SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
The Quarterly Period Ended March 31, 1994
Commission File Number 1-6537-3
EMPIRE GAS OPERATING CORPORATION
(Exact Name of Registrant as Specified in its Charter)
MISSOURI 43-1501508
(State or Other Jurisdiction IRS Employer
of Incorporation or Organization) Identification No.
1700 S. Jefferson Street, Lebanon, Missouri 65536
(Address of Principal Executive Offices and Zip Code
(417)532-3101
(Registrant's Telephone Number, Including Area Code)
EMPIRE GAS CORPORATION
(Former Name of Registrant)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes __X__ No
_____
Number of Shares outstanding common stock (one class only) as of March 31,
1994 was 10,448,162.
<PAGE> 2 of 16
EMPIRE GAS OPERATING CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Dollars In Thousands, Except Per Share Amounts)
March 31, June 30,
ASSETS 1994 1993
______ ________ ________
Current Assets
Cash $ 173 $ 352
Trade Receivables - Net 15,071 8,198
Inventories 9,313 9,691
Prepaid Expense 299 305
Deferred Income Taxes 408 -
_______ _______
Total Current Assets 25,264 18,546
_______ _______
Property, Plant and Equipment 155,267 151,586
Less Accumulated Depreciation 62,012 57,239
_______ _______
Fixed Assets - Net 93,255 94,347
_______ _______
Other Assets
Debt Acquisition Costs - Net 1,776 1,910
Excess of Cost Over Fair Value of Net
Assets Acquired - Net 9,633 10,167
Other 764 465
_______ _______
Total Other Assets 12,173 12,542
_______ _______
Total Assets $130,692 $125,435
_______ _______
_______ _______
<PAGE> 3 of 16
LIABILITIES AND STOCKHOLDER'S EQUITY
____________________________________
Current Liabilities
Current Maturities of Long-Term Debt $ 6,135 $ 5,181
Accounts Payable and Accrued Expenses 10,637 8,303
Income Taxes Payable 3,822 165
_______ _______
Total Current Liabilities 20,594 13,649
Long-Term Debt (Note 3) 66,696 74,068
Deferred Income Taxes 26,468 27,545
Accrued Self Insurance Liability (2) 2,039 1,874
_______ _______
Total Liabilities 115,797 117,136
_______ _______
Stockholder's Equity
Capital Stock
Preferred, Class A Non-Voting; 10% Cumulative;
Arrearage At March 31, 1994 $1,414
June 30, 1993 $1,189; No Par Value; $30
Per Share Liquidation Preference; Authorized,
issued, and outstanding 100,000
Shares 3,000 3,000
Preferred, Class B Non-Voting; No Par Value;
Non-Dividend Paying; $40 Per Share
Liquidation Preference After Class A;
Authorized, issued, and outstanding
100,000 Shares 4,000 4,000
Common: $.001 Par Value; Authorized 25,000,000
Shares; issued and outstanding March 31
1994 and June 30, 1993 10,448,162
Shares 10 10
Additional Paid-In Capital 4,325 4,325
Retained Earnings (Deficit) 4,859 (1,737)
______ _______
16,194 9,598
Investment in Parent Company Stock, at cost
(Note 4) (1,299) (1,299)
______ _______
Total Stockholder's Equity 14,895 8,299
______ _______
Total Liabilities and Stockholder's
Equity $130,692 $125,435
______ _______
______ _______
See Notes to Condensed Consolidated Financial Statements.
<PAGE> 4 of 16
EMPIRE GAS OPERATING CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS AND NINE MONTHS ENDED MARCH 31, 1994 AND 1993
(Unaudited)
(In Thousands, Except Per Share Amounts)
THREE MONTHS ENDED NINE MONTHS ENDED
MARCH 31 MARCH 31
________ ________
1994 1993 1994 1993
______ _______ _______ ________
Operating Revenue $46,121 $48,989 $110,107 $111,332
______ _______ _______ ________
Operating Costs and Expenses
Cost of Products Sold 20,117 23,696 50,770 52,807
General and Administrative 12,108 11,594 33,109 31,986
Depreciation and Amortization 2,097 2,199 6,311 6,576
______ _______ _______ ________
34,322 37,489 90,190 91,369
______ _______ _______ ________
Operating Income 11,799 11,500 19,917 19,963
______ _______ _______ ________
Other Expense
Interest Expense, Net (2,082) (2,380) (6,446) (7,541)
Amortization of Debt Discount
and Expense (509) (572) (1,501) (1,167)
Restructuring Proposal Costs
(Note 6) (276) -- (674) --
______ _______ _______ ________
(2,867) (2,952) (8,621) (8,708)
______ _______ _______ ________
Income Before Income Taxes 8,932 8,548 11,296 11,255
Provision for Income Taxes 3,700 3,400 4,700 4,500
______ _______ _______ ________
Net Income $ 5,232 $ 5,148 $ 6,596 $ 6,755
______ _______ _______ ________
______ _______ _______ ________
Income Per Common Share $ 0.49 $ 0.49 $ 0.61 $ 0.63
______ _______ _______ ________
______ _______ _______ ________
See Notes to Condensed Consolidated Financial Statements.
<PAGE> 5 of 16
EMPIRE GAS OPERATING CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED MARCH 31, 1994 AND 1993
(Unaudited)
(In Thousands)
1994 1993
________ ________
Cash Flows From Operating Activities
Net Income $ 6,596 $ 6,755
Items not requiring (providing) cash
Depreciation 5,746 5,913
Amortization 2,066 1,830
Deferred income taxes (1,485) (300)
(Gain) Loss on sale of assets 3 (162)
Changes In:
Trade Receivables (6,873) (9,365)
Inventories 378 (1,251)
Accounts Payable and Accrued Expenses 6,106 1,540
Prepaid expense & other (224) (337)
________ ________
Net Cash Provided By Operating
Activities 12,313 4,623
________ ________
Cash Flows from Investing Activities
Purchase of property & equipment (4,721) (3,098)
Proceeds from sales of property &
equipment 153 360
________ ________
Net Cash Used In Investing Activities (4,568) (2,738)
________ ________
Cash Flows From Financing Activities
Working Capital borrowings (3,800) (155)
Principal Payments on other long-term
debt (162) (134)
Principal Payments on term credit
facility (1,950) --
Debenture sinking fund payments (2,012) (528)
________ ________
Net Cash Used In Financing Activities (7,924) (817)
________ ________
Increase (Decrease) in Cash (179) 1,068
Cash, Beginning of Period 352 209
________ ________
Cash, End of Period $ 173 $ 1,277
________ ________
________ ________
See Notes to Condensed Consolidated Financial Statements.
<PAGE> 6 of 16
EMPIRE GAS OPERATING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS AND NINE MONTHS ENDED MARCH 31, 1994 AND 1993
(Unaudited)
(1) In the opinion of Management, the accompanying unaudited condensed
consolidated financial statements contain all adjustments necessary to
present fairly Empire Gas Operating Corporation's condensed consolidated
financial position as of March 31, 1994, and the condensed consolidated
results of its operations and changes in its financial position for the
periods ended March 31, 1994 and 1993. All such adjustments are of a
normal recurring nature.
The accounting policies followed by the Company are set forth in Note 1
to the Company's consolidated financial statements in the 1993 Annual
Report on Form 10-K.
The results of operations for the three month and nine month periods
ended March 31, 1994 are not necessarily indicative of the results to be
expected for the full year due to the seasonal nature of the Company's
business.
The Company is wholly owned subsidiary of Empire Gas Corporation (EGC)
(formerly Empire Gas Acquisition Corporation).
(2) The Company reports the following contingencies. Except as noted, there
have been no significant changes in these items since reports in the
Company's 1993 Annual Report on Form 10-K.
Under the Company's current insurance program, coverage for
comprehensive general liability, workers' compensation and vehicle
liability is obtained for catastrophic exposures as well as those risks
required to be insured by law or contract. The Company retains a
significant portion of certain expected losses related primarily to
comprehensive general liability, workers' compensation, and vehicle
liability. Under these current insurance programs, the Company self-
insures the first $500,000 of coverage (per incident). The Company
obtains excess coverage from carriers for these programs on claims-made
basis policies. The excess coverage for comprehensive general liability
provides a loss limitation that limits the Company's aggregate of self-
insured losses to $1 million per policy period. Provisions for self-
insured losses are recorded based upon the Company's estimates of the
aggregate self-insured liability for claims incurred.
For the policy periods July 1, 1989 through December 30, 1989, and
December 31, 1989 through June 30, 1991, the Company has incurred
aggregate comprehensive general liability losses in excess of the
policies' $1 million loss limit. Additional losses (except for punitive
damages), if any, are insured by the excess carrier and should not
result in additional expense to the Company. As of March 31, 1994, the
Company has not exceeded the $1 million loss limit for the comprehensive
general liability policy periods July 1, 1991 through June 30, 1992,
July 1, 1992 through June 30, 1993, and July 1, 1993 through June 30,
1994.
<PAGE> 7 of 16
EMPIRE GAS OPERATING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS AND NINE MONTHS ENDED MARCH 31, 1994 AND 1993
(Unaudited)
Effective July 1, 1993, the Company changed its policy so that it will
retain $500,000 of expected losses related to workers' compensation.
Previously the Company obtained coverage from carriers and state
insurance pools. Provisions for losses expected under this program will
be recorded based upon the Company's estimates of the aggregate
liability for claims incurred. The Company has provided letters of
credit aggregating approximately $2.3 million in connection with this
program at March 31, 1994.
The Company and its subsidiaries are defendants in various lawsuits
related to the self-insurance program which are not expected to have a
material adverse effect on the Company's financial position or results
of operations.
The Company currently self insures health benefits provided to the
employees of the Company and its subsidiaries. Provisions for losses
expected under this program are recorded based upon the Company's
estimate of the aggregate liability for claims incurred.
Interim accruals for the cost of self insurance are based on an estimate
of the related annual costs compared to the estimated total gallons of
propane to be sold during the same period. Presently, the resulting
accrual rate of expense recognizing self insurance is 3.5 cents per
gallon sold.
The Company's federal income tax returns for the fiscal years 1979 and
1980 were audited by the IRS. During August 1992, the Company paid $2.4
million which represented interest on previously paid income taxes.
This payment settled all outstanding federal tax audits. The Company
has no federal income tax audits in process at March 31, 1994.
The Company and its subsidiaries are also defendants in various state
income tax audits and other business-related lawsuits which are not
expected to have a material adverse effect on the Company's financial
position or results of operations.
(3) The term credit facility and revolving credit facility are provided to
the Company by the same lender under one agreement. In June 1993, the
proceeds from these new loans were used to repay the acquisition credit
facility, working capital facility, and notes payable to shareholder.
Substantially all of the Company's assets are pledged to the agreement
which contains working capital, debt and certain dividend restrictions.
These dividend restrictions prohibit the Company from paying common
stock cash dividends.
The term credit facility bears interest at either 1.125% over prime or
2.625% over the Eurodollar rate. The agreement requires quarterly
principal payments of $650,000.
<PAGE> 8 of 16
EMPIRE GAS OPERATING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS AND NINE MONTHS ENDED MARCH 31, 1994 AND 1993
(Unaudited)
The revolving credit facility provides for borrowings up to $22 million
and bears interest at either 1% over prime or 2.5% over the Eurodollar
rate. The agreement provides for a commitment fee of .5% per annum of
the unadvanced portion of the commitment. The Company's unused
revolving credit line amounted to $15,500,000 at March 31, 1994, after
considering $3,000,000 of letters of credit.
(4) In December 1992, the Company purchased from the employee stock bonus
plan 329,500 common shares of EGC stock for $1.3 million. The plan's
assets were being liquidated due to termination of the plan. The shares
purchased are classified as a reduction in equity because EGC has no
significant assets other than its investment in the Company.
(5) Additional Cash Flow Information (In Thousands)
Non Cash Investing and Financing Activities 1994 1993
___________________________________________
Short term note payable issued for repurchase
of debentures from employee benefit plan -- $ 778
Short term note payable issued for purchase of
EGAC stock from employee benefit plan -- $1,299
Purchase contract obligations incurred on
property and equipment purchases $ 200 --
Additional Cash Payment Information 1994 1993
___________________________________
Interest Paid $6,043 $9,543
Income Taxes Paid (net of refunds) $2,529 $2,384
(6) Restructuring proposal costs consist of legal and accounting expenses
incurred in connection with a proposed restructuring of the Company's
debt and equity. On April 29, 1994, the parent of the Company filed a
registration statement with the Securities Exchange Commission relating
to the issuance of $100 million initial accreted value of senior secured
notes of the parent. The registration statement describes a transaction
in which the Company would merge into its parent and the stock of
certain stockholders of the parent would be redeemed in exchange for
certain assets of the Company and cash. See Part II, Item 6.
<PAGE> 9 of 16
EMPIRE GAS OPERATING CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MANAGEMENT'S DISCUSSION AND ANALYSIS
THREE MONTHS AND NINE MONTHS ENDED MARCH 31, 1994 AND 1993
(Unaudited)
FINANCIAL CONDITION AND LIQUIDITY
The following table is presented as a measure of the Company's liquidity and
financial condition.
MARCH 31 JUNE 30
1994 1993 1993 1992
(IN THOUSANDS, EXCEPT RATIOS)
Total long-term debt
(including current maturities) $72,831 $78,354 $79,249 $ 78,958
Short-term notes payable -- $ 2,077 -- --
Working Capital $ 4,670 $(7,193) $ 4,897 $(13,924)
Current Ratio 1.23 .79 1.36 .52
During the nine months ended March 31, 1994, the Company's working capital
decreased by approximately $200,000. The decrease was due to the
reclassification of $1.0 million of long-term debt to current maturities
related to increased sinking fund requirements, the reclassification of $1.1
million of deferred income taxes to current income taxes payable, the net
usage of $4.6 million of working capital to purchase property and equipment,
the usage of $7.9 million of working capital to reduce the revolving credit
facility and long-term debt. These decreases were offset by $14.4 million
of net income (after adjustment for non-cash expenses).
During the nine months ended March 31, 1993, the Company's working capital
increased by approximately $6.7 million. The increase was due primarily to
$18.9 million of income before income taxes (after adjustment for non-cash
expenses) and the reclassification of $300,000 from current accrued expenses
to accrued self insurance liability. This increase was offset by a net
movement of $2.9 million of long-term debt into the current portion of long-
term debt, the use of $2.7 million in working capital for the purchase of
property and equipment, the use of $2.1 million in working capital for the
repurchase of debentures and stock from the employee benefit plants, $4.5
million in current income taxes accrued and the reclassification of $300,000
of deferred income tax to current income tax payable.
The net movement of $2.9 million of long-term debt into the current portion
of long-term debt in the 1993 period was a result of the movement of $5.4
million of long-term debt into the current portion of long-term debt offset
by the reclassification of $2.5 million from the current portion of long-
term debt (the reclassification of long-term debt to current portions of
long-term debt relates to borrowings from a related party which were due in
July 1993, purchase contract obligations and the current portion of
debenture sinking fund payments which were due December 1993 and March
1994). (The reduction of current maturities relates to the Company's
refinancing pursuant to the loan agreement of the Reliance debt obligation
of which $6.8 million was included in current maturities of long-term debt
at June 30, 1992).
<PAGE> 10 of 16
EMPIRE GAS OPERATING CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MANAGEMENT'S DISCUSSION AND ANALYSIS
THREE MONTHS AND NINE MONTHS ENDED MARCH 31, 1994 AND 1993
(Unaudited)
RESULTS OF OPERATIONS
Due to the seasonal nature of the Company's business, the Company usually
realizes a net loss the first quarter and net income for the second and
third quarters. Operating revenues for a particular quarter are not
indicative of a full fiscal year's operations because of the seasonal
element. Other expense items such as depreciation and general and
administrative expenses, however, continue on a more annualized basis.
Interest expense also continues on a more level basis although interest
expense is generally somewhat higher during the summer and fall months due
to increased working capital borrowings used to finance inventory purchases
in preparations for the Company's principal sales months.
Operating revenues for the nine months ended March 31, 1994, decreased by
$1.2 million as compared to the same period of the previous year as a result
of a decrease of $1.8 million in retail propane sales offset by an increase
of $600,000 in parts and appliance sales. The decrease in propane sales was
due to an approximate 0.6 cent decrease in the average net sales price per
gallon combined with a 1% decrease in gallons sold as compared to the prior
year. The increase in parts and appliance sales were due to increased sales
efforts by the Company. Cost of sales decreased by $2.0 million due to a
decrease of $2.5 million in the cost of propane offset by an increase of
$500,000 in the cost of parts and appliances. The decrease in the cost of
propane is due to an approximate 1.6 cent decrease in the average net cost
per gallon combined with a 1% decrease in gallons sold. The increase in the
cost of parts and appliances is due to the increased sales.
