PLAN AND AGREEMENT OF REORGANIZATION
This PLAN AND AGREEMENT OF REORGANIZATION (the "Agreement") is entered
into as of this 28th day of October, 1997, by and among Onsite Energy
Corporation, a Delaware corporation ("Onsite"), Westar Business Services, Inc.,
a Kansas corporation ("WBS"), Westar Energy, Inc. ("Westar Energy"), a Kansas
corporation and the sole shareholder of WBS), and Westar Capital, Inc., a Kansas
corporation ("Westar Capital").
PLAN OF REORGANIZATION
The transaction contemplated by this Agreement is intended to be a "tax
free" exchange (the "Reorganization") as contemplated by the provisions of
Section 368(a)(1)(B) of the Internal Revenue Code of 1986, as amended. However,
no representation is made nor has an opinion been obtained that the transaction
qualifies for Section 368(a)(1)(B) treatment. Onsite will offer to acquire 100%
of WBS's issued and outstanding capital stock, consisting solely of Common
Stock, no par value (the "WBS Shares"), in exchange for shares of Onsite's
voting common stock, par value $0.001 per share. Upon the consummation of the
transfer of WBS Shares and the issuance of the Exchange Stock to Westar Capital
as set forth in Sections 1 and 2 herein below, WBS will be a wholly-owned
subsidiary of Onsite.
AGREEMENT
SECTION 1
TRANSFER OF WBS SHARES
1.1 Delivery of WBS Shares. Westar Energy, the sole shareholder of WBS
as of the closing date as such term is defined in Section 3.1 hereof (the
"Closing Date"), shall transfer, assign, convey and deliver to Onsite, at the
Closing, as such term is defined in Section 3.1 hereof (the "Closing"),
certificates representing 100% of the WBS Shares. The transfer of all WBS Shares
shall be made free and clear of all liens, mortgages, pledges, encumbrances or
charges, whether disclosed or undisclosed, except as Westar Energy and Onsite
shall have otherwise agreed in writing prior to the Closing.
SECTION 2
ISSUANCE OF ONSITE STOCK
TO WESTAR CAPITAL
2.1 Issuance and Delivery of Exchange Stock. As consideration for the
transfer, assignment, conveyance and delivery of the WBS Shares hereunder, on
the Closing Date, Onsite shall deliver the "Exchange Stock" as follows:
(a) to Westar Capital, 1.7 million shares of Onsite voting
common stock, in exchange for all shares of WBS Common Stock
outstanding immediately prior to the Closing Date; and
(b) to Xxxxxx Eng Xxxx & Xxxxxxxx as Escrow Agent, 800,000
shares of Onsite voting common stock to be delivered to Westar
Capital in the event that WBS has executed a contract with (i)
the Kansas City, Kansas School District (KCK) for a minimum of
$3 million, or (ii) Health Midwest for a minimum of $2
million, before March 1, 1998, pursuant to the Escrow
Agreement and Instructions attached hereto as Exhibit A.
2.2 No Lien or Encumbrances on Exchange Stock. The issuance of the
Exchange Stock shall be made free and clear of all liens, mortgages, pledges,
encumbrances or charges, whether disclosed or undisclosed, except as Westar
Energy and Onsite shall have otherwise agreed in writing. As provided herein and
immediately prior to the Closing Date, WBS shall have issued and outstanding one
thousand (1,000) shares of WBS Common Stock.
2.3 Restrictions on the Exchange Stock. None of the Exchange Stock
issued to Westar Capital shall, at the time of Closing, be registered under
federal or state securities laws but, rather, the Exchange Stock shall be issued
pursuant to an exemption therefrom. All of such shares shall bear a legend
worded substantially as follows:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 OR ANY STATE SECURITIES LAWS. THEY MAY NOT BE SOLD OR OFFERED FOR
SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE
SECURITIES UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAW OR AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION
IS NOT REQUIRED."
Onsite's transfer agent shall annotate its records to reflect the
restrictions on transfer embodied in the legend set forth above. There shall be
no requirement that Onsite register the Exchange Stock under the Securities Act
of 1933, as amended (the "Securities Act"), except as set forth in the
Registration Rights Agreement between Westar Capital and Onsite of even date
herewith, nor shall WBS, Westar Energy or Westar Capital be required to register
any WBS Shares under the Securities Act.
2.4 Stockholders' Agreement. The Exchange Stock shall also be subject
to certain restrictions as set forth in the Stockholders Agreement dated October
28, 1997, between certain Onsite Shareholders and Westar Capital, and shall
contain a legend to that effect.
