_____________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
October 28, 1997
(Date of Report)
ONSITE ENERGY CORPORATION
(Exact name of registrant as specified in its charter)
STATE OF DELAWARE [1-12738] [33-0576371]
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification Number)
incorporation)
701 Palomar Airport Road, Suite 200, Carlsbad, California 92009
Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 760-931-2400
<PAGE>1
Item 2. ACQUISITION OR DISPOSITION OF ASSETS.
Item 5. OTHER EVENTS.
On October 28, 1997, Onsite Energy Corporation, a Delaware corporation
("Onsite" or the "Company"), entered into a "Plan And Agreement of
Reorganization" (the "Reorganization Agreement") with Westar Business
Services, Inc., a Kansas corporation ("WBS"), Westar Energy, Inc. ("Westar
Energy"), a Kansas corporation and sole shareholder of WBS and Westar
Capital, Inc., a Kansas corporation ("Westar Capital").
Pursuant to the Reorganization Agreement, the parties effected a "tax
free" exchange under Section 368(a)(1)(B) of the Internal Revenue Code of
1986, as amended (the "Reorganization"). Specifically, Onsite acquired
100% of WBS's issued and outstanding capital stock, consisting solely of
Common Stock, no par value, in exchange for One Million Seven Hundred
Thousand (1,700,000) shares of Onsite's Class A Common Stock, par value
$0.001 per share. An additional 800,000 shares of Onsite Class A Common
Stock will be delivered to Westar Capital in the event that WBS has
executed certain additional business contracts. The number of shares
issued was determined through negotiations between the parties. As a
result of the Reorganization, WBS is now a wholly-owned subsidiary of
Onsite.
WBS provides performance contracting services, utility services and
industrial water services in the states of Kansas, Missouri and Oklahoma.
The acquisition provides Onsite with the ability to develop new markets in
the mid-west and other areas.
In connection with the Reorganization, Western Resources, Inc., and
its subsidiaries have agreed not to compete with Onsite in certain business
services for five years in fifteen states.
The foregoing description of the Reorganization Agreement is a summary
of certain of its provisions and reference is made to a copy of the
Reorganization Agreement which is attached hereto as Exhibit 2.1 and
incorporated herein by reference for all of its terms and conditions.
In a related transaction, on October 28, 1997, Onsite entered into a
Stock Subscription Agreement (the "Stock Agreement") with Westar Capital.
Pursuant to the Stock Agreement, Onsite has made a private placement of Two
Million (2,000,000) shares of Onsite's Class A Common Stock at Fifty Cents
($.50) per share and Two Hundred Thousand (200,000) shares of Onsite's
newly created Series C Convertible Preferred Stock at Five Dollars ($5.00)
per share. Each share of Onsite's Series C Convertible Preferred Stock is
convertible into five shares on Onsite's Class A Common Stock and earns a
dividend of 9.75% per annum.
Under the Stock Agreement, between June 30, 1998 and December 31,
1998, Westar Capital will also have the right to purchase up to two million
(2,000,000) additional shares of Onsite's Class A Common Stock at market
<PAGE>3
price, but not below $1.00 or above $2.00 per share. Further, Onsite may
require further investment in Series C Convertible Preferred Stock by
Westar Capital of up to two million dollars ($2,000,000) before the end of
1998.
Further, as part of the Stock Agreement, Westar Capital will limit its
equity ownership to 45% of the outstanding shares of the Class A Common
Stock on a fully diluted basis for a period of five years, unless it
receives the Company's permission to exceed such limit.
Pursuant to the terms of the Stock Agreement, Westar Capital also has
preemptive rights to purchase its pro rata share of any equity offerings of
the Company on the same terms, limited to the 45% limit set forth above.
In the case of certain acquisitions by the Company of another corporation
or substantially all of its assets, the exercise price for the pre-emption
rights shall be the average trading price of Onsite's Class A Common Stock.
For any such acquisitions prior to December 31, 1998, the exercise price
shall be at least $1.00, but not more than $2.00.
Additionally, Westar Capital has the right to initially elect one
director to Onsite's board and has selected Rita A. Sharpe as director.
Ms. Sharpe is President of Westar Capital and Westar Business Services, and
has twenty years of experience in the electric utility and related
industries.
The foregoing description of the Stock Subscription Agreement is a
summary of certain of its provisions and reference is made to a copy of the
Stock Subscription Agreement which is attached hereto as Exhibit 10.1 and
incorporated herein by reference for all of its terms and conditions.
Further, certain principal Onsite shareholders have entered into an
agreement with Westar Capital (the "Stockholders Agreement") to ensure that
Westar Capital will receive representation on Onsite's board of directors
in proportion to its ownership.
The Class A Common Stock purchased by Westar Capital (including the
Class A Common Stock underlying the Series C Preferred Stock) is not
registered under the Securities Act of 1933, as amended. The Company and
Westar Capital have entered into a Registration Rights Agreement granting
Westar Capital three demand registrations and unlimited piggy-back
registration rights with respects to the Class A Common Stock (including
the Class A Common Stock underlying the Series C Preferred Stock).
Pursuant to the Certificate of Designations for the Series C Preferred
Stock, if, at any time four or more quarterly dividends, whether or not
consecutive, on the Series C Convertible Preferred Stock shall be in
default, in whole or in part, the holders of the Series C Convertible
Preferred Stock shall be entitled to elect the smallest number of Directors
as would constitute a majority of the Board of Directors, and the holders
<PAGE>4
of the Class A Common Stock as a class shall be entitled to elect the
remaining Directors. Such voting rights shall continue until all dividends
accrued on the Series C Convertible Preferred Stock shall have been paid or
set apart for payment, at which time such voting power shall cease until a
like default in payment recurs.
Each share of Preferred Stock is convertible at any time at the option
of the holder into five (5) fully paid and nonassessable share of Class A
Common Stock. The Company may require conversion if, at any time after six
months from the date of issuance but before two years from the date of
issuance of the Preferred Stock, the Average Closing Price of the Class A
Common Stock of the Company exceeds $2.00 per share. However, in that
event, the Company will be required to pay that amount which the Preferred
Stock would have earned in dividends had the conversion not been forced.
The foregoing description of the Registration Rights Agreement and
Certificate of Designation are a summary of certain of their provisions and
reference is made to a copy of such Agreements which are attached hereto as
Exhibit 10.2 and 4.1, respectively.
Westar Capital now beneficially owns approximately thirty percent
(30%) of the outstanding shares of Onsite.
Item 7. FINANCIAL STATEMENTS AND EXHIBITS.
a. FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED.
(1) Financial statements of Westar Business Services, Inc. will
be filed by amendment within 60 days.
b. EXHIBITS.
2.1 Copy of the Plan and Agreement of Reorganization
4.1 Copy of the Certificate of Designation of the Rights,
Privileges and Preferences of the Series C Convertible
Preferred Stock of Onsite Energy Corporation
10.1 Copy of the Stock Subscription Agreement
10.2 Copy of the Registration Rights Agreement
<PAGE>5
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 hereunto duly authorized.
Dated: November 11, 1997
ONSITE ENERGY CORPORATION
By: RICHARD T. SPERBERG
Richard T. Sperberg
President
EXHIBIT 2.1
PLAN AND AGREEMENT OF REORGANIZATION
This PLAN AND AGREEMENT OF REORGANIZATION (the "Agreement") is entered
into as of this 28th day of October, 1997, by and among Onsite Energy
Corporation, a Delaware corporation ("Onsite"), Westar Business Services,
Inc., a Kansas corporation ("WBS"), Westar Energy, Inc. ("Westar Energy"),
a Kansas corporation and the sole shareholder of WBS), and Westar Capital,
Inc., a Kansas corporation ("Westar Capital").
PLAN OF REORGANIZATION
The transaction contemplated by this Agreement is intended to be a
"tax free" exchange (the "Reorganization") as contemplated by the
provisions of Section 368(a)(1)(B) of the Internal Revenue Code of 1986, as
amended. However, no representation is made nor has an opinion been
obtained that the transaction qualifies for Section 368(a)(1)(B) treatment.
Onsite will offer to acquire 100% of WBS's issued and outstanding capital
stock, consisting solely of Common Stock, no par value (the "WBS Shares"),
in exchange for shares of Onsite's voting common stock, par value $0.001
per share. Upon the consummation of the transfer of WBS Shares and the
issuance of the Exchange Stock to Westar Capital as set forth in Sections 1
and 2 herein below, WBS will be a wholly-owned subsidiary of Onsite.
AGREEMENT
SECTION 1
TRANSFER OF WBS SHARES
1.1 DELIVERY OF WBS SHARES. Westar Energy, the sole shareholder of
WBS as of the closing date as such term is defined in Section 3.1 hereof
(the "Closing Date"), shall transfer, assign, convey and deliver to Onsite,
at the Closing, as such term is defined in Section 3.1 hereof (the
"Closing"), certificates representing 100% of the WBS Shares. The transfer
of all WBS Shares shall be made free and clear of all liens, mortgages,
pledges, encumbrances or charges, whether disclosed or undisclosed, except
as Westar Energy and Onsite shall have otherwise agreed in writing prior to
the Closing.
SECTION 2
ISSUANCE OF ONSITE STOCK
TO WESTAR CAPITAL
2.1 ISSUANCE AND DELIVERY OF EXCHANGE STOCK. As consideration for
the transfer, assignment, conveyance and delivery of the WBS Shares
hereunder, on the Closing Date, Onsite shall deliver the "Exchange Stock"
as follows:
(a) to Westar Capital, 1.7 million shares of Onsite voting common
stock, in exchange for all shares of WBS Common Stock outstanding
immediately prior to the Closing Date; and
(b) to Bartel Eng Linn & Schroder as Escrow Agent, 800,000 shares
of Onsite voting common stock to be delivered to Westar Capital
in the event that WBS has executed a contract with (i) the Kansas
City, Kansas School District (KCK) for a minimum of $3 million,
or (ii) Health Midwest for a minimum of $2 million, before March
1, 1998, pursuant to the Escrow Agreement and Instructions
attached hereto as Exhibit A.
2.2 NO LIEN OR ENCUMBRANCES ON EXCHANGE STOCK. The issuance of the
Exchange Stock shall be made free and clear of all liens, mortgages,
pledges, encumbrances or charges, whether disclosed or undisclosed, except
as Westar Energy and Onsite shall have otherwise agreed in writing. As
provided herein and immediately prior to the Closing Date, WBS shall have
issued and outstanding one thousand (1,000) shares of WBS Common Stock.
2.3 RESTRICTIONS ON THE EXCHANGE STOCK. None of the Exchange Stock
issued to Westar Capital shall, at the time of Closing, be registered under
federal or state securities laws but, rather, the Exchange Stock shall be
issued pursuant to an exemption therefrom. All of such shares shall bear a
legend worded substantially as follows:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 OR ANY STATE SECURITIES LAWS. THEY MAY NOT BE SOLD
OR OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT AS TO THE SECURITIES UNDER SAID ACT AND ANY APPLICABLE
STATE SECURITIES LAW OR AN OPINION OF COUNSEL SATISFACTORY TO THE
COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED."
Onsite's transfer agent shall annotate its records to reflect the
restrictions on transfer embodied in the legend set forth above. There
shall be no requirement that Onsite register the Exchange Stock under the
Securities Act of 1933, as amended (the "Securities Act"), except as set
forth in the Registration Rights Agreement between Westar Capital and
Onsite of even date herewith, nor shall WBS, Westar Energy or Westar
Capital be required to register any WBS Shares under the Securities Act.
2.4 STOCKHOLDERS' AGREEMENT. The Exchange Stock shall also be
subject to certain restrictions as set forth in the Stockholders Agreement
dated October 28, 1997, between certain Onsite Shareholders and Westar
Capital, and shall contain a legend to that effect.
SECTION 3
CLOSING
3.1 CLOSING OF TRANSACTION; CLOSING DATE. The Closing of the
Reorganization (the "Closing") shall take place on October 31, 1997, (the
"Closing Date") provided all of the conditions precedent provided for in
Section 7 shall have been satisfied or waived and all deliveries provided
for in Sections 3.2 and 3.3 have been made. The Closing shall take place
simultaneously at the offices of Bartel Eng Linn & Schroder, 300 Capitol
Mall, Suite 1100, Sacramento, California, at the offices of WBS, 818 Kansas
Avenue, Topeka, Kansas, and at the offices of Onsite, 701 Palomar Airport
Road, Suite 200, Carlsbad, California.
3.2 DELIVERIES ON THE CLOSING DATE BY WBS AND WESTAR ENERGY. WBS and
Westar Energy shall deliver or cause to be delivered to Onsite the
following on or before the Closing Date:
(a) a copy of the minutes and/or consent of WBS's Board of
Directors authorizing WBS to close the transaction described by this
Agreement;
(b) a Certificate of Good Standing for WBS issued not more than
thirty days prior to the Closing by the Kansas Secretary of State;
(c) certified copies of WBS's Articles and Bylaws, as amended to
the Closing Date;
(d) copies of WBS's unaudited financial statements for the years
ended December 31, 1995 and December 31, 1996, and unaudited financial
statements for the period ended September 30, 1997, certified to be
true and complete copies;
(e) share certificates representing all of the shares of WBS
Common Stock, sufficiently endorsed by stock powers for transfer to
Onsite pursuant to the terms and conditions of this Agreement;
(f) a certified resolution of Westar Energy forgiving that
portion of that certain note by and between WBS and Westar Energy for
which WBS has responsibility for repayment or liability;
(g) copies of the resignation letters of the directors and
officers of WBS;
(h) a certificate signed by WBS's President dated as of the
Closing Date stating that all of WBS's representations and warranties
set forth in this Agreement are true and correct and that all of the
conditions of this Agreement applicable to the Closing Date have been
satisfied or waived;
(i) a certificate signed by the President of Westar Energy dated
as of the Closing Date stating that all of the representations and
warranties by WBS and/or Westar Energy set forth in this Agreement are
true and correct and that all of the conditions of this Agreement
applicable to the Closing Date have been satisfied or waived;
(j) a certificate signed by the President of Westar Capital
dated as of the Closing Date stating that all of the representations
and warranties by Westar Capital set forth in this Agreement are true
and correct and that all of the conditions of this Agreement
applicable to the Closing Date have been satisfied or waived; and
(k) a copy of the Non-Compete Agreement between Western
Resources, Inc. and Onsite, attached hereto as Exhibit B, executed by
Western Resources, Inc.
3.3 DELIVERIES ON THE CLOSING DATE BY ONSITE TO WESTAR ENERGY.
Onsite shall deliver, or cause to be delivered, to Westar Energy the
following on or before the Closing Date:
(a) Share certificates evidencing the appropriate number of
shares of Onsite Common Stock in accordance with the provisions of
Section issued in the name of Westar Capital;
(b) a copy of the minutes and/or consents of Onsite's Board of
Directors authorizing Onsite to take the necessary steps toward
Closing the transaction described by this Agreement;
(c) a copy of a Certificate of Good Standing for Onsite issued
not more than thirty days prior to the Closing by the Delaware
Secretary of State;
(d) a certificate signed by Onsite's Chief Executive Officer
dated as of the Closing Date stating that all of Onsite's
representations and warranties set forth in this Agreement are true
and correct and that all of the conditions of this Agreement
applicable to the Closing Date have been satisfied or waived; and
(e) an opinion of counsel in the form attached hereto as Exhibit
C.
(f) a copy of the Purchase Agreement between Onsite and Westar
Energy in the form attached hereto as Exhibit D.
3.4 FILINGS; COOPERATION. WBS, Westar Energy, Westar Capital and
Onsite shall, on request and without further consideration, cooperate with
one another by furnishing or using their best efforts to cause others to
furnish any additional information and/or executing and delivering or using
their best efforts to cause others to execute and deliver any additional
documents and/or instruments, and doing or using their best efforts to
cause others to do any and all such other things as may be reasonably
required by the parties or their counsel to consummate or otherwise
implement the transactions contemplated by this Agreement.
SECTION 4
REPRESENTATIONS AND WARRANTIES BY WBS, WESTAR ENERGY,
AND WESTAR CAPITAL
4.1 REPRESENTATIONS AND WARRANTIES OF WBS AND WESTAR ENERGY. Subject
to the schedules attached hereto and incorporated herein by this reference
(which schedules shall be acceptable to Onsite), WBS and Westar Energy,
jointly and severally, represent and warrant to Onsite as follows:
(a) ORGANIZATION AND GOOD STANDING. WBS is a corporation duly
organized, validly existing and in good standing under the laws of Kansas,
and has all requisite power and authority to own or lease properties and to
carry on business as now being conducted and as proposed to be conducted.
WBS is duly qualified and in good standing in each jurisdiction in which
the nature of its properties, assets or business requires such
qualification.
(b) CAPITALIZATION. WBS's authorized capital stock consists of
1,000 shares, all of which are Common Stock, no par value, of which all are
issued and currently outstanding or will be issued and outstanding as of
the Closing Date. All of such outstanding shares are validly issued,
fully paid and non-assessable. WBS does not have any other equity
securities or instruments convertible into equity securities authorized,
issued or outstanding.
(c) WBS AUTHORITY TO EXECUTE AGREEMENT. The shareholders of
WBS, if required, and WBS's board of directors, pursuant to the power and
authority legally vested in them, have duly authorized the execution and
delivery by WBS of this Agreement, and have duly agreed to each of the
transactions hereby contemplated. WBS has the power and authority to
execute and deliver this Agreement, to approve the transactions hereby
contemplated and to take all other actions required to be taken by it
pursuant to the provisions hereof. WBS has taken all actions required by
law, its Articles of Incorporation, as amended, or otherwise to authorize
the execution and delivery of this Agreement. This Agreement is valid and
binding upon WBS in accordance with its terms. Neither the execution and
delivery of this Agreement nor the consummation of the transactions
contemplated hereby will constitute a violation or breach of the Articles
of Incorporation, as amended, or the Bylaws, as amended, of WBS, or any
agreement, stipulation, order, writ, injunction, decree, law, rule or
regulation applicable to WBS.
(d) WESTAR ENERGY AUTHORITY TO EXECUTE AGREEMENT. The
shareholders of Westar Energy, if required, and Westar Energy's board of
directors, pursuant to the power and authority legally vested in them, have
duly authorized the execution and delivery of this Agreement, and have duly
agreed to each of the transactions hereby contemplated. Westar Energy has
the power and authority to execute and deliver this Agreement, to approve
the transactions hereby contemplated and to take all other actions required
to be taken by it pursuant to the provisions hereof. Westar Energy has
taken all actions required by law, its Articles of Incorporation, as
amended, or otherwise to authorize the execution and delivery of this
Agreement. This Agreement is valid and binding upon Westar Energy in
accordance with its terms. Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby will
constitute a violation or breach of the Articles of Incorporation, as
amended, or the Bylaws, as amended, of Westar Energy, or any agreement,
stipulation, order, writ, injunction, decree, law, rule or regulation
applicable to Westar Energy.
(e) SUBSIDIARIES. WBS has no subsidiaries and no other material
investments, directly or indirectly, or other material financial interest
in any other corporation or business organization, joint venture or
partnership of any kind whatsoever.
(f) STOCK FREE FROM ENCUMBRANCES. Westar Energy is the legal
and beneficial owner of the WBS Shares, free of any liens and encumbrances,
and no other party has any right to assert an interest, inchoate or
otherwise, in any of the WBS Shares.
