EXHIBIT 10.1
STOCK SUBSCRIPTION AGREEMENT
THIS STOCK SUBSCRIPTION AGREEMENT (the "Agreement"), dated as of
October 28, 1997, is made and entered into by and between Onsite Energy
Corporation, a Delaware corporation (the "Company"), and Westar Capital,
Inc., a Kansas corporation (the "Investor").
W I T N E S S E T H
WHEREAS, the Company, in order to finance its operations, desires to
issue an aggregate of Two Million (2,000,000) shares of its Class A Common
Stock (the "Onsite Common Stock") and Two Hundred Thousand (200,000) shares
of its Series C Convertible Preferred Stock (the "Onsite Preferred Stock")
(collectively, the "Onsite Stock") to the Investor upon the terms and
conditions contained herein; and
WHEREAS, Investor desires to purchase Two Million (2,000,000) shares
of the Onsite Common Stock and Two Hundred Thousand (200,000) shares of the
Onsite Preferred Stock upon upon the terms and subject to the conditions
set forth herein.
NOW, THEREFORE, for and in consideration of the premises and of the
mutual representations, warranties, covenants, and agreements set forth in
this Agreement, and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereby agree
as follows:
1. CONTEMPLATED TRANSACTIONS AND CLOSING.
1. PURCHASE OF COMMON STOCK. Upon the terms and subject to the
conditions set forth in this Agreement, on the Closing Date (as provided
for in Section 1.5), the Investor shall purchase from the Company, and the
Company shall issue and sell to the Investor, two million (2,000,000)
shares of the Company's Class A Common Stock, par value $0.001 per share
(the "Onsite Common Stock"). The purchase of the Onsite Common Stock shall
occur at the Closing as specified in Section 1.5.
2. CONSIDERATION FOR ONSITE COMMON STOCK. In consideration of the
purchase in Section 1.1, at the Closing specified in Section 1.5, the
Investor shall pay to the Company $0.50 per share in immediately available
United States Dollars, in an aggregate amount equal to One Million Dollars
($1,000,000) for the Onsite Common Stock.
3. PURCHASE OF SERIES C CONVERTIBLE PREFERRED STOCK. Upon the terms
and subject to the conditions set forth in this Agreement, on the Closing
Date (as provided for in Section 1.5), the Investor shall purchase from the
Company, and the Company shall issue and sell to the Investor, two hundred
thousand (200,000) shares of the Company's Series C Convertible Preferred
Stock, par value $0.001 per share (the "Onsite Preferred Stock"). The
purchase of the Onsite Preferred Stock shall occur at the Closing as
specified in Section 1.5.
4. CONSIDERATION FOR ONSITE PREFERRED STOCK. In consideration of
the purchase in Section 1.3, at the Closing specified in Section 1.5, the
Investor shall pay to the Company $5.00 per share in immediately available
United States Dollars, in an aggregate amount equal to One Million Dollars
($1,000,000) for the Onsite Preferred Stock.
5. THE CLOSING; CLOSING DATE. The transactions contemplated hereby
shall be consummated at a closing (the "Closing"), which shall take place
simultaneously at 7:30 A.M. Pacific Standard Time on October 31, 1997, at
the offices of Xxxxxx Eng Xxxx & Xxxxxxxx, 000 Xxxxxxx Xxxx, Xxxxx 0000,
Xxxxxxxxxx, Xxxxxxxxxx 00000, the offices of the Company, 000 Xxxxxxx
Xxxxxxx Xxxx, Xxxxx 000, Xxxxxxxx, Xxxxxxxxxx 00000, and the offices of the
Investor, 000 Xxxxxx Xxxxxx, Xxxxxx, Xxxxxx 00000. The Closing may also be
held at such other time and place as may be agreed upon by the parties.
The date of the Closing is referred to herein as the "Closing Date" and all
transactions contemplated herein to occur at the Closing shall be deemed to
occur on the Closing Date and all transfers and assignments of title shall
vest and be deemed effective on the Closing Date.
6. DELIVERIES AT THE CLOSING. Upon the terms and conditions set
forth in this Agreement, the Investor and the Company shall make the
following deliveries at the Closing on the Closing Date:
1. DELIVERIES BY THE INVESTOR AT THE CLOSING. At or before the
Closing, the Investor shall deliver to the Company the following:
(a) Two Million Dollars ($2,000,000) in immediately
available United States funds in cash or by a wire transfer
in accordance with written instructions from the Company;
and
(b) a certificate, executed by the Investor and dated as of
the Closing Date, certifying that all of the representations
and warranties set forth in Section 3 hereof are true and
correct in all material respects and that all of the
conditions set forth in Section 4 hereof have been
satisfied.
