge of HNWC, neither HNWC or other Person has violated or breached, or committed any default under, any contract or agreement or permit, which violation, breach or default (alone or in combination with other violations, breaches or defaults under such contract or agreement or permit or under other contracts or agreements or permits) has had or may reasonably be expected to have a HNWC Material Adverse Effect. No event has occurred which, after notice or the passage of time or both, would constitute a default by HNWC under any contract or agreement or permit or give any Person the right to (A) declare a default or exercise any remedy under any contract or agreement or permit, (B) receive or require a rebate, chargeback, penalty or change in delivery schedule under any contract or agreement or permit, (C) accelerate the maturity or performance of any contract or agreement or permit, or (D) cancel, terminate or modify any contract or agreement or permit, in each case which, together with all other events of the types referred to in clauses (A), (B), (C) and (D) of this sentence has had or may reasonably be expected to have a HNWC Material Adverse Effect. All such contracts and agreements and permits will continue, after the Effective Time, to be binding in all material respects in accordance with their respective terms until their respective expiration dates. Section 4.26 Certain Business Practices. Neither HNWC nor to the knowledge of HNWC any director, officer, agent or employee of HNWC has (i) used any funds for unlawful contributions, gifts, entertainment or other unlawful expenses relating to political activity, (ii) made any unlawful payment to foreign or domestic government officials or employees or to foreign or domestic political parties or campaigns or violated any provision of the Foreign Corrupt Practices Act of 1977, as amended, (assuming for purposes of this Section 4.26 that HNWC is subject to Section 30A of the Exchange Act) or (iii) made any other unlawful payment. Section 4.27 Insurance. HNWC has made available to AMCON a summary of all material insurance policies and all material self insurance programs and arrangements relating to the business, assets and operations of HNWC . Each of such insurance policies is in full force and effect. Since December 31, 1999, HNWC has not received any notice or other communication regarding any actual or possible (i) cancellation or invalidation of any material insurance policy, (ii) refusal of any coverage or rejection of any material claim under any insurance policy, or (iii) material adjustment in the amount of the premiums payable with respect to any insurance policy. There is no pending workers' compensation or other claim under or based upon any insurance policy of HNWC other than claims incurred in the ordinary course of business. Section 4.28 No Actions Inconsistent with Article VI. HNWC has not taken any of the actions contemplated by Article VI of this Agreement during the period from and including September 29, 2000 through and including the date of this Agreement, except for the issuance of the Convertible Notes and the Non- Excluded Shares. Section 4.29 Use of Proceeds of Convertible Notes. None of the proceeds of the $500,000 Convertible Note or the other secured convertible promissory notes to AMCON in the aggregate principal amount of $750,000 (the "Other Convertible Notes") have been or will be used for any purposes other than (a) providing working capital and other general corporate purposes of HNWC, and (b) to redeem the HNWC Series A Convertible Preferred Stock or Series B Convertible Preferred Stock or both, in each case, outstanding as of September 29, 2000. ARTICLE V REPRESENTATIONS AND WARRANTIES OF MERGER SUB Merger Sub represents and warrants to HNWC as follows: Section 5.1 Organization. Merger Sub is a corporation duly incorporated, validly existing and in good standing under the laws of Delaware. Merger Sub is a direct wholly-owned subsidiary of AMCON. Section 5.2 Corporate Authorization. Merger Sub has all requisite corporate power and authority to enter into this agreement and to consummate the transaction contemplated by this Agreement. The execution, delivery and performance by each of Merger Sub of this Agreement and the consummation of the transactions contemplated by this Agreement have been duly authorized by all necessary corporate action on the part of Merger Sub. This Agreement has been duly executed and delivered by Merger Sub and constitutes a valid and binding agreement of Merger Sub, enforceable against it in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium and other similar laws relating to or affecting creditors generally or by general equity principles. Section 5.3 Non-Contravention. The execution, delivery and performance by Merger Sub of this Agreement and the consummation by Merger Sub of the transactions contemplated by this Agreement do not and will not contravene or conflict with its certificate of incorporation or bylaws. Section 5.4 No Business Activities. Merger Sub has not conducted any activities other than in connection with the organization of Merger Sub, the negotiation and execution of this Agreement and the consummation of the transactions contemplated by this Agreement. Merger Sub has no subsidiaries. Section 5.5 Taxes. Merger Sub has not taken or agreed to take, will not take, and is not aware of any fact or circumstance that would prevent or impede the Merger from qualifying as 368 Reorganizations. ARTICLE VI COVENANTS OF HNWC HNWC agrees as follows: Section 6.1 HNWC Interim Operations. Except as set forth in the HNWC Disclosure Schedule or as otherwise expressly contemplated or permitted hereby, or as required by any Governmental Entity of competent jurisdiction, without the prior consent of AMCON (which consent shall not be unreasonably withheld or delayed), from the date hereof until the Effective Time, HNWC shall conduct its business in all material respects in the ordinary course consistent with past practice and shall use commercially reasonable efforts to (i) preserve intact its present business organization, (ii) maintain in effect all material foreign, federal, state and local licenses, approvals and authorizations, including, without limitation, all material licenses and permits that are required for HNWC to carry on its business and (iii) preserve existing relationships with its material customers, lenders, suppliers and others having material business relationships with it. Without limiting the generality of the foregoing, except as otherwise expressly contemplated or permitted by this Agreement, or as required by a Governmental Entity of competent jurisdiction, from the date hereof until the Effective Time, without the prior consent of AMCON (which consent shall not be unreasonably withheld or delayed), HNWC shall not: (a) amend its certificate of incorporation or by-laws; (b) split, combine or reclassify any shares of capital stock of HNWC or declare, set aside or pay any dividend in respect of its capital stock or redeem, repurchase or otherwise acquire or offer to redeem, repurchase, or otherwise acquire any of its securities except for the 100 shares of its Series B Convertible Preferred Stock; (c) (i) issue, deliver or sell, or authorize the issuance, delivery or sale of, any shares of its capital stock of any class or any securities convertible into or exercisable for, or any rights, warrants or options to acquire, any such capital stock or any such convertible securities, other than (A) a number of shares of capital stock equal to that number of shares underlying options forfeited prior to the Closing by former HNWC employees, pursuant to the HNWC Employee Plans, (B) HNWC Common Stock upon the exercise of stock options or warrants in accordance with their present terms or upon exercise of options issued pursuant to clause (A) of this Section 6.1(c)(i), (C) HNWC Common Stock upon the conversion of the $500,000 Convertible Note or the Other Convertible Notes, or (D) other existing contractual arrangements, or (ii) amend in any respect any term of any outstanding security of HNWC; (d) other than in connection with transactions not prohibited by Section 6.1(e), incur any capital expenditures or any obligations or liabilities in respect thereof, except for those (i) contemplated by the capital expenditure budgets for HNWC previously made available to AMCON, or (ii) incurred in the ordinary course of business of HNWC and consistent with past practice; (e) acquire (whether pursuant to cash merger, stock or asset purchase or otherwise) in one transaction or series of related transactions (i) any assets (including any equity interests) having a fair market value in excess of $25,000, or (ii) all or substantially all of the equity interests of any Person or any business or division of any Person having a fair market value in excess of $25,000, but in no event shall the expenditures, commitments, obligations or liabilities made, incurred or assumed, as the case may be, by HNWC pursuant to Sections 6.1(d) and 6.1(e) exceed $50,000 in the aggregate; (f) sell, lease, out-license, encumber or otherwise dispose of any assets, other than (i) sales of finished goods in the ordinary course of business consistent with past practice, (ii) equipment and property no longer used in the operation of HNWC's business and (iii) assets related to discontinued operations of HNWC; (g) (i) incur any indebtedness for borrowed money or guarantee any such indebtedness, (ii) issue or sell any debt securities or warrants or rights to acquire any debt securities of HNWC, (iii) make any loans, advances or capital contributions to or investments in, any other Person, or (iv) guarantee any debt securities or indebtedness of others in any case in an amount in excess of $100,000, except in the ordinary course of business consistent with past practice (which exception shall include, without limitation, borrowings under HNWC's existing credit agreements and overnight borrowings); (h) (i) enter into any agreement or arrangement that limits or otherwise restricts HNWC or any of its Affiliates or any successor thereto or that would, after the Effective Time, limit or restrict HNWC or the Surviving Corporation, or any of their respective Affiliates, from engaging or competing in any line of business or in any location, or (ii) enter into, amend, modify or terminate any material contract, agreement or arrangement of HNWC or otherwise waive, release or assign any material rights, claims or benefits of HNWC thereunder; provided, however, that this Section 6.1(h) shall not prevent HNWC from entering into material contracts with customers, suppliers or distributors, so long as such contracts are entered into in the ordinary course and consistent with HNWC's prior practice; (i) (i) except as required by law or a written agreement existing on or prior to the date hereof, increase the amount of compensation of any director or executive officer or make any increase in or commitment to increase any employee benefits, (ii) except as required by law, a written agreement existing on or prior to the date hereof, or a HNWC severance policy existing as of the date hereof, grant any severance or termination pay to any director, officer or employee of HNWC or, (iii) adopt any additional employee benefit plan or, except in the ordinary course of business consistent with past practice and containing only normal and customary terms, make any contribution to any existing such plan or (iv) except as may be required by law or a written agreement or employee benefit plan existing on or prior to the date hereof, or as contemplated by this Agreement, enter into, amend in any respect, or accelerate the vesting under any HNWC Employee Plan, employment agreement, option, license agreement or retirement agreements, or (v) hire any employee with an annual base salary in excess of $40,000; (j) change (x) HNWC's methods of accounting in effect at December 31, 1999 except as required by changes in GAAP, as concurred with by its independent public accountants, (y) HNWC's fiscal year, or (z) make any material Tax election, other than in the ordinary course of business consistent with past practice and containing only normal and customary terms; (k) (i) settle, propose to settle or commence, any litigation, investigation, arbitration, proceeding or other claim that is material to the business of HNWC, other than the payment, discharge or satisfaction, in the ordinary course of business consistent with past practice of liabilities (x) recognized or disclosed in the HNWC Financial Statements (or the notes thereto) or (y) incurred since the date of such Financial Statements in the ordinary course of business consistent with past practice, or (ii) make any tax election or enter into any settlement or compromise of any tax liability; (l) enter into any new material line of business; (m) except to the extent required to comply with its obligations hereunder or required by law, HNWC shall not amend or propose to so amend its Certificate of Incorporation, Bylaws or other governing documents; (n) use any of the proceeds of the $500,000 Convertible Note or the Other Convertible Notes for any purposes other than (i) providing working capital and other general corporate purposes, and (ii) to redeem the HNWC Series A Convertible Preferred Stock or the Series B Convertible Preferred Stock or both, in each case, outstanding as of September 29, 2000; or (o) agree, resolve or commit to do any of the foregoing. Section 6.2 Acquisition Proposals; Board Recommendation. HNWC agrees that it shall not, nor shall it authorize or knowingly permit any officer, director, employee, investment banker, attorney, accountant, agent or other advisor or representative of HNWC, directly or indirectly, to (i) solicit, initiate or knowingly facilitate or encourage the submission of any Acquisition Proposal for HNWC, (ii) participate in any discussions or negotiations regarding, or furnish to any Person any information with respect to, or take any other action knowingly to facilitate any inquiries or the making of any proposal that constitutes an Acquisition Proposal for HNWC, (iii) grant any waiver or release under any standstill or similar agreement with respect to any class of HNWC equity securities or (iv) enter into any agreement with respect to any Acquisition Proposal for HNWC. Notwithstanding anything in this Agreement to the contrary, HNWC or its Board of Directors shall be permitted to (A) to the extent applicable, comply with Rule 14d-9 and Rule 14e-2 promulgated under the Exchange Act with regard to an Acquisition Proposal for HNWC. ARTICLE VII COVENANTS OF HNWC AND AMCON The parties hereto agree that: Section 7.1 Reasonable Best Efforts. Subject to the terms and conditions hereof, each party will use reasonable best efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper or advisable under applicable laws and regulations to consummate the transactions contemplated by this Agreement as promptly as practicable. Section 7.2 Certain Filings; Cooperation in Receipt of Consents; Listing. As promptly as reasonably practicable after the date hereof, HNWC and AMCON shall prepare and AMCON shall file with the SEC the Registration Statement, in which a Proxy Statement/Prospectus will be included as AMCON's prospectus. Each of HNWC and AMCON shall use all reasonable efforts to have the Registration Statement declared effective under the Securities Act as promptly as reasonably practicable after such filing and to keep the Registration Statement effective as long as is necessary to consummate the Merger and the transactions contemplated thereby. HNWC shall mail the Proxy Statement/Prospectus to its stockholders as promptly as reasonably practicable after the Registration Statement is declared effective under the Securities Act and, if necessary, after the Proxy Statement/Prospectus shall have been so mailed, promptly circulate amended, supplemental or supplemented proxy material, and, if required in connection therewith, resolicit proxies. AMCON and HNWC shall take any action (other than qualifying to do business in any jurisdiction in which it is not now so qualified or to file a general consent to service of process) required to be taken under any applicable state securities or blue sky laws in connection with the issuance of shares of Surviving Corporation Common Stock in the Merger. (a) No amendment or supplement to the Proxy Statement/Prospectus will be made by HNWC or AMCON without the approval of the other party, which will not be unreasonably withheld or delayed. Each party will advise the other party, promptly after it receives notice thereof, of (i) the time when the Registration Statement has become effective or any supplement or amendment has been filed, (ii) the issuance of any stop order, (iii) the suspension of the qualification of the shares of AMCON Common Stock issuable in connection with the Merger for offering or sale in any jurisdiction, or (iv) any request by the SEC for amendment of the Proxy Statement/Prospectus or comments thereon and responses thereto or requests by the SEC for additional information, in each case, whether orally or in writing. If at any time prior to the Effective Time, HNWC or AMCON discovers any information relating to either party, or any of their respective Affiliates, officers or directors, that should be set forth in an amendment or supplement to the Proxy Statement/Prospectus, so that such document would not include any misstatement of a material fact or omit to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, the party that discovers such information shall promptly notify the other party hereto and an appropriate amendment or supplement describing such information shall be promptly filed with respect thereto, and with respect to the Registration Statement, as the case may be, with the SEC and, to the extent required by law or regulation, disseminated to the stockholders of HNWC. (b) HNWC and AMCON shall cooperate with one another in (i) determining whether any other action by or in respect of, or filing with, any Governmental Entity is required, or any actions, consents, approvals or waivers are required to be obtained from parties to any material contracts, in connection with the consummation of the transactions contemplated hereby, (ii) seeking any such other actions, consents, approvals or waivers or making any such filings, furnishing information required in connection therewith and seeking promptly to obtain any such actions, consents, approvals or waivers, (iii) setting a mutually acceptable date for the HNWC Special Meeting, and (iv) taking all lawful action to call, give notice of, convene and hold a meeting of HNWC stockholders for the purpose of obtaining the requisite vote to approve and adopt this Agreement, the Merger and the other matters contemplated by this Agreement. The Board of Directors of HNWC shall, subject to its fiduciary duties under applicable law, declare the advisability of and recommend adoption and approval of this Agreement, the Merger and the other matters contemplated by this Agreement by the stockholders of HNWC, and shall not, subject to its fiduciary duties under applicable law, withdraw, modify or materially qualify in any manner adverse to AMCON to such recommendation or take any action or make any statement in connection with the HNWC Stockholders Meeting materially inconsistent with such recommendation (any such withdrawal, modification, qualification or statement (whether or not required), an "Adverse Change in the HNWC Recommendation"). (c) Each party shall permit the other party to review any communication given