UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
Form 8-K
 
Current Report Pursuant to Section 13 or 15(d) of
the Securities Act of 1934
 
Date of Report (Date of earliest event reported):  June 26, 2015
 
 
Synthesis Energy Systems, Inc.
(Exact name of registrant as specified in its charter)
 
 
Delaware
(State or other jurisdiction
of incorporation)
001-33522
(Commission
File Number)
20-2110031
(I.R.S. Employer
Identification No.)
 
Three Riverway, Suite 300
Houston, Texas
(Address of principal executive offices)
77056
( Zip Code)
 

 
(713) 579-0600
(Registrant’s telephone number, including area code)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
 
[   ]       Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
[   ]       Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
[   ]       Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14-2(b))
 
[   ]       Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CRF 240.133-4(c))
 
 
 
 
Item 1.01      Entry into a Material Definitive Agreement.

Share Purchase and Investment Agreement
 
Effective June 26, 2015, Synthesis Energy Systems Inc. – British Virgin Islands (“SES BVI”), an indirect subsidiary of Synthesis Energy Systems, Inc. (the “Company”), entered into a Share Purchase and Investment Agreement (the “SPA”) with Rui Feng Enterprises Limited (“Rui Feng”), a subsidiary of Shadong Saikong Automatic Equipment Company Ltd. (“Saikong”), whereby Rui Feng will acquire a controlling interest in Synthesis Energy Systems Investments Inc., a subsidiary of SES BVI which owns 98.05% of SES (Zao Zhuang) New Gas Co. Ltd., the Chinese joint venture which owns the ZaoZhuang plant of SES (“SES-ZZ”).  Pursuant to the SPA, SES BVI will sell an approximately 60% equity interest to Rui Feng in exchange for $10,000,000.  This amount shall be paid in four installments, with the first installment of approximately $1.6 million paid on June 26, 2015, and Rui Feng shall receive equity in SESI proportionate to its installment payments.  After the four installment payments have been made, if Rui Feng invests an additional amount of 40MM RMB equivalent in U.S. dollars for the construction of an expansion to the SES-ZZ plant, Rui Feng will receive an additional approximately 14% of the equity in SESI, for a total of 75%.
 
After each installment payment, Rui Feng shall be entitled to appoint one director on the board of SESI, such that after the four installments are paid, the board shall consist of seven directors, with four appointed by Rui Feng with the balance appointed by SES BVI.  Rui Feng shall also be entitled to appoint directors of SES-ZZ as the installment payments are made, such that when all installment payments are made, Rui Feng will have three directors, SESI shall have two directors and the Chinese joint venture partner shall have one director on the SES-ZZ board.

Operation and Management Agreement

In connection with entering into the SPA, SES-ZZ, Saikong, SESI and Rui Feng entered into a Operation and Management Agreement (the “OMA”), pursuant to which Rui Feng is entitled to appoint a general manager and the technical team for overall operation and management of the SES-ZZ plant.  Notwithstanding this, SESI shall be entitled to appoint a chief engineer and the chief financial officer for the plant.  The OMA further details the operational and management responsibilities of the various personnel.

The OMA will become effective upon payment of the third installment under the SPA and will terminate upon Rui Feng obtaining majority ownership of SESI.

The foregoing descriptions of the Marketing are qualified in its entirety by reference to the full text of the SPA and OMA, copies of which the Company plans to file as an exhibit to its Annual Report on Form 10-K for the year ended June 30, 2015.

Item 5.03       Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.
 
At the Annual Meeting of Stockholders (the “Annual Meeting”) of the Company on June 30, 2015 , the Company’s stockholders approved an amendment (the “Amendment”) to the Company’s certificate of incorporation to authorize a class of preferred stock, consisting of 20,000,000 authorized shares, which may be issued in one or more series, with such rights, preferences, privileges and restrictions as shall be fixed by the Company’s board of directors. The change in the authorized capital of the Company was effected when the Amendment was filed with the Secretary of State of the State of Delaware on June 30, 2015 and the Amendment was effective as of such date. The description of the Amendment set forth herein and in the Proxy Statement are summaries and are qualified in their entirety by the full text of the Amendment, a copy of which is incorporated by reference to Exhibit 3.1 to this Current Report on Form 8-K.