Operating revenues for the third quarter of fiscal year 1994 decreased by
$2.8 million as compared to the same period for the previous year due to a
$3.0 million decrease in propane sales offset by an increase of $200,000 in
parts and appliance sales. The decrease in propane sales was due to an
approximate 4.3 cent decrease in the average net sales price per gallon
combined with a 1% decrease in gallons sold as compared to the same period
in the prior year. The increase in parts and appliance sales was due to
increased sales efforts by the Company. Cost of sales decreased $3.5
million due to a decrease of $3.7 million in the cost of propane sales
offset by a $200,000 increase in the cost of parts and appliance sales. The
decrease in the cost of propane sales was due to an approximate 6.1 cent
decrease in the average net cost per gallon combined with a 1% decrease in
gallons sold. The increase in the cost of parts and appliances is due to
the increased sales.
General and administrative expenses for the nine months ended March 31,
1994, increased approximately $1.1 million due to increases of $700,000 in
insurance and liability claims expense, $500,000 in salaries and
commissions, and $200,000 in payroll taxes and employee benefits. These
increases were offset by decreases of $100,000 each in vehicle fuel and
maintenance, rent and maintenance, and travel and entertainment. The
increase in insurance and liability claims was due primarily to increased
claims. The increase in salaries and commissions was due to normal pay
increases combined with a slight increase in the total number of employees.
The increase in payroll taxes and employee benefits was due to the increase
<PAGE> 11 of 16
in taxes related to the increased payroll and the increase in health
insurance expenses. The decrease
<PAGE> 12 of 16
EMPIRE GAS OPERATING CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MANAGEMENT'S DISCUSSION AND ANALYSIS
THREE MONTHS AND NINE MONTHS ENDED MARCH 31, 1994 AND 1993
(Unaudited)
in vehicle fuel and maintenance was due to reduced vehicle maintenance as a
result of the purchase of new vehicles to replace some of the older
vehicles.
The decrease in rent and maintenance was due to reduced building
maintenance. The decrease in travel and entertainment was due to reduced
travel by retail employees for training, as most Company-wide training was
performed in May and June 1993.
General and administrative expenses for the third quarter of fiscal 1994,
increased approximately $500,000 due to increases of $300,000 in salaries
and commissions, $200,000 in payroll taxes and employee benefits, and
$100,000 in professional fees. These increases were offset by a $100,000
decrease in office expenses. The increase in salaries and commissions was
due to normal pay raises and a slight increase in the total number of
employees. The increase in payroll taxes and employee benefits is due to
the increase in payroll taxes related to the increased payroll and the
increase in health insurance expenses. The increase in professional fees
was due to increased fees incurred for tax and business planning. The
decrease in office expenses was due to reduced informational and advertising
mailings to customers.
Interest expense decreased $1.1 million for the nine months ended March 31,
1994, and $300,000 for the third quarter of fiscal year 1994 as compared to
the same period of the prior year. Both decreases were the result of lower
interest rates and reduced borrowing levels as compared to the prior year.
Restructuring proposal costs of $674,000 for the nine months ended March 31,
1994, and $276,000 for the third quarter of fiscal year 1994 consisted of
legal and accounting expenses incurred in connection with a proposed
restructuring of the Company's debt and equity. On April 29, 1994, the
parent of the Company filed a registration statement with the Securities and
Exchange Commission relating to the issuance of $100 million initial
accreted value of senior secured notes of the parent. The registration
statement describes a transaction in which the Company would merge into its
parent and the stock of certain stockholders of the parent would be redeemed
in exchange for certain assets of the Company and cash. See Part II,
Item 6.
<PAGE> 13 of 16
EMPIRE GAS OPERATING CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MANAGEMENT'S DISCUSSION AND ANALYSIS
THREE MONTHS AND NINE MONTHS ENDED MARCH 31, 1994 AND 1993
(Unaudited)
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Reference is made to Note 2 of the Condensed Consolidated Financial
Statements.
Item 2. Changes in Securities
Not applicable.
Item 3. Defaults Upon Senior Securities
During the period August 1, 1993 through November 15, 1993, the Company did
not comply with the working capital covenant contained in its credit
facility with the First National Bank of Boston ("FNBB"), which credit
facility consists of a term credit facility and a revolving credit facility
and provides for the issuance of letters of credit on the Company's behalf.
FNBB waived the noncompliance with this covenant. See Note 3 of the
Condensed Consolidated Financial Statements.
Item 4. Submission of Matters to a Vote of Security Holders
On April 22 1994, the sole stockholder of the Company executed a consent
approving an amendment to the Articles of Incorporation of the Company
changing the name of the Company from Empire Gas Corporation to Empire Gas
Operating Corporation.
Item 5. Other Information
Not applicable.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10.1 Stock Redemption Agreement dated May 7, 1994, between the Company,
Empire Gas Corporation, Empire Energy Corporation, Robert W. Plaster, Paul
S. Lindsey, Jr., Stephen R. Plaster, Joseph L. Schaefer, the Robert W.
Plaster Trust dated December 13, 1988, the Stephen Robert Plaster 10/30/88
Trust, the Stephen Robert Plaster 7/30/84 Trust, Empire Ranch, Inc., Empire
Airlines, Inc. and Evergreen National Corporation.
<PAGE> 14 of 16
15.1 Letter from Baird, Kurtz & Dobson dated May 13, 1994 regarding
unaudited interim financial information.
<PAGE> 15 of 16
EMPIRE GAS OPERATING CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MANAGEMENT'S DISCUSSION AND ANALYSIS
THREE MONTHS AND NINE MONTHS ENDED MARCH 31, 1994 AND 1993
(Unaudited)
Item 6. Exhibits and Reports on Form 8-K
(b) Reports on Form 8-K
On April 29, 1994, the Company filed a report on Form 8-K reporting (under
Item 5) the filing by the parent of the Company of a registration statement
relating to the issuance of $100 million initial accreted value senior
secured notes of the parent. The registration statement describes a
transaction in which the Company would merge into its parent and the stock
of certain stockholders of the parent would be redeemed in exchange for
certain assets of the Company and cash.
<PAGE> 16 of 16
Reviewed by Independent Certified Public Accountants
The March 31, 1994 financial statements included in this filing on Form 10-Q
have been reviewed by Baird, Kurtz & Dobson, Independent Certified Public
Accountants, in accordance with established professional standards and
procedures for such a review. The report of Baird, Kurtz & Dobson
commenting upon their review is appended hereto.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
EMPIRE GAS OPERATING CORPORATION
Registrant
/s/ Willis D. Green
__________________________
WILLIS D. GREEN
VICE PRESIDENT/CONTROLLER
DATE: May 13, 1994
<PAGE>
Exhibit 10.1<PAGE>
<PAGE>
STOCK REDEMPTION AGREEMENT
THIS STOCK REDEMPTION AGREEMENT (this "Agreement") is made
and entered into as of this __ day of May, 1994, by and among Empire Gas
Corporation, a Missouri corporation ("the Company"), Empire Gas Operating
Corporation, a Missouri corporation ("Empire Gas"), Empire Energy
Corporation, a Tennessee corporation ("Energy"), Robert W. Plaster
("Plaster"), Paul S. Lindsey, Jr. ("Lindsey"), Stephen R. Plaster, Joseph L.
Schaefer, the Robert W. Plaster Trust dated December 13, 1988 (the "R.
Plaster Trust"), the Stephen Robert Plaster Trust dated October 30, 1988 (the
"1988 S. Plaster Trust"), the Stephen Robert Plaster Trust dated July 30,
1984 (the "1984 S. Plaster Trust," and together with the R. Plaster Trust,
and the 1988 S. Plaster Trust, the "Sellers"), and certain parties related to
the Company or Plaster including, Empire Ranch, Inc. ("Ranch"), Empire
Airlines, Inc. ("Airlines"), Missouri corporations, and Evergreen National
Corporation, a Florida Corporation ("Evergreen").
WHEREAS, the Company is undertaking a series of transactions
to complete a restructuring, and in connection therewith, certain
shareholders of the Company desire to sell their shares of common stock,
$.001 par value, of the Company (the "EGAC Common Stock") to the Company in
exchange for the common stock of Energy, a subsidiary of the Company that has
approximately 139 wholly-owned subsidiaries, which subsidiaries own the
operating assets of certain liquified petroleum ("LP") gas and appliance
companies of the Company and certain other assets of the Company, including
but not limited to certain equipment and vehicles;
WHEREAS, each of the Sellers is the owner of shares of EGAC
Common Stock; and
WHEREAS, each of the Sellers wishes to sell to the Company
their EGAC Common Stock in exchange for the common stock of Energy, and the
Company wishes to repurchase from each of the Sellers, subject to the terms
and conditions of this Agreement, the number of shares of EGAC Common Stock
described below (the "Stock Purchase");
NOW, THEREFORE, in consideration of the premises and the
mutual covenants of the parties hereinafter expressed, it is hereby agreed as
follows:
1. Stock Purchase. Upon the terms and subject to the
conditions contained herein, the Company agrees to purchase from each of the
Sellers, and each of the Sellers agrees to sell to the Company, the number of
shares of EGAC Common Stock as indicated below at a purchase price of one (1)
share of common stock, no par value, of Energy (the "Energy Common Stock")
for each share of EGAC Common Stock:
Number of Shares
________________________________________
Name of Seller EGAC Common Stock Energy Common Stock
______________ _________________ ___________________
R. Plaster Trust 10,515,103 10,515,103
1988 S. Plaster Trust 24,388 24,388
1984 S. Plaster Trust 595,500 595,500
<PAGE>
__________ __________
11,134,991 11,134,991
__________ __________
__________ __________
Upon consummation of the Stock Purchase, the Sellers will together own in
excess of 90% of the issued and outstanding shares of Energy Common Stock.
Energy will own all of the issued and outstanding common stock of the
entities listed on Exhibit A hereto (the "Energy Subsidiaries").
2. Related Agreements. The Company, Empire Gas, Energy,
Plaster (who beneficially owns the EGAC Common Stock held by the R. Plaster
Trust and who will upon consummation of the Stock Purchase described in
Section 1 be the controlling shareholder of Energy), Ranch, Airlines, and
Evergreen further agree:
2.1 Energy Employees.
2.1(a) Energy shall have the right to
employ the individuals listed on Exhibit B hereto
(the "Energy Employees"), all of whom are currently
employees and/or directors of the Company and/or
Empire Gas, and the Company and Empire Gas shall
allow the Energy Employees to terminate their
employment with the Company and/or Empire Gas, as
the case may be, without any penalty, with such
termination of employment with the Company and/or
Empire Gas, and the commencement of employment with
Energy to be effective upon the date of the closing
of the transactions described herein (the "Closing
Date").
2.1(b) On the Closing Date, the Company
shall repurchase the EGAC Common Stock held by
certain Energy Employees. As set forth on Exhibit B
hereto, some Energy Employees and former Empire Gas
employees will receive a payment of $7.00 in cash
for each share of EGAC Common Stock and some Energy
Employees will receive a cash payment of $7.00 per
share for some of their shares of EGAC Common Stock
and for the remainder of their shares of EGAC Common
Stock, one (1) share of Energy Common Stock for each
share of EGAC Common Stock. The Company shall
deliver the cash payment and, if applicable, the
Energy Common Stock to each of these Energy
Employees on the Closing Date.
2.1(c) The provisions contained in this
Section 2.1 shall not create any right enforceable
by any Energy Employee against the Company, Empire
Gas, or Energy.
2.2 Use of Empire Gas Name and Logo.
2.2(a) For a period of ten (10) years from
the Closing Date, Energy and the Energy Subsidiaries
shall have the right to use the name Empire Gas and
the Empire Gas logo in (i) the
<PAGE>
states listed on Exhibit A hereto other than
Missouri, Illinois, and Arkansas, and (ii) the
western half of Virginia and the western half of
West Virginia. The use of the Empire Gas name and
logo in Missouri, Illinois, and Arkansas by Energy
and the Energy Subsidiaries shall be limited to the
following areas:
(i) Missouri - Energy and the
Energy Subsidiaries may use the Empire Gas
name and logo in Missouri in any area south
of Interstate 44 and in any area within a
fifty (50) mile radius of the present
location of any existing retail L.P. gas
and appliance company that will be operated
by an Energy Subsidiary after the Closing
Date,
(ii) Arkansas - Energy and the
Energy Subsidiaries may use the Empire Gas
name and logo in the northern half of
Arkansas, provided, however, that within a
fifty (50) mile radius of the two retail
L.P. gas and appliance companies in the
northern half of Arkansas that Empire Gas
and its subsidiaries will continue to own
and operate after the Closing Date, Energy
and Energy Subsidiaries may use the logo
only in those areas where any Energy
Subsidiary is currently operating, and
(iii) Illinois - Energy and the
Energy Subsidiaries may use the Empire Gas
name and logo in Illinois in the area
within a fifty (50) mile radius of the one
retail outlet in Illinois that will be
operated by an Energy Subsidiary after the
Closing Date.
2.2(b) For the ten-year period described
in Section 2.2(a), the Company, its subsidiaries
other than Energy and the Energy Subsidiaries (the
"Remaining Subsidiaries"), and their successors and
assigns shall have the right to use the name Empire
Gas and the Empire Gas logo in (i) any area other
than those areas ("Energy Areas") in which Energy
and the Energy Subsidiaries have the right to use
such name and logo as described in Section 2.2(a)
above, and (ii) Energy Areas to the extent any
Remaining Subsidiary is currently operating in an
Energy area.
2.2(c) At the end of the ten-year period
described in Section 2.2(a), there shall be no
restrictions on the use of the Empire Gas name or
logo by the Company, the Remaining Subsidiaries, or
their successors and assigns, or by Energy or the
Energy Subsidiaries.
<PAGE>
2.3 Payments at Closing. Promptly after the
Closing, on the Closing Date, the following payments shall
be made via wire transfer of immediately available funds:
2.3(a) Payment for the sum of liabilities
net of assets. Energy shall pay to Empire Gas an
amount equal to forty-seven and seven-tenths percent
(47.7%) of the difference between (x) the sum of the
liabilities net of assets set forth in subparagraphs
(i) - (vi) below and (y) the sum of three million
dollars ($3,000,000), any cash payments made by
Empire Gas after January 1, 1994 in respect of the
proposed acquisitions in North Carolina and Colorado
and underground storage leases in Kansas and North
Carolina and any cash payment made by Empire Gas
after January 1, 1994 in respect of fees incurred by
any third party after January 1, 1994 in connection
with this Agreement or the transactions contemplated
hereby, including but not limited to fees incurred
by Baird, Kurtz & Dobson, Doug Brown, Morgan Stanley
& Co., Wilmer, Cutler & Pickering and the firm
giving a solvency opinion.
(i) the outstanding balance under
Empire Gas' $22 million revolving credit
line with First National Bank of Boston,
excluding amounts related to the issuance
of letters of credit;
(ii) unfunded tax accruals for any
federal or state income tax liability of
the Company or any of its subsidiaries,
including Energy and the Energy
Subsidiaries, without considering the
effect of any remaining unamortized
original issue discount. If the tax
accrual at Closing is overfunded, the net
asset would be a reduction of the other
liabilities computed under this Section
2.3(a);
(iii) any unfunded accrued bonuses
for home office employees, i.e., all
employees other than those employed in the
Company's LP gas and appliance companies,
including the usual discretionary bonuses.
The estimated bonuses are intended to be
funded prior to the Closing Date with
Energy receiving cash equal to its
estimated bonuses and the Company retaining
cash equal to its estimated bonuses. This
cash will not be included with the current
assets specified in Section 2.3(a)(v)
below;
(iv) any accrued interest due on
Empire Gas' debentures, term credit
facility, or revolving credit facility;
<PAGE>
(v) all Home Office Company
(excluding Transport Companies and
including the Company) current assets
excluding series 144, 146, 115 and 170
account numbers and the cash identified in
Section 2.3(a)(iii) above; and
(vi) all Home Office Company
(excluding Transport Companies and
including the Company) current liabilities
excluding account numbers 309-100, 335-400,
and 342-100 and series 375 account numbers.
The amount of these assets and liabilities shall be
determined as of the last business day before the
Closing Date in accordance with generally accepted
accounting principles ("GAAP") as audited by Baird,
Kurtz & Dobson as described in Section 2.3(b). If
the sum of these liabilities net of assets is less
than the sum of three million dollars ($3,000,000)
and the cash payments identified in (y) above, then
Empire Gas will pay Energy 100% of such deficiency.
2.3(b) Audit by Baird, Kurtz & Dobson.
Baird, Kurtz & Dobson ("BKD") shall perform an audit
of the amounts payable under this Section 2.3. BKD
shall complete such an audit within forty (40) days
after the Closing Date and shall advise in writing
both Energy and Empire Gas of the results of its
audit. Energy and Empire Gas shall share equally
the costs of any such audit. The determination of
BKD shall be final and binding on all parties.