(g) FINANCIAL STATEMENTS. WBS's financial statements are true,
complete and correct in all material respects and have been prepared in
accordance with past practices, applied on a basis consistent with prior
accounting periods, present fairly the financial position and the results
of operations and changes in financial positions for the periods indicated
and have accurately recorded all material revenues and expenses of WBS on
an accrual basis as reflected in the books and records of WBS. The books
of account of WBS fully and fairly reflect all of the material transactions
of WBS.
(h) MARKETABLE TITLE. WBS has good and marketable title to all
of its material properties and assets, free and clear of any material
imperfection of title, security interest, lien, claim or encumbrance of any
kind except for the lien of taxes not yet due and payable, and assets or
properties held under valid and subsisting leases which are in full force
and effect and with which WBS is not in default with or without notice or
lapse of time.
(i) USE OF WESTAR NAME. On the Closing Date, WBS shall change
its name to a name of Onsite's choosing which does not include the word
"Westar." After Closing, WBS's right to use the names "Westar," "Westar
Business Services," "Westar Business Services, Inc." or any service name or
mark related to Westar Energy or Western Resources, Inc. shall be
controlled by the Transition Agreement between Onsite, WBS, Westar Energy,
Westar Capital and Western Resources, Inc., attached hereto as Exhibit E.
(j) ABSENCE OF CERTAIN CHANGES. Since the date of the most
recent available unaudited financial statements specified in Section 4.1(g)
above, to WBS's knowledge there has been no material change in WBS's
financial condition, assets or liabilities.
(k) ABSENCE OF UNDISCLOSED LIABILITIES. Except as disclosed on
WBS's most recent available balance sheet and, to WBS's knowledge, WBS has
no other liabilities, other than those incurred in the ordinary course of
business, secured or unsecured and whether accrued, absolute, contingent,
direct, indirect or otherwise, which would be individually, or in the
aggregate, material to the results of operations or financial condition of
WBS as of the Closing Date.
(l) EMPLOYEE OBLIGATIONS. Except as provided for in Section
8.1(g), WBS has no liabilities to any of its employees or any governmental
authority or private insurer, in connection with employee compensation and
benefits, including but not limited to: (i) unpaid wages/salary, including
unpaid overtime compensation whether accrued, absolute, contingent, direct,
indirect or otherwise, (ii) participation in WBS's medical and dental
plans, (iii) long-term disability plan payments, and (iv) workers'
compensation expenses, including settlement amounts.
(m) LITIGATION. There are no outstanding orders, judgments,
injunctions, awards or decrees of any court, governmental or regulatory
body or arbitration tribunal against WBS or its properties. There are no
actions, suits or proceedings pending, or, to the knowledge of WBS,
threatened against or affecting WBS, any of its officers or directors
relating to their positions as such, or any of its properties, at law or in
equity, or before or by any federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality, domestic
or foreign, in connection with the business, operations or affairs of WBS
which might result in any material adverse change in the operations or
financial condition of WBS, or which might prevent or materially impede the
consummation of the transactions under this Agreement.
(n) TAX MATTERS. All federal, foreign, state and local tax
returns, reports and information statements required to be filed by or with
respect to the activities of WBS have been filed for all the years and
periods for which such returns and statements were due, including
extensions thereof. WBS has not incurred any liability with respect to any
federal, foreign, state or local taxes except in the ordinary and regular
course of business. WBS is not delinquent in the payment of any such tax
or assessment, and no deficiencies for any amount of such tax have been
proposed or assessed.
(o) COMPLIANCE WITH LAWS. To WBS's knowledge, the operations
and affairs of WBS do not violate any law, ordinance, rule or regulation
currently in effect, or any order, writ, injunction or decree of any court
or governmental agency, the violation of which would substantially and
adversely affect the business, financial condition or operations of WBS.
(p) OPERATING AUTHORITIES. To WBS's knowledge, WBS has all
material operating authorities, governmental certificates and licenses,
permits, authorizations and approvals ("Permits") required to conduct its
business as presently conducted. Except as otherwise disclosed in this
Agreement, during the last two years, there has not been any notice or
adverse development regarding such Permits; such Permits are in full force
and effect; no material violations are or have been recorded in respect of
any Permit; and no proceeding is pending or, to WBS's knowledge, threatened
to revoke or limit any Permit.
(q) BOOKS AND RECORDS. The books and records of WBS are
complete and correct, are maintained in accordance with good business
practice and accurately present and reflect, in all material respects, all
of the transactions therein described, and there have been no transactions
involving WBS which properly should have been set forth therein and which
have not been accurately so set forth.
(r) MINUTE BOOK. The Minute Book of WBS as delivered to Onsite
contains complete and correct records of all meetings and other corporate
actions of the Boards of Directors (including any committee established by
the Directors) and the shareholders of WBS, as maintained by it, and is
maintained pursuant to the requirements of the jurisdictions of its
incorporation.
(s) CONTRACTS. A true, correct, and complete copy of each of
WBS's active contracts (the "Contracts") is included in the business
records located at WBS's business. WBS has duly performed in all material
respects all obligations to be performed by it under the Contracts at or
prior to the Closing Date and has received no notice from any other party
thereto that it is in default in any material respect under any of its
obligations thereunder. No other party to any Contract is in default in
any material respect under any of its obligations thereunder. To WBS's
knowledge, no condition or state of facts exists that with notice or the
passage of time, or both, would constitute a default by WBS under any
Contract, and each Contract is in full force and effect and enforceable by
WBS against all other parties thereto in all material respects.
(t) FINDER'S FEE. WBS and Westar Energy are not liable or
obligated to pay any finder's, agent's, broker's or consultant's fee
arising out of or in connection with this Agreement or the transactions
contemplated by this Agreement, and WBS and Westar Energy have done nothing
to cause Onsite to incur any liability to any party for any finder's,
agent's, broker's or consultant's fee arising out of or in connection with
this Agreement or the transactions contemplated by this Agreement.
4.2 REPRESENTATIONS AND WARRANTIES OF WESTAR CAPITAL. Westar Capital
represents and warrants to Onsite as follows:
(a) WESTAR CAPITAL AUTHORITY TO EXECUTE AGREEMENT. The
shareholders of Westar Capital, if required, and Westar Capital's board of
directors, pursuant to the power and authority legally vested in them, have
duly authorized the execution and delivery of this Agreement, and have duly
agreed to each of the transactions hereby contemplated. Westar Capital has
the power and authority to execute and deliver this Agreement, to approve
the transactions hereby contemplated and to take all other actions required
to be taken by it pursuant to the provisions hereof. Westar Capital has
taken all actions required by law, its Articles of Incorporation, as
amended, or otherwise to authorize the execution and delivery of this
Agreement. This Agreement is valid and binding upon Westar Capital in
accordance with its terms. Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby will
constitute a violation or breach of the Articles of Incorporation, as
amended, or the Bylaws, as amended, of Westar Capital, or any agreement,
stipulation, order, writ, injunction, decree, law, rule or regulation
applicable to Westar Capital.
(b) PURCHASE ENTIRELY FOR OWN ACCOUNT. This Agreement is made
by Onsite in reliance upon Westar Capital's representation to Onsite, which
by Westar Capital's execution of this Agreement Westar Capital hereby
confirms, that the Exchange Stock to be issued to Westar Capital hereunder
will be acquired for investment purposes for Westar Capital's own account,
not as a nominee or agent, and not with a view to the resale or
distribution of any part thereof in violation of applicable federal and
state securities laws. By executing this Agreement, Westar Capital further
represents that Westar Capital does not have any contract, undertaking,
agreement or arrangement with any person to sell, transfer or grant
participations to such person or to any third person, with respect to any
of the Exchange Stock. A transfer of the Exchange Stock to an Affiliate by
Westar Capital shall not be deemed to be a violation of this provision. As
used herein, the term "Affiliate" shall mean, with respect to any person,
any other person that directly or indirectly through one or more
intermediaries controls or is controlled by or is under common control with
such person.
(c) RELIANCE UPON WESTAR CAPITAL'S REPRESENTATIONS. Westar
Capital understands that the Exchange Stock has not been registered under
the Securities Act on the grounds that the transactions contemplated by
this Agreement and the issuance of the Exchange Stock is exempt from
registration under the Securities Act pursuant to Section 4(2) thereof, and
Regulation D promulgated thereunder, and that the Onsite's reliance on such
exemption is predicated on Westar Capital's representations set forth
herein.
(d) RECEIPT OF INFORMATION. Westar Capital has received
information and had the opportunity to ask questions of Onsite management
and has considered such information in evaluating the terms and conditions
of the offering of the Exchange Stock, and the business, properties,
prospects and financial condition of Onsite, and in deciding to accept the
Exchange Stock. The foregoing, however, does not limit or modify the
representations and warranties of Onsite in Section 5.1 hereof or the right
of Westar Capital to rely thereon.
(e) INVESTMENT EXPERIENCE. Westar Capital represents that it is
experienced in evaluating and investing in securities of companies and
acknowledges that it is able to fend for itself, can bear the economic risk
of the investment, and has such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and risks of
the investment in the Exchange Stock. WBS, Westar Energy and Westar
Capital further represent that none of them has been organized solely for
the purpose of acquiring the Exchange Stock.
(f) ACCREDITED INVESTOR. Westar Capital represents that it is
an "accredited investor" as that term is defined in Regulation D, 17 C.F.R.
230.501(a).
(g) RESTRICTED SECURITIES. Westar Capital understands that the
Exchange Stock issued, or to be issued, hereunder may not be sold,
transferred, or otherwise disposed of without registration under the
Securities Act or an exemption therefrom, and that in the absence of an
effective registration statement covering the Exchange Stock, or an
available exemption from registration under the Securities Act, the
Exchange Stock must be held indefinitely. In particular, Westar Capital is
aware that the Exchange Stock may not be sold pursuant to Rule 144, 17
C.F.R. 230.144, unless all of the conditions of that Rule are met.
4.3 DISCLOSURE. WBS and Westar Energy, jointly and severally, have
disclosed all events, conditions and facts materially affecting the
business and prospects of WBS. No representation or warranty by WBS or
Westar Energy in this Agreement, nor any statement or certificate furnished
or to be furnished to Onsite by WBS or Westar Energy pursuant hereto, or in
connection with the transactions contemplated hereby, knowingly contains or
will contain any untrue statement of a material fact, or omits or will omit
to state a material fact necessary to make the statements contained therein
not misleading.
SECTION 5
REPRESENTATIONS AND WARRANTIES BY ONSITE
5.1 REPRESENTATIONS AND WARRANTIES OF ONSITE. Onsite represents and
warrants to WBS as follows:
(a) ORGANIZATION AND GOOD STANDING. Onsite is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware and has full corporate power and authority to own or
lease its properties and to carry on its business as now being conducted
and as proposed to be conducted.
(b) CAPITALIZATION. Onsite's authorized capital stock consists
of (a) 24 million shares of Common Stock, 0.001 par value, of which
23,999,000 are designated Class A Common Stock, of which 12,944,172 are
currently outstanding and held by approximately 217 shareholders of record,
and (b) one million shares of preferred stock, $0.001 par value, of which
two hundred thousand (200,000) are issued and currently outstanding.
(c) AUTHORITY TO EXECUTE AGREEMENT. The Board of Directors of
Onsite, pursuant to the power and authority legally vested in it, has duly
authorized the execution and delivery by Onsite of this Agreement, and has
duly agreed to each of the transactions hereby contemplated. Onsite has
the power and authority to execute and deliver this Agreement, to approve
the transactions hereby contemplated and to take all other actions required
to be taken by it pursuant to the provisions hereof. Onsite has taken all
actions required by law, its Articles of Incorporation, as amended, or
otherwise to authorize the execution and delivery of this Agreement. This
Agreement is valid and binding upon Onsite. Neither the execution and
delivery of this Agreement nor the consummation of the transactions
contemplated hereby will constitute a violation or breach of the Articles
of Incorporation, as amended, or the Bylaws, as amended, of Onsite, or any
agreement, stipulation, order, writ, injunction, decree, law, rule or
regulation applicable to Onsite.
(d) SUBSIDIARIES. Except as set forth in Schedule 5.1(d),
Onsite has no subsidiaries, no other investments, directly or indirectly,
and no other financial interest in any other corporation or business
organization, joint venture or partnership of any kind whatsoever.
(e) FINANCIAL STATEMENTS. Onsite has delivered to WBS, prior to
the Closing Date, copies of Onsite's audited financial statements for each
of the three years ended June 30, 1995, 1996 and 1997, which are true and
complete and have been prepared in accordance with generally accepted
accounting principles applied on a basis consistent with past practice.
(f) ABSENCE OF CERTAIN CHANGES. Since the audited financial
statements in Onsite's Form 10-KSB for the year ended June 30, 1997, to
Onsite's knowledge, there has been no material change in Onsite's financial
condition, assets or liabilities.
(g) ABSENCE OF UNDISCLOSED LIABILITIES. Except to the extent
reflected in Onsite's most recent financial statements in Onsite's Form 10-
KSB for the year ended June 30, 1997, and to Onsite's knowledge, Onsite has
no other liabilities, other than those incurred in the ordinary course of
business, secured or unsecured and whether accrued, absolute, contingent,
direct, indirect or otherwise except the expenses in connection with the
acquisition of WBS, which would be materially adverse, individually or in
the aggregate, to the results of operation or financial condition of
Onsite.
(h) LITIGATION. Other than as disclosed in the auditors
response letter dated September 25, 1997 and previously provided to Westar
Energy, there are no outstanding orders, judgments, injunctions, awards or
decrees of any court, governmental or regulatory body or arbitration
tribunal against Onsite or its properties. There are no actions, suits or
proceedings pending, or, to the knowledge of Onsite, threatened against or
relating to Onsite. Onsite is not in default under or with respect to any
judgment, order, writ, injunction or decree of any court or of any federal,
state, municipal or other governmental authority, department, commission,
board, agency or other instrumentality.
(i) TAX MATTERS. All federal, foreign, state and local tax
returns, reports and information statements required to be filed by or with
respect to the activities of Onsite have been filed for all the years and
periods for which such returns and statements were due, including
extensions thereof. Onsite has not incurred any liability with respect to
any federal, foreign, state or local taxes except in the ordinary and
regular course of business. Onsite is not delinquent in the payment of any
such tax or assessment, and no deficiencies for any amount of such tax have
been proposed or assessed.
(j) COMPLIANCE WITH LAWS. To Onsite's knowledge, the operations
and affairs of Onsite do not violate any law, ordinance, rule or regulation
currently in effect, or any order, writ, injunction or decree of any court
or governmental agency, the violation of which would substantially and
adversely affect the business, financial condition or operations of Onsite.
(k) REPORTS AND OTHER INFORMATION. All material reports,
documents and information required to be filed with the Securities and
Exchange Commission with respect to Onsite have been filed. Since January
1, 1996, Onsite has made all filings required to be made in compliance with
the Securities Act, and, to Onsite's knowledge, such did not omit to state
any material fact necessary in order to make the statements contained
therein not misleading in light of the circumstances under which such
statements were made as of their respective dates of filing.
(l) OPERATING AUTHORITIES. To Onsite's knowledge, Onsite has
all material operating authorities, governmental certificates and licenses,
permits, authorizations and approvals ("Permits") required to conduct its
business as presently conducted. During the last 2 years, there has not
been any notice or adverse development regarding such Permits; such Permits
are in full force and effect; no material violations are or have been
recorded in respect of any Permit; and no proceeding is pending or, to
Onsite's knowledge, threatened to revoke or limit any Permit.
(m) BOOKS AND RECORDS. The books and records of Onsite are
complete and correct, are maintained in accordance with good business
practice and accurately present and reflect, in all material respects, all
of the transactions therein described, and there have been no transactions
involving Onsite which properly should have been set forth therein and
which have not been accurately so set forth.
(n) FINDER'S FEES. Onsite is not liable or obligated to pay any
finder's, agent's, broker's or consultant's fee arising out of or in
connection with this Agreement or the transactions contemplated by this
Agreement.
5.2 DISCLOSURE. Onsite has disclosed all events, conditions and
facts materially affecting the business and prospects of Onsite. No
representation or warranty by Onsite in this Agreement, nor any statement
or certificate furnished or to be furnished to WBS by Onsite pursuant
hereto, or in connection with the transactions contemplated hereby,
knowingly contains or will contain any untrue statement of a material fact,
or omits or will omit to state a material fact necessary to make the
statements contained therein not misleading.
SECTION 6
CONDUCT OF PARTIES PENDING CLOSING
6.1 CONDUCT OF WBS BUSINESS PENDING CLOSING. WBS covenants that,
pending the Closing Date:
(a) No change will be made in WBS's Articles of Incorporation or
bylaws other than such changes as may be first approved in writing by
Onsite.
(b) Subject to the protection provided by Section 8.8 herein,
WBS has given or will give to Onsite, its accountants and other
representatives full access during normal business hours throughout the
period prior to the Closing Date, to all of WBS's properties, books,
contracts, commitments, and records, and has furnished or will furnish
Onsite during such period with all such information concerning WBS's
affairs as Onsite may reasonably request.
(c) WBS's business will be conducted only in the ordinary
course, except as approved in writing by Onsite.
(d) WBS will not consider any inquiries or proposals relating to
the possible merger or reorganization of WBS or a purchase of its assets,
except to the extent that they may be legally obligated to do so in which
case Onsite shall be notified in writing.
(e) Except for the contracts related to KCK, Health Midwest, and
Mid-States referenced in Section and other than in the ordinary course of
business, unless such contract or commitment is less than $50,000, no
contract or commitment will be entered into by or on behalf of WBS or
indebtedness otherwise incurred, except with the prior consent of Onsite.
(f) No material increases in annual compensation to employees
shall be made and no employment agreements shall be entered into with any
employees of WBS.
(g) WBS shall not dispose of any of its assets, except in
connection with the "Appliances Business," or in the ordinary course of
business.
(h) WBS will use its best efforts to preserve WBS's business
intact; and to preserve the goodwill of those having business relations
with WBS.
6.2 CONDUCT OF ONSITE PENDING CLOSING. Onsite covenants that,
pending the Closing:
(a) Onsite's business will be conducted only in the ordinary
course.
(b) Except for the designation of the Series C Preferred Stock,
no change will be made in Onsite's Articles of Incorporation or bylaws
other than such changes as may be first approved in writing by WBS.
(c) Onsite will not consider any inquiries or proposals relating
to the possible merger or reorganization of Onsite or a purchase of its
assets, except to the extent that they may be legally obligated to do so in
which case Westar Energy shall be notified in writing.
(d) Onsite has given or will give to WBS and/or Westar Energy,
its accountants and other representatives, full access during normal
business hours throughout the period prior to the Closing Date, to all of
Onsite's properties, books, contracts, commitments, and records, and has
furnished or will furnish WBS during such period with all such information
concerning Onsite's affairs as WBS may reasonably request.
SECTION 7
CONDITIONS PRECEDENT TO CLOSING
7.1 CONDITIONS PRECEDENT TO CLOSING. All obligations of Onsite and
WBS under this Agreement are subject to the fulfillment, prior to or at the
Closing Date, of all conditions herein set forth, including, but not
limited to, receipt by the appropriate party of all deliveries required by
Sections 3.2 and 3.3 herein, and fulfillment, prior to the Closing Date, of
each of the following conditions:
(a) WBS's, Westar Energy's, and Onsite's representations,
warranties and covenants contained in this Agreement shall be true at the
time of the Closing Date as though such representations, warranties and
covenants were made at such time.