by it to, and consult with each other in advance of any meeting or conference with, any Governmental Entity or, in connection with any proceeding by a private party, with any other Person, and to the extent permitted by the applicable Governmental Entity or other Person, give the other party the opportunity to attend and participate in such meetings and conferences, in each case in connection with the transactions contemplated hereby. (d) AMCON and HNWC agree to use their respective reasonable best efforts to cause the shares of AMCON Common Stock to be issued upon conversion of shares of HNWC Common Stock in accordance with this Agreement, the Articles of Merger and the Certificate of Merger to be approved for listing upon issuance on the American Stock Exchange. Section 7.3 Headquarters. The parties intend that, by the end of one year after the AMCON Effective Time, the Surviving Corporation shall maintain its principal corporate offices and headquarters in Omaha, Nebraska. Section 7.4 Public Announcements. AMCON and HNWC shall use reasonable best efforts to develop a joint communications plan and each party shall use reasonable best efforts (i) to ensure that all press releases and other public statements with respect to the transactions contemplated hereby shall be consistent with such joint communications plan, and (ii) unless otherwise required by applicable law or by obligations pursuant to any rules of the American Stock Exchange, to consult with each other before issuing any press release or, to the extent practical, otherwise making any public statement with respect to this Agreement or the transactions contemplated hereby. Section 7.5 Access to Information; Notification of Certain Matters. (a) From the date hereof until the Effective Time and subject to applicable law, HNWC and AMCON shall (i) give to the other party, its counsel, financial advisors, auditors and other authorized representatives reasonable access during normal business hours to the offices, properties, books, records, contracts, commitments, officers and employees and all other information concerning it and its business, properties, assets, condition (financial or otherwise) or prospects of such party, (ii) consistent with its legal obligations, furnish or make available to the other party, its counsel, financial advisors, auditors and other authorized representatives such financial and operating data and other information as such Persons may reasonably request and (iii) instruct its employees, counsel, financial advisors, auditors and other authorized representatives to cooperate with the reasonable requests of the other party in its investigation. Any investigation pursuant to this Section 6.5 shall be conducted in such manner as not to interfere unreasonably with the conduct of the business of the other party. Unless otherwise required by law, each of AMCON and HNWC will hold, and will cause its respective officers, employees, counsel, financial advisors, auditors and other authorized representatives to hold, any nonpublic information obtained in any such investigation in confidence in accordance with Section 7.9. No information or knowledge obtained in any investigation pursuant to this Section 7.5 shall affect or be deemed to modify any representation or warranty made by any party hereunder. (b) Each party hereto shall give prompt notice to each other party hereto of: (i) the receipt by such party or any of such party's Subsidiaries of any notice or other communication from any Person alleging that the consent of such Person is or may be required in connection with the transactions contemplated by this Agreement. (ii) the receipt by such party or any of such party's Subsidiaries of any notice or other communication from any Governmental Entity in connection with any of the transactions contemplated by this Agreement; and (iii) such party's obtaining Knowledge of any actions, suits, claims, investigations or proceedings commenced, threatened against, relating to or involving or otherwise affecting any of HNWC or AMCON, as the case may be, or any AMCON Subsidiary which relate to the consummation of the transactions contemplated by this Agreement; and (iv) such party's obtaining Knowledge of the occurrence, or failure to occur, of any event which occurrence or failure to occur will be likely to cause (A) any representation or warranty contained in this Agreement to be untrue or inaccurate in any material respect, or (B) any material failure of any party to comply with or satisfy any covenant, condition or agreement o be complied with or satisfied by it under this Agreement; provided, however, that no such notification shall limit or otherwise affect the representations, warranties, obligations or remedies of the parties to the conditions to the obligations of the parties hereunder. Section 7.6 Further Assurances. At and after the Effective Time, the officers and directors of the Surviving Corporation will be authorized to execute and deliver, in the name and on behalf of AMCON, HNWC or Merger Sub, any deeds, bills of sale, assignments or assurances and to take and do, in the name and on behalf of AMCON, HNWC or Merger Sub, any other actions and things to vest, perfect or confirm of record or otherwise in the Surviving Corporation any and all right, title and interest in, to and under any of the rights, properties or assets of HNWC, AMCON or Merger Sub acquired or to be acquired by the Surviving Corporation as a result of, or in connection with the Merger. Section 7.7 Tax Treatment. (a) Prior to the Effective Time, each party shall cooperate with the other party and shall use its reasonable best efforts to cause the Merger to qualify as a 368 Reorganization, and will not take any action reasonably likely to cause the Merger not so to qualify. The Surviving Corporation shall not take any action after the Effective Time that would cause the Merger not to qualify as a 368 Reorganization. (b) Each party shall cooperate with the other party and shall use its reasonable best efforts to obtain the opinion referred to in Section 8.3(b) and in connection therewith, HNWC shall deliver to such counsel a customary representation letter substantially in the forms attached hereto as Exhibit H (the "HNWC Representation Letter") or otherwise in form and substance reasonably satisfactory to such counsel. Section 7.8 Affiliates. Not less than 45 days prior to the Effective Time, HNWC shall deliver to AMCON a letter identifying all persons who, in the reasonable judgment of HNWC, may be deemed at the time this Agreement is submitted for adoption by the stockholders of HNWC, "affiliates" of HNWC for purposes of Rule 145 under the Securities Act, and such list shall be updated as necessary to reflect changes from the date hereof. HNWC shall use reasonable best efforts to cause each Person identified on such list to deliver to AMCON not less than 30 days prior to the Effective Time, a written agreement substantially in the form attached as Exhibit I hereto (a "HNWC Affiliate Agreement"). Section 7.9 Confidentiality. (a) Prior to the Effective Time and after any termination of this Agreement each party hereto will hold, and will use its reasonable best efforts to cause its officers, directors, employees, accountants, counsel, consultants, advisors, affiliates (as such term is used in Rule 12b-2 under the Exchange Act) and representatives (collectively, the "Representatives"), to hold, in confidence all confidential documents and information concerning the other parties hereto and its Subsidiaries furnished to such party in connection with the transactions contemplated by this Agreement, including, without limitation, all analyses, compilations, studies or records prepared by the party receiving the information or by such party's Representatives, that contain or otherwise reflect or are generated from such information (collectively, the "Confidential Material"). The party furnishing any Confidential Material is herein referred to as the "Delivering Company" and the party receiving any Confidential Material is herein referred to as the "Receiving Company." (b) The Receiving Company agrees that the Confidential Material will not be used other than for the purpose of the transactions contemplated by this Agreement, and that such information will be kept confidential by the Receiving Company and its Representatives; provided, however, that (i) any of such information may be disclosed to the Representatives who need to know such information for the purpose described above (it being understood that (a) each such Representative shall be informed by the Receiving Company of the confidential nature of such information, shall be directed by the Receiving Company to treat such information confidentially and not to use it other than for the purpose described above and shall agree to be bound by the terms of this Section 7.9, and (b) in any event, the Receiving Company shall be responsible for any breach of this Agreement by any of its Representatives), and (ii) any other disclosure of such information may be made if the Delivering Company has, in advance, consented to such disclosure in writing. The Receiving Company will make all reasonable, necessary and appropriate efforts to safeguard the Confidential Material from disclosure to anyone other than as permitted hereby. (c) Notwithstanding the foregoing, if the Receiving Company or any of its Representatives is requested or required (by oral question or request for information or documents in legal proceedings, interrogatories, subpoena, civil investigative demand or similar process) to disclose any Confidential Material, the Receiving Company will promptly notify the Delivering Company of such request or requirement so that the Delivering Company may seek an appropriate protective order and/or waive the Receiving Company's compliance with the provisions of this Agreement. If, in the absence of a protective order or the receipt of a waiver hereunder, the Receiving Company or any of its Representatives is nonetheless, in the reasonable written opinion of the Receiving Company's counsel, compelled to disclose Confidential Material to any tribunal, the Receiving Company or such Representative, after notice to the Delivering Company, may disclose such information to such tribunal. The Receiving Party shall exercise reasonable efforts to obtain reliable assurance that confidential treatment will be accorded the Confidential Material so disclosed. The Receiving Company or such Representative shall not be liable for the disclosure of Confidential Material hereunder to a tribunal compelling such disclosure unless such disclosure to such tribunal was caused by or resulted from a previous disclosure by the Receiving Company or any of its Representatives not permitted by this Agreement. (d) This Section 7.9 shall be inoperative as to particular portions of the Confidential Material if such information (i) is or becomes generally available to the public other than as a result of a disclosure by the Receiving Company or its Representatives, (ii) was available to the Receiving Company on a non-confidential basis prior to its disclosure to the Receiving Company by the Delivering Company or the Delivering Company's Representatives, or (iii) becomes available to the Receiving Company on a non-confidential basis from a source other than the Delivering Company or the Delivering Company's Representatives, provided that such source is not known by the Receiving Company, after reasonable inquiry, to be bound by a confidentiality agreement with the Delivering Company or the Delivering Company's Representatives and is not otherwise prohibited from transmitting the information to the Receiving Company by a contractual, legal or fiduciary obligation. The fact that information included in the Confidential Material is or becomes otherwise available to the Receiving Company or its Representatives under clauses (i) through (iii) above shall not relieve the Receiving Company or its Representatives of the prohibitions of the confidentiality provisions of this Section 7.9 with respect to the balance of the Confidential Material. (e) If this Agreement is terminated, each party hereto will, and will use its reasonable best efforts to cause its officers, directors, employees, accountants, counsel, consultants, advisors and agents to, destroy or deliver to the party from whom such Confidential Material was obtained, upon request, all documents and other materials, and all copies thereof, obtained by such party or on its behalf from any such other parties in connection with this Agreement that are subject to such confidence. Section 7.10 Benefit Matters. AMCON and HNWC will work together to design benefit plans to be adopted by the Surviving Corporation for the benefit of its employees as soon as practicable following the Merger. Until such adoption, the Surviving Corporation shall cause all AMCON Employee Plans and all HNWC Employee Plans to be maintained in full force and effect. Section 7.11 Exemption From Liability Under Section 16(b). (a) Provided that HNWC delivers to AMCON the Section 16 Information with respect to HNWC prior to the Effective Time, the Board of Directors of AMCON, or a committee of Non-Employee Directors thereof (as such term is defined for purposes of Rule 16b-3(d) under the Exchange Act), shall adopt a resolution in advance of the Effective Time providing that the receipt by the HNWC Insiders of AMCON Common Stock in exchange for shares of HNWC Common Stock, and of options to purchase AMCON Common Stock upon assumption and conversion by the Surviving Corporation of options to purchase HNWC Common Stock, in each case pursuant to the transactions contemplated hereby and to the extent such securities are listed in the Section 16 Information, are intended to be exempt from liability pursuant to Rule 16b-3 under the Exchange Act. (b) "Section 16 Information" shall mean information accurate in all respects regarding the HNWC Insiders, the number of shares of HNWC Common Stock, or other HNWC equity securities, deemed to be beneficially owned by each such HNWC Insider and expected to be exchanged for Surviving Corporation Common Stock in connection with the Merger. (c) "HNWC Insiders" shall mean those officers and directors of HNWC who are subject to the reporting requirements of Section 16(a) of the Exchange Act who are listed in the Section 16 Information. Section 7.12 Lease Agreement. AMCON and HNWC agree that the Lease Agreement between HNWC and Hawaii Brewery Development Co., Inc. ("Hawaii Brewery"), regarding real property situated in Keaau, Puna, Hawaii, together with all buildings and other improvements located thereon, the water well located thereon and the appurtenant pumping equipment (which are described in Exhibits A and B to that Lease), which Lease has been duly and validly executed and delivered by HNWC and Hawaii Brewery and is attached hereto as Exhibit K, shall become effective on the Closing Date and shall thereupon become legally binding and enforceable in accordance with its terms. ARTICLE VIII CONDITIONS TO THE MERGER Section 8.1 Conditions to the Obligations of Each Party. The respective obligations of HNWC, AMCON and Merger Sub to consummate the Merger are subject to the satisfaction or waiver on or prior to the Closing Date of the following conditions: (a) Stockholder Approval. The HNWC Stockholder Approval shall have been obtained; (b) Securities Laws. (i) The Registration Statement shall have become effective in accordance with the provisions of the Securities Act, no stop order suspending the effectiveness of the Registration Statement shall have been issued by the SEC and no proceedings for that purpose shall have been initiated or threatened by the SEC and not concluded or withdrawn and (ii) all state securities or blue sky authorizations necessary to carry out the transactions contemplated hereby shall have been obtained and be in effect; (c) AMEX Listing. The shares of AMCON Common Stock to be issued in the Merger shall have been approved for listing upon issuance on the AMEX, subject to official notice of issuance; (d) Regulatory Approvals. Other than the filings provided for by Article II, all authorizations, consents, orders or approvals of, or declarations or filings with, or expirations of waiting periods imposed by, any Governmental Entity the failure of which to obtain would have a HNWC Material Adverse Effect, an AMCON Material Adverse Effect or a Surviving Corporation Material Adverse Effect, shall have been filed, occurred or been obtained; and (e) No Injunctions or Restraints; Illegality. No Laws shall have been adopted or promulgated, and no temporary restraining order, preliminary or permanent injunction or other order issued by a court or other Governmental Entity of competent jurisdiction shall be in effect, (i) having the effect of making the Merger illegal or otherwise prohibiting, enjoining or restraining consummation of the Merger or (ii) which otherwise would reasonably be expected to have a Surviving Corporation Material Adverse Effect after giving effect to the Merger; provided, however, that the provisions of this Section 8.1(e) shall not be available to any party whose failure to fulfill its obligations pursuant to Sections 7.1 and 7.2 shall have been the cause of, or shall have resulted in, such order or injunction. Section 8.2 Conditions to the Obligations of AMCON and Merger Sub. The obligations of AMCON and Merger Sub to consummate the Merger are subject to the satisfaction, or waiver by AMCON and Merger Sub, on or prior to the Closing Date, of the following further conditions: (a) Representations and Covenants. (i) HNWC shall have performed in all material respects all of its obligations hereunder required to be performed by it at or prior to the time of the filing of the Articles of Merger and the Certificates of Merger; (ii) the representations and warranties of HNWC in this Agreement that are qualified as to materiality, HNWC Material Adverse Effect or Surviving Corporation Material Adverse Effect shall be accurate, and any such representations and warranties that are not so qualified shall be accurate, in all material respects, as of the date of this Agreement and as of the Effective Time (except for representations and warranties that address matters only as of a specific date, in which case such representations and warranties qualified as to materiality, HNWC Material Adverse Effect or Surviving Corporation Material Adverse Effect shall be true and correct, and those not so qualified shall be true and correct in all material respects, on and as of such earlier date); and (iii) AMCON shall have received a certificate signed by the Chief Executive Officer or Chief Financial Officer of HNWC to the foregoing effect; (b) Affiliate Agreements. AMCON shall have received from each Person named in the letter referred to in Section 7.8 an executed copy of a HNWC Affiliate Agreement substantially in the form of Exhibit I to this Agreement; (c) Employment Agreements. The Chief Executive Officer of HNWC shall have executed and delivered to the Surviving Corporation an employment agreement in the form attached hereto as Exhibit J; (d) No Material Adverse Change. There shall have been no material adverse change in the financial condition, results of operations or cash flows or assets, liabilities, business or prospects of HNWC from September 29, 2000 through the Closing Date, except as disclosed in (i) the HNWC Disclosure Schedule dated the date hereof, or (ii) HNWC SEC Documents filed prior to the date hereof; (e) Dissenters. The aggregate number of Dissenters' Shares shall not exceed 5.0% of the total number