Document:

Exhibit 10.1

     

    FOURTH AMENDMENT TO

      SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

     

    THIS FOURTH AMENDMENT TO SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT (this “Amendment”) is dated as of March 20, 2020 among each of AMCON Distributing Company, a
      Delaware corporation, having its principal place of business at 7405 Irvington Road, Omaha, Nebraska 68122 (“AMCON”), Chamberlin Natural Foods, Inc., a Florida corporation, having its principal place of
      business at 3711 Oleander Way, Suite 1309, Casselberry, Florida 32707 (“Chamberlin Natural”), Health Food Associates, Inc., an Oklahoma corporation, having its principal place of business at 7807 East 51st
      Street, Tulsa, Oklahoma 74145 (“Health Food”), AMCON ACQUISITION CORP., a Delaware corporation, having its principal place of business at 7405 Irvington Road, Omaha, Nebraska 68122 (“AMCON Acquisition”); and EOM ACQUISITION CORP., a Delaware corporation, having its principal place of business at 7807 East 51st Street, Tulsa, Oklahoma 74145 (“EOM Acquisition”; AMCON,
      Chamberlin Natural, Health Food, AMCON Acquisition and EOM Acquisition are each referred to as a “Borrower” and are collectively referred to as “Borrowers”), and BANK OF AMERICA, N.A., a national banking
      association (in its individual capacity, “BofA”), as agent (in such capacity as agent, “Agent”) for itself and all other lenders from time to time a party to the Credit
      Agreement (as defined below) (“Lenders”), 135 South LaSalle Street, Chicago, Illinois 60603-4105.

     

    W I T N E S S E T H:

     

    WHEREAS, the Borrowers, the Lenders and Agent have entered into that certain Second Amended and Restated Loan and Security Agreement dated as of April 18, 2011, as amended by that
      certain Consent and First Amendment to Second Amended and Restated Loan and Security Agreement dated as of May 27, 2011, that certain Second Amendment to Second Amended and Restated Loan and Security Agreement dated as of July 16, 2013 and that
      certain Third Amendment to Second Amended and Restated Loan and Security Agreement dated as of November 6, 2017 (as may be further amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”) pursuant to
      which the Lenders agreed to provide certain credit facilities to the Borrowers;

     

    WHEREAS, the Borrowers have requested that the Agent and the Lenders amend the Credit Agreement in order to, among other things, (i) increase the aggregate principal amount of the
      Revolving Loan Commitment available thereunder from $70,000,000 to $110,000,000 (ii) extend the maturity date of the Revolving Loan Commitment to March 20, 2025 and (iii) effectuate such other amendments as provided herein; and

     

    WHEREAS, the Agent and the Lenders are willing to accommodate the Borrowers’ requests on the terms and conditions set forth below.

     

    NOW, THEREFORE, for and in consideration of the premises and mutual agreements herein contained and for the purposes of setting forth the terms and conditions of this Amendment, the
      parties, intending to be bound, hereby agree as follows:

     

    
      
        

    

    
     

    

    1.            Defined Terms; Incorporation of
          the Credit Agreement.  All capitalized terms which are not defined hereunder shall have the same meanings as set forth in the Credit Agreement, and the Credit Agreement, to the extent not inconsistent with this Amendment, is incorporated
        herein by this reference as though the same were set forth in its entirety.  To the extent any terms and provisions of the Credit Agreement are inconsistent with the amendments set forth in paragraph 3 below, such terms and provisions shall be
        deemed superseded hereby.  Except as specifically set forth herein, the Credit Agreement shall remain in full force and effect and its provisions shall be binding on the parties hereto.

     

    2.            Amendments to the Credit
          Agreement.  The Credit Agreement is hereby amended as follows:

     

    (a)            The following definitions are
        hereby added to Section 1.1 of the Credit Agreement to read as follows:

     

    “Applicable Hemp Laws” means all applicable provisions of all applicable federal and state laws, rules and regulations, including, without limitation, the
      Controlled Substances Act, governing the growth, harvesting, production, processing or sale of Hemp, Cannabis, CBD or Controlled Substances.

     

    “BHC Act Affiliate” of a party means an “affiliate” (as such term is defined under, and interpreted in accordance with, 12 U.S.C. 1841(k)) of such party.

     

    “Cannabis” shall have the meaning assigned to the term “marijuana” in the Controlled Substances Act.

     

    “CBD” means cannabidiol or any other cannabinoid.

     

    “CBD Inventory” means Inventory consisting of CBD and CBD related products.

     

    “Controlled Substances” shall have the meaning assigned to that term in the Controlled Substances Act.

     

    “Controlled Substances Act” means the United States Controlled Substances Act, 31 U.S.C. §801, et. seq.

     

    “Covered Entity” means any of the following:  (i) a “covered entity” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 252.82(b);
      (ii) a “covered bank” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 47.3(b); or (iii) a “covered FSI” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 382.2(b).

     

    
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    “Default Right” has the meaning assigned to that term in, and shall be interpreted in accordance with, 12 C.F.R. §§ 252.81, 47.2 or 382.1, as applicable.

     

    “Eligible CBD Inventory” means CBD Inventory which is deemed eligible for borrowing by all of the Lenders in writing in their sole discretion. 
      Notwithstanding the foregoing, any Lender may at any time determine in its sole discretion that CBD Inventory previously approved as Eligible CBD Inventory is no longer deemed Eligible CBD Inventory.

     

    “Eligible Vaping Inventory” means Vaping Inventory which is deemed eligible for borrowing by all of the Lenders in writing in their sole discretion. 
      Notwithstanding the foregoing, any Lender may at any time determine in its sole discretion that Vaping Inventory previously approved as Eligible Vaping Inventory is no longer deemed Eligible Vaping Inventory.

     

    “Hemp” means the plant Cannabis sativa L. and any part of that plant, including the seeds thereof and all derivatives, extracts, cannabinoids, isomers,
      acids, salts, and salts of isomers, whether growing or not, with a delta-9 tetrahydrocannabinol concentration of not more than three-tenths percent (0.3%) on a dry weight or per volume basis regardless of moisture content, and all derivatives
      thereof.

     

    “LIBOR Successor Rate Conforming Changes” means, with respect to any proposed LIBOR Successor Rate, any conforming changes to the definition of Base Rate,
      Interest Period, timing and frequency of determining rates and making payments of interest and other technical, administrative or operational matters as may be appropriate, in the discretion of the Agent, to reflect the adoption and implementation of
      such LIBOR Successor Rate and to permit the administration thereof by the Agent in a manner substantially consistent with market practice (or, if the Agent determines that adoption of any portion of such market practice is not administratively
      feasible or that no market practice for the administration of such LIBOR Successor Rate exists, in such other manner of administration as the Agent determines is reasonably necessary in connection with the administration of this Agreement).