1039(6).nks November 10, 1997
2
SECTION 3
CLOSING
3.1 Closing of Transaction; Closing Date. The Closing of the
Reorganization (the "Closing") shall take place on October 31, 1997, (the
"Closing Date") provided all of the conditions precedent provided for in Section
7 shall have been satisfied or waived and all deliveries provided for in
Sections 3.2 and 3.3 have been made. The Closing shall take place simultaneously
at the offices of Xxxxxx Eng Linn & Xxxxxxxx, 000 Xxxxxxx Xxxx, Xxxxx 0000,
Xxxxxxxxxx, Xxxxxxxxxx, at the offices of WBS, 000 Xxxxxx Xxxxxx, Xxxxxx,
Xxxxxx, and at the offices of Onsite, 000 Xxxxxxx Xxxxxxx Xxxx, Xxxxx 000,
Xxxxxxxx, Xxxxxxxxxx.
3.2 Deliveries on the Closing Date by WBS and Westar Energy. WBS and
Westar Energy shall deliver or cause to be delivered to Onsite the following on
or before the Closing Date:
(a) a copy of the minutes and/or consent of WBS's Board of
Directors authorizing WBS to close the transaction described by this
Agreement;
(b) a Certificate of Good Standing for WBS issued not more
than thirty days prior to the Closing by the Kansas Secretary of State;
(c) certified copies of WBS's Articles and Bylaws, as amended
to the Closing Date;
(d) copies of WBS's unaudited financial statements for the
years ended December 31, 1995 and December 31, 1996, and unaudited
financial statements for the period ended September 30, 1997, certified
to be true and complete copies;
(e) share certificates representing all of the shares of WBS
Common Stock, sufficiently endorsed by stock powers for transfer to
Onsite pursuant to the terms and conditions of this Agreement;
(f) a certified resolution of Westar Energy forgiving that
portion of that certain note by and between WBS and Westar Energy for
which WBS has responsibility for repayment or liability;
(g) copies of the resignation letters of the directors and
officers of WBS;
(h) a certificate signed by WBS's President dated as of the
Closing Date stating that all of WBS's representations and warranties
set forth in this Agreement
1039(6).nks November 10, 1997
3
are true and correct and that all of the conditions of this Agreement applicable
to the Closing Date have been satisfied or waived;
(i) a certificate signed by the President of Westar Energy
dated as of the Closing Date stating that all of the representations
and warranties by WBS and/or Westar Energy set forth in this Agreement
are true and correct and that all of the conditions of this Agreement
applicable to the Closing Date have been satisfied or waived;
(j) a certificate signed by the President of Westar Capital
dated as of the Closing Date stating that all of the representations
and warranties by Westar Capital set forth in this Agreement are true
and correct and that all of the conditions of this Agreement applicable
to the Closing Date have been satisfied or waived; and
(k) a copy of the Non-Compete Agreement between Western
Resources, Inc. and Onsite, attached hereto as Exhibit B, executed by
Western Resources, Inc.
3.3 Deliveries on the Closing Date by Onsite to Westar Energy. Onsite
shall deliver, or cause to be delivered, to Westar Energy the following on or
before the Closing Date:
(a) Share certificates evidencing the appropriate number of
shares of Onsite Common Stock in accordance with the provisions of
Section issued in the name of Westar Capital;
(b) a copy of the minutes and/or consents of Onsite's Board of
Directors authorizing Onsite to take the necessary steps toward Closing
the transaction described by this Agreement;
(c) a copy of a Certificate of Good Standing for Onsite issued
not more than thirty days prior to the Closing by the Delaware
Secretary of State;
(d) a certificate signed by Onsite's Chief Executive Officer
dated as of the Closing Date stating that all of Onsite's
representations and warranties set forth in this Agreement are true and
correct and that all of the conditions of this Agreement applicable to
the Closing Date have been satisfied or waived; and
(e) an opinion of counsel in the form attached hereto as
Exhibit C.
(f) a copy of the Purchase Agreement between Onsite and Westar
Energy in the form attached hereto as Exhibit D.
1039(6).nks November 10, 1997
4
3.4 Filings; Cooperation. WBS, Westar Energy, Westar Capital and Onsite
shall, on request and without further consideration, cooperate with one another
by furnishing or using their best efforts to cause others to furnish any
additional information and/or executing and delivering or using their best
efforts to cause others to execute and deliver any additional documents and/or
instruments, and doing or using their best efforts to cause others to do any and
all such other things as may be reasonably required by the parties or their
counsel to consummate or otherwise implement the transactions contemplated by
this Agreement.
SECTION 4
REPRESENTATIONS AND WARRANTIES BY WBS, WESTAR ENERGY,
AND WESTAR CAPITAL
4.1 Representations and Warranties of WBS and Westar Energy. Subject to
the schedules attached hereto and incorporated herein by this reference (which
schedules shall be acceptable to Onsite), WBS and Westar Energy, jointly and
severally, represent and warrant to Onsite as follows:
(a) Organization and Good Standing. WBS is a corporation duly
organized, validly existing and in good standing under the laws of Kansas, and
has all requisite power and authority to own or lease properties and to carry on
business as now being conducted and as proposed to be conducted. WBS is duly
qualified and in good standing in each jurisdiction in which the nature of its
properties, assets or business requires such qualification.