2. DELIVERIES BY THE COMPANY AT THE CLOSING. At the Closing,
the Company shall deliver to the Investor the following:
(a) Share certificates evidencing two million (2,000,000)
shares of the Onsite Common Stock issued in the name of the
Investor;
(b) share certificates evidencing two hundred thousand
(200,000) shares of the Onsite Preferred Stock issued in the
name of the Investor;
(c) a certificate, executed by the Company and dated as of
the Closing Date, certifying that all of the representations
and warranties set forth in Section 2 hereof are true and
correct in all material respects and that all of the
conditions set forth in Section 5 hereof have been
satisfied; and
(d) an opinion of counsel in the form attached hereto as
Exhibit A.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company hereby represents and warrants to Investor that:
1. DUE ORGANIZATION: GOOD STANDING AND CORPORATE POWER. The Company
is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware and has all requisite corporate
power and authority to carry on its business, and to own, lease and operate
any properties related to such business, except where the failure to have
such power and authority would not individually or in the aggregate have a
Material Adverse Effect (as defined below). The Company is duly qualified
or licensed to do business and in good standing in the State of California.
For purposes of this Agreement, a "Material Adverse Effect" shall mean an
event that could reasonably be expected to have a material adverse effect
on the business of the Company, or on its results of operations, properties
or financial condition; for purposes of this definition, any event which
reasonably could be expected to result in a potential liability to the
Company either individually or in the aggregate in excess of Fifty Thousand
Dollars ($50,000) will be deemed to have a Material Adverse Effect.
2. CAPITALIZATION. The Company's authorized capital stock consists
of (a) 24 million shares of Common Stock, $0.001 par value, of which
23,999,000 are designated Class A Common Stock, of which 10,944,172 are
currently outstanding and held by approximately 217 shareholders of record,
and (b) one million shares of preferred stock, $0.001 par value, of which
none are issued and currently outstanding. Schedule 2.2 sets forth the
names and share ownership of each Company shareholder owning over 5% of
Company's outstanding common stock as of the date of this Agreement.
Except as set forth in the notes to the financial statements contained in
the Company's Form 10-KSB for the year ended June 30, 1997, there are no
equity securities or debt obligations of the Company authorized, issued or
outstanding and there are no outstanding options, warrants, agreements,
contracts, calls, commitments or demands of any character, preemptive or
otherwise, other than this Agreement, relating to any of the Company's
capital stock, there is no outstanding security of any kind convertible
into the Company's capital stock, and there is no outstanding security with
a claim on dividends prior or senior to the Onsite Preferred Stock.
3. AUTHORIZATION.
1. All corporate action on the part of the Company, its
officers, directors and stockholders necessary for the sale and issuance of
the Onsite Stock pursuant hereto and the performance of the Company's
obligations hereunder has been taken or will be taken prior to the Closing.
2. The Onsite Stock, when issued, sold and delivered for the
consideration expressed and in compliance with the provisions of this
Agreement, will be duly authorized, validly issued, fully paid and
nonassessable, and will be free of restrictions on transfer other than
restrictions on transfer under this Agreement and under applicable federal
and state securities laws.
4. NO CONFLICT; NO CONSENTS OR APPROVALS REQUIRED. Neither the
execution and delivery of this Agreement by the Company, nor the
consummation by the Company of the transactions contemplated hereby will:
(a) conflict with or violate any provision of the
Certificate of Incorporation or Bylaws of the Company;
(b) conflict with or violate any law, rule, regulation,
ordinance, order, writ, injunction, judgment or decree applicable to the
Company or by which it or any of its properties or assets are bound or
affected; or
(c) conflict with or result in any breach of or constitute
a default (or an event which with notice or lapse of time or both would
become a default) under, or give to others any rights of termination or
cancellation of, or result in the creation of any lien, charge or
encumbrance on any of the respective properties or assets of it pursuant to
any of the terms, conditions or provisions of, any material note, bond,
mortgage, indenture, deed of trust, lease, permit, license, franchise,
authorization, agreement or other instrument or obligation to which the
Company is a party or by which the Company or any of its properties or
assets is bound or affected.
5. LITIGATION. There is no action, suit, proceeding, or
investigation pending or, currently threatened against the Company which
questions the validity of this Agreement or the right of the Company to
enter into it, or to consummate the transactions contemplated hereby, or
which might have, either individually or in the aggregate, a Material
Adverse Effect. The Company is not a party or subject to the provisions of
any order, writ, injunction, judgment or decree of any court or government
agency or instrumentality.