of shares of HNWC Common Stock outstanding and entitled to vote; (f) Consents. Consents shall have been obtained from all parties to HNWC Material Contracts (as defined in Section 4.25) that are needed because of the Merger or the transactions contemplated hereby in order to permit the Surviving Corporation to enjoy all rights and benefits thereunder (the "Material Consent Condition"); and (g) All of the shares of HNWC's Series B Convertible Preferred Stock shall have been repurchased. Section 8.3 Conditions to the Obligations of HNWC. The obligations of HNWC to consummate the Merger are subject to the satisfaction, or waiver by HNWC, on or prior to the Closing Date, of the following further conditions: (a) Representations and Covenants. (i) AMCON shall have performed in all material respects all of its obligations hereunder required to be performed by it at or prior to the time of the filing of the Articles of Merger and the Certificates of Merger; (ii) the representations and warranties of AMCON and Merger Sub in this Agreement that are qualified as to materiality, AMCON Material Adverse Effect or Surviving Corporation Material Adverse Effect shall be accurate, and any such representations and warranties that are not so qualified shall be accurate, in all material respects, as of the date of this Agreement and as of the Effective Time (except for representations and warranties which address matters only as of a specific date, in which case such representations and warranties qualified as to materiality, AMCON Material Adverse Effect or Surviving Corporation Material Adverse Effect shall be true and correct, and those not so qualified shall be true and correct in all material respects, on and as of such earlier date); and (iii) HNWC shall have received a certificate signed by the Chief Executive Officer or Chief Financial Officer of AMCON and Merger Sub to the foregoing effect; (b) Tax Opinion. HNWC shall have received an opinion of Squire, Sanders & Dempsey L.L.P. in form and substance reasonably satisfactory to HNWC, on the basis of certain facts, representations and assumptions set forth in such opinion, dated as of the date of the filing of the Articles of Merger and the Certificates of Merger, to the effect that the Merger will qualify for federal income tax purposes as a 368 Reorganization and that each of AMCON and HNWC will be a party to the reorganizations within the meaning of Section 368(b) of the Code. In rendering such opinion, such counsel shall be entitled to rely upon representations of officers of AMCON and HNWC; (c) Employment Agreements. The Chief Executive Officer of HNWC shall have executed and delivered to the Surviving Corporation an employment agreement in the form attached hereto as Exhibit J; and (d) No Material Adverse Change. There shall have been no material adverse change in the financial condition, results of operations or cash flows or assets, liabilities, business or prospects of AMCON from September 30, 2000 through the Closing Date, except as disclosed in (i) the AMCON Disclosure Schedule dated the date hereof, or (ii) AMCON SEC Documents filed prior to the date hereof. ARTICLE IX TERMINATION Section 9.1 Termination. This Agreement may be terminated at any time prior to the Effective Time by written notice by the terminating party to the other party (except if such termination is pursuant to Section 9.1(a)), notwithstanding approval thereof by the stockholders of HNWC: (a) by mutual written agreement of AMCON and HNWC; (b) by either HNWC or AMCON, if (i) the Merger shall not have been consummated by September 30, 2001 (the "Expiration Date"); provided, however, that the right to terminate this Agreement under this Section 9.1(b)(i) shall not be available to any party whose breach of any provision of this Agreement has resulted in the failure of the Merger to occur on or before the Expiration Date; or (ii) there shall be any Law that makes consummation of the Merger illegal or otherwise prohibited or any judgment, injunction, order or decree of any Governmental Entity having competent jurisdiction enjoining AMCON, HNWC or the Merger Sub from consummating the Merger is entered and such judgment, injunction, judgment or order shall have become final and nonappealable and, prior to such termination, the parties shall have used reasonable best efforts to resist, resolve or lift, as applicable, such law, regulation, judgment, injunction, order or decree. (c) by AMCON, (i) if there shall have occurred a willful and material breach of Section 6.2 by HNWC or any of its officers, directors, employees, advisors or agents; (ii) if a breach of any representation, warranty, covenant or agreement on the part of HNWC set forth in this Agreement shall have occurred that would cause the condition set forth in Section 8.2(a) not to be satisfied, and such condition shall be incapable of being satisfied by the Expiration Date; (iii) HNWC shall have failed to include in the Proxy Statement/Prospectus the recommendation of the Board of Directors of HNWC in favor of the adoption and approval of this Agreement and the approval of the Merger; (v) the Board of Directors of HNWC shall have approved, endorsed or recommended any Acquisition Proposal; (vi) a tender or exchange offer relating to securities of HNWC shall have been commenced and HNWC shall not have sent to its security holders, within ten business days after the commencement of such tender or exchange offer, a statement disclosing that HNWC recommends rejection of such tender or exchange offer; or (vii) HNWC or HNWC's Board of Directors or any committee thereof shall have resolved to do or permit any of the foregoing; (d) by HNWC, if a breach of any representation, warranty, covenant or agreement on the part of AMCON set forth in this Agreement shall have occurred that would cause the condition set forth in Section 8.3(a) not to be satisfied, and such condition is incapable of being satisfied by the Expiration Date; or (e) automatically if the transactions contemplated herein are enjoined by a court of competent jurisdiction for a period extending beyond 90 days. Section 9.2 Effect of Termination. If this Agreement is terminated pursuant to Section 9.1, this Agreement shall forthwith become void and there shall be no liability or obligation on the part of AMCON or HNWC or their respective officers or directors (i) except with respect to the provisions of Sections 7.9, 9.2, 10.1, 10.4, 10.5, 10.10 and 10.11 of this Agreement which provisions shall remain in full force and effect and survive any termination of this Agreement, and (ii) except that, notwithstanding anything to the contrary contained in this Agreement, neither AMCON nor HNWC shall be relieved or released from any liabilities or damages arising out of its willful material breach of this Agreement. Section 9.3 Fees and Expenses. All fees and expenses incurred in connection herewith and the transactions contemplated hereby shall be paid by the party incurring such expenses, whether or not the Merger is consummated. As used in this Agreement, "Expenses" includes all out-of-pocket expenses (including, without limitation, all fees and expenses of counsel, accountants, investment bankers, experts and consultants to a party hereto and its affiliates) incurred by a party or on its behalf in connection with or related to the authorization, preparation, negotiation, execution and performance of this Agreement and the transactions contemplated hereby, including the preparation, printing, filing and mailing of the Proxy Statement/Prospectus and the solicitation of stockholder approvals and all other matters related to the transactions contemplated hereby. ARTICLE X MISCELLANEOUS Section 10.1 Notices. All notices and other communications hereunder shall be in writing and shall be deemed duly given (a) on the date of delivery if delivered personally, or by telecopy or telefacsimile, upon confirmation of receipt, in each case, if on a Business Day, and otherwise on the next Business Day, (b) on the first service, or (c) on the fifth Business Day following the date of mailing if delivered by registered or certified mail, return receipt requested, postage prepaid. All notices hereunder shall be delivered as set forth below, or pursuant to such other instructions as may be designated in writing by the party to receive such notice: if to the Surviving Corporation, to the address set forth below for AMCON and HNWC, including copies; if to AMCON, to: William F. Wright Chairman of the Board AMCON Distributing Company P.O. Box 1010 Del Mar, California 92014 Facsimile: (858) 793-1994 with a copy to: John A. Granda Stinson, Mag & Fizzell, P.C. 1201 Walnut Street, Suite 2800 Kansas City, Missouri 64106 Facsimile: (816) 691-3495 if to HNWC to: Marcus Bender President Hawaiian Natural Water Company, Inc. 98-746 Kuahao Place Pearl City, Hawaii 96814 Facsimile: (808) 483-0536 with a copy to: Richard P. Manson Squire, Sanders & Dempsey L.L.P. 801 S. Figueroa Street 14th Floor Los Angeles, California 90017 Facsimile: (213) 623-4581 Section 10.2 Survival of Representations, Warranties and Covenants After the Effective Time. The representations, warranties, covenants and other agreements contained herein and in any certificate or other instrument delivered pursuant hereto, including any rights arising out of any breach of such representations, warranties, covenants and other agreements, shall not survive the Effective Time. Section 10.3 Amendments; No Waivers. (a) Any provision of this Agreement may be amended or waived prior to the Effective Time if, and only if, such amendment or waiver is in writing and signed, in the case of an amendment, by AMCON and HNWC or in the case of a waiver, by the party against whom the waiver is to be effective; provided that after the HNWC Stockholder Approval, no such amendment or waiver shall, without the further approval of such stockholders, be made that would require such approval under any applicable law, rule or regulation. (b) No failure or delay by any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law. Section 10.4 Assignment. Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by any of the parties hereto, in whole or in part (whether by operation of law or otherwise), without the prior written consent of the other party, and any attempt to make any such assignment without such consent shall be null and void. Subject to the preceding sentence, this Agreement will be binding upon, inure to the benefit of and be enforceable by the parties and their respective successors and assigns. Section 10.5 Governing Law. This Agreement shall be construed in accordance with and governed by the internal laws of the State of Delaware without regard to any principles of Hawaii conflicts or choice of law. Section 10.6 Counterparts; Effectiveness. This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other party (including by facsimile transmission), it being understood that both parties need not sign the same counterpart. This Agreement shall become effective when each party hereto shall have received counterparts hereof signed by all of the other parties hereto. Section 10.7 No Third Party Beneficiaries. This Agreement shall be binding upon and inure solely to the benefit of each party hereto, and nothing in this Agreement, express or implied, is intended to or shall confer upon any other Person any right, benefit or remedy of any nature whatsoever under or by reason of this Agreement. Section 10.8 Interpretation. When a reference is made in this Agreement to Sections, Exhibits or Schedules, such reference shall be to a Section of or Exhibit or Schedule to this Agreement unless otherwise indicated. The table of contents and headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. Whenever the words "include," "includes" or "including" are used in this Agreement, they shall be deemed to be followed by the words "without limitation." Section 10.9 Enforcement. The parties agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms. It is accordingly agreed that the parties shall be entitled to specific performance of the terms hereof, this being in addition to any other remedy to which they are entitled at law or in equity. Section 10.10 Entire Agreement. This Agreement (together with the exhibits and schedules hereto) constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior agreements and understandings, both oral and written, between the parties with respect to the subject matter hereof. Section 10.11 Severability. If any term, provision, covenant or restriction set forth in this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth in this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated so long as the economic or legal substance of the transactions contemplated hereby is not deemed by a party (acting reasonably and in good faith) to be materially adverse to that party. Upon such a determination, the parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in order that the transactions contemplated hereby may be consummated as originally contemplated to the fullest extent possible. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written. AMCON DISTRIBUTING COMPANY By: /s/ William F. Wright ---------------------------- Name: William F. Wright Title: Chairman of the Board HAWAIIAN NATURAL WATER COMPANY, INC. By: /s/ Marcus Bender ---------------------------- Name: Marcus Bender Title: President AMCON MERGER SUB, INC. By: /s/ William F. Wright ---------------------------- Name: William F. Wright Title: Chairman of the Board APPENDIX I DEFINITIONS "Acquisition Proposal for HNWC" means any offer or proposal for a merger, consolidation, share exchange, business combination, reorganization, recapitalization, issuance of securities, liquidation, dissolution, tender offer or exchange offer or other similar transaction or series of transactions involving, or any purchase of 10% or more of the assets, or directly or indirectly acquires beneficial ownership of securities representing, or exchangeable for or convertible into, more than 10% of the outstanding securities of any class of voting securities of HNWC or in which HNWC issues securities representing 10% of the outstanding securities of any class of voting securities of HNWC, other than the transactions contemplated by this Agreement. "Action" means any action, suit, proceeding or investigation by or before any Governmental Entity or arbitrator. "Affiliate" means, with respect to any Person, any other Person, directly or indirectly, controlling, controlled by, or under common control with, such Person. For purposes of this definition, the term "control" (including the correlative terms "controlling", "controlled by" and "under common control with") means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, or partnership or other ownership interests, by contract, or otherwise. "AMCON Disclosure Schedule" means the schedule delivered to HNWC by AMCON pursuant to Article I hereof containing exceptions to the representations and warranties of AMCON set forth in such Article III. "AMCON SEC Documents" means (i) AMCON's annual report on Form 10-K for its fiscal year ended September 30, 2000 (the "AMCON 10-K"), (ii) AMCON's quarterly reports on Form 10-Q for its fiscal quarters ended December 31, 2000 and March 31, 2001, and (iii) all other reports, filings, registration statements and other documents filed by it with the SEC since September 30, 2000. "Articles of Merger" means the Articles of Merger of HNWC with and into Merger Sub, in substantially the form attached hereto as Exhibit B. "Average AMCON Stock Price" means the average of the closing sales price per share of AMCON Common Stock as reported by AMEX on each of the 20 consecutive trading days immediately preceding the third trading day prior to the Determination Date. "Business Day" means any day other than a Saturday, Sunday or one on which banks are authorized by law to close in the City of New York. "Certificate of Merger" means the Certificate of Merger of HNWC with and into Merger Sub, in substantially the form attached hereto as Exhibit C. "Closing" means the closing of the Merger contemplated in this Agreement. "Closing Date" means the date on which the Closing occurs. "Code" means the Internal Revenue Code of 1986, as amended. "Determination Date" means the date on which the last of the following occurs: (i) the effective date (including the expiration of any applicable waiting period by law) of the last required consent or order of any Governmental Entity having authority over and approving or exempting the Merger, and (ii) the date on which the stockholders of HNWC have approved the Merger. "Exchange Act" means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder. "Exchange Agent" means the agent to be agreed upon by AMCON and HNWC and engaged by the Surviving Corporation to effect the exchange of the Common Certificates pursuant to Section 2.9 of this Agreement. "Governmental Entity" means any federal, state or local governmental authority, any transgovernmental authority or any court, tribunal, administrative or regulatory agency or commission or other governmental authority or agency, domestic or foreign. "HNWC Common Stock" means the common stock of HNWC, no par value per share. "HNWC Disclosure Schedule" means the schedule delivered to AMCON by HNWC pursuant to Article IV hereof containing exceptions to the representations and warranties of HNWC set forth in such Article V. "HNWC SEC Documents" means (i) HNWC annual report on Form 10-KSB for its fiscal year ended December 31, 2000 (the "HNWC 10-KSB"), (ii) HNWC quarterly report on Form 10-QSB for its fiscal quarter ended March 31, 2001 (the "HNWC 10-QSB"), (iii) HNWC proxy or information statements relating to meetings of, or actions taken without a meeting by, HNWC stockholders held since December 31, 1999, and (iv) all other reports, filings, registration statements and other documents filed by it with the SEC since December 31, 2000. "HNWC Series A Convertible Preferred Stock" means the 1,250 shares of Series A Convertible Preferred Stock of HNWC, par value $1.00 per share, authorized by unanimous written consent of the HNWC board of directors dated March 1, 1999. "HNWC Series B Convertible Preferred Stock" means the 250 shares of Series B Convertible Preferred Stock of HWNC, par value $1.00 per share, authorized by unanimous consent of the HNWC board of directors dated March 3, 2000. "HNWC Series C Convertible Preferred Stock" means the 750,000 shares of Series C Convertible Preferred Stock of HWNC, par value of $1.00 per share, authorized by unanimous consent of the HWNC board of directors dated as of October , 2000. "Knowledge" means, with respect to the matter in question, if any of (i) in the case of AMCON or Merger Sub, William Wright, Chairman of the Board, Kathleen Evans, President, and Mike James, Chief Financial Officer, and (ii) in the case of HNWC, [insert names and titles of relevant officers] officers of AMCON or HNWC, as the case may be, has actual knowledge of such matter. "Law" means any federal, state, local, municipal, foreign, international, multinational, or other judicial or administrative order, judgment, decree, constitution, statute, rule, regulation, treaty, ordinance or principle of common law. "Lien" means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset. "Material Adverse Effect" means a material adverse effect on the financial condition, business, results of operations or prospects of a Person and its Subsidiaries, taken as a whole, but shall exclude any material adverse effect arising out of any change or development relating to (i) U.S. or global economic or industry