U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
<checked-box> QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1998.
<square> TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM
TO
Commission File Number 1-12738
ONSITE ENERGY CORPORATION
(NAME OF SMALL BUSINESS ISSUER IN ITS CHARTER)
Delaware 33-0576371
(State or other jurisdiction of incorporation or organization) (I.R.S.
Employer Identification No.)
701 Palomar Airport Road, Suite 200, Carlsbad, CA 92009
(Address of principal executive offices) (ZIP Code)
Issuer's telephone number, including area code: (760) 931-2400
CHECK WHETHER THE ISSUER (1) FILED ALL REPORTS REQUIRED TO BE FILED BY SECTION
13 OR 15(D) OF THE EXCHANGE ACT DURING THE PAST 12 MONTHS (OR FOR SUCH SHORTER
PERIOD THAT THE REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN
SUBJECT TO SUCH FILING REQUIREMENTS FOR THE PAST 90 DAYS. YES X No
The number of Class A common stock, $0.001 par value, outstanding, as of May
20, 1998 is 15,585,569.
<PAGE>
Onsite Energy Corporation
Condensed Consolidated Balance Sheet
March 31, 1998
(Unaudited)
Current Assets:
Cash $ 511,897
Cash -Restricted 152,925
Accounts receivable, net of allowance for doubtful
accounts of $15,030 4,830,298
Costs and estimated earnings in excess of billings
on uncompleted contracts 1,173,637
Inventory 110,273
Other assets 96,857
----------
TOTAL CURRENT ASSETS 6,875,887
Cash-restricted 78,990
Costs incurred on future projects 80,215
Property and equipment, net 809,368
Goodwill, net of amortization of $1,611,472 364,884
Other 24,478
----------
TOTAL ASSETS $ 8,233,822
==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 3,203,140
Current portion of notes payable 75,572
Accrued expenses and other liabilities 837,381
----------
TOTAL CURRENT LIABILITIES 4,116,093
----------
Long-Term Liabilities:
Accrued future operation and maintenance costs
associated with energy services agreements 421,432
----------
TOTAL LIABILITIES 4,537,525
----------
Commitments and contingencies -
Shareholders' Equity:
Preferred Stock, Series A, 4,000 shares authorized,
none issued and outstanding -
Preferred Stock, Series B, 625,000 shares
authorized, none issued and outstanding -
Preferred Stock, Series C, 1,000,000 shares authorized,
203,250 issued and outstanding 203
Common Stock, $.001 par value, 24,000,000 shares authorized:
Class A common stock, 23,999,000 shares authorized,
15,512,272 shares issued and outstanding 15,510
Class B common stock, 1,000 shares authorized,
none issued and outstanding -
Additional paid-in capital 20,709,567
Accumulated deficit (17,028,983)
----------
TOTAL SHAREHOLDERS' EQUITY 3,696,297
----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 8,233,822
==========
The accompanying notes are an integral part of these condensed consolidated
financial statements.
<PAGE>
Onsite Energy Corporation
Condensed Consolidated Statement of Operations
(Unaudited)
Three Months Ended Nine Months Ended
March 31, March 31,
1998 1997 1998 1997
----------- ---------- ---------- ----------
Revenues $ 5,401,634 $ 1,646,305 $ 11,345,548 $ 7,892,695
Cost of sales 4,154,730 1,322,262 8,296,595 5,782,767
----------- ---------- ---------- ----------
Gross Margin 1,246,904 324,043 3,048,953 2,109,928
Selling, General,
and Administrative
Expenses 1,029,331 785,912 2,458,356 2,699,303
Depreciation
& Amortization 148,552 71,173 407,657 360,656
----------- ---------- ---------- ----------
Operating income (loss) 69,021 (533,042) 182,940 (950,031)
----------- ---------- ---------- ----------
Other income (expense):
Interest (expense) (5,762) (40,858) (14,350) (141,688)
Interest income 9,392 383 22,766 7,759
Other income (expense):(47,641) - (53,200) -
Loss on sale of
partnership interest - (425,240) - (425,240)
----------- ---------- ---------- ----------
Total other
income(expense) (44,011) (465,715) (44,784) (559,169)
----------- ---------- ---------- ----------
Income (loss) from operations
before provision(benefit)
for income taxes 25,010 (998,757) 138,156 (1,509,200)
Provision (benefit) for
income taxes 4,438 - 16,675 -
----------- ---------- ---------- ----------
Net income (loss) $ 20,572 $ (998,757) $ 121,481 $ 1,509,200)
=========== ========== ========== ==========
Basic and Diluted income
(loss) per Class A
common share $ ** $ (0.09) $ ** $ (0.14)
=========== ========== ========== ==========
**Less than $ 0.01 per share
The accompanying notes are an integral part of these condensed consolidated
financial statements.
<PAGE>
Onsite Energy Corporation
Condensed Consolidated Statement of Cash Flows
(Unaudited)
Nine Months Ended
March 31,
1998 1997
___________ ____________
Cash flows from operating activities:
Net income (loss) $ 121,481 $ (1,509,200)
Adjustments to reconcile net income (loss)
to net cash used in operating activities:
Amortization of goodwill 278,139 300,000
Inventory (110,273) -
Amortization of acquired contract costs 192,061 386,773
Provision for future operation and
maintenance costs - 54,256
Depreciation and amortization 129,518 60,656
Loss on disposal of partnership interest - 425,640
Change in operating assets and liabilities:
Accounts receivable (3,447,315) 19,545
Increase (decrease) in billings related
to costs and estimated earnings on
uncompleted contracts (1,222,752) 1,039,531
Amounts due pursuant to sale of subsidiary - (421,834)
Other assets (76,806) 65,696
Cash-restricted 41,252 (272,592)
Accounts payable and accrued expenses 2,522,955 (1,062,347)
___________ ____________
Net cash used in operating activities (1,571,740) (913,876)
___________ ____________
Cash flows from investing activities:
Acquisition of Fixed Assets (327,597) -
Proceeds from sale of subsidiary - 778,166
___________ ____________
Net cash provided (used)
by investing activities (327,597) 778,166
----------- ------------
Cash flows from financing activities:
Proceeds from issuance of stock 1,947,287 -
Proceeds from exercise of stock options 20,157 44,679
Repayment of long-term debt (83,104) (631,813)
___________ ____________
Net cash provided (used) by
financing activities 1,884,340 (587,134)
___________ ____________
Net increase (decrease) in cash (14,997) (722,844)
Cash, beginning of year 526,894 976,470
___________ ____________
Cash, end of quarter $ 511,897 $ 253,626
=========== =============
The accompanying notes are an integral part of these condensed consolidated
financial statements.
<PAGE>
ONSITE ENERGY CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1: As contemplated by the Securities and Exchange Commission under
Item 310 of Regulation S-B, the accompanying consolidated financial
statements and footnotes have been condensed and do not contain all
disclosures required by generally accepted accounting principles
and, therefore, should be read in conjunction with the Form 10-KSB
for Onsite Energy Corporation ("Onsite") as of and for the year
ended June 30, 1997. In the opinion of management, the accompanying
unaudited condensed consolidated financial statements contain all
adjustments (consisting of normal recurring adjustments) necessary
to present fairly its financial position and results of its
operations for the interim period.
NOTE 2: The condensed consolidated balance sheet as of March 31, 1998, and
the condensed consolidated statements of operations and cash flows
for the three and nine months ended March 31, 1998 and 1997,
represent the financial position and results of operations of
Onsite. The results of operations for the three and nine months
ended March 31, 1998 and 1997 are not necessarily indicative of the
results to be expected for the forthcoming year.
**The remainder of this page left intentionally blank**
<PAGE>
NOTE 3: In February 1997, the Financial Accounting Standards Board issued a
new statement titled "EARNINGS PER SHARE" ("FAS 128"). The new
statement is effective for both interim and annual periods ending
after December 15, 1997. FAS 128 replaces the presentation of
primary and fully diluted earnings per share with the presentation
of basic and diluted earnings per share. Basic earnings per share
excludes dilution and is calculated by dividing income available to
common stockholders by the weighted-average number of common shares
outstanding for the period. Diluted earnings per share reflects the
potential dilution that could occur if securities or other
contracts to issue common stock were exercised or converted into
common stock or resulted in the issuance of common stock that then
shared in the earnings of the entity. Common stock equivalents for
the three and nine months ended March 31, 1997 were anti-dilutive
and excluded in the earnings per share computation.
Onsite Energy Corporation
Earnings per Share
(Unaudited)
Three Months Ended Nine Months Ended
March 31, March 31,
1998 1997 1998 1997
--------- ------------ --------- -----------
BASIC EARNINGS PER SHARE:
Net income (loss) $ 20,572 $ (998,757) $ 121,481 $(1,509,200)
Less-Preferred Stock Dividends 4,955 - 8,374 -
--------- ------------ --------- -----------
Net Income (Loss) applicable
to common shareholders $ 15,617 $ (998,757) $ 113,107 $(1,509,200)
========= ============ ========= ===========
Weighted average number of
common shares 14,714,361 10,935,598 13,061,167 10,776,607
Basic Earnings (Loss)
per share $ ** (0.09) $ ** (0.14)
========= ============ ========= ===========
DILUTED EARNINGS PER SHARE:
Net Income from primary income
per common share $ 15,617 $ (998,957) $ 113,107 $(1,509,200)
Add: Preferred Stock Dividend 4,955 - 8,374 -
--------- ------------ --------- -----------
Net Income for diluted earnings
(loss) per share $ 20,572 $ (998,957) $ 121,481 $(1,509,200)
--------- ------------ --------- -----------
Weighted average number of shares
used in calculating basic earnings
per common share 14,714,361 10,935,598 13,061,167 10,776,607
Add: Common stock equivalents 1,332,622 - 1,043,761 -
--------- ------------ --------- -----------
Weighted Average number of shares
used in calculation of diluted
earnings per share 16,046,983 10,935,598 14,104,928 10,776,607
--------- ------------ --------- -----------
Diluted Earnings (Loss)
per share $ ** $ (0.09) $ ** $ (0.14)
========= ============ ========= ===========
**Less than $ 0.01 per share
<PAGE>
NOTE 4: On October 28, 1997, Onsite entered into a Stock Subscription
Agreement (the "Stock Agreement") with Westar Capital, Inc.
("Westar Capital"). Pursuant to the Stock Agreement, Onsite made a
private placement of 2,000,000 shares of Onsite's Class A Common
Stock at $0.50 per share and 200,000 shares of Onsite's newly
created Series C Convertible Preferred Stock at $5.00 per share.
Each share of Onsite's Series C Convertible Preferred Stock is
convertible into five shares of Onsite's Class A Common Stock and
earns a dividend of 9.75 percent per annum.
In a related transaction on October 28, 1997, Onsite entered into a
Plan and Agreement of Reorganization (the "Reorganization
Agreement") with Westar Capital, Westar Energy, Inc. and Westar
Business Services, Inc., a Kansas corporation ("WBS").
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 percent of WBS's issued and
outstanding capital stock, consisting solely of Common Stock, no
par value, in exchange for 1,700,000 shares of Onsite's Class A
Common Stock, par value $0.001 per share. On or about March 31,
1998, an additional 800,000 shares of Onsite Class A Common Stock
were delivered to Westar Capital based on the execution of 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, and has legally changed its name to Onsite Business
Services, Inc.
WBS provides performance contracting services, utility services and
industrial water services primarily in the states of Kansas,
Missouri and Oklahoma. The acquisition provides Onsite with the
ability to develop new markets in the Midwest and other areas.
The following presents Pro Forma information as if the acquisition of WBS
occurred on July 1, 1996:
Three Months Ended Nine Months Ended
March 31, March 31,
1998 1997 1998 1997
--------- ---------- ---------- ----------
Revenues $5,401,634 $ 2,225,555 $11,944,216 $9,630,445
Income (Loss) from Operations$ 69,021 $ (571,792) $ (35,728) $(1,066,281)
Net Income (Loss) $ 20,572 $(1,037,507) $ (97,187) $(1,625,450)
Basic and Diluted Income
(Loss) Per Share $ ** $ (0.07) $ ** $ (0.11)
========= ============ ========= ===========
**Less than $ 0.01 per share
**The remainder of this page left intentionally blank**
<PAGE>
NOTE 5: On or about May 19, 1998, Onsite entered into an Asset Purchase
Agreement and an Employment and Noncompetition Agreement with SYCOM
Enterprises, LLC ("SYCOM LLC"), SYCOM Corporation and/or SYCOM
Enterprises, L.P. ("SYCOM L.P."), and related entities for the
purchase by a to-be-formed wholly-owned subsidiary of Onsite, SYCOM
ONSITE Corporation ("SYCOM ONSITE"), of all of the assets, and the
assumption of specific liabilities, of SYCOM LLC in exchange for
1,750,000 shares of Onsite's Class A Common Stock. In addition,
pursuant to the Employment Agreement and Noncompetition Agreement,
SYCOM ONSITE will retain the services of all of the employees of,
and enter into a noncompete agreement with, SYCOM Corporation and
SYCOM L.P. in exchange for non-dividend preferred stock of Onsite
that is convertible into 15,750,000 shares of Onsite Class A Common
Stock. The preferred stock will be held in escrow until certain
performance-related conditions are met. Onsite's Board of
Directors will be increased by two members designated by SYCOM LLC.
The transaction is expected to be completed before June 30, 1998.