Neither Energy nor Empire Gas shall delay making any
payments required under Section 2.3(a) pending the
results of the BKD audit. Following the BKD audit,
Energy or Empire Gas, as the case may be, shall
promptly pay the other any amount determined to be
payable by BKD.
2.3(c) In addition to any amount payable
pursuant to Section 2.3(a) above, Empire Gas shall
pay to Energy the sum of four million, one hundred
twenty-five thousand dollars ($4,125,000).
2.3(d) OID. The Company and Energy have
agreed that any benefit arising out of the Company's
original issue discount relating to its currently
outstanding debentures ("OID") will remain with the
Company and not be shared with Energy.
2.3(e) Additional Extraordinary
Expenditures. After the date hereof, except for the
expenditures identified in 2.3(a)(y) above, neither
Empire Gas nor any of its subsidiaries shall make
any expenditures outside the ordinary
<PAGE>
course of business unless such expenditures are
approved in advance by Plaster and Lindsey.
2.4 Fixed Asset Purchases. All land, buildings,
customer tanks, truck beds, equipment, vehicles and other
assets purchased and paid for from and after January 1, 1994
through the Closing Date shall be allocated to the entity
for whom such assets were purchased. Any monetary
differential between the assets allocated to the Company and
Energy, as computed by BKD, shall be applied against the
balance due under 2.3a above. All land, buildings, customer
tanks, truck beds, equipment, and vehicles and other assets
purchased but not paid for at closing shall become the asset
of and liability of the entity for whom such assets were
purchased. This Section 2.4 shall not apply to assets
purchased in connection with either the Colorado acquisition
or the proposed North Carolina acquisition.
2.5 Liability Insurance. If economically feasible,
Pipeline, the Company and Energy shall cooperate and jointly
negotiate with insurers to acquire one general liability
insurance policy for the Company and its Remaining
Subsidiaries, and a separate general liability policy for
Energy, the Energy Subsidiaries, Pipeline, Exploration, and
Ranch.
2.6 Termination of Certain Agreements. The
employment agreement by and between Empire Gas and Robert W.
Plaster dated June 19, 1992 (the "Employment Agreement"),
the ranch agreement dated June 19, 1992 by and between
Empire Gas and Ranch (the "Ranch Agreement"), the Airline
Agreement by and between Empire Gas and Airlines dated June
19, 1992 (the "Airline Agreement"), and the lease agreement
by and between Empire Gas and Evergreen, dated January 1,
1993 (the "Evergreen Lease Agreement") shall be terminated
as of the Closing Date, at no cost to the Company or Empire
Gas.
2.7 Execution of Certain Agreements.
2.7(a) Non-Compete Agreement. The Company,
Lindsey, who shall become the controlling shareholder of the
Company upon the consummation of the transactions described
herein, Energy, Plaster, Stephen R. Plaster (who
beneficially owns the shares of EGAC Common Stock held by
the 1988 S. Plaster Trust and 1984 S. Plaster Trust), and
Joseph L. Schaefer (who beneficially owns shares of EGAC
Common Stock held by certain trusts which are transferring
shares to the Company pursuant to a separate agreement)
shall enter into a non-compete agreement in the form of
Exhibit E hereto (the "Non-Compete Agreement"), with such
agreement to become effective upon the consummation of the
transactions contemplated hereby.
2.7(b) Lease Agreement. The Company and Evergreen
shall enter into a lease agreement for the lease by the
Company of office space for its headquarters in the form of
Exhibit F hereto (the "Headquarters Lease"), with such lease
<PAGE>
to become effective upon the consummation of the
transactions contemplated hereby.
2.7(c) Services Agreement. The Company and a
company that will be wholly owned by Energy shall enter into
a service agreement in the form of Exhibit G hereto (the
"Services Agreement"), with such agreement to be effective
upon the consummation of the transactions contemplated
hereby.
2.8 Use of hangar by the Company. Airlines agrees
that the Company, Empire Gas, and their respective
successors may use, at no cost, its hangar which is located
in Lebanon Missouri, for the storage of two aircraft. The
right of the Company, Empire Gas, and their successors to
use this hangar shall terminate in the event either Paul S.
Lindsey, Jr., and/or Kristin Lindsey cease to beneficially
own, in the aggregate or separately, a majority of the
shares of outstanding common stock of the Company or its
successor or the Headquarters Lease is terminated. The
agreement contained in this Section 2.8 may otherwise be
terminated by the mutual consent of Airlines, the Company,
Empire Gas, and their respective successors, if any.
2.9 Litigation and Federal Tax Audits.
2.9(a) In the event that any claim,
action, suit, or other proceeding relating to the
operations of Energy or any of the Energy
Subsidiaries prior to the Closing Date ("Energy
Claim") is pending as of or arises after the Closing
Date, Energy shall assume the conduct or defense of
such claim, action, suit, or proceeding. In the
event that any claim, action, suit, or other
proceeding relating to the operations of the Company
or the Remaining Subsidiaries prior to the Closing
Date is pending as of or arises after the Closing
Date ("Empire Gas Claim"), the Company and its
successor shall assume the conduct or defense of
such claim, action, suit, or proceeding. If both
Energy or any of the Energy Subsidiaries and Empire
Gas or any of the Remaining Subsidiaries are named
as defendants in a claim, action, suit or
proceeding, such claim, action, suit or proceeding
will be an Energy Claim if the conduct at issue
relates to an existing or previous customer of
Energy or any of the Energy Subsidiaries or relates
or occurred in any territory where Energy has the
right to use the Empire Gas name and logo, and any
other claim, action, suit or proceeding shall be an
Empire Gas Claim.
2.9(b) Costs and expenses unreimbursed by
an insurance carrier and incurred in defending and
in satisfying any Energy Claim or Empire Gas Claim
shall be shared as follows: 47.7% of such costs and
expenses shall be borne by Energy and 52.3% of such
costs and expenses shall be borne by Empire
<PAGE>
Gas. Prior to the Closing Date, Energy and Empire
Gas shall exchange a list of all pending and
threatened Energy and Empire Gas Claims. After the
Closing Date, Energy and Empire Gas shall promptly
notify each other of any new Energy or Empire Gas
Claim. Within 15 days after the end of each
quarter, beginning with the quarter ending September
30, 1994, Energy and Empire Gas shall notify each
other in writing the aggregate amount of funds spent
during the quarter on each Energy Claim and on each
Empire Gas Claim, respectively, and shall pay any
amounts owed to each other as a result of the
obligation to share expenses for such Claims under
this Agreement. Either Energy or Empire Gas may
request BKD to audit expenses under this Section
2.9(b), and the expenses of any such audit shall be
shared equally. Energy and Empire Gas shall have
insurance for their respective Claims, which
insurance shall be maintained after the Closing Date
for as long as any Claims remain unresolved and
which insurance shall be reasonably satisfactory to
both Energy and Empire Gas.
2.9(c) In the event any federal, state, or
local tax liability (including penalties and
interest) is imposed on Empire Gas or the Remaining
Subsidiaries or on Energy or the Energy Subsidiaries
for any period prior to the Closing Date (other than
amounts contemplated by Section 2.3(a)(ii) above),
the Company shall pay fifty-two and three-tenths
percent (52.3%) and Energy shall pay forty-seven and
seven-tenths percent (47.7%) of any such liability
as well as the costs associated with any such
liability. As promptly as practicable after the
date hereof, the Company and Energy shall enter into
a tax indemnification agreement implementing this
Section 2.9(c) and addressing related tax matters.
2.9(d) The Company shall be indemnified by
Energy for any amounts it is required to pay in
excess of its obligations under Section 2.9(b), and
Energy shall be indemnified by the Company for any
amounts that it is required to pay in excess of its
obligations under Sections 2.9(b).
3. Closing. The closing of the transactions (the
"Closing") described herein shall be held at the offices of Empire Gas
Corporation, 1700 South Jefferson Street, Lebanon, Missouri 65536, at 9:00
a.m., on the date on which the conditions to Closing set forth in Sections 7,
8, and 9 have been satisfied, or such other time and place as the parties
agree. The Company shall notify each of the Sellers of the anticipated
Closing Date at least five business days in advance of such date.
4. Payment and Delivery. At the Closing, each Seller shall
deliver an Assignment Separate From Certificate substantially in the form of
Exhibit C hereto, transferring to the Company the number of shares of EGAC
<PAGE>
Common Stock owned by Seller as indicated in Section 1 hereof along with a
stock certificate representing the number of shares to be sold by such Seller
to the Company hereunder. The Company shall deliver to each Seller an
Assignment Separate From Certificate substantially in the form of Exhibit D
hereto, transferring to each Seller the number of shares of Energy Common
Stock that each Seller is entitled to receive as indicated in Section 1
hereof along with a stock certificate representing the number of shares to be
sold by the Company to such Seller.
<PAGE>
5. Representations of Sellers. Each of the Sellers hereby
severally but not jointly makes the following representations and warranties
to the Company and Energy (but only as to the shares of EGAC Common Stock
owned by such Seller and only as to the shares of Energy Common Stock to be
received by such Seller):
5.1 Ownership. Each Seller is, and at the Closing
Date will be, the record and beneficial owner of the number
of shares of EGAC Common Stock as indicated in Section 1 of
this Agreement, and no Seller has any outstanding options or
other rights of any kind to acquire additional EGAC Common
Stock of the Company.
5.2 Title. Each Seller now has, and at the Closing
Date will have, good and marketable title to such shares of
EGAC Common Stock, free and clear of all adverse claims,
options, liens, security interests, restrictions and other
encumbrances. No consents, approvals, orders,
authorizations, registrations, qualifications, designations,
declarations or filings with or from any United States or
foreign governmental agency or authority or any other person
or entity is required on the part of the Seller in
connection with the execution, delivery or performance of
this Agreement and the consummation of the transactions
contemplated herein, except for those which have been
obtained or will be obtained by the Sellers prior to the
Closing Date.
5.3 Right to Transfer. Each Seller now has, and at
the Closing Date will have, full legal right and power to
transfer and deliver to the Company the shares of EGAC
Common Stock to be transferred to the Company pursuant to
the terms of Section 1 of this Agreement, and the Company
will receive good and marketable title thereto, free and
clear of all adverse claims, options, liens, security
interests, restrictions and other encumbrances.
5.4 No Conflicts. The execution, delivery and
performance of and compliance with this Agreement and the
sale of the shares of EGAC Common Stock to the Company
hereunder will not conflict with, or constitute a default
under, any provision of any mortgage, indenture, contract,
agreement, judgment or decree to which the Seller is party
or by which it is bound and will not violate any law to
which the Seller is subject.
5.5 Own Account. Seller is purchasing the Energy
Common Stock solely for its own account, for investment and
not with a view to or for sale in connection with any
<PAGE>
distribution of the Energy Common Stock or any portion
thereof and not with any present intention of selling,
offering to sell, or otherwise disposing of or distributing
the Energy Common Stock or any portion thereof.
5.6 Business Relationship. Seller is generally
familiar with the business and affairs of Energy and has
discussed Energy and its plans, operations and financial
condition with one or more of the officers or directors of
Energy.
5.7 Disclosure. The Company and Energy have
disclosed to Seller in writing that:
5.7(a) the sale of the Energy Common Stock
has not been registered under the Securities Act of
1933, as amended (the "Act"), or qualified under the
securities laws of any state and the Energy Common
Stock must be held indefinitely unless a sale or
transfer of the Energy Common Stock is subsequently
registered under the Act and qualified under
applicable state securities laws or exemptions
therefrom are available;
5.7(b) any certificates representing the
Energy Common Stock will bear the following legend
restricting transfer:
"The securities represented hereby have not
been registered under the Securities Act of
1933, as amended ("Act"), nor have any been
registered or qualified under the
securities laws of any state. No transfer
of such securities will be permitted unless
a registration statement under the Act is
in effect as to such transfer, the transfer
is made in accordance with Rule 144 under
the Act, or in the opinion of counsel
(which may be counsel for the Company)
registration under the Act is unnecessary
in order for such transfer to comply with
the Act and with applicable state
securities laws."; and
5.7(c) the Company will instruct the
transfer agent for the Energy Common Stock to make a
notation in its stock records of the aforementioned
restrictions on transfer.
5.8 Reliance. Each of the Sellers understands that
the Company, Energy, and its officers and directors are
relying upon the representations and warranties made by it
in this Agreement.
6. The Company's Representations. In connection with the
purchase by the Company hereunder, the Company hereby represents, as of the
Closing Date, to each of the Sellers as follows:
<PAGE>
6.1 Ownership. The Company, at the Closing Date
will be, the record and beneficial owner of the number of
shares of Energy Common Stock as indicated in Section 1 of
this Agreement, which shares will comprise all of the issued
and outstanding shares of Energy, and the Company will not
have any outstanding options or other rights of any kind to
acquire additional Energy Common Stock.
6.2 Title. The Company, at the Closing Date, will
have good and marketable title to such shares of Energy
Common Stock, free and clear of all adverse claims, options,
liens, security interests, restrictions and other
encumbrances. No consents, approvals, orders,
authorizations, registrations, qualifications, designations,
declarations or filings with or from any United States or
foreign governmental agency or authority or any other person
or entity is required on the part of the Company in
connection with the execution, delivery or performance of
this Agreement and the consummation of the transactions
contemplated herein, except for those which have been
obtained or will be obtained by the Company prior to the
Closing Date.
6.3 Right to Transfer. The Company, at the Closing
Date will have, full legal right and power to transfer and
deliver to each Seller the shares of Energy Common Stock to
be transferred to such Seller pursuant to the terms of
Section 1 of this Agreement, and the Company will receive
good and marketable title thereto, free and clear of all
adverse claims, options, liens, security interests,
restrictions, and other encumbrances.
6.4 Assets of Energy. The sole assets of Energy
shall consist, as of the Closing Date, of all of the issued
and outstanding common stock of the corporations set forth
on Exhibit A hereto.
6.5 No Conflicts. The execution, delivery and
performance of and compliance with this Agreement and the
sale of the shares of Energy Common Stock to each Seller
hereunder will not conflict with, or constitute a default
under, any provision of any mortgage, indenture, contract,
agreement, judgment or decree to which the Company is party
or by which it is bound and will not violate any law to
which the Company is subject.
6.6 Reliance. The Company understands that each
Seller is relying upon the representations and warranties
made by it in this Agreement.
7. Conditions to the Company's Obligations. The
obligations of the Company under this Agreement are subject to fulfillment of
each of the following conditions, in addition to the conditions contained in
Section 9 below, all of which must be fulfilled at or prior to the Closing.
<PAGE>
7.1 Consummation of Offering of Senior Notes. In
connection with the transactions contemplated by this
Agreement, the Company intends to undertake an offering of
at least $100 million principal amount senior notes (the
"Offering"). The Offering shall be consummated
contemporaneously with the closing of the transactions
contemplated hereby.
7.2 Termination of Certain Agreements. The
Employment Agreement, the Ranch Agreement, the Airline
Agreement, and the Evergreen Lease Agreement shall be
terminated, at no cost to the Company or Empire Gas,
effective upon the consummation of the transactions
contemplated hereby.
7.3 Representations and Warranties. The
representations and warranties of each of the Sellers
contained in Section 5 of this Agreement shall be true and
correct when made and shall be true and correct on and as of
the Closing Date.
7.4 Performance. Each of the Sellers shall have
performed and satisfied all agreements and conditions
contained herein and required to be performed or satisfied
by it on or prior to the Closing Date.
7.5 Proceedings and Documents. All corporate
and other proceedings in connection with the transactions
contemplated by this Agreement and all documents incident
thereto shall be satisfactory in form and substance to the
Company.
8. Conditions to the Sellers' Obligations. The obligations
of the Sellers under this Agreement are subject to fulfillment of each of the
following conditions, in addition to the conditions contained in Section 9
below, all of which must be fulfilled at or prior to the Closing.
8.1 Representations and Warranties. The
representations and warranties of the Company contained in
Section 6 of this Agreement shall be true and correct when
made and shall be true and correct on and as of the Closing
Date.
9. Conditions to both Company's and Sellers' Obligations.
The obligations of the Company and Sellers under this Agreement are subject
to fulfillment of each of the following conditions at or prior to the
Closing. These conditions are in addition to any conditions contained in
Section 7, in the case of the Company, and Section 8, in the case of each
Seller.
9.1 Receipt of favorable ruling from the IRS. The
Company shall have received a ruling from the IRS to the
effect that the transfer of the shares of Energy Common
Stock to the Sellers will be a tax-free distribution under
355 of the Internal Revenue Code of 1986, as amended.
<PAGE>
9.2 Solvency Opinion. The Company shall have
received a solvency opinion from a nationally recognized
firm which provides assurances that the transfer of the
shares of Energy Common Stock to Sellers and the
consummation of the Offering will not render the Company
insolvent nor leave the Company with inadequate or
unreasonably small capital.