conditions, (ii) changes in U.S. or global financial markets or conditions, and/or (iii) any generally applicable change in Law or GAAP or interpretation of any thereof. "AMCON Material Adverse Effect" means a Material Adverse Effect in respect of AMCON, "HNWC Material Adverse Effect" means a Material Adverse Effect in respect of HNWC and "Surviving Corporation Material Adverse Effect" means a Material Adverse Effect in respect of the Surviving Corporation. "Merger" has the meaning specified in the Recitals to this Agreement. "Person" means an individual, a corporation, a limited liability company, a partnership, an association, a trust or any other entity or organization, including any Governmental Entity. "Proxy Statement/Prospectus" means the proxy statement of HNWC and the prospectus of AMCON included in the Registration Statement of AMCON relating to the HNWC Special Meeting, together with any amendments or supplements thereto. "Registration Statement" means the Registration Statement on Form S-4 registering under the Securities Act the AMCON Common Stock issuable in connection with the Merger. "SEC" means the Securities and Exchange Commission. "Securities Act" means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder. "Subsidiary" means, with respect to any Person, any corporation or other entity of which securities or other ownership interests having ordinary voting power to elect a majority of the board of directors or other Persons performing similar functions are directly or indirectly owned by such Person. "AMCON Subsidiary" means a Subsidiary of AMCON. "Surviving Corporation Common Stock" means the common stock of Merger Sub. "Tax" or "Taxes" means any federal, state, county, local or foreign taxes, charges, levies, imposts, duties, other assessments or similar charges of any kind whatsoever, including any interest, penalties and addition imposed thereon or with respect thereto. In addition to the definitions set forth above, each of the following terms is defined in the Section set forth opposite such term: TERMS Section - ----- -------- 368 Reorganization Recitals Adverse Change in the HNWC Recommendation 7.2(b) AMCON Preamble AMCON Employee Plans 3.13(a) AMCON Intellectual Property 3.16(b) AMCON Preferred Stock 3.5 AMCON Representation Letter 8.7(b) AMCON Returns 3.12(a) AMCON Securities 4.5(b) AMCON Stock Options 3.5(a) AMCON Warrants 3.5(a) Common Certificates 2.9 Confidential Material 7.9(a) Confidentiality Agreement 5.2(a) Delaware Law 3.1(a) Delivering Company 8.9(a) Effective Time 2.1(b) Environmental Laws 3.17(b) ERISA 3.13(a) ERISA Affiliate 3.13(a) Expenses 10.3 Expiration Date 10.1(b)(i) Hawaii Law 2.1(a) HNWC Preamble HNWC Affiliate Agreement 7.8 HNWC Employee Plans 4.13(a) HNWC Financial Statements 4.8(a) HNWC Insider 8.11(c) HNWC Intellectual Property 4.16(b) HNWC Representation Letter 7.7(b) HNWC Returns 4.12(a) HNWC Securities 4.5(b) HNWC Stock Options 4.5(a) HNWC Stockholder Approval 4.19(a) HNWC Stockholders Meeting 4.19(b) HNWC Warrants 4.5(a) Merger Recitals Merger Consideration 2.2(a) Multiemployer Plan 3.13(b) Receiving Company 7.9(a) Representatives 7.9(a) Retirement Plan 3.13(b) Section 16 Information 7.11(b) Stockholder Agreements Recitals Surviving Corporation 2.1(a) APPENDICES Appendix I - Definitions EXHIBITS Exhibit A- Stockholders' Agreement Exhibit B- Articles of Merger Exhibit C- Certificate of Merger Exhibit D- Certificate of Incorporation of Merger Sub Exhibit E- Bylaws of Merger Sub Exhibit F- List of Surviving Corporations' Directors Exhibit G- Principal Officers of Surviving Corporation Exhibit H- HNWC Representation Letter Exhibit I- Form of HNWC Affiliate Agreement Exhibit J- Form of Employment Agreement Exhibit K- Form of Lease Agreement EX-2 3 hnwc350.txt $350,000 SECURED CONVERTIBLE NOTE THIS THIRD AMENDED AND RESTATED 10% SECURED CONVERTIBLE NOTE, AND THE SECURITIES INTO WHICH IT IS CONVERTIBLE (COLLECTIVELY, THE "SECURITIES"), HAS NOT BEEN REGISTERED WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES COMMISSION OF ANY STATE UNDER APPLICABLE STATE SECURITIES LAWS. THE SECURITIES HAVE BEEN ACQUIRED PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THE SECURITIES ARE "RESTRICTED" AND MAY NOT BE OFFERED OR SOLD UNLESS THE SECURITIES ARE REGISTERED UNDER THE ACT, OR PURSUANT TO AVAILABLE EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND THE ISSUER WILL BE PROVIDED WITH OPINION OF COUNSEL OR OTHER SUCH INFORMATION AS IT MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH EXEMPTIONS ARE AVAILABLE. HAWAIIAN NATURAL WATER COMPANY, INC. Third Amended and Restated 10% Secured Convertible Note Due September 30, 2001 $350,000.00 June 21, 2001 FOR VALUE RECEIVED, Hawaiian Natural Water Company, Inc., a Hawaiian corporation (the "Corporation"), promises to pay to the order of AMCON Distributing Company, a Delaware corporation (the "Holder"), the principal sum of Three Hundred Fifty Thousand and NO/100 Dollars ($350,000.00), on September 30, 2001 (the "Maturity Date"), together with interest in the amount and manner hereafter provided. IT IS FURTHER AGREED THAT: 1. Interest. The Corporation promises to pay interest on the principal amount of this Third Amended and Restated 10% Secured Convertible Note (the "Note") at the rate per annum of ten percent (10%), compounded quarterly. Interest will be computed on the basis of a three hundred sixty (360) day year of twelve (12), thirty (30) day months. Interest will be paid quarterly on January 1, April 1, July 1, and October 1 of each year and at maturity, with the first such interest payment to be made on January 1, 2001. 2. Method of Payment. Except with respect to the rights of conversion provided herein, and subject to Section 3 hereof, the Corporation will pay principal and interest by wire transfer of immediately-available money of the United States, or other form of payment of immediately available money of the United States as the Holder may direct the Corporation, that at the time of payment is legal tender for payment of public and private debts. Information for making the wire transfers will be provided in writing by the Holder to the Corporation. If any payment hereunder becomes due and payable on a day other than a business day, the due date thereof shall be extended to the next business day and, with respect to payments of principal, interest thereon shall be payable at the applicable rate during such extension. 3. Right to Prepay. The Corporation shall have the right to prepay all or any part of the Note. 4. Right to Convert. (a) At any time before the close of business on the Maturity Date but after the earlier of (A) termination of the Fourth Amended and Restated Agreement and Plan of Merger (the "Merger Agreement"), dated as of June 21, 2001, among the Corporation, the Holder and AMCON Merger Sub, Inc. ("Merger Sub") or (B) the occurrence of an Event of Default, the Holder may convert the outstanding principal balance and unpaid accrued interest of this Note into fully paid and non-assessable shares of Series C Convertible Preferred Stock, par value $1.00 per share, of the Corporation (the "Preferred Stock"). The price at which shares of Preferred Stock shall be delivered upon conversion (herein called the "Preferred Conversion Price") shall be $1.00 per share of Preferred Stock. (b) At any time following 61 days advance notice to the Corporation given before the Maturity Date, the Holder may convert the outstanding principal balance and unpaid accrued interest of this Note into fully paid and non-assessable shares of common stock of the Corporation (the "Common Stock"). The price at which shares of Common Stock shall be delivered upon conversion (herein called the "Common Conversion Price") shall be equal to the quotient of $2,865,348, divided by the number of shares of Common Stock that are outstanding on the date of conversion (excluding for this purpose shares of Common Stock issued upon conversion of this Note, the Preferred Stock, and the Third Amended and Restated 10% Secured Convertible Note in the principal sum of $400,000 payable by the Corporation to the Holder due on September 30, 2001). (c) This Note may be converted in whole, but not in part, into Preferred Stock or Common Stock or a combination thereof (referred to collectively as the "Conversion Shares") based on the terms set forth in subsections (a) and (b) of this Section 4, as the case may be. 5. Mechanics of Conversion. If the Holder desires to exercise such right of conversion, such Holder shall give written notice to the Corporation in the form attached to this Note as Exhibit A (the "Conversion Notice") of that Holder's election to convert a stated whole dollar amount of outstanding principal balance and unpaid accrued interest of the Note into shares of Preferred Stock, and/or Common Stock, as the case may be, and surrender to the Corporation, at its principal office or at such other office or agency maintained by the Corporation for such purpose, this Note. The Conversion Notice shall also contain a statement of the name or names (with addresses) in which the certificate or certificates for Preferred Stock and/or Common Stock, as the case may be, shall be issued. Notwithstanding the foregoing, the Corporation shall not be required to issue any certificates to any person other than the Holder thereof unless the Corporation has obtained reasonable assurance that such transaction is exempt from the registration requirements of, or is covered by an effective registration statement under, the Securities Act of 1933, as amended (the "Act"), and all applicable state securities laws, including, if necessary in the reasonable judgment of the Corporation or its legal counsel, receipt of an opinion to such effect from counsel reasonably satisfactory to the Corporation. In no event would such opinion be required if the shares of Preferred Stock and/or Common Stock, as the case may be, could, upon conversion, be resold pursuant to Rule 144 or Rule 144A under the Act. As promptly as practicable, and in any event within five business days, after the receipt of the Conversion Notice (the "Date of Conversion") and the surrender of the certificate or certificates representing the Conversion Shares, the Corporation shall issue and deliver, or cause to be delivered, to the Holder or his nominee or nominees, (i) a certificate or certificates for the number of shares of Preferred Stock and/or Common Stock, as the case may be, issuable upon the conversion of this Note, and (ii) if less than the full dollar amount of the outstanding principal balance and unpaid accrued interest of this Note is being converted, a new Note, of like tenor, evidencing the outstanding principal balance and unpaid accrued interest of the Note after taking into account such conversion, provided that all unpaid accrued interest shall be applied to such partial conversion before any of the outstanding principal balance shall be applied. Such conversion shall be deemed to have been effected as of the close of business on the Date of Conversion and the replacement Note, and the person or persons entitled to receive the shares of Preferred Stock and/or Common Stock, as the case may be, issuable upon conversion shall be treated for all purposes as the holder or holders of record of such shares of Preferred Stock and/or Common Stock, as the case may be, as of the close of business on such date. 6. Fractions of Share. The Corporation shall not be required to issue fractions of a share or scrip representing fractional shares of Preferred Stock and/or Common Stock, as the case may be, upon the exercise of any conversion right hereunder. If any fraction of a share of Preferred Stock and/or Common Stock, as the case may be, would, except for the provisions of this Section 6, be issuable upon any conversion exercise, the Corporation shall pay a cash adjustment in respect of such fraction, equal to the value of such fraction based on the Conversion Price per share of Preferred Stock. 7. Security. (a) Except as limited by Subsection (d) of this Section 7, the Corporation hereby grants to Holder a perfected first priority security interest in all real and personal property, and interests in property in which the Corporation now or hereafter has rights or powers (collectively the "Collateral"), including, without limiting the generality of the foregoing: (i) all inventory (the "Inventory"); (ii) all raw materials, supplies, goods, incidentals, packaging and processing materials, labels and other items, work in process, components, and any other materials used, consumed, generated, manufactured, and/or produced to generate the Inventory, or otherwise carry out the business of the Corporation; (iii) all accounts, contract rights, and rights to receive payments however evidenced (the "Accounts"); (iv) all claims for moneys that are due or are to become due and all receipts (whether cash, cash equivalents or otherwise), other cash or non-cash income, rents, profits, revenues, and/or proceeds received by the Corporation from any source; (v) all instruments, negotiable or other documents (including without limitation documents of title), policies and certificates of insurance, money, chattel paper, deposits, warehouse receipts and things in action; (vi) all investment property, securities (whether certificated or uncertificated), security entitlements, securities accounts, commodity contracts, and commodity accounts; (vii) all goods, furniture, fixtures, equipment and machinery (including without limitation motor vehicles and aircraft), together with any and all attachments, parts, repairs and accessories now or hereafter affixed thereto or used in connection therewith, and any warranty claims or settlements or resolutions for defective items; (viii) all reserves, deposits, certificates of deposit and deposit accounts and interest or dividends thereon, securities, cash, cash equivalents and other property now or at any time or times hereafter in the possession or under the control of Holder, its affiliates, or its bailee; (ix) all motor vehicles and trailers, whether or not subject to a certificate of title or manufacturer's statement of origin; (x) all general intangibles, including without limitation licenses, permits, trademarks, corporate and trade names, copyrights, franchise rights, goodwill, patents and patent applications; (xi) all credit card receipts, receivables, sales drafts, credits, provisional credits, rights of collections, and any other right to payment with respect to credit cards howsoever evidenced (collectively, the "Credit Card Receipts"); (xii) all books, records, computer records, ledger cards, programs and other computer materials, customer and supplier lists, invoices, orders and other property at any time evidencing or relating to the Collateral ("Records"); (xiii) all interests in real estate, including interests in leases of real property; (xiv) all additions, accessions, replacements and substitutions, renewals, improvements, and replacements of, to or for any of the foregoing and any and all proceeds and products of any of the foregoing; and (xv) all insurance in any way relating to the foregoing. (b) If any item of the Collateral is a motor vehicle or any other type of collateral for which a certificate of title can be issued under any state or federal statute, the Corporation will cause a certificate of title evidencing ownership thereof to be endorsed to reflect Holder's interest therein, if such endorsement is required or permitted by law, concurrently with the execution of this Note or, as to any such Collateral in which the Corporation acquires rights after the date hereof, as soon as the Corporation has rights therein. (c) The Corporation shall deliver all of the Collateral consisting of instruments or negotiable documents or chattel paper to Holder concurrently with the execution of this Note or, as to any such Collateral in which the Corporation acquires rights after the date hereof, as soon as the Corporation has acquired rights therein. (d) The Corporation represents that it cannot grant a first priority security interest to Holder in the blow molding machine and related equipment used in bottling operations and all additions, accessories, replacements and substitutions, renewals, improvements and replacements of, or for any of such property, any and all proceeds and products of any of such property and any insurance relating thereto (collectively, the "Excluded Items"), due to a prior security interest granted therein. Accordingly, Holder's security interest in the Excluded Items may be subject to such prior security interest, but such prior security interest shall not effect the validity of Holder's security interest in the Excluded Items. (e) The security interests described herein are granted to Holder to secure the performance and payment of this Note and any and all obligations and liabilities of the Corporation to Holder, now existing or hereafter arising, direct or indirect, absolute or contingent, joint or several, primary or secondary, due or to become due, including without limitation any renewa1s or extensions thereof and substitutions therefor and future advances (such obligations and liabilities being referred to herein as the "Secured Obligations"). (f) Upon the written request of Holder, the Corporation will execute in form satisfactory to Lender one or more financing statements pursuant to the applicable Uniform Commercial Code, mortgages, deeds of trust and such other documents as Holder may from time to time request. Upon the occurrence of an Event of Default, Holder is hereby authorized to file or record one or more financing statements, mortgages, deeds of trust and other documents signed only by Holder in any location in any jurisdiction where such authorization is permitted by law. Holder shall notify the Corporation in writing in the event it takes such actions. If applicable law requires the Corporation to sign any financing statement or other document for filing or recording purposes, Holder and/or any representative of Holder is hereby: (a) appointed as the Corporation's attorney and agent, with full power of substitution, to sign or endorse the Corporation's name on any such financing statement or other document, and (b) authorized to file or record the same. (g) Upon an Event of Default, Holder shall have the following rights and remedies and be entitled to exercise any or all of the following remedies, in addition to any other rights and remedies under law or equity of Holder however arising: (i) In its sole an absolute discretion and without notice thereof to the Corporation, in the name of Holder and/or the Corporation, Holder may: (A) notify the parties liable on all Accounts or Credit Card Receipts ("Account Debtors") on any or all Collateral that such Collateral has been assigned to Holder and that Holder has a security interest therein; (B) direct such Account Debtors to make payment due from them to the Corporation directly to Holder; and (C) enforce payment of, and collect by legal proceedings or otherwise, such amounts due, including to: demand, collect, receipt for, settle, compromise, adjust, sue for, foreclose or realize upon or with respect to such Collateral. (ii) Holder may receive, open and dispose of mail addressed to the Corporation and endorse notes, checks, drafts, money orders, documents of title or other evidences of payment, shipment or storage or any other item constituting or relating to the Collateral on behalf of and in the name of the Corporation. (iii) Holder may take control and apply to the Secured Obligations any or all proceeds constituting a part of the Collateral. (iv) Holder may, without notice or