**The remainder of this page left intentionally blank**
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
BACKGROUND
Onsite is a comprehensive energy services company ("ESCO") involved in the
development, engineering, installation and operation of energy projects for
industrial, commercial and institutional facilities. By combining development,
engineering, analysis, project management and financial management skills,
Onsite provides a complete package of services, ranging from feasibility
assessment through construction and operation for energy efficiency projects
incorporating lighting, energy management systems, HVAC upgrades, cogeneration
and other energy efficiency measures. Onsite also provides comprehensive energy
supply (natural gas and electricity) services to commercial and industrial
customers related to the evolving restructured competitive retail market for
energy.
Unless the context indicates otherwise, reference to Onsite shall include all
of its wholly owned subsidiaries.
NINE MONTHS ENDED MARCH 31, 1998 COMPARED TO THE NINE MONTHS ENDED MARCH 31,
1997
RESULTS OF OPERATIONS. Revenues for the nine months ended March 31, 1998 were
$11,345,548 compared to $7,892,695 for the nine months ended March 31, 1997, an
increase of $3,452,853 or 43.7 percent. The increase in revenues was primarily
attributed to one larger sized energy efficiency contract in 1998, as well as
the addition of operating revenues from Onsite Business Services, Inc. ("OBS"),
which was acquired in October 1997.
Gross margin for the nine months ended March 31, 1998 was $3,048,953 or 26.9
percent of revenues, compared to $2,109,928, or 26.7 percent of revenues, for
the nine months ended March 31, 1997. The modest increase in gross margin as a
percentage of revenues was the result of a larger percentage of consulting
revenues, which generally provide higher gross margins.
Selling, General and Administrative ("SG&A") expenses were $2,866,013 for the
nine month period ended March 31, 1998, compared to $3,059,959 for the nine
months ended March 31, 1997. The reduction of $193,946 or 6.3 percent is
attributable to the continued efforts by Onsite to implement savings and
expense reductions in an effort to improve overall operating results.
Net other income/expense was $44,784 in other expense for the nine months ended
March 31, 1998 compared to $559,169 in net other expense for the nine months
ended March 31, 1997. Included in net other expense for the nine months ended
March 31, 1997, was a one time non-recurring loss on the sale of Onsite's
interests in a cogeneration system of $425,240.
Net income for the nine months ended March 31, 1998 was $121,481, or less than
$0.01 income per share, compared to a net loss of $1,509,200, or $0.14 loss per
share for the nine month period ended March 31, 1997. Per share numbers in 1998
were adjusted for dividends accrued on the convertible Series C Preferred
Stock.
Three Months Ended March 31, 1998 Compared to the Three Months Ended March 31,
1997
RESULTS OF OPERATIONS. Revenues for the three month period ended March 31, 1998
were $5,401,634 compared to $1,646,305 for the three months ended March 31,
1997, an increase of $3,755,329, or 228 percent. The increase in revenues is
largely due to one large contract signed in the most recent quarter and
revenues from OBS, which was acquired in October 1997.
Gross Margin was $1,246,904, or 23 percent of revenues for the three month
period ended March 31, 1998, compared to $324,043, or 19.7 percent of revenues
for the three month period ended March 31, 1997. The
increase in margin is largely attributable to higher margins on new contracts
and an increase in consulting revenue, which generally provides higher gross
margin.
SG&A expenses were $1,177,883 for the three months ended March 31, 1998,
compared to $857,085 for the three months ended March 31, 1997. The change was
attributable to the additional expenses acquired with OBS.
Net other income/expense was $44,011 in other expense for the three month
period ended March 31, 1998, compared to $465,715 in net other expense for the
three month period ended March 31, 1997, a decrease of $421,704 in net other
expense. As discussed above, the decrease is due to the $425,240 one time non-
recurring loss recorded on the sale of Onsite's interest in a cogeneration
system.
Net income for the three months ended March 31, 1998 was $20,572, or less than
$0.01 income per share, compared to net loss of $998,757, or $0.09 loss per
share for the three month period ended March 31, 1997.
LIQUIDITY AND CAPITAL RESOURCES. Onsite's cash and cash equivalents were
$511,897 as of March 31, 1998, compared to $526,894 as of June 30, 1997.
Working capital was $2,759,794 as of March 31, 1998 compared to a negative
working capital of $30,333 as of June 30, 1997. The increase in working
capital is largely due to the transaction, including the sale of securities,
with Westar Capital completed in October 1997.
Cash flows used by operating activities during the nine months ended March 31,
1998 were $1,571,740, compared to cash flows used by operating activities of
$913,876 for the nine months ended March 31, 1997, an increase of $657,864.
The increase in cash flow used by operating activities is due primarily to the
increase in accounts receivable and costs and estimated earnings in excess of
billings on uncompleted contracts as it relates to the increase in accounts
payable.
Cash flows used by investing activities were $327,597 for the nine month period
ended March 31, 1998, compared to cash flows provided by investing activities
of $778,166 for the nine month period ended March 31, 1997. The increase in
cash flows used by investing activities is due to the acquisition of additional
fixed assets for the nine month period ended March 31, 1998 whereas the nine
month period ended March 31, 1997 included cash flows provided by the sale of
Onsite's interest in the cogeneration system as discussed above.
Cash flows provided by financing activities were $1,884,340 during the nine
months ended March 31, 1998, compared to $587,134 for the comparable period
last year. The increase in cash provided by financing activities in the
current year includes $1,947,287 in proceeds from the issuance of stock to
Westar Capital, which is offset by $83,104 in repayment of long-term debt.
YEAR 2000. The Company is developing plans to address issues related to the
impact on its computer systems of the year 2000. Financial and operational
systems are being assessed and plans are being developed to address systems
modification requirements. The financial impact of making the required systems
changes is not expected to be material to the Company's consolidated financial
position liquidity and results of operations.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings - None
Item 2. Changes in Securities - Not Applicable
Item 3. Defaults upon Senior Securities - Not Applicable
Item 4. Submission of Matters to a Vote of Security Holders - Not
Applicable
Item 5. Other Information
On or about May 19, 1998, Onsite entered into an Asset Purchase Agreement and
an Employment and Noncompetition Agreement with SYCOM Enterprises, LLC ("SYCOM
LLC"), SYCOM Corporation and/or SYCOM Enterprises, L.P. ("SYCOM L.P."), and
related entities for the purchase by a to-be-formed wholly-owned subsidiary of
Onsite, SYCOM ONSITE Corporation ("SYCOM ONSITE"), of all of the assets, and
the assumption of specific liabilities, of SYCOM LLC in exchange for 1,750,000
shares of Onsite's Class A Common Stock. In addition, pursuant to the
Employment Agreement and Noncompetition Agreement, SYCOM ONSITE will retain the
services of all of the employees of, and enter into a noncompete agreement
with, SYCOM Corporation and SYCOM L.P. in exchange for non-dividend preferred
stock of Onsite that is convertible into 15,750,000 shares of Onsite Class A
Common Stock. The preferred stock will be held in escrow until certain
performance-related conditions are met. Onsite's Board of Directors will be
increased by two members designated by SYCOM LLC. The transaction is expected
to be completed before June 30, 1998.
With the exception of historical facts stated herein, the matters discussed in
this report are "forward looking" statements that involve risks and
uncertainties that could cause actual results to differ materially from
projected results. Such "forward looking" statements include, but are not
necessarily limited to, statements regarding anticipated levels of future
revenue and earnings from operations of Onsite, projected costs and expenses
related to Onsite's energy services agreements, and the availability of future
debt and equity capital on commercially reasonable terms. Factors that could
cause actual results to differ materially include, in addition to the other
factors identified in this report, the cyclical and volatile price of energy,
the inability to continue to contract sufficient customers to replace contracts
as they become completed, unanticipated delays in the approval of proposed
energy efficiency measures by Onsite's customers, delays in the receipt of, or
failure to receive necessary governmental or utility permits, or approvals, or
the renewals thereof, risks and uncertainties relating to general economic and
political conditions, both domestically and internationally, changes in the law
and regulations governing Onsite's activities as an energy services company and
the activities of the nation's public utilities seeking energy efficiency as a
cost effective alternative to constructing new power generation facilities,
results of project specific and company working capital and financing efforts
and market conditions, and other risk factors detailed in Onsite's Securities
and Exchange Commission filings including the risk factors set forth in
Onsite's Registration Statement on Form S-4, SEC File 33-66010. Readers of this
report are cautioned not to put undue reliance on "forward looking statements,
which are, by their nature, uncertain as reliable indicators of future
performance. Onsite disclaims any intent or obligation to publicly update these
"forward looking" statements, whether as a result of new information, future
events, or otherwise.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibit
10.88 Performance Based Energy Savings Agreement dated March 31, 1998, between
Onsite Energy Corporation and Unified School District No. 500, Wyandotte
County, Kansas
10.89 Engineering, Procurement and Construction Agreement between Onsite Energy
Corporation and Lighting Technology Services, Inc., dated as of March 31,
1998
10.90 Engineering, Procurement and Construction Agreement between Onsite Energy
Corporation and The Fagan Company, dated as of March 31, 1998
b) Reports on Form 8-K
Form 8-K filed November 12, 1997, as amended on January 12, 1998, regarding the
private placement by Onsite Energy Corporation of its securities with Westar
Capital, Inc.
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
ONSITE ENERGY CORPORATION
Dated: MAY 20, 1998 By: RICHARD T. SPERBERG
Richard T. Sperberg
Chief Executive Officer
Chief Financial Officer
ONSITE ENERGY CORPORATION PERFORMANCE BASED ENERGY SAVINGS AGREEMENT
<TABLE>
<CAPTION>
CONTRACTOR: Client:
<S> <C>
Onsite Energy Corporation Unified School District No. 500,
8912 Nieman Road Wyandotte County, Kansas
Overland Park, KS 66214 625 Minnesota Avenue
Kansas City, Kansas 66101
Corporate Headquarters:
701 Palomar Airport Road, Suite 200
Carlsbad, CA 92009
Program Data: Planned Service Data:
Date of this Agreement: MARCH , 1998 Anticipated Date of Commencement: DECEMBER 1, 1998
Savings Period: 10 YEARS PLUS
INSTALLATION PERIOD Duration of Planned Services: 10 YEARS
Total Project Fee: $5,930,576 First Year Monthly Monitoring Fee: $5,416.00 *
Payable in Advance
(* First Year Monitoring Fee of $64,992, payable in
monthly installments)
</TABLE>
SCHEDULES OF AGREEMENT
SCHEDULE TITLE ATTACHED
A. Energy Conservation Measures *
B. Energy Use Base *
C. Base Energy Rates *
D. Insurance *
E. Client's Facilities and Existing Equipment *
F. Measurement & Verification (M&V) Protocols *
G. Payment Schedule *
H. Stipulated Savings *
I. Client Disclosure Information *
J. Responsibilities of Contractor & Client *
K. Annual Program Costs *
L. Planned Service *
This Onsite Energy Corporation Performance Based Energy Savings Agreement (this
"Agreement") is entered into by and between Onsite Energy Corporation of 8912
Nieman, Overland Park, Kansas 66214, ("Contractor") and the Unified School
District No. 500, Wyandotte County, Kansas ("Client") identified above, and
consists of this facing sheet, Exhibit I, and Schedules A through L attached
hereto. In consideration of the foregoing (comprising a part of the written
agreement between the parties) and the additional terms and conditions attached
hereto as Exhibit I, the parties agree by signing this facing sheet below to be
bound by the foregoing and attached Exhibit I.
Onsite Energy Corporation: Unified School District No. 500, Wyandotte
County, Kansas:
By: __________________________ By: ______________________________
Print Print
Name: RICHARD T. SPERBERG Name: GEORGE BREIDENTHAL
Title: PRESIDENT AND CEO Title: PRESIDENT, BOARD OF EDUCATION
Date Signed: __________________________ Date Signed: _________________________
<PAGE>
EXHIBIT I
ONSITE ENERGY CORPORATION PERFORMANCE BASED ENERGY SAVINGS
AGREEMENT TERMS AND CONDITIONS
PRELIMINARY STATEMENT
A. Client desires to install various EC Measures
for the purpose of achieving reductions in Client's
operating costs including energy consumption, demand and
maintenance.
B. Contractor has expertise in the design,
implementation and monitoring of EC Measures.
C. Contractor has analyzed energy use at the
Client's facilities described in Schedule E (the "Client's
Facilities") and made recommendations as set forth herein
concerning the EC Measures and the Program.
D. Contractor will guarantee that Client will
obtain the energy savings set forth in this Agreement
(calculated as set forth in this Agreement), and will
assist Client in obtaining the agreement of Westar Capital,
Inc. ("Westar") to guarantee Contractor's performance under
this Agreement, including any energy savings guarantee as
set forth herein.
1. DEFINITIONS:
A. Performance Based Guaranteed Energy
Savings Program ("Program"): The full complement of EC
Measures to be designed, implemented and monitored by
Contractor pursuant to this Agreement, and the energy
savings guarantee set forth in Section 5 of this Agreement.
B. Energy Conservation Measures ("EC
Measures"): Those Energy Conservation Measures set forth in
the attached Schedule A.
C. Energy Conservation Savings ("EC
Savings"): Those savings achieved through reduction in
energy consumption, demand or maintenance costs by
implementation of the EC Measures identified by Contractor,
to be calculated as set forth in Section 4.
D. Base Energy Rates ("Base Energy Rates"):
The energy rates described on Schedule C and increased each
year on a cumulative basis by 5.40 percent beginning on the
first anniversary of the Commencement Date and continuing
on the first day of each Contract Year thereafter used by
Contractor, as set forth in Section 4, to calculate the EC
Savings for the various EC Measures.
E. Substantial Completion ("Substantial
Completion"): When substantially all of the items of new
equipment included in the EC Measures are operational and
Contractor notifies Client thereof in writing, and Client
confirms the same in writing to Contractor, which
confirmation shall not be unreasonably withheld.