(b) WBS shall have performed and complied with all agreements
and conditions required by this Agreement to be performed or complied with
prior to or at the Closing Date.
(c) Westar Energy shall have performed and complied with all
agreements and conditions required by this Agreement to be performed or
complied with prior to or at the Closing Date.
(d) Onsite shall have performed and complied with all agreements
and conditions required by this Agreement to be performed or complied with
prior to or at the Closing Date.
(e) Effective as of the Closing Date, WBS's director(s) shall
have resigned from the board and appointed new director(s), as nominated by
letter from Onsite's Chief Executive Officer.
(f) The Stock Subscription Agreement, and related agreements,
between Onsite and Westar Capital shall have closed.
(g) Effective as of the Closing Date, WBS's officer(s) shall
have resigned from such positions.
(h) The Transition Agreement, attached hereto as Exhibit E,
between Onsite and Western Resources, Inc. shall have been executed and
delivered.
(i) The Separation Plan attached hereto as Exhibit F (the
"Separation Plan") shall have been adopted by Onsite.
SECTION 8
ADDITIONAL COVENANTS OF THE PARTIES
8.1 EMPLOYEES. Upon the Closing, all of WBS's employees shall be
terminated and Onsite shall offer employment to each of WBS's employees on
an "at will" basis with a severance package as set forth in the Separation
Plan.
(a) OFFER OF EMPLOYMENT. At least one calendar day prior to the
Closing Date, Onsite shall make an offer of "at will" employment to every
employee listed by WBS on Schedule 8.1(a) attached hereto, which offer
shall include cash compensation as indicated next to such employee's name
on Schedule 8.1(a) and inclusion of such employee in the employee benefit
plans of Onsite, including but not limited to government-mandated plans
("Offer of Employment").
(b) ACCEPTANCE OF AN OFFER OF EMPLOYMENT. Acceptance of the
Offer of Employment will be effective only upon the receipt by Onsite via
facsimile, or by written acceptance delivered to Rita A. Sharpe, not later
than 8:00 a.m. Central Standard Time on November 3, 1997, ("Offer
Acceptance Deadline") on a form to be provided by Onsite with the Offer of
Employment. If the acceptance of the Offer of Employment is not received
by Onsite before 8:00 a.m. Central Standard Time on November 3, 1997, then
it shall be deemed rejected. An individual who rejects an Offer of
Employment shall not become a "Continuing Employee," and Onsite shall have
no obligation to such individual, except as provided in paragraph (c)
below. Each employee of WBS who accepts an Offer of Employment and
commences active full-time employment is referred to in this Agreement as a
"Continuing Employee."
(c) DECLINING EMPLOYEE. In the event that a WBS employee listed
in Schedule 8.1(a) is required by Onsite under the Offer of Employment and
as a condition of employment to report to work at a location more than 35
miles from such individual's work location prior to the Closing (provided
such new work location is not actually closer to the employee's residence)
and such individual does not accept the Offer of Employment (a "Declining
Employee"), Onsite agrees to pay Westar Energy and Westar Energy agrees to
pay the Declining Employee an amount equal to the amount Onsite would have
paid the Declining Employee under paragraphs 4(a), (b) or (c) of the
Separation Plan if the Declining Employee was eligible for benefits under
the Separation Plan. It is specifically recognized that no Declining
Employee shall be deemed an employee of Onsite by virtue of such payment,
nor shall any Declining Employee be eligible for the insurance benefits set
forth in paragraph 4(d) of the Separation Plan.
(d) SEVERANCE. Each Continuing Employee who is terminated from
employment by Onsite within one year after the Closing Date shall, if such
Continuing Employee is eligible for separation pay and benefits in
accordance with the Separation Plan, receive the separation pay and
benefits provided in the Separation Plan. Onsite shall adopt the
Separation Plan at Closing and keep such Separation Plan in effect for 12
months thereafter.
(e) EMPLOYMENT AT WILL. Nothing in this Agreement nor the
Separation Plan shall be construed to imply that Onsite has assumed any
obligation not expressly set forth herein or alter the fact that each
Continuing Employee shall be an employee at will.
(f) BENEFIT PLANS. Onsite shall make available to Continuing
Employees and their eligible dependents (i) Onsite's policies, programs,
and plans in effect, as of the date hereof, and (ii) workers' compensation,
unemployment compensation, and all other government-mandated plans.
Onsite's benefit plans shall not provide for ineligibility for benefits for
any Continuing Employee and their eligible dependents based on a
preexisting condition unless, immediately as of the Closing Date, such
conditions also resulted in ineligibility for benefits for such Continuing
Employee or their eligible dependent, as the case may be, under WBS's
benefit plans.
(g) WESTAR ENERGY'S OBLIGATIONS. After the Closing, Westar
Energy shall have responsibility for all wages and salaries accrued to the
Offer Acceptance Deadline, all payroll taxes incurred prior to the Offer
Acceptance Deadline, and the following benefit payments: (i) all medical or
dental expenses incurred prior to the Offer Acceptance Deadline by any WBS
employee and individuals covered under any employee's participation in
WBS's medical and dental plans in accordance with WBS's group insurance
policy extension provisions; (ii) all payments for sick leave taken by any
WBS employee prior to the Offer Acceptance Deadline (although this
Agreement shall not create or impose any right to payments which did not
otherwise exist); (iii) all long-term disability plan payments relating to
disabilities which commenced prior to the Offer Acceptance Deadline; (iv)
benefit expenses incurred by any WBS employee or eligible dependent, as the
case may be, prior to the Offer Acceptance Deadline under WBS's benefit
plans, (v) workers' compensation expenses, including settlement amounts,
arising from or related to events occurring prior to the Offer Acceptance
Deadline; (vi) all payments for accrued and unused vacation time, and (vii)
expenses, including settlement amounts, incurred with respect to WBS
employees for workers' compensation claims arising out of occurrences which
occurred prior to the Offer Acceptance Deadline.
(h) ONSITE'S OBLIGATIONS. Onsite shall be responsible for all
benefits of Continuing Employees and their eligible dependents which are
incurred after the Offer Acceptance Deadline and are payable under the
terms and conditions of Onsite's benefit plans. With respect to workers'
compensation and any other government-mandated plans, this Section shall
not be construed to violate applicable statutes or regulations. Where
permissible, any liabilities (other than those Westar Energy has agreed to
retain) under workers' compensation and other government-mandated plans
shall be transferred from Westar to Onsite as of the Offer Acceptance
Deadline. Where such transfer is prohibited by law, this provision is
intended to establish that primary responsibility as between Westar Energy
and Onsite for any liabilities, other than those liabilities which Westar
Energy has agreed to retain, shall be borne by Onsite.
(i) SEPARATION ARRANGEMENTS. Effective as of the Offer
Acceptance Deadline, Onsite shall establish and adopt the Separation Plan,
as set forth in Exhibit F attached hereto, for the benefit of all
Continuing Employees. Onsite shall maintain the Separation Plan for a
period of at least one year from the Closing Date. The costs incurred,
directly or indirectly, under the Separation Plan in connection with the
termination of any Continuing Employee after the Closing Date, shall be
borne exclusively by Onsite. "Years of Service" for each Continuing
Employee as such term is used in the Separation Plan is set forth in
Schedule 8.1(a). If, at any time within 12 calendar months after the date
of termination of employment of any Continuing Employee, Westar Energy
hires such Continuing Employee, then Westar Energy shall promptly pay to
Onsite an amount equal to the total amount paid by Onsite to such
terminated Continuing Employee under the Separation Plan.
8.2 OFFICES. Onsite shall cause WBS to maintain offices in Topeka
and Kansas City, Kansas as long as it makes good business sense.
8.3 COVENANT NOT TO COMPETE. To secure the interests of Onsite
hereunder, Westar Energy covenants and agrees that it will employ best
efforts to not, directly or indirectly, for the five years following the
Closing Date, anywhere in the states of Kansas, Missouri, Oklahoma,
California, New Jersey, New York, Massachusetts, Pennsylvania, Maryland,
Virginia, Florida, Washington, Arizona, Texas and Illinois, unless
otherwise authorized by Onsite in writing:
(a) solicit any customer of WBS or Onsite for services of the
Businesses, either directly or indirectly, or any current customer,
regardless of where located; or
(b) participate in the ownership, management, operation or
control of, or have any financial interest in or be connected with, or
engage in or aid or knowingly assist anyone else, in the conduct of the
following activities (collectively referred to as the "Businesses"):
(i) Reverse osmosis water treatment except for Western
Resources facilities not currently served by WBS;
(ii) construction and installation of electric substations
and other electrical equipment for use by industrial and
governmental entities within systems owned by them, other than
for emergency repairs and maintenance performed by Western
Resources and its regulated affiliates for such entities or for
its own system. This does not include services provided by
Western Resources and its regulated affiliates as part of its
electric and gas business as currently regulated; or
(iii) comprehensive design and installation of equipment
and services for the purpose of reducing energy costs.
Provided, however, that, during such five year period, if Westar
Energy or any of its affiliates should acquire a company which engages in
the Businesses, Westar Energy or such affiliate will offer to sell such
Businesses to Onsite, and Onsite and Westar Energy or such affiliate will
negotiate in good faith to consummate such sale. In the event Onsite and
Westar Energy or such affiliate are unable to agree to the terms of such
sale, the parties shall retain a third-party appraiser to set the sale
price. In the event Onsite and Westar Energy or such affiliate do not
consummate a sale based on the price recommended by the third-party
appraiser, Westar Energy or its affiliate may retain and operate such
Businesses and will not by virtue of such activities be deemed to be in
violation of this covenant not to compete.
It is not a violation of this Agreement for Western Resources or an
affiliate to acquire or hold a passive interest not in excess of 5% of the
outstanding equity in an entity engaged in the Businesses.
8.4 TAXES. Westar Energy shall pay, to Onsite or to the appropriate
taxing authority, any and all tax liability incurred by WBS prior to the
Closing Date, including taxes which have been incurred but are not yet
assessed, due and/or payable.
8.5 COOPERATION. WBS, Westar Energy, and Onsite will cooperate with
each other and their respective agents in carrying out the transactions
contemplated by this Agreement, and in delivering all documents and
instruments deemed reasonably necessary or useful by the other party.
8.6 EXPENSES. Each of the parties hereto shall pay all of its
respective costs and expenses (including attorneys' and accountants' fees,
finder's and consultant's fees, costs and expenses) incurred in connection
with this Agreement and the consummation of the transactions contemplated
herein.
8.7 PUBLICITY. Prior to the Closing Date, any written news releases
and/or other shareholder communication by any party pertaining to this
Agreement or the transactions contemplated herein shall be submitted to the
other parties for their review and approval prior to such news release
and/or other shareholder communication; provided, however, that (a) such
approval shall not be unreasonably withheld, and (b) such review and
approval shall not be required of disclosures required to comply, in the
judgment of counsel, with federal or state securities or corporate laws or
policies.
Each party shall provide the other reasonable opportunity, considering
the urgency of the disclosure of a particular matter, to review and comment
upon disclosures required to comply, in the judgment of counsel, with
federal or state securities or corporate laws or policies.
8.8 CONFIDENTIALITY. While each party is obligated to provide access
to and furnish information in accordance with this Agreement, it is
understood and agreed that such disclosure and information obtained as a
result of such disclosure are proprietary and confidential in nature. Each
party agrees to hold such information in confidence and not to reveal any
such information to any person who is not a party to this Agreement, or an
officer, director or key employee thereof, and not to use the information
obtained for any purpose other than assisting in its due diligence inquiry,
unless such information was obtained without restriction from an
alternative source or if the disclosure of such information is required by
law. This Section shall survive the execution and delivery of this
Agreement, the Closing and the consummation of the transaction called for
by this Agreement and shall not be limited to the time period otherwise set
forth in Section 10 below.
SECTION 9
TERMINATION
9.1 MUTUAL TERMINATION. WBS and Onsite may agree to mutually
terminate this Agreement prior to Closing without any liability to each
other.
9.2 TERMINATION UPON BREACH. Either party may terminate this
Agreement upon a material breach of this Agreement by the other.
SECTION 10
SURVIVAL OF REPRESENTATIONS AND
WARRANTIES
10.1 AS TO WBS. The representations and warranties of WBS contained
herein shall survive the execution and delivery of this Agreement, the
Closing and the consummation of the transactions called for by this
Agreement for a period of 2 years from the date of this Agreement unless a
lesser time period is specified.
10.2 AS TO WESTAR ENERGY. The representations and warranties of
Westar Energy contained herein shall survive the execution and delivery of
this Agreement, the Closing and the consummation of the transactions called
for by this Agreement for a period of 2 years from the date of this
Agreement unless a lesser time period is specified.
10.3 AS TO ONSITE. The representations and warranties of Onsite
contained herein shall survive the execution and delivery of this
Agreement, the Closing and the consummation of the transactions called for
by this Agreement for a period of 2 years from the date of this Agreement
unless a lesser time period is specified.
SECTION 11
MISCELLANEOUS
11.1 ENTIRE AGREEMENT, AMENDMENTS. This Agreement (including the
Exhibits and Schedules hereto) contains the entire agreement between the
parties with respect to the transactions contemplated hereby, and
supersedes all negotiations, representations, warranties, commitments,
offers, contracts, and writings prior to the date hereof.
11.2 BINDING AGREEMENT. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective assigns and
successors in interest; provided that neither this Agreement nor any right
hereunder shall be assignable by Onsite or WBS without the prior written
consent of the other parties.
11.3 INDEMNIFICATION.
(a) BY ONSITE. Onsite covenants and agrees to defend, indemnify
and hold harmless WBS and each of its officers, directors, employees,
agents, advisors and shareholders and affiliates, as such persons existed
prior to the Closing Date (collectively, the "WBS Indemnitees") from and
against, any loss, liability, damage or expense (including reasonable
attorneys' fees and costs) which any WBS Indemnitee may suffer, sustain or
become subject to as a result of a breach of any representation, warranty
or covenant by Onsite contained in this Agreement.
(b) BY WBS. WBS covenants and agrees to defend, indemnify and
hold harmless Onsite and each of its officers, directors, employees,
agents, advisors and shareholders and affiliates, as such persons existed
prior to the Closing Date (collectively, the "Onsite Indemnitees") from and
against any loss, liability, damage or expense (including reasonable
attorneys' fees and costs) which any Onsite Indemnitee may suffer, sustain
or become subject to, as a result of a breach of any representation,
warranty or covenant by WBS contained in this Agreement.
(c) BY WESTAR ENERGY. Westar Energy covenants and agrees to
defend, indemnify and hold harmless Onsite and each of its officers,
directors, employees, agents, advisors and shareholders and affiliates, as
such persons existed prior to the Closing Date (collectively, the "Onsite
Indemnitees") from and against any loss, liability, damage or expense
(including reasonable attorneys' fees and costs) which any Onsite
Indemnitee may suffer, sustain or become subject to, as a result of a
breach of any representation, warranty or covenant by WBS and/or Westar
Energy contained in this Agreement.
(d) BY WESTAR CAPITAL. Westar Capital covenants and agrees to
defend, indemnify and hold harmless Onsite and each of its officers,
directors, employees, agents, advisors and shareholders and affiliates, as
such persons existed prior to the Closing Date (collectively, the "Onsite
Indemnitees") from and against any loss, liability, damage or expense
(including reasonable attorneys' fees and costs) which any Onsite
Indemnitee may suffer, sustain or become subject to, as a result of a
breach of any representation, warranty or covenant by Westar Capital
contained in this Agreement.
11.4 DISPUTE RESOLUTION. No party to this Agreement shall be entitled
to take legal action with respect to any dispute relating hereto until it
has complied in good faith with the following alternative dispute
resolution procedures. This Section shall not apply to the extent it is
deemed necessary to take legal action immediately to preserve a party's
adequate remedy.
(a) NEGOTIATION. The parties shall attempt promptly and in good
faith to resolve any dispute arising out of or relating to this Agreement,
through negotiations between representatives who have authority to settle
the controversy. Any party may give the other party written notice of any
such dispute not resolved in the normal course of business. Within 20 days
after delivery of the notice, representatives of both parties shall meet at
a mutually acceptable time and place, and thereafter as often as they
reasonably deem necessary, to exchange information and to attempt to
resolve the dispute, until the parties conclude that the dispute cannot be
resolved through unassisted negotiation. Negotiations extending sixty days
after notice shall be deemed at an impasse, unless otherwise agreed by the
parties.
If a negotiator intends to be accompanied at a meeting by an attorney,
the other negotiator(s) shall be given at least three working days' notice
of such intention and may also be accompanied by an attorney. All
negotiations pursuant to this clause are confidential and shall be treated
as compromise and settlement negotiations for purposes of the Federal and
state Rules of Evidence.
(b) ADR PROCEDURE. If a dispute with more than $20,000.00 at
issue has not been resolved within 60 days of the disputing party's notice,
a party wishing resolution of the dispute ("Claimant") shall initiate
assisted Alternative Dispute Resolution ("ADR") proceedings as described in
this Section. Once the Claimant has notified the other party
("Respondent") of a desire to initiate ADR proceedings, the proceedings
shall be governed as follows: By mutual agreement, the parties shall
select the ADR method they wish to use. That ADR method may include
arbitration, mediation, mini-trial, or any other method which best suits
the circumstances of the dispute. The parties shall agree in writing to
the chosen ADR method and the procedural rules to be followed within 30
days after receipt of notice of intent to initiate ADR proceedings. To the
extent the parties are unable to agree on procedural rules in whole or in
part, the current Center for Public Resources, Inc. ("CPR") Model Procedure
for Mediation of Business Disputes, CPR Model Mini-trial Procedure, or CPR
Commercial Arbitration Rules--whichever applies to the chosen ADR
method--shall control, to the extent such rules are consistent with the
provisions of this Section. If the parties are unable to agree on an ADR
method, the method shall be arbitration.
The parties shall select a single Neutral (as defined by CPR) third
party to preside over the ADR proceedings, by the following procedure:
Within 15 days after an ADR method is established, the Claimant shall
submit a list of 5 acceptable Neutrals to the Respondent. Each Neutral
listed shall be sufficiently qualified, including demonstrated neutrality,
experience and competence regarding the subject matter of the dispute. A
Neutral who is an attorney or former judge shall be deemed to have adequate
experience. None of the Neutrals may be present or former employees,
attorneys, or agents of either party. The list shall supply information
about each Neutral, including address, and relevant background and
experience (including education, employment history and prior ADR
assignments). Within 15 days after receiving the Claimant's list of
Neutrals, the Respondent shall select one Neutral from the list, if at
least one individual on the list is acceptable to the Respondent. If none
on the list are acceptable to the Respondent, the Respondent shall submit a
list of 5 Neutrals, together with the above background information, to the
Claimant. Each of the Neutrals shall meet the conditions stated above
regarding the Claimant's Neutrals. Within 15 days after receiving the
Respondent's list of Neutrals, the Claimant shall select one Neutral, if at
least one individual on the list is acceptable to the Respondent. If none
on the list are acceptable to the Claimant, then the parties shall request
assistance from the CPR to select a Neutral.
The ADR proceeding shall take place within 30 days after the Neutral
has been selected. The Neutral shall issue a written decision within 30
days after the ADR proceeding is complete. Each party shall be responsible
for an equal share of the costs of the ADR proceeding. The parties agree
that any applicable statute of limitations shall be tolled during the
pendency of the ADR proceedings, and no legal action may be brought in
connection with this Agreement during the pendency of an ADR proceeding.