9.3 Execution of Non-Compete Agreements.
9.3(a) The Company, Lindsey, Energy,
Plaster, Stephen R. Plaster, and Joseph L. Schaefer
shall have executed the Non-Compete Agreement
described in Section 2.7(a) above.
9.3(b) The spouse and adult children of
both Plaster and Lindsey, all Sellers and all
division managers and officers and employees senior
to division managers of Energy and Empire Gas and
their respective subsidiaries shall have executed
non-compete agreements containing substantially the
same terms as the form of agreement set forth in
Exhibit E hereto with such agreements to be
effective upon the consummation of the transactions
contemplated hereby and with such agreements to bar
competition with both Energy and Empire Gas and
their respective Subsidiaries.
9.4 Lease Agreement. The Company and Evergreen
shall have entered into the Headquarters Lease described in
Section 2.7(b) above.
9.5 Services Agreement. The Company and a wholly-
owned subsidiary of Energy shall have entered into the
Services Agreement described in the Section 2.7(c) above.
9.6 Tax Agreement. The Company and Energy
shall have entered into the tax agreement as described in
Section 2.9(c).
9.7 Purchase of Debentures. The Company shall have
purchased for par from Plaster $4.7 million principal amount
of Empire Gas's 9% Subordinated Debenture, due 2007 (the
"Debentures") and shall have purchased for par from those
individuals listed on Exhibit B hereto all Debentures owned
by such individuals as of the date hereof.
9.8 Use of Proceeds. The Company shall have used
the proceeds of the Offering to call all Empire Gas's 12%
Senior Subordinated Debentures due 2002, all Empire Gas's 9%
Convertible Subordinated Debentures due 1998, and not less
then $8.5 million principal amount of the Debentures.
9.9 Key Man Insurance. The Company shall have
obtained a $30 million key-man life insurance policy for
Lindsey with a term of not less than five years.
<PAGE>
9.10 Litigation Insurance. The Company shall
have obtained an insurance policy naming the Company,
Energy, Lindsey, Plaster and other officers and directors as
insureds providing insurance of up to $5 million (with a
reasonable deductible) for a term of six years for the cost
of any litigation or proceeding commenced by a creditor of
the Company or any of its subsidiaries or any other third
party arising from transactions contemplated by this
Agreement.
9.11 Shareholder Approval. The shareholders of
the Company shall have approved the transactions
contemplated by this Agreement; provided, however, that each
of the Sellers and Lindsey hereby agree to vote their shares
to approve such transactions.
10. Miscellaneous
10.1 Survival of Representations and Warranties.
All representations and warranties of the Sellers and the
Company made under or pursuant to this Agreement shall
survive the Closing Date.
10.2 Payment of Fees and Expenses. The Company
shall pay the fees and expenses, if any, as provided in
Section 2.3(a) above. Each party shall otherwise be
responsible for any other costs that party may have incurred
incident to the negotiation, preparation, and execution of
this Agreement and the consummation of the transactions
contemplated hereby. Each of the parties represents and
warrants to the other that there are no brokers or finders
fees payable as of the date hereof.
10.3 Entire Agreement and Modification. This
Agreement constitutes the entire agreement between the
parties, all prior agreements being merged herein. No
changes to, modifications of, or additions to, this
Agreement shall be valid unless the same shall be in writing
and signed by all parties hereto.
10.4 Binding Agreement; Assignment. This Agreement
shall be binding upon and inure to the benefit of the
parties named herein and to their respective successors and
assigns. This Agreement shall not be assignable by any
party without the prior written consent of the other
parties; provided that the Company may assign its rights
hereunder to an entity controlled by, controlling or under
common control with the Company.
10.5 Termination. This Agreement may be terminated
any time prior to the Closing Date (i) by the mutual consent
of the Company, Lindsey, and all of the Sellers or (ii) by
any of the Sellers, if the Closing shall not have occurred
on or before June 28, 1994.
<PAGE>
10.6 Litigation. If either Plaster or Lindsey
commences litigation against the other for any reason
relating to this Agreement, the party commencing such
litigation shall reimburse the other for any and all costs
of defending the litigation, including without limitation
all legal fees and the costs of expert testimony, travel,
professional services and the employee time and expense
incurred in connection with the litigation, except and
unless the party commencing the litigation prevails on all
the counts and claims thereof. As used in this
Section 10.6, "Plaster" shall mean Robert W. Plaster,
Energy, any of the Energy Subsidiaries and any Seller, and
"Lindsey" shall mean Paul Lindsey, Kristin Lindsey, the
Company and any of the Remaining Subsidiaries.
10.7 Indemnification from Claims of Creditors. The
Company shall indemnify Plaster or his personal
representatives or successors in interest, each Seller,
Energy and each Energy Subsidiary and hold each of them
harmless from and against any liability, claim or litigation
arising out of this Agreement or transactions contemplated
hereby and commenced by or on behalf of any present or
future creditor of the Company or any of its Subsidiaries or
any other third party, provided that the insurance obtained
pursuant to Section 9.10 covers claims by any such other
third party. The Company shall notify Energy promptly if
any such claim or litigation is commenced and shall
reimburse each of the indemnified parties for all its
reasonable costs, including its legal fees.
10.8 Further Assurances. Each party agrees to
cooperate fully with the other parties and to execute such
further instruments, documents, and agreements and to give
such further written assurances, as may be reasonably
requested by any other party to evidence and reflect the
transactions described herein and contemplated hereby, and
to carry into effect the intents and purposes of this
Agreement.
10.9 Notices. All notices, demands and requests
required by this Agreement shall be in writing and shall be
deemed to have been given for all purposes (i) upon personal
delivery, (ii) two days after being sent, when sent by
professional overnight courier service, (iii) five days
after posting when sent by registered or certified mail, or
(iv) on the date of transmission when sent by telegram,
telegraph, telex or facsimile transmission, addressed
If to the Company, Empire Gas, or Energy:
[name of party]
1700 South Jefferson Street
Lebanon, Missouri 65536
<PAGE>
If to Lindsey:
Paul S. Lindsey, Jr.
303 Stonewood Blvd.
Roanoke, Texas 76262
If to a Seller, Plaster, Ranch, Airlines, or
Evergreen:
[name of party]
c/o Robert W. Plaster
307 Ocean Boulevard
Golden Beach, Florida 33160
with a copy to:
Lynn Hoover, Esq.
Hillix, Brewer, Hoffhaus, Whittaker
& Wright
Fourth Floor, Two Crown Center
2420 Pershing Road
Kansas City, Missouri 64108-0355
Any party hereto may from time to time by notice in writing
served upon the others as provided herein, designate a
different mailing address or a different person to which
such notices or demands are thereafter to be addressed or
delivered.
10.10 Captions. Captions are provided herein for
convenience only and they are not to serve as a basis for
interpretation or construction of this Agreement, nor as
evidence of the intention of the parties hereto.
10.11 Attorney's Fees. In any action at law or in
equity to enforce any of the provisions or rights under this
Agreement, the unsuccessful party to such litigation, as
determined by the court in a final judgment or decree, shall
pay the successful party all costs, expenses and reasonable
attorneys' fees, as set by the court and not by a jury,
ncurred by the successful party (including, without
limitation, costs, expenses and fees on any appeal).
10.12 Governing Law. This Agreement shall be
governed by and construed in accordance with the laws of the
state of Missouri, without reference to conflicts of laws,
and the parties agree that any action, suit, or proceeding
relating to this Agreement shall be instituted and
prosecuted in the courts of the County of Clay, State of
Missouri, and each party waives the right to change of
venue.
10.13 Counterparts. This Agreement may be executed
in one or more counterparts, each of which shall be deemed
an original but all of which together shall constitute one
and the same instrument.
<PAGE>
10.14 Status of Ranch, Airlines and Evergreen.
Ranch, Airlines and Evergreen are signing this Agreement
solely for the purpose of Sections 2.6, 2.7(b) and 2.8 and
are not otherwise to be considered parties to this
Agreement.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the day and year first written.
SELLERS:
______________________________
Robert W. Plaster
Robert W. Plaster Trust dated
December 13, 1988
By: __________________________
Robert W. Plaster,
Trustee
Stephen Robert Plaster Trust dated
October 30, 1988
By:___________________________
Stephen R. Plaster, Trustee
Stephen Robert Plaster Trust dated July
30, 1984
By:___________________________
Dolly Francine Plaster,
Trustee
______________________________
Stephen R. Plaster
______________________________
Joseph L. Schaefer
OTHER PARTIES: EMPIRE GAS CORPORATION
a Missouri corporation
By:___________________________
Name:______________________
Title:_____________________
<PAGE>
EMPIRE GAS OPERATING CORPORATION
a Missouri corporation
By:______________________________
Name:_________________________
Title:________________________
EMPIRE ENERGY CORPORATION
a Tennessee corporation
By:______________________________
Name:_________________________
Title:________________________
_________________________________
Paul S. Lindsey, Jr.
EMPIRE RANCH, INC.
a Missouri corporation
By:______________________________
Name:_________________________
Title:________________________
EMPIRE AIRLINES, INC.
a Missouri corporation
By:___________________________
Name:______________________
Title:_____________________
EVERGREEN NATIONAL CORPORATION
a Florida corporation
By:___________________________
Name:______________________
Title:_____________________
<PAGE>
<TABLE>
EXHIBIT A
EMPIRE ENERGY CORPORATION
<S> <C> <C>
SHARES OF COMMON
STATE IN WHICH STOCK ISSUED TO
NAME OF SUBSIDIARY ORGANIZED AND DOES EMPIRE ENERGY
BUSINESS CORPORATION
EMPIRE BUILDING CORPORATION DELAWARE 30,000, $1 par
EMPIRE EQUIPMENT CORPORATION DELAWARE 30,000, $1 par
EMPIREGAS TRUCKING CORPORATION (JASPER) DELAWARE 30,000, $1 par
EMPIREGAS INC. OF AMORY MISSISSIPPI 30,000, $1 par
EMPIREGAS INC. OF BAY SPRINGS MISSISSIPPI 30,000, $1 par
EMPIREGAS INC. OF BLUE MOUNTAIN MISSISSIPPI 30,000, $1 par
EMPIREGAS INC. OF BRUCE MISSISSIPPI 30,000, $1 par
EMPIREGAS INC. OF COLUMBUS, MS MISSISSIPPI 30,000, $1 par
EMPIREGAS INC. OF JACKSON, MS MISSISSIPPI 30,000, $1 par
EMPIREGAS INC. OF KOSCIUSKO MISSISSIPPI 30,000, $1 par
EMPIREGAS INC. OF PONTOTOC MISSISSIPPI 30,000, $1 par
EMPIREGAS INC. OF WAYNESBORO MISSISSIPPI 30,000, $1 par
EMPIREGAS INC. OF ROGERS ARKANSAS 30,000, $1 par
EMPIREGAS INC. OF BLUE EYE MISSOURI 30,000, $1 par
EMPIREGAS INC. OF BRANSON MISSOURI 30,000, $1 par
EMPIREGAS INC. OF CASSVILLE MISSOURI 30,000, $1 par
EMPIREGAS INC. OF FAIR GROVE MISSOURI 30,000, $1 par
EMPIREGAS INC. OF GALENA MISSOURI 30,000, $1 par
EMPIREGAS INC. OF KIMBERLING CITY MISSOURI 30,000, $1 par
EMPIREGAS INC. OF MONETT MISSOURI 30,000, $1 par
EMPIREGAS INC. OF NEOSHO MISSOURI 30,000, $1 par
EMPIREGAS INC. OF NOEL MISSOURI 30,000, $1 par
EMPIREGAS INC. OF SPRINGFIELD MISSOURI 30,000, $1 par
EMPIREGAS INC. OF SELIGMAN MISSOURI 30,000, $1 par
EMPIREGAS INC. OF WHEATON MISSOURI 30,000, $1 par
EMPIREGAS INC. OF MARSHFIELD MISSOURI 30,000, $1 par
EMPIREGAS INC. OF GREENE COUNTY MISSOURI 30,000, $1 par
EMPIREGAS INC. OF BATESVILLE ARKANSAS 30,000, $1 par
EMPIREGAS INC. OF BLYTHEVILLE ARKANSAS 30,000, $1 par
EMPIREGAS INC. OF HARDY ARKANSAS 30,000, $1 par
EMPIREGAS INC. OF HARRISON ARKANSAS 30,000, $1 par
EMPIREGAS INC. OF MELBOURNE ARKANSAS 30,000, $1 par
EMPIREGAS INC. OF MOUNTAIN HOME ARKANSAS 30,000, $1 par
EMPIREGAS INC. OF MOUND CITY ILLINOIS 30,000, $1 par
TRI-LAKES GAS CO., INC. MISSOURI 30,000, $1 par
EMPIREGAS INC. OF ALTON MISSOURI 30,000, $1 par
EMPIREGAS INC. OF AVA MISSOURI 30,000, $1 par
EMPIREGAS INC. OF BIRCH TREE MISSOURI 30,000, $1 par
EMPIREGAS INC. OF CAPE GIRARDEAU MISSOURI 30,000, $1 par
EMPIREGAS INC. OF ELLINGTON MISSOURI 30,000, $1 par
EMPIREGAS INC. OF HOUSTON, MO MISSOURI 30,000, $1 par
EMPIREGAS INC. OF MALDEN MISSOURI 30,000, $1 par
EMPIREGAS INC. OF MOUNTAIN GROVE MISSOURI 30,000, $1 par
EMPIREGAS INC. OF PERRYVILLE MISSOURI 30,000, $1 par
EMPIREGAS INC. OF PIEDMONT MISSOURI 30,000, $1 par
EMPIREGAS INC. OF POPLAR BLUFF MISSOURI 30,000, $1 par
EMPIREGAS INC. OF SALEM MISSOURI 30,000, $1 par
EMPIREGAS INC. OF SIKESTON MISSOURI 30,000, $1 par
<PAGE>
SHARES OF COMMON
STATE IN WHICH STOCK ISSUED TO
NAME OF SUBSIDIARY ORGANIZED AND DOES EMPIRE ENERGY
BUSINESS CORPORATION
EMPIREGAS INC. OF WEST PLAINS MISSOURI 30,000, $1 par
GENERAL GAS CO., INC. MISSOURI 30,000, $1 par
S. P. GAS CO. OF LEBANON MISSOURI 30,000, $1 par
EMPIREGAS INC. OF BRYANT INDIANA 30,000, $1 par
EMPIREGAS INC. OF HARTFORD CITY INDIANA 30,000, $1 par
EMPIREGAS INC. OF MARION INDIANA 30,000, $1 par
EMPIREGAS INC. OF INDIANAPOLIS INDIANA 30,000, $1 par
EMPIREGAS INC. OF PENDLETON INDIANA 30,000, $1 par
EMPIREGAS INC. OF ROCHESTER INDIANA 30,000, $1 par
EMPIREGAS INC. OF WARSAW, IN INDIANA 30,000, $1 par
EMPIREGAS INC. OF COLUMBUS, IN INDIANA 30,000, $1 par
EMPIREGAS INC. OF EVANSVILLE INDIANA 30,000, $1 par
EMPIREGAS INC. OF GREENSBURG INDIANA 30,000, $1 par
EMPIREGAS INC. OF OSGOOD INDIANA 30,000, $1 par
EMPIREGAS INC. OF SCOTTSBURG INDIANA 30,000, $1 par
EMPIREGAS INC. OF VINCENNES INDIANA 30,000, $1 par
EMPIREGAS INC. OF BARDSTOWN KENTUCKY 30,000, $1 par
EMPIREGAS INC. OF CORINTH KENTUCKY 30,000, $1 par
EMPIREGAS INC. OF CROFTON KENTUCKY 30,000, $1 par
EMPIREGAS INC. OF FALMOUTH KENTUCKY 30,000, $1 par
EMPIREGAS INC. OF WALTON KENTUCKY 30,000, $1 par
EMPIREGAS INC. OF HODGENVILLE KENTUCKY 30,000, $1 par
EMPIREGAS INC. OF LA GRANGE KENTUCKY 30,000, $1 par
EMPIREGAS INC. OF LEBANON JUNCTION KENTUCKY 30,000, $1 par
EMPIREGAS INC. OF LOUISVILLE KENTUCKY 30,000, $1 par
EMPIREGAS INC. OF MOREHEAD KENTUCKY 30,000, $1 par
EMPIREGAS INC. OF NICHOLASVILLE KENTUCKY 30,000, $1 par
EMPIREGAS INC. OF OWENSBORO KENTUCKY 30,000, $1 par
EMPIREGAS INC. OF DALTON GEORGIA 30,000, $1 par
EMPIREGAS INC. OF ROME GEORGIA 30,000, $1 par
EMPIREGAS INC. OF CORBIN KENTUCKY 30,000, $1 par
EMPIREGAS INC. OF HAZARD KENTUCKY 30,000, $1 par
EMPIREGAS INC. OF JACKSON, KY KENTUCKY 30,000, $1 par