     

    “QFC” has the meaning assigned to the term “qualified financial contract” in, and shall be interpreted in accordance with, 12 U.S.C. 5390(c)(8)(D).

     

    
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    “Relevant Governmental Body” means the Federal Reserve Board and/or the Federal Reserve Bank of New York, or a committee officially endorsed or convened by
      the Federal Reserve Board and/or the Federal Reserve Bank of New York for the purpose of recommending a benchmark rate to replace LIBOR in loan agreements similar to this Agreement.

     

    “SOFR” with respect to any day means the secured overnight financing rate published for such day by the Federal Reserve Bank of New York, as the
      administrator of the benchmark (or a successor administrator) on the Federal Reserve Bank of New York’s website (or any successor source) and, in each case, that has been selected or recommended by the Relevant Governmental Body.

     

    “SOFR-Based Rate” means SOFR or Term SOFR.

     

    “Swap Contract” means (a) any and all rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity swaps,
      commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward
      foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate swap transactions, currency options, spot contracts, or any other similar transactions or any combination of any
      of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any master agreement, and (b) any and all transactions of any kind, and the related confirmations, which are
      subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., any International Foreign Exchange Master Agreement, or any other master agreement (any such
      master agreement, together with any related schedules, a “Master Agreement”), including any such obligations or liabilities under any Master Agreement.

     

    “Term SOFR” means the forward-looking term rate for any period that is approximately (as determined by the Agent) as long as any of the Interest Period
      options set forth in the definition of “Interest Period” and that is based on SOFR and that has been selected or recommended by the Relevant Governmental Body, in each case as published on an information service as selected by the Agent from time to
      time in its reasonable discretion.

     

    “Vaping Inventory” means Inventory consisting of vaping and vaping related products.

     

    
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    (b)            The definition of the terms “Applicable

          Margin,” “Eligible Inventory,” “Fixed Charge Coverage Ratio” and “Maximum Loan Limit” appearing in Section 1.1 of the Credit Agreement are hereby amended and restated to read as follows:

     

    “Applicable Margin” means, for any day, the rate per annum set forth below opposite the level (the “Level”) then in effect, it being understood that the
      Applicable Margin for LIBOR Rate Loans shall be the percentage set forth under the column “Applicable Margin” for such Loan based on average Excess Availability determined on a quarterly basis by dividing (i) the total of each day’s Excess
      Availability for such quarterly period by (ii) the number of days in such quarterly period.

     

    	
            Level

          	
            Quarterly Excess Availability

          	
            Applicable

            Margin

          
	
            I

          	
            Greater than or equal to $20,000,000

          	
            1.25%

          
	
            II

          	
            Less than $20,000,000

          	
            1.50%

          

    

    

    The Applicable Margin shall be determined on or prior to the fifth (5th) Business Day after the Borrowers are required to provide the quarterly financial
      statements and other information pursuant to Section 9(c); provided that any change in the Applicable Margin shall be effective on the first day of the month in which such quarterly financial statements are delivered.  Notwithstanding
      anything contained in this paragraph to the contrary, (a) unless otherwise waived in writing by the Lenders, if the Borrowers fail to deliver the financial statements in accordance with the provisions of Section 9(c), the Applicable Margin
      shall be based upon Level II above beginning on the first day of the month in which such financial statements were required to be delivered until the fifth (5th) Business Day after such financial statements are actually delivered, whereupon the
      Applicable Margin shall be determined by the then current Level; and (b) no reduction to any Applicable Margin shall become effective at any time when an Event of Default or Unmatured Event of Default has occurred and is continuing.

     

    “Eligible Inventory” shall mean (a) Inventory  of a Borrower which is acceptable to Agent in its sole discretion for lending purposes and (b) Eligible CBD
      Inventory and Eligible Vaping Inventory of a Borrower which is acceptable to each Lender in its sole discretion for lending purposes.  Without limiting Agent’s and the Lenders’ discretion above, such parties shall, in general, consider Inventory, CBD
      Inventory and Vaping Inventory to be Eligible Inventory if it meets, and so long as it continues to meet, the following requirements:

     

    
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    (i) it is owned by such Borrower, such Borrower has the right to subject it to a security interest in favor of Agent and it is subject to a first priority
      perfected security interest in favor of Agent and to no other claim, lien, security interest or encumbrance whatsoever, other than Permitted Liens;

     

    (ii) it is located on one of the premises listed on Exhibit A (or other locations of which Agent has been advised in writing pursuant to subsection 12(b)(i)
      hereof), such locations are within the United States and is not in transit except to the extent that it may be in transit to another location listed on Exhibit A on vehicles owned by such Borrower;

     

    (iii) if held for sale or lease or furnishing under contracts of service, it is (except as Agent may otherwise consent in writing) new and unused and free from
      defects which would, in Agent’s sole determination, affect its market value;

     

    (iv) it is not stored with a bailee, consignee, warehouseman, processor or similar party unless Agent has given its prior written approval and such Borrower has
      caused any such bailee, consignee, warehouseman, processor or similar party to issue and deliver to Agent, in form and substance acceptable to Agent, such Uniform Commercial Code financing statements, warehouse receipts, waivers and other documents
      as Agent shall require;

     

    (v) it is not Inventory, CBD Inventory or Vaping Inventory consisting of perishable, non frozen or refrigerated foods;

     

    (vi) Agent has determined, in accordance with Agent’s customary business practices, that it is not unacceptable due to age, type, category or quantity; and

     

    (vii) it is not Inventory, CBD Inventory or Vaping Inventory (A) with respect to which any of the representations and warranties contained in this Agreement are
      untrue; or (B) which violates any of the covenants of such Borrower contained in this Agreement.

     

    “Fixed Charge Coverage Ratio” means for any period of determination for the Borrowers, the ratio of EBITDA to Fixed Charges determined in accordance with
      GAAP.  Notwithstanding the foregoing, the $6,500,000 investment and $3,500,000 loan made by AMCON in Team Sledd, LLC, a Delaware limited liability company, pursuant to its January 3, 2020 Contribution Agreement, shall be excluded from the calculation
      of Fixed Charge Coverage Ratio.

     

    
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    “Maximum Loan Limit” shall mean One Hundred Ten Million and 00/100 Dollars ($110,000,000.00).

     

    (c)            The definition of the term “LIBOR

          Rate” appearing in Section 1.1 is hereby amended by adding the following sentence at the end of such definition:

     

    Notwithstanding the foregoing, the LIBOR Rate shall not be less than one percent (1.0%).