6. TITLE TO PROPERTIES AND ASSETS. Except for the security
interests granted to those persons specified in Schedule 2.6, and except
for liens for taxes not yet due and payable, the Company has good and
marketable title to all of its properties and assets used in and necessary
to the conduct of its business and has good and marketable title to its
leasehold interests, in each case subject to no material mortgage, pledge,
lien or encumbrance.
7. FINANCIAL STATEMENTS. The Company has made available to the
Investor a true and complete copy of the audited financial statements of
the Company, for the fiscal years ended June 30, 1995, June 30, 1996 and
June 30, 1997, and related statements of income and cash flows for the
years ended June 30, 1995, June 30, 1996 and June 30, 1997 and changes in
stockholders' equity for the period from July 1, 1994 to June 30, 1997, as
contained in the Company's Annual Reports on Form 10-KSB for the fiscal
years ended June 30, 1997 and June 30, 1996. All such financial statements
are complete and correct, are in accordance with the books and records of
the Company, present fairly the financial condition for the periods
indicated, and have been prepared in accordance with generally accepted
accounting principles ("GAAP") applied on a basis consistent with past
practice.
8. NO MATERIAL ADVERSE CHANGE. Since the Company's report on Form
10-KSB for the fiscal year ended June 30, 1997, there has been no material
adverse change in the business, operations or financial condition or
prospects of the Company.
9. REPORTS AND OTHER INFORMATION. All material reports, documents
and information required to be filed with the Securities and Exchange
Commission with respect to the Company have been filed. Since January 1,
1996, the Company has made all filings required to be made in compliance
with the Securities Act of 1933, as amended (the "Securities Act"), and
such did not omit to state any material fact necessary in order to make the
statements contained therein not misleading in light of the circumstances
under which such statements were made as of their respective dates of
filing.
10. STATEMENTS AND REPORTS TRUE AND CORRECT. The financial
statements identified in Section 2.7 were and are true and correct as of
the dates thereof. The financial statements identified in Section 2.7
contain no untrue statements of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
3. REPRESENTATIONS AND WARRANTIES OF INVESTOR.
The Investor represents and warrants that:
1. AUTHORIZATION. All action on the part of the Investor, including
any action by its officers, directors and stockholders, necessary for the
purchase of the Onsite Stock pursuant hereto and the performance of the
Investor's obligations hereunder has been taken or will be taken prior to
the Closing.
2. PURCHASE ENTIRELY FOR OWN ACCOUNT. This Agreement is made with
the Investor in reliance upon such Investor's representation to the
Company, which by the Investor's execution of this Agreement the Investor
hereby confirms, that the Onsite Stock to be purchased by the Investor will
be acquired for investment purposes for the Investor's own account, not as
a nominee or agent, and not with a view to the resale or distribution of
any part thereof in violation of applicable federal and state securities
laws. By executing this Agreement, the Investor further represents that
the Investor does not have any contract, undertaking, agreement or
arrangement with any person to sell, transfer or grant participations to
such person or to any third person, with respect to any of the Onsite
Stock. A transfer of the Onsite Stock to an Affiliate by Investor shall
not be deemed to be a violation of this provision. As used herein, the
term "Affiliate" shall mean, with respect to any person, any other person
that directly or indirectly through one or more intermediaries controls or
is controlled by or is under common control with such person.
3. RELIANCE UPON INVESTOR'S REPRESENTATIONS. Investor understands
that the Onsite Stock has not been registered under the Securities Act on
the grounds that the transactions contemplated by this Agreement and the
issuance of the Securities hereunder is exempt from registration under the
Securities Act pursuant to Section 4(2) thereof, and Regulation D
promulgated thereunder, and that the Company's reliance on such exemption
is predicated on the Investor's representations set forth herein.
4. RECEIPT OF INFORMATION. The Investor has received information
and had the opportunity to ask questions of the Company's management and
has considered such information in evaluating the terms and conditions of
the offering of the Onsite Stock, and the business, properties, prospects
and financial condition of the Company, and in deciding to accept the
Onsite Stock. The foregoing, however, does not limit or modify the
representations and warranties of the Company in Section 2 hereof or the
right of the Investor to rely thereon.
5. INVESTMENT EXPERIENCE. The Investor represents that it is
experienced in evaluating and investing in securities of companies and
acknowledges that it is able to fend for itself, can bear the economic risk
of the investment, and has such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and risks of
the investment in the Onsite Stock. The Investor further represents that
it has not been organized solely for the purpose of acquiring the Onsite
Stock.
6. ACCREDITED INVESTOR. The Investor represents that it is an
"accredited investor" as that term is defined in Regulation D, 17 C.F.R.
230.501(a).