EMPIREGAS INC. OF ATHENS, TN TENNESSEE 30,000, $1 par
EMPIREGAS INC. OF CLINTON, TN TENNESSEE 30,000, $1 par
EMPIREGAS INC. OF DUNLAP TENNESSEE 30,000, $1 par
EMPIREGAS INC. OF KINGSTON TENNESSEE 30,000, $1 par
EMPIREGAS INC. OF LEBANON TENNESSEE 30,000, $1 par
EMPIREGAS INC. OF MARYVILLE TENNESSEE 30,000, $1 par
EMPIREGAS INC. OF NEW TAZEWELL TENNESSEE 30,000, $1 par
EMPIREGAS INC. OF SEVIERVILLE TENNESSEE 30,000, $1 par
EMPIREGAS INC. OF SNEEDVILLE TENNESSEE 30,000, $1 par
EMPIREGAS INC. OF CLEVELAND TENNESSEE 30,000, $1 par
EMPIREGAS INC. OF ARAB ALABAMA 30,000, $1 par
EMPIREGAS INC. OF ATHENS, AL ALABAMA 30,000, $1 par
EMPIREGAS INC. OF BELLE MINA ALABAMA 30,000, $1 par
EMPIREGAS INC. OF CULLMAN ALABAMA 30,000, $1 par
EMPIREGAS INC. OF DOUBLE SPRINGS ALABAMA 30,000, $1 par
EMPIREGAS INC. OF FAYETTE ALABAMA 30,000, $1 par
EMPIREGAS INC. OF FORT PAYNE ALABAMA 30,000, $1 par
JEFFERSON COUNTY GAS CO. ALABAMA 30,000, $1 par
EMPIREGAS INC. OF GERALDINE ALABAMA 30,000, $1 par
EMPIREGAS INC. OF HENAGAR ALABAMA 30,000, $1 par
EMPIREGAS INC. OF HUNTSVILLE ALABAMA 30,000, $1 par
<PAGE>
SHARES OF COMMON
STATE IN WHICH STOCK ISSUED TO
NAME OF SUBSIDIARY ORGANIZED AND DOES EMPIRE ENERGY
BUSINESS CORPORATION
EMPIREGAS INC. OF ONEONTA ALABAMA 30,000, $1 par
EMPIREGAS INC. OF SKYLINE ALABAMA 30,000, $1 par
EMPIREGAS INC. OF ALBERTVILLE ALABAMA 30,000, $1 par
EMPIREGAS INC. OF NEW HOPE ALABAMA 30,000, $1 par
EMPIREGAS INC. OF TRENTON GEORGIA 30,000, $1 par
EMPIREGAS INC. OF ARDMORE TENNESSEE 30,000, $1 par
EMPIREGAS INC. OF CHATTANOOGA TENNESSEE 30,000, $1 par
EMPIREGAS INC. OF FAYETTEVILLE TENNESSEE 30,000, $1 par
EMPIREGAS INC. OF LEWISBURG TENNESSEE 30,000, $1 par
EMPIREGAS INC. OF LORETTO TENNESSEE 30,000, $1 par
EMPIREGAS INC. OF MURFREESBORO TENNESSEE 30,000, $1 par
EMPIREGAS INC. OF SHELBYVILLE TENNESSEE 30,000, $1 par
EMPIREGAS INC. OF TULLAHOMA TENNESSEE 30,000, $1 par
EMPIREGAS INC. OF CARTERSVILLE GEORGIA 30,000, $1 par
EMPIREGAS INC. OF CLERMONT GEORGIA 30,000, $1 par
EMPIREGAS INC. OF JASPER GEORGIA 30,000, $1 par
EMPIREGAS INC. OF WARNER ROBINS GEORGIA 30,000, $1 par
NAILS CREEK GAS CO. GEORGIA 30,000, $1 par
EMPIREGAS INC. OF SANDERSVILLE GEORGIA 30,000, $1 par
EMPIREGAS INC. OF DALEVILLE ALABAMA 30,000, $1 par
EMPIREGAS INC. OF DOTHAN ALABAMA 30,000, $1 par
EMPIREGAS INC. OF CROSS CITY FLORIDA 30,000, $1 par
EMPIREGAS INC. OF CRYSTAL RIVER FLORIDA 30,000, $1 par
EMPIREGAS INC. OF DADE CITY FLORIDA 30,000, $1 par
EMPIREGAS INC. OF GROVELAND FLORIDA 30,000, $1 par
EMPIREGAS INC. OF LEESBURG FLORIDA 30,000, $1 par
EMPIREGAS INC. OF PANAMA CITY FLORIDA 30,000, $1 par
EMPIREGAS INC. OF PENSACOLA FLORIDA 30,000, $1 par
EMPIREGAS INC. OF PORT RICHEY FLORIDA 30,000, $1 par
EMPIREGAS INC. OF RIVERVIEW FLORIDA 30,000, $1 par
EMPIREGAS INC. OF BAINBRIDGE GEORGIA 30,000, $1 par
EMPIREGAS INC. OF BLAKELY GEORGIA 30,000, $1 par
EMPIREGAS INC. OF BOSTON GEORGIA 30,000, $1 par
EMPIREGAS INC. OF DAWSON GEORGIA 30,000, $1 par
EMPIREGAS INC. OF DONALSONVILLE GEORGIA 30,000, $1 par
EMPIREGAS INC. OF MOULTRIE GEORGIA 30,000, $1 par
EMPIREGAS INC. OF COOKEVILLE TENNESSEE 30,000, $1 par
Three Subsidiaries in formation:
Blairsville, Georgia; Blue Ridge, Georgia; and Bella Vista, Arkansas.
Two additional subsidiaries:
Empire Gas, Inc. of Horseshoe Bend, Arkansas and Tri-Lakes Gas, Inc. of Highlandville, Missouri.
</TABLE>
<PAGE>
<TABLE>
EXHIBIT B
SHARES OF EGAC NUMBER OF SHARES
COMMON STOCK TO BE EXCHANGED FOR
NAME TO BE PURCHASED(1) CASH ENERGY COMMON STOCK
<S> <C> <C>
Robert L. Wooldridge 260,500 96,814 163,686
Dwight Gilpin 80,000 31,053 48,947
Luther Gill 29,450 12,636 16,814
Earl Noe 51,000 20,488 30,512
Paul Stalhman 26,712 11,639 15,073
Charlie Jones 25,000 11,015 13,985
Stephen R. Plaster n/a n/a n/a
Joseph L. Schaefer n/a n/a n/a
Gwen Vanderhoef 100,000 100,000 --
Martin F. Dryden, Jr. 10,000 10,000 --
Larry Weis 7,000 4,457 2,543
Farrell Stamper 3,900 3,328 572
Tom Flak 5,500 3,911 1,589
Floyd Waterman 27,000 11,744 15,256
Carolyn Rein 5,300 3,838 1,462
Dan Weatherly 200 200 --
Joyce Kinnett 100 100 --
S.A. Spencer 125,000 25,000 100,000
All employees currently working for any Energy Subsidiary may become employees of any Energy Subsidiary. In addition,
the following individuals may become employees of Energy or an Energy Subsidiary: Kevin Moran, Steven Politte, Pat
Green, Mike Patrick, L. Young, D. Wiggington, Kermit Clay, Dave Dean, Doug Dyer, and numerous clerical personnel to be
determined.
__________
(1) Assumes all options to purchase shares of EGAC Common Stock that are held by these employees are exercised prior
to the date the Company repurchases these shares of EGAC Common Stock.
</TABLE>
<PAGE>
EXHIBIT C
ASSIGNMENT SEPARATE FROM CERTIFICATE
For value received, the undersigned hereby sells, assigns
and transfers unto Empire Gas Corporation, a Missouri corporation, ________
shares of Empire Gas Corporation common stock, par value $.001, standing in
the name of [NAME OF SELLER] on the books of said corporation represented by
Certificate No. ___ herewith and does hereby irrevocably constitute and
appoint _______________________ to transfer the said stock on the books of
the within named corporation with full power of substitution.
DATED: ___________________, 1994
[Name of Shareholder]
By:________________________
Name:___________________
Title:__________________
Signed and delivered in the presence of
________________________
Signature guaranteed by Empire Gas Corporation
By:________________________
Name:___________________
Title:__________________
<PAGE>
EXHIBIT D
ASSIGNMENT SEPARATE FROM CERTIFICATE
For value received, the undersigned hereby sells, assigns and transfers unto
[NAME OF SELLER], ________ shares of Empire Energy Corporation common stock,
par value $.01, standing in the name of Empire Gas on the books of said
corporation represented by Certificate No. ___ herewith and does hereby
irrevocably constitute and appoint _______________________ to transfer the
said stock on the books of the within named corporation with full power of
substitution.
DATED: ___________________, 1994
Empire Gas Corporation
By:________________________
Name:___________________
Title:__________________
Signed and delivered in the presence of
________________________
Signature guaranteed by Empire Energy Corporation
By:________________________
Name:___________________
Title:__________________
<PAGE>
Exhibit E
NON-COMPETITION AGREEMENT
AGREEMENT made this __th day of ____________, 1994, by and among
Empire Gas Corporation, a Missouri corporation (the "Company"), Empire Energy
Corporation, a Tennessee corporation ("Energy"), Mr. Robert W. Plaster
("Plaster"), Mr. Stephen R. Plaster ("S. Plaster"), Mr. Joseph Schaefer
("Schaefer") and Mr. Paul S. Lindsey, Jr. ("Lindsey") shall become effective
upon the closing of the purchase by the Company of 11,593,991 shares of its
$.001 par value, common stock (the "EGAC Common Stock") pursuant to the terms
of the Stock Redemption Agreement dated March __, 1994, by and among the
Company, Energy, Plaster, S. Lindsey, S. Plaster, Schaefer, Empire Gas
Operating Corporation, a Missouri corporation ("Empire Gas"), the Robert W.
Plaster Trust dated December 13, 1988 (the "R. Plaster Trust"), the Dolly
Francine Plaster Trust dated July 30, 1984 (the "D. Plaster Trust"), the
Tammy Jane Plaster Trust dated July 30, 1984 (the "T. Plaster Trust"), the
Stephen Robert Plaster Trust dated October 30, 1988 (the "1988 S. Plaster
Trust"), the Stephen Robert Plaster Trust dated July 30, 1984 (the "1984 S.
Plaster Trust"), the Cheryl Jean Plaster Schaefer Trust dated October 30,
1988 (the "1988 C. Schaefer Trust"), the Cheryl Jean Plaster Schaefer Trust
dated July 30, 1984 (the "1984 C. Schaefer Trust," and together with the R.
Plaster Trust, D. Plaster Trust, T. Plaster Trust, 1988 S. Plaster Trust,
1984 S. Plaster Trust, and 1988 C. Schaefer Trust, the "Sellers"), and
certain other entities related to the Company or Plaster (the "Stock
Purchase").
WHEREAS, the Company is undertaking a series of transactions to
complete a restructuring, and in connection therewith, the Sellers will sell
their shares of EGAC Common Stock to the Company in exchange for shares of
common stock of Energy ("Energy Common Stock"), a subsidiary of the Company
that has approximately 139 wholly-owned subsidiaries which own the operating
assets of certain of the Company's liquified petroleum ("LP") gas and
appliance companies and other assets; and
WHEREAS, following the restructuring, Energy will be the owner of and
will operate certain LP gas and appliance companies that were previously
owned by the Company, and the Company will continue to operate the LP gas and
appliance companies of which it has retained ownership; and
WHEREAS, Plaster, the Chairman of the Board of Directors and Chief
Executive Officer of the Company and its wholly-owned subsidiary Empire Gas,
currently owns a controlling interest in the Company by virtue of his
beneficial ownership of the shares of EGAC Common Stock held by the Sellers;
and
WHEREAS, upon consummation of the Stock Purchase, Plaster shall sell
his entire ownership interest in the Company, shall resign as Chief Executive
Officer and Chairman of the Board of Directors of the Company and Empire Gas,
and shall become the beneficial owner of a controlling interest in Energy;
and
WHEREAS, upon consummation of the Stock Purchase, Lindsey shall
beneficially own a controlling interest in EGAC and shall become the Chairman
of the Board of Directors, Chief Executive Officer, and President of the
Company; and
<PAGE>
WHEREAS, as part of the consideration for the parties hereto and the
Sellers to enter into the transactions contemplated by the Stock Redemption
Agreement, the parties hereto have agreed to enter into this agreement
limiting the ability of Energy, Plaster, and their Affiliates, and Empire,
Lindsey, and their Affiliates to compete in the LP gas and appliance
business;
NOW THEREFORE, in consideration of the transactions contemplated by
the Stock Redemption Agreement and other good and valuable consideration the
receipt and adequacy of which the parties do acknowledge, it is mutually
agreed as follows:
1. Definitions
(a) "Affiliate" shall mean, with respect to any party, any
individual, partnership, joint venture, corporation, trust, and
unincorporated organization directly or indirectly controlling,
controlled by, or under common control with such party following the
consummation of the Stock Purchase, including without limitation, in
the case of Plaster and Lindsey, any relative living in their home.
(b) "Empire Group" shall mean Empire Gas Acquisition
Corporation, Lindsey, and their Affiliates.
(c) "Energy Group" shall mean Empire Energy Corporation,
Plaster, S. Plaster, Schaefer and their respective Affiliates.
(d) "Non-Compete Period" shall mean the period commencing
on the date this Agreement becomes effective and continuing for a
period of three years thereafter.
2. Covenant Not To Compete.
(a) Secrecy. Energy Group and Empire Group each agree that
during the Non-Compete Period:
(1) the members of its group shall not, directly or
indirectly, at any time reveal, make known, or use any con-
fidential business information (including without limitation
customer lists and records) relating to the LP gas and
appliance business of any of the members of the other group
for any purpose or benefit that might have an adverse effect
upon the business of any of the members of such other group.
(2) Notwithstanding Section 2(a)(1) above, a member
of either group may disclose any such confidential business
information to the extent necessary to resolve any pending
or threatened audit, investigation, action, suit, claim, or
proceeding by any third party, including without limitation
any regulatory body or the Internal Revenue Service,
involving such member.
(b) Non-Compete.
(1) Subject to the exception described in Section
2(b)(3) below, the members of Energy Group agree that during
the Non-Compete Period they shall not, directly or
indirectly, own, manage, operate, control, or participate in
<PAGE>
the ownership, management, operation or control of, or be
connected as a partner, representative, shareholder (with
the exception of beneficial ownership of not more than 5% of
the outstanding equity securities of any publicly held
corporation or entity), consultant, agent, broker, dealer
with, or have any direct or indirect financial interest in,
or directly or indirectly finance, aid or assist in any way
in any LP gas or appliance business in the marketing
territory of the Empire Group (the "Empire Marketing
Territory), as set forth on Exhibit A hereto.
(2) Subject to the exception described in Section
2(b)(3) below, the members of Empire Group agree that during
the Non-Compete Period they shall not, 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 (with
the exception of beneficial ownership of not more than 5% of
the outstanding equity securities of any publicly held
corporation or entity), consultant, agent, broker, dealer
with, or have any direct or indirect financial interest in,
or directly or indirectly finance, aid or assist in any way
in any LP gas or appliance business in the marketing
territory of the Energy Group (the "Energy Marketing
Territory"), as set forth on Exhibit B hereto.
(3) Notwithstanding Section 2(b)(1) and
2(b)(2), either group may consummate a Multi-State
Acquisition that would result in the acquisition and
subsequent operation of an LP gas and appliance company in
one or more locations in which such group would otherwise be
prohibited from engaging in the LP gas and appliance
business because of the prohibitions contained in Sections
2(b)(1) or 2(b)(2) ("Encroaching Businesses") provided that
the acquisition of such Encroaching Businesses is incidental
to the Multi-State Acquisition. As used herein, "Multi-
State Acquisition" shall mean an acquisition of the stock or
assets of an LP gas business with retail outlets located in
three or more states. The Encroaching Businesses shall be
deemed to be incidental if the retail gallons sold by the
Encroaching Businesses in the last full fiscal year for
which data is available accounted for less than 30% of all
retail gallons sold by the business constituting the Multi-
State Acquisition.
(i) The consummation of any such Multi-
State Acquisition that results in the acquisition of
Encroaching Businesses shall not operate to permit
the group acquiring the Encroaching Businesses to
make further acquisitions in the area in which the
Encroaching Businesses are located, except that the
group may make further Multi-State Acquisitions in
accordance with Section 2(b)(3).
(ii) The application of the exception
contained in this Section 2(b)(3) shall apply only
to Sections 2(b)(1) and 2(b)(2) above and shall not
modify, change, or otherwise affect any other
<PAGE>
section of this Agreement, including but not limited
to, Section 2(c) and 2(d) below.
