AGREEMENT AMENDING AND RESTATING
AGREEMENT AMONG INITIAL STOCKHOLDERS AND SYN INC.
THIS AGREEMENT, dated July 31, 1995, is made and entered
into among Empire Gas Corporation, a Missouri corporation
("Empire"), Northwestern Growth Corporation, a South Dakota
corporation ("NGC"), and SYN Inc., a Delaware corporation
("SYN"), with respect to the following facts:
A. The parties hereto previously entered into that
certain agreement, dated May 17, 1995, titled "Agreement Among
Initial Stockholders and SYN Inc."
B. Such parties now desire to amend said Agreement
Among Initial Stockholders and SYN Inc., effective as of its
May 17, 1995 date, so as to make changes therein to
accommodate the use of certain stock of SYN as collateral to
secure financing obtained by or for SYN, and to restate in its
entirety the Agreement Among Initial Stockholders and SYN
Inc., as thus amended.
NOW THEREFORE, the parties hereto agree that said
Agreement Among Initial Stockholders and SYN Inc. is hereby
amended effective as of its original date of May 17, 1995,
and, as thus amended, is restated in its entirety to read as
attached hereto as Exhibit I and that the amended and restated
agreement in such Exhibit I may be treated as the agreement of
the parties thereto without reference to or display of this
Agreement.
IN WITNESS WHEREOF, each of the parties hereto have
caused this Agreement to be executed in its name as of the
date first above written.
EMPIRE GAS CORPORATION
By /s/ Paul S. Lindsey, Jr.
__________________________
President
NORTHWESTERN GROWTH CORPORATION
By /s/ Richard R. Hylland
___________________________
President
SYN INC.
By /s/ Paul S. Lindsey, Jr.
___________________________
Title President
EXHIBIT I
AMENDED AND RESTATED AGREEMENT AMONG
INITIAL STOCKHOLDERS AND SYN INC.
THIS AGREEMENT, dated as of May 17, 1995, is made
and entered into among Empire Gas Corporation, a Missouri
corporation ("Empire"), Northwestern Growth Corporation, a
South Dakota corporation ("NGC"), and SYN Inc., a Delaware
corporation ("SYN"), with respect to the following facts:
A. Empire currently is engaged in the business of
distributing and selling at retail liquified petroleum ("LP")
gas and appliances, and has a management experienced in the
operation of such business.
B. NGC is a wholly-owned subsidiary of
Northwestern Public Service Company ("NWPS") and has as one of
its objectives the making of investments that could benefit
NWPS and its stockholders.
C. Empire and NGC, acting together, have made a
successful bid to acquire the LP gas distribution and
appliance business of Synergy Group Incorporated ("Synergy";
such acquisition being hereinafter called the "Synergy
Acquisition"), in what is planned to be the first step in the
proposed development by Empire and NGC, on a team basis, of a
significant position in the LP gas distribution industry.
Empire and NGC have contemplated, in their bidding for the
Synergy Acquisition, that they will rely principally on Empire
for management expertise and on NGC to provide or arrange the
financing for the Synergy Acquisition, and that the success of
the Synergy Acquisition will depend in large measure upon the
cost savings and operating improvements expected to be
achieved by having Empire do the planning and management of
the business of Synergy and its subsidiaries, under the
direction of the Board of Directors of SYN.
D. Empire and NGC have caused SYN to be
incorporated to serve as the vehicle (directly or through
subsidiaries to be created) for making the Synergy
Acquisition.
E. Empire and NGC, on behalf of SYN, are
concluding the negotiation of the definitive agreement (the
"Synergy Acquisition Agreement") for the Synergy Acquisition,
and need to provide for (i) the initial capitalization of SYN,
(ii) certain loan financing for SYN, (iii) the management of
SYN and (iv) for certain matters pertaining to the ownership
of shares of stock of SYN.