7. RESTRICTED SECURITIES. The Investor understands that the Onsite
Stock issued, or to be issued, hereunder may not be sold, transferred, or
otherwise disposed of without registration under the Securities Act or an
exemption therefrom, and that in the absence of an effective registration
statement covering the Onsite Stock, or an available exemption from
registration under the Securities Act, the Onsite Stock must be held
indefinitely. In particular, the Investor is aware that the Onsite Stock
may not be sold pursuant to Rule 144, 17 C.F.R. 230.144, unless all of the
conditions of that Rule are met.
4. CONDITIONS OF INVESTOR'S OBLIGATIONS AT CLOSING.
The obligations of the Investor under this Agreement are subject to
the fulfillment on or before the Closing Date of each of the following
conditions, the waiver of which shall not be effective against the Investor
unless consented to by Investor in writing:
1. REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Company contained in Section 2 hereof shall be true and
correct in all material respects on and as of the Closing Date.
2. PERFORMANCE. The Company shall have performed and complied with
all agreements, obligations, and conditions contained in this Agreement
that are required to be performed or complied with by it on or before the
Closing Date.
3. QUALIFICATIONS. All authorizations, approvals, or permits, if
any, of any governmental authority or regulatory body that are required in
connection with the lawful issuance and sale of the Onsite Stock pursuant
to this Agreement shall be duly obtained and effective as of the Closing
Date.
4. PROCEEDINGS AND DOCUMENTS. All corporate and other proceedings
in connection with the transactions contemplated to occur on the Closing
Date and all documents incident thereto shall be reasonably satisfactory in
form and substance to the Investor, or Investor's counsel, as the case may
be.
5. EXECUTION OF RELATED AGREEMENTS. The following agreements between
the parties shall have been executed and delivered between the parties to
such agreements:
(a) the Stockholders Agreement attached hereto as Exhibit B
between the Investor and Onsite Stockholders (as defined in such
agreement). All such action shall have been taken as may be
necessary to elect Investor's designee to the Board of Directors
of the Company, effective upon Closing, as provided in the
Stockholders Agreement;
(b) the Registration Rights Agreement attached hereto as
Exhibit C between Company and Investor; and
(c) the Plan and Agreement of Reorganization between the
Company, Westar Business Services, Inc., Westar Energy, Inc., and
Westar Capital, Inc.
5. CONDITIONS OF THE COMPANY'S OBLIGATIONS AT CLOSING.
The obligations of the Company to the Investor under this Agreement
are subject to the fulfillment on or before the Closing Date of each of the
following conditions by the Investor, the waiver of which shall not be
effective unless consented thereto in writing:
1. REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Investor contained in Section 3 hereof shall be true and
correct in all material respects on and as of the Closing Date.
2. QUALIFICATIONS. All authorizations, approvals, or permits, if
any, of any governmental authority or regulatory body that are required in
connection with the lawful issuance and sale of the Onsite Stock pursuant
to this Agreement shall be duly obtained and effective as of the Closing
Date.
3. PERFORMANCE. The Investor shall have performed and complied with
all agreements, obligations, and conditions contained in this Agreement
that are required to be performed or complied with by it on or before the
Closing Date.
6. RESTRICTIONS ON TRANSFERABILITY OF SECURITIES; COMPLIANCE WITH
SECURITIES ACT.
1. RESTRICTIONS ON TRANSFERABILITY. The Onsite Stock shall not be
transferable, except upon the conditions specified in this Section. The
Investor will cause any successor or proposed transferee of the Onsite
Stock to agree to take and hold the Onsite Stock subject to the conditions
specified in this Section. The Investor acknowledges the restrictions upon
its right to transfer the Onsite Stock set forth in this Section.
2. RESTRICTIVE LEGEND. Each certificate representing the Onsite
Stock shall (unless otherwise permitted or unless the securities evidenced
by such certificate shall have been registered under the Securities Act) be
stamped or otherwise imprinted with a legend in the following form (in
addition to any legend required under applicable state securities laws):
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 OR ANY STATE SECURITIES LAWS. THEY MAY NOT BE SOLD
OR OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT AS TO THE SECURITIES UNDER SAID ACT AND ANY APPLICABLE
STATE SECURITIES LAW OR AN OPINION OF COUNSEL SATISFACTORY TO THE
COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED."
Upon request of the holder of such a certificate, the Company shall
remove the foregoing legend from the certificate or issue to such holder a
new certificate therefor free of any transfer legend, if, with such
request, the Company shall have received the opinion referred to in Section
6.3.1.