The Neutral's written decision shall become final and binding on the
parties, unless a party objects in writing within 30 days of receipt of the
decision. The objecting party may then file a lawsuit in any court allowed
by this Agreement. The Neutral's written decision shall be admissible in
the objecting party's lawsuit.
11.5 AMENDMENTS AND WAIVERS. Any term of this Agreement may be
amended and the observance of any term of this Agreement may be waived
(either generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the parties. Any
amendment or waiver effected in accordance with this paragraph shall be
binding upon all of the parties. A waiver by any party hereto of a default
in the performance of this Agreement shall not operate as a waiver of any
future or other default, whether of a like or different kind.
11.6 SEVERABILITY. If one or more provisions of this Agreement are
held to be unenforceable under applicable law, such provision shall be
excluded from this Agreement and the parties shall use their efforts to
substitute provisions of substantially the same effect. The balance of the
Agreement shall be interpreted as if such provision were so excluded and
shall be enforceable in accordance with its terms.
11.7 GOVERNING LAW. This Agreement shall be construed in accordance
with the laws of the State of California.
11.8 NOTICES. All notices or other communications required hereunder
shall be in writing and shall be sufficient in all respects and shall be
deemed delivered after 5 days if sent via registered or certified mail,
postage prepaid; the next day if sent by overnight courier service; or one
business day after transmission, if sent by facsimile to the following:
(i) If to Onsite: Onsite Energy Corporation
701 Palomar Airport Rd., Suite 200
Carlsbad, CA 92009
Fax: (760) 931-2405
Attn: Richard T. Sperberg
with a copy to: Bartel Eng Linn & Schroder
300 Capitol Mall, Suite 1100
Sacramento, CA 95814
Fax: (916) 442-3442
Attn: Scott E. Bartel, Esq.
(ii) If to WBS, Westar Energy and/or Westar Capital:
Westar Energy, Inc.
PO Box 889
818 Kansas Avenue
Topeka, KS 66601
Fax: (785) 575-1771
Attn: Rita A. Sharpe
with a copy to: Westar Energy, Inc.
PO Box 889
818 Kansas Avenue
Topeka, KS 66601
Fax: (785) 575-1771
Attn: John K. Rosenberg
Any party hereto may change its address for purposes hereof by notice to
all other parties hereto.
11.9 COUNTERPARTS; SIGNATURES. This Agreement may be executed in one
or more counterparts, each of which may be deemed an original, but all of
which together shall constitute one and the same instrument. This
Agreement may be executed by a party and sent to the other parties via
facsimile transmission and the facsimile transmitted copy shall have the
same integrity, force and effect as an original document.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
ONSITE ENERGY CORPORATION, WESTAR BUSINESS SERVICES,
a Delaware corporation INC., a Kansas corporation
By: RICHARD T. SPERBERG By: RITA A. SHARPE
Richard T. Sperberg, Rita A. Sharpe,
President President
WESTAR ENERGY, INC.,
a Kansas corporation
By: RITA A. SHARPE
Rita A. Sharpe,
President
WESTAR CAPITAL, INC.,
a Kansas corporation
By: RITA A. SHARPE
Rita A. Sharpe,
President
EXHIBIT 4.1
CERTIFICATE OF DESIGNATIONS
of
SERIES C CONVERTIBLE PREFERRED STOCK
of
ONSITE ENERGY CORPORATION
Pursuant to Section 151(g) of the General Corporation Law
of the State of Delaware
Onsite Energy Corporation, a Delaware corporation (the "Company"),
certifies that pursuant to the authority contained in its Certificate of
Incorporation, as amended, and in accordance with the provisions of Section
151(g) of the General Corporation Law of the State of Delaware, its Board
of Directors (the "Board of Directors") has adopted the following
resolution creating a series of its Preferred Stock, $0.001 par value,
designating a segment thereof as Series C Convertible Preferred Stock;
WHEREAS, the Certificate of Incorporation of the Company presently
authorizes the issuance of one million shares of Preferred Stock, $0.001
par value, in one or more series upon terms and conditions that are to be
designated by the Board of Directors;
WHEREAS, in order to accommodate a business purpose deemed proper by
the Board of Directors, i.e., to facilitate a private placement of
securities which when completed will generate additional working capital
for the Company, the Board of Directors does hereby seek to provide for the
designation of a segment of the Company's Preferred Stock as "Series C
Convertible Preferred Stock;"
WHEREAS, the terms, conditions, voting rights, preferences,
limitations and special rights of the Series C Convertible Preferred Stock
in their entirety are as provided herein.
NOW THEREFORE, be it:
RESOLVED, that a series of the class of authorized Preferred Stock,
$0.001 par value, of the Company hereinafter designated "Series C
Convertible Preferred Stock," is hereby created, and that the designation
and amount thereof and the voting powers, preferences and relative
participating, optional and other special rights of the shares of such
series, and the qualifications, limitations or restrictions thereof are as
follows:
Section 1. DESIGNATION AND AMOUNT.
The shares of such series shall be designated as the "Series C
Convertible Preferred Stock" (the "Series C Convertible Preferred Stock")
and the number of shares initially constituting such series shall be
1,000,000.
Section 2. DIVIDENDS AND DISTRIBUTIONS.
(a) Each holder of a share of Series C Convertible Preferred Stock in
preference to the holders of shares of the Company's common stock, $0.001
par value (the "Common Stock"), and of any other capital stock of the
Company ranking junior to the Series C Convertible Preferred Stock as to
payment of dividends, shall be entitled, when and as declared by the Board,
and out of any funds legally available therefor, to an annual dividend at
the rate of 9.75% of the liquidation preference of the Series C Convertible
Preferred Stock per annum. Provided that the declaration and payment of
dividends by the Company is permissible under the General Corporation Law
of the State of Delaware, the Board of Directors shall declare a dividend
on the Series C Convertible Preferred Stock quarterly. Dividend payments
to the holders of shares of Series C Convertible Preferred Stock shall be
payable in cash on the 15th day of the first month of each quarter
(January, April, July, October) by delivery of a check to each entitled
holder's address which is registered with the Secretary of the Company.
(b) Dividends payable pursuant to paragraph (a) of this Section 2
shall begin to accrue from the date of original issue of the Series C
Convertible Preferred Stock with the first dividend to be paid on January
15, 1998 and thereafter shall be cumulative. Dividends paid on the shares
of Series C Convertible Preferred Stock in an amount less than the total
amount of such dividends at the time accrued and payable on such shares
shall be allocated pro rata on a share-by-share basis among all such shares
at the time outstanding.
(c) During the period beginning with the issuance of the Series C
Convertible Preferred Stock and ending two years after such issuance, any
change (i) in the Internal Revenue Code of 1986, as amended to the date
hereof (the "Code") or the regulations thereunder as in effect on the date
hereof or (ii) in the interpretation thereof by any Court, administrative
body, or the Internal Revenue Service, the result of which cause the
holders of Series C Convertible Preferred Stock not to be eligible to claim
the 80% dividends received deduction provided by Section 243 of the Code
(the "Dividends Received Deduction") with respect to dividends on the
Series C Convertible Preferred Stock (other than partly or wholly as a
result of such holder's failure to meet the current requirements of Section
243 of the Code) may, at the option of such holders, be considered a Forced
Conversion as defined in Section 5(d) of such Series C Convertible
Preferred Stock to Class A Common Stock, as defined in Section 5(d) hereof.
In the event of such Forced Conversion, the Company shall pay any affected
holder which thereafter and within two years of the issuance of such Series
C Convertible Preferred Stock exercises its option to convert any of its
Series C Convertible Preferred Stock to Class A Common Stock an amount
equal to the payments which would be due such holder under Section 5(d)(i)
of this Agreement as though the Company had exercised its right to require
conversion of such Series C Convertible Preferred Stock pursuant to Section
5(d).
(d) Notwithstanding anything to the contrary set forth at paragraphs
(a) or (b) of this Section 2, prior to the second anniversary of the
issuance of the Series C Convertible Preferred Stock, the Company shall
have the option to pay dividends by delivery to the holders of the Series C
Convertible Preferred Stock, such additional number of shares of the
Company's Series C Convertible Preferred Stock as may be determined by
dividing the total dividend payment due to each holder by the liquidation
preference of the Series C Convertible Preferred Stock.
(e) The holders of shares of Series C Convertible Preferred Stock
shall not be entitled to receive any dividends or other distributions
except as provided in this Certificate of Designations of Series C
Convertible Preferred Stock.
Section 3. VOTING RIGHTS.
(a) Holders of Series C Convertible Preferred Stock shall be entitled
to vote on all matters to be presented to the stockholders and shall have a
number of votes equal to the number of shares of Class A Common Stock into
which the Series C Convertible Preferred Stock is convertible as of record
date.
(b) Unless required by law, such votes shall be counted together with
all other shares of stock of the Company having general voting power and
NOT separately as a class.
(c) If, at any time four or more quarterly dividends, whether or not
consecutive, on the Series C Convertible Preferred Stock shall be in
default, in whole or in part, the holders of the Series C Convertible
Preferred Stock shall be entitled to elect the smallest number of Directors
as would constitute a majority of the Board of Directors, and the holders
of the Class A Common Stock as a class shall be entitled to elect the
remaining Directors. Such voting rights shall continue until all dividends
accrued on the Series C Convertible Preferred Stock shall have been paid or
set apart for payment, at which time such voting power shall cease until a
like default in payment recurs.
At any time after the voting power to elect a majority of the Board of
Directors shall have become vested in the holders of the Series C
Convertible Preferred Stock as provided in this paragraph, the Secretary of
the Company may, and on the request of the record holders of at least 10
percent of the Series C Convertible Preferred Stock then outstanding
addressed to the Secretary at the principal executive office of the
Company, shall call a special meeting of the shareholders for the election
of directors, to be held at the place and on the notice provided in the
Bylaws of the Company for the holding of annual meetings. If notice of the
requested meeting is not given within 20 days after receipt of the request
for the meeting, then a person designated by the record holders of at least
10 percent of the Series C Convertible Preferred Stock then outstanding may
call such a special meeting at the place and on the notice above provided,
and for that purpose shall have access to the stock books of the Company.
At any meeting so called or at any annual meeting held while the holders of
the Series C Convertible Preferred Stock have the voting power to elect a
majority of the Board of Directors, the holders of a majority of the then
outstanding Series C Convertible Preferred Stock, present in person or by
proxy, shall constitute a quorum for the election of Directors as provided
in this paragraph. The terms of office of all persons who are directors of
the Company at the time of the meeting shall terminate upon the election at
the meeting by the holders of the Series C Convertible Preferred Stock of
the number of directors they are entitled to elect, and the persons so
elected as directors by the holders of the Series C Convertible Preferred
Stock, together with the persons, if any, elected as directors by the
holders of the Class A Common Stock, shall constitute the duly elected
directors of the Company. In the event the holders of Class A Common Stock
fail to elect the number of Directors that they are entitled to elect at
the meeting, the resulting vacancies may be filled by the directors who are
elected.
Whenever the voting rights of holders of the Series C Convertible
Preferred Stock shall cease as provided in this paragraph (c), the term of
office of all persons who are at the time directors of the Company shall
terminate upon election of their successors by the holders of the Class A
Common Stock.
Section 4. LIQUIDATION, DISSOLUTION, WINDING UP OR CERTAIN MERGERS OR
CONSOLIDATIONS.
(a) If the Company shall adopt a plan of liquidation or of
dissolution, or commence a voluntary case under the federal bankruptcy laws
or any other applicable state or federal bankruptcy, insolvency or similar
law, or consent to the entry of an order for relief in any involuntary case
under such law or to the appointment of a receiver, liquidator, assignee,
custodian, trustee or sequestrator (or similar official) of the Company or
of any substantial part of its property, or make an assignment for the
benefit of its creditors, or admit in writing its inability to pay its
debts generally as they become due and on account of such event the Company
shall liquidate, dissolve or wind up, or engage in a merger, plan of
reorganization or consolidation, then and in that event, no distribution
shall be made to the holders of shares of Common Stock, unless, prior
thereto, the holders of the Series C Convertible Preferred Stock shall have
first received an amount in cash or equivalent value in securities or other
consideration equal to the "liquidation preferences" thereof.
If upon any such liquidation, dissolution, winding up, merger, plan of
reorganization or consolidation, the amount so payable or distributable
does not equal or exceed the "liquidation preferences" of the Series C
Convertible Preferred Stock, then, and in that event, the amount of cash so
payable, shall be distributed ratably to the holders of the Series C
Convertible Preferred Stock on the basis of the number of shares of Series
C Convertible Preferred Stock held. After payment in full of the
"liquidation preferences" owed to the holders of the Series C Convertible
Preferred Stock, the holders of the Common Stock shall be entitled, to the
exclusion of the holders of the Series C Convertible Preferred Stock, to
share in all remaining assets of the Company in accordance with their
respective interests.
For the purposes hereof, the term "liquidation preferences" shall mean
$5.00 per share plus an amount equal to all accrued and unpaid dividends
thereon, whether or not earned or declared, up to and including the date
full payment shall be tendered to the holders of the Series C Convertible
Preferred Stock.
(b) Except as provided in subparagraph (a) above, neither the
consolidation, merger or other business combination of the Company with or
into any other person or persons nor the sale, lease, exchange or
conveyance of all or any part of the property, assets or business of the
Company to a Person or Persons other than the holders of the Company's
Common Stock, shall be deemed to be a liquidation, dissolution or winding
up of the Company for purposes of this Section 4.
Section 5. CONVERSION.
(a) Subject to the provisions for adjustment hereinafter set forth,
each share of Series C Convertible Preferred Stock shall be convertible in
the manner hereinafter set forth into fully paid and nonassessable shares
of Common Stock. Commencing upon issuance (the "Conversion Date"), each
share of Series C Convertible Preferred Stock may, at the option of the
holder thereof, be converted into five (5) shares of Class A Common Stock.
(b) The number of shares of Class A Common Stock into which each
share of Series C Convertible Preferred Stock is convertible shall be
subject to adjustment from time to time as follows:
(i) In case the Company shall at any time or from time to time
declare a dividend, or make a distribution, on the outstanding shares of
Common Stock in shares of Common Stock or subdivide or reclassify the
outstanding shares of Common Stock into a greater number of shares or
combine or reclassify the outstanding shares of Common Stock into a smaller
number of shares of Common Stock, then, and in each case,
(A) the number of shares of Class A Common Stock into which
each share of Series C Convertible Preferred Stock is convertible shall be
adjusted so that the holder of each share thereof shall be entitled to
receive, upon the conversion thereof, the number of shares of Class A
Common Stock which the holder of a share of Series C Convertible Preferred
Stock would have been entitled to receive after the happening of any of the
events described above had such share been converted immediately prior to
the happening of such event or the record date therefor, whichever is
earlier; and
(B) an adjustment made pursuant to this clause (i) shall
become effective (1) in the case of any such dividend or distribution,
immediately after the close of business on the record date for the
determination of holders of shares of Class A Common Stock entitled to
receive such dividend or distribution, or (2) in the case of any such
subdivision, reclassification or combination, at the close of business on
the day upon which such corporate action becomes effective.
(C) In case the Company shall be a party to any transaction
(including, without limitation, a merger, consolidation, sale of all or
substantially all of the Company's assets or recapitalization of the Common
Stock and excluding (A) any transaction to which clause (i) of this
paragraph (b) applies, and (B) a merger or consolidation in which the
Company is the surviving corporation in which the previously outstanding
Common Stock shall be changed into or, pursuant to the operation of law or
the terms of the transaction to which the Company is a party, exchanged for
different securities of the Company or common stock or other securities of
another corporation or interests in a noncorporate entity or other property
(including cash) or any combination of any of the foregoing), then, as a
condition of the consummation of such transaction, lawful and adequate
provision shall be made so that each holder of shares of Series C
Convertible Preferred Stock shall be entitled, upon conversion, to an
amount per share equal to the greater of (i) (A) the aggregate amount of
stock, securities, cash and/or any other property (payable in kind), as the
case may be, into which or which each share of Class A Common Stock is
changed or exchanged times (B) the number of shares of Class A Common Stock
into which a share of Series C Convertible Preferred Stock is convertible
immediately prior to the consummation of such transaction, or (ii) the
"liquidation preferences" defined in Section 4(a) hereof.
(D) In case the Company shall be a party to a transaction
described in subparagraph (b) (ii) above resulting in the change or
exchange of the Company's Class A Common Stock then, from and after the
date of announcement of the pendency of such subparagraph (b) (ii)
transaction until the effective date thereof, each share of Series C
Convertible Preferred Stock may be converted, at the option of the holder
thereof, into shares of Class A Common Stock on the terms and conditions
set forth in this Section 5, and if so converted during such period, such
holder shall be entitled to receive such consideration in exchange for such
holder's shares of Class A Common Stock as if such holder had been the
holder of such shares of Class A Common Stock as of the record date for
such change or exchange of the Class A Common Stock.
(c) The holder of any shares of Series C Convertible Preferred Stock
may exercise his right to convert such shares into shares of Class A Common
Stock by surrendering for such purpose to the Company, at the offices of
the Company, 701 Palomar Airport Road, Suite 200, Carlsbad, California
92009, or any successor location, a certificate or certificates
representing the shares of Series C Convertible Preferred Stock to be
converted with the form of election to convert (the "Election to Convert")
on the reverse side of the stock certificate completed and executed as
indicated, thereby stating that such holder elects to convert all or a
specified whole number of such shares in accordance with the provisions of
this Section 5 and specifying the name or names in which such holder wishes
the certificate or certificates for shares of Class A Common Stock to be
issued. In case the Election to Convert shall specify a name or names
other than that of such holder, it shall be accompanied by payment of all
transfer or other taxes payable upon the issuance of shares of Class A
Common Stock in such name or names that may be payable in respect of any
issue or delivery of shares of Class A Common Stock on conversion of Series
C Convertible Preferred Stock pursuant hereto. The Company will have no
responsibility to pay any taxes with respect to the Series C Convertible
Preferred Stock. As promptly as practicable after the surrender of such
certificate or certificates and the receipt of the Election to Convert,
and, if applicable, payment of all transfer or other taxes (or the
demonstration to the satisfaction of the Company that such taxes have been
paid), the Company shall deliver instructions to its transfer agent to
delivered (i) certificates representing the number of validly issued, fully
paid and nonassessable full shares of Class A Common Stock to which the
holder of shares of Series C Convertible Preferred Stock so converted shall
be entitled and (ii) if less than the full number of shares of Series C
Convertible Preferred Stock evidenced by the surrendered certificate or
certificates are being converted, a new certificate or certificates, of
like tenor, for the number of shares evidenced by such surrendered
certificate or certificates less the number of shares converted. Such
conversion shall be deemed to have been made at the close of business on
the date of giving of the Election to Convert and of such surrender of the
certificate or certificates representing the shares of Series C Convertible
Preferred Stock to be converted so that the rights of the holder thereof as
to the shares being converted shall cease except for the right to receive
shares of Class A Common Stock in accordance herewith, and the person
entitled to receive the shares of Class A Common Stock shall be treated for
all purposes as having become the record holder of such shares of Class A
Common Stock at such time. The Company shall not be required to convert,
and no surrender of shares of Series C Convertible Preferred Stock shall be
effective for that purpose, while the transfer books of the Company for the
Common Stock are closed for any purpose (but not for any period in excess
of seven (7) calendar days); but the surrender of shares of Series C
Convertible Preferred Stock for conversion during any period while such
books are so closed shall become effective for conversion immediately upon
the reopening of such books, as if the conversion had been made on the date
such shares of Series C Convertible Preferred Stock were surrendered.