     

    (d)            Sections 2(a)(i), (ii) and (iii)
        of the Credit Agreement are hereby amended and restated to read as follows:

     

    (i)            Up to
        eighty-five percent (85%) of the face amount (less maximum discounts, credits and allowances which may be taken by or granted to Account Debtors in connection therewith in the ordinary course of AMCON’s and AMCON Acquisition’s business) of AMCON’s
        and AMCON Acquisition’s Eligible Accounts or Seventy-Five Million and No/100 Dollars ($75,000,000.00), whichever is less; plus

     

    (ii)            Up to
        eighty-five percent (85%) of the lower of cost or market value of Eligible Cigarette Inventory or Seventy-Five Million and No/100 Dollars ($75,000,000.00), whichever is less; plus

     

    (iii)            Up to seventy
        percent (70%) of the lower of cost or market value of AMCON’s and AMCON Acquisition’s Eligible Inventory (consisting solely of AMCON’s and AMCON Acquisition’s Eligible Inventory other than Eligible Cigarette Inventory set forth in clause (ii)
        above) or Thirty Million and No/100 Dollars ($30,000,000.00), whichever is less; plus

     

    (e)            The reference to the Maximum
        Revolving Loan Limit of “Seventy Million Dollars ($70,000,000)” set forth in Section 2(a) is hereby deleted and the words “One Hundred Ten Million and No/100 Dollars ($110,000,000.00)” are hereby added in its place.

     

    (f)            A new Section 4(e) is
        hereby added to the Credit Agreement to read as follows:

     

    Notwithstanding anything to the contrary in this Agreement or any of the Other Agreements, if the Agent determines (which determination shall be conclusive absent
      manifest error), or the Borrower or Requisite Lenders notify the Agent (with, in the case of the Requisite Lenders, a copy to the Borrower) that the Borrower or Requisite Lenders (as applicable) have determined, that:

     

    
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    (i)            adequate and
        reasonable means do not exist for ascertaining LIBOR for any requested Interest Period, including, without limitation, because the LIBOR Screen Rate is not available or published on a current basis and such circumstances are unlikely to be
        temporary; or

     

    (ii)            the
        administrator of the LIBOR Screen Rate or a Governmental Authority having jurisdiction over the Agent has made a public statement identifying a specific date after which LIBOR or the LIBOR Screen Rate shall no longer be made available, or used for
        determining the interest rate of loans, provided that, at the time of such statement, there is no successor administrator that is satisfactory to the Agent, that will continue to provide LIBOR after such specific date (such specific date, the
        “Scheduled Unavailability Date”); or

     

    (iii)            syndicated
        loans currently being executed, or that include language similar to that contained in this Section 4, are being executed or amended (as applicable) to incorporate or adopt a new benchmark interest rate to replace LIBOR,

     

    then, reasonably promptly after such determination by the Agent or receipt by the Agent of such notice, as applicable, the Agent and the Borrower may amend this
      Agreement solely for the purpose of replacing LIBOR in accordance with this Section 4(e) one or more SOFR-Based Rates or (y) another alternate benchmark rate giving due consideration to any evolving or then existing convention for similar
      U.S. dollar denominated syndicated credit facilities for such alternative benchmarks and, in each case, including any mathematical or other adjustments to such benchmark giving due consideration to any evolving or then existing convention for similar
      U.S. dollar denominated syndicated credit facilities for such benchmarks, which adjustment or method for calculating such adjustment shall be published on an information service as selected by the Agent from time to time in its reasonable discretion
      and may be periodically updated  (the “Adjustment;” and any such proposed rate, a “LIBOR Successor Rate”), and any such amendment shall become effective at 5:00 p.m. on the fifth Business Day after the Agent shall have posted such proposed amendment
      to all Lenders and the Borrower unless, prior to such time, Lenders comprising the Requisite Lenders have delivered to the Agent written notice that such Requisite Lenders (A) in the case of an amendment to replace LIBOR with a rate described in
      clause (x), object to the Adjustment; or (B) in the case of an amendment to replace LIBOR with a rate described in clause (y), object to such amendment; provided that for the avoidance of doubt, in the case of clause (A), the Requisite Lenders shall
      not be entitled to object to any SOFR-Based Rate contained in any such amendment.  Such LIBOR Successor Rate shall be applied in a manner consistent with market practice; provided that to the extent such market practice is not administratively
      feasible for the Agent, such LIBOR Successor Rate shall be applied in a manner as otherwise reasonably determined by the Agent.

     

    
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    If no LIBOR Successor Rate has been determined and the circumstances under clause (i) above exist or the Scheduled Unavailability Date has occurred (as
      applicable), the Agent will promptly so notify the Borrowers and each Lender.  Thereafter, (x) the obligation of the Lenders to make or maintain LIBOR Rate Loans shall be suspended, (to the extent of the affected LIBOR Rate Loans or Interest
      Periods), and (y) the Eurodollar Rate component shall no longer be utilized in determining the Base Rate.  Upon receipt of such notice, the Borrower may revoke any pending request for a Borrowing of, conversion to or continuation of LIBOR Rate Loans
      (to the extent of the affected LIBOR Rate Loans or Interest Periods) or, failing that, will be deemed to have converted such request into a request for a Borrowing of Base Rate Loans (subject to the foregoing clause (y)) in the amount specified
      therein.

     

    Notwithstanding anything else herein, any definition of LIBOR Successor Rate shall provide that in no event shall such LIBOR Successor Rate be less than one
      percent (1.0%) for purposes of this Agreement.

     

    In connection with the implementation of a LIBOR Successor Rate, the Agent will have the right to make LIBOR Successor Rate Conforming Changes from time to time
      and, notwithstanding anything to the contrary herein or in any other Loan Document, any amendments implementing such LIBOR Successor Rate Conforming Changes will become effective without any further action or consent of any other party to this
      Agreement, provided that, with respect to any such amendment effected, the Agent shall post each such amendment implementing such LIBOR Successor Conforming Changes to the Lenders reasonably promptly after such amendment becomes effective.

     

    (g)            Section 10 of the Credit
        Agreement is hereby amended and restated to read as follows:

     

    
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    10.            TERMINATION;
        AUTOMATIC RENEWAL.

