WAIVER AGREEMENT
THIS AGREEMENT made this 29th day of April, 1995, by and
among EMPIRE GAS CORPORATION, a Missouri corporation ("Empire"), SYN, INC.,
a corporation to be formed under the laws of Delaware (such corporation and
its subsidiaries are referred to collectively as "SYN") and PAUL S. LINDSEY,
JR. ("Lindsey") (Empire, Lindsey, the affiliates of either of them, and SYN
are collectively referred to herein as the "Empire Group"); NORTHWESTERN
GROWTH CORPORATION, a South Dakota corporation ("NGC"); and EMPIRE ENERGY
CORPORATION, a Tennessee corporation ("Energy"), ROBERT W. PLASTER
("Plaster") and STEPHEN R. PLASTER ("S. Plaster") (Energy, Plaster and S.
Plaster are collectively referred to herein as the "Plaster Group").
WHEREAS, the Plaster Group and certain members of the Empire
Group are parties to a Non-Competition Agreement dated May 7, 1994 and
effective as of June 30, 1994 ("NCA") wherein the parties agreed, inter
alia, that for the period of three years from the effective date of the NCA,
such members of the Empire Group would not compete with the business of
Energy in the marketing territory of Energy as set forth in the NCA.
WHEREAS, Empire and NGC are contemplating entering into a
transaction whereby, through SYN, (i) they will acquire an interest in the
stock and/or assets of Synergy Group, Incorporated, a Delaware corporation,
and certain of its affiliates and subsidiaries (collectively, "Synergy"),
which is in the same business as Energy and which has certain of its
operations located in the marketing territory of Energy as set forth in the
NCA; and (ii) after such acquisition Empire will manage the business and
assets so acquired by SYN for the benefit of SYN and its investors, of which
NGC will be the major investor. Such transaction is hereafter referred to
as the "Synergy Transaction."
WHEREAS, the Empire Group and NGC desire to obtain a waiver
of certain provisions of the NCA in order to consummate the proposed Synergy
Transaction, and in consideration of such waiver are willing to cause SYN to
grant Energy an option to purchase certain of the retail propane locations
to be acquired as part of the Synergy Transaction.
NOW THEREFORE, in consideration of the premises and of the
mutual covenants and undertakings contained herein, the parties agree as
follows:
1. In connection with and conditioned upon the closing
of the Synergy Transaction, the Plaster Group hereby waives Sections 2(b)(2)
and 2(b)(3) of the NCA (as amended pursuant to paragraph 9 of this
Agreement) as they might apply to the Empire Group's acquisition and
subsequent operation of the retail propane outlets located in Energy's
marketing territory that are listed on Schedules A and B hereto (the retail
propane outlets listed on Schedule A are referred to as the "Optioned
Outlets," those listed on Schedule B are referred to as the "Retained
Outlets," and the Optioned Outlets and the Retained Outlets are referred to
jointly as the "Outlets"); and the Exchanged Outlets, as defined in Schedule
C hereto.
2. In connection with and conditioned upon the closing
of the Synergy Transaction, the Plaster Group agrees and covenants that no
member of the Plaster Group shall file any action or lawsuit seeking to
enforce or to obtain damages with respect to (i) Sections 2(b)(2) and
2(b)(3) of the NCA (as amended pursuant to Paragraph 9 of this Agreement)
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against the Empire Group or any member thereof based upon the Empire Group's
acquisition or subsequent operation of any of the Outlets or the Exchanged
Outlets; (ii) Section 2(a) of the NCA (as amended pursuant to Paragraph 9
of this Agreement) against SYN for any alleged breach thereof by any member
of the Empire Group; or (iii) Section 2(d) of the NCA (as amended pursuant
to Paragraph 9 of this Agreement) against SYN for any alleged breach thereof
by any member of the Empire Group that does not arise from the solicitation
or other inducement of Employees (as defined in the NCA) of the Plaster
Group to become Employees of SYN or any of its affiliates; provided, however
that, if SYN becomes the successor in interest to Empire, the agreements and
covenants set forth in subsections (ii) and (iii) of this paragraph 2 shall
become null and void.