NOW THEREFORE, in consideration of the premises and
the agreements exchanged herein, the parties hereto agree as
follows:
ARTICLE 1: INITIAL CAPITALIZATION OF SYN;
STOCK SUBSCRIPTIONS AND RESERVATIONS OF STOCK
SECTION 1.01 INITIAL AUTHORIZED STOCK OF SYN. SYN has
been incorporated by Empire and NGC with an initial authorized
capitalization (as set forth in Article FOURTH of SYN's
Certificate of Incorporation, a true and complete copy of
which is attached hereto as Exhibit A), consisting of 100,000
shares of common stock, par value 1CENT per share (the "Common
Stock"; and the 100,000 shares of Common Stock referred to
herein shall only be increased with the prior written
agreement of Empire and NGC unless such increased number of
shares is to be issued in an arm's length transaction to a
party who is not affiliated with any of the parties to this
Agreement), and 100,000 shares of preferred stock, par value
1CENT per share, issuable in one or more series (the "Preferred
Stock"). Prior to the consummation of the Synergy
Acquisition, SYN shall, and Empire and NGC shall cause SYN to,
take all action necessary to create and authorize the issuance
of a series of the Preferred Stock, namely, the Series A
Cumulative Preferred Stock, consisting of 70,500 shares, the
terms of which shall be as set forth in Exhibit B attached
hereto, with such changes therein as the parties hereto may
approve before such series is created (the "Series A Preferred
Stock").
SECTION 1.02 SUBSCRIPTIONS AND OPTION FOR STOCK. NGC
has previously purchased, and hereby subscribes for, stock of
SYN, and NGC has granted Empire an option to purchase certain
shares of stock from NGC, as follows:
(a) SYN and NGC acknowledge that NGC has purchased
from SYN, and SYN has sold and issued to NGC, 1,000
shares of Common Stock for a cash purchase price of
$1,000.00 which has been paid by NGC to SYN, and that
these shares are the only shares of stock of SYN that are
currently outstanding.
(b) NGC hereby subscribes for, and agrees to
purchase from SYN, and SYN hereby agrees to sell and
issue to NGC, an additional 71,500 shares of Common Stock
for a cash purchase price of $71,500.00 to be paid at the
time of such issuance, with this transaction to be
consummated (the "Subscription Closing") at the First
Closing, as defined in the Synergy Acquisition Agreement,
unless an earlier time for the Subscription Closing is
agreed to by the parties hereto. The obligation of NGC
under its subscription in this paragraph (b) is subject
to the condition (unless waived by NGC) that NGC shall
have been able to obtain the funds from the Permanent
Financing or the Temporary Financing, as those terms are
defined in the Synergy Acquisition Agreement, at or prior
to the time of the Subscription Closing.
(c) NGC hereby subscribes for, and agrees to
purchase, or to cause its parent corporation, NWPS, to
purchase from SYN, and SYN hereby agrees to sell and
issue to NGC or NWPS, as the case may be, 68,000 shares
of Series A Preferred Stock for a cash purchase price of
$1,000 per share ($68,000,000.00 total), with this
transaction to be consummated at the Subscription
Closing. The obligation of NGC under its subscription in
this paragraph (c) is subject to the condition (unless
waived by NGC) that NGC or NWPS shall have been able to
obtain the funds from the Permanent Financing or the
Temporary Financing, as those terms are defined in the
Synergy Acquisition Agreement, at or prior to the time of
the Subscription Closing and that, at the time of the
Subscription Closing, the First Closing (as defined in
the Synergy Acquisition Agreement) is concurrently
occurring or is reasonably assured of being consummated
immediately thereafter.
(d) Empire hereby subscribes for, and agrees to
purchase from SYN, and SYN hereby agrees to issue and
sell to Empire, 10,000 shares of Common Stock (which
shall represent 10% of the issued and outstanding Common
Stock) for a cash purchase price of $10,000 to be paid at
the time of such issuance, with this transaction to be
consummated at the Subscription Closing. The obligation
of Empire under its subscription in this paragraph (d) is
subject to the condition (unless waived by Empire) that
NGC consummates its purchase of shares of Common Stock
under paragraph (b) above in this Section 1.2 at the
Subscription Closing.