(4) Notwithstanding Section 2(b)(2), Lindsey may
acquire the business of Red Top Gas currently owned by his
brother in the event his brother dies during the Non-Compete
Period, and Lindsey and members of his family may advance
funds to RPA Incorporated so long as such funds are not
being used by RPA Incorporated in the Energy Marketing
Territory to make acquisitions or start new plants or to
expand into the Energy Marketing Territory or take the
customers of any member of the Energy Group.
(c) Customers. Energy Group and Empire Group each agree
that, during the Non-Compete Period, the members of its group shall
not, for themselves or in conjunction with or on behalf of any other
individual or entity, solicit, divert, take away or endeavor to take
away any person, firm, association or corporation listed as a
customer or account of the LP gas or appliance business of any member
of the other group.
(d) Employees. Energy Group and Empire Group each agree
that, during the Non-Compete Period, the members of its group shall
not, for themselves or in conjunction with or on behalf of any other
individual or entity, entice, solicit, take away, hire, employ or
endeavor to employ any person who (i) is, or shall be, in the service
of any member of the other group and (ii) is engaged in the LP gas or
appliance business (an "Employee"). Each of Energy Group and Empire
Group shall be permitted to hire, during the Non-Compete Period, any
Employee of the other group whose employment is terminated by the
other group.
(e) Enforcement and Injunctive Relief.
The parties expressly acknowledge that the
provisions of this Section 2 shall be enforced to the
fullest extent permissible under the laws and public
policies of each jurisdiction in which enforcement is
sought. If any particular provision in this Section 2 is
adjudicated to be invalid or unenforceable, this Section
shall be amended to delete such provision therefrom in the
jurisdiction where such adjudication is made.
(2) Energy, Plaster, S. Plaster, Joseph
Schaefer, Empire, and Lindsey each acknowledge that the
other parties hereto will be irreparably injured by any
breach of its obligations under this Section 2, and that the
remedies at law available to such parties may be inadequate,
and accordingly that such parties shall be entitled to
injunctive and other equitable relief in addition to any
other remedy available at law upon the occurrence of such
breach.
3. Option. If Energy Group or Empire Group acquires an
interest in a LP gas and appliance business in violation of Section 2(b), the
group that acquired such interest (the "Acquiring Group") shall grant to the
other group (the "Grantee Group") a non-transferrable option to acquire such
interest on as nearly as practicable the same terms and conditions as those
upon which the Acquiring Group acquired such interest. Such option
<PAGE>
shall be exercisable for a period of sixty (60) days following the date the
Grantee Group has actual notice that the Acquiring Group acquired such
interest. The Grantee Group's decision to exercise or not to exercise this
option shall not affect the other remedies available to the Grantee Group if
the Acquiring Group violates its obligations under this Agreement.
4. Waiver of Breach. The waiver by any party to this Agreement of a
breach of any provisions of this Agreement by any other party hereto shall
not operate or be construed as a waiver of any other breach. No delay on the
part of any party in enforcing its rights under this Agreement shall operate
as a waiver thereof with the exception that the period during which the
Grantee Group (as defined in Section 3) may exercise the option described in
Section 3 shall not be affected by the provision contained in this Section.
5. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Missouri, without
reference to conflicts of laws.
6. Attorney's Fees. In any action at law or in equity to
enforce any of the provisions or rights under this Agreement, the
unsuccessful party to such litigation, as determined by the court in a final
judgment or decree, shall pay the successful party all costs, expenses and
reasonable attorneys' fees, as set by the court and not by a jury, incurred
by the successful party (including, without limitation, costs, expenses and
fees on any appeal).
7. Notices. All notices to be served or delivered hereunder by
the parties hereto shall be in writing and shall be deemed to have been given
for all purposes (i) upon personal delivery or (ii) five days after posting
when sent by registered or certified mail addressed
If to the Company or Energy:
[name of party]
Empire Gas Corporation
1700 South Jefferson Street
Lebanon, Missouri 65536
If to Lindsey:
Paul S. Lindsey, Jr.
303 Stonewood Blvd.
Roanoke, Texas 76262
If to Plaster, S. Plaster or Joseph Schaefer:
[Name of party]
c/o Robert W. Plaster
307 Ocean Boulevard.
Golden Beach, Florida 33160
Any party hereto may from time to time by notice in writing served
upon the other party as provided herein, designate a different mailing
address or a different person to which such notices are thereafter to be
addressed or delivered.
<PAGE>
8. Captions. Captions are provided herein for convenience only
and they are not to serve as a basis for interpretation or construction of
this Agreement, nor as evidence of the intention of the parties hereto.
9. Entire Agreement. This Agreement cancels and supersedes all
previous understandings or agreements relating to the subject matter of this
Agreement, whether written or oral, between the parties hereto, and shall not
be amended or modified except by an agreement in writing signed by all
parties to this Agreement.
10. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement on the
day and year first written above effective upon the consummation of the Stock
Purchase.
WITNESS:
_________________________ _________________________
Robert W. Plaster
EMPIRE ENERGY CORPORATION
_________________________ By: _____________________
Its: ____________________
_________________________ _________________________
Paul S. Lindsey, Jr.
EMPIRE GAS CORPORATION
_________________________ By: _____________________
Its: ____________________
_________________________ _________________________
Stephen R. Plaster
________________________ _________________________
Joseph Schaefer
Note: Any Seller or senior employee of Energy or Empire Gas required to
execute a non-competition agreement shall agree not to compete with either
Energy or Empire Gas.
<PAGE>
Exhibit A to Non-Compete Agreement
The marketing territory of the Empire Group shall consist of
all areas in the United States other than the areas designated in Exhibit B
as being in the Energy Marketing territory; provided, however, that the
marketing territory of the Empire Group shall also include any area where any
Remaining Subsidiary is currently operating including the area within a fifty
(50) mile radius of the present location of any existing retail outlet
otherwise in the marketing territory of the Empire Group; and provided,
further, that where the fifty (50) mile radius of the present location of
such an outlet and the fifty (50) mile radius of the present location of a
retail outlet that will be operated by the Energy Group after the
consummation of the Stock Redemption Agreement overlap, then the fifty (50)
mile radius of each outlet shall be reduced to reflect the existing marketing
territory of each outlet.
<PAGE>
Exhibit B to Non-Compete Agreement
The marketing territory of the Energy Group shall consist
of:
1. The following states in their entirety:
a. Alabama
b. Florida
c. Georgia
d. Indiana
e. Kentucky
f. Mississippi
g. Tennessee
2. The following areas:
a. Missouri - the area south of Interstate 44
and the area within a fifty (50) mile
radius of the present location of any
existing retail outlet that will be
operated by the Energy Group after
consummation of the Stock Redemption
Agreement.
b. Arkansas - any area in the northern half of
Arkansas and any area within a fifty (50)
mile radius of the present location of any
existing retail outlet that will be
operated by the Energy Group after
consummation of the Stock Redemption
Agreement.
c. Illinois - the area within a fifty (50)
mile radius of the present location of the
one retail outlet that will be operated by
the Energy Group after consummation of the
Stock Redemption Agreement.
d. Virginia - the Western half of Virginia
(provided that the Company and its
subsidiaries and their successors may make
acquisitions in the western half of
Virginia but may not start new plants
there)
e. Western half of West Virginia (provided
that Empire Gas and its subsidiaries may
make acquisitions in the western half of
West Virginia but may not start new plants
there)
Notwithstanding the foregoing, where the fifty (50) mile radius of the
present location of any retail outlet specified above and the fifty (50) mile
radius of the present location of a retail outlet that will be operated by
the Empire Group after the consummation of the Stock Redemption Agreement
overlap, then the fifty (50) mile radius of each outlet shall be reduced to
reflect the existing marketing territory of each outlet.
<PAGE>
EXHIBIT F
LEASE AGREEMENT
THIS LEASE ("Lease") is made and entered into this __st day
of _______ 1994, by and between Evergreen National Corporation, a Florida
corporation ("Lessor"), and Empire Gas Corporation, a Missouri corporation
("Lessee").
WITNESSETH: Lessor hereby leases and Lessee agrees to lease
from Lessor, each upon and subject to the terms and conditions hereinafter
set forth the office space in the office building located at 1700 South
Jefferson Street, Laclede County, Lebanon, Missouri (the "Building") as set
forth on Exhibit A hereto (the "Premises"), together with certain personal
property, furniture and equipment (collectively, "Personalty") identified on
Exhibit B attached hereto and said parties do hereby covenant and agree with
each other as follows:
(1) USE: The Premises and Personalty are to be used and occupied by
the Lessee for any lawful purpose.
(2) TERM: This Lease shall become effective and Lessee shall
have the right to take possession upon the closing date of that certain Stock
Redemption Agreement dated March __, 1994, entered into by and among Lessee,
Empire Energy Corporation, a Tennessee corporation, Empire Gas Corporation, a
Missouri corporation, Robert W. Plaster, Stephen R. Plaster, Joseph L.
Schaefer, Paul S. Lindsey, Jr., the Robert W. Plaster Trust dated December
13, 1988, the Dolly Francine Plaster Trust dated July 30, 1984, the Tammy
Jane Plaster Trust dated July 30, 1984, the Stephen Robert Plaster Trust
dated October 30, 1988, the Stephen Robert Plaster Trust dated July 30, 1984,
the Cheryl Jean Plaster Schaefer Trust dated October 30, 1988, the Cheryl
Jean Plaster Schaefer Trust dated July 30, 1984, and certain other parties
related to or controlled by Lessee or Robert W. Plaster. The Lease shall
continue in effect for a term that expires June 30, 2001, or until earlier
terminated in accordance with the terms and conditions of this Lease.
(3) OPTION TO RENEW: The Lessee shall have two options to renew
this Lease for a term of three (3) years each upon the same terms and
conditions as are provided herein except that the minimum rent during each of
said renewal terms shall be the greater of Six Thousand Two Hundred Fifty and
no/100 Dollars ($6,250.00) per month or the fair market rental value of the
Premises and Personalty.
(4) BASIC MONTHLY RENT: The Lessee does hereby promise to pay the
Lessor, basic monthly rent equal to Six Thousand Two Hundred Fifty and no/100
Dollars ($6,250.00), payable in advance on the first day of each month
without deduction or set off, in lawful tender. As used herein, the term
"rent" shall include both the basic monthly rent and any additional rent as
described in Paragraph 5 hereof.
(5) ADDITIONAL RENT: In addition to the basic monthly rent, Lessee
shall pay the following additional rent:
(i) Lessee shall pay to Lessor, within fifteen (15) days
following receipt of an invoice from Lessor, Lessee's Proportionate
Share of the total cost of the Utilities (as defined in Paragraph 7)
<PAGE>
provided by Lessor to the Building; provided, however, that Lessee shall not
pay for telephone services under this Lease since it will be paying for
telephone service under a Services Agreement being entered into by Lessee
simultaneously herewith. As used in this Lease, Lessee's "Proportionate
Share" shall mean 37.5%.
(ii) Lessee shall pay to Lessor, within fifteen (15) days
following receipt of an invoice from Lessor (i) one hundred percent
(100%) of the cost of repairs and maintenance performed by Lessor
solely for the benefit of Lessee, and (ii) Lessee's Proportionate
Share of the cost of the repairs and maintenance performed by Lessor
for the benefit of the entire Building, except that Lessee shall be
liable for payment of one hundred percent (100%) of such repairs and
maintenance required because of Lessee's gross negligence or wilful
misconduct, and shall not be liable for payment of any repairs and
maintenance required because of the gross negligence or wilful
misconduct of Lessor or any other tenant in the Building.
(iii) Lessee shall pay to Lessor, within fifteen (15) days
following receipt of an invoice from Lessor, Lessee's Proportionate
Share of any taxes and levies described in Paragraph 9 that relate
solely to the Premises, the entire Building, or the contents of the
Building.
(iv) Lessee or its representative shall have the right upon
ten (10) days advance written notice, to examine, during reasonable
business hours, Lessor's books and records with respect to the costs
described in subparagraphs 5(a),(b), and (c) above and the allocation
of such costs.
(v) Lessee shall pay to Lessor, upon presentation of
appropriate premium notices to Lessee, its Proportionate Share of the
insurance required to be obtained by Lessor pursuant to Paragraph 8.
(vi) If any dispute arises as to the amount of rent
payable under this Paragraph 5, either Lessor or Lessee can request
an audit by Baird, Kurtz & Dobson ("BKD"). Lessor and Lessee shall
share the expense of any such audit, and the decision by BKD as to
the amount of rent owed shall be final and binding on Lessor and
Lessee.
(6) MAINTENANCE OF PREMISES AND PERSONALTY:
(i) Condition of Premises. Lessee has inspected and knows
the condition of the Premises and Personalty and accepts said
Premises and Personalty in their present condition.
(ii) Public or private nuisance. Lessee shall not
commit, or suffer to be committed, any waste upon the Premises and
Personalty, or any public or private nuisance, or other act or things
which may disturb the quiet enjoyment of any other neighbors in the
area in which the Premises is located.
(iii) Alterations. Lessee shall not make, or suffer to be
made, any alterations of said Premises, or any part thereof, without
obtaining the prior written consent of the Lessor and any additions
to, or alterations of, the said Premises, shall become at once a
<PAGE>
part of the Premises and belong to the Lessor. Any mechanic's lien filed
against the Premises, or any part thereof, for work claimed to have been done
for, or materials claimed to have been furnished to Lessee, shall be
discharged by Lessee within ten (10) days thereafter, at Lessee's expense.
(iv) Compliance with laws and ordinances and surrender of
Premises. Lessee further agrees to obey all laws and ordinances
affecting said Premises; and hereby agrees at the expiration of the
term hereof or any extension thereof, to surrender to Lessor the
Premises and Personalty and all improvements and appurtenances
thereto in as good condition as when they were received by Lessee,
ordinary wear and tear, alteration permitted by this Lease and damage
by fire and providential destruction excepted.
(v) Repairs and Maintenance.
a) Lessee agrees that it shall take good care of
the Personalty and Premises and the equipment and fixtures
therein. Lessee may make all repairs necessitated by its
misuse of the Premises or Personalty that solely affect the
Premises or Personalty.
b) Lessor agrees that within a reasonable
period after written notice from Lessee, Lessor shall make
all repairs necessary or advisable to keep said Premises,
both inside and outside, and all additions and appurtenances
thereto, in good and inhabitable condition. Repairs and
maintenance that Lessor shall be responsible for shall
include: repainting, repairs of roof, sewerage, heating and
air conditioning systems, gas fixtures, plumbing, and every
other sort of repairs not specifically set forth herein.
c) To the extent that a dangerous condition exists
in the Building that does not provide time for notification
of Lessor pursuant to subparagraph 6(e)(2), Lessee shall be
free to take such steps as are reasonably necessary to
correct the dangerous condition, and provided that such
condition did not result from Lessee's gross negligence or
wilful misconduct, Lessee shall be entitled to
indemnification from Lessor for all costs incurred in
correcting the dangerous condition.
(7) UTILITIES: Lessor shall be responsible for providing all
utilities for the Premises, including telephone service (the "Utilities").
The Utilities shall include, but not be limited to gas, electricity, water,
sewer, and trash pick up and telephone. The Lessor shall not be liable for
failure to furnish any of the Utilities, nor shall failure of Lessor to do so
be grounds for termination of this Lease, if such failure is due to
nonpayment by Lessee of its Proportionate Share of such Utilities as required
in Paragraph 5, or to any act or event beyond the control of Lessor.
(8) INSURANCE.
(i) Lessor shall keep in force with an insurance company a
policy of comprehensive public liability insurance, including
property damage, with respect to the Building and the Premises and
the businesses operated by Lessor and Lessee and any other occupant
of the Premises, in which the limits of coverage shall not be less
<PAGE>
than $10,000,000.00 (combined single limit bodily injury and property
damage). In addition to Lessor, the policy shall also name Lessee as an
additional insured. The insurance required in this subparagraph may be
covered under a so-called "blanket" policy covering other facilities of
Lessor and its affiliates.
(ii) Lessor shall keep in force with an insurance company
fire insurance (with extended coverage and vandalism and malicious
mischief coverage), water damage and sprinkler leakage, boiler and
machinery insurance, on the standard forms, insuring the Personalty,
all of Lessee's property in the Premises and all betterments,
additions, repairs, improvements and alterations made to the Premises
by Lessee, in an amount equal to one hundred percent (100%) of the
replacement cost thereof. Lessee shall be named as an additional
insured, and all monies collected on the insurance policy in respect
of the property of Lessee shall be and become the sole and exclusive
property of Lessee.
(iii) Lessee shall give prompt notice to Lessor in case of
casualty damage to or accidents in the Premises.
(9) TAXES: The Lessor shall be responsible for payment of all real
estate taxes, assessments, water rates and charges, sewer rates and all other
governmental levies and charges, general or special, ordinary or
extraordinary, unforeseen as well as foreseen, of any kind, which are
assessed or imposed upon the Premises or Personalty or any part thereof, or
become payable during the term of this Lease.