F. Energy Savings Commencement Date
("Commencement Date"): The first day of the month following
Substantial Completion of all EC Measures.
G. Contract Year ("Contract Year"): Each one-
year period following the Commencement Date.
H. Energy Use Base ("Energy Use Base"): The
historical energy usage and demand of the Client's
Facilities and existing equipment are described in Schedule
B. In determining the Energy Use Base, Contractor
identified factors which may affect energy use for the
Client's Facilities and existing equipment, including but
not limited to: hours and levels of occupancy; adjustments
in labor force; building use and operational procedures;
temperature, humidification and ventilation levels;
installed lighting and scheduled use; building construction
and size; general level of repair and efficiency of heating
and air conditioning equipment and other energy using
equipment; and amount of heating and air conditioning
equipment and other energy using equipment.
I. Equipment ("Equipment"): All equipment
provided to Client by Contractor pursuant to this
Agreement.
J. Installation Period ("Installation
Period"): The period of time beginning on the date of this
Agreement and ending on the Commencement Date.
2. EC MEASURES:
A. Client authorizes Contractor to design,
implement and monitor the Program. Contractor shall supply
all labor, materials, equipment, management and supervision
necessary to design, install and commission all EC
Measures. Contractor's responsibilities for each of the EC
Measures described in Schedule A shall include:
(1) providing all necessary
designs, plans and specifications;
(2) selecting subcontractors;
(3) awarding subcontracts;
(4) obtaining and evaluating
submitted drawings on all Equipment to be provided;
(5) progress inspections during
installation;
(6) training Client's personnel on
proper operation of the newly installed Equipment;
(7) final inspection,
(8) commissioning or start-up of
each item of Equipment; and
(9) measurement and verification of
EC Savings.
3. MONITORING:
A. Client acknowledges and consents to
Contractor's right to monitor EC Savings and Program
performance by conducting on-site measurements, including
but not limited to reading meters, and installing and
observing on-site monitoring equipment. Client shall
cooperate fully with any such measures instituted by
Contractor pursuant to this subsection. Contractor shall
not institute any measures which unreasonably interfere
with the business of Client conducted at the Client's
Facilities.
B. For the purpose of documenting EC Savings,
Contractor shall prepare quarterly measurement and
verification reports from and after the Commencement Date.
Schedule F details the measurement and verification
protocols (the "M&V Protocols") and report content.
C. Client shall notify Contractor within
twenty-four (24) hours of the discovery or obtaining actual
knowledge of any malfunction in the operation of any
Equipment, or of the interruption or alteration of the
energy supplies to the Client's Facilities. Client shall
notify Contractor as soon as possible after the discovery
or obtaining actual knowledge of the existence of any
emergency or dangerous condition affecting the Equipment.
If Client delays in so notifying Contractor of a
malfunction or emergency, Contractor may make reasonable
adjustments to the energy savings guarantee for financial
loss due solely to the delay.
D. Client shall forward copies of its monthly
utility bills to Contractor within ten (10) working days of
receipt by Client, or Client and Contractor may make
arrangements for duplicate copies of such bills to be
forwarded directly to Contractor.
E. Contractor will provide Client training
throughout the Term of this Agreement (as defined in
Section 28 hereof) in accordance with Schedule L.
4. EC SAVINGS:
A. Within forty-five (45) days after receipt
from the Client of its twelfth monthly utility bill after
the Commencement Date, and for each Contract Year during
the Term of this Agreement, Contractor shall submit an
annual energy savings report ("Energy Savings Report") with
a calculation of the EC Savings to Client in accordance
with this Agreement. The annual EC Savings will be
determined by using the M&V Protocols documented in
Schedule F.
B. EC Savings for each Contract Year shall
consist of utility cost savings derived from the sources
indicated below. From and after the Commencement Date, EC
Savings shall be computed as specified in this section and
further detailed in Schedule F. Four different types of EC
Savings may be achieved under this Agreement: Energy Use
Savings (1), Fuel Switch Savings (2), Energy Rate Savings
(3) and Stipulated Savings (4). EC Savings will be
determined by adding together the Energy Use Savings, Fuel
Switch Savings, Energy Rate Savings and Stipulated Savings
for each Contract Year. Regardless of whether amounts
saved are classified as Energy Use Savings, Fuel Switch
Savings, Energy Rate Savings or Stipulated Savings,
Contractor and Client agree that no dollars saved as a
result of implementation of the EC Measures will be double-
counted in calculating EC Savings.
1) Energy Use Savings are those savings achieved
through reduction in energy consumption (including
energy and demand savings). Contractor will
calculate Energy Use Savings achieved at the
Client's Facilities according to the M&V Protocols
detailed in Schedule F. In no case, however,
shall energy unit costs utilized in the
calculations be less than the Base Energy Rates.
The dollar amount arrived at by such calculation
shall be the Energy Use Savings for such period.
2) Fuel Switch Savings are those savings achieved
by switching to a more economical source of
energy. Contractor will calculate Fuel Switch
Savings by subtracting the dollar value of the
alternate energy utilized during the applicable
period from the Energy Use Savings as determined
in Section 4(B)(1). The dollar value of the base
energy consumption which would have been utilized,
is determined by multiplying the number of units
of base energy consumption by the then current
unit costs. Savings will be determined by
subtracting the alternate energy costs from the
base energy costs. In no case, however, shall
unit cost utilized in this specific calculation be
more than the Base Energy Rate for said alternate
energy used.
3) Energy Rate Savings are those savings achieved
through a reduction in fuel and/or electricity
rates by one of the following means:
a) Improved rate from local electric utility
company, natural gas or fuel company
occurring after the date of this Agreement,
b) Direct purchase of natural gas or
electricity from a supplier other than the
local electric utility company, natural gas
or fuel company, or
c) Bulk purchase of fuel.
Contractor will calculate the Energy Rate Savings
obtained for each period by multiplying energy
consumption and demand for the applicable period
by the energy rate reduction which is the amount
by which the Base Energy Rate exceeds the then
current rate. There will be no Energy Rate
Savings calculation or penalty if the current
energy rate exceeds the Base Energy Rate. There
will be no Energy Rate Savings calculation unless
an energy rate reduction has been achieved either
directly or indirectly by the Contractor through
one of the means listed in this Section 4(B)(3).
4) Stipulated Savings are
those savings that Contractor and Client have
agreed will be achieved and are set forth in
Schedule H.
5. ENERGY SAVINGS GUARANTEE:
A. Subject to the provisions of Section 6
hereof, Contractor guarantees that Client will realize EC
Savings from the EC Measures during the Term of this
Agreement of not less than Total Project Costs (as set
forth in Schedule K). If the EC Savings realized do not
meet or exceed the Total Project Costs, Contractor
guarantees to make payment of any shortfall to Client in
accordance with the terms of
this Section. Additionally, Contractor shall obtain a
guarantee of the payment of any shortfall in EC Savings
from Westar.
D. Within sixty (60) days after the
Commencement Date, or earlier if otherwise specified in
this Agreement, Contractor will calculate the savings
achieved during the Installation Period and advise Client
of the amount of such savings. Savings shall be calculated
in accordance with the methods stated in this Agreement
with review and concurrence by Client. For purposes of
this reconciliation, such Installation Period savings shall
be considered savings achieved during the first Contract
Year of the Term of this Agreement. The Stipulated Savings
shall be credited to the EC Savings on the Commencement
Date and each Contract Year thereafter.
If the EC Savings during a specific Contract Year are less
than the Total Project Costs for the same Contract Year, at
Client's option Contractor may apply the difference
(shortfall) against any unpaid balances then due from
Client under the Agreement. If there are any remaining
amounts, Client may elect to have Contractor carry over the
difference to the next Contract Year so as to increase the
Total Project Costs attributable to that Contract Year or,
at Client's election, pay Client the remaining amounts.
Upon the mutual agreement of the parties, Contractor may
also provide additional products or services, in the value
of the shortfall, at no additional cost to the Client.
Where shortfalls have occurred, Contractor reserves the
right, subject to the approval of the Client, which shall
not be unreasonably withheld, to implement additional
operational improvements or conservation measures, at no
cost to the Client, that will generate additional savings
in future Contract Years. Client shall notify Contractor
within forty (45) days of Client's receipt of the Energy
Savings Report of Client's decision required under this
paragraph regarding the payment and/or application of any
shortfall. If Client elects to require Contractor to pay
any shortfall amounts in accordance with this paragraph,
Contractor shall pay such amounts within thirty (30) days
of receipt of said notification from Client. If the EC
Savings during a specific Contract Year are greater than
the Total Project Costs for the same Contract Year,
Contractor may carry over the difference (surplus) to
future Contract Year(s) and use the same to offset any
shortfall in EC Savings that may occur in such future
Contract Year(s).
6. CHANGES IN FACTORS AFFECTING ENERGY USE:
A. Client shall notify Contractor within ten (10) business
days of any change in its operations or the Client's
Facilities which may have a material impact on any factor
as set forth in the Energy Use Base, Schedule B.
Contractor will determine the effect that any such change
will have on EC Savings.
B. If a material change in any of the factors involved in
the Energy Use Base occurs and results in a material change
in consumption, then the dollar level of energy savings to
be guaranteed by Contractor may be adjusted per the M&V
Protocols in Schedule F.
C. Client and Contractor may from time to time desire to
make changes for the express purpose of increasing EC
Savings. It is agreed that these changes will only be made
with the prior consent of both parties, which will not be
unreasonably withheld. The EC Savings will not be adjusted
to reflect any changes agreed to under this subparagraph.
7. WARRANTIES:
A. Client shall maintain all EC Measures
installed under this Agreement in a manner consistent with
the manufacturer's recommended maintenance schedules and
procedures, which Contractor will provide to Client.
Client shall provide Contractor with quarterly
service/maintenance checklists. Contractor shall, if it
deems it necessary, inspect the Client's Facilities
annually.
B. For the benefit of Client, Contractor
shall obtain from all vendors and manufacturers (as
applicable) of the Equipment installed or materials used in
the EC Measures such warranties against defects and
deficiencies in design, material and workmanship as are
generally given in the trade to an owner or contractor.
Except as otherwise set forth in this Agreement, Contractor
makes no warranties or representations of any kind with
respect to any of the Equipment or materials supplied by
Contractor or by any vendor or subcontractor hereunder, and
all Equipment and materials hereunder is delivered as is,
and the sole warranties and representations that shall
apply with respect to such Equipment and materials shall be
those warranties and representations, whether statutory,
written, oral, express or implied (including warranties of
fitness for a particular purpose or merchantability) that
have been given or made by suppliers or subcontractors to
Contractor or by manufacturers of such equipment to end
users. This warranty is expressly in lieu of all other
warranties except as are expressly stated in this
Agreement. Contractor hereby assigns to Client all of
Contractor's interest, if any, in all Equipment vendors and
manufacturers' warranties and guarantees, express or
implied, issued on or applicable to the Equipment installed
and materials used in EC Measures. Client shall hold
Contractor harmless for any loss, damage or injury to
persons or property caused by the Equipment and not caused
in whole or in part by Contractor. No representation or
warranty by the suppliers or manufacturers is binding on
Contractor nor shall breach of such warranty relieve Client
of Client's obligations to Contractor. During the
applicable warranty periods, Contractor shall assist Client
in the administration of said warranties.
C. In connection with any Equipment, property or services
described herein or utilized in any Program,
each party hereby disclaims any liability for consequential,
indirect or special damages incurred by the other even
if said party is advised as to the possibility of such
consequential, indirect or special damages.
D. Contractor accepts the relationship of trust and
confidence established by this Agreement and
covenants with Client to utilize Contractor's commercially
reasonable skill, efforts and judgment in furthering the
interests of Client; to furnish efficient business
administration and supervision to make commercially reasonable
efforts to furnish at all times an adequate supply of workers
and materials; and to perform the work set forth in
this Agreement (the "Work") in an expeditious and economical
manner consistent with the interests of Client. Client
agrees to exercise commercially reasonable efforts to enable
Contractor to perform the Work in an expeditious manner
by furnishing and approving in a timely way information
required by Contractor and by making payments to Contractor
in accordance with the requirements of this Agreement.
E. Contractor shall be responsible for initiating, maintaining,
planning and supervising all safety
precautions and programs in connection with the Work.
F. Via the EC Savings guarantee set forth in this Agreement,
Contractor hereby warrants to Client the
appropriateness of the EC Measures designed and implemented by
Contractor.
G. Contractor shall, at its own cost and expense, obtain all
necessary permits, licenses, approvals or
consents required by law or regulation to perform the Work at
the Client's Facilities as set forth in this
Agreement. Contractor also shall give all notices, pay
all fees and otherwise comply with all applicable laws,
ordinances, rules and regulations.
H. On or before the date of execution of this Agreement, and
on or before September 30 of each year
thereafter, Contractor shall give Client copies of
Contractor's then current fiscal year financial statements,
including balance sheet for Contractor's last fiscal year.
8. REPRESENTATION AND WARRANTIES OF CLIENT:
A. Client hereby warrants and represents to
Contractor that: (i) Client has provided Contractor with
all records heretofore requested by Contractor and, to
Client's knowledge, the information set forth therein is,
and all information in other records to be subsequently
provided by the Client pursuant to this Agreement will
be, true and accurate in all material respects; (ii)
except as disclosed by Client to Contractor, Client has
not entered into any contracts or agreements with other
persons or entities regarding the provision of energy
management services or with regard to servicing any of
the Equipment located on the Client's Facilities; and
(iii) Client presently intends to continue the use of the
Client's Facilities in a manner similar to its present
use, except as is disclosed by Client in writing on
Schedule I to this Agreement.