(e) NGC hereby grants to Empire an option to
purchase from NGC, at a price of $1.00 per share, up to
20,000 of the shares of Common Stock which shall
represent 20% of the issued and outstanding Common Stock,
subject to NGC acquiring such shares pursuant to
paragraph (b) above in this Section 1.2. Such option may
be exercised at any time after September 30, 1995 and
prior to September 30, 1997, or the Determination Date
(as defined in Section 1.04 herein), whichever is earlier,
by Empire's giving written notice of such exercise to
NGC. After the giving of such notice, NGC shall assign
and deliver to Empire the shares of Common Stock for
which the stock option was exercised, as promptly as
possible, but in any event within seven days, in exchange
for Empire's payment to NGC of the purchase price for
such shares; and the shares so assigned and delivered
shall then be shares owned by Empire and shall be held by
Empire subject to the terms of this Agreement.
SECTION 1.03 RESERVATIONS OF STOCK FOR ISSUANCE. SYN
shall, and Empire and NGC shall cause SYN to, take all action
necessary to reserve for initial issuance, 17,500 shares of
Common Stock and 2,500 shares of Series A Preferred Stock to
be issued to the Stockholders (as defined in the Synergy
Acquisition Agreement) at the Second Closing (also as defined
in the Synergy Acquisition Agreement), pursuant to the Synergy
Acquisition Agreement.
SECTION 1.04 COMMON STOCK RETURN. The following
provisions of this Section 1.04 apply in the event Empire
exercises the stock option granted to it in Section 1.02(e)
herein:
(a) The "Common Stock Return" as that term is used
herein, shall be the number of shares of Common Stock of
SYN which Empire hereby agrees to assign and deliver to
NGC, without cost to NGC, in the event that the common
equity value at a Determination Date (as defined below)
is below levels specified for such date in subparagraph
(iii) in this paragraph (a). The Common Stock Return
shall be set in accordance with the following formula.
(i) The Determination Date shall be the date
on which SYN is sold (meaning a sale of
substantially all of the assets of SYN and its
subsidiaries, the acquisition of SYN by another,
non-affiliated entity by merger or consolidation, or
the sale of partnership units or shares of stock of
SYN which entitle the holder thereof to cast at
least a majority of the votes entitled to be cast in
the general election of directors of SYN or the date
on which the sale of partnership units or shares of
SYN's Common Stock is closed in an underwritten
public offering, for which the partnership units or
shares are registered under the Securities Act of
1933, or the date on which this Agreement expires or
is terminated in accordance with Section 7.02 herein,
whichever of the foregoing first occurs).
(ii) The value of the total outstanding Common
Stock of SYN on the Determination Date (the
"Value"), shall be determined by the parties hereto
on the basis of the sale price for SYN if the sale
of SYN is involved, or based upon the price to SYN
(or the selling stockholders if SYN is not the
seller) in the event an underwritten public offering
of partnership units or Common Stock of SYN is
involved, or on the basis of the fair market value
of the outstanding Common Stock of SYN in every
other event, as determined by an appraisal firm or
an investment banking firm selected by the parties
hereto, with such fair market value to be determined
on the basis of the value of SYN and its
subsidiaries as a whole, if sold as a going concern.
In the event there is a combination of one or more
entities with SYN, the value of SYN will be
determined by either (x) a fair market value
appraisal or (y) in the event there is a public
offering within nine months after such combination,
the value shall be the initial price to the public
of SYN shares of Common Stock or partnership units
in such public offering.
(iii) For these purposes, "deemed outstanding
shares of Common Stock" shall be the total of the
number of shares of Common Stock issued and
outstanding plus the number that would be issued and
outstanding if all outstanding stock options,
warrants, conversion rights and other rights to
acquire shares of Common Stock were exercised,
whether or not exercisable at the time. The number
of shares of Common Stock of SYN constituting the
Common Stock Return shall be the percentage of the
deemed outstanding shares of Common Stock of SYN as
of the Determination Date, determined on the basis
of the following table and paragraph (b) below, if
applicable:
____________________________________________________________________________
Column A Column B Column C
Percentage of Percentage of
deemed outstanding deemed outstanding
shares of Common shares of Common
Stock of SYN shall Stock of SYN shall
be 0% if the Value be 7.5% if the
Fiscal Year of SYN as of the Value as of the
in which Determination Date Determination Date
Determination Date is at least the is less than the
occurs: following amount: following amount:
1996 $24,500,000 $22,250,000
1997 $30,000,000 $24,750,000
1998 $36,750,000 $27,500,000
1999 $45,000,000 $30,600,000
2000 $55,200,000 $34,000,000
After 2000 1.225 times the 1.1125 times the
previous year's previous year's
amount amount
____________________________________________________________________________
(b) If the Value as of the Determination Date is
more than the amount in Column C in Section 1.04(a)(iii)
above, but less than the amount in Column B therein, the
percentage used to determine the Common Stock Return
shall be a figure between 7.5% and 0% which is in
proportion to what the Value is to the amounts in the two
columns for the particular Determination Date.