 
 
 
Item 5.07        Submission of Matters to a Vote of Security Holders.

At the Annual Meeting, eight directors were elected for terms expiring on the date of the annual meeting for the year ended June 30, 2015. As to each nominee for director, the results of the voting were as follows:

Name of Nominee
 
Number of Votes
Voted For
 
Number of Votes
Withheld
 
Number of Broker
Non-Votes
Lorenzo Lamadrid
 
47,593,791
 
2,217,475
 
13,485,036
Robert Rigdon
 
49,453,605
 
357,661
 
13,485,036
Denis Slavich
 
48,914,470
 
896,796
 
13,485,036
Harry Rubin
 
48,914,495
 
896,771
 
13,485,036
Xu, Ziwang
 
49,442,142
 
369,124
 
13,485,036
Gao, Feng
 
49,441,657
 
369,609
 
13,485,036
Yang, Guang
 
49,430,131
 
381,135
 
13,485,036
Charles Brown
 
49,446,377
 
364,889
 
13,485,036
 
 
The result of the vote on the amendment to the Company’s Certificate of Incorporation to authorize a class of preferred stock, consisting of 20,000,000 authorized shares, which may be issued in one or more series, with such rights, preferences, privileges and restrictions as shall be fixed by the Company’s board of directors was as follows:
 
Number of Votes
Voted For
 
Number of Votes
Voted Against
 
Number of Votes
Abstaining
 
Number of
Broker Non-Votes
43,388,430
 
6,469,327
 
212,628
 
13,225,917
 
 
The result of the vote on the ratification of BDO USA, LLP as the Company’s independent registered public accounting firm was as follows:
 
Number of Votes
Voted For
 
Number of Votes
Voted Against
 
Number of Votes
Abstaining
 
Number of
Broker Non-Votes
62,725,608
 
434,412
 
136,282
 
0


Item 8.01        Other Events.

On June 29, 2015, the Company issued a press release announcing the execution of the SPA and DOMA.  A copy of the press release is filed herewith as Exhibit 99.1.
 
 
 
 
Item 9.01        Financial Statements and Exhibits
 
Exhibits

*3.1           Certificate of Amendment to the Company’s Certificate of Incorporation.

*99.1           Press Release dated June 29, 2015.


* Filed herewith.


 
 
 
 

 
 
 
 
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.
 
  Synthesis Energy Systems, Inc.
     
     
Dated: July 1, 2015 /s/ Robert Rigdon  
 
Robert Rigdon
President and Chief Executive Officer
 
 
 
 
 
 
EXHIBIT 3.1
 
CERTIFICATE OF AMENDMENT
TO
CERTIFICATE OF INCORPORATION
OF
SYNTHESIS ENERGY SYSTEMS, INC.

Pursuant to the provisions of Section 242 of the Delaware General Corporation Law, as amended (the “ DGCL ”), SYNTHESIS ENERGY SYSTEMS, INC., a Delaware corporation (the “ Corporation ”), hereby certifies as follows:

ARTICLE ONE

The name of the Corporation is SYNTHESIS ENERGY SYSTEMS, INC.

ARTICLE TWO

This amendment to the Corporation’s Certificate of Incorporation (the “ Certificate of Incorporation ”) was duly adopted in accordance with Section 242 of the DGCL by the board of directors on April 16, 2015 and by the stockholders of the Corporation at a meeting of the stockholders held on June 30, 2015.