Client will provide Contractor with copies of any
successor or additional contracts for the management or
servicing of pre-existing equipment or the Equipment
which may be executed from time to time hereinafter
within ten (10) days after execution thereof.
9. AFFIRMATIVE COVENANTS OF CLIENT:
A. The parties acknowledge and agree that the
EC Savings will not likely be obtained unless certain
procedures and methods of operation designed for energy
conservation shall be implemented and followed by Client
on a regular basis. Client agrees that it shall exercise
commercially reasonable efforts to follow and implement
the procedures and methods of operation and maintenance
set forth in this Agreement and the Schedules hereto. In
addition, Client agrees to continue and follow the
operational procedures set forth by Contractor.
Client agrees that Contractor shall have the right, with
prior notice, to inspect the Client's Facilities to
determine Client's compliance with its obligations as set
forth above. In the event that any inspection discloses
that Client has failed on the date of the inspection to
be in compliance with any items set forth above, then the
portion of EC Savings attributable to the specific
facility of the Client's Facilities at which such failure
occurred shall be assumed to have been achieved for and
with respect to the portion of the applicable Contract
Year during which such failure shall have existed.
10. FEES:
A. Client shall pay Contractor the Total Project Fee, as
set forth on the facing page of this Agreement and in
Schedule G, and the Annual Monitoring Fee, as set forth
on the facing sheet of this Agreement and in Schedule L.
The Annual Monitoring Fee shall be increased annually at
the rate of five percent (5%) of the initial Contract
Year's cost, with the first such increase to be effective
twelve (12) months after the Commencement Date. The
Total Project Fee is payable in the manner set forth in
Section 13 below following the date of invoices sent to
Client by Contractor, either on a monthly basis or upon
the occurrence of "milestone" dates or events specified
in Schedule G.
11. WORKING HOURS:
A. It is agreed that all installation work
except lighting renovations shall be conducted during
normal working hours, unless otherwise mutually agreed to
by the parties. The extra expense incurred for overtime
work shall be paid by the party requiring it.
Additionally, Contractor agrees to conduct all work in a
manner which minimizes disruption to Client's educational
program and business operations.
12. TERMINATION OF CONTRACT:
A. Contractor shall have the option to terminate this
Agreement without further responsibility or liability only
upon the following conditions:
(1) All or any part of Client's ownership interest in
the Client's Facilities is transferred voluntarily or
involuntarily by any means including but not limited
to the transfer of any ownership interest in the
Client.
(2) If Client defaults in any payment or any other
obligation to Contractor under this Agreement, and
such default is not cured within fifteen (15) days
(for payment) or sixty (60) days (for any other
obligation) of notice by Contractor to Client of such
alleged default.
C. In the event of the termination of this Agreement by
either party, Contractor and Client shall continue to be
responsible for their respective payment obligations
accrued under this Agreement prior to the date of
termination. Client agrees to pay Contractor all Annual
Monitoring Fees and Total Project Fees incurred or accrued
prior to the date of termination.
D. Client reasonably believes that sufficient funds will be
obtained to pay all monies due during the Term of this
Agreement (as the same may be extended in accordance with
Section 28 hereof), and hereby covenants that it will do
all things lawfully within its power to obtain, maintain
and properly request and pursue funds from which the
payments may be made, including making provisions for such
payments to the extent necessary in each budget submitted
for the purpose of obtaining funding, using commercially
reasonable efforts to have such portion of the budget
approved. It is Client's intent to make all payments
required hereunder, if funds are legally available
therefor, and in that regard, Client represents that the
use of the Equipment is essential to its proper, efficient
and economic operation.
In the event no funds or insufficient funds are
appropriated and budgeted or are otherwise legally
available by any means whatsoever in any fiscal period
for payments due under this Agreement, then Client will
immediately notify Contractor or its successor or
assignee of such occurrence and this Agreement shall
terminate as of the last day of the fiscal period for
which appropriations were received without penalty or
further expense to Client except as otherwise expressly
provided for herein and except as to the portions of
payments required hereunder for which funds shall have
been appropriated and budgeted or otherwise available.
Client has informed Contractor that funds sufficient to
pay the Total Project Fee have been allocated, and thus
are available therefor.
Mf\work\onsite\filings\10q exhibit 10.88\<<Date>> 2
<PAGE>
13. TERMS OF PAYMENT:
A. Contractor shall submit to Client invoices for the work
performed to the date of each invoice in accordance with
Schedule G. Invoices must be received by Client within
five (5) days of their date. All invoices of Contractor
shall be due and payable by Client within thirty (30) days
of the invoice date. Interest at rate of ten percent (10%)
per annum will accrue on all unpaid balances more than
thirty (30) calendar days after the invoice date.
B. Prevailing wage compliance documentation, if required,
and conditional lien waivers from Contractor shall be among
the evidence required by Client to be submitted by
Contractor with each invoice. With each invoice,
Contractor shall submit partial lien waivers from
Contractor and all applicable subcontractors and suppliers,
which waivers shall be submitted to Client prior to the
time that the next succeeding invoice is submitted by
Contractor to Client.
14. INDEPENDENT CONTRACTOR:
A. Contractor is an independent Contractor
and is not an employee, partner, legal representative,
joint venturer or agent of Client. Contractor does not
in any way assume any of the contractual or other
obligations of Client to other parties under any
agreements referred to herein or otherwise. Client is not
an employee, partner, legal representative, joint
venturer or agent of Contractor. Client does not in any
way assume any of the contractual or other obligations of
Contractor to other parties under agreements referred to
herein or otherwise.
15. CASUALTY OR CONDEMNATION OF FACILITIES:
A. Any fire, flood or other casualty or
condemnation affecting any portion of the Client's
Facilities may be a material change. If so, the notice
thereof shall be given to Contractor by Client and the
appropriate modifications, if any are required, to the EC
Savings guarantee will be made. If any fire, flood or
other casualty or condemnation renders a majority of the
Client's Facilities incapable of being occupied and the
affected portion is not or cannot be reconstructed or
restored within one hundred twenty (120) days from the
date of such casualty or condemnation, either party may
terminate this Agreement by delivery of written notice to
the other. Any such termination shall not be considered
a breach of this Agreement.
16. NOTICES:
A. Any notice required or permitted to be given under
this Agreement shall be sufficient if in writing, and if
sent by a nationally recognized overnight carrier, or by
registered or certified mail, postage prepaid, return
receipt requested to either party at its address
specified on the facing sheet to this Agreement.
17. GOVERNING LAW:
A. This Agreement is made in the State of Kansas and
shall be subject to and governed by the laws of the State
of Kansas, and all questions concerning its validity,
construction and administration shall be determined under
such laws.
Mf\work\onsite\filings\10q exhibit 10.88\<<Date>> 3
<PAGE>
18. INDEMNIFICATION:
A. To the fullest extent permitted by law, Contractor shall
indemnify and hold harmless Client, its agents and
employees, from and against claims, damages, losses and
expenses, including but not limited to reasonable
attorneys' fees, arising out of or resulting from
performance of the Work, which is caused in whole or in
part by the negligent acts or omissions of Contractor, a
subcontractor of Contractor, anyone directly or indirectly
employed by them or anyone for whose acts them may be
liable. In the event any action is brought therefor
against Client or any of its agents or employees,
Contractor shall assume full responsibility for the defense
therefor. Upon Contractor's failure to do so on proper
notice, Client reserves the right to defend such action and
to charge all reasonable costs thereof to Contractor. Such
obligation shall not be construed to negate, abridge or
reduce other rights or obligations to indemnify which would
otherwise exist as to a party or person described in this
paragraph.
B. Claims against Client may be pursued in accordance with,
and subject to, the Kansas Tort Claims Act, K.S.A. 75-6101,
ET SEQ., as amended. Client agrees to be responsible for
claims, liability, causes of action or damages, including
reasonable attorneys' fees, arising directly or indirectly
from the acts or omissions of Client's employees and
agents.
19. DOCUMENTS:
A. All drawings, designs and specifications
prepared by Contractor for Client hereunder shall remain
the property of Contractor until such time as the Total
Project Fee has been paid in full, at which time said
documents shall become the property of Client. Client
grants Contractor a perpetual, non-exclusive and royalty-
free license to use all such drawings, designs and
specifications. Without specific written consent,
however, Contractor shall not use Client's name in
connection with any such drawings, designs and
specifications.
20. SEVERABILITY:
A. This Agreement shall be severable.
Accordingly, to the extent that any part of the Agreement
is unenforceable for any reason whatsoever, the remaining
parts of this Agreement shall remain in full force and
effect.
21. ASSIGNMENT:
A. This Agreement is not assignable by Client
or by Contractor without the prior written consent of the
other party.
22. SUCCESSORS AND ASSIGN:
A. The obligations of this Agreement shall be
binding on the successors and assigns of Client and of
Contractor.
23. INSURANCE:
A. Contractor and Client at all times during
the term of this Agreement shall carry the types of
insurance coverage as set forth in the attached Schedule
D.
B. Contractor shall be required to purchase and maintain
in force for the duration of this Agreement, from
insurance companies authorized to conduct business in the
State of Kansas, (a) general liability, providing bodily
injury and property damage coverage in the minimum amount
of $2,000,000 per person and $2,000,000 per occurrence,
(b) automobile liability insurance with the minimum
amount of $1,000,000, with a deductible not in excess of
$5,000, (c) workers compensation insurance as required by
the laws of the State of Kansas, and (d) excess coverage
or umbrella coverage in the minimum amount of $5,000,000.
Contractor also agrees to have Client named as an
additional insured on all such insurance policies and to
deliver, or cause to have delivered, to Client
certificates of insurance evidencing the appropriate
insurance coverage containing a provision that at least
thirty (30) days prior written notice be given to Client
by the insurance company prior to cancellation or
alternation in the event of cancellation, reduction in
coverage, or non-renewal of the insurance. Contractor
also shall confirm that any of its subcontractors have
adequate insurance, including workers' compensation, to
protect the interests of Client.
C. At all times during the Term of this Agreement
following the installation of any or all of the EC
Measures, Client shall maintain in full force and
effect, at its expense, property and liability
insurance on the Premises and on the Equipment for
the replacement value thereof. Client shall bear
the entire risk of loss with respect to any
damage, destruction, loss or theft of the
Equipment after installation of the same by
Contractor, whether partial or complete.
Contractor shall ensure that its subcontractors
carry installation floaters covering the Equipment
being installed in the performance of the Work
while such equipment and materials are in transit
or at the Client's Facilities prior to
installation, in an amount equal to the cost to
replace the Equipment with like kind and quality.
This installation floaters insurance shall be on
an "all risk" basis including, but not limited to,
the perils of fire, vandalism, malicious mischief
and theft.
24. MEDIATION:
A. Any dispute, controversy or claim arising
out of or relating to this Agreement or any breach or
alleged breach hereof, shall, upon the request of any
party involved, be submitted to mediation by a mediator
mutually agreed upon by the parties. If the parties do
not agree upon a mediator, or if the mediation does not
result in a resolution of the dispute between the
parties, then the parties shall be free to exercise any
and all rights and remedies which either may have under
applicable law. No mediation statement or documents
shall be admissible in court without the express written
consent of the other party.
25. PRIOR AGREEMENTS:
A. This Agreement supersedes the terms and
conditions of any prior agreements, understandings or
representations, oral or written, between the parties.
26. SUBCONTRACTORS:
A. Prior to the execution of any subcontracts, Contractor
agrees to provide to Client a list of all
subcontractors and suppliers which Contractor intends to
utilize in completing the Work. Contractor shall not
engage any subcontractor to which Client shall have an
objection. Also, Contractor shall not install or use any
equipment, materials or supplies to which Client has an
objection. Additionally, Client may designate specific
subcontractors or suppliers from whom Contractor shall
obtain bids. Client may not, however, prohibit Contractor
from obtaining bids from other subcontractors or suppliers.
Contractor shall not be required to contract with
anyone to whom Contractor has reasonable objection.
<PAGE>
27. NONDISCRIMINATION:
A. Contractor shall not discriminate against any employee, applicant for
employment or subcontractor or supplier on the basis of race,
religion, color, sex, handicap or national origin.
28. TERM:
A. The term of this Agreement (the "Term") shall be for a period
commencing on the date of execution hereof and
ending on June 30, 1999. The Agreement shall be automatically
renewed for successive one-year terms, commencing
on July 1{st} of each succeeding year, until the date ten
(10) years from the Commencement Date, unless Client
notified Contractor in writing of its intent to terminate
this Agreement within thirty (30) days prior to the
renewal date of July 1st.
UNIFIED SCHOOL DISTRICT NO. 500,
WYANDOTTE COUNTY, KANSAS
ENGINEERING, PROCUREMENT AND CONSTRUCTION AGREEMENT
SUBCONTRACTOR: LIGHTING TECHNOLOGY SERVICES, INC.
SCOPE: LIGHTING
ADDRESS: 1715 E. Wilshire Ave., Suite 724
Santa Ana, CA 92705
TELEPHONE: 714/550-7223 CA CONTRACTORS LICENSE NO. 675901
FAX: 714/550-7226
This Engineering, Procurement and Construction Agreement (this "Agreement")
is made effective as of March 31, 1998, by and between Onsite Energy
Corporation, a Delaware corporation having its principal offices at 701
Palomar Airport Road, Suite 200, Carlsbad, CA 92009 ("Onsite"), and
Lighting Technology Services, Inc., a California corporation having its
principal place of business at 1715 East Wilshire Avenue, Suite 724, Santa
Ana CA 92705 ("Subcontractor").