(10) RE-ENTRY BY LESSOR: The Lessor, its agent, or employees may
enter said Premises, upon reasonable notice, and at reasonable times, to view
them or show them to parties wishing to Lease or purchase.
(11) ASSIGNMENT, SUBLETTING OR ENCUMBRANCING: The Lessee
covenants that it will not allow anyone to share said Premises, nor assign,
sublet, or transfer or encumber its interest in this Lease or in the Premises
or any part thereof or encumber its interest in this Lease or in the Premises
without the Lessor's prior written consent, which consent shall not be
unreasonably withheld; also, that the written assent hereon to one
assignment, subletting or transfer of this Lease or encumbrancing of its
interest in this Lease or the Premises shall not be considered as a waiver of
this covenant by the Lessor to any subsequent assignment, transfer,
subletting or encumbrancing, nor shall such written assent to any assignment
or transfer, release said Lessee from liability hereunder.
(12) CONDITION OF PREMISES AND NON-LIABILITY OF LESSOR: The
Lessee, upon occupancy, accepts said Premises and Personalty in its condition
at time of occupancy and acceptance and agrees that at the time of the
execution of this Lease the Premises and Personalty are delivered in a safe
and tenantable condition.
(13) DAMAGE BY CASUALTY: If during the term of this Lease the
Premises shall be so damaged by fire or other cause as to become
substantially destroyed, then this Lease shall terminate and any unearned
rent paid in advance by Lessee shall be refunded to Lessee. If the Premises
shall be partially destroyed by fire or other casualty, the rent shall
forthwith abate according to the extent to which the premises have been
rendered uninhabitable and if they are not restored and put in proper
condition for use and occupancy within one hundred twenty (120) days of the
casualty, then Lessee's sole right shall be to terminate this Lease. Lessor
<PAGE>
shall not be liable in any manner whatsoever, except to repay any unearned
rent paid in advance. The obligations of Lessor in repairing and restoring
the Premises shall pertain to the condition of the Building and Premises upon
the execution of this Lease.
(14) SUBORDINATION: Lessor reserves the right to subject and
subordinate this Lease at all times to the lien of any mortgage or mortgages
now or hereafter placed upon Lessor's interest in the Premises, but no such
subordination shall be valid or operative unless the mortgagee shall agree in
writing that the mortgagee or anyone claiming by, through or under the
mortgagee, upon the foreclosure of any such mortgage, provided Lessee is not
in default hereunder, shall adopt this Lease and be bound by all of the terms
and provisions hereof accruing from and after the date of foreclosure, and
upon receiving such agreement or agreements from any mortgagee or proposed
mortgagee, Lessee shall execute and deliver upon demand such further
instrument or instruments subordinating this Lease to the lien of any such
mortgagee or proposed mortgagee. Lessor agrees to pay any indebtedness
secured by any such mortgage or mortgages as the same becomes due and
payable.
(15) BANKRUPTCY: If during the life of this Lease, Lessee shall
file a voluntary petition under the Bankruptcy Act, as amended, or if any
involuntary petition under the Bankruptcy Act, as amended, be filed against
Lessee and the same is not fully and finally dismissed within sixty (60) days
after the filing thereof, or if Lessee makes an assignment for the benefit of
its creditors, or if a receiver be appointed to take charge of Lessee's
business and such proceedings are not fully and finally dismissed and
receiver discharged within sixty (60) days after the appointment of such
receiver, or if an execution or attachment shall issue against Lessee
whereupon the leased premises shall be taken or attempted to be taken and
said execution or attachment is not released prior to judicial sale
thereunder, then, upon any of the events set forth, this Lease shall
terminate forthwith and Lessor shall be entitled to immediate possession of
the leased premises. In the event of such termination, Lessee shall and
agrees to pay to Lessor forthwith as liquidated damages the difference
between the value of the minimum monthly rent reserved herein for the residue
of the term hereof and the fair rental value of the leased premises for the
residue of said term.
(16) SURRENDER OF POSSESSION: Upon the termination of this
Lease, whether by reason of lapse of time, cancellation, forfeiture or
otherwise, Lessee shall immediately surrender and deliver to Lessor the
peaceable possession of the Premises and Personalty and all appurtenances and
improvements thereto in as good a state and condition as when they were
received by Lessee, ordinary wear and tear, alterations permitted by this
Lease, damage by fire and providential destruction excepted. All alterations,
additions, repairs and improvements which shall be made or installed by
Lessee, except moveable furniture, trade equipment and trade fixtures put in
by and at the expense of Lessee and removable without damage to the Premises,
shall become and be a part of the Premises and shall be and remain the
property of Lessor and shall remain and be surrendered with the Premises as a
part thereof at the termination of the Lease. In the event possession be not
immediately surrendered, Lessor, with or without process of law, may re-enter
said Premises and repossess the same, or any part thereof in the name of the
whole, and may remove therefrom all persons and property, using such force as
may be necessary, without being deemed guilty of any unlawful act and without
prejudice to any other remedy available to Lessor. In the event (i) this
Lease is terminated pursuant to paragraph 20 hereunder or (ii) the Lease is
terminated for any reason whatsoever and
<PAGE>
Lessee does not surrender and deliver to Lessor the possession of the
Premises in accordance with this paragraph, Lessee agrees to pay to Lessor on
demand the amount of all loss and damage the Lessor may suffer by reason of
such termination or failure to surrender the premises, whether such loss or
damage is incurred due to Lessor's inability to relet the Premises on
satisfactory terms or in effecting compliance with Lessee's obligations under
this Lease.
(17) CONDEMNATION: If the whole of the Premises or any part
thereof materially affecting Lessee's use of the Premises shall be condemned
or taken by eminent domain of any county, state, or federal authority, then
this Lease shall be terminated as of the date of possession as required by
the condemnor. If the condemnation or taking of part of the Premises does
not materially affect Lessee's use of the Premises, this Lease shall not
terminate, but a portion of the rent for the rest of the term shall be abated
in proportion to the amount of Premises taken. All compensation paid in
connection with the condemnation shall belong to and be the sole property of
Lessor, provided however, that the Lessor shall not be entitled to any
portion of the award made to the Lessee for loss of business and for the cost
of removal of trade fixtures, or other reimbursable expenses allowed under
applicable statute.
(18) SIGNS AND ADVERTISEMENTS: Lessor and Lessee agree that the
signs on and around the Building shall remain and that if such signs need to
be replaced, the new signs shall be substantially identical to the existing
signs.
(19) NO WAIVER: All rights, options and remedies of the parties
under this Lease shall be cumulative, and in addition to such rights, options
and remedies as may be available at law. The failure of either party to
insist on strict performance of any covenant or condition hereof or to
exercise any option herein shall not be constructed as a waiver of such
covenant, condition, or option in any other instance.
(20) REMEDIES: The Lessee covenants and agrees that if it fails
to pay any sum due under this Lease within ten (10) days after such sum is
due; or if it fails to perform any of the Lease provisions and such non-
performance is not cured within thirty (30) days after receipt of written
notice of such non-performance; or if there is a change in control of Lessee,
such that Paul S. Lindsey, Jr., and/or Kristin Lindsey cease to beneficially
own, in the aggregate or separately, a majority of the shares of the
outstanding common stock of Lessee, or its successor, then at the option of
the Lessor, this Lease shall be terminated and Lessee shall immediately
vacate the Premises in compliance with Paragraph 16 herein. In addition,
Lessee further covenants and agrees that such termination, annulment, or
voidance shall not relieve Lessee from its obligation to make the monthly
basic rent payments hereinabove reserved, and in the case of any such default
of Lessee, Lessor may re-let said Premises as the agent for and in the name
of Lessee at any rental readily obtainable and Lessee hereby covenants and
agrees that if Lessor shall recover or take possession of said Premises as
aforesaid, and be unable to re-let and rent the same so as to realize a sum
equal to the basic monthly rent hereby reserved, Lessee shall and will pay to
Lessor any and all loss of difference of said sums for the residue of the
term, including reasonable attorney's fees and all costs and expenses,
including expenses incurred in reletting the Premises. In addition, if any
sum is not paid on time, the Lessor has the option of declaring a termination
of the Lease.
<PAGE>
(21) LESSEE'S OPTION TO TERMINATE. At any time after June 30,
1998, upon one hundred twenty (120) days written notice to Lessor, Lessee may
terminate the Lease and vacate the Premises in compliance with Paragraph 16.
Lessee does not intend to terminate the Lease unless a change in its business
circumstances, such as an acquisition, makes it in the best interests of the
Lessee to terminate the Lease. Lessee covenants and agrees that if it
terminates the Lease pursuant to this Paragraph 21, Lessee shall continue to
be liable to pay the basic monthly rent payments until June 30, 2001;
provided, however, that Lessor shall use its best efforts to re-let the
Premises. If Lessor re-lets the Premises after Lessee's termination of the
Lease, the basic monthly rent otherwise payable by Lessee shall be reduced by
the amount of basic monthly rent paid by the new tenant.
(22) USE OF PARKING FACILITIES: Lessee shall have the right of
joint use of all the parking facilities located at 1700 South Jefferson
Street, Lebanon, Missouri; provided, however, that Lessor shall have
exclusive use of the east parking lot other than use of the garage being
built on such lot for use by Lessee. There shall be preferred parking for
the executives of Lessee in the west and south parking lots. Lessee
acknowledges and agrees that Lessor has retained the right to relocate or
exchange for similar facilities the parking facilities that Lessee may use.
In the event that Lessor exercises its rights under this paragraph, it shall
give Lessee 30 days written notice of its intent to do so. Upon the
expiration of said 30 days, the Lessor shall have the right to provide Lessee
the use of alternate parking facilities so long as such parking facilities
are not in a location that will unreasonably inconvenience Lessee.
(23) NOTICES: All notices under this Lease shall be given in
writing and shall be deemed to be properly served only if sent, postage
prepaid, by certified mail, with return receipt requested, to Lessor at the
last address where rent was paid and to Lessee, to the Premises. Such notice
shall be deemed to have been made on the date it is deposited in the United
States mail with postage prepaid. Either party may, by notice to the other,
change its address for notice purposes.
(24) GOVERNING LAW: This Lease shall be governed by and
construed in accordance with the laws of the state of Missouri, without
reference to conflicts of laws, and the parties agree that any action, suit,
or proceeding relating to this Lease shall be instituted and prosecuted in
the courts of the County of Clay, State of Missouri, and each party waives
the right to change of venue.
(25) ATTORNEYS' FEES: In any action at law or in equity to
enforce any of the provisions or rights under this Lease, the unsuccessful
party to such litigation, as determined by the court in a final judgment or
decree, shall pay the successful party all costs, expenses and reasonable
attorneys' fees, as set by the court and not by a jury, incurred by the
successful party (including, without limitation, costs, expenses and fees on
any appeal).
(26) CAPTIONS. Captions are provided herein for convenience only
and they are not to serve as a basis for interpretation or construction of
this Lease nor as evidence of the intention of the parties hereto.
<PAGE>
(27) COUNTERPARTS. This Lease may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
(28) SEVERABILITY. The provisions in this Lease are severable,
and if any one clause or provision hereof shall be held invalid or
unenforceable, then such invalidity or unenforceability shall affect only
such clause or provision, or part thereof, and shall not in any manner affect
any other clause or provision of this Lease.
(29) ENTIRE AGREEMENT; BINDING EFFECT: This Lease embodies the sole
and entire agreement and understanding between the parties hereto with regard
to the entire subject matter hereof, supersedes all prior discussions,
understandings and agreements between the parties, cannot be changed or
altered without the written agreement of all parties hereto, and shall be
binding upon, and shall inure to the benefit of the parties hereto, their
successors and assigns.
IN WITNESS WHEREOF, the parties hereto have executed this Lease
Agreement the day and year first above written.
LESSEE: LESSOR:
EMPIRE GAS CORPORATION, EVERGREEN NATIONAL
a Missouri corporation CORPORATION,
a Florida corporation
By:______________________ By:________________________
<PAGE>
STATE OF MISSOURI )
) SS.
COUNTY OF LACLEDE)
On this __th day of ________ 1994, known before me, appeared Valeria
Schall to me personally known, who being by me duly sworn, did say that she
is the Vice President of EMPIRE GAS CORPORATION, a Missouri corporation, and
that the seal affixed to the foregoing instrument was signed and sealed in
behalf of said corporation by authority of its Board of Directors, and said
Valeria Schall acknowledged said instrument to be the free act and deed of
said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
notarial seal at my office in Lebanon, the day and year last above written.
__________________________
Notary Public
My Commission Expires:
<PAGE>
STATE OF MISSOURI)
) SS.
COUNTY OF LACLEDE)
On this ____ day of _____________, 1994, known before me, appeared
Robert W. Plaster to me personally known, who being by me duly sworn, did say
that he is the President of EVERGREEN NATIONAL CORPORATION, a Florida
corporation, and that the seal affixed to the foregoing instrument was signed
and sealed in behalf of said corporation by authority of its Board of
Directors, and said Robert W. Plaster acknowledged said instrument to be the
free act and deed of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
notarial seal at my office in Lebanon, the day and year last above written.
_______________________
Notary Public
My Commission Expires:
______________________
<PAGE>
EXHIBIT A
<PAGE>
EXHIBIT G
SERVICES AGREEMENT
This Services Agreement (the "Agreement") is made and entered into as
of this __ day of __________, 1994, by and among Empire Gas Corporation
("Empire"), a Missouri corporation, having its principal place of business at
1700 South Jefferson Street, Lebanon, Missouri 65536 ("Lebanon"), and Empire
Service Corporation, a [Tennessee] corporation ("Service Corp.") having its
principal place of business in Lebanon.
WHEREAS, Empire is undertaking a series of transactions to complete a
restructuring pursuant to which it will divest its ownership interest in
Empire Energy Corporation, a wholly owned subsidiary of the Company that has
approximately 139 wholly owned subsidiaries ("Energy"), which subsidiaries
own the operating assets of certain liquified petroleum ("LP") gas and
appliance companies and certain other assets; and
WHEREAS, upon consummation of the restructuring Empire and Energy
will be independently owned and operated companies; and
WHEREAS, in connection with the restructuring, Empire desires to
enter into an agreement to obtain certain data processing, management
information, and other services from Service Corp., a wholly owned subsidiary
of Energy; and
WHEREAS, Service Corp. is capable of and desires to provide such
services to Empire.
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Empire and Service Corp. agree
as follows:
1. Data processing and management information services.
(a) Data input. Empire shall be responsible for the input
of its financial and operating data, which data shall include but not
be limited to the following data: LP gas inventory, equipment and
appliance inventory, customer accounts, profit and loss, and such
other data as Empire currently uses in its operations.
(b) Computer terminals. Service Corp. will provide, for
Empire's use, the computer terminals in Lebanon that are currently in
place in the office space to be occupied by Empire pursuant to that
certain lease agreement between Empire and Evergreen National
Corporation, a Florida corporation ("Evergreen"), which lease
agreement shall be executed on the date hereof (the "Lease"). These
computer terminals are the property of Service Corp. and shall be
returned to Service Corp. in the event this Agreement is terminated.
Empire shall use these terminals for on-line access to its financial
and other data and to input such data. Any further computer
terminals required by Empire, including but not limited to any
terminals required to replace the existing terminals due to wear and
tear or damage, shall be purchased by Empire at its own expense. Any
such computer terminals acquired by Empire shall be the property of
Empire, and Service Corp. shall have no right of ownership or
possession with respect to those computer terminals.
<PAGE>
(c) Data maintenance. Service Corp. shall be responsible
for the maintenance of the magnetic media files that are used for
processing and storing Empire's data.
(d) Maintenance contract. Service Corp. shall acquire
and maintain a maintenance contract for the maintenance of the
computer hardware located at the L.P. gas and appliance companies
that Empire will continue to own following the restructuring and for
the computer terminals used by Empire as provided in Section 1.2,
whether such terminals are provided by Service Corp. or by Empire.
(e) Reports. Service Corp. shall provide Empire the
computer-generated operational and accounting reports that Empire
currently uses in its operations. Service Corp. shall make
modifications to the reports or provide additional computer-generated
reports upon Empire's reasonable request and shall give preferential
treatment to any such request after day-to-day operations have been
completed for both Empire and Energy. The operating and financial
reports shall be provided by Service Corp. to Empire as promptly as
is reasonably possible, based on the current schedule upon which such
reports are generated and distributed, with such modifications
thereto as Empire and Service Corp. may mutually agree.
(f) Billing. Service Corp. shall prepare and mail the
monthly bills for Empire's customers, which shall be substantially in
the form of the invoice that Empire currently uses in its operations,
with such reasonable modifications as Empire may request. The
monthly bills to customers shall be sent to customers as promptly as
practicable following the cut-off of business for the billing period.