demand, declare any or all of the Secured Obligations immediately due and payable, notwithstanding any provision to the contrary contained in any agreement or instrument evidencing or relating to any of the Secured Obligations. (v) Holder may set off any deposits or other moneys due from Holder to the Corporation against any of the Secured Obligations, whether or not the same is due and in any order of priority. (vi) Holder shall have all of the rights and be entitled to all of the remedies of a Holder under the applicable Uniform Commercial Code, including (without limitation) the right to take possession of the Collateral or any portion thereof, the right to sell, lease or otherwise dispose of the Collateral or any portion thereof and the right to recover reasonable expenses of retaking, holding, preparing for sale or lease, selling, leasing and the like and, to the extent not prohibited by law, reasonable attorneys' fees and legal expenses incurred by Holder. (vii) Holder may require the Corporation to assemble the Collateral and make it available to Holder at a place to be designated by Holder which is reasonably convenient to both parties, or, if the Corporation fails or refuses to so assemble the Collateral, Holder may, and the Corporation hereby authorizes and empowers Holder to, enter upon the premises wherever the Collateral may be in order to remove the same. (viii) Holder shall have the right to enter, with or without process of law and without breach of the peace, any premises where the Collateral is or may be located, and without charge or liability to Holder therefor seize and remove the Collateral from said premises and/or remain upon said premises and use the same for the purpose of collecting, preparing and disposing of the Collateral. (ix) Unless the Collateral is perishable or threatens to decline speedily in value or is of a type customarily sold on a recognized market, Holder will give the Corporation reasonable notice of the time and place of any public sale of the Collateral or any portion thereof or of the time after which any private sale or other intended disposition thereof is to be made. The requirements of commercially reasonable and fair notice shall be met if such notice is mailed, postage prepaid, to the Corporation at least 7 calendar days prior to the date of such sale or disposition. The Corporation agrees that: (A) a public sale of all or any of the Collateral is commercially reasonable irrespective of the amount received for such collateral at such sale; and (B) the Corporation shall be credited with the net proceeds of such sale only when such proceeds are actually received by Holder. (x) The Corporation hereby: (A) agrees that Holder has no obligation to preserve rights against prior parties to the Collateral; (B) waives and releases any cause of action and claim against Holder as a result of Holder's possession, collection or sale of the Collateral, any liability or penalty for failure of Holder to comply with any requirement imposed on Holder relating to notice of sale, holding of sale or reporting of sale of the Collateral, and, to the extent permitted by law, any right of redemption from such sale; and (C) in the event Holder seeks possession of the Collateral through replevin or other court process, waives any bond, surety or security required as an incident to such possession, and any demand for possession of the Collateral prior to commencement of any suit or action to recover possession thereof. (xi) Holder's costs of collection, enforcement and prosecution of its rights and remedies hereunder or otherwise arising, whether or not involving a case, action or other proceeding before any state or federal court or other body, including without limitation attorneys' fees and expenses, shall be the sole obligation of the Corporation. 8. Corporation Covenants. The Corporation represents, warrants, covenants and agrees that: (a) Any shares of Preferred Stock and/or Common Stock, as the case may be, delivered upon conversion of this Note shall, at the time of delivery of the certificates for such shares of Preferred Stock or Common Stock, be validly issued and outstanding and fully-paid and non-assessable shares of Preferred Stock or Common Stock free from taxes, liens and charges with respect to their purchase. Without limiting the generality of the foregoing, the Corporation covenants and agrees to take any necessary actions to assure that the par value per share of the Preferred Stock is at all times equal to or less than the then current Conversion Price per share for the Preferred Stock issuable pursuant to this Note. The Corporation further covenants and agrees that it will pay when due and payable any and all federal and state original issue stock taxes, if any, which may be payable in respect of the issue of the shares of referred Stock or Common Stock upon the conversion of this Note or a part hereof. Except for an amendment required pursuant to the foregoing sentence, the Certificate of Designation, Preferences and Rights of the Preferred Stock shall not be amended without the prior written consent of the Holder. (b) The Corporation shall at all times reserve and keep available a number of its authorized but unissued shares of Preferred Stock and Common Stock which will be sufficient to permit the full exercise of this Note. If at any time the number of authorized but unissued shares of Preferred Stock or Common Stock is not sufficient for this purpose, the Corporation shall take such corporate actions as may be necessary to increase its authorized but unissued shares of Preferred Stock and/or Common Stock, as the case may be, to a number of shares sufficient for such purpose. (c) (i) The Corporation is duly organized as a corporation under the laws of the State of Hawaii, it is authorized to transact business in all jurisdictions where the conduct of its business requires it to be qualified, and it is duly authorized to execute, deliver and perform under this Note without the necessity of obtaining any consents or approvals of, or the taking of any other action with respect to, any governmental agency or third party; and (ii) The financial statements submitted to Holder fairly present the financial condition of the Corporation as of the date of this Note knowing that Holder has relied thereon in granting the Loan, there have been no material adverse changes in the financial condition of the Corporation since the date of said financial statements, the Corporation has no material obligations, financial or otherwise, not disclosed to Holder, and at the present time there are no material, unrealized or anticipated losses from any present commitment of the Corporation. 9. Rights of Holder. The Holder of this Note shall not be entitled to vote or receive dividends or be deemed the Holder of Preferred Stock or Common Stock of the Corporation for any purpose, nor shall anything contained in this Note be construed to confer upon the Holder, as such, any of the rights of a stockholder of the Corporation or any right to vote for the election of directors or upon any matter submitted to stockholders at any meeting thereof, or to give or withhold consent to any corporate action (whether upon a merger, conveyance or otherwise) or to receive notice of meetings, or to receive dividends or subscription rights or otherwise until this Note shall have been exercised and the Preferred Stock or Common Stock purchasable upon the exercise hereof shall have become deliverable. 10. Rights Upon Exercise. Irrespective of the date Preferred Stock or Common Stock is issued and of delivery of certificates for any shares issuable upon the exercise of the conversion privilege under this Note, each person in whose name any such certificate is issued shall for all purposes be deemed to have become the holder of record of the shares represented thereby on the Date of Conversion. 11. Investment Representation; Transfer. The Holder hereby represents and warrants to the Corporation that it has purchased this Note and will purchase shares of the Preferred Stock and/or Common Stock, as the case may be, of the Corporation issuable upon conversion hereof for investment purposes only and not with a view to the distribution thereof. The Holder acknowledges that it has been advised by the Corporation that neither this Note nor the Conversion Shares has been registered under the Securities Act of 1933 or any state securities law for the reason that no distribution or public offering of this Note or the Conversion Shares is to be effected. 12. Dissolution. In case any voluntary or involuntary dissolution, liquidation or winding up of the Corporation shall at any time be proposed, the Corporation shall give at least sixty-two (62) days' prior written notice thereof to the Holder stating the date on which such event is to take place and the date (which shall be at least sixty-two (62) days after the giving of such notice) as of which the holders of Preferred Stock or Common Stock of record shall be entitled to exchange their Preferred Stock or Common Stock for securities or other property deliverable upon such dissolution, liquidation or winding up. 13. Default. Any one or more of the following shall be events of default under this Note ("Events of Default"): (a) Default shall be made: (i) in the payment of the principal or interest under this Note when due; or (ii) in due observance or performance of any other agreement contained in this Note, which is not remedied within fifteen (15) days after notice to the Corporation; (b) Any warranty, representation or agreement made or furnished to the Holder by or on behalf of the Corporation in the Merger Agreement proves to have been false in any material respect when made or furnished; or (c) The insolvency of the Corporation, the making of a general assignment for the benefit of creditors, or the filing of any voluntary or involuntary petition or commencement of any proceeding by or against the Corporation under any bankruptcy or insolvency laws. Upon the occurrence of one or more Events of Default and at any time thereafter, the Holder may, by notice in writing to the Corporation, declare the entire outstanding principal amount of the Note to be, and such entire principal amount of the Note shall thereupon become forthwith, due and payable in full together with interest accrued thereon, anything in this Note to the contrary notwithstanding. Upon the occurrence of one or more Events of Default, the Corporation agrees to pay out-of-pocket expenses, including reasonable attorneys' fees and legal expenses, whether or not suit is commenced, incurred by the Holder. If an Event of Default shall have occurred and has not been cured by the Corporation within 90 days after the occurrence thereof, then thereafter this Note shall accrue interest at the rate per annum of eighteen percent (18%), compounded quarterly and computed in accordance with Section 1 of this Note. 14. Notice. All notices and other communications from the Corporation to the Holder shall be mailed by first class registered mail, postage prepaid, to the principal business address of the Holder or other address furnished to the Corporation in writing by the Holder. All notices and other communications from the Holder to the Corporation shall be mailed by first class registered mail, postage prepaid, to the principal business address of the Corporation or other address furnished to the Holder in writing by the Corporation. All notices and other communications delivered in the manner set forth above shall be deemed delivered two (2) days after the date mailed. 15. Governing Law; Certain Waivers. This Note, without regard to the place of execution, delivery or payment, shall be construed and enforced according to and governed by the laws of the State of Delaware. The Corporation waives presentment and demand for payment, notice of dishonor, protest and notice of protest. 16. Severability. Whenever possible, each provision of this Note shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Note shall be prohibited by or invalid under such law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Note. 17. Amendment and Restatement of Original Note. This Note (i) further amends and restates the Second Amended and Restated 10% Secured Convertible Note in the principal sum of $350,000 payable by the Corporation to the Holder due on May 31, 2001 which, in turn, (ii) amended and restated the Amended and Restated 10% Secured Convertible Note in the principal sum of $350,000 payable by the Corporation to the Holder due on March 31, 2001 which, in turn, (iii) amended and restated the 10% Secured Convertible Note in the principal sum of $350,000 due on February 28, 2001 ("Original Note"), but the date of grant of the security interest, mortgage, deeds of trust and other documents contemplated by Section 7 hereof shall continue to be the date of the Original Note. HAWAIIAN NATURAL WATER COMPANY, INC. By: /s/ Marcus Bender ---------------------------------- Name: Marcus Bender Title: President EXHIBIT A --------- CONVERSION NOTICE ------------------ (To be executed by the Holder in order to Convert the Note) TO: HAWAIIAN NATURAL WATER COMPANY, INC. The undersigned hereby irrevocably elects to convert $-------------of the principal amount of, and $----------------- of any accrued but unpaid interest on, the above Third Amended and Restated 10% Secured Convertible Note into (i) - ------------------- shares of Series C Preferred Stock, par value $1.00 per share, of Hawaiian Natural Water Company, Inc. (the "Company"), and (ii)------ - ------------- shares of Common Stock of the Company, in each case according to the conditions stated in such Note, as of the Conversion Date written below. Conversion Date:---------------------------------- Applicable Conversion Price:---------------------- Signature:---------------------------------------- Name:--------------------------------------------- Address:------------------------------------------ ------------------------------------------ EX-3 4 hnwc400.txt $400,000 SECURED CONVERTIBLE NOTE THIS THIRD AMENDED AND RESTATED 10% SECURED CONVERTIBLE NOTE, AND THE SECURITIES INTO WHICH IT IS CONVERTIBLE (COLLECTIVELY, THE "SECURITIES"), HAS NOT BEEN REGISTERED WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES COMMISSION OF ANY STATE UNDER APPLICABLE STATE SECURITIES LAWS. THE SECURITIES HAVE BEEN ACQUIRED PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THE SECURITIES ARE "RESTRICTED" AND MAY NOT BE OFFERED OR SOLD UNLESS THE SECURITIES ARE REGISTERED UNDER THE ACT, OR PURSUANT TO AVAILABLE EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND THE ISSUER WILL BE PROVIDED WITH OPINION OF COUNSEL OR OTHER SUCH INFORMATION AS IT MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH EXEMPTIONS ARE AVAILABLE. HAWAIIAN NATURAL WATER COMPANY, INC. Third Amended and Restated 10% Secured Convertible Note Due September 30, 2001 $400,000.00 June 21, 2001 FOR VALUE RECEIVED, Hawaiian Natural Water Company, Inc., a Hawaiian corporation (the "Corporation"), promises to pay to the order of AMCON Distributing Company, a Delaware corporation (the "Holder"), the principal sum of Four Hundred Thousand and NO/100 Dollars ($400,000.00), on September 30, 2001 (the "Maturity Date"), together with interest in the amount and manner hereafter provided. IT IS FURTHER AGREED THAT: 1. Interest. The Corporation promises to pay interest on the principal amount of this Third Amended and Restated 10% Secured Convertible Note (the "Note") at the rate per annum of ten percent (10%), compounded quarterly. Interest will be computed on the basis of a three hundred sixty (360) day year of twelve (12), thirty (30) day months. Interest will be paid quarterly on January 1, April 1, July 1, and October 1 of each year and at maturity, with the first such interest payment to be made on January 1, 2001. 2. Method of Payment. Except with respect to the rights of conversion provided herein, and subject to Section 3 hereof, the Corporation will pay principal and interest by wire transfer of immediately-available money of the United States, or other form of payment of immediately available money of the United States as the Holder may direct the Corporation, that at the time of payment is legal tender for payment of public and private debts. Information for making the wire transfers will be provided in writing by the Holder to the Corporation. If any payment hereunder becomes due and payable on a day other than a business day, the due date thereof shall be extended to the next business day and, with respect to payments of principal, interest thereon shall be payable at the applicable rate during such extension. 3. Right to Prepay. The Corporation shall have the right to prepay all or any part of the Note. 4. Right to Convert. (a) At any time before the close of business on the Maturity Date but after the earlier of (A) termination of the Fourth Amended and Restated Agreement and Plan of Merger (the "Merger Agreement"), dated as of June 21, 2001, among the Corporation, the Holder and AMCON Merger Sub, Inc. ("Merger Sub") or (B) the occurrence of an Event of Default, the Holder may convert the outstanding principal balance and unpaid accrued interest of this Note into fully paid and non-assessable shares of Series C Convertible Preferred Stock, par value $1.00 per share, of the Corporation (the "Preferred Stock"). The price at which shares of Preferred Stock shall be delivered upon conversion (herein called the "Preferred Conversion Price") shall be $1.00 per share of Preferred Stock. (b) At any time following 61 days advance notice to the Corporation given before the Maturity Date, the Holder may convert the outstanding principal balance and unpaid accrued interest of this Note into fully paid and non-assessable shares of common stock of the Corporation (the "Common Stock"). The price at which shares of Common Stock shall be delivered upon conversion (herein called the "Common Conversion Price") shall be equal to the quotient of $2,865,348, divided by the number of shares of Common Stock that are outstanding on the date of conversion (excluding for this purpose shares of Common Stock issued upon conversion of this Note, the Preferred Stock, and the Third Amended and Restated 10% Secured Convertible Note in the principal sum of $350,000 payable by the Corporation to the Holder due on September 30, 2001). (c) This Note may be converted in whole, but not in part, into Preferred Stock or Common Stock or a combination thereof (referred forth in subsections (a) and (b) of this Section 4, as the case may be. 5. Mechanics of Conversion. If the Holder desires to exercise such right of conversion, such Holder shall give written notice to the Corporation in the form attached to this Note as Exhibit A (the "Conversion Notice") of that Holder's election to convert a stated whole dollar amount of outstanding principal balance and unpaid accrued interest of the Note into shares of Preferred Stock, and/or Common Stock, as the case may be, and surrender to the Corporation, at its principal office or at such other office or agency maintained by the Corporation for such purpose, this Note. The Conversion Notice shall also contain a statement of the name or names (with addresses) in which the certificate or certificates for Preferred Stock and/or Common Stock, as the case may be, shall be issued. Notwithstanding the foregoing, the Corporation shall not be required to issue any certificates to any person other than the Holder thereof unless the Corporation has obtained reasonable assurance that such transaction is exempt from the registration requirements of, or is covered by an effective registration statement under, the Securities Act of 1933, as amended (the "Act"), and all applicable state securities laws, including, if necessary in the reasonable judgment of the Corporation or its legal counsel, receipt of an opinion to such effect from counsel reasonably satisfactory to the Corporation. In no event would such opinion be required if the shares of Preferred Stock and/or Common Stock, as the case may be, could, upon conversion, be resold pursuant to Rule 144 or Rule 144A under the Act. As promptly as practicable, and in any event within five business days, after the receipt of the Conversion Notice (the "Date of Conversion") and the surrender of the certificate or certificates representing the Conversion Shares, the Corporation shall issue and deliver, or cause to be delivered, to the Holder or his nominee or nominees, (i) a certificate or certificates for the number of shares of Preferred Stock and/or Common Stock, as the case may be, issuable upon the conversion of this Note, and (ii) if less than the full dollar amount of the outstanding principal balance and unpaid accrued interest of this Note is being converted, a new Note, of like tenor, evidencing the outstanding principal balance and unpaid accrued interest of the Note after taking into account such conversion, provided that all unpaid accrued interest shall be applied to such partial conversion before any of the outstanding principal balance shall be applied. Such conversion shall be deemed to have been effected as of the close of business on the Date of Conversion and the replacement Note, and the person or persons entitled to receive the shares of Preferred Stock and/or Common Stock, as the case may be, issuable upon conversion shall be treated for all purposes as the holder or holders of record of such shares of Preferred Stock and/or Common Stock, as the case may be, as of the close of business on such date. 6. Fractions of Share. The Corporation shall not be required to issue fractions of a share or scrip representing fractional shares of Preferred Stock and/or Common Stock, as the case may be, upon the exercise of any conversion right hereunder. If any fraction of a share of Preferred Stock and/or Common Stock, as the case may be, would, except for the provisions of this Section 6, be issuable upon any conversion exercise, the Corporation shall pay a cash adjustment in respect of such fraction, equal to the value of such fraction based on the Conversion Price per share of Preferred Stock. 