(b) Capitalization. WBS's authorized capital stock consists of
1,000 shares, all of which are Common Stock, no par value, of which all are
issued and currently outstanding or will be issued and outstanding as of the
Closing Date. All of such outstanding shares are validly issued, fully paid and
non-assessable. WBS does not have any other equity securities or instruments
convertible into equity securities authorized, issued or outstanding.
(c) WBS Authority to Execute Agreement. The shareholders of
WBS, if required, and WBS's board of directors, pursuant to the power and
authority legally vested in them, have duly authorized the execution and
delivery by WBS of this Agreement, and have duly agreed to each of the
transactions hereby contemplated. WBS has the power and authority to execute and
deliver this Agreement, to approve the transactions hereby contemplated and to
take all other actions required to be taken by it pursuant to the provisions
hereof. WBS has taken all actions required by law, its Articles of
Incorporation, as amended, or otherwise to authorize the execution and delivery
of this Agreement. This Agreement is valid and binding upon WBS in accordance
with its terms. Neither the execution and delivery of this Agreement nor the
consummation of the transactions
1039(6).nks November 10, 1997
5
contemplated hereby will constitute a violation or breach of the Articles of
Incorporation, as amended, or the Bylaws, as amended, of WBS, or any agreement,
stipulation, order, writ, injunction, decree, law, rule or regulation applicable
to WBS.
(d) Westar Energy Authority to Execute Agreement. The
shareholders of Westar Energy, if required, and Westar Energy's board of
directors, pursuant to the power and authority legally vested in them, have duly
authorized the execution and delivery of this Agreement, and have duly agreed to
each of the transactions hereby contemplated. Westar Energy has the power and
authority to execute and deliver this Agreement, to approve the transactions
hereby contemplated and to take all other actions required to be taken by it
pursuant to the provisions hereof. Westar Energy has taken all actions required
by law, its Articles of Incorporation, as amended, or otherwise to authorize the
execution and delivery of this Agreement. This Agreement is valid and binding
upon Westar Energy in accordance with its terms. Neither the execution and
delivery of this Agreement nor the consummation of the transactions contemplated
hereby will constitute a violation or breach of the Articles of Incorporation,
as amended, or the Bylaws, as amended, of Westar Energy, or any agreement,
stipulation, order, writ, injunction, decree, law, rule or regulation applicable
to Westar Energy.
(e) Subsidiaries. WBS has no subsidiaries and no other
material investments, directly or indirectly, or other material financial
interest in any other corporation or business organization, joint venture or
partnership of any kind whatsoever.
(f) Stock Free from Encumbrances. Westar Energy is the legal
and beneficial owner of the WBS Shares, free of any liens and encumbrances, and
no other party has any right to assert an interest, inchoate or otherwise, in
any of the WBS Shares.
(g) Financial Statements. WBS's financial statements are true,
complete and correct in all material respects and have been prepared in
accordance with past practices, applied on a basis consistent with prior
accounting periods, present fairly the financial position and the results of
operations and changes in financial positions for the periods indicated and have
accurately recorded all material revenues and expenses of WBS on an accrual
basis as reflected in the books and records of WBS. The books of account of WBS
fully and fairly reflect all of the material transactions of WBS.
(h) Marketable Title. WBS has good and marketable title to all
of its material properties and assets, free and clear of any material
imperfection of title, security interest, lien, claim or encumbrance of any kind
except for the lien of taxes not yet due and payable, and assets or properties
held under valid and subsisting leases which are in full force and effect and
with which WBS is not in default with or without notice or lapse of time.
1039(6).nks November 10, 1997
6
(i) Use of Westar Name. On the Closing Date, WBS shall change
its name to a name of Onsite's choosing which does not include the word
"Westar." After Closing, WBS's right to use the names "Westar," "Westar Business
Services," "Westar Business Services, Inc." or any service name or xxxx related
to Westar Energy or Western Resources, Inc. shall be controlled by the
Transition Agreement between Onsite, WBS, Westar Energy, Westar Capital and
Western Resources, Inc., attached hereto as Exhibit E.
(j) Absence of Certain Changes. Since the date of the most
recent available unaudited financial statements specified in Section 4.1(g)
above, to WBS's knowledge there has been no material change in WBS's financial
condition, assets or liabilities.
(k) Absence of Undisclosed Liabilities. Except as disclosed on
WBS's most recent available balance sheet and, to WBS's knowledge, WBS has no
other liabilities, other than those incurred in the ordinary course of business,
secured or unsecured and whether accrued, absolute, contingent, direct, indirect
or otherwise, which would be individually, or in the aggregate, material to the
results of operations or financial condition of WBS as of the Closing Date.