3. NOTICE OF PROPOSED TRANSFER.
1. NOTICE. Prior to any proposed transfer of any of the Onsite
Stock, the Investor shall give written notice to the Company of its
intention to effect such transfer. Each such notice shall describe the
manner and circumstances of the proposed transfer in sufficient detail, and
shall be accompanied by a written opinion of legal counsel reasonably
satisfactory to the Company, addressed to the Company and reasonably
satisfactory in form and substance to the Company's counsel, to the effect
that the proposed transfer of the Onsite Stock may be effected without
registration under the Securities Act, whereupon the Investor shall be
entitled to transfer the Onsite Stock, subject to the restrictions
contained in this Agreement, in accordance with the terms of the notice
delivered by the Investor to the Company.
2. CERTIFICATE FOR TRANSFERRED ONSITE STOCK. Each certificate
evidencing the Onsite Stock transferred as above provided shall bear the
appropriate restrictive legend set forth in Section 6.2 above, except that
such certificate shall not bear such restrictive legend if the opinion of
counsel referred to above is to the further effect that such legend is not
required in order to establish compliance with any provisions of the
Securities Act. Each transferee of the Onsite Stock shall agree with
respect to those securities to be bound by the terms of this subsection.
4. STANDSTILL AGREEMENT.
1. Investor agrees that for a period of five (5) years from the
date of this Agreement (the "Standstill Period"), except as otherwise
permitted or contemplated by this Agreement, Investor will not, directly or
indirectly, nor will it permit any of its affiliates, as that term is
defined in Section 3.2 hereof, to, from or after the date such person
becomes an affiliate, without the prior approval of a majority vote of the
directors of the Company's board of directors (a "Requisite Board Vote")
who are not the designated directors of the Investor or otherwise
affiliates of Investor (the "Disinterested Directors") do any of the
following:
(a) acquire, or offer to acquire, whether by purchase, gift
or by joining a partnership or other group (as defined in Section
13(d)(3) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")), any shares of the Company's common or preferred
stock (collectively, the "Voting Stock"), securities convertible
into, exchangeable for, or exercisable for Voting Stock which
would result in the Investor holding in excess of forty-five
percent (45%) of the Company's outstanding securities on a fully
diluted basis at the time of any such proposed acquisition,
except as contemplated by this Agreement; or
(b) (i) solicit, initiate or participate in any
"solicitation" of "proxies" or become a "participant" in any
"election contest" (as such terms are defined or used in
Regulation 14A under the Exchange Act, disregarding clause (iv)
of Rule 14a-1(1)(2) and including any exempt solicitation
pursuant to Rule 14a-2(b)(1)); call, or in any way participate in
a call, for any special meeting of stockholders of the Company
(or take any action with respect to acting by written consent of
the stockholders); request or take any action to obtain or retain
any list of holders of any securities of the Company; initiate or
propose any stockholder proposal or participate in the making of,
or solicit stockholders for the approval of, one or more
stockholder proposals relating to the Company's Voting Stock;
(ii) deposit any Voting Stock in a voting trust or subject them
to any voting agreement or arrangements, except as provided for
herein; (iii) form, join, or in any way participate in a group
with respect to any shares of Voting Stock, or any securities the
ownership thereof would make the owner a beneficial owner of
Voting Stock; (iv) otherwise act to control or influence the
Company or the management, the Disinterested Directors, policies
or affairs of the Company; (v) disclose any intent, purpose, plan
or proposal with respect to this Agreement or the Company, its
affiliates or the board of directors, management, policies, or
affairs or securities or assets of the Company or its affiliates
that is securities or assets of the Company or its Affiliates
that is not consistent with this Agreement or the Purchase
Agreement, including any intent, purpose, plan or proposal that
is conditioned upon, or that would require the Company or any of
its Affiliates to make public disclosure relating to any such
intent, purpose, plan, proposal or condition; or (vi) assist,
advise, encourage or act in concert with any person with respect
to, or seek to do, any of the foregoing.
2. If, at any time four or more quarterly dividends, whether or not
consecutive, on the Series C Convertible Preferred Stock shall be in
default, in whole or in part, if the Investor has exercised its rights to
elect a majority of the directors of the Company's board, all directors
shall be entitled to vote pursuant to Section 6.4.1 above. Such
modification to the provisions of Section 6.4.1 shall continue until all
dividends accrued on the Series C Convertible Preferred Stock shall have
been paid or set apart for payment, at which time Section 6.4.1 shall again
be in force as written.
3. Nothing in this Agreement shall preclude or prevent Investor from
making a counter-offer to acquire the Company in the event that a third
party makes an unsolicited bona fide publicly announced offer to acquire
control of the Company pursuant to a tender offer, merger, consolidation,
share exchange, purchase of a substantial portion of assets, business
combination or other similar transaction (a "Third Party Offer") and (B)
the Company thereafter (i) issues a statement recommending the Third Party
Offer to its shareholders or (ii) the Company either issues a statement not
recommending the Third Party Offer or takes no position with respect to
such offer but is required by a court to furnish the party making the Third
Party Offer a list of shareholders of the Company.