(g) Backup Procedures. Service Corp. shall keep in a
separate and safe place additional copies of all Empire records that
are on magnetic media. Service Corp. shall use reasonable care to
minimize the likelihood of all damage, loss of data, delays, and
errors resulting from an uncontrollable event, and should such
damage, loss of data, delays or errors occur Service Corp. shall use
its best efforts to mitigate the effects of such occurrence. Service
Corp. shall deliver to Empire a monthly backup tape of all Empire's
data. In the event of loss of data by Service Corp., Service Corp.
shall regenerate the lost data. In the event only Empire's data is
lost, Empire will bear one-half of the actual costs incurred by
Service Corp. in regenerating Empire's lost data. In the event that
the data of both Empire and Energy are lost, Empire will bear one-
half of the actual costs incurred by Service Corp. in regenerating
the lost data of both Empire and Energy.
(h) Data Ownership
(1) Service Corp. agrees that all magnetic media
records containing Empire data are the exclusive property of Empire
and that all such records shall be furnished without additional
charge, except for actual processing costs and the costs of storing
the magnetic media, to Empire in available machine readable form
immediately upon termination of this Agreement for any reason
whatsoever.
<PAGE>
(2) Upon Empire's request at any time or times
while this Agreement is in effect, Service Corp. shall immediately
deliver to Empire at Empire's expense, any or all of the magnetic
media records containing Empire data held by Service Corp. pursuant
to this Agreement, in available machine readable form. Service Corp.
shall not possess any interest, title, lien or right to any such
records.
2. Software. The Software shall mean any software developed by
Service Corp. during the term of this Agreement or, prior to the
restructuring, by Empire that is used in Empire's business operations.
(a) In accordance with the terms contained herein,
Service Corp. grants to Empire, and Empire accepts from Service
Corp., a non-exclusive and non-transferable license to use the
Software during the term of this Agreement.
(b) Service Corp. represents that it is the owner of the
Software or any portion thereof being licensed hereunder and that it
has the right to grant Empire the license being granted hereunder.
(c) Service Corp. shall assume the defense of any claim,
demand, cause of action, suit, or proceeding brought against itself
or Empire based upon a claim that any Software used within the scope
of the license granted hereunder, infringes, violates or relates to
any patents, copyrights, license, or other property right, provided
that Service Corp. is notified of such claim. Empire, may, at its
own expense, assist in such defense. All actual costs incurred by
Service Corp. in its defense of any such claim shall be shared
equally by Service Corp. and Empire.
(d) Service Corp. shall be responsible for the proper
performance and maintenance of the Software including the performance
and maintenance of the operating software and the computer hardware
for the host system required to operate the Software.
(e) Service Corp. shall make such modifications to the
Software as Empire and Service Corp. may mutually agree upon, and
Service Corp. shall be responsible for the proper performance and
maintenance of the Software as modified.
(f) Upon termination of this Agreement for any reason
whatsoever, or at Empire's request, Service Corp. shall provide to
Empire a copy of the Software, as it may have been modified, and will
grant to Empire a non-exclusive and non-transferable license to use
the Software.
3. Parallel Operations. Empire may acquire its own computer
equipment and use the Software on its own computer equipment and perform some
or all of the data processing and management information services otherwise
to be provided by Service Corp. under Section 1 hereof. If Empire acquires
its own computer equipment and performs for itself some or all of the
services to be provided by Service Corp. under Section 1, Empire shall
nevertheless be obligated to pay the amount required under Section 8.1
hereof; provided, however, that Service Corp. shall use its best efforts to
reduce its costs in light of Empire's providing for itself some of the
services formerly provided by Service Corp.
<PAGE>
4. Receptionist and switchboard services. Service Corp. shall
provide receptionist and switchboard services for Empire at its corporate
headquarters in Lebanon. These services shall be provided, from 7:00 a.m. to
6:00 p.m., Monday through Friday, and from 8:00 a.m. to 12:00 p.m. on
Saturdays. Receptionist or switchboard services shall not be provided on the
following holidays: New Years Day, Memorial Day, the Fourth of July, Labor
Day, Thanksgiving, and Christmas.
5. Compliance with Laws, Regulations, Policies, and Procedures. The
services provided by Service Corp. to Empire shall comply with all applicable
laws and regulations, and, except as may be otherwise specifically agreed by
the parties, shall conform to all of the applicable internal policies and
procedures of Empire.
6. Independent Contractor.
(a) Service Corp. is and shall be considered for all
purposes to be an independent contractor of Empire. Service Corp.
recognizes and agrees that as an independent contractor, it, its
employees, agents, and representatives shall not be eligible to
participate in any of Empire's employee benefits or similar programs,
and the exclusive consideration payable by Empire to Service Corp.
shall be as set forth herein.
(b) Service Corp. shall select its own employees, agents,
and representative to provide services to Empire pursuant to this
Agreement and shall be and act under the exclusive supervision and
control of Service Corp. and who shall not be, or deemed for any
purpose to be, employees or agents of Empire. Service Corp. is
solely and exclusively responsible for determining and adhering to
the terms and conditions of hiring, employment or engagement of
itself, and its employees, agent and representatives, including hours
of work, rates and payment of compensation and benefits, and the
payment, reporting, collection, withholding and deduction of all
federal, state and local taxes in contributions.
7. Term.
(a) This Agreement shall become effective upon the closing
date of that certain Stock Redemption Agreement dated March __, 1994,
entered into by and among Empire, Service Corp., Empire Gas
Corporation, a Missouri corporation, Robert W. Plaster, Stephen R.
Plaster, Joseph L. Schaefer, Paul S. Lindsey, Jr., the Robert W.
Plaster Trust dated December 13, 1988, the Dolly Francine Plaster
Trust dated July 30, 1984, the Tammy Jane Plaster Trust dated July
30, 1984, the Stephen Robert Plaster Trust dated October 30, 1988,
the Stephen Robert Plaster Trust dated July 30, 1984, the Cheryl Jean
Plaster Schaefer Trust dated October 30, 1988, the Cheryl Jean
Plaster Schaefer Trust dated July 30, 1984, and certain other parties
related to or controlled by Empire or Robert W. Plaster.
(b) This Agreement shall terminate on June 30, 2001, the
termination date of the Lease by and between Empire and Evergreen, or
such earlier date as the Lease may terminate.
(c) At any time after June 30, 1998, upon one hundred
twenty (120) days written notice to Service Corp., Empire may
terminate this Agreement. Empire does not intend to terminate this
Agreement unless a change in its business circumstances, such as an
<PAGE>
acquisition, makes it in the best interests of Empire to terminate this
Agreement. Empire covenants and agrees that if it terminates this Agreement
pursuant to this Section 7.3, Empire shall pay Service Corp. the amount paid
by Empire in accordance with Section 8 below for the last whole month for
which services were provided to Empire by Service Corp. pursuant to this
Agreement, multiplied by the number of whole months remaining until the
original termination date (June 30, 2001) of this Agreement, as such term may
be modified by the mutual consent of Empire and Service Corp., as liquidated
damages. Such liquidated damages shall be paid in equal monthly installments
with the last installment payable on the original termination date.
(d) Service Corp. may terminate its participation in this
Agreement in the event Paul S. Lindsey, Jr. and/or Kristin Lindsey
ceases to beneficially own, in the aggregate or separately, a
majority of the shares of the outstanding common stock of Empire or
its successor. In the event of termination pursuant to this section,
Empire shall make such payment as may be required pursuant to Section
8 below, for services rendered from the beginning of the month in
which termination occurs pursuant to this Section 7.4 through the
date of termination.
8. Payment. The payment to be made by Empire for the services
provided above will be based on (i) an allocation of the actual cost of
providing such services to Empire and providing substantially similar
services to Energy and for providing data processing services to Empire
Pipeline Corporation, a Texas corporation ("Pipeline"), and to Empire
Exploration Company, a Missouri Corporation ("Exploration") and (ii) the
actual cost of certain services attributable solely to Empire's operations.
(a) Empire shall pay to Service Corp. a monthly payment
that shall be determined as follows:
(1) Service Corp. shall determine the actual costs
it incurred in providing the services set forth herein to
Empire and in providing substantially similar services to
Energy for the month just ended (the "Actual Costs"). For
purposes of this calculation actual costs shall mean Service
Corp.'s actual out-of-pocket expenses, including but not
limited to: salaries, payroll taxes and related employee
costs for those employees providing services hereunder,
leasing and maintenance costs for software, maintenance
expense for home office computer equipment and mail room and
print shop equipment, the basic monthly bill for telephone
service (all other telephone charges shall be treated as
provided in Section 8.1(d)) and cost of paper and other
supplies. Actual Costs shall not include any capital
expenditures; provided, however, that Actual Costs will
include (i) the monthly amortization cost of any new
equipment purchased to provide services hereunder, with such
amortization to be based on a five-year amortization
schedule, and (ii) the rental costs of any new equipment
leased by Service Corp. for the purpose of providing
services to Empire hereunder. Service Corp. shall not
purchase such new equipment or lease such new equipment
without Empire's prior written consent, which shall not be
unreasonably withheld.
<PAGE>
(2) The Actual Costs shall be reduced each month by
(i) $1,250 for the cost of services provided to Pipeline,
and (ii) $1,250 for the cost of services provided to
Exploration (the "Adjusted Actual Costs"). In the event Mr.
Plaster sells or transfers his entire ownership interest in
either Pipeline or Exploration to an unaffiliated person and
as a result of such sale or transfer, Service Corp. no
longer provides services to that entity, then the monthly
reduction relating to the entity that has been sold or
transferred shall be discontinued.
(3) Empire shall pay the amount that equals the
product of the Adjusted Actual Cost for the month and a
fraction, the numerator of which is the total gallons of LP
gas sold by Empire and its subsidiaries during that month
(excluding gallons sold that are delivered by transport
trucks), and the denominator of which is the total gallons
of LP gas sold by both Empire and its subsidiaries and
Energy and its subsidiaries (excluding gallons sold that are
delivered by transport trucks) during that month.
(4) In addition to the amounts payable under
Section 8.1(c), Empire shall pay: (i) the actual telephone
charges incurred by Empire (excluding the basic monthly bill
for telephone service) for the preceding month, (ii) the
actual cost of postage attributable to Empire's operations
for the preceding month, and (iii) the actual cost of the
maintenance contract described in Section 1.4 for the
preceding month.
(b) Invoices. Service Corp. shall invoice Empire monthly
itemizing in detail the basis for each invoice amount. The invoice
shall also include, in the case of the telephone charges, a copy of
the bill from the telephone company. Empire shall pay each Service
Corp. invoice within fifteen (15) days after receipt of the invoice.
(c) Audit Rights. At reasonable times and on reasonable
notice to Service Corp., Empire shall have the right to inspect
Service Corp.'s books and records to verify the accuracy of any
invoices submitted pursuant to this Agreement.
(1) The parties further acknowledge that Service
Corp. has a legal obligation to maintain accurate records.
On reasonable notice to Service Corp., Empire shall have the
right to audit Service Corp.'s operations and its
maintenance of Empire's data.
(2) At Service Corp.'s option, such audits may be
performed by either Empire's internal audit staff, if any,
or by Baird, Kurtz & Dobson. This audit shall provide
verification of the accuracy of processing and maintaining
Empire's data, and the costs of any such audit shall be
shared equally by Empire and Service Corp.
(d) Service Corp.'s Operations. Except as Empire and Service
Corp. may otherwise agree, during the term of this agreement, Service Corp.
shall engage in no operations other than providing the services contemplated
hereunder to Energy, Empire, Pipeline, and Exploration, and shall have no
employees other than those necessary to provide such services.
<PAGE>
9. Confidentiality.
(a) Service Corp. agrees to treat all records, data, and
other information with respect to Empire and its operations
confidentially and shall not disclose any such information to any
person other than Empire and its authorized agents without the prior
written consent of Empire.
(b) Service Corp. shall provide such home office
computer hardware, software and shall implement such policies and
procedures to ensure that all records, data, and other information
relating to Empire and its operations may only be accessed by Empire
and the personnel of Service Corp. performing the services hereunder.
10. Breach. If a party fails to perform any of its obligations
hereunder and has failed to cure such non-performance within sixty (60) days
of the receipt of written notice of such non-performance, the other party may
terminate this Agreement and pursue whatever additional remedies may be
available at law or in equity. During any 60-day cure period, the defaulting
party shall diligently attempt to cure its breach.
11. Miscellaneous
(a) Entire Agreement and Modification. This Agreement
constitutes the entire agreement between the parties, all prior
agreements being merged herein. No changes to, modifications of, or
additions to, this Agreement shall be valid unless the same shall be
in writing and signed by the parties hereto.
(b) Severability. The provisions in this Agreement are
severable, and if any one clause or provision hereof shall be held
invalid or unenforceable, then such invalidity or unenforceability
shall affect only such clause or provision, or part thereof, and
shall not in any manner affect any other clause or provision of this
Agreement.
(c) Binding Agreement; Assignment. This Agreement shall be
binding upon and inure to the benefit of the parties named herein and
to their respective successors and assigns. This Agreement shall not
be assignable by any party without the prior written consent of the
other parties; provided that Empire may assign its rights to its
successor provided that Paul S. Lindsey, Jr. and/or Kristin Lindsey,
beneficially own, in the aggregate or separately, the majority of the
outstanding shares of common stock of such successor.
(d) Person. For purposes of this Agreement, the term
person shall include any individual, corporation, partnership, trust,
unincorporated association, business, or other legal entity.
(e) Notices. All notices, demands and requests required by
this Agreement shall be in writing and shall be deemed to have been
given for all purposes (i) upon personal delivery, (ii) two days
after being sent, when sent by professional overnight courier
service, (iii) five days after posting when sent by registered or
certified mail, or (iv) on the date of transmission when sent by
telegram, telegraph, telex or facsimile transmission, addressed
<PAGE>
If to Empire:
Empire Gas Corporation
1700 South Jefferson Street
Lebanon, Missouri 65536
If to Service Corp.:
Empire Service Corporation
1700 South Jefferson Street
Lebanon, Missouri 65536
Any party hereto may from time to time by notice in writing served
upon the others as provided herein, designate a different mailing
address or a different person to which such notices or demands are
thereafter to be addressed or delivered.
(f) Captions. Captions are provided herein for convenience
only and they are not to serve as a basis for interpretation or
construction of this Agreement, nor as evidence of the intention of
the parties hereto.
(g) Attorney's Fees. In any action at law or in equity to
enforce any of the provisions or rights under this Agreement, the
unsuccessful party to such litigation, as determined by the court in
a final judgment or decree, shall pay the successful party all costs,
expenses and reasonable attorneys' fees, as set by the court and not
by a jury, incurred by the successful party (including, without
limitation, costs, expenses and fees on any appeal).
(h) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the state of Missouri,
without reference to conflicts of laws, and the parties agree that
any action, suit, or proceeding relating to this Agreement shall be
instituted and prosecuted in the courts of the County of Clay, State
of Missouri, and each party waives the right to change of venue.
(i) Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original but all
of which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the day and year first written.
EMPIRE GAS CORPORATION
By:___________________________
Name:_________________________
Title:________________________
EMPIRE SERVICE CORPORATION
By:___________________________
<PAGE>
Name:_________________________
Title:________________________
Exhibit 15.1<PAGE>
<PAGE>
Independent Accountant's Report
Board of Directors and Stockholder
Empire Gas Operating Corporation
Lebanon, Missouri
We have reviewed the accompanying condensed consolidated
balance sheet of EMPIRE GAS OPERATING CORPORATION AND SUBSIDIARIES, FORMERLY
EMPIRE GAS CORPORATION, (a wholly-owned subsidiary of Empire Gas
Corporation, formerly Empire Gas Acquisition Corporation) as of March 31,
1994, and the related condensed consolidated statements of operations and
cash flows for the three-month and nine-month periods ended March 31, 1994
and 1993. These condensed consolidated financial statements are the
responsibility of the Company's management.
We conducted our review in accordance with standards
established by the American Institute of Certified Public Accountants. A
review of interim financial information consists principally of applying
analytical procedures to financial data and making inquiries of persons
responsible for financial and accounting matters. It is substantially less
in scope than an audit conducted in accordance with generally accepted
auditing standards, the objective of which is the expression of an opinion
regarding the condensed consolidated financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material
modifications that should be made to the accompanying condensed consolidated
financial statements for them to be in conformity with generally accepted
accounting principles.
We have previously audited, in accordance with generally
accepted auditing standards, the consolidated balance sheet as of June 30,
1993, and the related consolidated statements of operations, stockholder's
equity and cash flows for the year then ended (not presented herein); and in
our report dated July 30, 1993, we expressed an unqualified opinion on those
consolidated financial statements. In our opinion, the information set
forth in the accompanying condensed consolidated balance sheet as of
June 30, 1993, is fairly stated in all material respects in relation to the
consolidated balance sheet from which it has been derived.
Springfield, Missouri
May 3, 1994