3. Except as provided in paragraphs 1 and 2 above and
as amended pursuant to Paragraph 9 below, the terms of the NCA shall remain
in full force and effect. Specifically, nothing in this Agreement is
intended or shall be construed to waive or prevent any member of the Plaster
Group from seeking to enforce or obtain damages (i) with respect to Sections
2(b)(2) and 2(b)(3) of the NCA (as amended pursuant to Paragraph 9 of this
Agreement) other than in connection with the Empire Group's acquisition and
subsequent operation of the Outlets and the Exchanged Outlets; (ii) with
respect to Section 2(a) or 2(d) of the NCA (as amended pursuant to Paragraph
9 of this Agreement) against any member of the Empire Group other than SYN;
or (iii) with respect to any other provision of the NCA (as amended pursuant
to Paragraph 9 of this Agreement) against any member of the Empire Group;
provided, however, that no member of the Empire Group shall be deemed to be
in violation of Section 2(a) of the NCA (as amended pursuant to Paragraph 9
of this Agreement) as a result of having provided information about the
Exchanged Outlets to SYN.
4. In consideration of the Plaster Group's waiver of
the provisions of the NCA with respect to the Synergy Transaction as
specified in Paragraphs 1 and 2 of this Agreement (the "Waiver"), the Empire
Group and NGC shall cause Energy to be granted, at the time the purchase
agreement providing for the Synergy Transaction (the "Synergy Purchase
Agreement") is executed and delivered, an exclusive option (the "Option") to
purchase the assets associated with the Optioned Outlets on substantially
the terms and conditions described in the Purchase Agreement attached hereto
as Schedule D (the "Definitive Agreement"). The Option shall be assignable
by Energy to any of its affiliates. The holder of the Option is hereinafter
referred to as the "Optionee."
5. The parties acknowledge that (i) the Definitive
Agreement has been negotiated in light of the information about the Outlets
and the Synergy Transaction that has been provided to the Plaster Group as
of the date of this Agreement; (ii) neither the Plaster Group nor the Empire
Group nor NGC has had an opportunity to complete its due diligence with
respect to the Outlets as of the date of this Agreement; (iii) the form of
the Definitive Agreement is based upon the current form of the Synergy
Purchase Agreement; (iv) the Synergy Purchase Agreement will not be executed
until after the Empire Group and NGC have completed their due diligence; and
(v) the form of the Synergy Purchase Agreement and the terms of the Synergy
Transaction may change as a result of due diligence conducted by the Empire
Group and NGC and other events occurring after the date of this Agreement.
Accordingly, (x) the Empire Group and NGC agree to conduct such reasonable
due diligence with respect to the Optioned Outlets as the Plaster Group may
reasonably request and is permissible under the terms of the Synergy
Transaction, and promptly to make available to the Plaster Group all
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material information obtained as a result of such due diligence; and (y) if
the Option is exercised, the parties agree to negotiate in good faith to
make such modifications to the Definitive Agreement as may be necessary to
take account of changes in the terms of the Synergy Transaction and the
Synergy Purchase Agreement that occur after the date of this Agreement.
6. The Option may be exercised by delivering written
notice to Empire and SYN no later than 5:00 p.m. Central Time on the later
of the fifteenth day before the scheduled second closing of the Synergy
Transaction or the fifth (5th) business day after Optionee has received
written notice of the date of the scheduled second closing of the Synergy
Transaction. If the Option is exercised, the Empire Group and NGC shall
cause SYN to sell the Optioned Outlets to Optionee on the terms and
conditions set forth in the Definitive Agreement (with such modifications as
may be required pursuant to Paragraph 5 of this Agreement). Closing of the
Optionee's purchase of the Optioned Outlets shall take place in escrow,
which will be established on the same day as, and immediately following, the
first closing of the Synergy Transaction. The escrowed purchase price and
closing documents pertaining to the Optionee's purchase of the Optioned
Outlets shall be released from escrow on the same day as, and immediately
following, the second closing of the Synergy Transaction. If the second
closing of the Synergy Transaction fails to occur, the escrowed purchase
price and closing documents shall be returned to the parties that deposited
them in escrow and the Empire Group and NGC shall pay or reimburse the
Plaster Group for all fees, charges and expenses incurred by the Plaster
Group in connection with placing the above-referenced funds and closing
documents in escrow.
7. The Waiver shall remain in full effect
notwithstanding the failure or inability of the Optionee to exercise and
close on the Option; provided, however, that nothing in this paragraph is
intended or shall be construed to relieve any member of the Empire Group or
NGC of liability for breach of this Agreement, the Option, or the Definitive
Agreement.
8. The parties hereto each acknowledge and agree that,
in the event of any breach of this Agreement or the Definitive Agreement to
be entered into if the Optionee exercises the Option, the non-breaching
party would be irreparably harmed and could not be made whole by monetary
damages alone. Accordingly, the parties hereby agree that such non-
breaching party shall be entitled to compel specific performance of this
Agreement and the Definitive Agreement to be entered into if the Optionee
exercises the Option.