5. INVESTOR'S PREEMPTIVE RIGHTS. The Company hereby grants to the
Investor the right, on the terms (including the limitations contained in
Section 6.4) set forth below, to purchase the Investor's pro rata share of
New Securities (as defined below) which the Company may, from time to time,
propose to sell and issue for cash or other consideration. The pro rata
share is the ratio of (x) the underlying Common Stock and Preferred Stock
on a fully diluted basis held by the Investor at the time the New
Securities are to be sold, or otherwise transferred, to (y) the total
number of shares of common stock then issued and outstanding plus the
number of shares of underlying common stock represented by all then
outstanding securities convertible at a price below the then Average
Closing Price, as that term is defined in Section 7.1, into or exercisable
at a price below the then Average Closing Price, as that term is defined in
Section 7.1, for shares of common stock held by any Person. The right
shall be subject to the following provisions:
In the case of securities to be issued pursuant to the acquisition of
another corporation or entity by the Company by merger, purchase of all or
substantially all of the assets or other reorganization whereby the Company
shall become the owner of more than 50% of the voting power of such
corporation, the price at which the Investor may exercise its pre-emption
rights shall be the Average Closing Price, as that term is defined in
Section 7.1, for the twenty day period ending the day before a public
announcement of the merger or other transaction is made; provided, however,
that prior to December 31, 1998, such price shall be at least $1.00, but
not more than $2.00.
"New Securities" shall mean any authorized but unissued shares, and
any treasury shares, of capital stock of the Company and all rights,
options or warrants to purchase capital stock, and securities of any type
whatsoever that are, or may become, convertible into Common Stock;
PROVIDED, HOWEVER, that the term "New Securities" does not include:
- securities issued under this Agreement;
- shares of Class A Common issued upon conversion of options
and warrants issued and outstanding as of the Closing Date;
- securities issued in connection with any stock split, stock
dividend or reclassification of Class A Common distributable on a pro
rata basis to all holders of Class A Common;
- shares of Class A Common issued pursuant to options
outstanding and/or granted after the date hereof to any senior
management personnel or directors or pursuant to any Employee Benefit
Plan as that term is defined in SEC Rule 405 entered into by the
Company and approved by the Company's Board of Directors.
In the event the Company proposes to undertake an issuance of New
Securities, it shall give the Investor reasonable written notice of its
intention, describing the type of New Securities, the consideration and the
general terms upon which the Company proposes to issue the same. The
Investor shall have a reasonable time under the circumstances to agree to
purchase its pro rata share of such New Securities for the cash or cash
equivalent consideration and upon the general terms specified in the notice
by giving written notice to the Company and stating therein the quantity of
New Securities to be purchased. The New Securities shall be purchased
simultaneously with the closing of the offering of the New Securities if
practical, but in no event later than 15 days after the closing at the
Company's election.
The purchase rights granted under this Section shall be exercisable
only by the Investor and its successors but not its assigns, unless such
assign is an affiliate of the Investor. Upon request of the Investor or
its successors, the Company will promptly inform the requesting party in
writing of (x) the number of shares of common stock issued and outstanding
and (y) the number of shares of underlying common stock represented by then
outstanding securities convertible into or exercisable for shares of common
stock held by any Person, in each case as of the date of such notice by the
Company. The right of the Investor or successor to the private preemptive
right herein provided shall be determined on the basis of the information
contained in such notice, irrespective of any exercise of options or
conversion rights or like rights to acquire shares of Common Stock of the
Company after the date of such notice.
7. ADDITIONAL COVENANTS OF THE PARTIES.
1. RIGHT TO PURCHASE ADDITIONAL SHARES OF CLASS A COMMON STOCK.
Investor may, at its option and upon notice to the Company, between June
30, 1998 and December 31, 1998, purchase an additional two million shares
of Class A Common Stock at a per share price equal to the Average Closing
Price of the Class A Common Stock, but in no event less than $1.00 per
share nor greater than $2.00 per share. The purchase of the additional
shares shall be completed within 5 business days.
"Average Closing Price" shall mean the average closing price for the
Company's Class A Common Stock for a period of 20 consecutive trading days
as quoted on a national securities exchange, or, if the Company's Class A
Common Stock is not traded on a national securities exchange, then on the
NASDAQ Stock Market, or, if the Company's Class A Common Stock is not
traded on the NASDAQ Stock Market, then on the OTC Bulletin Board or
similar public market.