SECTION 1. STATEMENT OF WORK. In exchange for the consideration set
forth in Section 3 below, Subcontractor agrees to furnish all materials,
labor, tools, equipment and supplies necessary to perform all of the work
set forth in EXHIBIT 1 attached hereto (the "Work") for the energy
efficiency project (the "Project") being implemented by Onsite at the
facilities set forth on EXHIBIT 2 attached hereto (the "Premises") for
Unified School District No. 500, Wyandotte County, Kansas ("Customer"), all
in accordance with the Contract Documents, which mean and include (i) this
Agreement and all exhibits, schedules and amendments hereto; (ii) the scope
of the Work attached hereto as EXHIBIT 1; and (iii) any final plans and
specifications as modified and approved by Onsite, Customer and
Subcontractor.
SECTION 2. PREVAILING WAGE. To the extent required by law, all Work shall
be performed in compliance with applicable prevailing wage laws, including
as set forth in the General Decision No. KS970012 for Wyandotte County,
Kansas, as the same may be amended or updated from time to time, a copy of
which is attached hereto as EXHIBIT 3, or other applicable state prevailing
wage determinations; provided, however, that by attaching a copy of the
same, nothing herein shall be deemed to relieve Subcontractor of its
obligation to pay prevailing wages in accordance with any other trade rate
determination if the Work requires the same. If requested by Onsite,
Subcontractor shall provide Onsite with certified copies of Subcontractor's
payroll.
SECTION 3. PAYMENTS. Onsite agrees to pay Subcontractor for the materials
furnished and the Work performed in accordance with this Agreement the sum
of One Million Six Hundred Thousand Thirty-Three Dollars ($1,600,033),
which amount includes all applicable sales and other taxes, and all
applicable permit and license fees and costs (as applicable, the "Contract
Price"). Unless otherwise instructed by Onsite, Subcontractor shall
initiate the Work upon receipt from Onsite of a written notice to proceed
(the "Notice to Proceed").
Onsite shall pay Subcontractor for the Work in accordance with the Project
Milestone Schedule below. Upon Completion (as defined below) of the
applicable portion of the Work in accordance with the Project Milestone
Schedule below, Subcontractor shall furnish Onsite a detailed invoice (each
an "Invoice") for such Work, accompanied by such substantiating data as
Onsite and/or Customer may reasonably require, including vendors and
subcontractor's lien releases and invoices. Onsite shall pay Subcontractor
the amount of each Invoice in accordance with the Project Milestone
Schedule below. Any Invoice not paid in accordance therewith shall be
deemed delinquent and shall bear interest from the date of such invoice at
the rate of prime plus two percent (2%) per month until paid in full. Such
interest shall not exceed the maximum rate permitted by law.
Upon Final Acceptance, as defined below, Subcontractor shall provide to
Onsite an invoice (the "Final Invoice") (i) summarizing and reconciling all
previous payments on Invoices; and (ii) setting forth all amounts due and
owing by Onsite to Subcontractor for work performed by Subcontractor per a
Contract Change Order (as defined below) ("Contract Change Order Work").
Within thirty (30) days of the receipt and approval of the Final Invoice by
Onsite, Onsite shall pay Subcontractor (i) the remaining balance, if any,
of the Contract Price due and owing to Subcontractor; and (ii) any amounts
due and owing for Contract Change Order Work (the "Final Payment").
Payments will be made to Subcontractor in accordance with the following
Project Milestone Schedule within five (5) business days of Onsite's
receipt of any requisite corresponding payment from Customer:
1. Upon receipt of the Notice to Proceed $480,009.90
(30% of the Contract Price)
1. Monthly progress payments based on the percentage $960,019.80
of the Work completed up to 90% of the Work
(60% of the Contract Price)
3. Upon Final Acceptance (as defined below) by Customer $160,003.30
of the Work (10% of the Contract Price)
CONTRACT PRICE: $1,600,033.00
Subcontractor acknowledges that Onsite previously issued Purchase Order No.
5KCKSD-001 to Walters Wholesale Electric Co. ("Walters") in the amount of
Six Hundred Seventy-Two Thousand Seven Hundred Seventy-Three Dollars
($672,773) for the purchase of certain equipment and materials for the
Project (the "PO"). Onsite may (and currently intends to) assign the PO to
Subcontractor and increase the Contract Price accordingly (to reflect the
outstanding balance on the PO (that is, the above amount less any amounts
paid by Onsite to Walters under the PO) at the time of assignment), and
Subcontractor hereby agrees to accept such assignment and upon such
assignment, assumes all liabilities thereunder, agrees to make all payments
required under the PO, and agrees to indemnify and hold harmless Onsite
from and against any and all liabilities and obligations under, arising out
of or associated with the PO. Upon assignment of the PO, the payments set
forth in the Project Milestone Schedule above shall be revised on a pro
rata basis to include the outstanding balance of the PO.
"Acceptance" is contingent upon successful completion of some or all of the
Work, as applicable ("Completion"), including but not limited to a post-
installation inspection of the Work by Onsite, at Onsite's option, and the
execution by Customer and Subcontractor of an Interim Certificate of
Completion and Acceptance (substantially in the form attached hereto as
EXHIBIT 4 and incorporated herein) or other form of written evidence from
Customer of its acceptance of the applicable portion of the Work,
accompanied by documented evidence (in the form of lien releases and
similar documents), as applicable and at Onsite and/or Customer's option,
that all Subcontractor's obligations to laborers, subcontractors,
materialmen and others who have Mechanics Lien Rights or other legal claims
related to the Project have been satisfied. "Final Acceptance" shall be
deemed to occur upon execution by Customer and Onsite of any form of
written evidence from Customer of its final acceptance of the Work.
SECTION 4. SCOPE OF AGREEMENT. Subcontractor certifies and agrees that
Subcontractor is fully familiar with all terms, conditions and obligations
of the Contract Documents, the location of the Project, and the conditions
under which the Work is to be performed, and that Subcontractor enters into
this Agreement based upon Subcontractor's investigation of all such matters
and is in no way relying upon any opinions or representations of Onsite or
Customer regarding the same; provided, however, that Onsite acknowledges
that Subcontractor presented its bid for the Project based on the scope of
the Work as provided to Subcontractor by Onsite. It is also agreed and
understood that Subcontractor has relied on manufacturer's information and
specifications for equipment and that Subcontractor will not be bound by
any misrepresentations or falsities pertaining to the information provided
by such manufacturers. It is further agreed that Contract Documents are
incorporated in this Agreement by this reference, with the same force and
effect as if the same were set forth at length herein, and that
Subcontractor and its subcontractors will be and are bound by any and all
of said Contract Documents insofar as they relate in any part or in any
way, directly or indirectly, to the Work covered by this Agreement.
Additionally, Subcontractor agrees to comply with any security, and health
and safety, requirements of Customer applicable to the performance of the
Work.
SECTION 5. CLEAN-UP. Clean-up of Subcontractor and its subcontractors'
waste materials and refuse will be the full responsibility of the
Subcontractor. If Subcontractor fails to assume this responsibility, then
said clean-up work will be performed by Onsite and the Contract Price
reduced by an amount equal to the cost to Onsite of the same.
SECTION 6. CHANGES IN THE WORK. It is the expressed intent of this
Agreement that Subcontractor perform the Work acting as a "turnkey"
provider of goods and services with full expectations that changes in the
scope of the Work necessitating pricing changes, or relaxation in
requirements as provided herein, will not be required. Subcontractor shall
adhere strictly to the Contract Documents unless a change therefrom is
authorized in writing by Onsite (a "Contract Change Order," substantially
in the form attached hereto as EXHIBIT 5). The parties acknowledge that the
Contract Price includes some allocation of funds for scope change
contingencies, and therefore Subcontractor hereby agrees (i) to make any
and all changes, furnish the materials and perform the Work that Onsite may
require under a Contract Change Order but for which Onsite receives no
additional compensation from Customer at Subcontractor's direct costs only;
and (ii) to make any and all changes, furnish the materials and perform the
Work that Onsite may require under a Contract Change Order but for which
Onsite receives additional compensation from Customer for Subcontractor's
direct costs plus a gross profit margin of 14.8%, unless otherwise agreed
by Subcontractor and Onsite.
SECTION 7. TIME AND MANNER OF PERFORMANCE. Subcontractor shall commence
performance of this Agreement forthwith upon receipt of the Notice to
Proceed and shall furnish all materials, labor, tools, equipment and
supplies necessary for the performance of this Agreement in a proper,
efficient and workmanlike manner. Subcontractor shall execute the Work
undertaken in a prompt and diligent manner so as to promote the general
progress of the entire design, construction and start-up, and shall not, by
delay or otherwise, interfere with or hinder the work of Onsite or any
other subcontractor. Subcontractor agrees to conduct all work in a manner
which minimizes disruption to Customer's education program and business
operations.
SECTION 8. SUBSTANTIAL COMPLETION AND LIQUIDATED DAMAGES. Subcontractor
shall achieve substantial completion of the Work (that is, Completion of
ninety percent (90%) or more of the Work) ("Substantial Completion"), as
evidenced by the execution of some form of written documentation by
Customer (and acceptable to Onsite) of its agreement of Substantial
Completion, not later than November 30, 1998 (the "Substantial Completion
Date"). In the event Subcontractor does not achieve Substantial Completion
by the Substantial Completion Date and as a result of Subcontractor's
conduct or delay, Onsite is assessed liquidated damages by Customer,
Subcontractor shall be subject to a charge for liquidated damages of Two
Hundred Fifty Dollars ($250) per day for each day that Substantial
Completion exceeds the Substantial Completion Date. The parties agree that
because the actual amount of damages Onsite would incur as a result of any
failure of Subcontractor to achieve Substantial Completion by the
Substantial Completion Date is difficult to calculate, the amount of
liquidated damages set forth herein is reasonable and is not being imposed
as a penalty.
SECTION 9. WORKMANSHIP. Every part of the Work shall be executed in
accordance with the Contract Documents in a sound, workmanlike and
substantial manner. All workmanship shall be of good quality and materials
used shall be furnished in ample quantities to facilitate the proper and
expeditious execution of the Work, and shall be reasonable for the
applications.
SECTION 10. ASSIGNMENT OF CONTRACT. Subcontractor shall have the right,
with the prior written consent of Onsite, which shall not be unreasonably
withheld, and of Customer, if required under Onsite's agreement with
Customer, to assign, transfer or sublet any portion or part of the Work
required by this Agreement. Onsite may assign, transfer or grant a
security interest in any of its rights under this Agreement without the
prior written consent of Subcontractor, and may assign or transfer any of
its obligations under this Agreement with the prior written consent of
Subcontractor, which shall not be unreasonably withheld.
SECTION 11. INSURANCE. Subcontractor shall provide and maintain
throughout the term of this Agreement, including any applicable warranty
periods, Workers' Compensation, Commercial General Liability, Contractual
Liability, Comprehensive Automobile Liability and Floaters Installation
Insurance, with companies authorized to conduct business in the State of
Kansas, at the following minimum limits:
a. WORKERS' COMPENSATION AND EMPLOYER'S LIABILITY INSURANCE with a
limit of $500,000 (or such higher limit as may be required by law) to
provide for payment to Subcontractor's employees, and/or their dependents,
employed on or in connection with the Work covered by this Agreement, of
Workers' Compensation benefits in accordance with applicable laws.
b. (i) COMMERCIAL GENERAL LIABILITY INSURANCE covering all
operations, including completed operations and contractual liability, with
the following limits: $1,000,000 per occurrence, $2,000,000 general
aggregate and $2,000,000 completed operations aggregate; and (ii) EXCESS or
UMBRELLA LIABILITY INSURANCE with the following limits: $2,000,000 per
occurrence and $2,000,000 general aggregate.
c. PRIMARY COMPREHENSIVE AUTOMOBILE PUBLIC LIABILITY INSURANCE
covering owned, non-owned and hired automotive equipment used in connection
with Subcontractor's operations, with a combined single limit for bodily
injury or death and property damage of $500,000 per accident (unless
coverage can be obtained at a limit of $1,000,000 per accident, and then at
this higher limit).
d. INSTALLATION FLOATER INSURANCE covering the equipment and
materials being installed in the performance of the Work while such
equipment and materials are in transit, at the job site or the Premises,
and after installation pending Final Acceptance, in an amount equal to the
cost to replace the equipment and materials with like kind and quality.
This insurance shall be on an "all risk" basis including, but not limited
to, the perils of fire, vandalism, malicious mischief and theft.
In the event any of the Work hereunder is contracted to subcontractors by
Subcontractor, Subcontractor will require its subcontractors to carry and
maintain the same insurance as specified above. Onsite and Customer shall
be included as additional insureds on the liability insurance policy(ies)
specified herein. The naming of Onsite and Customer as additional insureds
shall not obligate Onsite or Customer to pay any premium on the policies.
Such insurance shall be primary insurance and shall contain a Severability
of Interest clause with respect to each insured. The "Other Insurance"
clause of such policies shall be modified, if necessary, to specify that
any separate insurance maintained in force by Onsite or Customer shall be
considered excess insurance and shall not contribute with insurance
extended by Subcontractor's and/or subcontractor's insurer(s) under this
requirement.
Subcontractor shall, ten (10) days before commencing Work under this
Agreement (unless otherwise agreed by Onsite), and prior to expiration of
any policy of insurance specified herein, deliver to Onsite, Attention:
Audrey Nelson Stubenberg, Esq., two (2) originals of the Certificate(s) of
Insurance completed by Subcontractor and its subcontractor's insurance
carrier or agent certifying that minimum insurance coverage, as required
above, is in effect and will not be canceled or changed until thirty (30)
days after written notice is given to Onsite and Customer. Subcontractor
shall immediately notify Onsite and Customer upon receipt of any
cancellation notice.