SECTION 1.05 ACQUISITION FOR INVESTMENT. Empire and NGC
each represent and warrant to the other, and to SYN, as
follows: It has (through its management personnel) such
knowledge and experience in financial and business matters
that it is capable of evaluating the merits and risks of its
purchase of securities of SYN as provided for in this
Agreement; it is acquiring such securities, and will acquire
them, for investment and not with a view toward, or with any
intention of, distributing or selling any of the securities
and it will not sell or offer to sell or otherwise transfer
any of the securities in violation of the Securities Act of
1933, as amended.
ARTICLE 2: LOAN FINANCING FOR SYN
NGC shall make a commercially reasonable effort to
arrange for SYN, or provide SYN with, loan financing for SYN,
on a fully secured basis, of up to $70,000,000 principal
amount needed by SYN for the Synergy Acquisition.
ARTICLE 3: LIMIT TO FINANCING OBLIGATIONS
Neither Empire nor NGC, nor any of their affiliates,
shall have any obligation to provide, or arrange, financing
for SYN other than as expressly provided for in Articles 1 and
2 herein.
ARTICLE 4: SYNERGY ACQUISITION
Each of the parties hereto will make a commercially
reasonable effort in cooperation with the other parties
hereto, to do those things within its control to consummate
the Synergy Acquisition in accordance with the terms of, and
subject to the conditions in, the Synergy Acquisition
Agreement. Nothing in this Agreement or otherwise shall be
construed to give anyone who is not a party to this Agreement,
whether under a third party beneficiary legal doctrine or
otherwise, a right to enforce the provisions of this Article
or to obtain relief for any failure to perform in accordance
with the requirements of this Article.
ARTICLE 5: MANAGEMENT OF SYN
SECTION 5.01 At or before the First Closing (as defined
in the Synergy Acquisition Agreement), the parties hereto will
enter into a management agreement in substantially the form
attached hereto as Exhibit C, or with such changes therein as
the parties hereto hereafter agree upon (the "Management
Agreement"), pursuant to which the planning and management of
the business of SYN subsequent to the Second Closing (as
defined in the Synergy Acquisition Agreement) will be
conducted by Empire under the direction of the Board of
Directors of SYN, as provided therein.
SECTION 5.02 DIRECTORS AND OFFICERS OF SYN.
(a) For purposes of this Agreement, "Control
Period" means the period of time commencing on the date
of this Agreement and continuing either (i) until this
Agreement is terminated pursuant to Section 7.02 herein
because of the termination of the Synergy Acquisition
Agreement without the Synergy Acquisition having been
completed or (ii) until a time after the First Closing,
as defined in the Synergy Acquisition Agreement, when (A)
the Control Period is terminated by agreement of the
parties hereto, (B) NGC no longer owns a majority of the
shares of Common Stock of SYN deemed to be outstanding
(determined as provided in Section 1.4 herein), (C)
Empire no longer owns at least 20% of the shares of
Common Stock of SYN deemed to be outstanding or has an
option to acquire at least that amount of shares, or (D)
when SYN consummates an underwritten public offering of
partnership units or shares of its Common Stock,
registered under the Securities Act of 1933, whichever of
(A), (B), (C) or (D) first occurs.