2. CALL FOR ADDITIONAL SHARES OF SERIES C CONVERTIBLE PREFERRED
STOCK. Provided that the Company is not in default with respect to the
dividends on the Series C Convertible Preferred Stock, the Company may, at
its option and upon 10 business days' written notice to the Investor, until
December 31, 1998, require Investor to purchase up to an additional four
hundred thousand shares of Series C Convertible Preferred Stock at $5.00
per share, using up to two separate calls of at least 100,000 shares each,
but limited to one such call per quarter. The purchase of the additional
shares shall be completed within 5 business days.
3. SECURITIES LAW FILINGS UNDERTAKING. So long as the Investor is a
holder of the Company's common stock or preferred stock, the Company will
use its best efforts to maintain adequate public information as is
necessary or appropriate such that the Company qualifies to use a Form S-3
Registration Statement and such that the Investor may transfer any of the
Company's common stock or preferred stock held by it pursuant to Rule 144
under the Securities Act. All such filings shall be made at the Company's
expense.
8. REGISTRATION RIGHTS.
1. DEMAND AND PIGGY-BACK RIGHTS. The Company shall enter into a
Registration Rights Agreement in the form attached hereto as Exhibit C,
pursuant to which the Investor shall be granted demand registration rights
and piggy-back registration rights.
9. MISCELLANEOUS
1. ENTIRE AGREEMENT. This Agreement and the schedules and other
documents referred to herein constitute the entire agreement among the
parties and no party shall be liable or bound to any other party in any
manner by any warranties, representations, or covenants except as
specifically set forth herein or therein.
2. SURVIVAL OF WARRANTIES. The warranties, representations and
covenants of the Company and the Investor, jointly and severally, contained
in or made pursuant to this Agreement shall survive the execution and
delivery of this Agreement and the Closing Date.
3. SUCCESSORS AND ASSIGNS. Except as otherwise provided herein, the
terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective successors and assigns of the parties. Nothing
in this Agreement, express or implied, is intended to confer upon any party
other than the parties hereto or their respective successors and assigns
any rights, remedies, obligations, or liabilities under or by reason of
this Agreement, except as expressly provided in this Agreement.
4. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of California.
5. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which may be deemed an original, but all of which
together shall constitute one and the same instrument. This Agreement may
be executed by a party and sent to the other parties via facsimile
transmission and the facsimile transmitted copy shall have the same
integrity, force and effect as an original document.
6. TITLES AND SUBTITLES. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
7. NOTICES. All notices or other communications required hereunder
shall be in writing and shall be sufficient in all respects and shall be
deemed delivered after 5 days if sent via registered or certified mail,
postage prepaid; the next day if sent by overnight courier service; or one
business day after transmission, if sent by facsimile, to the following:
If to Company : Onsite Energy Corporation
000 Xxxxxxx Xxxxxxx Xx., #000
Xxxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxxx
Fax: (000) 000-0000
with copies to: Xxxxxx Eng Linn & Xxxxxxxx
000 Xxxxxxx Xxxx, Xxxxx 0000
Xxxxxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxx, Esq.
Fax: (000) 000-0000
If to Investor: Westar Capital, Inc.
XX Xxx 000
000 Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: Xxxx X. Xxxxxx
Fax: (000) 000-0000
with copies to: Westar Capital, Inc.
XX Xxx 000
000 Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: Xxxx X. Xxxxxxxxx
Fax: (000) 000-0000
Any party hereto may change its address for purposes hereof by notice to
all other parties hereto.
8. DISPUTE RESOLUTION. No party to this Agreement shall be entitled
to take legal action with respect to any dispute relating hereto until it
has complied in good faith with the following alternative dispute
resolution procedures. This Section shall not apply to the extent it is
deemed necessary to take legal action immediately to preserve a party's
adequate remedy.
1. NEGOTIATION. The parties shall attempt promptly and in
good faith to resolve any dispute arising out of or relating to this
Agreement, through negotiations between representatives who have authority
to settle the controversy. Any party may give the other party written
notice of any such dispute not resolved in the normal course of business.
Within 20 days after delivery of the notice, representatives of both
parties shall meet at a mutually acceptable time and place, and thereafter
as often as they reasonably deem necessary, to exchange information and to
attempt to resolve the dispute, until the parties conclude that the dispute
cannot be resolved through unassisted negotiation. Negotiations extending
sixty days after notice shall be deemed at an impasse, unless otherwise
agreed by the parties.