(l) Employee Obligations. Except as provided for in Section
8.1(g), WBS has no liabilities to any of its employees or any governmental
authority or private insurer, in connection with employee compensation and
benefits, including but not limited to: (i) unpaid wages/salary, including
unpaid overtime compensation whether accrued, absolute, contingent, direct,
indirect or otherwise, (ii) participation in WBS's medical and dental plans,
(iii) long-term disability plan payments, and (iv) workers' compensation
expenses, including settlement amounts.
(m) Litigation. There are no outstanding orders, judgments,
injunctions, awards or decrees of any court, governmental or regulatory body or
arbitration tribunal against WBS or its properties. There are no actions, suits
or proceedings pending, or, to the knowledge of WBS, threatened against or
affecting WBS, any of its officers or directors relating to their positions as
such, or any of its properties, at law or in equity, or before or by any
federal, state, municipal or other governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, in connection with the
business, operations or affairs of WBS which might result in any material
adverse change in the operations or financial condition of WBS, or which might
prevent or materially impede the consummation of the transactions under this
Agreement.
(n) Tax Matters. All federal, foreign, state and local tax
returns, reports and information statements required to be filed by or with
respect to the activities of WBS have been filed for all the years and periods
for which such returns and statements were due, including extensions thereof.
WBS has not incurred any liability with respect to any federal,
1039(6).nks November 10, 1997
7
foreign, state or local taxes except in the ordinary and regular course of
business. WBS is not delinquent in the payment of any such tax or assessment,
and no deficiencies for any amount of such tax have been proposed or assessed.
(o) Compliance with Laws. To WBS's knowledge, the operations
and affairs of WBS do not violate any law, ordinance, rule or regulation
currently in effect, or any order, writ, injunction or decree of any court or
governmental agency, the violation of which would substantially and adversely
affect the business, financial condition or operations of WBS.
(p) Operating Authorities. To WBS's knowledge, WBS has all
material operating authorities, governmental certificates and licenses, permits,
authorizations and approvals ("Permits") required to conduct its business as
presently conducted. Except as otherwise disclosed in this Agreement, during the
last two years, there has not been any notice or adverse development regarding
such Permits; such Permits are in full force and effect; no material violations
are or have been recorded in respect of any Permit; and no proceeding is pending
or, to WBS's knowledge, threatened to revoke or limit any Permit.
(q) Books and Records. The books and records of WBS are
complete and correct, are maintained in accordance with good business practice
and accurately present and reflect, in all material respects, all of the
transactions therein described, and there have been no transactions involving
WBS which properly should have been set forth therein and which have not been
accurately so set forth.
(r) Minute Book. The Minute Book of WBS as delivered to Onsite
contains complete and correct records of all meetings and other corporate
actions of the Boards of Directors (including any committee established by the
Directors) and the shareholders of WBS, as maintained by it, and is maintained
pursuant to the requirements of the jurisdictions of its incorporation.
(s) Contracts. A true, correct, and complete copy of each of
WBS's active contracts (the "Contracts") is included in the business records
located at WBS's business. WBS has duly performed in all material respects all
obligations to be performed by it under the Contracts at or prior to the Closing
Date and has received no notice from any other party thereto that it is in
default in any material respect under any of its obligations thereunder. No
other party to any Contract is in default in any material respect under any of
its obligations thereunder. To WBS's knowledge, no condition or state of facts
exists that with notice or the passage of time, or both, would constitute a
default by WBS under any Contract, and each Contract is in full force and effect
and enforceable by WBS against all other parties thereto in all material
respects.
1039(6).nks November 10, 1997
8
(t) Finder's Fee. WBS and Westar Energy are not liable or
obligated to pay any finder's, agent's, broker's or consultant's fee arising out
of or in connection with this Agreement or the transactions contemplated by this
Agreement, and WBS and Westar Energy have done nothing to cause Onsite to incur
any liability to any party for any finder's, agent's, broker's or consultant's
fee arising out of or in connection with this Agreement or the transactions
contemplated by this Agreement.
4.2 Representations and Warranties of Westar Capital.
Westar Capital represents and warrants to Onsite as follows:
(a) Westar Capital Authority to Execute Agreement. The
shareholders of Westar Capital, if required, and Westar Capital's board of
directors, pursuant to the power and authority legally vested in them, have duly
authorized the execution and delivery of this Agreement, and have duly agreed to
each of the transactions hereby contemplated. Westar Capital has the power and
authority to execute and deliver this Agreement, to approve the transactions
hereby contemplated and to take all other actions required to be taken by it
pursuant to the provisions hereof. Westar Capital has taken all actions required
by law, its Articles of Incorporation, as amended, or otherwise to authorize the
execution and delivery of this Agreement. This Agreement is valid and binding
upon Westar Capital in accordance with its terms. Neither the execution and
delivery of this Agreement nor the consummation of the transactions contemplated
hereby will constitute a violation or breach of the Articles of Incorporation,
as amended, or the Bylaws, as amended, of Westar Capital, or any agreement,
stipulation, order, writ, injunction, decree, law, rule or regulation applicable
to Westar Capital.