(d) The Company shall have the right to require the conversion of the
Series C Convertible Preferred Stock to into Class A Common Stock, if the
Average Closing Price of the Company's Class A Common Stock is equal to or
exceeds $2.00 per share, under the following terms and conditions ("Forced
Conversion"):
(i) During the period beginning six months after the issuance of
the Series C Convertible Preferred Stock and ending two years after
such issuance, upon written notice to the holders of the Series C
Convertible Preferred Stock, the Company may force the conversion of
the Series C Convertible Preferred Stock by issuing that number of
Class A Common Stock into which the then outstanding shares of Series
C Convertible Preferred Stock would be convertible and by paying the
holders of the Series C Convertible Preferred Stock (a) accrued and
unpaid dividends to date, (b) an additional amount which would have
accrued to the Series C Convertible Stock holders had the Series C
Convertible Preferred Shares been held for two years from the original
date of issuance, not including any dividends already paid, and (c) an
additional amount sufficient to make such holders' net after-tax
proceeds equal to the net after-tax proceeds from Series C Convertible
Preferred Share dividends such holders would have received from the
date of such payment until the second anniversary of the issuance of
such Series C Convertible Preferred Shares in the absence of Company's
exercise a Forced Conversion.
(ii) Beginning on the second anniversary of the issuance of the
Series C Convertible Preferred Stock, upon written notice to the
holders of the Series C Convertible Preferred Stock, the Company may
force the conversion of the Series C Convertible Preferred Stock by
issuing that number of Class A Common Stock into which the then
outstanding shares of Series C Convertible Preferred Stock would be
convertible and by paying the holders of the Series C Convertible
Preferred Stock any accrued and unpaid dividends to date.
(iii) The notice of mandatory conversion must be sent within 5
days of the last day of any period of 20 or more consecutive days
during which the Company trades at a price in excess of $2.00 per
share.
(iv) "Average Closing Price" shall mean the average closing
price for the Company's Class A Common Stock for a period of 20
consecutive trading days as quoted on a national securities exchange,
or, if Company's Class A Common Stock is not traded on a national
securities exchange, then on the NASDAQ Stock Market, or, if the
Company's Class A Common Stock is not traded on the NASDAQ Stock
Market, then on the OTC Bulletin Board or similar public market.
(e) Upon conversion of any shares of Series C Convertible Preferred
Stock, the holder thereof shall be entitled to receive any accrued
dividends in respect of the shares so converted, which dividends shall be
prorated from the most recent dividend payment date to the date of
conversion.
(f) In connection with the conversion of any shares of Series C
Convertible Preferred Stock, no fractions of shares of Class A Common Stock
shall be issued, but in lieu thereof the Company shall pay a cash
adjustment in respect of such fractional interest in an amount equal to
such fractional interest multiplied by the conversion rate of $5.00 as
adjusted under paragraph (b) of this Section 5.
(g) The disposition of the shares of Class A Common Stock into which
each share of Series C Convertible Preferred Stock is convertible may be
subject to limitations contained within the Stock Subscription Agreement
entered into and closed on or about the 24th day of October, 1997, by and
among the Company and Westar Capital, Inc., and the Company or the
Company's transfer agent is directed to take notice of any such provisions.
(h) The Company shall at all times reserve and keep available out of
its authorized but unissued shares of Class A Common Stock, solely for the
purposes of effecting the conversion of the shares of Series C Convertible
Preferred Stock, such number of its shares of Class A Common Stock as shall
from time to time be sufficient to effect the conversion of all outstanding
shares of Series C Convertible Preferred Stock; and if at any time the
number of authorized but unissued shares of Class A Common Stock shall not
be sufficient to effect the conversion of all then outstanding shares of
Series C Convertible Preferred Stock, the Company will take such corporate
action as may, in the opinion of its counsel, be necessary to increase its
authorized but unissued shares of Class A Common Stock to such number of
shares as shall be sufficient for such purpose.
(i) Any notice required or permitted by this Section 5 or any other
provision contained herein to be given to a holder of Series C Convertible
Preferred Stock or to the Company shall be in writing and be deemed given
upon the earlier of (1) personal delivery to such holder at the address
appearing on the books of the Company, (2) actual receipt or three (3) days
after the same has been deposited by first class mail in the United States
mail, postage prepaid, and addressed to the holder at the address appearing
on the books of the Company, (3) actual receipt or three (3) days after
the same has been sent via an overnight courier service, and addressed to
the holder at the address appearing on the books of the Company, or (4)
sending of facsimile to such holder at the facsimile number provided by
such holder to the Secretary of the Company.
(j) The Company shall not amend its Certificate of Incorporation or
participate in any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities or any other voluntary
action for the purpose of avoiding or seeking to avoid the observance or
performance of any of the terms to be observed or performed hereunder by
the Company, but will at all times in good faith assist in carrying out all
such action as may be reasonably necessary or appropriate in order to
protect the conversion rights of the holder of Series C Convertible
Preferred Stock against dilution or other impairment.
Section 6. REPORTS AS TO ADJUSTMENTS.
Whenever the number of shares of Class A Common Stock into which each
share of Series C Convertible Preferred Stock is convertible is adjusted as
provided in Section 5 hereof, the Company shall promptly mail to the
holders of record of the outstanding shares of Series C Convertible
Preferred Stock at their respective addresses as the same shall appear in
the Company's stock records, or send by facsimile at the facsimile number
provided by such holders to the Secretary of the Corporation, a notice
stating that the number of shares of Class A Common Stock into which the
shares of Series C Convertible Preferred Stock are convertible has been
adjusted and setting forth the new number of shares of Class A Common Stock
(or describing the new stock, securities, cash or other property) into
which each share of Series C Convertible Preferred Stock is convertible, as
a result of such adjustment, a brief statement of the facts requiring such
adjustment and the computation thereof, and when such adjustment became
effective.
Section 7. REDEMPTION. The Series C Convertible Preferred Stock is
not redeemable.
Section 8. NOTICES OF RECORD DATE.
In the event of (1) any taking by the Company of a record of the
holders of any class or series of securities for the purpose of determining
the holders thereof who are entitled to receive any dividend or other
distribution or (2) any reclassification or recapitalization of the capital
stock of the Company or any voluntary or involuntary dissolution,
liquidation or winding up of the Company, the Company shall send by
personal delivery to such holder at the address appearing on the books of
the Company, by first class mail addressed, postage prepaid, and addressed
to the holder at the address appearing on the books of the Company, or by
sending of facsimile to such holder at the facsimile number provided by
such holder to the Secretary of the Company, at least 30 days prior to the
record date specified therein, a notice specifying (A) the date on which
any such record is to be taken for the purpose of such dividend or other
distribution and a description of such dividend or distribution, (B) the
date on which any such reorganization, reclassification, dissolution,
liquidation or winding up is expected to become effective, and (C) the
time, if any is to be fixed, as to when the holders of record of Series C
Convertible Preferred Stock shall be entitled to exchange their Series C
Convertible Preferred Stock for securities or other property deliverable
upon such reorganization, reclassification, dissolution, liquidation or
winding up.
Section 9. CERTAIN RESTRICTIONS.
Without the consent of a majority of the outstanding Series C
Convertible Preferred Stock, the Company shall not (A) issue any additional
equity security equal to or higher in seniority than the Series C
Convertible Preferred Stock, (B) declare or pay dividends, or make any
other distributions, on any shares of Common Stock or other capital stock
ranking equal or junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series C Convertible Preferred Stock; (C)
redeem or purchase or otherwise acquire for consideration any shares of
Common Stock or other capital stock ranking equal or junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Series C
Convertible Preferred Stock; or (D) purchase or otherwise acquire for
consideration any shares of Series C Convertible Preferred Stock.
Section 10. REACQUIRED SHARES.
Any shares of Series C Convertible Preferred Stock converted,
purchased or otherwise acquired by the Company in any manner whatsoever
shall be retired and cancelled promptly after the acquisition thereof, and,
if necessary to provide for the lawful purchase of such shares, the capital
represented by such shares shall be reduced in accordance with the General
Corporation Law of the State of Delaware. All such shares shall upon their
cancellation become authorized but unissued shares of Preferred Stock,
$0.001 par value, of the Company and may be reissued as part of another
series of Preferred Stock, $0.001 par value, of the Company.
Section 11. CERTAIN DEFINITIONS.
For the purposes of the Certificate of Designations of Series C
Convertible Preferred Stock which embodies this resolution:
"Trading Day" means a day on which the principal national securities
exchange on which the Common Stock is listed or admitted to trading is open
for the transaction of business or, if the Common Stock is not listed or
admitted to trading on any national securities exchange, any day other than
a Saturday, Sunday, or a day on which banking institutions in the State of
California are authorized or obligated by law or executive order to close.
IN WITNESS WHEREOF, the Company has caused this Certificate of
Designations of Series C Convertible Preferred Stock to be duly executed by
its President and attested to by its Secretary and has caused its corporate
seal to be affixed hereto, this 23rd day of October, 1997.
ONSITE ENERGY CORPORATION
By: RICHARD T. SPERBERG
Richard T. Sperberg, President
ATTEST:
By:WILLIAM M. GARY III
William M. Gary, III, Secretary
EXHIBIT 10.1
STOCK SUBSCRIPTION AGREEMENT
THIS STOCK SUBSCRIPTION AGREEMENT (the "Agreement"), dated as of
October 28, 1997, is made and entered into by and between Onsite Energy
Corporation, a Delaware corporation (the "Company"), and Westar Capital,
Inc., a Kansas corporation (the "Investor").
W I T N E S S E T H
WHEREAS, the Company, in order to finance its operations, desires to
issue an aggregate of Two Million (2,000,000) shares of its Class A Common
Stock (the "Onsite Common Stock") and Two Hundred Thousand (200,000) shares
of its Series C Convertible Preferred Stock (the "Onsite Preferred Stock")
(collectively, the "Onsite Stock") to the Investor upon the terms and
conditions contained herein; and
WHEREAS, Investor desires to purchase Two Million (2,000,000) shares
of the Onsite Common Stock and Two Hundred Thousand (200,000) shares of the
Onsite Preferred Stock upon upon the terms and subject to the conditions
set forth herein.
NOW, THEREFORE, for and in consideration of the premises and of the
mutual representations, warranties, covenants, and agreements set forth in
this Agreement, and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereby agree
as follows:
1. CONTEMPLATED TRANSACTIONS AND CLOSING.
1. PURCHASE OF COMMON STOCK. Upon the terms and subject to the
conditions set forth in this Agreement, on the Closing Date (as provided
for in Section 1.5), the Investor shall purchase from the Company, and the
Company shall issue and sell to the Investor, two million (2,000,000)
shares of the Company's Class A Common Stock, par value $0.001 per share
(the "Onsite Common Stock"). The purchase of the Onsite Common Stock shall
occur at the Closing as specified in Section 1.5.
2. CONSIDERATION FOR ONSITE COMMON STOCK. In consideration of the
purchase in Section 1.1, at the Closing specified in Section 1.5, the
Investor shall pay to the Company $0.50 per share in immediately available
United States Dollars, in an aggregate amount equal to One Million Dollars
($1,000,000) for the Onsite Common Stock.
3. PURCHASE OF SERIES C CONVERTIBLE PREFERRED STOCK. Upon the terms
and subject to the conditions set forth in this Agreement, on the Closing
Date (as provided for in Section 1.5), the Investor shall purchase from the
Company, and the Company shall issue and sell to the Investor, two hundred
thousand (200,000) shares of the Company's Series C Convertible Preferred
Stock, par value $0.001 per share (the "Onsite Preferred Stock"). The
purchase of the Onsite Preferred Stock shall occur at the Closing as
specified in Section 1.5.
4. CONSIDERATION FOR ONSITE PREFERRED STOCK. In consideration of
the purchase in Section 1.3, at the Closing specified in Section 1.5, the
Investor shall pay to the Company $5.00 per share in immediately available
United States Dollars, in an aggregate amount equal to One Million Dollars
($1,000,000) for the Onsite Preferred Stock.
5. THE CLOSING; CLOSING DATE. The transactions contemplated hereby
shall be consummated at a closing (the "Closing"), which shall take place
simultaneously at 7:30 A.M. Pacific Standard Time on October 31, 1997, at
the offices of Bartel Eng Linn & Schroder, 300 Capitol Mall, Suite 1100,
Sacramento, California 95814, the offices of the Company, 701 Palomar
Airport Road, Suite 200, Carlsbad, California 92009, and the offices of the
Investor, 818 Kansas Avenue, Topeka, Kansas 66612. The Closing may also be
held at such other time and place as may be agreed upon by the parties.
The date of the Closing is referred to herein as the "Closing Date" and all
transactions contemplated herein to occur at the Closing shall be deemed to
occur on the Closing Date and all transfers and assignments of title shall
vest and be deemed effective on the Closing Date.
6. DELIVERIES AT THE CLOSING. Upon the terms and conditions set
forth in this Agreement, the Investor and the Company shall make the
following deliveries at the Closing on the Closing Date:
1. DELIVERIES BY THE INVESTOR AT THE CLOSING. At or before the
Closing, the Investor shall deliver to the Company the following:
(a) Two Million Dollars ($2,000,000) in immediately
available United States funds in cash or by a wire transfer
in accordance with written instructions from the Company;
and
(b) a certificate, executed by the Investor and dated as of
the Closing Date, certifying that all of the representations
and warranties set forth in Section 3 hereof are true and
correct in all material respects and that all of the
conditions set forth in Section 4 hereof have been
satisfied.
2. DELIVERIES BY THE COMPANY AT THE CLOSING. At the Closing,
the Company shall deliver to the Investor the following:
(a) Share certificates evidencing two million (2,000,000)
shares of the Onsite Common Stock issued in the name of the
Investor;
(b) share certificates evidencing two hundred thousand
(200,000) shares of the Onsite Preferred Stock issued in the
name of the Investor;
(c) a certificate, executed by the Company and dated as of
the Closing Date, certifying that all of the representations
and warranties set forth in Section 2 hereof are true and
correct in all material respects and that all of the
conditions set forth in Section 5 hereof have been
satisfied; and
(d) an opinion of counsel in the form attached hereto as
Exhibit A.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company hereby represents and warrants to Investor that:
1. DUE ORGANIZATION: GOOD STANDING AND CORPORATE POWER. The Company
is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware and has all requisite corporate
power and authority to carry on its business, and to own, lease and operate
any properties related to such business, except where the failure to have
such power and authority would not individually or in the aggregate have a
Material Adverse Effect (as defined below). The Company is duly qualified
or licensed to do business and in good standing in the State of California.
For purposes of this Agreement, a "Material Adverse Effect" shall mean an
event that could reasonably be expected to have a material adverse effect
on the business of the Company, or on its results of operations, properties
or financial condition; for purposes of this definition, any event which
reasonably could be expected to result in a potential liability to the
Company either individually or in the aggregate in excess of Fifty Thousand
Dollars ($50,000) will be deemed to have a Material Adverse Effect.
2. CAPITALIZATION. The Company's authorized capital stock consists
of (a) 24 million shares of Common Stock, $0.001 par value, of which
23,999,000 are designated Class A Common Stock, of which 10,944,172 are
currently outstanding and held by approximately 217 shareholders of record,
and (b) one million shares of preferred stock, $0.001 par value, of which
none are issued and currently outstanding. Schedule 2.2 sets forth the
names and share ownership of each Company shareholder owning over 5% of
Company's outstanding common stock as of the date of this Agreement.
Except as set forth in the notes to the financial statements contained in
the Company's Form 10-KSB for the year ended June 30, 1997, there are no
equity securities or debt obligations of the Company authorized, issued or
outstanding and there are no outstanding options, warrants, agreements,
contracts, calls, commitments or demands of any character, preemptive or
otherwise, other than this Agreement, relating to any of the Company's
capital stock, there is no outstanding security of any kind convertible
into the Company's capital stock, and there is no outstanding security with
a claim on dividends prior or senior to the Onsite Preferred Stock.
3. AUTHORIZATION.
1. All corporate action on the part of the Company, its
officers, directors and stockholders necessary for the sale and issuance of
the Onsite Stock pursuant hereto and the performance of the Company's
obligations hereunder has been taken or will be taken prior to the Closing.
2. The Onsite Stock, when issued, sold and delivered for the
consideration expressed and in compliance with the provisions of this
Agreement, will be duly authorized, validly issued, fully paid and
nonassessable, and will be free of restrictions on transfer other than
restrictions on transfer under this Agreement and under applicable federal
and state securities laws.
4. NO CONFLICT; NO CONSENTS OR APPROVALS REQUIRED. Neither the
execution and delivery of this Agreement by the Company, nor the
consummation by the Company of the transactions contemplated hereby will:
(a) conflict with or violate any provision of the
Certificate of Incorporation or Bylaws of the Company;
(b) conflict with or violate any law, rule, regulation,
ordinance, order, writ, injunction, judgment or decree applicable to the
Company or by which it or any of its properties or assets are bound or
affected; or
(c) conflict with or result in any breach of or constitute
a default (or an event which with notice or lapse of time or both would
become a default) under, or give to others any rights of termination or
cancellation of, or result in the creation of any lien, charge or
encumbrance on any of the respective properties or assets of it pursuant to
any of the terms, conditions or provisions of, any material note, bond,
mortgage, indenture, deed of trust, lease, permit, license, franchise,
authorization, agreement or other instrument or obligation to which the
Company is a party or by which the Company or any of its properties or
assets is bound or affected.
5. LITIGATION. There is no action, suit, proceeding, or
investigation pending or, currently threatened against the Company which
questions the validity of this Agreement or the right of the Company to
enter into it, or to consummate the transactions contemplated hereby, or
which might have, either individually or in the aggregate, a Material
Adverse Effect. The Company is not a party or subject to the provisions of
any order, writ, injunction, judgment or decree of any court or government
agency or instrumentality.
6. TITLE TO PROPERTIES AND ASSETS. Except for the security
interests granted to those persons specified in Schedule 2.6, and except
for liens for taxes not yet due and payable, the Company has good and
marketable title to all of its properties and assets used in and necessary
to the conduct of its business and has good and marketable title to its
leasehold interests, in each case subject to no material mortgage, pledge,
lien or encumbrance.
7. FINANCIAL STATEMENTS. The Company has made available to the
Investor a true and complete copy of the audited financial statements of
the Company, for the fiscal years ended June 30, 1995, June 30, 1996 and
June 30, 1997, and related statements of income and cash flows for the
years ended June 30, 1995, June 30, 1996 and June 30, 1997 and changes in
stockholders' equity for the period from July 1, 1994 to June 30, 1997, as
contained in the Company's Annual Reports on Form 10-KSB for the fiscal
years ended June 30, 1997 and June 30, 1996. All such financial statements
are complete and correct, are in accordance with the books and records of
the Company, present fairly the financial condition for the periods
indicated, and have been prepared in accordance with generally accepted
accounting principles ("GAAP") applied on a basis consistent with past
practice.
8. NO MATERIAL ADVERSE CHANGE. Since the Company's report on Form
10-KSB for the fiscal year ended June 30, 1997, there has been no material
adverse change in the business, operations or financial condition or
prospects of the Company.
9. REPORTS AND OTHER INFORMATION. All material reports, documents
and information required to be filed with the Securities and Exchange
Commission with respect to the Company have been filed. Since January 1,
1996, the Company has made all filings required to be made in compliance
with the Securities Act of 1933, as amended (the "Securities Act"), and
such did not omit to state any material fact necessary in order to make the
statements contained therein not misleading in light of the circumstances
under which such statements were made as of their respective dates of
filing.