If a negotiator intends to be accompanied at a meeting by an attorney,
the other negotiator(s) shall be given at least three working days' notice
of such intention and may also be accompanied by an attorney. All
negotiations pursuant to this clause are confidential and shall be treated
as compromise and settlement negotiations for purposes of the Federal and
state Rules of Evidence.
2. ADR PROCEDURE. If a dispute with more than $20,000.00 at
issue has not been resolved within 60 days of the disputing party's notice,
a party wishing resolution of the dispute ("Claimant") shall initiate
assisted Alternative Dispute Resolution ("ADR) proceedings as described in
this Section. Once the Claimant has notified the other ("Respondent") of a
desire to initiate ADR proceedings, the proceedings shall be governed as
follows: By mutual agreement, the parties shall select the ADR method they
wish to use. That ADR method may include arbitration, mediation,
mini-trial, or any other method which best suits the circumstances of the
dispute. The parties shall agree in writing to the chosen ADR method and
the procedural rules to be followed within 30 days after receipt of notice
of intent to initiate ADR proceedings. To the extent the parties are
unable to agree on procedural rules in whole or in part, the current Center
for Public Resources ("CPR") Model Procedure for Mediation of Business
Disputes, CPR Model Mini-trial Procedure, or CPR Commercial Arbitration
Rules--whichever applies to the chosen ADR method--shall control, to the
extent such rules are consistent with the provisions of this Section. If
the parties are unable to agree on an ADR method, the method shall be
arbitration.
The parties shall select a single Neutral third party to preside over
the ADR proceedings, by the following procedure: Within 15 days after an
ADR method is established, the Claimant shall submit a list of 5 acceptable
Neutrals to the Respondent. Each Neutral listed shall be sufficiently
qualified, including demonstrated neutrality, experience and competence
regarding the subject matter of the dispute. A Neutral who is an attorney
or former judge shall be deemed to have adequate experience. None of the
Neutrals may be present or former employees, attorneys, or agents of either
party. The list shall supply information about each Neutral, including
address, and relevant background and experience (including education,
employment history and prior ADR assignments). Within 15 days after
receiving the Claimant's list of Neutrals, the Respondent shall select one
Neutral from the list, if at least one individual on the list is acceptable
to the Respondent. If none on the list are acceptable to the Respondent,
the Respondent shall submit a list of 5 Neutrals, together with the above
background information, to the Claimant. Each of the Neutrals shall meet
the conditions stated above regarding the Claimant's Neutrals. Within 15
days after receiving the Respondent's list of Neutrals, the Claimant shall
select one Neutral, if at least one individual on the list is acceptable to
the Respondent. If none on the list are acceptable to the Claimant, then
the parties shall request assistance from the Center for Public Resources,
Inc., to select a Neutral.
The ADR proceeding shall take place within 30 days after the Neutral
has been selected. The Neutral shall issue a written decision within 30
days after the ADR proceeding is complete. Each party shall be responsible
for an equal share of the costs of the ADR proceeding. The parties agree
that any applicable statute of limitations shall be tolled during the
pendency of the ADR proceedings, and no legal action may be brought in
connection with this Agreement during the pendency of an ADR proceeding.
The Neutral's written decision shall become final and binding on the
parties, unless a party objects in writing within 30 days of receipt of the
decision. The objecting party may then file a lawsuit in any court allowed
by this Agreement. The Neutral's written decision shall be admissible in
the objecting party's lawsuit.
9. AMENDMENTS AND WAIVERS. Any term of this Agreement may be
amended and the observance of any term of this Agreement may be waived
(either generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the parties. Any
amendment or waiver effected in accordance with this paragraph shall be
binding upon the Investor, its successors or assigns, and each future
holder of such securities and the Company. A waiver by any party hereto of
a default in the performance of this Agreement shall not operate as a
waiver of any future or other default, whether of a like or different kind.
10. SEVERABILITY. If one or more provisions of this Agreement are
held to be unenforceable under applicable law, such provision shall be
excluded from this Agreement and the parties shall use their efforts to
substitute provisions of substantially the same effect. The balance of the
Agreement shall be interpreted as if such provision were so excluded and
shall be enforceable in accordance with its terms.
11. COUNTERPARTS; SIGNATURES. This Agreement may be executed in one
or more counterparts, each of which may be deemed an original, but all of
which together shall constitute one and the same instrument. This
Agreement may be executed by a party and sent to the other parties via
facsimile transmission and the facsimile transmitted copy shall have the
same integrity, force and effect as an original document.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
COMPANY:
Onsite Energy Corporation
By: XXXXXXX X. XXXXXXXX
Xxxxxxx X. Xxxxxxxx, President
INVESTOR:
Westar Capital, Inc.
By: XXXX X. XXXXXX
Xxxx X. Xxxxxx, President