SECTION 12. ADDITIONAL REQUIREMENTS. Subcontractor, any of its officers,
agents, employees or servants, further agrees:
(1) to indemnify and hold to hold harmless, and hereby does
indemnify and hold harmless, Onsite from any and all claims, suits,
liability or patent rights arising in connection with this Agreement or the
performance of the Work;
(2) to pay promptly all valid bills and charges for material,
labor or otherwise in connection with or arising out of this Agreement, and
hereby indemnifies and holds harmless Onsite from and against all liens and
claims for labor and material filed against the property or any part
thereof, and from and against all expenses and liability in connection
therewith, including but not limited to court costs and attorney's fees
resulting or arising therefrom, by others than Subcontractor. Should Onsite
receive notice of unpaid bills or charges in connection with the Work,
Subcontractor shall forthwith pay and discharge the same and cause the same
to be released of record, or shall furnish Onsite with proper indemnity,
either by satisfactory corporate surety bond or satisfactory title policy;
and
(3) to obtain and pay for all permits, licenses and official
inspections made necessary by this Work, unless otherwise agreed to by
Onsite and Subcontractor, and to comply with all laws, ordinances and
regulations bearing on the Work and the conduct thereof. Subcontractor
represents and warrants that Subcontractor is a licensed contractor in good
standing under the laws of the State of California and, if required, the
jurisdiction in which the Project is located and agrees to furnish Onsite
with a copy of Subcontractor's license upon execution of this Agreement.
In addition, Subcontractor, a corporation, represents that Subcontractor
(i) is organized under or authorized to do business under the laws of the
State of California; and (ii) is authorized to transact business under and
in accordance with the laws of the state where the Project is located.
Additionally, Onsite agrees to indemnify and hold harmless, and hereby does
indemnify and hold harmless, Subcontractor from and against any and all
claims, suits or liability incurred by Subcontractor related to any claims
or actions by a third party subcontractor against LTS arising out of
Onsite's decision to subcontract the Work to Subcontractor and not to the
other third party subcontractor.
SECTION 13. GUARANTEES AND WARRANTIES.
a. WORKMANSHIP AND MATERIALS. Subcontractor warrants and guarantees
the Work performed, and materials utilized in the performance of the same,
under this Agreement shall be free from material defects for a period of
one (1) year from the date of Final Acceptance (or such longer period as
may be provided by law). Subcontractor shall, within a reasonable amount
of time after written notice thereof from Onsite and/or Customer, correct
such defects to the reasonable satisfaction of Customer. For the benefit
of Customer, Subcontractor shall obtain from all subcontractors a similar
warranty and guaranty of workmanship.
b. EQUIPMENT AND MATERIALS. For the benefit of Customer and Onsite,
Subcontractor shall obtain from all vendors and manufacturers (as
applicable) of equipment installed or materials used in the performance of
the Work such warranties against defects and deficiencies in design,
material and workmanship as are generally given in the trade to an owner or
contractor; provided however, that Subcontractor is hereby authorized and
obligated to obtain the customary services furnished in connection with
such warranties and guarantees on behalf of Onsite during the Term of this
Agreement. Subcontractor hereby assigns to Customer all of Subcontractor's
interest, if any, in all such vendor and manufacturer warranties, and
during the applicable warranty periods shall assist Onsite and/or Customer
in the administration of said warranties.
SECTION 14. RELATIONSHIP; COMPENSATION AND TAXES. The parties expressly
intend, agree and understand that Subcontractor is an independent
contractor and an employing unit subject, as an employer, to all applicable
Unemployment and Workers' Compensation statutes so as to relieve
Subcontractor's employees as employees of Onsite for the purpose of keeping
records, taking reports and payment of Unemployment and Workers'
Compensation premiums or contributions. Subcontractor agrees to indemnify
and hold Onsite and Customer harmless and reimburse Onsite for any expense
or liability incurred under such statutes in connection with employees of
Subcontractor.
Subcontractor further agrees with regard to (i) the production, purchase,
sale, furnishing, delivery, pricing and use or consumption of materials,
supplies and equipment; (ii) the hiring, tenure or conditions of employment
of employees and their hours of work and rates of and the payment of their
wages; and (iii) the keeping of records, collection and payment of federal,
state and municipal taxes and contributions, that Subcontractor will keep
and have available all necessary records and make all reports, returns,
withholding deductions, collections and payments and otherwise do any and
all things necessary so as to fully comply with all federal, state and
municipal laws, ordinances and regulations insofar as they affect or
involve Subcontractor's performance of this Agreement, all so as to fully
relieve Onsite and a Customer from and to protect Onsite and Customer
against any and all responsibility or liability therefore or in regard
thereto. This Agreement does not constitute a hiring by either party, and
Subcontractor is not an employee, partner or joint venturer of Onsite.
SECTION 15. HEALTH AND SAFETY PROVISION. Subcontractor shall perform the
Work in accordance with the statutes, ordinances, rules and regulations of
any and all federal, state, local, municipal or other agencies having
jurisdiction over the Work and at the Project and in accordance with
applicable health and safety regulations. Subcontractor hereby agrees to
indemnify and hold harmless Onsite from and against any liability arising
out of any violation of the above mentioned laws and regulations by
Subcontractor, and/or Subcontractor's employees, agents or subcontractors.
SECTION 16. ACCEPTANCE OF FINAL PAYMENT CONSTITUTES RELEASE. The
acceptance by Subcontractor of the Final Payment shall be and shall operate
as a release to Onsite and Customer of all claims and all liability to
Subcontractor for all things done or furnished in connection with the Work
and for every act and neglect to Onsite, Customer and others relating or
arising out of the Work.
SECTION 17. TIME. Time is of the essence in this Agreement.
SECTION 18. ARBITRATION. Any controversy or claim arising out of or
relating to this Agreement, or any alleged breach thereof, will be settled
by binding arbitration with such arbitration service as the parties may
agree, and in the absence of such agreement, in accordance with the
Commercial Rules of the American Arbitration Association, and judgment upon
the award rendered by the Arbitrator(s) may be entered in any court having
jurisdiction thereof. In no event will the arbitration of any controversy
or the settlement thereof delay the performance of this Agreement.
Arbitration hearings, unless the parties agree otherwise, will be held in
the County of San Diego, California. The prevailing party will be
reimbursed for any and all attorney's fees, costs and expenses, including
those incurred in any arbitration hearing and including the arbitrator's
fees, costs and expenses.
SECTION 19. NON-DISCRIMINATION. Subcontractor shall not discriminate
against any employee or applicant for employment because of race, creed,
color, sex, national origin or any other unlawful reason. Subcontractor
shall take affirmative action to ensure that applicants are employed, and
that employees are treated during employment, without regard to their race,
creed, color, sex or national origin. Such action shall include, but not
be limited to, the following: employment, upgrading, demotion or transfer;
recruitment or recruitment advertising; layoff or termination; rates of pay
or other forms of compensation; and selection for training, including
apprenticeship.
SECTION 20. NOTICE. Any notices to be given under and pursuant to the
terms of this Agreement shall be made by personal delivery, by a nationally
recognized overnight carrier, or by registered or certified mail, postage
prepaid, return receipt requested, and such notice shall be deemed given
upon receipt if delivered personally or by overnight carrier, or forty-
eight (48) hours after deposit in the United States mails as set forth
herein. Any notice to Onsite shall be addressed as follows:
Onsite Energy Corporation
701 Palomar Airport Road, Suite 200
Carlsbad, CA 92009
Attention: Richard T. Sperberg, President
Any notice to Subcontractor shall be addressed as follows:
Lighting Technology Services, Inc.
1715 East Wilshire Avenue, Suite 724
Santa Ana, CA 92705
Attention: Russell Wm. Royal, President
SECTION 21. EVENTS OF DEFAULT. Subcontractor shall be deemed to be in
default of this Agreement (i) if Subcontractor shall at any time shall
(a) refuse or neglect to supply a sufficient number of properly skilled
workmen or sufficient materials of the proper quality; (b) fail in any
respect to execute the Work as described in this Agreement with promptness;
(c) cause by any action or omission the stoppage or delay of or
interference with the Work or of the Work of any subcontractors; (d) fail
in the performance of any of the covenants herein contained; or (ii) if
Subcontractor be adjudged bankrupt or shall make a general assignment for
the benefits of its creditors; or (iii) if a Receiver shall be appointed
for Subcontractor or for its assets; or (iv) if Subcontractor shall become
insolvent or become a debtor in reorganization, composition or arrangement
proceedings, then in any such event, after serving a five (5) day written
notice mailed or delivered to the last known address of Subcontractor of
the existence of any of the foregoing causes, and unless the cause
specified in such notice is cured within such five (5) days, Onsite, at its
option, may provide either itself or through others, any such labor or
materials to complete the Work and may deduct the cost thereof from any
money then due, or hereafter to become due, to Subcontractor under this
Agreement, provided, however, if the default is of a nature that is not
curable in such five (5) day period and Subcontractor is diligently
pursuing a cure, then the cure period shall be extended thirty (30) days.
In any such event, after such notice and failure to cure such cause within
five (5) day specified, Onsite, at its option, may terminate this Agreement
and may enter on the premises and take possession, for the purpose of
completing the Work, of all materials and equipment of Subcontractor which
Subcontractor hereby assigns to Onsite, may employ other persons to
complete the Work by whatever method Onsite may deem expedient, and may
deduct the cost thereof from any money then due, or hereafter to become
due, to Subcontractor under this Agreement. In the event the expense
incurred by Onsite under this Section 21 after the termination of
Subcontractor hereunder exceeds the Contract Price, such excess shall be
paid by Subcontractor to Onsite.
SECTION 22. ENVIRONMENTAL REQUIREMENTS. Subcontractor recognizes that in
connection with the performance of the Work or the Project, Onsite is not
responsible for any work relating to (i) asbestos and materials containing
asbestos; (ii) pollutants, hazardous wastes, hazardous materials,
contaminants, including without limitation ballasts that may contain PCBs
(collectively, clauses (i) and (ii), "Hazardous Materials"); and (iii) the
storage, handling, use, transportation, treatment, disposal, discharge,
leakage, detection, removal or containment thereof. The materials and
activities listed in the foregoing sentence are referred to as "Excluded
Materials and Activities." Subcontractor agrees that if performance of Work
involves any Excluded Materials and Activities, Subcontractor will
immediately notify Onsite and Customer in writing and will perform, or
arrange for the performance of, such work directly with Customer and will
bear the sole risk and responsibility therefore. Furthermore, in handling
any of Customer's property, including without limitation Customer's
ballasts that may contain PCBs, Onsite does not take title to any such
property, nor does Onsite assume any responsibility for the transportation,
handling or disposal of such property. Notwithstanding the foregoing,
Subcontractor shall be solely responsible for the identification, removal
and disposal of ballasts that may contain PCBs (subject to the provisions
of EXHIBIT 1), and the recycling of fluorescent lamps, all in accordance
with all federal, state and local laws, statutes and regulations applicable
thereto, and shall furnish to Onsite written evidence of satisfactory
disposal of the same. In furtherance of the foregoing, Subcontractor
agrees to release, indemnify, defend and hold harmless Onsite and its
consultants, partners, directors, officers, agents and employees of and
from all costs, claims, damages and liability arising out of or relating to
Excluded Materials and Activities, acts or omissions of Onsite or third
parties relating thereto, or injury caused thereby, excepting only such
costs, claims, or damages or liability as are the result of any willful
misconduct of Onsite.
SECTION 23. MISCELLANEOUS.
a. ENTIRE AGREEMENT. This Agreement, together with any Exhibits or
amendments hereto, represents the entire agreement between the parties as
to the subject matter hereof. This Agreement shall be binding on and inure
to the benefit of the heirs, successors and assigns of the respective
parties.
b. AMENDMENT. The provisions of this Agreement can be modified only
by a writing that expressly states that modification of this Agreement is
intended.
c. WAIVER. No waiver of any provision of this Agreement shall
constitute a waiver of any other provision, nor shall any waiver constitute
a continuing waiver unless otherwise expressly provided hereunder or in a
writing signed by the party against whom any such waiver is sought to be
enforced.
d. GOVERNING LAW. This Agreement shall be interpreted and enforced
under the laws of the State of California.
e. SEVERABILITY. Any provision of this Agreement prohibited by, or
unlawful or unenforceable under, any applicable law or any jurisdiction
shall be ineffective as to such jurisdiction without invalidating the
remaining provisions of this Agreement.
f. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all of
which together shall constitute one and the same instrument.
g. HEADINGS. Headings or captions of paragraphs or sections of this
Agreement are for convenience of reference only and shall not be considered
in the interpretation of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first set forth above.
ONSITE: SUBCONTRACTOR:
ONSITE ENERGY CORPORATION LIGHTING TECHNOLOGY SERVICES,
INC.