     

    THIS AGREEMENT SHALL BE IN EFFECT FROM THE DATE HEREOF UNTIL MARCH 20, 2025 (THE “ORIGINAL TERM”) AND SHALL AUTOMATICALLY RENEW ITSELF FROM YEAR TO YEAR
      THEREAFTER (EACH SUCH ONE-YEAR RENEWAL BEING REFERRED TO HEREIN AS A “RENEWAL TERM”) UNLESS (A) THE DUE DATE OF THE LIABILITIES IS ACCELERATED PURSUANT TO SECTION 16 HEREOF; OR (B) A BORROWER OR ANY LENDER ELECTS TO TERMINATE THIS AGREEMENT
      AT THE END OF THE ORIGINAL TERM OR AT THE END OF ANY RENEWAL TERM BY GIVING THE OTHER PARTIES HERETO WRITTEN NOTICE OF SUCH ELECTION AT LEAST 90 DAYS PRIOR TO THE END OF THE ORIGINAL TERM OR THE THEN CURRENT RENEWAL TERM.  UPON TERMINATION OF THIS
      AGREEMENT BORROWERS SHALL PAY ALL OF THE LIABILITIES IN FULL.  If one or more of the events specified in clauses (A) and (B) occurs, then (i) Agent and Lenders shall not make any additional Loans on or after the date identified as the date on which
      the Liabilities are to be repaid; and (ii) this Agreement shall terminate on the date thereafter that the Liabilities are paid in full.  At such time as Borrowers have repaid all of the Liabilities and this Agreement has terminated, each Borrower
      shall deliver to Agent and Lenders a release, in form and substance satisfactory to Agent, of all obligations and liabilities of Agent and its Lenders and their officers, directors, employees, agents, parents, subsidiaries and affiliates to such
      Borrower, and if such Borrower is obtaining new financing from another lender, such Borrower shall deliver such lender’s indemnification of Agent and Lenders, in form and substance satisfactory to Agent, for checks which Agent has credited to such
      Borrower’s account, but which subsequently are dishonored for any reason or for automatic clearinghouse or wire transfers not yet posted to such Borrower’s account.

     

    (h)            Section 11(e) of the Credit
        Agreement are hereby amended and restated to read as follows:

     

    (e)            Compliance
          with Laws and Maintenance of Permits.  Each Borrower has obtained all governmental consents, franchises, certificates, licenses, authorizations, approvals and permits, the lack of which would have a Material Adverse Effect on such Borrower. 
        Each Borrower is in compliance in all material respects with all applicable federal, state, local and foreign statutes, orders, regulations, rules and ordinances (including, without limitation, Environmental Laws and statutes, orders, regulations,
        rules and ordinances relating to taxes, employer and employee contributions and similar items, securities, ERISA or employee health and safety) the failure to comply with which would have a Material Adverse Effect.  Notwithstanding the foregoing,
        the materiality qualifiers set forth in this section shall not apply to or otherwise override the provisions of Section 13(w) and (x)  with respect to laws and regulations governing CBD and Vaping Inventory.

     

    
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    (i)            Section 12(c) of the Credit
        Agreement are hereby amended and restated to read as follows:

     

    (c)            Compliance
          with Laws and Maintenance of Permits.  Each Borrower shall maintain all governmental consents, franchises, certificates, licenses, authorizations, approvals and permits, the lack of which would have a Material Adverse Effect on such Borrower
        and each Borrower shall remain in compliance with all applicable federal, state, local and foreign statutes, orders, regulations, rules and ordinances (including, without limitation, Environmental Laws and statutes, orders, regulations, rules and
        ordinances relating to taxes, employer and employee contributions and similar items, securities, ERISA or employee health and safety) the failure with which to comply would have a Material Adverse Effect on such Borrower.  Following any
        determination by Agent that there is non-compliance, or any condition which requires any action by or on behalf of a Borrower in order to avoid non-compliance, with any Environmental Law, in each case where such non-compliance would have a Material
        Adverse Effect on such Borrower, at such Borrower’s expense cause an independent environmental engineer acceptable to Agent to conduct such tests of the relevant site(s) as are appropriate and prepare and deliver a report setting forth the results
        of such tests, a proposed plan for remediation and an estimate of the costs thereof.  Notwithstanding the foregoing, the materiality qualifiers set forth in this section shall not apply to or otherwise override the provisions of Section 13(w)
        and (x)  with respect to laws and regulations governing CBD and Vaping Inventory.

     

    (j)            The last sentence of Section 12(d)
        of the Agreement is hereby amended and restated to read as follows:

     

    Further, provided no Event of Default has occurred, the inspection fees of the Agent conducted in the ordinary course of business shall not exceed $30,000 in the
      aggregate per calendar year.

     

    (k)            Section 13(b) of the Credit
        Agreement are hereby amended and restated to read as follows:

     

    (b)            Indebtedness. 

        No Borrower shall create, incur, assume or become obligated (directly or indirectly), for any loans or other indebtedness for borrowed money other than the Loans, except that a Borrower may (i) borrow money from a Person other than Agent and
        Lenders on an unsecured and subordinated basis if a subordination agreement in favor of Agent for its benefit and the benefit of the other Lenders and in form and substance satisfactory to the Agent is executed and delivered to Agent relative
        thereto; (ii) maintain its present indebtedness listed on Schedule 11(n) hereto; (iii) incur unsecured indebtedness to trade creditors in the ordinary course of business; (iv) incur purchase money indebtedness or capitalized lease
        obligations in connection with Capital Expenditures; (v) together with each other Borrower, incur operating lease obligations requiring payments not to exceed Six Million and No/100 Dollars ($6,000,000.00) in the aggregate for all Borrowers during
        any Fiscal Year of Borrowers; (vi) incur Rate Hedging Obligations; and (vii) incur other indebtedness not to exceed $2,500,000 in the aggregate at any time.

     

    

    
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    (l)            Subsection (iv) set forth in
        the last paragraph of Section 13(d) of the Credit Agreement is hereby amended and restated to read as follows:

     

    (iv)            (x) the
        Borrowers have Excess Availability greater than or equal to seventeen and one-half percent (17.50%) of the Maximum Loan Limit on a pro-forma basis for the thirty day period immediately prior to the closing of such Acquisition (as if such
        Acquisition had already occurred) and immediately after giving effect to such Acquisition or (y) the Borrowers have (a) Excess Availability greater than or equal to twelve and one-half percent (12.5%) of the Maximum Loan Limit on a pro-forma basis
        for the thirty day period immediately prior to the closing of such Acquisition and (b) a proforma Fixed Charge Coverage Ratio of 1.00:1.0 (in each case, as if such Acquisition had already occurred);

     

    (m)            Section 13(e) of the Credit
        Agreement is hereby amended and restated to read as follows:

     