ARTICLE THREE

Article V of the Certificate of Incorporation is deleted and replaced in its entirety as follows:

“ ARTICLE V
 
(a)  
The total number of shares of stock of all classes which the Corporation shall have authority to issue is 220,000,000 shares consisting of (i) 200,000,000 shares of common stock, par value $.01 per share (the “ Common Stock ”), and (ii) 20,000,000 shares of preferred stock, par value $.01 per share (the “ Preferred Stock ”).

 
(b)  
Each holder of Common Stock shall be entitled to one vote for each share of Common Stock held of record by such holder on the record date for such vote. Except as otherwise required by the Delaware Law and subject to the rights of any holder of issued and outstanding shares of Preferred Stock, the holders of Common Stock shall possess all voting power, and holders of shares of Preferred Stock shall not be entitled to receive notice of any meeting of stockholders at which they are not entitled to vote. Subject to any preferential rights of any class or series of Preferred Stock outstanding from time to time, (i) when, as and if dividends or distributions are declared on outstanding shares of Common Stock, whether payable in cash, securities of the Corporation or other property, each holder of record of Common Stock on the record date for any such dividend or distribution shall be entitled to share ratably in such dividend or distribution in proportion to the number of shares of Common Stock held by such holder on the record date for such dividend or distribution and (ii) upon any voluntary or involuntary liquidation, dissolution or winding up of the Corporation, each holder of outstanding shares of Common Stock shall be entitled to share ratably in the assets of the Corporation to be distributed among the holders of Common Stock in proportion to the number of shares of Common Stock held by such holder.

 
(c)  
(i) Preferred Stock may be issued from time to time either as a class without series or as a class having one or more series. All shares of Preferred Stock, if issued as a class without series, or all shares of Preferred Stock of any one series, if issued in series, shall be identical to each other in all respects and shall entitle the holders thereof to the same rights and privileges, except that shares of any one series issued at different times may differ as to the dates from which dividends thereon, if cumulative, shall be cumulative.

 
 
 
(ii) The board of directors is hereby expressly vested with the authority to adopt a resolution or resolutions providing for the issuance of authorized but unissued shares of Preferred Stock and to fix in any such resolution or resolutions the designations, rights, voting rights, and relative, participating, optional or other special rights, if any, of such class or series of Preferred Stock and the qualifications, limitations or restrictions of any such class or series of Preferred Stock (a “ Preferred Stock Resolution ”). The authority of the board of directors to issue Preferred Stock shall include, without limitation, the power and authority to determine and establish by a Preferred Stock Resolution the following:

(1)  Voting rights, if any, including, without limitation, the authority to confer multiple votes per share, voting rights as to specified matters or issues or, subject to the provisions of this Certificate of Incorporation, voting rights to be exercised either together with the holders of Common Stock as a single class, or independently as a separate class;

(2) The rate per annum and the times at and conditions upon which the holders of shares of such class or series shall be entitled to receive dividends, the conditions and dates upon which such dividends shall be payable and whether such dividends shall be cumulative or noncumulative, and, if cumulative, the terms upon which such dividends shall be cumulative;

(3) Redemption, repurchase, retirement and sinking fund rights, preferences and limitations, if any, the amount payable on shares of such class or series in the event of such redemption, repurchase or retirement, the terms and conditions of any sinking fund, the manner of creating such fund or funds and whether any of the foregoing shall be cumulative or noncumulative;

(4) The rights to which the holders of the shares of such class or series shall be entitled upon any voluntary or involuntary liquidation, dissolution or winding up of the Corporation;

(5) The terms, if any, upon which the shares of such class or series shall be convertible into or exchangeable for shares of stock of any other class or classes or of any other series of the same or any other class or classes, including the price or prices or the rate or rates of conversion or exchange and the terms of adjustment, if any;

(6) The conditions or restrictions upon the creation of indebtedness of the Corporation or upon the issuance of additional Preferred Stock or other stock ranking on a parity therewith, or senior thereto, with respect to dividends or distribution of assets upon liquidation; and

(7) The conditions or restrictions with respect to the issuance of, payment of dividends upon, or the making of other distributions to, or the acquisition or redemption of, shares ranking junior to the Preferred Stock or to any series thereof with respect to dividends or distribution of assets upon liquidation.