By: _____________________________ By:
Richard T. Sperberg, President Name:
Title:
Date: __________, 1998 Date: __________, 1998
Attachments:
Exhibit 1 - Scope of Work
Exhibit 2 - Facilities List
Exhibit 3 - General Decision No. KS970012, Wyandotte County, KS
Exhibit 4 - Interim Certificate of Completion and Acceptance
Exhibit 5 - Form of Contract Change Order
Mf\work\onsite\filings\10q exhibit 10.89\<<Date>>
UNIFIED SCHOOL DISTRICT NO. 500,
WYANDOTTE COUNTY, KANSAS
ENGINEERING, PROCUREMENT AND CONSTRUCTION AGREEMENT
SUBCONTRACTOR: THE FAGAN COMPANY
SCOPE: MECHANICAL
ADDRESS: 3125 Brinkerhoff Road
Kansas City, KS 66115
TELEPHONE: 913/621-4444 LICENSE #:_____________
FAX: 913/621-3626
This Engineering, Procurement and Construction Agreement ("Agreement") is
made effective as of March 31, 1998, by and between Onsite Energy
Corporation, a Delaware corporation having its principal offices at 701
Palomar Airport Road, Suite 200, Carlsbad, CA 92009 ("Onsite"), and The
Fagan Company, a Kansas corporation having its principal place of business
at 3125 Brinkerhoff Road, Kansas City, KS 66115 ("Subcontractor").
SECTION 1. STATEMENT OF WORK. In exchange for the consideration set
forth in Section 3 below, Subcontractor agrees to furnish all materials,
labor, tools, equipment and supplies necessary to perform all work set
forth in EXHIBIT 1 attached hereto and incorporated herein (the "Work") for
the lighting efficiency project (the "Project") being implemented by Onsite
at the facilities set forth on EXHIBIT 2 attached hereto (the "Premises")
for Unified School District No. 500, Wyandotte County, Kansas ("Customer"),
all in accordance with the Contract Documents, which mean and include (i)
this Agreement and all exhibits, schedules and amendments hereto; (ii) the
scope of the Work attached hereto as EXHIBIT 1; and (iii) any final plans
and specifications as modified and approved by Onsite, Customer and
Subcontractor.
SECTION 2. PREVAILING WAGE. To the extent required by law, all Work shall
be performed in compliance with applicable prevailing wage laws.
SECTION 3. PAYMENTS. Onsite agrees to pay Subcontractor for the materials
furnished and the Work performed in accordance with this Agreement the sum
of One Million Three Hundred Eighty-One Thousand Four Hundred Fifty-Nine
Dollars ($1,381,459) (the "Contract Price"). Any changes to the Contract
Price will be in accordance with Section 6 herein. Unless otherwise
instructed by Onsite, Subcontractor shall initiate the Work upon receipt
from Onsite of a written notice to proceed (the "Notice to Proceed").
Onsite shall pay Subcontractor for the Work in accordance with the Project
Milestone Schedule below, unless the same is altered by written agreement
of the parties in accordance with this Section 3. Upon Completion (as
defined below) of the applicable portion of the Work in accordance with the
Project Milestone Schedule below, Subcontractor shall furnish Onsite a
detailed invoice (each an "Invoice") for such Work, accompanied by such
substantiating data as Onsite may reasonably require, including vendors and
subcontractor's lien releases and invoices. Onsite shall pay Subcontractor
the amount of each Invoice within thirty (30) days after Acceptance (as
defined below). Any Invoice not paid within thirty (30) days of Acceptance
shall be deemed delinquent and shall bear interest from the date of such
invoice at the rate of one and one-half percent (1.5%) per month until paid
in full. Such interest shall not exceed the maximum rate permitted by law.
In no case shall the information pertaining to Onsite payment delinquency
be construed as an alternative performance provision for payment due
Subcontractor.
Upon Final Acceptance, as defined below, Subcontractor shall provide to
Onsite an invoice (the "Final Invoice") (i) summarizing and reconciling all
previous payments on Invoices; and (ii) setting forth all amounts due and
owing by Onsite to Subcontractor for work performed by Subcontractor per a
Contract Change Order (as defined below) ("Contract Change Order Work").
Within thirty (30) days of the receipt and approval of the Final Invoice by
Onsite, Onsite shall pay Subcontractor (i) the remaining balance, if any,
of the Contract Price due and owing to Subcontractor; and (ii) any amounts
due and owing for Contract Change Order Work (the "Final Payment").
Payments will be made to Subcontractor in accordance with the following
Project Milestone Schedule:
1. Within forty-five (45) days of Subcontractor's
receipt of the Notice to Proceed (30%) $414,437.70
2. Upon Completion and Acceptance by Customer of the
following facilities: Arrowhead Elementary, Career Learning
Center, Coronado Elementary, Transportation, Whittier Elementary
School, Argentine Library, Central Middle School, Pearson
Elementary School, West Library $51,877.80
1. Upon Completion and Acceptance by Customer of the
following facilities: Argentine Middle School, Bethel Elementary
School, Grant Elementary, Noble Prentis School, Rosedale Middle
School, Rushton Elementary School $135,538.20
2. Upon Completion and Acceptance by Customer of the
following facilities: Central Prevention, Douglas Elementary
School, Harmon High School $156,465.60
3. Upon Completion and Acceptance by Customer of the
following facilities: Hazel Grove Elementary, Huyck Elementary
School, Lindbergh Elementary School, Northwest Middle
School, Stoneypoint North, West Middle School $225,710.40
4. Upon Completion and Acceptance by Customer of the
following facilities: Main Library, Parker Elementary School,
Stanley Elementary School $144,766.20
5. Upon Completion and Acceptance by Customer of the
Following facilities: Storeroom, Sumner Academy, Ware
Elementary, Washington High School, Welborn Elementary
School, Wyandotte High School $114,517.20
8. Upon Final Acceptance (as defined below)
by Customer of the Work (10%) $138,145.90
TOTAL: $1,381,459.00
Subcontractor and Onsite acknowledge that the facility groupings set forth
in each of the Milestones above may need to be revised after Subcontractor
commences performance of the Work in order to group together facilities
that are located near one another or facilities at which similar Work is
being performed by Subcontractor. In the event Subcontractor determines
that the above facility groupings should be revised, Subcontractor shall
notify Onsite, and provide to Onsite Subcontractor's proposed facility
groupings. Onsite shall promptly meet with Subcontractor regarding
Subcontractor's proposed facility groupings, and upon the agreement of the
parties to a revised facility grouping, and corresponding revised Milestone
payment schedule, the parties shall execute a written amendment to this
Agreement setting forth the revised Project Milestone Schedule.
"Acceptance" is contingent upon successful completion of some or all of the
Work, as applicable ("Completion"), including but not limited to a post-
installation inspection of the Work by Onsite, at Onsite's option, and the
execution by Customer and Subcontractor of an Interim Certificate of
Completion and Acceptance (substantially in the form attached hereto as
EXHIBIT 3 and incorporated herein), or other form of written evidence from
Customer of its acceptance of the applicable portion of the Work,
accompanied by documented evidence (in the form of lien releases and
similar documents), as applicable and at Onsite's option, that all
Subcontractor's obligations to laborers, subcontractors, materialmen and
others who have Mechanics Lien Rights or other legal claims related to the
Project have been satisfied. "Final Acceptance" shall be deemed to occur
upon execution by Customer and Onsite of any form of written evidence from
Customer of its final acceptance of the Work.
SECTION 4. SCOPE OF AGREEMENT. Subcontractor certifies and agrees that
Subcontractor is fully familiar with all terms, conditions and obligations
of the Contract Documents, the location of the Project, and the conditions
under which the Work is to be performed, and that Subcontractor enters into
this Agreement based upon Subcontractor's investigation of all such matters
and is in no way relying upon any opinions or representations of Onsite or
Customer. It is also agreed and understood that Subcontractor has relied
on manufacturer's information and specifications for equipment and that
Subcontractor will not be bound by any misrepresentations or falsities
pertaining to the information provided by such manufacturers. It is
further agreed that Contract Documents are incorporated in this Agreement
by this reference, with the same force and effect as if the same were set
forth at length herein, and that Subcontractor and its subcontractors will
be and are bound by any and all of said Contract Documents insofar as they
relate in any part or in any way, directly or indirectly, to the Work
covered by this Agreement.
SECTION 5. CLEAN-UP. Clean-up of Subcontractor and its subcontractors'
waste materials and refuse will be the full responsibility of the
Subcontractor. If Subcontractor fails to assume this responsibility, then
said clean-up work will be performed by Onsite and the Contract Price
reduced by an amount equal to the cost to Onsite of the same.
SECTION 6. CHANGES IN THE WORK. It is the expressed intent of this
Agreement that Subcontractor perform the Work acting as a "turnkey"
provider of goods and services with full expectations that changes in the
scope of the Work necessitating pricing changes, or relaxation in
requirements as provided herein, will not be required. Except as otherwise
set forth in Section 3 above regarding the Project Milestone Schedule,
Subcontractor shall adhere strictly to the Contract Documents unless a
change therefrom is authorized in writing (a "Contract Change Order,"
substantially in the form attached hereto as EXHIBIT 5) by Onsite.
Subcontractor hereby agrees to make any and all changes, furnish the
materials and perform the Work that Onsite may require at a reasonable
addition to the Contract Price as stated herein. Subcontractor shall give
written notice of any Work for which extra compensation is required prior
to performing the Contract Change Order Work. Onsite shall pay
Subcontractor any amounts due and owing for any Contract Change Order Work
performed by Subcontractor upon Final Acceptance in accordance with Section
3.
SECTION 7. TIME AND MANNER OF PERFORMANCE. Subcontractor shall commence
performance of this Agreement forthwith upon receipt of the Notice to
Proceed and shall furnish all materials, labor, tools, equipment and
supplies necessary for the performance of this Agreement in a proper,
efficient and workmanlike manner. Subcontractor shall execute the Work
undertaken in a prompt and diligent manner so as to promote the general
progress of the entire design, construction and start-up, and shall not, by
delay or otherwise, interfere with or hinder the work of Onsite or any
other subcontractor. Subcontractor agrees to conduct all work in a manner
which minimizes disruption to Customer's education program and business
operations.
SECTION 8. SUBSTANTIAL COMPLETION AND LIQUIDATED DAMAGES. Subcontractor
shall achieve substantial completion of the Work (that is, Completion of
ninety percent (90%) or more of the Work), as evidenced by the execution of
some form of written documentation by Customer (and acceptable to Onsite)
of Customer's agreement of Substantial Completion, not later than February
26, 1999 (the "Substantial Completion Date"). Subcontractor shall be
subject to a charge for liquidated damages of Two Hundred Fifty Dollars
($250) per day for each day that Substantial Completion exceeds the
Substantial Completion Date. The parties agree that because the actual
amount of damages Onsite would incur as a result of any failure of
Subcontractor to achieve Substantial Completion by the Substantial
Completion Date is difficult to calculate, the amount of liquidated damages
set forth herein is reasonable and is not being imposed as a penalty.
SECTION 9. WORKMANSHIP. Every part of the Work shall be executed in
accordance with the Contract Documents in a sound, workmanlike and
substantial manner. All workmanship shall be of good quality and materials
used shall be furnished in ample quantities to facilitate the proper and
expeditious execution of the Work, and shall be reasonable for the
applications.
SECTION 10. ASSIGNMENT OF CONTRACT. Subcontractor shall have the right,
with the written consent of Onsite, which shall not be unreasonably
withheld, and of Customer, if required under Onsite's agreement with
Customer, to assign, transfer or sublet any portion or part of the Work
required by this Agreement. Onsite may assign, transfer or grant a
security interest in any of its rights under this Agreement without the
prior written consent of Subcontractor, and may assign or transfer any of
its obligations under this Agreement with the prior written consent of
Subcontractor, which shall not be unreasonably withheld.
SECTION 11. INSURANCE. Subcontractor shall provide and maintain
throughout the Term of this Agreement Workers' Compensation, Commercial
General Liability, Contractual Liability, Comprehensive Automobile
Liability and Floaters Installation Insurance at the following minimum
limits:
a. WORKERS' COMPENSATION AND EMPLOYER'S LIABILITY INSURANCE with a
limit of $500,000 (or such higher limit as may be required by law) to
provide for payment to Subcontractor's employees, and/or their dependents,
employed on or in connection with the Work covered by this Agreement, of
Workers' Compensation benefits in accordance with applicable laws.
b. (i) COMMERCIAL GENERAL LIABILITY INSURANCE covering all
operations, including completed operations and contractual liability, with
the following limits: $1,000,000 per occurrence, $2,000,000 general
aggregate and $2,000,000 completed operations aggregate; and (ii) EXCESS or
UMBRELLA LIABILITY INSURANCE with the following limits: $2,000,000 per
occurrence and $2,000,000 general aggregate.
c. PRIMARY COMPREHENSIVE AUTOMOBILE PUBLIC LIABILITY INSURANCE
covering owned, non-owned and hired automotive equipment used in connection
with Subcontractor's operations, with a combined single limit for bodily
injury or death and property damage of $1,000,000 per accident.
d. INSTALLATION FLOATER INSURANCE covering the equipment and
materials being installed in the performance of the Work while such
equipment and materials are in transit, at the job site or the Premises,
and after installation pending Acceptance of the same by Customer, in an
amount equal to the cost to replace the equipment and materials with like
kind and quality. This insurance shall be on an "all risk" basis
including, but not limited to, the perils of fire, vandalism, malicious
mischief and theft.
In the event any of the Work hereunder is contracted to subcontractors by
Subcontractor, Subcontractor will require its subcontractors to carry and
maintain the same insurance as specified above. Onsite and Customer shall
be included as additional insureds on the liability insurance policy(ies)
specified herein. The naming of Onsite and Customer as additional insureds
shall not obligate Onsite or Customer to pay any premium on the policies.
Such insurance shall be primary insurance and shall contain a Severability
of Interest clause with respect to each insured. The "Other Insurance"
clause of such policies shall be modified, if necessary, to specify that
any separate insurance maintained in force by Onsite or Customer shall be
considered excess insurance and shall not contribute with insurance
extended by Subcontractor's and/or subcontractor's insurer(s) under this
requirement.