9. Subject to Paragraphs 4, 5 and 6 of this Agreement,
upon the second closing of the Synergy Transaction, the parties to the NCA
shall execute and deliver an amendment to the NCA to provide as follows:
(i) From and after the effective date of such
amendment, any member of the Energy Group (as defined in the
NCA) or any member of the Empire Group (as defined in the
NCA) may, directly or indirectly, own, manage, operate,
control, or participate in the ownership, management,
operation or control of, or be connected as a partner,
representative, shareholder, consultant, agent, broker,
dealer with, or have any direct or indirect financial
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interest in, or directly or indirectly finance, aid or
assist in any way in any LP gas or appliance business
located east of the Mississippi River provided that the
operating area of such business (which shall be deemed to
include all areas within a 50-mile radius of the location of
such business) does not overlap with the operating area
(which shall be deemed to include all areas within a 50-mile
radius) of any LP gas or appliance business in which any
member of the other Group then has a direct or indirect
interest.
(ii) From and after the effective date of such
amendment, the Energy Group shall have a non-exclusive
perpetual royalty-free license to use the trademarks,
service marks and logos of the Empire Group listed on
Schedule E hereto in connection with the Energy Group's
retail operations in areas east of the Mississippi River.
The remaining provisions of the NCA, including provisions relating to LP gas
or appliance businesses located west of the Mississippi River, shall not be
affected by such amendment unless the parties otherwise agree.
10. Subject to Paragraphs 4, 5 and 6 of this Agreement,
if the Optionee exercises the Option and purchases the Optioned Outlets from
SYN, and if a member of the Empire Group subsequently purchases all of the
stock and/or assets of Energy and such subsequent purchase transaction
closes within 180 days after the date of this Agreement, the portion of the
purchase price to be paid in such subsequent purchase transaction that is
attributable to the Optioned Outlets shall be equal to the sum of (a) the
total purchase price paid to SYN by the Optionee for such Optioned Outlets,
including both the Optioned Outlets Cash Price and the value of the
Exchanged Outlets (as defined in Schedule D) plus (b) the aggregate amount
of all capital expenditures made by the Optionee with respect to the
Optioned Outlets after closing of the Optionee's purchase of the Optioned
Outlets. Nothing in this Agreement shall be construed to give any member of
the Empire Group an option, right of first refusal or other right to
purchase any stock and/or assets of Energy; to require any member of the
Plaster Group to negotiate with any member of the Empire Group with respect
to the purchase and sale of any stock or assets of Energy; or to prevent any
member of the Plaster Group from negotiating with and consummating any
transaction with any third party with respect to the purchase and sale of
any stock or assets of Energy.
11. The Empire Group and NGC shall cause SYN to execute
and deliver this Agreement to all other parties promptly after SYN is
incorporated, thereby making SYN a party to this Agreement, and prior to
that happening this Agreement shall be the binding agreement of all of the
other parties hereto.
12. This Agreement shall be governed by the laws of the
State of Missouri without regard to the choice of law provisions thereof.
13. This Agreement will not become effective until it
has been executed by all parties other than SYN. This Agreement will
terminate and be null and void in the event that the second closing of the
Synergy Transaction has not occurred by September 30, 1995.
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IN WITNESS WHEREOF, the parties have entered into this
Agreement as of this ____ day of April 1995, except that SYN has entered
into this Agreement as of the date set forth opposite its name below.
WITNESS:
_____________________________ By: /s/ Robert W. Plaster
_____________________
Robert W. Plaster
WITNESS:
_____________________________ By: /s/ Stephen R. Plaster
______________________
Stephen R. Plaster
EMPIRE ENERGY CORPORATION
WITNESS:
_____________________________ By: /s/ Stephen R. Plaster
______________________
Stephen R. Plaster
President
WITNESS:
_____________________________ By: /s/ Paul S. Lindsey, Jr.
________________________
Paul S. Lindsey, Jr.
EMPIRE GAS CORPORATION
WITNESS:
_____________________________ By: /s/ Paul S. Lindsey, Jr.
________________________
Paul S. Lindsey, Jr.
President
Dated: ___________________, 1995 SYN, INC.
WITNESS:
_____________________________ By: _______________________
Name: _______________________
Title: _______________________
NORTHWESTERN GROWTH CORPORATION
WITNESS:
_____________________________ By: _______________________
Name: _______________________
Title: _______________________