(iii) Except as otherwise provided in a Preferred Stock Resolution, the number of shares constituting a series of Preferred Stock may be increased (but not above the total number of authorized shares of the class) or decreased (but not below the number of shares thereof then outstanding) to the fullest extent permitted by Delaware Law by like action of the board of directors.

 
 
 
(iv) Shares of any series of any Preferred Stock that have been redeemed (whether through the operation of a sinking fund or otherwise), purchased by the Corporation, or which, if convertible or exchangeable, have been converted into, or exchanged for, shares of stock of any other class or classes or any evidences of indebtedness shall resume the status which they had before being designated as part of a class of Preferred Stock and may be redesignated and reissued, all subject to the conditions or restrictions on issuance set forth in the Preferred Stock Resolution relating to any class or series of Preferred Stock and to any filing required by law.”

IN WITNESS WHEREOF, the undersigned, being the duly authorized President & Chief Executive Officer of the Corporation, for the purpose of amending the Certificate of Incorporation of the Corporation pursuant to Section 242 of the DGCL, does make and file this Certificate of Amendment this 30th day of June, 2015.
 
 
SYNTHESIS ENERGY SYSTEMS, INC.
     
 
By:  
/s/ Robert Rigdon
 
   
Robert Rigdon, President & Chief Executive Officer

 

EXHIBIT 99.1

Synthesis Energy Systems, Inc. Enters Definitive Agreements on $26 Million Package for Its Zao Zhuang New Gas Company Gasification Facility Expansion

HOUSTON, June 29, 2015 (GLOBE NEWSWIRE) -- Synthesis Energy Systems, Inc. (SES) (NASDAQ:SYMX), a global energy and gasification technology company enabling clean, high-value energy and chemical products from multiple feedstocks announced that it has entered into a definitive Share Purchase and Investment Agreement (SPIA) with Rui Feng Enterprises Limited, a British Virgin Islands company and a separate Operation and Management (OM) Agreement with Shandong Saikong Automation Equipment Co. Ltd, an affiliate of Rui Feng registered in the People's Republic of China (together referred to as "the Transaction Partners") to achieve SES' strategic aim of repurposing and expanding its Zao Zhuang New Gas Company joint venture facility (ZZ) in Zao Zhuang City, Shandong Province, China. The agreements became effective on June 26, 2015, with the first installment payment of $1.6 million received by SES in its account outside China.

The transaction for selling SES' shares of the ZZ joint venture is to be completed offshore of the People's Republic of China. Under the terms of the SPIA agreement, the Transaction Partners will pay $10 million cash to SES in four installments over a period of 15 months for 59.81% of SES's shares in ZZ. The Transaction Partners will also invest a minimum additional equity of $6.6 million (40 million Yuan) to fund the estimated $16 million (100 million Yuan) expansion and increase its ownership to a capped limit of 73.53%. Additional debt financing will be raised by the Transaction Partners and the ZZ joint venture for completion of the expansion. SES is not required to invest additional equity or provide debt to the expanded ZZ facility and will retain a minimum 24.52% ownership in the new enterprise.

A separate Operation and Management Agreement between the Transaction Partners and the ZZ plant has also been signed which establishes a new General Manager of ZZ and a project team to carry forward on both day to day plant operations as well as oversee the construction of the expansion project. Under the terms of the OM agreement the Transaction Partners will finance all operating costs of the ZZ Plant and have preferential profit distribution right for the first 36 months of operations from the expanded facility.