    (e)            Dividends
          and Distributions.  No Borrower shall declare or pay any dividend or other distribution (whether in cash or in kind) on any class of its stock (if such Borrower is a corporation) or on account of any equity interest in such Borrower (if such
        Borrower is a partnership, limited liability company or other type of entity).  Notwithstanding the foregoing, provided that (i) each such dividend payment is permitted under all applicable laws, and (ii) no Event of Default shall have occurred
        prior to, or would occur as a result of, any such dividend payment, AMCON may pay the regularly scheduled dividends on its (w) Common Stock, (x) Series A Preferred Stock in accordance with the terms of such stock, (y) Series B Preferred Stock in
        accordance with the terms of such stock, and (z) Series C Convertible Preferred Stock in accordance with the terms of the Series C Certificate of Designations (as defined below) in an aggregate amount not to exceed $3,500,000  for all such
        dividends and distributions in any Fiscal Year less the amount of any additional Investments permitted under Section 13(f) herein made during such Fiscal Year (the “Dividend Limit”).  Further, provided that (i) each such dividend
        payment is permitted under all applicable laws; (ii) no Event of Default shall have occurred prior to, or would occur as a result of, any such dividend payment; (iii) (x) Borrowers have Excess Availability greater than or equal to seventeen and
        one-half percent (17.5%) of the Maximum Loan Limit on a pro forma basis for the thirty day period immediately prior to the payment of any dividend or distribution and immediately after giving effect to the payment of such dividend or distribution
        or (y) Borrowers have Excess Availability greater than or equal to twelve and one-half percent (12.5%) of the Maximum Loan Limit on a pro forma basis for the thirty day period immediately prior to the payment of any dividend or distribution and a
        pro-forma Fixed Charge Coverage Ratio of 1.00:1.0, in each case and immediately after giving effect to the payment of such dividend or distribution, AMCON may pay additional dividends in excess of the Dividend Limit on its (w) Common Stock,
        (x) Series A Preferred Stock in accordance with the terms of such stock, (y) Series B Preferred Stock in accordance with the terms of such stock, and (z) Series C Convertible Preferred Stock in accordance with the terms of the Series C Certificate
        of Designations (as defined below).

     

    
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    (n)            Section 13(f) of the Credit
        Agreement is hereby amended and restated to read as follows:

     

    (f)  Investments; Loans; Transfers.  No Borrower shall purchase or otherwise acquire, or contract to purchase or otherwise acquire, the obligations or
      stock of any Person, other than direct obligations of the United States; nor shall a Borrower lend or otherwise advance funds or transfer any assets to any Person (including, but not limited to, any Subsidiary which is not a Subsidiary Borrower
      hereunder) (collectively, “Investments”) except for advances made to employees, officers and directors for travel and other expenses arising in the ordinary course of business; provided however, (i) so long as no Event of Default exists or would be
      caused thereby and (ii) (x) Borrowers have Excess Availability greater than or equal to seventeen and one-half percent (17.5%) of the Maximum Loan Limit on a pro forma basis for the thirty day period immediately prior to and after making any such
      Investment, or (y) Borrowers have Excess Availability greater than or equal to twelve and one-half percent (12.5%) of the Maximum Loan Limit on a pro forma basis for the thirty day period immediately prior to and after making such Investment and a
      pro-forma Fixed Charge Coverage Ratio of 1.00:1.0 prior to and immediately after giving effect to making such Investment, Borrowers may make additional Investments in an amount not to exceed the Dividend Limit less the amount of all regularly
      scheduled dividends paid during such Fiscal Year, it being understood and agreed that the $3,500,000 loan made by AMCON in Team Sledd, LLC, a Delaware limited liability company, pursuant to its January 3, 2020 Contribution Agreement, shall be
      excluded for purposes of additional Investments.

     

    (o)            New Sections 13(w), (x)
        and (y) are hereby added to the Credit Agreement to read as follows:

     

    
      13

      
        

    

     

    

    (w)  The Borrowers and their Subsidiaries are and will at all times be in compliance with and properly licensed and operating lawfully under all Applicable Law
      relating to CBD Inventory and Vaping Inventory, including but not limited to all Applicable Hemp Laws.

     

    (x)  The Borrowers and their Subsidiaries have established and will maintain policies, procedures and controls designed to ensure compliance by each of them with
      Applicable Law relating to CBD Inventory and Vaping Inventory, including but not limited to all Applicable Hemp Laws.

     

    (y)  The Borrower shall furnish to the Agent prompt written notice of:

     

    (i) The receipt by the Borrower or any of its Subsidiaries of any notice of any investigation by a Governmental Authority or any litigation or
      proceeding commenced or threatened against the Borrower or any of its Subsidiaries that (i) seeks damages, (ii) seeks injunctive relief, (iii) alleges any violation of any Applicable Law, including Applicable Hemp Laws or any criminal misconduct,
      (iv) asserts liability in respect of any tax, fee, assessment, fine, penalty or other governmental charge under any Applicable Law, including Applicable Hemp Laws, or (v) involves ay product recall in respect of any Cannabis, CBD, Controlled
      Substances or Hemp; and

     

    (ii) Any determination by the Borrower that the conduct of any part of its business (without regard to materiality) is reasonably likely to
      cause the Borrower or any of its Subsidiaries or any of their respective officers, directors, employees or related individuals to become the subject of criminal charges, including, without limitation, violations of any Applicable Hemp Laws, the Money
      Laundering Control Act or any similar or successor laws, rules or regulations of the United States, any state thereof, the District of Columbia or any other jurisdiction.

     

    (p)            A new Section 36 is hereby
        added to the Credit Agreement to read as follows:

     

    
      14

      
        

    

     

    

    36.  Acknowledgement Regarding Any Supported QFCs.

     

    To the extent that this Agreement and any document executed in connection with this Agreement (collectively, “Other Agreements”) provide support, through a
      guarantee or otherwise, for any Swap Contract or any other agreement or instrument that is a QFC (such support, “QFC Credit Support”, and each such QFC, a “Supported QFC”), the parties acknowledge and agree as follows with respect to
      the resolution power of the Federal Deposit Insurance Corporation under the Federal Deposit Insurance Act and Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act (together with the regulations promulgated thereunder, the “U.S.