(b) Purchase Entirely for Own Account. This Agreement is made by
---------------------------------
Onsite in reliance upon Westar Capital's representation to Onsite, which by
Westar Capital's execution of this Agreement Westar Capital hereby confirms,
that the Exchange Stock to be issued to Westar Capital hereunder will be
acquired for investment purposes for Westar Capital's own account, not as a
nominee or agent, and not with a view to the resale or distribution of any part
thereof in violation of applicable federal and state securities laws. By
executing this Agreement, Westar Capital further represents that Westar Capital
does not have any contract, undertaking, agreement or arrangement with any
person to sell, transfer or grant participations to such person or to any third
person, with respect to any of the Exchange Stock. A transfer of the Exchange
Stock to an Affiliate by Westar Capital shall not be deemed to be a violation
of this provision. As used herein, the term "Affiliate" shall mean, with
respect to any person, any other person that directly or indirectly through one
or more intermediaries controls or is controlled by or is under common control
with such person.
(c) Reliance Upon Westar Capital's Representations.
Westar Capital understands that the Exchange Stock has not been registered under
the Securities Act on the
1039(6).nks November 10, 1997
9
grounds that the transactions contemplated by this Agreement and the issuance of
the Exchange Stock is exempt from registration under the Securities Act pursuant
to Section 4(2) thereof, and Regulation D promulgated thereunder, and that the
Onsite's reliance on such exemption is predicated on Westar Capital's
representations set forth herein.
(d) Receipt of Information. Westar Capital has received
information and had the opportunity to ask questions of Onsite management and
has considered such information in evaluating the terms and conditions of the
offering of the Exchange Stock, and the business, properties, prospects and
financial condition of Onsite, and in deciding to accept the Exchange Stock. The
foregoing, however, does not limit or modify the representations and warranties
of Onsite in Section 5.1 hereof or the right of Westar Capital to rely thereon.
(e) Investment Experience. Westar Capital represents that it
is experienced in evaluating and investing in securities of companies and
acknowledges that it is able to fend for itself, can bear the economic risk of
the investment, and has such knowledge and experience in financial and business
matters that it is capable of evaluating the merits and risks of the investment
in the Exchange Stock. WBS, Westar Energy and Westar Capital further represent
that none of them has been organized solely for the purpose of acquiring the
Exchange Stock.
(f) Accredited Investor. Westar Capital represents that it is
an "accredited investor" as that term is defined in Regulation D, 17 C.F.R.
230.501(a).
(g) Restricted Securities. Westar Capital understands that the
Exchange Stock issued, or to be issued, hereunder may not be sold, transferred,
or otherwise disposed of without registration under the Securities Act or an
exemption therefrom, and that in the absence of an effective registration
statement covering the Exchange Stock, or an available exemption from
registration under the Securities Act, the Exchange Stock must be held
indefinitely. In particular, Westar Capital is aware that the Exchange Stock may
not be sold pursuant to Rule 144, 17 C.F.R. 230.144, unless all of the
conditions of that Rule are met.
4.3 Disclosure. WBS and Westar Energy, jointly and severally, have
disclosed all events, conditions and facts materially affecting the business and
prospects of WBS. No representation or warranty by WBS or Westar Energy in this
Agreement, nor any statement or certificate furnished or to be furnished to
Onsite by WBS or Westar Energy pursuant hereto, or in connection with the
transactions contemplated hereby, knowingly contains or will contain any untrue
statement of a material fact, or omits or will omit to state a material fact
necessary to make the statements contained therein not misleading.
1039(6).nks November 10, 1997
10
SECTION 5
REPRESENTATIONS AND WARRANTIES BY ONSITE
5.1 Representations and Warranties of Onsite. Onsite represents and
warrants to WBS as follows:
(a) Organization and Good Standing. Onsite is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware and has full corporate power and authority to own or lease its
properties and to carry on its business as now being conducted and as proposed
to be conducted.
(b) Capitalization. Onsite's authorized capital stock consists
of (a) 24 million shares of Common Stock, 0.001 par value, of which 23,999,000
are designated Class A Common Stock, of which 12,944,172 are currently
outstanding and held by approximately 217 shareholders of record, and (b) one
million shares of preferred stock, $0.001 par value, of which two hundred
thousand (200,000) are issued and currently outstanding.