7. Security. The obligations herein are secured by the security interest granted pursuant to that certain Third Amended and Restated 10% Convertible Note in the principal sum of $350,000.00 payable by the Corporation to Holder due on September 30, 2001. 8. Corporation Covenants. The Corporation represents, warrants, covenants and agrees that: (a) Any shares of Preferred Stock and/or Common Stock, as the case may be, delivered upon conversion of this Note shall, at the time of delivery of the certificates for such shares of Preferred Stock or Common Stock, be validly issued and outstanding and fully-paid and non-assessable shares of Preferred Stock or Common Stock free from taxes, liens and charges with respect to their purchase. Without limiting the generality of the foregoing, the Corporation covenants and agrees to take any necessary actions to assure that the par value per share of the Preferred Stock is at all times equal to or less than the then current Conversion Price per share for the Preferred Stock issuable pursuant to this Note. The Corporation further covenants and agrees that it will pay when due and payable any and all federal and state original issue stock taxes, if any, which may be payable in respect of the issue of the shares of Preferred Stock or Common Stock upon the conversion of this Note or a part hereof. Except for an amendment required pursuant to the foregoing sentence, the Certificate of Designation, Preferences and Rights of the Preferred Stock shall not be amended without the prior written consent of the Holder. (b) The Corporation shall at all times reserve and keep available a number of its authorized but unissued shares of Preferred Stock and Common Stock which will be sufficient to permit the full exercise of this Note. If at any time the number of authorized but unissued shares of Preferred Stock or Common Stock is not sufficient for this purpose, the Corporation shall take such corporate actions as may be necessary to increase its authorized but unissued shares of Preferred Stock and/or Common Stock, as the case may be, to a number of shares sufficient for such purpose. (c) (i)The Corporation is duly organized as a corporation under the laws of the State of Hawaii, it is authorized to transact business in all jurisdictions where the conduct of its business requires it to be qualified, and it is duly authorized to execute, deliver and perform under this Note without the necessity of obtaining any consents or approvals of, or the taking of any other action with respect to, any governmental agency or third party; and (ii)The financial statements submitted to Holder fairly present the financial condition of the Corporation as of the date of this Note knowing that Holder has relied thereon in granting the Loan, there have been no material adverse changes in the financial condition of the Corporation since the date of said financial statements, the Corporation has no material obligations, financial or otherwise, not disclosed to Holder, and at the present time there are no material, unrealized or anticipated losses from any present commitment of the Corporation. 9. Rights of Holder. The Holder of this Note shall not be entitled to vote or receive dividends or be deemed the Holder of Preferred Stock or Common Stock of the Corporation for any purpose, nor shall anything contained in this Note be construed to confer upon the Holder, as such, any of the rights of a stockholder of the Corporation or any right to vote for the election of directors or upon any matter submitted to stockholders at any meeting thereof, or to give or withhold consent to any corporate action (whether upon a merger, conveyance or otherwise) or to receive notice of meetings, or to receive dividends or subscription rights or otherwise until this Note shall have been exercised and the Preferred Stock or Common Stock purchasable upon the exercise hereof shall have become deliverable. 10. Rights Upon Exercise. Irrespective of the date Preferred Stock or Common Stock is issued and of delivery of certificates for any shares issuable upon the exercise of the conversion privilege under this Note, each person in whose name any such certificate is issued shall for all purposes be deemed to have become the holder of record of the shares represented thereby on the Date of Conversion. 11. Investment Representation; Transfer. The Holder hereby represents and warrants to the Corporation that it has purchased this Note and will purchase shares of the Preferred Stock and/or Common Stock, as the case may be, of the Corporation issuable upon conversion hereof for investment purposes only and not with a view to the distribution thereof. The Holder acknowledges that it has been advised by the Corporation that neither this Note nor the Conversion Shares has been registered under the Securities Act of 1933 or any state securities law for the reason that no distribution or public offering of this Note or the Conversion Shares is to be effected. 12. Dissolution. In case any voluntary or involuntary dissolution, liquidation or winding up of the Corporation shall at any time be proposed, the Corporation shall give at least sixty-two (62) days' prior written notice thereof to the Holder stating the date on which such event is to take place and the date (which shall be at least sixty-two (62) days after the giving of such notice)as of which the holders of Preferred Stock or Common Stock of record shall be entitled to exchange their Preferred Stock or Common Stock for securities or other property deliverable upon such dissolution, liquidation or winding up. 13. Default. Any one or more of the following shall be events of default under this Note ("Events of Default"): (a) Default shall be made: (i) in the payment of the principal or interest under this Note when due; or (ii) in due observance or performance of any other agreement contained in this Note, which is not remedied within fifteen (15) days after notice to the Corporation; (b) Any warranty, representation or agreement made or furnished to the Holder by or on behalf of the Corporation in the Merger Agreement proves to have been false in any material respect when made or furnished; or (c) The insolvency of the Corporation, the making of a general assignment for the benefit of creditors, or the filing of any voluntary or involuntary petition or commencement of any proceeding by or against the Corporation under any bankruptcy or insolvency laws. Upon the occurrence of one or more Events of Default and at any time thereafter, the Holder may, by notice in writing to the Corporation, declare the entire outstanding principal amount of the Note to be, and such entire principal amount of the Note shall thereupon become forthwith, due and payable in full together with interest accrued thereon, anything in this Note to the contrary notwithstanding. Upon the occurrence of one or more Events of Default, the Corporation agrees to pay out-of-pocket expenses, including reasonable attorneys' fees and legal expenses, whether or not suit is commenced, incurred by the Holder. If an Event of Default shall have occurred and has not been cured by the Corporation within 90 days after the occurrence thereof, then thereafter this Note shall accrue interest at the rate per annum of eighteen percent (18%), compounded quarterly and computed in accordance with Section 1 of this Note. 14. Notice. All notices and other communications from the Corporation to the Holder shall be mailed by first class registered mail, postage prepaid, to the principal business address of the Holder or other address furnished to the Corporation in writing by the Holder. All notices and other communications from the Holder to the Corporation shall be mailed by first class registered mail, postage prepaid, to the principal business address of the Corporation or other address furnished to the Holder in writing by the Corporation. All notices and other communications delivered in the manner set forth above shall be deemed delivered two (2) days after the date mailed. 15. Governing Law; Certain Waivers. This Note, without regard to the place of execution, delivery or payment, shall be construed and enforced according to and governed by the laws of the State of Delaware. The Corporation waives presentment and demand for payment, notice of dishonor, protest and notice of protest. 16. Severability. Whenever possible, each provision of this Note shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Note shall be prohibited by or invalid under such law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Note. 17. Amendment and Restatement of Original Note. This Note (i) further amends and restates the Second Amended and Restated 10% Secured Convertible Note in the principal sum of $400,000 payable by the Corporation to the Holder due on May 31, 2001 which, in turn, (ii) amended and restated the Amended and Restated 10% Secured Convertible Note in the principal sum of $400,000 payable by the Corporation to the Holder due on March 31, 2001 which, in turn, (iii) amended and restated the 10% Secured Convertible Note in the principal sum of $400,000 payable by the Corporation to the Holder due on February 28, 2001 ("Original Note"), but the date of grant of the security interest, mortgage, deeds of trust and other documents contemplated by Section 7 hereof shall continue to be the date of the Original Note. HAWAIIAN NATURAL WATER COMPANY, INC. By: /s/ Marcus Bender --------------------------------- Name: Marcus Bender Title: President EXHIBIT A --------- CONVERSION NOTICE ------------------ (To be executed by the Holder in order to Convert the Note) TO: HAWAIIAN NATURAL WATER COMPANY, INC. The undersigned hereby irrevocably elects to convert $----------- of the principal amount of, and $------------- of any accrued but unpaid interest on, the above Third Amended and Restated 10% Secured Convertible Note into (i)---- - ---------- shares of Series C Preferred Stock, par value $1.00 per share, of Hawaiian Natural Water Company, Inc. (the "Company"), and (ii)----------- shares of Common Stock of the Company, in each case according to the conditions stated in such Note, as of the Conversion Date written below. Conversion Date: ----------------------------------------- Applicable Conversion Price: ----------------------------- Signature: ----------------------------------------------- Name: ---------------------------------------------------- Address: ------------------------------------------------- ------------------------------------------------- EX-4 5 hnwc500.txt $500,000 SECURED CONVERTIBLE NOTE THIS 10% SECURED CONVERTIBLE NOTE, AND THE SECURITIES INTO WHICH IT IS CONVERTIBLE (COLLECTIVELY, THE "SECURITIES"), HAS NOT BEEN REGISTERED WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES COMMISSION OF ANY STATE UNDER APPLICABLE STATE SECURITIES LAWS. THE SECURITIES HAVE BEEN ACQUIRED PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THE SECURITIES ARE "RESTRICTED" AND MAY NOT BE OFFERED OR SOLD UNLESS THE SECURITIES ARE REGISTERED UNDER THE ACT, OR PURSUANT TO AVAILABLE EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND THE ISSUER WILL BE PROVIDED WITH OPINION OF COUNSEL OR OTHER SUCH INFORMATION AS IT MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH EXEMPTIONS ARE AVAILABLE. HAWAIIAN NATURAL WATER COMPANY, INC. 10% Secured Convertible Note Due September 30, 2001 $500,000.00 June 21, 2001 FOR VALUE RECEIVED, Hawaiian Natural Water Company, Inc., a Hawaiian corporation (the "Corporation"), promises to pay to the order of AMCON Distributing Company, a Delaware corporation (the "Holder"), the principal sum of Five Hundred Thousand and NO/100 Dollars ($500,000.00), on September 30, 2001 (the "Maturity Date"), together with interest in the amount and manner hereafter provided. IT IS FURTHER AGREED THAT: 1. Interest. The Corporation promises to pay interest on the principal amount of this 10% Secured Convertible Note (the "Note") at the rate per annum of ten percent (10%), compounded quarterly. Interest will be computed on the basis of a three hundred sixty (360) day year of twelve (12), thirty (30) day months. Interest will be paid quarterly on January 1, April 1, July 1, and October 1 of each year and at maturity, with the first such interest payment to be made on July 1, 2001. 2. Method of Payment. Except with respect to the rights of conversion provided herein, and subject to Section 3 hereof, the Corporation will pay principal and interest by wire transfer of immediately-available money of the United States, or other form of payment of immediately available money of the United States as the Holder may direct the Corporation, that at the time of payment is legal tender for payment of public and private debts. Information for making the wire transfers will be provided in writing by the Holder to the Corporation. If any payment hereunder becomes due and payable on a day other than a business day, the due date thereof shall be extended to the next business day and, with respect to payments of principal, interest thereon shall be payable at the applicable rate during such extension. 3. Right to Prepay. The Corporation shall have the right to prepay all or any part of the Note; provided, however, that (i) the Corporation must give written notice to the Holder of its intention to make any such prepayment not less than five (5) and not more than ten (10) business days in advance of such prepayment, which notice must include a representation that the funds to effect the prepayment are legally available for that purpose and that representation must be supported by evidence reasonably satisfactory to the Holder that such funds will be provided to the Corporation at the time specified in the notice for prepayment, and (ii) during the period following that notice and prior to the actual prepayment, the Holder shall be entitled to exercise the conversion privilege set forth in Section 4(a) hereof, if the right to convert specified therein is available by its terms, or Section 4(b) hereof. 4. Right to Convert. (a) At any time before the close of business on the Maturity Date but after the earlier of (A) termination of the Fourth Amended and Restated Agreement and Plan of Merger (the "Merger Agreement"), dated as of June 21, 2001, among the Corporation, the Holder and AMCON Merger Sub, Inc. ("Merger Sub") or (B) the occurrence of an Event of Default, the Holder may convert the outstanding principal balance and unpaid accrued interest of this Note into fully paid and non-assessable shares of Series C Convertible Preferred Stock, par value $1.00 per share, of the Corporation (the "Preferred Stock"). The price at which shares of Preferred Stock shall be delivered upon conversion (herein called the "Preferred Conversion Price") shall be $1.00 per share of Preferred Stock. (b) At any time before the close of business on the Maturity Date, the Holder may convert the outstanding principal balance and unpaid accrued interest of this Note into fully paid and non-assessable shares of common stock of the Corporation (the "Common Stock"). The price at which shares of Common Stock shall be delivered upon conversion shall be $0.40 per share; provided, however, that if the Corporation shall at any time increase or decrease the number of its outstanding shares of Common Stock or change in any way the rights and privileges of such shares by means of the payment of a stock dividend or any other distribution upon such shares payable in Common Stock, or through a stock split, subdivision, consolidation, combination, reclassification or recapitalization involving the Common Stock, then the price at which shares shall be delivered upon conversion shall be proportionately increased or decreased, as the case may be, to avoid dilution of the number and kind of shares to which the Noteholder is fairly entitled upon conversion of the Note. (c) This Note may be converted in whole, but not in part, into Preferred Stock or Common Stock or a combination thereof (referred to collectively as the "Conversion Shares") based on the terms set forth in subsections (a) and (b) of this Section 4, as the case may be. 5. Mechanics of Conversion. If the Holder desires to exercise such right of conversion, such Holder shall give written notice to the Corporation in the form attached to this Note as Exhibit A (the "Conversion Notice") of that Holder's election to convert a stated whole dollar amount of outstanding principal balance and unpaid accrued interest of the Note into shares of Preferred Stock, and/or Common Stock, as the case may be, and surrender to the Corporation, at its principal office or at such other office or agency maintained by the Corporation for such purpose, this Note. The Conversion Notice shall also contain a statement of the name or names (with addresses) in which the certificate or certificates for Preferred Stock and/or Common Stock, as the case may be, shall be issued. Notwithstanding the foregoing, the Corporation shall not be required to issue any certificates to any person other than the Holder thereof unless the Corporation has obtained reasonable assurance that such transaction is exempt from the registration requirements of, or is covered by an effective registration statement under, the Securities Act of 1933, as amended (the "Act"), and all applicable state securities laws, including, if necessary in the reasonable judgment of the Corporation or its legal counsel, receipt of an opinion to such effect from counsel reasonably satisfactory to the Corporation. In no event would such opinion be required if the shares of Preferred Stock and/or Common Stock, as the case may be, could, upon conversion, be resold pursuant to Rule 144 or Rule 144A under the Act. As promptly as practicable, and in any event within two business days, after the receipt of the Conversion Notice (the "Date of Conversion") and the surrender of the certificate or certificates representing the Conversion Shares, the Corporation shall issue and deliver, or cause to be delivered, to the Holder or his nominee or nominees, a certificate or certificates for the number of shares of Preferred Stock and/or Common Stock, as the case may be, issuable upon the conversion of this Note. Such conversion shall be deemed to have been effected as of the close of business on the Date of Conversion and the replacement Note, and the person or persons entitled to receive the shares of Preferred Stock and/or Common Stock, as the case may be, issuable upon conversion shall be treated for all purposes as the holder or holders of record of such shares of Preferred Stock and/or Common Stock, as the case may be, as of the close of business on such date. 6. Fractions of Share. The Corporation shall not be required to issue fractions of a share or scrip representing fractional shares of Preferred Stock and/or Common Stock, as the case may be, upon the exercise of any conversion right hereunder. If any fraction of a share of Preferred Stock and/or Common Stock, as the case may be, would, except for the provisions of this Section 6, be issuable upon any conversion exercise, the Corporation shall pay a cash adjustment in respect of such fraction, equal to the value of such fraction based on the Conversion Price per share of Preferred Stock. 