        Special Resolution Regimes”) in respect of such Supported QFC and QFC Credit Support (with the provisions below applicable notwithstanding that the Other Agreements and any Supported QFC may in fact be stated to be governed by the laws of the
      Governing Law State and/or of the United States or any other state of the United States):

     

    (a)            In the event a Covered Entity that is party to a Supported QFC (each, a “Covered Party”) becomes subject to a proceeding under a U.S. Special Resolution Regime, the transfer of such Supported QFC and the benefit of such QFC Credit
        Support (and any interest and obligation in or under such Supported QFC and such QFC Credit Support, and any rights in property securing such Supported QFC or such QFC Credit Support) from such Covered Party will be effective to the same extent as
        the transfer would be effective under the U.S. Special Resolution Regime if the Supported QFC and such QFC Credit Support (and any such interest, obligation and rights in property) were governed by the laws of the United States or a state of the
        United States.  In the event a Covered Party or a BHC Act Affiliate of a Covered Party becomes subject to a proceeding under a U.S. Special Resolution Regime, Default Rights under the Other Agreements that might otherwise apply to such Supported
        QFC or any QFC Credit Support that may be exercised against such Covered Party are permitted to be exercised to no greater extent than such Default Rights could be exercised under the U.S. Special Resolution Regime if the Supported QFC and the
        Other Agreements were governed by the laws of the United States or a state of the United States.  Without limitation of the foregoing, it is understood and agreed that rights and remedies of the parties with respect to a Defaulting Lender shall in
        no event affect the rights of any Covered Party with respect to a Supported QFC or any QFC Credit Support.

     

    

    
      15

      
        

    

     

    3.            Representations, Covenants and
          Warranties; No Default.  Except for the representations and warranties of the Borrowers made as of a particular date, the representations, covenants and warranties set forth in Sections 11, 12 and 13 of the Credit
        Agreement shall be deemed remade as of the date hereof by the Borrowers; provided, however, that any and all references to the Credit Agreement in such representations and warranties shall be deemed to include this Amendment.  The Borrowers hereby
        represent, warrant and covenant that after giving effect to the amendments contained in this Amendment, no Default or Event of Default has occurred and is continuing.  The Borrowers represent and warrant to Agent and the Lenders that the execution
        and delivery by each Borrower of this Amendment and the performance by it of the transactions herein contemplated (i) are and will be within its organizational powers, (ii) have been authorized by all necessary organizational action, and (iii) are
        not and will not be in contravention of any order of any court or other agency of government, of law or any other indenture, agreement or undertaking to which such Borrower is a party or by which the property of such Borrower is bound, or be in
        conflict with, result in a breach of, or constitute (with due notice and/or lapse of time) a default under any such indenture, agreement or undertaking, which conflict could reasonably be expected to have a Material Adverse Effect or result in the
        imposition of any lien, charge or encumbrance of any nature on any of the properties of such Borrower.

     

    4.            Affirmation.  Except as
        specifically amended pursuant to the terms hereof, the Credit Agreement and the Other Agreements (and all covenants, terms, conditions and agreements therein), shall remain in full force and effect, and are hereby ratified and confirmed in all
        respects by the Borrowers.  The Borrowers covenant and agree to comply with all of the terms, covenants and conditions of the Credit Agreement, as amended hereby, notwithstanding any prior course of conduct, waivers, releases or other actions or
        inactions on Agent’s or any Lender’s part which might otherwise constitute or be construed as a waiver of or amendment to such terms, covenants and conditions.  The Borrowers hereby represent and warrant to Agent and Lenders that as of the date
        hereof, there are no claims, counterclaims, offsets or defenses arising out of or with respect to the Liabilities.  Each Borrower hereby confirms its existing grant to Agent of a Lien on and security interest in the Collateral.  Each Borrower
        hereby confirms that all Liens and security interests at any time granted by it to Agent continue in full force and effect and secure and shall continue to secure the Liabilities.  Nothing herein contained is intended to in any manner impair or
        limit the validity, priority and extent of Agent’s existing security interest in and Liens upon the Collateral.

     

    5.            Fees and Expenses.  The
        Borrowers agree to pay on demand all costs and expenses incurred by Agent and the Lenders in connection with the drafting, negotiation, execution and implementation of this Amendment including, but not
        limited to, the expenses and reasonable fees of counsel for Agent and the Lenders.  In addition, the Borrowers shall pay on the date of this Amendment to Agent, for the account of each Lender on a pro-rata basis, an amendment fee which shall be
        deemed fully earned as of the date of this Amendment and shall be non-refundable, in the amount set forth in the Fee Letter of even date herewith.

     

    6.            Closing Documents.  This
        Amendment shall be deemed effective as of the date hereof provided that Borrowers shall deliver to Agent the following documents and/or complete the following requirements (collectively, the “Closing Requirements”) upon execution hereof (in
        each case in form and substance satisfactory to Agent and the Lenders):

     

    (a)            this Amendment executed by the
        Borrowers and the Agent;

     

    (b)            the documents, instruments and
        agreements set forth on the Closing Checklist attached hereto as Annex 1;

     

    (c)            receipt by Agent of the amendment
        fee described in Section 5 above; and

     

    (d)            such other documents, instruments,
        agreements, opinions or certificates as required by Agent.

     

    
      16

      
        

    

     

    

    7.            Continuing Effect.  Except as
        otherwise specifically set forth herein, the provisions of the Credit Agreement shall remain in full force and effect.

     

    8.            Counterparts.  This Amendment
        may be executed in two or more counterparts, each of which shall be deemed an original, and all of which together shall constitute one and the same instrument.  Receipt of an executed signature page to this Agreement by facsimile or other
        electronic transmission shall constitute effective delivery thereof and shall be deemed an original signature hereunder.

     

    [SIGNATURE PAGE FOLLOWS]

     

    

    

    

    

    
      17

      
        

    

    

    

    
      Signature Page to Fourth Amendment to

        Second Amended and Restated Loan and Security Agreement

       

       

      

    

    IN WITNESS WHEREOF, the parties hereto have duly executed this Fourth Amendment to Second Amended and Restated Loan and Security Agreement as of the date first above written.

     

     

    

    
      	BORROWERS:	
              AMCON DISTRIBUTING COMPANY 

              

            
	
               

            	
               

            	
               

            
	
               

            	By:

            	/s/ Andrew C. Plummer

            
	
               

            	Title:

            	President

            
	
               

            	
               

            	
               

            
	
               

            	
               

            	
               

            
	
               

            	CHAMBERLIN NATURAL FOODS, INC.
	
               

            	
               

            	
               

            
	
               

            	By:

            	/s/ Andrew C. Plummer
	
               

            	Title:

            	Secretary
	
               

            	
               

            	
               

            
	
               

            	
               

            	
               

            
	
               

            	HEALTH FOOD ASSOCIATES, INC.
	
               

            	
               

            	
               

            
	
               

            	By:

            	/s/ Andrew C. Plummer
	
               

            	Title:

            	Secretary

            
	
               

            	
               

            	
               

            
	 	 	 
	 	AMCON ACQUISITION CORP. 
	 	 	 