(c) Authority to Execute Agreement. The Board of Directors of
Onsite, pursuant to the power and authority legally vested in it, has duly
authorized the execution and delivery by Onsite of this Agreement, and has duly
agreed to each of the transactions hereby contemplated. Onsite has the power and
authority to execute and deliver this Agreement, to approve the transactions
hereby contemplated and to take all other actions required to be taken by it
pursuant to the provisions hereof. Onsite has taken all actions required by law,
its Articles of Incorporation, as amended, or otherwise to authorize the
execution and delivery of this Agreement. This Agreement is valid and binding
upon Onsite. Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will constitute a violation
or breach of the Articles of Incorporation, as amended, or the Bylaws, as
amended, of Onsite, or any agreement, stipulation, order, writ, injunction,
decree, law, rule or regulation applicable to Onsite.
(d) Subsidiaries. Except as set forth in Schedule 5.1(d),
Onsite has no subsidiaries, no other investments, directly or indirectly, and no
other financial interest in any other corporation or business organization,
joint venture or partnership of any kind whatsoever.
(e) Financial Statements. Onsite has delivered to WBS, prior
to the Closing Date, copies of Onsite's audited financial statements for each of
the three years ended June 30, 1995, 1996 and 1997, which are true and complete
and have been prepared in accordance with generally accepted accounting
principles applied on a basis consistent with past practice.
1039(6).nks November 10, 1997
11
(f) Absence of Certain Changes. Since the audited financial
statements in Onsite's Form 10-KSB for the year ended June 30, 1997, to Onsite's
knowledge, there has been no material change in Onsite's financial condition,
assets or liabilities.
(g) Absence of Undisclosed Liabilities. Except to the extent
reflected in Onsite's most recent financial statements in Onsite's Form 10-KSB
for the year ended June 30, 1997, and to Onsite's knowledge, Onsite has no other
liabilities, other than those incurred in the ordinary course of business,
secured or unsecured and whether accrued, absolute, contingent, direct, indirect
or otherwise except the expenses in connection with the acquisition of WBS,
which would be materially adverse, individually or in the aggregate, to the
results of operation or financial condition of Onsite.
(h) Litigation. Other than as disclosed in the auditors
response letter dated September 25, 1997 and previously provided to Westar
Energy, there are no outstanding orders, judgments, injunctions, awards or
decrees of any court, governmental or regulatory body or arbitration tribunal
against Onsite or its properties. There are no actions, suits or proceedings
pending, or, to the knowledge of Onsite, threatened against or relating to
Onsite. Onsite is not in default under or with respect to any judgment, order,
writ, injunction or decree of any court or of any federal, state, municipal or
other governmental authority, department, commission, board, agency or other
instrumentality.
(i) Tax Matters. All federal, foreign, state and local tax
returns, reports and information statements required to be filed by or with
respect to the activities of Onsite have been filed for all the years and
periods for which such returns and statements were due, including extensions
thereof. Onsite has not incurred any liability with respect to any federal,
foreign, state or local taxes except in the ordinary and regular course of
business. Onsite is not delinquent in the payment of any such tax or assessment,
and no deficiencies for any amount of such tax have been proposed or assessed.
(j) Compliance with Laws. To Onsite's knowledge, the
operations and affairs of Onsite do not violate any law, ordinance, rule or
regulation currently in effect, or any order, writ, injunction or decree of any
court or governmental agency, the violation of which would substantially and
adversely affect the business, financial condition or operations of Onsite.
(k) Reports and Other Information. All material reports,
documents and information required to be filed with the Securities and Exchange
Commission with respect to Onsite have been filed. Since January 1, 1996, Onsite
has made all filings required to be made in compliance with the Securities Act,
and, to Onsite's knowledge, such did not omit to state any material fact
necessary in order to make the statements contained therein not misleading in
light of the circumstances under which such statements were made as of their
respective dates of filing.
(l) Operating Authorities. To Onsite's knowledge, Onsite
has all material operating authorities, governmental certificates and licenses,
permits, authorizations and
1039(6).nks November 10, 1997
12
approvals ("Permits") required to conduct its business as presently conducted.
During the last 2 years, there has not been any notice or adverse development
regarding such Permits; such Permits are in full force and effect; no material
violations are or have been recorded in respect of any Permit; and no proceeding
is pending or, to Onsite's knowledge, threatened to revoke or limit any Permit.
(m) Books and Records. The books and records of Onsite are
complete and correct, are maintained in accordance with good business practice
and accurately present and reflect, in all material respects, all of the
transactions therein described, and there have been no transactions involving
Onsite which properly should have been set forth therein and which have not been
accurately so set forth.
(n) Finder's Fees. Onsite is not liable or obligated to pay
any finder's, agent's, broker's or consultant's fee arising out of or in
connection with this Agreement or the transactions contemplated by this
Agreement.
5.2 Disclosure. Onsite has disclosed all events, conditions and facts
materially affecting the business and prospects of Onsite. No representation or
warranty by Onsite in this Agreement, nor any statement or certificate furnished
or to be furnished to WBS by Onsite pursuant hereto, or in connection with the
transactions contemplated hereby, knowingly contains or will contain any untrue
statement of a material fact, or omits or will omit to state a material fact
necessary to make the statements contained therein not misleading.