10. STATEMENTS AND REPORTS TRUE AND CORRECT. The financial
statements identified in Section 2.7 were and are true and correct as of
the dates thereof. The financial statements identified in Section 2.7
contain no untrue statements of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
3. REPRESENTATIONS AND WARRANTIES OF INVESTOR.
The Investor represents and warrants that:
1. AUTHORIZATION. All action on the part of the Investor, including
any action by its officers, directors and stockholders, necessary for the
purchase of the Onsite Stock pursuant hereto and the performance of the
Investor's obligations hereunder has been taken or will be taken prior to
the Closing.
2. PURCHASE ENTIRELY FOR OWN ACCOUNT. This Agreement is made with
the Investor in reliance upon such Investor's representation to the
Company, which by the Investor's execution of this Agreement the Investor
hereby confirms, that the Onsite Stock to be purchased by the Investor will
be acquired for investment purposes for the Investor's own account, not as
a nominee or agent, and not with a view to the resale or distribution of
any part thereof in violation of applicable federal and state securities
laws. By executing this Agreement, the Investor further represents that
the Investor does not have any contract, undertaking, agreement or
arrangement with any person to sell, transfer or grant participations to
such person or to any third person, with respect to any of the Onsite
Stock. A transfer of the Onsite Stock to an Affiliate by Investor shall
not be deemed to be a violation of this provision. As used herein, the
term "Affiliate" shall mean, with respect to any person, any other person
that directly or indirectly through one or more intermediaries controls or
is controlled by or is under common control with such person.
3. RELIANCE UPON INVESTOR'S REPRESENTATIONS. Investor understands
that the Onsite Stock has not been registered under the Securities Act on
the grounds that the transactions contemplated by this Agreement and the
issuance of the Securities hereunder is exempt from registration under the
Securities Act pursuant to Section 4(2) thereof, and Regulation D
promulgated thereunder, and that the Company's reliance on such exemption
is predicated on the Investor's representations set forth herein.
4. RECEIPT OF INFORMATION. The Investor has received information
and had the opportunity to ask questions of the Company's management and
has considered such information in evaluating the terms and conditions of
the offering of the Onsite Stock, and the business, properties, prospects
and financial condition of the Company, and in deciding to accept the
Onsite Stock. The foregoing, however, does not limit or modify the
representations and warranties of the Company in Section 2 hereof or the
right of the Investor to rely thereon.
5. INVESTMENT EXPERIENCE. The Investor represents that it is
experienced in evaluating and investing in securities of companies and
acknowledges that it is able to fend for itself, can bear the economic risk
of the investment, and has such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and risks of
the investment in the Onsite Stock. The Investor further represents that
it has not been organized solely for the purpose of acquiring the Onsite
Stock.
6. ACCREDITED INVESTOR. The Investor represents that it is an
"accredited investor" as that term is defined in Regulation D, 17 C.F.R.
230.501(a).
7. RESTRICTED SECURITIES. The Investor understands that the Onsite
Stock issued, or to be issued, hereunder may not be sold, transferred, or
otherwise disposed of without registration under the Securities Act or an
exemption therefrom, and that in the absence of an effective registration
statement covering the Onsite Stock, or an available exemption from
registration under the Securities Act, the Onsite Stock must be held
indefinitely. In particular, the Investor is aware that the Onsite Stock
may not be sold pursuant to Rule 144, 17 C.F.R. 230.144, unless all of the
conditions of that Rule are met.
4. CONDITIONS OF INVESTOR'S OBLIGATIONS AT CLOSING.
The obligations of the Investor under this Agreement are subject to
the fulfillment on or before the Closing Date of each of the following
conditions, the waiver of which shall not be effective against the Investor
unless consented to by Investor in writing:
1. REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Company contained in Section 2 hereof shall be true and
correct in all material respects on and as of the Closing Date.
2. PERFORMANCE. The Company shall have performed and complied with
all agreements, obligations, and conditions contained in this Agreement
that are required to be performed or complied with by it on or before the
Closing Date.
3. QUALIFICATIONS. All authorizations, approvals, or permits, if
any, of any governmental authority or regulatory body that are required in
connection with the lawful issuance and sale of the Onsite Stock pursuant
to this Agreement shall be duly obtained and effective as of the Closing
Date.
4. PROCEEDINGS AND DOCUMENTS. All corporate and other proceedings
in connection with the transactions contemplated to occur on the Closing
Date and all documents incident thereto shall be reasonably satisfactory in
form and substance to the Investor, or Investor's counsel, as the case may
be.
5. EXECUTION OF RELATED AGREEMENTS. The following agreements between
the parties shall have been executed and delivered between the parties to
such agreements:
(a) the Stockholders Agreement attached hereto as Exhibit B
between the Investor and Onsite Stockholders (as defined in such
agreement). All such action shall have been taken as may be
necessary to elect Investor's designee to the Board of Directors
of the Company, effective upon Closing, as provided in the
Stockholders Agreement;
(b) the Registration Rights Agreement attached hereto as
Exhibit C between Company and Investor; and
(c) the Plan and Agreement of Reorganization between the
Company, Westar Business Services, Inc., Westar Energy, Inc., and
Westar Capital, Inc.
5. CONDITIONS OF THE COMPANY'S OBLIGATIONS AT CLOSING.
The obligations of the Company to the Investor under this Agreement
are subject to the fulfillment on or before the Closing Date of each of the
following conditions by the Investor, the waiver of which shall not be
effective unless consented thereto in writing:
1. REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Investor contained in Section 3 hereof shall be true and
correct in all material respects on and as of the Closing Date.
2. QUALIFICATIONS. All authorizations, approvals, or permits, if
any, of any governmental authority or regulatory body that are required in
connection with the lawful issuance and sale of the Onsite Stock pursuant
to this Agreement shall be duly obtained and effective as of the Closing
Date.
3. PERFORMANCE. The Investor shall have performed and complied with
all agreements, obligations, and conditions contained in this Agreement
that are required to be performed or complied with by it on or before the
Closing Date.
6. RESTRICTIONS ON TRANSFERABILITY OF SECURITIES; COMPLIANCE WITH
SECURITIES ACT.
1. RESTRICTIONS ON TRANSFERABILITY. The Onsite Stock shall not be
transferable, except upon the conditions specified in this Section. The
Investor will cause any successor or proposed transferee of the Onsite
Stock to agree to take and hold the Onsite Stock subject to the conditions
specified in this Section. The Investor acknowledges the restrictions upon
its right to transfer the Onsite Stock set forth in this Section.
2. RESTRICTIVE LEGEND. Each certificate representing the Onsite
Stock shall (unless otherwise permitted or unless the securities evidenced
by such certificate shall have been registered under the Securities Act) be
stamped or otherwise imprinted with a legend in the following form (in
addition to any legend required under applicable state securities laws):
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 OR ANY STATE SECURITIES LAWS. THEY MAY NOT BE SOLD
OR OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT AS TO THE SECURITIES UNDER SAID ACT AND ANY APPLICABLE
STATE SECURITIES LAW OR AN OPINION OF COUNSEL SATISFACTORY TO THE
COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED."
Upon request of the holder of such a certificate, the Company shall
remove the foregoing legend from the certificate or issue to such holder a
new certificate therefor free of any transfer legend, if, with such
request, the Company shall have received the opinion referred to in Section
6.3.1.
3. NOTICE OF PROPOSED TRANSFER.
1. NOTICE. Prior to any proposed transfer of any of the Onsite
Stock, the Investor shall give written notice to the Company of its
intention to effect such transfer. Each such notice shall describe the
manner and circumstances of the proposed transfer in sufficient detail, and
shall be accompanied by a written opinion of legal counsel reasonably
satisfactory to the Company, addressed to the Company and reasonably
satisfactory in form and substance to the Company's counsel, to the effect
that the proposed transfer of the Onsite Stock may be effected without
registration under the Securities Act, whereupon the Investor shall be
entitled to transfer the Onsite Stock, subject to the restrictions
contained in this Agreement, in accordance with the terms of the notice
delivered by the Investor to the Company.
2. CERTIFICATE FOR TRANSFERRED ONSITE STOCK. Each certificate
evidencing the Onsite Stock transferred as above provided shall bear the
appropriate restrictive legend set forth in Section 6.2 above, except that
such certificate shall not bear such restrictive legend if the opinion of
counsel referred to above is to the further effect that such legend is not
required in order to establish compliance with any provisions of the
Securities Act. Each transferee of the Onsite Stock shall agree with
respect to those securities to be bound by the terms of this subsection.
4. STANDSTILL AGREEMENT.
1. Investor agrees that for a period of five (5) years from the
date of this Agreement (the "Standstill Period"), except as otherwise
permitted or contemplated by this Agreement, Investor will not, directly or
indirectly, nor will it permit any of its affiliates, as that term is
defined in Section 3.2 hereof, to, from or after the date such person
becomes an affiliate, without the prior approval of a majority vote of the
directors of the Company's board of directors (a "Requisite Board Vote")
who are not the designated directors of the Investor or otherwise
affiliates of Investor (the "Disinterested Directors") do any of the
following:
(a) acquire, or offer to acquire, whether by purchase, gift
or by joining a partnership or other group (as defined in Section
13(d)(3) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")), any shares of the Company's common or preferred
stock (collectively, the "Voting Stock"), securities convertible
into, exchangeable for, or exercisable for Voting Stock which
would result in the Investor holding in excess of forty-five
percent (45%) of the Company's outstanding securities on a fully
diluted basis at the time of any such proposed acquisition,
except as contemplated by this Agreement; or
(b) (i) solicit, initiate or participate in any
"solicitation" of "proxies" or become a "participant" in any
"election contest" (as such terms are defined or used in
Regulation 14A under the Exchange Act, disregarding clause (iv)
of Rule 14a-1(1)(2) and including any exempt solicitation
pursuant to Rule 14a-2(b)(1)); call, or in any way participate in
a call, for any special meeting of stockholders of the Company
(or take any action with respect to acting by written consent of
the stockholders); request or take any action to obtain or retain
any list of holders of any securities of the Company; initiate or
propose any stockholder proposal or participate in the making of,
or solicit stockholders for the approval of, one or more
stockholder proposals relating to the Company's Voting Stock;
(ii) deposit any Voting Stock in a voting trust or subject them
to any voting agreement or arrangements, except as provided for
herein; (iii) form, join, or in any way participate in a group
with respect to any shares of Voting Stock, or any securities the
ownership thereof would make the owner a beneficial owner of
Voting Stock; (iv) otherwise act to control or influence the
Company or the management, the Disinterested Directors, policies
or affairs of the Company; (v) disclose any intent, purpose, plan
or proposal with respect to this Agreement or the Company, its
affiliates or the board of directors, management, policies, or
affairs or securities or assets of the Company or its affiliates
that is securities or assets of the Company or its Affiliates
that is not consistent with this Agreement or the Purchase
Agreement, including any intent, purpose, plan or proposal that
is conditioned upon, or that would require the Company or any of
its Affiliates to make public disclosure relating to any such
intent, purpose, plan, proposal or condition; or (vi) assist,
advise, encourage or act in concert with any person with respect
to, or seek to do, any of the foregoing.
2. If, at any time four or more quarterly dividends, whether or not
consecutive, on the Series C Convertible Preferred Stock shall be in
default, in whole or in part, if the Investor has exercised its rights to
elect a majority of the directors of the Company's board, all directors
shall be entitled to vote pursuant to Section 6.4.1 above. Such
modification to the provisions of Section 6.4.1 shall continue until all
dividends accrued on the Series C Convertible Preferred Stock shall have
been paid or set apart for payment, at which time Section 6.4.1 shall again
be in force as written.
3. Nothing in this Agreement shall preclude or prevent Investor from
making a counter-offer to acquire the Company in the event that a third
party makes an unsolicited bona fide publicly announced offer to acquire
control of the Company pursuant to a tender offer, merger, consolidation,
share exchange, purchase of a substantial portion of assets, business
combination or other similar transaction (a "Third Party Offer") and (B)
the Company thereafter (i) issues a statement recommending the Third Party
Offer to its shareholders or (ii) the Company either issues a statement not
recommending the Third Party Offer or takes no position with respect to
such offer but is required by a court to furnish the party making the Third
Party Offer a list of shareholders of the Company.
5. INVESTOR'S PREEMPTIVE RIGHTS. The Company hereby grants to the
Investor the right, on the terms (including the limitations contained in
Section 6.4) set forth below, to purchase the Investor's pro rata share of
New Securities (as defined below) which the Company may, from time to time,
propose to sell and issue for cash or other consideration. The pro rata
share is the ratio of (x) the underlying Common Stock and Preferred Stock
on a fully diluted basis held by the Investor at the time the New
Securities are to be sold, or otherwise transferred, to (y) the total
number of shares of common stock then issued and outstanding plus the
number of shares of underlying common stock represented by all then
outstanding securities convertible at a price below the then Average
Closing Price, as that term is defined in Section 7.1, into or exercisable
at a price below the then Average Closing Price, as that term is defined in
Section 7.1, for shares of common stock held by any Person. The right
shall be subject to the following provisions:
In the case of securities to be issued pursuant to the acquisition of
another corporation or entity by the Company by merger, purchase of all or
substantially all of the assets or other reorganization whereby the Company
shall become the owner of more than 50% of the voting power of such
corporation, the price at which the Investor may exercise its pre-emption
rights shall be the Average Closing Price, as that term is defined in
Section 7.1, for the twenty day period ending the day before a public
announcement of the merger or other transaction is made; provided, however,
that prior to December 31, 1998, such price shall be at least $1.00, but
not more than $2.00.
"New Securities" shall mean any authorized but unissued shares, and
any treasury shares, of capital stock of the Company and all rights,
options or warrants to purchase capital stock, and securities of any type
whatsoever that are, or may become, convertible into Common Stock;
PROVIDED, HOWEVER, that the term "New Securities" does not include:
- securities issued under this Agreement;
- shares of Class A Common issued upon conversion of options
and warrants issued and outstanding as of the Closing Date;
- securities issued in connection with any stock split, stock
dividend or reclassification of Class A Common distributable on a pro
rata basis to all holders of Class A Common;
- shares of Class A Common issued pursuant to options
outstanding and/or granted after the date hereof to any senior
management personnel or directors or pursuant to any Employee Benefit
Plan as that term is defined in SEC Rule 405 entered into by the
Company and approved by the Company's Board of Directors.
In the event the Company proposes to undertake an issuance of New
Securities, it shall give the Investor reasonable written notice of its
intention, describing the type of New Securities, the consideration and the
general terms upon which the Company proposes to issue the same. The
Investor shall have a reasonable time under the circumstances to agree to
purchase its pro rata share of such New Securities for the cash or cash
equivalent consideration and upon the general terms specified in the notice
by giving written notice to the Company and stating therein the quantity of
New Securities to be purchased. The New Securities shall be purchased
simultaneously with the closing of the offering of the New Securities if
practical, but in no event later than 15 days after the closing at the
Company's election.
The purchase rights granted under this Section shall be exercisable
only by the Investor and its successors but not its assigns, unless such
assign is an affiliate of the Investor. Upon request of the Investor or
its successors, the Company will promptly inform the requesting party in
writing of (x) the number of shares of common stock issued and outstanding
and (y) the number of shares of underlying common stock represented by then
outstanding securities convertible into or exercisable for shares of common
stock held by any Person, in each case as of the date of such notice by the
Company. The right of the Investor or successor to the private preemptive
right herein provided shall be determined on the basis of the information
contained in such notice, irrespective of any exercise of options or
conversion rights or like rights to acquire shares of Common Stock of the
Company after the date of such notice.
7. ADDITIONAL COVENANTS OF THE PARTIES.
1. RIGHT TO PURCHASE ADDITIONAL SHARES OF CLASS A COMMON STOCK.
Investor may, at its option and upon notice to the Company, between June
30, 1998 and December 31, 1998, purchase an additional two million shares
of Class A Common Stock at a per share price equal to the Average Closing
Price of the Class A Common Stock, but in no event less than $1.00 per
share nor greater than $2.00 per share. The purchase of the additional
shares shall be completed within 5 business days.
"Average Closing Price" shall mean the average closing price for the
Company's Class A Common Stock for a period of 20 consecutive trading days
as quoted on a national securities exchange, or, if the Company's Class A
Common Stock is not traded on a national securities exchange, then on the
NASDAQ Stock Market, or, if the Company's Class A Common Stock is not
traded on the NASDAQ Stock Market, then on the OTC Bulletin Board or
similar public market.
2. CALL FOR ADDITIONAL SHARES OF SERIES C CONVERTIBLE PREFERRED
STOCK. Provided that the Company is not in default with respect to the
dividends on the Series C Convertible Preferred Stock, the Company may, at
its option and upon 10 business days' written notice to the Investor, until
December 31, 1998, require Investor to purchase up to an additional four
hundred thousand shares of Series C Convertible Preferred Stock at $5.00
per share, using up to two separate calls of at least 100,000 shares each,
but limited to one such call per quarter. The purchase of the additional
shares shall be completed within 5 business days.
3. SECURITIES LAW FILINGS UNDERTAKING. So long as the Investor is a
holder of the Company's common stock or preferred stock, the Company will
use its best efforts to maintain adequate public information as is
necessary or appropriate such that the Company qualifies to use a Form S-3
Registration Statement and such that the Investor may transfer any of the
Company's common stock or preferred stock held by it pursuant to Rule 144
under the Securities Act. All such filings shall be made at the Company's
expense.
8. REGISTRATION RIGHTS.
1. DEMAND AND PIGGY-BACK RIGHTS. The Company shall enter into a
Registration Rights Agreement in the form attached hereto as Exhibit C,
pursuant to which the Investor shall be granted demand registration rights
and piggy-back registration rights.
9. MISCELLANEOUS
1. ENTIRE AGREEMENT. This Agreement and the schedules and other
documents referred to herein constitute the entire agreement among the
parties and no party shall be liable or bound to any other party in any
manner by any warranties, representations, or covenants except as
specifically set forth herein or therein.
2. SURVIVAL OF WARRANTIES. The warranties, representations and
covenants of the Company and the Investor, jointly and severally, contained
in or made pursuant to this Agreement shall survive the execution and
delivery of this Agreement and the Closing Date.
3. SUCCESSORS AND ASSIGNS. Except as otherwise provided herein, the
terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective successors and assigns of the parties. Nothing
in this Agreement, express or implied, is intended to confer upon any party
other than the parties hereto or their respective successors and assigns
any rights, remedies, obligations, or liabilities under or by reason of
this Agreement, except as expressly provided in this Agreement.
4. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of California.
5. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which may be deemed an original, but all of which
together shall constitute one and the same instrument. This Agreement may
be executed by a party and sent to the other parties via facsimile
transmission and the facsimile transmitted copy shall have the same
integrity, force and effect as an original document.
6. TITLES AND SUBTITLES. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
7. NOTICES. All notices or other communications required hereunder
shall be in writing and shall be sufficient in all respects and shall be
deemed delivered after 5 days if sent via registered or certified mail,
postage prepaid; the next day if sent by overnight courier service; or one
business day after transmission, if sent by facsimile, to the following:
If to Company : Onsite Energy Corporation
701 Palomar Airport Rd., #200
Carlsbad, CA 92009
Attn: Richard T. Sperberg
Fax: (760) 931-2405
with copies to: Bartel Eng Linn & Schroder
300 Capitol Mall, Suite 1100
Sacramento, CA 95814
Attn: Scott E. Bartel, Esq.