	 	By:

            	/s/ Andrew C. Plummer
	
               

            	Title:

            	President

            
	 	 	 
	 	 	 
	 	EOM ACQUISITION CORP.  

            
	 	 	 
	 	By:

            	/s/ Andrew C. Plummer
	 	Title:

            	Secretary

    

     

    

    

  

  
    
      

  

  

    

    

    
      Signature Page to Fourth Amendment to

        Second Amended and Restated Loan and Security Agreement

       

       

      

    

    
      	LENDERS:	BANK OF AMERICA, N.A., as Agent and a Lender
	
               

            	
               

            	
               

            
	
               

            	By:

            	/s/ Charles Fairchild

            
	
               

            	Title:

            	Senior Vice President

            
	
               

            	
               

            	
               

            
	
               

            	Revolving Loan Commitment:  $73,333,333.33
	
               

            	
               

            	
               

            
	
               

            	
               

            	
               

            
	 	BMO HARRIS BANK N.A., as a Lender 

            
	 	 	 
	 	By:

            	/s/ Jason Hoefler

            
	 	Title:

            	Managing Director

            
	 	 	 
	 	Revolving Loan Commitment:  $36,666,666.67krtx-ex43_784.htm

Exhibit 4.3

 

DESCRIPTION OF CAPITAL STOCK

General

Our authorized capital stock consists of 150,000,000 shares of common stock, par value $0.0001 per share, and 10,000,000 shares of preferred stock, par value $0.0001 per share, all of which shares of preferred stock are undesignated.

As of December 31, 2019, 26,012,754 shares of our common stock were outstanding and held by 12 common shareholders of record.

Common Stock

The holders of our common stock are entitled to one vote for each share held on all matters submitted to a vote of the stockholders. The holders of our common stock do not have any cumulative voting rights. Holders of our common stock are entitled to receive ratably any dividends declared by our board of directors out of funds legally available for that purpose, subject to any preferential dividend rights of any outstanding preferred stock. Our common stock has no preemptive rights, conversion rights or other subscription rights or redemption or sinking fund provisions.

In the event of our liquidation, dissolution or winding up, holders of our common stock will be entitled to share ratably in all assets remaining after payment of all debts and other liabilities and any liquidation preference of any outstanding preferred stock. The shares to be issued by us in this offering will be, when issued and paid for, validly issued, fully paid and non-assessable.

Preferred Stock

Our board of directors has the authority, without further action by our stockholders, to issue up to 10,000,000 shares of preferred stock in one or more series and to fix the rights, preferences, privileges and restrictions thereof. These rights, preferences and privileges could include dividend rights, conversion rights, voting rights, terms of redemption, liquidation preferences, sinking fund terms and the number of shares constituting, or the designation of, such series, any or all of which may be greater than the rights of common stock. The issuance of our preferred stock could adversely affect the voting power of holders of common stock and the likelihood that such holders will receive dividend payments and payments upon our liquidation. In addition, the issuance of preferred stock could have the effect of delaying, deferring or preventing a change in control of our company or other corporate action.

Registration Rights

The holders of 15,879,157 shares of our common stock are entitled to rights with respect to the registration of these securities under the Securities Act. These rights are provided under the terms of an amended and restated investors’ rights agreement, or the investors’ rights agreement, between us and holders of our preferred stock. The investors’ rights agreement includes demand registration rights, short-form registration rights and piggyback registration rights. All fees, costs and expenses of underwritten registrations under this agreement will be borne by us and all selling expenses, including underwriting discounts and selling commissions, will be borne by the holders of the shares being registered.

Demand Registration Rights

The holders of 15,879,157 shares of our common stock are entitled to demand registration rights. Under the terms of the investors’ rights agreement, we will be required, upon the written request of the holders of at least 40% of our outstanding registrable securities, as defined in the investors’ rights agreement, or a lesser percent if the total amount of registrable shares requested to be registered has an anticipated aggregate offering price to the public, net of selling expenses, of least $10.0 million, to file a registration statement and use commercially reasonable efforts to effect the registration of all or a portion of their registrable securities for public resale. We are required to effect only two registrations pursuant to this provision of the investors’ rights agreement.

Short-Form Registration Rights

Pursuant to the investor rights agreement, if we are eligible to file a registration statement on Form S-3, upon the written request of the holders of our outstanding registrable securities, as defined in the investors’ rights agreement, may demand in writing that we register their registrable securities under the Securities Act so long as the total amount of registrable shares requested to be registered has an anticipated aggregate offering price to the public, net of selling expenses, of least $5.0 million. We are required to effect only two registrations in any twelve-month period pursuant to this provision of the investors’ rights agreement. The right to have such shares registered on Form S-3 is further subject to other specified conditions and limitations.

Piggyback Registration Rights

Pursuant to the investors’ rights agreement, if we register any of our securities either for our own account or for the account of other security holders, the holders of these shares are entitled to include their shares in the registration. Subject to certain exceptions contained in the investors’ rights agreement, we and the underwriters may limit the number of shares included in the underwritten offering to the number of shares which we and the underwriters determine in our sole discretion will not jeopardize the success of the offering. In connection with this offering, the holders of registrable securities were entitled to, and the necessary percentage of holders waived, their rights to notice of this offering and to include their shares of registrable securities in this offering.

Indemnification

Our investor rights agreement contains customary cross-indemnification provisions, under which we are obligated to indemnify holders of registrable securities in the event of material misstatements or omissions in the registration statement attributable to us, and they are obligated to indemnify us for material misstatements or omissions attributable to them.

Expiration of Registration Rights

The demand registration rights and short form registration rights granted under the investor rights agreement will terminate on June 27, 2024.

Anti-Takeover Effects of our Certificate of Incorporation and Bylaws and Delaware Law

Our certificate of incorporation and bylaws include a number of provisions that may have the effect of delaying, deferring or preventing another party from acquiring control of us and encouraging persons considering unsolicited tender offers or other unilateral takeover proposals to negotiate with our board of directors rather than pursue non-negotiated takeover attempts. These provisions include the items described below.

Board Composition and Filling Vacancies

Our certificate of incorporation provides for the division of our board of directors into three classes serving staggered three-year terms, with one class being elected each year. Our certificate of incorporation also provides that directors may be removed only for cause and then only by the affirmative vote of the holders of 75% or more of the shares then entitled to vote at an election of directors. Further, any vacancy on our board of directors, however occurring, including a vacancy resulting from an increase in the size of our board, may only be filled by the affirmative vote of a majority of our directors then in office even if less than a quorum. The classification of directors, together with the limitations on removal of directors and treatment of vacancies, has the effect of making it more difficult for stockholders to change the composition of our board of directors.