(b) Throughout the Control Period, NGC and Empire
shall vote their voting shares of stock of SYN that are
capable of being voting in a general election of
directors of SYN (i.e., not including the Series A
Preferred Stock or other classes or series of stock which
vote only for a limited number of directors if and when a
prescribed default in the payments of dividends thereon
has continued for a prescribed period of time), and will
otherwise use their respective commercially reasonable
efforts, to carry out the following:
(i) the Board of Directors of SYN shall
consist of five members, three of whom shall be
nominees of NGC (the "NGC Positions") and two of
whom shall be nominees of Empire (the "Empire
Positions"); and any vacancies occurring in the NGC
Positions will be promptly filled with nominees of
NGC and any vacancies occurring in the Empire
Positions will be promptly filled with nominees of
Empire.
(ii) The officers of SYN shall include at all
times a Chairman of the Board and a Vice Chairman of
the Board, who will be persons nominated by NGC, and
a President and Chief Executive Officer, who will be
Paul S. Lindsey, Jr., and a Secretary, who will be a
person nominated by Empire. The authority and
duties of such officers shall be as set forth in the
by-laws of SYN, a true and complete copy of which as
in effect on the date hereof is attached hereto as
Exhibit D.
(c) To initiate compliance with preceding
paragraph (b), Empire and NGC have caused the following
persons to be elected to the positions with SYN indicated
by their names, to serve for the period provided in the
by-laws of SYN:
* Chairman of the Board and director - Merle
D. Lewis (an NGC nominee for such
positions);
* Vice Chairman of the Board and director -
Richard R. Hylland (an NGC nominee for
such positions);
* President and Chief Executive Officer and
director -- Paul S. Lindsey, Jr. (an
Empire nominee as to the position of
director);
* Secretary and director -- Douglas A. Brown
(an Empire nominee for such positions);
with the fifth member of the Board of Directors of SYN
(one of the NGC Positions) to be nominated by NGC, and
elected, at a future time when NGC has selected the
nominee for such position.
ARTICLE 6: DISPOSITION OF SYN STOCK BY EMPIRE OR NGC
SECTION 6.01 PERMITTED DISPOSITIONS.
(a) NGC may at any time or from time to time
transfer any of the securities issued by SYN which NGC
may own at any time to NWPS or any wholly-owned
subsidiary of NWPS, provided that notice of such transfer
is given to the other parties to this Agreement and that
the transferee becomes a party to this Agreement with
respect to the securities so transferred, but all of such
transferees and NGC shall collectively act, and be
treated, as a single entity with NGC acting as their
representative for purposes of this Agreement.
(b) Empire may at any time and from time to time
transfer any of the securities issued by SYN which Empire
may own at any time to any affiliated party, provided
that notice of such transfer is given to the other
parties to this Agreement and the transferee becomes a
party to this Agreement with respect to the securities so
transferred, but all such transferees and Empire shall
collectively act, and be treated, as a single entity with
Empire acting as their representative for purposes of
this Agreement.
SECTION 6.02 RIGHTS OF FIRST REFUSAL.
(a) Except as permitted by Section 1.04 and Section
6.01(b) herein, so long as the Management Agreement is in
effect, Empire will not sell or otherwise dispose of any
shares of Common Stock of SYN, or any other securities
convertible into such shares, to any party without first
offering the same for sale to NGC in writing on the same
terms as are offered to or by the other party (with full
disclosure of such terms to NGC) and allowing not less
than 30 days after its receipt of the offer for NGC to
accept the offer; and if such offer is accepted by NGC,
NGC shall have 90 days in which to complete the purchase
on such terms.
(b) Except as permitted by Section 1.02(e) and
Section 6.01(a) herein, so long as the Management
Agreement is in effect, NGC will not sell or otherwise
dispose of any shares of Common Stock of SYN, or any
other securities convertible into such shares, to any
party without first offering the same for sale to Empire
in writing on the same terms as are offered to or by the
other party (with full disclosure of such terms to
Empire) and allowing Empire not less than 30 days after
its receipt of the offer for Empire to accept the offer,
and if such offer is accepted by Empire, Empire shall
have 90 days in which to complete the purchase on such
terms, but if Empire declines such offer, then Empire
shall have the right to participate on a pro rata basis
in the sale of such shares by NGC; provided, however,
that the preceding provisions of this paragraph (b) shall
not apply to any pledge or granting of a security
interest in any shares of Common Stock of SYN, or any
other securities convertible into such shares, by NGC to
secure loan financing obtained by NWPS, NGC or SYN, or
guaranties of such loan financing, or any sale thereof by
foreclosure of such pledge or security interest, or any
sale thereof in lieu of such foreclosure.