Fax: (916) 442-3442
If to Investor: Westar Capital, Inc.
PO Box 889
818 Kansas Avenue
Topeka, KS 66601
Attn: Rita A. Sharpe
Fax: (785) 575-1771
with copies to: Westar Capital, Inc.
PO Box 889
818 Kansas Avenue
Topeka, KS 66601
Attn: John K. Rosenberg
Fax: (785) 575-1788
Any party hereto may change its address for purposes hereof by notice to
all other parties hereto.
8. DISPUTE RESOLUTION. No party to this Agreement shall be entitled
to take legal action with respect to any dispute relating hereto until it
has complied in good faith with the following alternative dispute
resolution procedures. This Section shall not apply to the extent it is
deemed necessary to take legal action immediately to preserve a party's
adequate remedy.
1. NEGOTIATION. The parties shall attempt promptly and in
good faith to resolve any dispute arising out of or relating to this
Agreement, through negotiations between representatives who have authority
to settle the controversy. Any party may give the other party written
notice of any such dispute not resolved in the normal course of business.
Within 20 days after delivery of the notice, representatives of both
parties shall meet at a mutually acceptable time and place, and thereafter
as often as they reasonably deem necessary, to exchange information and to
attempt to resolve the dispute, until the parties conclude that the dispute
cannot be resolved through unassisted negotiation. Negotiations extending
sixty days after notice shall be deemed at an impasse, unless otherwise
agreed by the parties.
If a negotiator intends to be accompanied at a meeting by an attorney,
the other negotiator(s) shall be given at least three working days' notice
of such intention and may also be accompanied by an attorney. All
negotiations pursuant to this clause are confidential and shall be treated
as compromise and settlement negotiations for purposes of the Federal and
state Rules of Evidence.
2. ADR PROCEDURE. If a dispute with more than $20,000.00 at
issue has not been resolved within 60 days of the disputing party's notice,
a party wishing resolution of the dispute ("Claimant") shall initiate
assisted Alternative Dispute Resolution ("ADR) proceedings as described in
this Section. Once the Claimant has notified the other ("Respondent") of a
desire to initiate ADR proceedings, the proceedings shall be governed as
follows: By mutual agreement, the parties shall select the ADR method they
wish to use. That ADR method may include arbitration, mediation,
mini-trial, or any other method which best suits the circumstances of the
dispute. The parties shall agree in writing to the chosen ADR method and
the procedural rules to be followed within 30 days after receipt of notice
of intent to initiate ADR proceedings. To the extent the parties are
unable to agree on procedural rules in whole or in part, the current Center
for Public Resources ("CPR") Model Procedure for Mediation of Business
Disputes, CPR Model Mini-trial Procedure, or CPR Commercial Arbitration
Rules--whichever applies to the chosen ADR method--shall control, to the
extent such rules are consistent with the provisions of this Section. If
the parties are unable to agree on an ADR method, the method shall be
arbitration.
The parties shall select a single Neutral third party to preside over
the ADR proceedings, by the following procedure: Within 15 days after an
ADR method is established, the Claimant shall submit a list of 5 acceptable
Neutrals to the Respondent. Each Neutral listed shall be sufficiently
qualified, including demonstrated neutrality, experience and competence
regarding the subject matter of the dispute. A Neutral who is an attorney
or former judge shall be deemed to have adequate experience. None of the
Neutrals may be present or former employees, attorneys, or agents of either
party. The list shall supply information about each Neutral, including
address, and relevant background and experience (including education,
employment history and prior ADR assignments). Within 15 days after
receiving the Claimant's list of Neutrals, the Respondent shall select one
Neutral from the list, if at least one individual on the list is acceptable
to the Respondent. If none on the list are acceptable to the Respondent,
the Respondent shall submit a list of 5 Neutrals, together with the above
background information, to the Claimant. Each of the Neutrals shall meet
the conditions stated above regarding the Claimant's Neutrals. Within 15
days after receiving the Respondent's list of Neutrals, the Claimant shall
select one Neutral, if at least one individual on the list is acceptable to
the Respondent. If none on the list are acceptable to the Claimant, then
the parties shall request assistance from the Center for Public Resources,
Inc., to select a Neutral.
The ADR proceeding shall take place within 30 days after the Neutral
has been selected. The Neutral shall issue a written decision within 30
days after the ADR proceeding is complete. Each party shall be responsible
for an equal share of the costs of the ADR proceeding. The parties agree
that any applicable statute of limitations shall be tolled during the
pendency of the ADR proceedings, and no legal action may be brought in
connection with this Agreement during the pendency of an ADR proceeding.
The Neutral's written decision shall become final and binding on the
parties, unless a party objects in writing within 30 days of receipt of the
decision. The objecting party may then file a lawsuit in any court allowed
by this Agreement. The Neutral's written decision shall be admissible in
the objecting party's lawsuit.
9. AMENDMENTS AND WAIVERS. Any term of this Agreement may be
amended and the observance of any term of this Agreement may be waived
(either generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the parties. Any
amendment or waiver effected in accordance with this paragraph shall be
binding upon the Investor, its successors or assigns, and each future
holder of such securities and the Company. A waiver by any party hereto of
a default in the performance of this Agreement shall not operate as a
waiver of any future or other default, whether of a like or different kind.
10. SEVERABILITY. If one or more provisions of this Agreement are
held to be unenforceable under applicable law, such provision shall be
excluded from this Agreement and the parties shall use their efforts to
substitute provisions of substantially the same effect. The balance of the
Agreement shall be interpreted as if such provision were so excluded and
shall be enforceable in accordance with its terms.
11. COUNTERPARTS; SIGNATURES. This Agreement may be executed in one
or more counterparts, each of which may be deemed an original, but all of
which together shall constitute one and the same instrument. This
Agreement may be executed by a party and sent to the other parties via
facsimile transmission and the facsimile transmitted copy shall have the
same integrity, force and effect as an original document.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
COMPANY:
Onsite Energy Corporation
By: RICHARD T. SPERBERG
Richard T. Sperberg, President
INVESTOR:
Westar Capital, Inc.
By: RITA A. SHARPE
Rita A. Sharpe, President
EXHIBIT 10.2
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") is made and entered
into as of October 28, 1997, by and among Onsite Energy Corporation, a Delaware
corporation (the "Company"), and Westar Capital, Inc. a Kansas corporation (the
"Investor").
This Agreement is made pursuant to the Stock Subscription Agreement dated
as of the date hereof by and between the Company and the Investor (the "Stock
Subscription Agreement") and pursuant to the Plan and Agreement of
Reorganization of even date herewith to which the Company and the Investor are
parties (the "Reorganization Agreement"). In order to induce the Investor to
enter into the Stock Subscription Agreement and the Reorganization Agreement,
the Company has agreed to provide the registration rights set forth in this
Agreement.
The parties hereby agree as follows:
1. DEFINITIONS
Capitalized terms used herein without definition shall have their
respective meanings set forth in the Stock Subscription Agreement. As used in
this Agreement, the following capitalized terms shall have the following
meanings:
COMMON STOCK: The Common Stock issued by the Company to the
Investor pursuant to the Stock Subscription Agreement and pursuant to the
Reorganization Agreement.
CONVERTIBLE PREFERRED STOCK: The Series C Convertible Preferred
Stock issued by the Company to the Investor pursuant to the Stock Subscription
Agreement.
DEMAND REGISTRATION: See Section 3 hereof.
EXCHANGE ACT: The Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated by the SEC thereunder.
PERSON: An individual, partnership, corporation, joint venture,
association, joint-stock company, trust, unincorporated organization, or a
government or agency or political subdivision thereof, including without
limitation, any "person" as defined in Section 13(d) of the Exchange Act.
PIGGYBACK REGISTRATION: See Section 4 hereof.
PROSPECTUS: The Prospectus included in any Registration Statement
(including, without limitation, a prospectus that discloses information
previously omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A), as amended or supplemented by any
prospectus supplement with respect to the terms of the offering of any portion
of the Registrable Securities covered by such Registration Statement and all
other amendments and supplements to the Prospectus, including post-effective
amendments and all material incorporated by reference or deemed to be
incorporated by reference in such Prospectus.
REGISTRABLE SECURITIES: All shares of Common Stock issued by the
Company to the Investor pursuant to the Stock Subscription Agreement and the
Reorganization Agreement, and all shares issued or issuable by the Company upon
the conversion of the Convertible Preferred Stock, including all shares of
Common Stock received in respect thereof, whether by reason of a stock split,
reclassification or stock dividend thereon, upon original issuance thereof and
at all times subsequent thereto until, in the case of any such security, (i) it
is effectively registered under the Securities Act and disposed of in
accordance with the Registration Statement covering it, or (ii) it is sold
pursuant to Rule 144 (or any similar provisions then in force) under the
Securities Act (unless such sale is to an affiliate of the Investor).
REGISTRATION EXPENSES: See Section 7 hereof.
REGISTRATION STATEMENT: Any registration statement of the Company
which covers any of the Registrable Securities pursuant to the provisions of
this Agreement, including the Prospectus, amendments and supplements to such
Registration Statement, including post-effective amendments, all exhibits and
all material incorporated by reference or deemed to be incorporated by
reference in such Registration Statement.
SECURITIES ACT: The Securities Act of 1933, as amended from time to
time, and the rules and regulations promulgated by the SEC thereunder.
SEC: The Securities and Exchange Commission.
UNDERWRITTEN REGISTRATION OR UNDERWRITTEN OFFERING: A registration
in which securities of the Company are sold to an underwriter for reoffering to
the public.
2. SECURITIES SUBJECT TO THIS AGREEMENT
(a) REGISTRABLE SECURITIES. The securities entitled to the
benefits of this Agreement are the Investor's Registrable Securities.
(b) RESTRICTION ON TRANSFER. Each certificate representing any
Registrable Security shall be imprinted with a legend substantially in the
following form and a similar legend with respect to applicable state securities
law, if required:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD, TRANSFERRED,
HYPOTHECATED OR OTHERWISE ASSIGNED EXCEPT PURSUANT TO (i) A REGISTRATION
STATEMENT RELATING TO THE SECURITIES WHICH IS EFFECTIVE UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, (ii) RULE 144 UNDER SUCH ACT, OR (iii) AN OPINION OF
COUNSEL OR OTHER EVIDENCE SATISFACTORY TO THE COMPANY THAT AN EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF SUCH ACT OR ANY APPLICABLE STATE SECURITIES
LAWS IS AVAILABLE.
Prior to any proposed transfer of any of such Registrable Securities
(other than under circumstances described in Sections 3 or 4 hereof), and so
long as such securities bear the restrictive legend required under this
paragraph (b), the holder thereof shall deliver to the Company (except in
transactions demonstrated to the Company's reasonable satisfaction to be in
compliance with Rule 144 or other available exemption under the Securities Act,
or any substantially similar successor rule of the SEC either (i) a written
opinion of legal counsel reasonably satisfactory to the Company to the effect
that the proposed transfer of such securities may be effected without
registration or qualification under the Securities Act and any applicable state
securities laws, or (ii) a "no action" letter from the SEC (and any necessary
state securities administrators) to the effect that the proposed transfer of
such securities without registration will not result in a recommendation by the
staff of the SEC (or such administrators) that action be taken with respect
thereto, whereupon the holder of such securities shall be entitled to transfer
such securities in accordance with the terms of such opinion or "no action"
letter.
The Company shall remove the legend or legends from a certificate if
it receives a written opinion of legal counsel reasonably satisfactory to the
Company to the effect that such legend or legends are not required in order to
establish compliance with any provision of the Securities Act or applicable
state securities law.
3. DEMAND REGISTRATION OF REGISTRABLE SECURITIES
(a) REQUESTS FOR REGISTRATION. Subject to the provisions of
Section 3(b) hereof, the Investor may make a written request (the "Registration
Request") to the Company for registration under and in accordance with the
provisions of the Securities Act of all or part of their Registrable Securities
(the "Demand Registration"). The Company shall as promptly as practicable, and
in no event later than forty-five (45) days after the Registration Request is
made, prepare and file with the SEC a Registration Statement covering all of
the Registrable Securities requested to be included by the Investor. The
Registration Request made pursuant to this Section 3(a) shall specify the
number of shares of the Registrable Securities to be registered and shall also
specify the intended methods of disposition thereof.
(b) NUMBER OF DEMAND REGISTRATIONS. The Company shall be obligated
to effect not more than three (3) Demand Registrations.
(c) PRIORITY ON DEMAND REGISTRATION. If any of the Registrable
Securities registered pursuant to Demand Registrations are to be sold in one or
more firm commitment underwritten offerings, and the managing underwriter or
underwriters advise the Company and the Investor in writing that in their
opinion the total number or dollar amount of Registrable Securities requested
to be included in such registration is sufficiently large to adversely affect
the success of such offering, the Company shall include, on behalf of the
Investor, in such firm commitment underwritten offering the number of shares of
Registrable Securities which, in the opinion of such managing underwriter or
underwriters, can be sold without any adverse affect on the offering.
(d) WITHDRAWAL. The Investor may, before such Registration
Statement becomes effective, withdraw its Registrable Securities from sale,
should the terms of sale not be reasonably satisfactory to it; however, such
Demand Registration shall be deemed to have occurred for the purposes of
Section 3(b) hereof, unless such withdrawal is more than 5 days prior to the
effective date of such Registration Statement. If there is no other seller
after the withdrawal of the Investor, the Investor shall pay all of the out-of-
pocket expenses of the Company incurred in connection with such registration
within thirty (30) days after receipt of a written itemization of such
expenses.
(e) SELECTION OF UNDERWRITERS. If any Demand Registration is in
the form of an underwritten offering, the Company will select and obtain the
investment banker or investment bankers and manager or managers that will
administer the offering.
4. PIGGYBACK REGISTRATIONS
(a) RIGHT TO PIGGYBACK. Whenever the Company proposes (whether or
not for its own account) to register any of its equity securities under the
Securities Act except with respect to a registration statement (i) on Form S-8
or any successor form to such Form or (ii) filed in connection with an exchange
offer or relating to a transaction pursuant to Rule 145 of the Securities Act,
the Company shall give written notice to the Investor of its intention to
effect such a registration not later than thirty (30) days prior to the
anticipated date of filing with the SEC of a Registration Statement with
respect to such registration. Such notice shall offer the Investor the
opportunity to include in such Registration Statement such Registrable
Securities as the Investor may request (a "Piggyback Registration"). Subject
to the provisions of Sections 4(b) and 4(c) hereof, the Company shall include
in each such Piggyback Registration all Registrable Securities with respect to
which the Company has received a written request for inclusion therein within
fifteen (15) days after the receipt by the Investor of the Company's notice.
No registration effected pursuant to a request or requests referred to in this
Section 4 shall be deemed Demand Registrations pursuant to Section 3. Upon the
giving of notice of a proposed registration by the Company pursuant to this
Section 4(a), the Investor may exercise only its rights to Piggyback
Registration and not Demand Registration as to the Company's proposed
registration.
(b) PRIORITY ON PRIMARY REGISTRATION. If a Piggyback Registration
is being made with respect to an underwritten primary registration on behalf of
the Company and the managing underwriter or underwriters advise the Company in
writing that in their opinion the total number or dollar amount of securities
of any class requested to be included in such registration is sufficiently
large to adversely affect the success of such offering, the Company shall
include in such registration: (1) first, all securities the Company proposes to
sell to the public, the proceeds of which shall go to the Company, (2) second,
up to the full number of Registrable Securities requested to be included in
such registration in excess of the number or dollar amount of securities the
Company proposes to sell which, in the opinion of such managing underwriter or
underwriters, can be sold without adversely affecting the offering.
(c) PRIORITY ON SECONDARY REGISTRATIONS. If a Piggyback
Registration is being made with respect to an underwritten secondary
registration on behalf of holders of the securities of the Company, and the
managing underwriters advise the Company in writing that in their opinion the
dollar amount or number of securities of any class requested to be included in
such registration is sufficiently large to adversely affect the success of such
offering, the Company shall include in such registration (1) first, up to the
full number of securities requested to be included therein by holders
exercising demand registration rights which in the opinion of such underwriter
can be sold without adversely affecting the offering and (2) second, up to the
full number of Registrable Securities requested to be included in such
registration in excess of the number or dollar amount of securities which
holders exercising demand registration rights propose to sell, which, in the
opinion of such managing underwriter or underwriters, can be sold without
adversely affecting the offering.
5. HOLD-BACK AGREEMENTS
(a) RESTRICTIONS ON PUBLIC SALE BY THE INVESTOR. The Investor
agrees, if requested by the managing underwriter or underwriters in any
underwritten offering (to the extent timely notified in writing by the Company
or the managing underwriter or underwriters) of the Company's securities
covered by a Registration Statement, not to effect any public sale or
distribution of any Registrable Securities not included in such Registration
Statement, including a sale pursuant to Rule 144 under the Securities Act
(except as part of such underwritten registration), during the ten (10) day
period prior to, and during the forty-five (45) day period beginning on, the
effective date of each underwritten offering made pursuant to such Registration
Statement, provided that Investor shall not be obligated to delay the public
sale or distribution of Registrable Securities for a period in excess of one
hundred ten (110) days in any twelve-month period. Such forty-five (45) day
period shall be extended with regard to the Registrable Securities to such
longer period as may be agreed to in writing by the Investor.
The foregoing provisions shall not apply to the Investor if it is
prevented by applicable statute or regulation from entering into any such
agreement; PROVIDED that the Investor shall undertake, in its request to
participate in any such underwritten offering, not to effect any public sale or
distribution of the applicable Registrable Securities commencing on the date of
sale of such applicable class of Registrable Securities pursuant to such a
Registration Statement unless it has provided forty-five (45) days prior
written notice of such sale or distribution to the managing underwriter or
underwriters.
(b) RESTRICTIONS ON PUBLIC SALE BY THE COMPANY AND OTHERS. The
Company agrees, (i) without the written consent of the managing underwriter or
underwriters in an underwritten offering of Registrable Securities covered by a
Registration Statement filed by the Company pursuant to Section 3 or 4 hereof,
not to effect any public or private sale or distribution of its securities,
including a sale pursuant to Regulation D under the Securities Act, during the
ten (10) day period prior to, and during the one hundred fifty (150) day period
beginning on, the effective date of an underwritten offering made pursuant to a
Registration Statement (except as part of such underwritten registration or
pursuant to registrations on Form S-8 or any successor form or relating to a
transaction pursuant to Rule 145 of the Securities Act) and (ii) to use its
best efforts to obtain the written agreement of, and to cause each holder of
more than five percent (5%) of any class of its securities purchased from it at
any time (other than in a registered public offering) not to effect any
registration, public sale or distribution of any such securities during such
period, including a sale pursuant to Rule 144 under the Securities Act (except
as part of such underwritten registration, if otherwise permitted).