SECTION 6
CONDUCT OF PARTIES PENDING CLOSING
6.1 Conduct of WBS Business Pending Closing. WBS covenants that,
pending the Closing Date:
(a) No change will be made in WBS's Articles of Incorporation
or bylaws other than such changes as may be first approved in writing by Onsite.
(b) Subject to the protection provided by Section 8.8 herein,
WBS has given or will give to Onsite, its accountants and other representatives
full access during normal business hours throughout the period prior to the
Closing Date, to all of WBS's properties, books, contracts, commitments, and
records, and has furnished or will furnish Onsite during such period with all
such information concerning WBS's affairs as Onsite may reasonably request.
(c) WBS's business will be conducted only in the ordinary
course, except as approved in writing by Onsite.
1039(6).nks November 10, 1997
13
(d) WBS will not consider any inquiries or proposals relating
to the possible merger or reorganization of WBS or a purchase of its assets,
except to the extent that they may be legally obligated to do so in which case
Onsite shall be notified in writing.
(e) Except for the contracts related to KCK, Health Midwest,
and Mid-States referenced in Section and other than in the ordinary course of
business, unless such contract or commitment is less than $50,000, no contract
or commitment will be entered into by or on behalf of WBS or indebtedness
otherwise incurred, except with the prior consent of Onsite.
(f) No material increases in annual compensation to employees
shall be made and no employment agreements shall be entered into with any
employees of WBS.
(g) WBS shall not dispose of any of its assets, except in
connection with the "Appliances Business," or in the ordinary course of
business.
(h) WBS will use its best efforts to preserve WBS's business
intact; and to preserve the goodwill of those having business relations with
WBS.
6.2 Conduct of Onsite Pending Closing. Onsite covenants that,
pending the Closing:
(a) Onsite's business will be conducted only in the
ordinary course.
(b) Except for the designation of the Series C Preferred
Stock, no change will be made in Onsite's Articles of Incorporation or bylaws
other than such changes as may be first approved in writing by WBS.
(c) Onsite will not consider any inquiries or proposals
relating to the possible merger or reorganization of Onsite or a purchase of its
assets, except to the extent that they may be legally obligated to do so in
which case Westar Energy shall be notified in writing.
(d) Onsite has given or will give to WBS and/or Westar Energy,
its accountants and other representatives, full access during normal business
hours throughout the period prior to the Closing Date, to all of Onsite's
properties, books, contracts, commitments, and records, and has furnished or
will furnish WBS during such period with all such information concerning
Onsite's affairs as WBS may reasonably request.
SECTION 7
CONDITIONS PRECEDENT TO CLOSING
7.1 Conditions Precedent to Closing. All obligations of Onsite and WBS
under this Agreement are subject to the fulfillment, prior to or at the Closing
Date, of all conditions herein set forth, including, but not limited to, receipt
by the appropriate party of
1039(6).nks November 10, 1997
14
all deliveries required by Sections 3.2 and 3.3 herein, and fulfillment, prior
to the Closing Date, of each of the following conditions:
(a) WBS's, Westar Energy's, and Onsite's representations,
warranties and covenants contained in this Agreement shall be true at the time
of the Closing Date as though such representations, warranties and covenants
were made at such time.
(b) WBS shall have performed and complied with all agreements
and conditions required by this Agreement to be performed or complied with prior
to or at the Closing Date.
(c) Westar Energy shall have performed and complied with all
agreements and conditions required by this Agreement to be performed or complied
with prior to or at the Closing Date.
(d) Onsite shall have performed and complied with all
agreements and conditions required by this Agreement to be performed or complied
with prior to or at the Closing Date.
(e) Effective as of the Closing Date, WBS's director(s) shall
have resigned from the board and appointed new director(s), as nominated by
letter from Onsite's Chief Executive Officer.
(f) The Stock Subscription Agreement, and related agreements,
between Onsite and Westar Capital shall have closed.
(g) Effective as of the Closing Date, WBS's officer(s) shall
have resigned from such positions.
(h) The Transition Agreement, attached hereto as Exhibit E,
between Onsite and Western Resources, Inc. shall have been executed and
delivered.
(i) The Separation Plan attached hereto as Exhibit F (the
"Separation Plan") shall have been adopted by Onsite.
SECTION 8
ADDITIONAL COVENANTS OF THE PARTIES
8.1 Employees. Upon the Closing, all of WBS's employees shall be
terminated and Onsite shall offer employment to each of WBS's employees on an
"at will" basis with a severance package as set forth in the Separation Plan.