No Written Consent of Stockholders

Our certificate of incorporation provides that all stockholder actions are required to be taken by a vote of the stockholders at an annual or special meeting, and that stockholders may not take any action by written consent in lieu of a meeting. This limit may lengthen the amount of time required to take stockholder actions and would prevent the amendment of our bylaws or removal of directors by our stockholders without holding a meeting of stockholders.

Meetings of Stockholders

Our certificate of incorporation and bylaws provide that only a majority of the members of our board of directors then in office may call special meetings of stockholders and only those matters set forth in the notice of the special meeting may be considered or acted upon at a special meeting of stockholders. Our bylaws limit the business that may be conducted at an annual meeting of stockholders to those matters properly brought before the meeting.

Advance Notice Requirements

Our bylaws establish advance notice procedures with regard to stockholder proposals relating to the nomination of candidates for election as directors or new business to be brought before meetings of our stockholders. These procedures provide that notice of stockholder proposals must be timely given in writing to our corporate secretary prior to the meeting at which the action is to be taken. Generally, to be timely, notice must be received at our principal executive offices not less than 90 days nor more than 120 days prior to the first anniversary date of the annual meeting for the preceding year. Our bylaws specify the requirements as to form and content of all stockholders’ notices. These requirements may preclude stockholders from bringing matters before the stockholders at an annual or special meeting.

Amendment to Certificate of Incorporation and Bylaws

Any amendment of our certificate of incorporation must first be approved by a majority of our board of directors, and if required by law or our certificate of incorporation, must thereafter be approved by a majority of the outstanding shares entitled to vote on the amendment and a majority of the outstanding shares of each class entitled to vote thereon as a class, except that the amendment of the provisions relating to stockholder action, board composition, limitation of liability and the amendment of our bylaws and certificate of incorporation must be approved by not less than 75% of the outstanding shares entitled to vote on the amendment, and not less than 75% of the outstanding shares of each class entitled to vote thereon as a class. Our bylaws may be amended by the affirmative vote of a majority of the directors then in office, subject to any limitations set forth in the bylaws; and may also be amended by the affirmative vote of at least 75% of the outstanding shares entitled to vote on the amendment, or, if our board of directors recommends that the stockholders approve the amendment, by the affirmative vote of the majority of the outstanding shares entitled to vote on the amendment, in each case voting together as a single class.

Undesignated Preferred Stock

Our certificate of incorporation provides for 10,000,000 authorized shares of preferred stock. The existence of authorized but unissued shares of preferred stock may enable our board of directors to discourage an attempt to obtain control of us by means of a merger, tender offer, proxy contest or otherwise. For example, if in the due exercise of its fiduciary obligations, our board of directors were to determine that a takeover proposal is not in the best interests of our stockholders, our board of directors could cause shares of preferred stock to be issued without stockholder approval in one or more private offerings or other transactions that might dilute the voting or other rights of the proposed acquirer or insurgent stockholder or stockholder group. In this regard, our certificate of incorporation grants our board of directors broad power to establish the rights and preferences of authorized and unissued shares of preferred stock. The issuance of shares of preferred stock could decrease the amount of earnings and assets available for distribution to holders of shares of common stock. The issuance may also adversely affect the rights and powers, including voting rights, of these holders and may have the effect of delaying, deterring or preventing a change in control of us.

Exclusive Jurisdiction for Certain Actions

Our bylaws provide that, unless we consent in writing to an alternative forum, the Court of Chancery of the State of Delaware will be the sole and exclusive forum for state law claims for (i) any derivative action or proceeding brought on our behalf, (ii) any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers and employees to us or our stockholders, (iii) any action asserting a claim arising pursuant to any provision of the Delaware General Corporation Law, our certificate of incorporation or our bylaws, or (iv) any action asserting a claim that is governed by the internal affairs doctrine, in each case subject to the Court of Chancery having personal jurisdiction over the indispensable parties named as defendants therein. This provision will not apply to actions arising under the Securities Act or the Exchange Act. Although we believe this provision benefits us by providing increased consistency in the application of Delaware law in the types of lawsuits to which it applies, the provision may have the effect of discouraging lawsuits against our directors and officers. The enforceability of similar exclusive forum provisions in other companies’ bylaws has been challenged in legal proceedings, and it is possible that a court could rule that this provision in our bylaws is inapplicable or unenforceable.

Section 203 of the Delaware General Corporation Law

We are subject to the provisions of Section 203 of the Delaware General Corporation Law. In general, Section 203 prohibits a publicly held Delaware corporation from engaging in a “business combination” with an “interested stockholder” for a three-year period following the time that this stockholder becomes an interested stockholder, unless the business combination is approved in a prescribed manner. Under Section 203, a business combination between a corporation and an interested stockholder is prohibited unless it satisfies one of the following conditions:

 

	
 
	
•
	
 
	
before the stockholder became interested, our board of directors approved either the business combination or the transaction which resulted in the stockholder becoming an interested stockholder;

 

	
 
	
•
	
 
	
upon consummation of the transaction which resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, excluding for purposes of determining the voting stock outstanding, shares owned by persons who are directors and also officers, and employee stock plans, in some instances, but not the outstanding voting stock owned by the interested stockholder; or

 

	
 
	
•
	
 
	
at or after the time the stockholder became interested, the business combination was approved by our board of directors and authorized at an annual or special meeting of the stockholders by

	
  
	
the affirmative vote of at least two-thirds of the outstanding voting stock which is not owned by the interested stockholder.

 

	
 
	
•
	
 
	
Section 203 defines a business combination to include:

 

	
 
	
•
	
 
	
any merger or consolidation involving the corporation and the interested stockholder; any sale, transfer, lease, pledge or other disposition involving the interested stockholder of 10% or more of the assets of the corporation; subject to exceptions, any transaction that results in the issuance or transfer by the corporation of any stock of the corporation to the interested stockholder;

 

	
 
	
•
	
 
	
subject to exceptions, any transaction involving the corporation that has the effect of increasing the proportionate share of the stock of any class or series of the corporation beneficially owned by the interested stockholder; and

 

	
 
	
•
	
 
	
the receipt by the interested stockholder of the benefit of any loans, advances, guarantees, pledges or other financial benefits provided by or through the corporation.

In general, Section 203 defines an interested stockholder as any entity or person beneficially owning 15% or more of the outstanding voting stock of the corporation and any entity or person affiliated with or controlling or controlled by the entity or person.

Nasdaq Global Market Listing

Our common stock is listed on The Nasdaq Global Market under the trading symbol “KRTX.”

Transfer Agent and Registrar

The transfer agent and registrar for our common stock is American Stock Transfer & Trust Company, LLC.

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