6. REGISTRATION PROCEDURES
In connection with the Company's obligations to file a Registration
Statement pursuant to Section 3 hereof, the Company shall use its reasonable
best efforts to effect such registration to permit the sale of such Registrable
Securities in accordance with the intended method or methods of disposition
thereof, and pursuant thereto the Company shall as expeditiously as
practicable:
(a) FILING; REVIEW - prepare and file with the SEC as soon as
practical, but in no event later than the time periods specified herein a
Registration Statement relating to the Demand Registration on any appropriate
form under the Securities Act, which form shall be available for the sale of
the Registrable Securities in accordance with the intended method or methods of
distribution thereof, and use its reasonable best efforts to cause such
Registration Statement to become effective and remain effective as provided
herein; PROVIDED that at least fifteen (15) days before filing a Registration
Statement or Prospectus or any amendments or supplements thereto, including
documents incorporated or deemed to be incorporated by reference in the
Registration Statement after the initial filing of any Registration Statement,
the Investor, its counsel and the managing underwriters, if any, copies of all
such documents proposed to be filed (excluding exhibits unless otherwise
requested), which documents shall be subject to the review of the Investor, its
counsel and managing underwriters, and the Company shall not file any
Registration Statement or amendment thereto or any Prospectus or any supplement
thereto (including such documents incorporated or deemed to be incorporated by
reference) to which the Investor or the managing underwriters, if any, shall
reasonably object on a timely basis;
(b) AMENDMENTS; SUPPLEMENTS - prepare and file with the SEC such
amendments and post-effective amendments to a Registration Statement as may be
necessary to keep such Registration Statement continuously effective for the
applicable period; cause the related Prospectus to be supplemented by any
required prospectus supplement and as so supplemented to be filed pursuant to
Rule 424 (or any similar provisions then in force) under the Securities Act;
and comply with the provisions of the Securities Act with respect to the
disposition of all securities covered by such Registration Statement during the
applicable period in accordance with the intended methods of disposition by the
sellers thereof set forth in such Registration Statement or supplement to such
Prospectus;
(c) NOTICE OF EVENTS - notify the Investor, its counsel and the
managing underwriters, if any, promptly, and (if requested by any such Person)
confirm such notice in writing, (1) when a Prospectus or any prospectus
supplement or post-effective amendment has been filed, and, with respect to a
Registration Statement or any post-effective amendment, when the same has
become effective, (2) of any request by the SEC for amendments or supplements
to a Registration Statement or related Prospectus or for additional information
to be included in any Registration Statement or Prospectus or otherwise, (3) of
the issuance by the SEC of any stop order suspending the effectiveness of a
Registration Statement or the initiation of any proceedings for that purpose,
(4) if at any time the representations and warranties of the Company
contemplated by paragraph (m) below cease to be true and correct, (5) of the
receipt by the Company of any notification with respect to the suspension of
the qualification of any of the Registrable Securities for sale in any
jurisdiction or the initiation or threatening of any proceeding for such
purpose, (6) of the happening of any event which makes any statement made in
the Registration Statement, the Prospectus or any document incorporated or
deemed to be incorporated therein by reference untrue or which requires the
making of any changes in the Registration Statement or Prospectus so that they
shall not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein (with respect to a Prospectus, in light of the circumstances in which
they were made) not misleading, and (7) of the reasonable determination of the
Company that a post-effective amendment to a Registration Statement would be
appropriate;
(d) SUSPENSION - make every reasonable effort to obtain the
withdrawal of any order suspending the effectiveness of a Registration
Statement or the lifting of any suspension of the qualification or exemption
from qualification of any of the Registrable Securities for sale in any
jurisdiction, as soon as practicable;
(e) ADDITIONAL INFORMATION - if requested by the managing
underwriters, if any, or the Investor, to immediately incorporate in a
prospectus supplement or post-effective amendment such information as the
managing underwriters, if any, and the Investor agree should be included
therein as required by applicable law; and make all required filings of such
prospectus supplement or post-effective amendment as soon as practicable after
the Company has received notification of the matters to be incorporated
therein; provided, however, that the Company shall not be required to take any
of the actions in this Section 6(e) which are not, in the opinion of counsel
for the Company, in its sole discretion, in compliance with applicable law;
(f) COPIES - furnish to the Investor's counsel and each managing
underwriter, without charge, a signed copy of the Registration Statement and
any post-effective amendment thereto, including financial statements and
schedules, all documents incorporated therein by reference and all exhibits
(including those incorporated by reference);
(g) PROSPECTUSES - deliver to the Investor and to the underwriters,
if any, without charge, as many copies of the Prospectus (including each
preliminary prospectus) and any amendment or supplement thereto as may be
reasonably requested; the Company consents to the use of such Prospectus or any
amendment or supplement thereto by the Investor and the underwriters, if any,
in connection with the offering and sale of the Registrable Securities covered
by such Prospectus or any amendment or supplement thereto;
(h) BLUE SKY - prior to any public offering of Registrable
Securities, register or qualify or cooperate with the Investor, the
underwriters, if any, and their respective counsel in connection with the
registration or qualification of such Registrable Securities for offer and sale
under the securities or blue sky laws of such jurisdictions within the United
States as the Investor or underwriter reasonably requests in writing, keep each
such registration or qualification effective during the period such
Registration Statement is required to be kept effective and do any and all
other acts or things necessary or advisable to enable the disposition in such
jurisdictions of the Registrable Securities covered by the applicable
Registration Statement; PROVIDED that the Company shall not be required to
qualify to do business in any jurisdiction where it is not then so qualified or
to take any action which would subject it to general service of process in any
such jurisdiction where it is not then so subject;
(i) CERTIFICATES - cooperate with the Investor and the managing
underwriters, if any, to facilitate the timely preparation and delivery of
certificates representing Registrable Securities to be sold and not bearing any
restrictive legends; and enable such Registrable Securities to be in such
denominations and registered in such names as the managing underwriters may
request at least two (2) business days prior to any sale of Registrable
Securities to the underwriters;
(j) CORRECTIONS - upon the occurrence of any event contemplated by
Section 6(c)(6) above, prepare a supplement or post-effective amendment to the
applicable Registration Statement or related Prospectus or any document
incorporated therein by reference or file any other required document so that,
as thereafter delivered to the purchasers of the Registrable Securities being
sold thereunder, such Prospectus shall not contain an untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein, in light of the circumstances in which they were made, not
misleading;
(k) LISTING - if requested in writing by the Investor, use its
reasonable best efforts to cause all Registrable Securities covered by the
Registration Statement to be listed on each securities exchange, if any, on
which similar securities issued by the Company are then listed;
(l) CUSIP; TRANSFER AGENT; REGISTRAR - provide a CUSIP number,
transfer agent and registrar for all Registrable Securities being registered,
not later than the effective date of the applicable Registration Statement
covering such securities;
(m) OTHER AGREEMENTS; OPINIONS - enter into such agreements
(including an underwriting agreement in form, scope and substance as is
customary in underwritten offerings) and take all such other actions as the
Investor or the underwriters, if any, may reasonably request, or any and all
such other actions reasonably required in connection therewith in order to
expedite or facilitate the disposition of such Registrable Securities and in
such connection, whether or not an underwriting agreement is entered into and
whether or not the registration is an underwritten registration, (1) make such
representations and warranties, if any, to the Investor and to enter into any
indemnity arrangement with the underwriters in form, substance and scope as are
customarily made by issuers to underwriters in underwritten offerings and
confirm the same if and when reasonably requested; (2) obtain opinions of
counsel to the Company and updates thereof (which counsel and opinions shall be
reasonably satisfactory in form, scope and substance to the managing
underwriters, if any, or if the offering is not underwritten, then to
Investor's counsel) addressed to the Investor covering the matters customarily
covered in opinions requested in underwritten offerings; (3) use its best
efforts to obtain "cold comfort" letters and updates thereof from the Company's
independent certified public accountants addressed to the underwriters, if any,
such letters to be in customary form and covering matters of the type
customarily covered in "cold comfort" letters obtained by underwriters in
connection with underwritten offerings; and (4) the Company shall deliver such
documents and certificates as may be reasonably requested by the Investor or
the managing underwriters, if any, to evidence compliance with clause (j) above
and with any customary conditions contained in the underwriting agreement or
other agreement entered into by the Company. The above shall be done at each
closing under such underwriting or similar agreement or as to the extent
required thereunder;
(n) ACCESS - make available for inspection by a representative of
the Investor, any underwriter, if any, and any attorney, accountant or other
agent retained by the Investor or underwriter, all pertinent financial and
other records, corporate documents and properties of the Company (collectively
"Records"), and cause the Company's officers, directors and employees to supply
all information reasonably requested by any such representative, underwriter,
attorney or accountant in connection with such Registration Statement; provided
that any Records which the Company determines to be confidential and which it
notifies the representative, underwriter, attorney or accountant are
confidential, shall not be disclosed by such individuals unless (i) such
Records are in the public domain or (ii) disclosure of such Records is required
by court or administrative order or applicable law;
(o) OTHER AGENCIES - use its reasonable best efforts to cause the
Registrable Securities covered by each Registration Statement to be registered
with or approved by such other government agencies or authorities as may be
necessary to the Investor or the underwriters, if any, to consummate the
disposition of such Registrable Securities in the United States;
(p) COMPLIANCE - use its reasonable best efforts to comply with all
applicable rules and regulations of the SEC and make generally available to its
security holders earning statements satisfying the provisions of Section 11(a)
of the Securities Act and Rule 158 thereunder, no later than forty-five (45)
days after the end of any twelve (12) month period (or ninety (90) days after
the end of any twelve (12) month period if such period is a fiscal year) (i)
commencing at the end of any fiscal quarter in which Registrable Securities are
sold to underwriters in a firm commitment or best efforts underwritten offering
and (ii) if not sold to underwriters in such an offering, commencing on the
first day of the first fiscal quarter of the Company after the effective date
of a Registration Statement, which statements shall cover said twelve (12)
month periods; and
(q) CERTIFICATES - on or before the effective date of a
registration, provide the transfer agent with printed certificates for the
Registrable Securities which are in a form eligible for deposit with The
Depositary Trust Company.
The Company may require the Investor to furnish to the Company such
information regarding the distribution of such securities and such other
information as the Company may from time to time reasonably request in writing,
and the Company may exclude from such registration the Registrable Securities
of the Investor for unreasonably failing to furnish such information within a
reasonable time after receiving such request.
The Investor agrees by acquisition of such Registrable Securities
that, upon receipt of any notice from the Company of the happening of any event
of the kind described in Section 6(c)(2), 6(c)(3), 6(c)(5) or 6(c)(6), the
Investor will forthwith discontinue disposition of such Registrable Securities
covered by such Registration Statement or Prospectus until receipt of the
copies of the supplemented or amended prospectus contemplated by Section 6(j),
or until it is advised in writing (the "Advice") by the Company that the use of
the applicable Prospectus may be resumed, and has received copies of any
additional or supplemental filings which are incorporated by reference in such
Prospectus, and if so directed by the Company, the Investor shall deliver to
the Company all copies, other than permanent filed copies then in Investor's
possession, of the Prospectus covering such Registrable Securities current at
the time of receipt of such notice.
7. REGISTRATION EXPENSES
All fees and expenses incident to the Company's performance of or
compliance with this Agreement, including without limitation (a) all
registration and filing fees, including all expenses incident to filings
required to be made with the National Association of Securities Dealers, Inc.
or listing on any securities exchange, fees and expenses of compliance with
securities or blue sky laws (including reasonable fees and disbursements of
counsel for the underwriters in connection with blue sky qualifications of the
Registrable Securities and determination of the eligibility of any of the
Registrable Securities for investment under the laws of such jurisdictions as
the managing underwriters or the Investor may designate in accordance with
Section 6(h)), fees and expenses of compliance with state insurance or other
governmental regulations and rating agency fees, (b) printing expenses,
messenger, telephone and delivery expenses, and other internal expenses, (c)
all fees and disbursements of counsel for the Company and of all independent
certified public accountants of the Company (including the expenses of any
special audit and "cold comfort" letters required by or incident to such
performance), (d) fees and expenses of underwriters (excluding discounts,
commissions or fees of underwriters, selling brokers, dealer managers or
similar securities industry professionals relating to the distribution of the
Registrable Securities and legal expenses of selling holders and the
underwriters but including the fees and expenses of any "qualified independent
underwriter" or other independent appraiser participating in an offering
pursuant to Section 3 of Schedule E to the By-Laws of the National Association
of Securities Dealers, Inc.), (e) securities acts liability insurance if the
Company so desires and (f) fees and expenses of other Persons retained by the
Company (all such included expenses being herein called "Registration
Expenses") shall be borne by the Company whether or not any of the Registration
Statements become effective. Notwithstanding any of the foregoing, the
Investor upon sales of Registrable Securities shall bear its own expenses for
all underwriting commissions applicable to such sales and any legal fees of
counsel hired by the Investor.
The Company shall pay its general expenses (including, without
limitation, all salaries and expenses of its officers and employees performing
legal or accounting duties), the expense of any audit, and the fees and
expenses incurred in connection with the listing of the securities to be
registered on each securities exchange on which similar securities issued by
the Company are then listed.
8. MISCELLANEOUS
(a) SUCCESSOR AND ASSIGNS. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the
parties.
(b) COUNTERPARTS. This Agreement may be executed in two or more
counterparts and by the parties hereto in separate counterparts (including by
facsimile signatures), each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
Agreement.
(c) HEADINGS. The headings in this Agreement are for convenience
of reference only and shall not limit or otherwise affect the meaning hereof.
(d) GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of California.
(e) SEVERABILITY. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the
remaining provisions contained herein shall not be affected or impaired
thereby.
(f) ENTIRE AGREEMENT. This Agreement is intended by the parties as
a final expression of their Agreement and intended to be a complete and
exclusive statement of the Agreement and understanding of the parties hereto in
respect of the subject matter contained herein. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred to
herein with respect to the registration rights granted by the Company with
respect to the securities issued pursuant to the Stock Subscription Agreement
and the Reorganization Agreement. This Agreement supersedes all prior
Agreements and understandings between the parties with respect to such subject
matter.
(g) NOTICES. All notices or other communications required
hereunder shall be in writing and shall be sufficient in all respects and shall
be deemed delivered after 5 days if sent via registered or certified mail,
postage prepaid; the next day if sent by overnight courier service; or one
business day after transmission if sent by facsimile, to the following:
If to Company : Onsite Energy Corporation
701 Palomar Airport Rd., #200
Carlsbad, CA 92009
Attn: Richard T. Sperberg
Fax: (760) 931-2405
with copies to: Bartel Eng Linn & Schroder
300 Capitol Mall, Suite 1100
Sacramento, CA 95814
Attn: Scott E. Bartel, Esq.
Fax: (916) 442-3442
If to Investor: Westar Capital, Inc.
PO Box 889
818 Kansas Avenue
Topeka, KS 66601
Attn: Rita A. Sharpe
Fax: (785) 575-1771
with copies to: Westar Capital, Inc.
PO Box 889
818 Kansas Avenue
Topeka, KS 66601
Attn.: John K. Rosenberg
Fax: (785) 575-1788
Any party hereto may change its address for purposes hereof by notice to all
other parties hereto.
(h) DISPUTE RESOLUTION. No party to this agreement shall be
entitled to take legal action with respect to any dispute relating hereto until
it has complied in good faith with the following alternative dispute resolution
procedures. This section shall not apply to the extent it is deemed necessary
to take legal action immediately to preserve a party's adequate remedy.
(i) NEGOTIATION. The parties shall attempt promptly and in
good faith to resolve any dispute arising out of or relating to this Contract,
through negotiations between representatives who have authority to settle the
controversy. Any party may give the other party(ies) written notice of any
such dispute not resolved in the normal course of business. Within 20 days
after delivery of the notice, representatives of both parties shall meet at a
mutually acceptable time and place, and thereafter as often as they reasonably
deem necessary, to exchange information and to attempt to resolve the dispute,
until the parties conclude that the dispute cannot be resolved through
unassisted negotiation. Negotiations extending sixty days after notice shall
be deemed at an impasse, unless otherwise agreed by the parties.
If a negotiator intends to be accompanied at a meeting by an attorney,
the other negotiator(s) shall be given at least three working days' notice of
such intention and may also be accompanied by an attorney. All negotiations
pursuant to this clause are confidential and shall be treated as compromise and
settlement negotiations for purposes of the Federal and state Rules of
Evidence.
(ii) ADR PROCEDURE. If a dispute with more than $20,000.00
at issue has not been resolved within 60 days of the disputing party's notice,
a party wishing resolution of the dispute ("Claimant") shall initiate assisted
Alternative Dispute Resolution ("ADR") proceedings as described in this
Section. Once the Claimant has notified the other party ("Respondent") of a
desire to initiate ADR proceedings, the proceedings shall be governed as
follows: By mutual agreement, the parties shall select the ADR method they
wish to use. That ADR method may include arbitration, mediation, mini-trial,
or any other method which best suits the circumstances of the dispute. The
parties shall agree in writing to the chosen ADR method and the procedural
rules to be followed within 30 days after receipt of notice of intent to
initiate ADR proceedings. To the extent the parties are unable to agree on
procedural rules in whole or in part, the current Center for Public Resources
("CPR") Model Procedure for Mediation of Business Disputes, CPR Model
Mini-trial Procedure, or CPR Commercial Arbitration Rules--whichever applies to
the chosen ADR method--shall control, to the extent such rules are consistent
with the provisions of this Section. If the parties are unable to agree on an
ADR method, the method shall be arbitration.
The parties shall select a single Neutral (as defined by CPR) third party
to preside over the ADR proceedings, by the following procedure: Within 15
days after an ADR method is established, the Claimant shall submit a list of 5
acceptable Neutrals to the Respondent. Each Neutral listed shall be
sufficiently qualified, including demonstrated neutrality, experience and
competence regarding the subject matter of the dispute. A Neutral shall be
deemed to have adequate experience if an attorney or former judge. None of the
Neutrals may be present or former employees, attorneys, or agents of either
party. The list shall supply information about each Neutral, including
address, and relevant background and experience (including education,
employment history and prior ADR assignments). Within 15 days after receiving
the Claimant's list of Neutrals, the Respondent shall select one Neutral from
the list, if at least one individual on the list is acceptable to the
Respondent. If none on the list are acceptable to the Respondent, the
Respondent shall submit a list of 5 Neutrals, together with the above
background information, to the Claimant. Each of the Neutrals shall meet the
conditions stated above regarding the Claimant's Neutrals. Within 15 days
after receiving the Respondent's list of Neutrals, the Claimant shall select
one Neutral, if at least one individual on the list is acceptable to the
Respondent. If none on the list are acceptable to the Claimant, then the
parties shall request assistance from CPR to select a Neutral.
The ADR proceeding shall take place within 30 days after the Neutral has
been selected. The Neutral shall issue a written decision within 30 days after
the ADR proceeding is complete. Each party shall be responsible for an equal
share of the costs of the ADR proceeding. The parties agree that any
applicable statute of limitations shall be tolled during the pendency of the
ADR proceedings, and no legal action may be brought in connection with this
agreement during the pendency of an ADR proceeding.
The Neutral's written decision shall become final and binding on the
parties, unless a party objects in writing within 30 days of receipt of the
decision. The objecting party may then file a lawsuit in any court allowed by
this Contract. The Neutral's written decision shall be admissible in the
objecting party's lawsuit.
(i) AMENDMENTS AND WAIVERS. Any term of this Agreement may be
amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the parties. Any amendment or
waiver effected in accordance with this paragraph shall be binding upon the
Investor, its successors or assigns, and each future holder of such securities
and the Company. A waiver by any party hereto of a default in the performance
of this Agreement shall not operate as a waiver of any future or other default,
whether of a like or different kind.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
ONSITE ENERGY CORPORATION WESTAR CAPITAL, INC.
By: RICHARD T. SPERBERG By: RITA A. SHARPE
Richard T. Sperberg, Rita A. Sharpe
President President