The two existing SES gasification systems will be refurbished and prepared for full capacity operation and the syngas will be used for the production of 100,000 tons per year of acetic acid, as well as a secondary product of propionic acid (~10,000tpa). The agreed goal is to complete the expansion within 24 months. The parties will now work closely together to immediately amend the ZZ plant's existing facility's local government approvals to allow for production of the new products and begin equipment financing and engineering for the expansion. In addition, the ZZ plant will continue to generate methanol from Xuecheng Energy's coke oven gas (COG) under the terms of the existing Methanol Cooperation Agreement between ZZ and Shandong Weijiao Group Xuecheng EnergyCo., Ltd.

"I am proud of our team to have found such an enthusiastic partner with a solid commitment to expand the ZZ plant. This expansion is expected to allow our two SES gasification systems to operate at 100% design capacity which will drive lower unit costs for the new enterprise plus the production of acetic acid and the related products is expected to provide higher profitability through improved operating margins which we believe will produce long-term financial results from the ZZ joint venture," said Robert W. Rigdon, President and CEO of SES. "This move accomplishes our strategic aim to both monetize a portion of the ZZ asset and repurpose the facility for growth and future earnings without additional equity or debt required from SES. A lot of hard work still remains to secure the additional financing and complete the expansion project and we will be working closely with our new partners to get it done successfully."

"Through friendly cooperation of all parties we will undertake a great project expansion effort to create value for our shareholders. Zao Zhuang is a preferable location to place this important acetic acid production facility and improve the overall conditions for the area," said Madame Li Bing, General Manager of Rui Feng. "We are utilizing an advanced downstream technology that has been commercially proven to generate acetic acid at favorable economics and we will now put all efforts to move quickly toward our goal of a big project success."

About Synthesis Energy Systems, Inc.

Synthesis Energy Systems (SES) is a Houston-based technology company focused on bringing clean high-value energy to developing countries from low-cost and low-grade coal and biomass through its proprietary gasification technology based upon U-Gas®, licensed from the Gas Technology Institute. The SES Gasification Technology enables Growth With Blue Skies, and greater fuel flexibility for both large-scale and efficient small- to medium-scale operations close to fuel sources. Fuel sources include low-rank, low-cost high ash, high moisture coals, which are significantly cheaper than higher grade coals, many coal waste products, and biomass feedstocks. For more information, please visit: www.synthesisenergy.com.

SES Forward-Looking Statements

This press release includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical fact are forward-looking statements. Forward-looking statements are subject to certain risks, trends and uncertainties that could cause actual results to differ materially from those projected. Among those risks, trends and uncertainties are the ability of our ZZ joint venture to effectively operate XE's methanol plant and produce methanol; our ability to successfully expand the ZZ joint venture through our partnership with Saikong; the ability of our project with Yima to produce earnings and pay dividends; our ability to develop and expand business of the Tianwo-SES joint venture in the joint venture territory; our ability to successfully partner our technology business; our ability to develop our power business unit and marketing arrangement with GE and our other business verticals, including DRI steel, through our marketing arrangement with Midrex Technologies, and renewables; our ability to successfully develop the SES licensing business; events or circumstances which result in an impairment of assets, including, but not limited to, at our ZZ Joint Venture; our ability to reduce operating costs; our ability to make distributions and repatriate earnings from our Chinese operations; our limited history, and viability of our technology; commodity prices, including in particular methanol, and the availability and terms of financing; our ability to obtain the necessary approvals and permits for future projects; our ability to raise additional capital, if any, and our ability to estimate the sufficiency of existing capital resources; the sufficiency of internal controls and procedures; and our results of operations in countries outside of the U.S., where we are continuing to pursue and develop projects. Although SES believes that in making such forward-looking statements our expectations are based upon reasonable assumptions, such statements may be influenced by factors that could cause actual outcomes and results to be materially different from those projected by us. SES cannot assure you that the assumptions upon which these statements are based will prove to have been correct.

Contact:

MDC Group
Investor Relations:
David Castaneda
Arsen Mugurdumov
414.351.9758
IR@synthesisenergy.com

Media Relations:
Susan Roush
747.222.7012
PR@synthesisenergy.com