ARTICLE 7: MISCELLANEOUS
SECTION 7.01 RESTRICTIVE LEGEND. Each certificate
issued by SYN to evidence shares of Common Stock, or
securities convertible into such shares, owned by either
Empire or NGC shall be endorsed with the following legend:
"The shares represented by this certificate are
subject to the Amended and Restated Agreement among
the Corporation and its Initial Stockholders, dated
as of May 17, 1995, as the same may be amended, on
file with the issuing Corporation at its principal
business office and may be transferred or otherwise
disposed of only in accordance therewith."
SECTION 7.02 TERM OF THIS AGREEMENT. This Agreement, if
not sooner terminated by agreement of the parties hereto or
pursuant to the next sentence, shall terminate when the
Control Period terminates. In the event the Synergy
Acquisition Agreement is terminated without the Synergy
Acquisition having been completed, the parties hereto will
liquidate and dissolve SYN as promptly as possible when all
obligations of SYN under, or with respect to, the Synergy
Acquisition Agreement have been discharged or provided for;
and this Agreement shall then automatically terminate.
SECTION 7.03 NOTICES. All notices and other
communications hereunder shall be in writing and shall be
deemed to have been given (a) when delivered in person, (b)
one business day after deposit with a nationally recognized
overnight courier service (c) two business days after being
deposited in the United States mail, postage prepaid, first
class, registered or certified mail, or (d) the business day
on which it is sent and received by facsimile, as follows:
(i) If to SYN, to
SYN Inc.
c/o Northwestern Growth Corporation
33 Third Street, S.E.
Huron, South Dakota 57350
Fax No. (605) 353-8286
Attention: Richard R. Hylland, President
with a copy to Empire, addressed and sent to it at
the place required under this Agreement for giving
notice to Empire.
(ii) If to Empire, to:
Empire Gas Corporation
P.O. Box 303
1700 South Jefferson
Lebanon, Missouri 65536
Fax No. (417) 532-8529
Attention: Paul S. Lindsey, Jr., President
(iii) If the NGC, to:
Northwestern Growth Corporation
33 Third Street, S.E.
Huron, South Dakota 57350
Fax No. (605) 353-8286
Attention: Richard R. Hylland, President
SECTION 7.04 SECTION 351 OF THE CODE. Each of the
parties hereto agrees to comply with the requirements of
Section 6.28 of the Synergy Acquisition Agreement, both with
respect to the transaction referred to therein and with
respect to any transaction under this Agreement to the extent
necessary to assure the result under Section 351 of the
Internal Revenue Code of 1986, as amended, for the transaction
referred to in such Section 6.28.
SECTION 7.05 CAPTIONS. The captions in this Agreement
are included for convenience of reference only and shall be
ignored in the construction and interpretation of this
Agreement.
SECTION 7.06 GOVERNING LAW. This Agreement shall be
construed in accordance with and governed by the internal laws
of the State of Delaware without regard to the choice of law
principles thereof.
SECTION 7.07 COUNTERPARTS. Execution of separate copies
of this Agreement by each or some of the several parties
hereto shall have the same force and effect as though all such
parties had executed the original of this Agreement. Further,
the parties hereto may execute several counterparts of this
Agreement, all of which shall constitute but one and the same
agreement.
IN WITNESS WHEREOF, each of the parties hereto has
caused this Agreement to be executed in its name as of the
date first above written.
EMPIRE GAS CORPORATION
By /s/ Paul S. Lindsey, Jr.
____________________________
President
NORTHWESTERN GROWTH CORPORATION
By /s/ Richard R. Hylland
____________________________
President
SYN INC.
By /s/ Paul S. Lindsey, Jr.
____________________________
Title President