7. Security. The obligations herein are secured by the security interest granted pursuant to that certain Second Amended and Restated 10% Convertible Note in the principal sum of $350,000.00 payable by the Corporation to Holder due on September 30, 2001 (and as such note may be further amended and/or restated). 8. Corporation Covenants. The Corporation represents, warrants, covenants and agrees that: (a) Any shares of Preferred Stock and/or Common Stock, as the case may be, delivered upon conversion of this Note shall, at the time of delivery of the certificates for such shares of Preferred Stock or Common Stock, be validly issued and outstanding and fully-paid and non-assessable shares of Preferred Stock or Common Stock free from taxes, liens and charges with respect to their purchase. Without limiting the generality of the foregoing, the Corporation covenants and agrees to take any necessary actions to assure that the par value per share of the Preferred Stock is at all times equal to or less than the then current Conversion Price per share for the Preferred Stock issuable pursuant to this Note. The Corporation further covenants and agrees that it will pay when due and payable any and all federal and state original issue stock taxes, if any, which may be payable in respect of the issue of the shares of Preferred Stock or Common Stock upon the conversion of this Note or a part hereof. Except for an amendment required pursuant to the foregoing sentence, the Certificate of Designation, Preferences and Rights of the Preferred Stock shall not be amended without the prior written consent of the Holder. (b) The Corporation shall at all times reserve and keep available a number of its authorized but unissued shares of Preferred Stock and Common Stock which will be sufficient to permit the full exercise of this Note. If at any time the number of authorized but unissued shares of Preferred Stock or Common Stock is not sufficient for this purpose, the Corporation shall take such corporate actions as may be necessary to increase its authorized but unissued shares of Preferred Stock and/or Common Stock, as the case may be, to a number of shares sufficient for such purpose. (c) (i)The Corporation is duly organized as a corporation under the laws of the State of Hawaii, it is authorized to transact business in all jurisdictions where the conduct of its business requires it to be qualified, and it is duly authorized to execute, deliver and perform under this Note without the necessity of obtaining any consents or approvals of, or the taking of any other action with respect to, any governmental agency or third party; and (ii)The financial statements submitted to Holder fairly present the financial condition of the Corporation as of the date of this Note knowing that Holder has relied thereon in granting the Loan, there have been no material adverse changes in the financial condition of the Corporation since the date of said financial statements, the Corporation has no material obligations, financial or otherwise, not disclosed to Holder, and at the present time there are no material, unrealized or anticipated losses from any present commitment of the Corporation. (d) The Corporation shall give written notice to the Holder at least 10 days prior to establishing a record date to determine the stockholders of record entitled to vote on the merger contemplated by the Merger Agreement in order to permit the Holder to exercise the right to convert this Note and vote upon such merger and to receive merger consideration pursuant to such merger. 9. Rights of Holder. The Holder of this Note shall not be entitled to vote or receive dividends or be deemed the Holder of Preferred Stock or Common Stock of the Corporation for any purpose, nor shall anything contained in this Note be construed to confer upon the Holder, as such, any of the rights of a stockholder of the Corporation or any right to vote for the election of directors or upon any matter submitted to stockholders at any meeting thereof, or to give or withhold consent to any corporate action (whether upon a merger, conveyance or otherwise) or to receive notice of meetings, or to receive dividends or subscription rights or otherwise until the right to convert this Note shall have been exercised and the Preferred Stock or Common Stock purchasable upon the exercise hereof shall have become deliverable. 10. Rights Upon Exercise. Irrespective of the date Preferred Stock or Common Stock is issued and of delivery of certificates for any shares issuable upon the exercise of the conversion privilege under this Note, each person in whose name any such certificate is issued shall for all purposes be deemed to have become the holder of record of the shares represented thereby on the Date of Conversion. 11. Investment Representation; Transfer. The Holder hereby represents and warrants to the Corporation that it has purchased this Note and will purchase shares of the Preferred Stock and/or Common Stock, as the case may be, of the Corporation issuable upon conversion hereof for investment purposes only and not with a view to the distribution thereof. The Holder acknowledges that it has been advised by the Corporation that neither this Note nor the Conversion Shares has been registered under the Securities Act of 1933 or any state securities law for the reason that no distribution or public offering of this Note or the Conversion Shares is to be effected. 12. Dissolution. In case any voluntary or involuntary dissolution, liquidation or winding up of the Corporation shall at any time be proposed, the Corporation shall give at least sixty-two (62) days' prior written notice thereof to the Holder stating the date on which such event is to take place and the date (which shall be at least sixty-two (62) days after the giving of such notice) as of which the holders of Preferred Stock or Common Stock of record shall be entitled to exchange their Preferred Stock or Common Stock for securities or other property deliverable upon such dissolution, liquidation or winding up. 13. Default. Any one or more of the following shall be events of default under this Note ("Events of Default"): (a) Default shall be made: (i) in the payment of the principal or interest under this Note when due; or (ii) in due observance or performance of any other agreement contained in this Note, which is not remedied within fifteen (15) days after notice to the Corporation; (b) Any warranty, representation or agreement made or furnished to the Holder by or on behalf of the Corporation in the Merger Agreement proves to have been false in any material respect when made or furnished; or (c) The insolvency of the Corporation, the making of a general assignment for the benefit of creditors, or the filing of any voluntary or involuntary petition or commencement of any proceeding by or against the Corporation under any bankruptcy or insolvency laws. Upon the occurrence of one or more Events of Default and at any time thereafter, the Holder may, by notice in writing to the Corporation, declare the entire outstanding principal amount of the Note to be, and such entire principal amount of the Note shall thereupon become forthwith, due and payable in full together with interest accrued thereon, anything in this Note to the contrary notwithstanding. Upon the occurrence of one or more Events of Default, the Corporation agrees to pay out-of-pocket expenses, including reasonable attorneys' fees and legal expenses, whether or not suit is commenced, incurred by the Holder. If an Event of Default shall have occurred and has not been cured by the Corporation within 90 days after the occurrence thereof, then thereafter this Note shall accrue interest at the rate per annum of eighteen percent (18%), compounded quarterly and computed in accordance with Section 1 of this Note. 14. Notice. All notices and other communications from the Corporation to the Holder shall be mailed by first class registered mail, postage prepaid, to the principal business address of the Holder or other address furnished to the Corporation in writing by the Holder. All notices and other communications from the Holder to the Corporation shall be mailed by first class registered mail, postage prepaid, to the principal business address of the Corporation or other address furnished to the Holder in writing by the Corporation. All notices and other communications delivered in the manner set forth above shall be deemed delivered two (2) days after the date mailed. 15. Governing Law; Certain Waivers. This Note, without regard to the place of execution, delivery or payment, shall be construed and enforced according to and governed by the laws of the State of Delaware. The Corporation waives presentment and demand for payment, notice of dishonor, protest and notice of protest. 16. Severability. Whenever possible, each provision of this Note shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Note shall be prohibited by or invalid under such law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Note. HAWAIIAN NATURAL WATER COMPANY, INC. By: /s/ Marcus Bender -------------------------------- Name: Marcus Bender Title: President EXHIBIT A ----------- CONVERSION NOTICE ------------------- (To be executed by the Holder in order to Convert the Note) TO: HAWAIIAN NATURAL WATER COMPANY, INC. The undersigned hereby irrevocably elects to convert $-------------- of the principal amount of, and $------------ of any accrued but unpaid interest on, the above Second Amended and Restated 10% Secured Convertible Note into (i)----------------shares of Series C Preferred Stock, par value $1.00 per share, of Hawaiian Natural Water Company, Inc. (the "Company"), and (ii)-------------- shares of Common Stock of the Company, in each case according to the conditions stated in such Note, as of the Conversion Date written below. Conversion Date: ------------------------------------ Applicable Conversion Price: ------------------------ Signature: ------------------------------------------ Name: ----------------------------------------------- Address: -------------------------------------------- -------------------------------------------- EX-5 6 hnwcstockagree.txt STOCKHOLDER AGREEMENT AMENDED AND RESTATED STOCKHOLDER AGREEMENT --------------------- AMENDED AND RESTATED STOCKHOLDER AGREEMENT (this "Agreement") dated as of November 7, 2000 among AMCON Distributing Company, a Delaware corporation ("AMCON"), Andrew Merger Sub, Inc., a Delaware corporation and a wholly-owned subsidiary of AMCON ("Merger Sub"), and the stockholders of Hawaiian Natural Water Company, Inc., a Hawaii corporation (the "Company" or "HNWC"), named on Schedule I hereto (individually, a "Stockholder" and collectively, the "Stockholders"). WHEREAS, AMCON and Merger Sub propose to enter into an Agreement and Plan of Merger dated as of the date hereof (as amended from time to time, the "Merger Agreement"; capitalized terms used but not defined herein shall have the meanings set forth in the Merger Agreement) with the Company which provides, among other things, that the Company will merge with and into Merger Sub (the "Merger"); and WHEREAS, as of the date hereof, each Stockholder owns of record or beneficially the respective number of shares of the Company Common Stock set opposite such Stockholder's name on Schedule I hereto; and WHEREAS, as an essential condition to the willingness of AMCON and Merger Sub to enter into the Merger Agreement, AMCON and Merger Sub have requested that each Stockholder agree, and in order to induce AMCON and Merger Sub to enter into the Merger Agreement, each Stockholder has agreed, to enter into this Agreement with respect to (i) all the shares of the Company Common Stock owned beneficially and of record by such Stockholder as of the date hereof or of which such Stockholder may hereafter acquire record or beneficial ownership (the "Shares") and (ii) any other securities owned of record or beneficially by such Stockholder as of the date hereof or of which such Stockholder may hereafter acquire ownership of record or beneficially which may be voted by or at the direction or on behalf of the Stockholder at any meeting of the Company stockholders or with respect to which action taken without a meeting may be authorized by or at the direction or on behalf of such Stockholder by written consent (the "Other Securities"); NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements contained herein and intending to be legally bound hereby, the parties hereto agree as follows: ARTICLE I VOTING AGREEMENT Section 1.1 Voting Agreement. Each Stockholder hereby agrees that, with respect to the Company Stockholders Meeting and any other meeting of the Company stockholders or any action to be taken by written consent the Stockholder shall: (a) appear in person or by proxy (or use its reasonable best efforts to cause the holder of record on any applicable record date to appear in person or by proxy) for the purpose of obtaining a quorum at the Company Stockholders Meeting and at any adjournment or postponement thereof; (b) vote (or cause to be voted) the Shares and the Other Securities (or, as applicable, shall execute or cause to be executed written consents in respect of the Shares and the Other Securities) in favor of the approval and adoption of the Merger Agreement, the Merger and, any other transactions or matters contemplated by the Merger Agreement, and any actions required in furtherance thereof and hereof; and (c) not encourage any holder of securities of the Company to vote against the approval and adoption of the Merger Agreement, the Merger or any other transactions or matters contemplated by the Merger Agreement, and not take any action, or permit any action to be taken, that would reasonably be expected to impede, interfere, or be inconsistent with, delay, postpone, discourage, disparage or otherwise adversely affect, the Merger Agreement, the Merger, this Agreement and any other transactions or matters contemplated by the Merger Agreement, or a Stockholder's obligations hereunder, including, but not limited to, the obligations of each Stockholder to vote for the approval and adoption of the Merger Agreement, the Merger and any other transactions or matters contemplated by the Merger Agreement, and to use its reasonable best efforts to consummate and make effective the transactions contemplated by this Agreement, provided that nothing in this Section 1.1 shall limit any individual Stockholder who is a director of the Company from exercising or performing any of such Stockholder's rights or duties solely in such Stockholder's capacity as a director of the Company. Section 1.2 Irrevocable Proxy. In order to ensure that the voting agreement set forth in Section 1.1 and the other obligations of each Stockholder hereunder will be carried out, each Stockholder hereby grants an irrevocable proxy, coupled with an interest, in the form attached hereto as Exhibit A (the "Irrevocable Proxy") to, and hereby constitutes and appoints AMCON and each of its officers as such Stockholder's sole and exclusive attorney and proxy pursuant to the provisions of Section 414-33(c) of the Hawaii Business Corporations Act, with full power of substitution, (a) to vote and otherwise act (by written consent or otherwise) with respect to the Shares and the Other Securities which such Stockholder is entitled to vote at the Company Stockholders Meeting and any other meeting of the Company Stockholders, or pursuant to any written consent in lieu of a meeting of the Company Stockholders, and at any adjournment or postponement thereof on the matters and in the manner specified in Section 1.1 and (b) to execute and deliver any and all further consents, instruments or other agreements or documents and take any and all such reasonable actions in connection with or in furtherance of the obligations of such Stockholder set forth in this Agreement and in furtherance of each of the transactions. THIS PROXY AND POWER OF ATTORNEY IS IRREVOCABLE AND COUPLED WITH AN INTEREST. Such Stockholder hereby revokes all other proxies and powers of attorney with respect to the Shares and the Other Securities that such Stockholder may have heretofore appointed or granted that would prevent such Stockholder from performing its obligations hereunder, and no subsequent proxy or power of attorney shall be given or written consent executed (and if given or executed, shall not be effective) by such Stockholder with respect thereto. All authority herein conferred or agreed to be conferred shall survive the death or incapacity of any Stockholder and any obligation of such Stockholder under this Agreement shall be binding upon the heirs, personal representatives, successors and permitted assigns of such Stockholder. Section 1.3 Evaluation of Investment. Each Stockholder, by reason of such Stockholder's knowledge and experience in financial and business matters, is capable of evaluating the merits and risks of the investment in AMCON Common Stock to be received pursuant to the Merger, contemplated by the Merger Agreement. Section 1.4 Documents Delivered. The Stockholder acknowledges receipt of copies of the following documents: (a) the Merger Agreement and all schedules and exhibits thereto; (b) AMCON's Annual report on Form 10-K for the fiscal year ended September 30, 1999; (c) AMCON's Proxy Statement dated January 24, 2000; (d) each report filed with the Securities and Exchange Commission by AMCON on Forms 8-K and 10-Q since September 30, 1999; and (e) any other information reasonably requested by any Stockholder concerning an evaluation of an investment in AMCON Common Stock. Each Stockholder also acknowledges that it possesses the information relating to the Company which such Stockholder deems relevant to its investment in AMCON Common Stock should the Merger be consummated. ARTICLE II REPRESENTATIONS AND WARRANTIES Section 2.1 Representations and Warranties of Each Stockholder. Except as set forth on the disclosure letter attached hereto, each Stockholder represents and warrants to AMCON and Merger Sub as follows: (a) Each Stockholder (if it is a corporation, general or limited partnership, limited liability company or other legal entity) is duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization. Such Stockholder has the requisite power and authority (and if a natural person, the legal capacity) to execute and deliver this Agreement and to perform its obligations hereunder. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by such Stockholder and no other proceedings on the part of such Stockholder are necessary to authorize this Agreement and the consummation of the transactions contemplated hereby. This Agreement has been duly executed and delivered by such Stockholder and, assuming that this Agreement constitutes a valid and binding agreement of AMCON, is a legal, valid and binding obligation of such Stockholder, enforceable against such Stockholder in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium and similar laws, now or hereafter in effect, relating to or affecting the rights and remedies of creditors generally, and to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or a law) and to general principles governing the duties of fiduciaries. (b) The execution and delivery of this Agreement by such Stockholder does not, and the performance of this Agreement by such Stockholder will not, conflict with, result in any breach of or constitute a default (or an event that with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, or require payment under, or result in the creation of any Encumbrances (as defined in Section 5.1 below) on any of the assets of such Stockholder pursuant to any contract or other instrument to which such Stockholder is a party or by which such Stockholder or any of such Stockholder's assets are bound, except for any thereof that would not reasonably be expected to materially impair the ability of such Stockholder to perform such Stockholder's obligations hereunder or to consummate the transactions contemplated hereby. (c) There is no suit, action, investigation or proceeding pending or, to the knowledge of such Stockholder, threatened against such Stockholder at law or in equity before or by any Governmental Entity that would reasonably be expected to materially impair the ability of such Stockholder to perform such Stockholder's obligations hereunder or to consummate the transactions contemplated hereby. (d) Such Stockholder owns beneficially and of record the shares of Company Common Stock set forth opposite such Stockholder's name on Schedule I hereto (the "Existing Shares"). The Existing Shares constitute all the shares of the Company Common Stock owned of record or beneficially by such Stockholder. Such Stockholder has sole voting power, sole power of disposition and all other stockholder rights with respect to all the Existing Shares, with no restrictions, other than pursuant to applicable securities laws, on such Stockholder's rights of disposition pertaining thereto. Such Stockholder owns options or warrants to purchase or other securities convertible or exchangeable into or exercisable for the number of shares of such Common Stock set forth opposite such Stockholder's name on Schedule I hereto (collectively, the "Derivative Securities"). None of the Existing Shares or Derivative Securities is subject to (i) any right of first refusal or first offer, (ii) right to purchase, acquire or vote, or (iii) proxy or power of attorney, except in the case of clause (ii) or (iii) any rights created by this Agreement. Such Stockholder has good and valid title to all the Existing Shares, free and clear of all Encumbrances (other than any Encumbrance created by this Agreement). ARTICLE III COVENANTS OF THE STOCKHOLDER Section 3.1 No Solicitation. Each Stockholder and its Representatives shall immediately cease and cause to be terminated all existing discussions or negotiations to which the Stockholder or its officers, directors, employees, agents, accountants, counsel, advisors or consultants (collectively, "Representatives") are a part relating to an Acquisition Proposal for the Company or any transaction referred to in Section 3.1 or 3.2 with any parties conducted heretofore. From the date hereof until the Effective Time or, if earlier, the termination of the Merger Agreement pursuant to Article X thereof, each Stockholder shall not, whether directly or indirectly through Representatives or other intermediaries, and will instruct such Stockholder's Representatives not to, whether directly or indirectly through Representatives or other intermediaries, initiate, solicit or encourage (including by way of furnishing information or assistance), or take any other action to facilitate, any inquiries or the making of any proposal regarding a potential Acquisition Proposal for HNWC or any transaction referred to in Section 3.1 or 3.2, or enter into or maintain discussions or negotiate with any person regarding, in furtherance of or relating to such inquiries or the making of a proposal regarding or consummation of an Acquisition Proposal for HNWC or any transaction referred to in Section 3.1 or 3.2, or agree to or endorse any Acquisition Proposal for HNWC or any transaction referred to in Section 3.1 or 3.2, or disclose any non-public information relating to the Company to any person that has made or may reasonably be expected to make a proposal regarding an Acquisition Proposal for HNWC or any transaction referred to in Section 3.1 or 3.2 or that has advised the Company that it is or may be interested in making a proposal regarding an Acquisition Proposal for HNWC or any transaction referred to in Section 3.1 or 3.2, or authorize or permit any of such Stockholder's Representatives to take any such action, and each Stockholder shall use such Stockholder's reasonable best efforts to cause such Stockholder's Representatives not to take any such action, and each Stockholder shall promptly notify AMCON if any such inquiries or proposals are made regarding a potential Acquisition Proposal for HNWC or any transaction referred to in Section 3.1 or 3.2, and each Stockholder shall promptly inform AMCON as to the terms and details of any such inquiry or proposal (including the identity of the true party in interest making such inquiry or proposal) and, if in writing, promptly deliver or cause to be delivered to AMCON a copy of such inquiry or proposal, and each Stockholder shall keep AMCON informed, on a current basis, of the status, terms and details of any such inquiries or such proposals. Anything in this Section 3.1 to the contrary notwithstanding, nothing in this Section 3.1 shall limit any individual Stockholder who is also a director of the Company, from exercising or performing any of such Stockholder's rights or duties solely in such Stockholder's capacity as a director of the Company. Section 3.2 No Disposition of Shares Prior to Termination. (a) Each Stockholder hereby agrees that, until the Merger Agreement is terminated in accordance with Article IX thereof, and except pursuant to the Merger and any transactions contemplated by the Merger Agreement, the Stockholder shall not (i) sell, transfer, tender, assign, contribute to the capital of any Person, grant a participation in or otherwise dispose of, or create, become a party to, be bound by or permit to exist, any Encumbrance (other than any Encumbrance created by this Agreement) of any nature with respect to, any of the Shares or Other Securities or any interest therein (or agree or consent to, or offer to do, any of the foregoing), (ii) take any action that would reasonably be expected to make any representation or warranty of such Stockholder herein materially untrue or materially incorrect or have the effect of preventing or disabling such Stockholder from performing such Stockholder's obligations hereunder, or (iii) directly or indirectly, initiate, solicit or encourage any Person to take actions that would reasonably be expected to lead to the occurrence of any of the foregoing. (b) Each Stockholder agrees that, so long as this Section 3.2 shall remain in effect, such Stockholder shall not request the Company to register the transfer (book-entry or otherwise) of any certificate or uncertificated interest evidencing any Shares or Other Securities, unless such transfer is made pursuant to the Merger or the transactions contemplated by the Merger Agreement. In the event of a stock dividend or distribution, or any change in the Company Common Stock by reason of any stock dividend, split-up, recapitalization, combination, exchange of shares or the like, for all purposes of this Agreement, the term "Shares" or "Other Securities," as the case may be, shall be deemed to refer to and include the Shares or Other Securities, as the case may be, as well as all such stock dividends and distributions and any shares into which or for which any or all of such Shares or Other Securities may be changed or exchanged. (c) Each Stockholder hereby agrees and consents to the entry of stop transfer instructions by the Company against transfer of any Shares or Other Securities except pursuant to the transactions or the proviso set forth in Section 3.2(a) above. Section 3.3 Further Assurances. Each Stockholder agrees to use such Stockholder's reasonable best efforts to take, or cause to be taken, all appropriate action, and to do, or cause to be done, all things necessary, proper or advisable under applicable laws and regulations to consummate and make effective the transactions contemplated by this Agreement, including, but not limited to, the Merger or the transactions contemplated by the Merger Agreement. If any further action is necessary or desirable to carry out the purposes of this Agreement, such Stockholder shall use such Stockholder's reasonable best efforts to take all such action as promptly as practicable. Section 3.4 Legend. Each Stockholder will request the Company to have the certificates evidencing those shares which are owned of record or beneficially by such Stockholder to bear substantially the following legend and to request the Company to instruct its transfer agent to stop the transfer of any certificates bearing such legend that is not made in accordance with this Agreement: THE TRANSFER OF AND VOTING OF THE SHARES REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO THE PRIOR RIGHTS AND LIMITATIONS IMPOSED BY THE AMENDED AND RESTATED STOCKHOLDER AGREEMENT DATED AS OF NOVEMBER 7, 2000 AMONG AMCON DISTRIBUTING COMPANY, A DELAWARE CORPORATION, ANDREW MERGER SUB, INC., A DELAWARE CORPORATION, AND CERTAIN STOCKHOLDERS WHO ARE SIGNATORIES THERETO. A COPY OF SUCH AGREEMENT WILL BE FURNISHED BY THE COMPANY'S SECRETARY UPON WRITTEN REQUEST AND WITHOUT CHARGE. ARTICLE IV TERMINATION Section 4.1 Termination. This Agreement shall terminate upon any termination of the Merger Agreement in accordance with Article IX thereof. Section 4.2 Effect of Termination. In the event that this Agreement shall terminate pursuant to this Article IV, this Agreement shall thereafter be void and the parties hereto shall have no further rights or obligations with respect thereto, except as a result of any prior breach thereof. ARTICLE V DEFINITIONS Section 5.1 Definitions. For purposes of this Agreement: (a) "Beneficially own" or "beneficial ownership" with respect to any securities shall mean having "beneficial ownership" of such securities (as determined pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, as amended), including pursuant to any agreement, arrangement or understanding, whether or not in writing. Securities beneficially owned by one Person shall include securities beneficially owned by all other Persons with whom such Person would constitute a "group" within the meaning of Section 13(d)(3) of the Exchange Act. (b) "Person" shall mean an individual, corporation, partnership, joint venture, association, trust, unincorporated organization or other entity. (c) "Encumbrance" means any pledge, security interest, lien, claim, encumbrance, mortgage, charge, hypothecation, option, right of first refusal or offer, community property right, other marital right, preemptive right, voting agreement, voting trust, proxy, power of attorney, escrow, option, forfeiture, penalty, action at law or in equity, security agreement, shareholder agreement or other agreement, arrangement, contract, commitment, understanding or obligation, or any other restriction, qualification or limitation on the use, transfer, right to vote, right to dissent, and seek appraisal, receipt of income or other exercise of any attribute of ownership, except for those which do not or could not reasonably be expected to, individually or in the aggregate, impair the ability of such Stockholder to perform such Stockholder's obligations hereunder or to consummate the transactions contemplated hereby. ARTICLE VI MISCELLANEOUS Section 6.1 Severability. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule of law, or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of this Agreement is not affected in any manner materially adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in a mutually acceptable manner in order that the terms of this Agreement remain as originally contemplated to the fullest extent possible. Section 6.2 Entire Agreement. This Agreement constitutes the entire agreement between Parent and each Stockholder with respect to the subject matter hereof and supersedes all prior agreements and understandings, both written and oral, between AMCON and such Stockholder with respect to the subject matter hereof. Section 6.3 Counterparts. This Agreement may be executed and delivered (including by facsimile transmission) in one or more counterparts, and by the different parties hereto in separate counterparts, each of which when executed and delivered shall be deemed to be an original but all of which taken together shall constitute one and the same instrument. Section 6.4 Assignment. Neither this Agreement nor any rights or interests hereunder shall be assigned by any Stockholder (whether by operation of law or otherwise) without the prior written consent of AMCON. AMCON may assign, in its sole discretion, its rights hereunder to any direct or indirect wholly owned subsidiary or affiliate of AMCON, but no such assignment shall relieve AMCON of its obligations hereunder if such assignee does not perform such obligations. Section 6.5 Amendments. This Agreement may not be amended, supplemented, waived or otherwise modified or terminated, except upon the execution and delivery of a written agreement executed by the parties hereto. Section 6.6 Notices. All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be given (and shall be deemed to have been duly received if so given) by hand delivery, facsimile transmission, mail (registered or certified mail, postage prepaid, return receipt requested), or courier service providing proof of delivery. All communications hereunder shall be delivered to the respective parties at the following addresses: If to Stockholder, in accordance with the information set forth on Schedule I hereto. If to AMCON: AMCON Distributing Company 10228 L Street Omaha, Nebraska 68127 Attention: President Telephone: (402) 331-3727 Fax: copies to: Stinson, Mag & Fizzell, P.C. 1201 Walnut, Suite 2800 Kansas City, MO 64106 Attention: John A. Granda, Esq. Telephone (816) 691-3188 Fax: (816) 691-3495 or to such other address as the person to whom notice is given may have previously furnished the others in writing in the manner set forth above. Section 6.7 No Third Party Beneficiaries. This Agreement is not intended to be for the benefit of, and shall not be enforceable by, any person or entity not a party hereto. Section 6.8 Specific Performance. Each of the parties hereto acknowledges that a breach by it of any agreement contained in this Agreement may cause the other party to sustain damage for which it may not have an adequate remedy at law for money damages, and therefore each of the parties hereto agrees that in the event of any such breach the aggrieved party may be entitled to the remedy of specific performance of such agreement and injunctive and other equitable relief in addition to any other remedy to which it may be entitled, at law or in equity. Section 6.9 Remedies Cumulative. All rights, powers and remedies provided under this Agreement or otherwise available in respect hereof at law or in equity shall be cumulative and not alternative, and the exercise of any thereof by any party shall not preclude the simultaneous or later exercise of any other such right, power or remedy by such party. Section 6.10 No Waiver. The failure of any party hereto to exercise any right, power or remedy provided under this Agreement or otherwise available in respect hereof at law or in equity, or to insist upon strict compliance by any other party hereto with its obligations hereunder, and any custom or practice of the parties at variance with the terms hereof, shall not constitute a waiver by such party of its right to exercise any such or other right, power or remedy or to demand such compliance. Section 6.11 Governing Law. (a) This Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware, without giving effect to the principles of conflicts of law thereof. (b) Each party hereby irrevocably submits to the exclusive jurisdiction of the Court of Chancery in the State of Delaware in any action, suit or proceeding arising in connection with this Agreement, and agrees that any such action, suit or proceeding shall be brought only in such court (and waives any objection based on forum non conveniens or any other objection to venue therein); provided, however, that such consent to jurisdiction is solely for the purpose referred to in this subsection (b) and shall not be deemed to be a general submission to the jurisdiction of such court or in the State of Delaware other than for such purposes. Section 6.12 Waiver of Jury Trial. EACH OF AMCON, MERGER SUB AND EACH STOCKHOLDER HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE ACTIONS OF PARENT OR SUCH STOCKHOLDER IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT THEREOF. Section 6.13 Descriptive Headings. The descriptive headings used herein are inserted for convenience of reference only and are not intended to be part of or to affect the meaning or interpretation of this Agreement. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first above written. AMCON DISTRIBUTING COMPANY By: /s/ William F. Wright ------------------------- Name: William F. Wright Title: Chairman of the Board HAWAIIAN NATURAL WATER COMPANY, INC. By: /s/ Marcus Bender ------------------------- Name: Marcus Bender Title: President STOCKHOLDERS: HSC, Inc. By: /s/ Michael Chagani ------------------------- Title: Treasurer H.B.D.C. Inc. By: /s/ Marcus Bender ------------------------- Title: President By: /s/ Marcus Bender ------------------------- Marcus Bender, individually By: /s/ Dennis Harris ------------------------- By: /s/ Wilhelm Kuhlmann ------------------------- By: /s/ Keijiro Sorimachi ------------------------- SCHEDULE I Shares Owned and Derivative Name of Certificate Securities Owned Address for Stockholder Number(s) Notices -----END PRIVACY-ENHANCED MESSAGE-----