Subcontractor shall, ten (10) days before commencing Work under this
Agreement (unless otherwise agreed by Onsite), and prior to expiration of
any policy of insurance specified herein, deliver to Onsite, Attention:
Audrey Nelson Stubenberg, Esq., two (2) originals of the Certificate(s) of
Insurance completed by Subcontractor and its subcontractor's insurance
carrier or agent certifying that minimum insurance coverage, as required
above, is in effect and will not be canceled or changed until thirty (30)
days after written notice is given to Onsite and Customer. Subcontractor
shall immediately notify Onsite and Customer upon receipt of any
cancellation notice.
SECTION 12. ADDITIONAL REQUIREMENTS. Subcontractor, any of its officers,
agents, employees or servants, further agrees:
(1) to indemnify and hold to hold harmless, and hereby does
indemnify and hold harmless, Onsite from any and all claims, suits,
liability or patent rights arising in connection with this Agreement or the
performance of the Work;
(2) to pay promptly all valid bills and charges for material,
labor or otherwise in connection with or arising out of this Agreement, and
hereby indemnifies and holds harmless Onsite from and against all liens and
claims for labor and material filed against the property or any part
thereof, and from and against all expenses and liability in connection
therewith, including but not limited to court costs and attorney's fees
resulting or arising therefrom, by others than Subcontractor. Should Onsite
receive notice of unpaid bills or charges in connection with the Work,
Subcontractor shall forthwith pay and discharge the same and cause the same
to be released of record, or shall furnish Onsite with proper indemnity,
either by satisfactory corporate surety bond or satisfactory title policy;
and
(3) to obtain and pay for all permits, licenses and official
inspections made necessary by this Work, and to comply with all laws,
ordinances and regulations bearing on the Work and the conduct thereof.
Subcontractor represents and warrants that Subcontractor is a licensed
contractor in good standing under the laws of the jurisdiction in which the
Project is located and agrees to furnish Onsite with a copy of
Subcontractor's license upon execution of this Agreement. In addition,
Subcontractor, a corporation, represents that Subcontractor (i) is
organized under or authorized to do business under the laws of the State of
Kansas; and (ii) is authorized to transact business under and in accordance
with the laws of the state where the Project is located.
SECTION 13. GUARANTEES AND WARRANTIES.
a. WORKMANSHIP AND MATERIALS. Subcontractor warrants and guarantees
the Work performed, and materials utilized in the performance of the same,
under this Agreement shall be free from material defects for a period of
one (1) year from the date of Acceptance of the same by Customer (or such
longer period as may be provided by law). Subcontractor shall, within a
reasonable amount of time after written notice thereof from Onsite and/or
Customer, correct such defects to the reasonable satisfaction of Customer.
For the benefit of Customer, Subcontractor shall obtain from all
subcontractors a similar warranty and guaranty of workmanship.
b. EQUIPMENT AND MATERIALS. For the benefit of Customer and Onsite,
Subcontractor shall obtain from all vendors and manufacturers (as
applicable) of equipment installed or materials used in the performance of
the Work such warranties against defects and deficiencies in design,
material and workmanship as are generally given in the trade to an owner or
contractor; provided however, that Subcontractor is hereby authorized and
obligated to obtain the customary services furnished in connection with
such warranties and guarantees on behalf of Onsite during the Term of this
Agreement.
SECTION 14. RELATIONSHIP; COMPENSATION AND TAXES. The parties expressly
intend, agree and understand that Subcontractor is an independent
contractor and an employing unit subject, as an employer, to all applicable
Unemployment and Workers' Compensation statutes so as to relieve
Subcontractor's employees as employees of Onsite for the purpose of keeping
records, taking reports and payment of Unemployment and Workers'
Compensation premiums or contributions. Subcontractor agrees to indemnify
and hold Onsite and Customer harmless and reimburse Onsite for any expense
or liability incurred under such statutes in connection with employees of
Subcontractor.
Subcontractor further agrees with regard to (i) the production, purchase,
sale, furnishing, delivery, pricing and use or consumption of materials,
supplies and equipment; (ii) the hiring, tenure or conditions of employment
of employees and their hours of work and rates of and the payment of their
wages; and (iii) the keeping of records, collection and payment of federal,
state and municipal taxes and contributions, that Subcontractor will keep
and have available all necessary records and make all reports, returns,
withholding deductions, collections and payments and otherwise do any and
all things necessary so as to fully comply with all federal, state and
municipal laws, ordinances and regulations insofar as they affect or
involve Subcontractor's performance of this Agreement, all so as to fully
relieve Onsite and a Customer from and to protect Onsite and Customer
against any and all responsibility or liability therefore or in regard
thereto. This Agreement does not constitute a hiring by either party, and
Subcontractor is not an employee, partner or joint venturer of Onsite.
SECTION 15. HEALTH AND SAFETY PROVISION. Subcontractor shall perform the
Work in accordance with the statutes, ordinances, rules and regulations of
any and all federal, state, local, municipal or other agencies having
jurisdiction over the Work and at the Project and in accordance with
applicable health and safety regulations. Subcontractor hereby agrees to
indemnify and hold harmless Onsite from and against any liability arising
out of any violation of the above mentioned laws and regulations by
Subcontractor, and/or Subcontractor's employees, agents or subcontractors.
SECTION 16. ACCEPTANCE OF FINAL PAYMENT CONSTITUTES RELEASE. The
acceptance by Subcontractor of the Final Payment shall be and shall operate
as a release to Onsite and Customer of all claims and all liability to
Subcontractor for all things done or furnished in connection with the Work
and for every act and neglect to Onsite, Customer and others relating or
arising out of the Work.
SECTION 17. TIME. Time is of the essence in this Agreement.
SECTION 18. ARBITRATION. Any controversy or claim arising out of or
relating to this Agreement, or any alleged breach thereof, will be settled
by binding arbitration with such arbitration service as the parties may
agree, and in the absence of such agreement, in accordance with the
Commercial Rules of the American Arbitration Association, and judgment upon
the award rendered by the Arbitrator(s) may be entered in any court having
jurisdiction thereof. In no event will the arbitration of any controversy
or the settlement thereof delay the performance of this Agreement.
Arbitration hearings, unless the parties agree otherwise, will be held in
the County of San Diego, California. The prevailing party will be
reimbursed for any and all attorney's fees, costs and expenses, including
those incurred in any arbitration hearing (and including the arbitrator's
fees, costs and expenses).
SECTION 19. NON-DISCRIMINATION. Subcontractor shall not discriminate
against any employee or applicant for employment because of race, creed,
color, sex, national origin or any other unlawful reason. Subcontractor
shall take affirmative action to ensure that applicants are employed, and
that employees are treated during employment, without regard to their race,
creed, color, sex or national origin. Such action shall include, but not
be limited to, the following: employment, upgrading, demotion or transfer;
recruitment or recruitment advertising; layoff or termination; rates of pay
or other forms of compensation; and selection for training, including
apprenticeship.
SECTION 20. NOTICE. Any notices to be given under and pursuant to the
terms of this Agreement shall be made by personal delivery, by a nationally
recognized overnight carrier, or by registered or certified mail, postage
prepaid, return receipt requested, and such notice shall be deemed given
upon receipt if delivered personally or by overnight carrier, or forty-
eight (48) hours after deposit in the United States mails as set forth
herein. Any notice to Onsite shall be addressed as follows:
Onsite Energy Corporation
701 Palomar Airport Road, Suite 200
Carlsbad, CA 92009
Attention: Richard T. Sperberg, President
Any notice to Subcontractor shall be addressed as follows:
The Fagan Company
3125 Brinkerhoff Road
PO Box 15238
Kansas City, KS 66115
Attention: Tom Fagan, Vice President
SECTION 21. EVENTS OF DEFAULT. Subcontractor shall be deemed to be in
default of this Agreement (i) if Subcontractor shall at any time shall
(a) refuse or neglect to supply a sufficient number of properly skilled
workmen or sufficient materials of the proper quality; (b) fail in any
respect to execute the Work as described in this Agreement with promptness;
(c) cause by any action or omission the stoppage or delay of or
interference with the Work or of the Work of any subcontractors; (d) fail
in the performance of any of the covenants herein contained; or (ii) if
Subcontractor be adjudged bankrupt or shall make a general assignment for
the benefits of its creditors; or (iii) if a Receiver shall be appointed
for Subcontractor or for its assets; or (iv) if Subcontractor shall become
insolvent or become a debtor in reorganization, composition or arrangement
proceedings, then in any such event, after serving a five (5) day written
notice mailed or delivered to the last known address of Subcontractor of
the existence of any of the foregoing causes, and unless the cause
specified in such notice is cured within such five (5) days, Onsite, at its
option, may provide either itself or through others, any such labor or
materials to complete the Work and may deduct the cost thereof from any
money then due, or hereafter to become due, to Subcontractor under this
Agreement, provided, however, if the default is of a nature that is not
curable in such five (5) day period and Subcontractor is diligently
pursuing a cure, then the cure period shall be extended thirty (30) days.
In any such event, after such notice and failure to cure such cause within
five (5) day specified, Onsite, at its option, may terminate this Agreement
and may enter on the premises and take possession, for the purpose of
completing the Work, of all materials and equipment of Subcontractor which
Subcontractor hereby assigns to Onsite, may employ other persons to
complete the Work by whatever method Onsite may deem expedient, and may
deduct the cost thereof from any money then due, or hereafter to become
due, to Subcontractor under this Agreement. In the event the expense
incurred by Onsite under this Section 21 after the termination of
Subcontractor hereunder exceeds the Contract Price, such excess shall be
paid by Subcontractor to Onsite.
SECTION 22. ENVIRONMENTAL REQUIREMENTS. Subcontractor recognizes that in
connection with the performance of the Work or the Project, Onsite is not
responsible for any work relating to (i) asbestos and materials containing
asbestos; (ii) pollutants, hazardous wastes, hazardous materials,
contaminants, including without limitation ballasts that may contain PCBs
(collectively, clauses (i) and (ii), "Hazardous Materials"); and (iii) the
storage, handling, use, transportation, treatment, disposal, discharge,
leakage, detection, removal or containment thereof. The materials and
activities listed in the foregoing sentence are referred to as "Excluded
Materials and Activities." Subcontractor agrees that if performance of Work
involves any Excluded Materials and Activities, Subcontractor will
immediately notify Onsite and Customer in writing and will perform, or
arrange for the performance of, such work directly with Customer and will
bear the sole risk and responsibility therefore. Furthermore, in handling
any of Customer's property, including without limitation Customer's
ballasts that may contain PCBs, Onsite does not take title to any such
property, nor does Onsite assume any responsibility for the transportation,
handling or disposal of such property. Subcontractor shall assist Customer
who is solely responsible for the identification and disposal of Customer's
property in accordance with all federal, state and local laws, statutes and
regulations applicable thereto, and shall, upon the request of Onsite,
furnish to Onsite copies of any manifests or other written evidence of
satisfactory disposal of the same. In furtherance of the foregoing,
Subcontractor agrees to release, indemnify, defend and hold harmless Onsite
and its consultants, partners, directors, officers, agents and employees of
and from all costs, claims, damages and liability arising out of or
relating to Excluded Materials and Activities, acts or omissions of Onsite
or third parties relating thereto, or injury caused thereby, excepting only
such costs, claims, or damages or liability as are the result of any
willful misconduct of Onsite.
SECTION 23. MISCELLANEOUS.
a. ENTIRE AGREEMENT. This Agreement, together with any Exhibits or
amendments hereto, represents the entire agreement between the parties as
to the subject matter hereof. This Agreement shall be binding on and inure
to the benefit of the heirs, successors and assigns of the respective
parties.
b. AMENDMENT. The provisions of this Agreement can be modified only
by a writing that expressly states that modification of this Agreement is
intended.
c. WAIVER. No waiver of any provision of this Agreement shall
constitute a waiver of any other provision, nor shall any waiver constitute
a continuing waiver unless otherwise expressly provided hereunder or in a
writing signed by the party against whom any such waiver is sought to be
enforced.
d. GOVERNING LAW. This Agreement shall be interpreted and enforced
under the laws of the State of California.
e. SEVERABILITY. Any provision of this Agreement prohibited by, or
unlawful or unenforceable under, any applicable law or any jurisdiction
shall be ineffective as to such jurisdiction without invalidating the
remaining provisions of this Agreement.
f. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all of
which together shall constitute one and the same instrument.
[Remainder of page intentionally left blank]
Mf\work\onsite\filings\10q exhibit 10-90\<<Date>>
<PAGE>
g. HEADINGS. Headings or captions of paragraphs or sections of this
Agreement are for convenience of reference only and shall not be considered
in the interpretation of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first set forth above.
ONSITE: SUBCONTRACTOR:
ONSITE ENERGY CORPORATION THE FAGAN COMPANY
By: ________________________________ By:
_________________________________
Richard T. Sperberg, President Name:
___________________________
Title:
____________________________
Date: March ___, 1998 Date: March ___, 1998
Attachments:
Exhibit 1 - Scope of Work
Exhibit 2 - Facilities List
Exhibit 3 - Interim Certificate of Completion and Acceptance
Exhibit 4 - Form of Contract Change Order
Mf\work\onsite\filings\10q exhibit 10-90\<<Date>>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE 10-QSB
FOR THE PERIOD ENDED MARCH 31, 1998 FOR ONSITE ENERGY CORPORATION AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-END> MAR-31-1998
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<RECEIVABLES> 4,845,328
<ALLOWANCES> (15,030)
<INVENTORY> 110,273
<CURRENT-ASSETS> 6,875,887
<PP&E> 995,091
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<COMMON> 15,510
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<TOTAL-COSTS> 11,162,608
<OTHER-EXPENSES> 30,434
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