1039(6).nks November 10, 1997
15
(a) Offer of Employment. At least one calendar day prior to
the Closing Date, Onsite shall make an offer of "at will" employment to every
employee listed by WBS on Schedule 8.1(a) attached hereto, which offer shall
include cash compensation as indicated next to such employee's name on Schedule
8.1(a) and inclusion of such employee in the employee benefit plans of Onsite,
including but not limited to government-mandated plans ("Offer of Employment").
(b) Acceptance of an Offer of Employment. Acceptance of the
Offer of Employment will be effective only upon the receipt by Onsite via
facsimile, or by written acceptance delivered to Xxxx X. Xxxxxx, not later than
8:00 a.m. Central Standard Time on November 3, 1997, ("Offer Acceptance
Deadline") on a form to be provided by Onsite with the Offer of Employment. If
the acceptance of the Offer of Employment is not received by Onsite before 8:00
a.m. Central Standard Time on November 3, 1997, then it shall be deemed
rejected. An individual who rejects an Offer of Employment shall not become a
"Continuing Employee," and Onsite shall have no obligation to such individual,
except as provided in paragraph (c) below. Each employee of WBS who accepts an
Offer of Employment and commences active full-time employment is referred to in
this Agreement as a "Continuing Employee."
(c) Declining Employee. In the event that a WBS employee
listed in Schedule 8.1(a) is required by Onsite under the Offer of Employment
and as a condition of employment to report to work at a location more than 35
miles from such individual's work location prior to the Closing (provided such
new work location is not actually closer to the employee's residence) and such
individual does not accept the Offer of Employment (a "Declining Employee"),
Onsite agrees to pay Westar Energy and Westar Energy agrees to pay the Declining
Employee an amount equal to the amount Onsite would have paid the Declining
Employee under paragraphs 4(a), (b) or (c) of the Separation Plan if the
Declining Employee was eligible for benefits under the Separation Plan. It is
specifically recognized that no Declining Employee shall be deemed an employee
of Onsite by virtue of such payment, nor shall any Declining Employee be
eligible for the insurance benefits set forth in paragraph 4(d) of the
Separation Plan.
(d) Severance. Each Continuing Employee who is terminated from
employment by Onsite within one year after the Closing Date shall, if such
Continuing Employee is eligible for separation pay and benefits in accordance
with the Separation Plan, receive the separation pay and benefits provided in
the Separation Plan. Onsite shall adopt the Separation Plan at Closing and keep
such Separation Plan in effect for 12 months thereafter.
(e) Employment at will. Nothing in this Agreement nor the
Separation Plan shall be construed to imply that Onsite has assumed any
obligation not expressly set forth herein or alter the fact that each Continuing
Employee shall be an employee at will.
(f) Benefit Plans. Onsite shall make available to Continuing
Employees and their eligible dependents (i) Onsite's policies, programs, and
plans in effect, as of the
1039(6).nks November 10, 1997
16
date hereof, and (ii) workers' compensation, unemployment compensation, and all
other government-mandated plans. Onsite's benefit plans shall not provide for
ineligibility for benefits for any Continuing Employee and their eligible
dependents based on a preexisting condition unless, immediately as of the
Closing Date, such conditions also resulted in ineligibility for benefits for
such Continuing Employee or their eligible dependent, as the case may be, under
WBS's benefit plans.
(g) Westar Energy's Obligations. After the Closing, Westar
Energy shall have responsibility for all wages and salaries accrued to the Offer
Acceptance Deadline, all payroll taxes incurred prior to the Offer Acceptance
Deadline, and the following benefit payments: (i) all medical or dental expenses
incurred prior to the Offer Acceptance Deadline by any WBS employee and
individuals covered under any employee's participation in WBS's medical and
dental plans in accordance with WBS's group insurance policy extension
provisions; (ii) all payments for sick leave taken by any WBS employee prior to
the Offer Acceptance Deadline (although this Agreement shall not create or
impose any right to payments which did not otherwise exist); (iii) all long-term
disability plan payments relating to disabilities which commenced prior to the
Offer Acceptance Deadline; (iv) benefit expenses incurred by any WBS employee or
eligible dependent, as the case may be, prior to the Offer Acceptance Deadline
under WBS's benefit plans, (v) workers' compensation expenses, including
settlement amounts, arising from or related to events occurring prior to the
Offer Acceptance Deadline; (vi) all payments for accrued and unused vacation
time, and (vii) expenses, including settlement amounts, incurred with respect to
WBS employees for workers' compensation claims arising out of occurrences which
occurred prior to the Offer Acceptance Deadline.
(h) Onsite's Obligations. Onsite shall be responsible for all
benefits of Continuing Employees and their eligible dependents which are
incurred after the Offer Acceptance Deadline and are payable under the terms and
conditions of Onsite's benefit plans. With respect to workers' compensation and
any other government-mandated plans, this Section shall not be construed to
violate applicable statutes or regulations. Where permissible, any liabilities
(other than those Westar Energy has agreed to retain) under workers'
compensation and other government-mandated plans shall be transferred from
Westar to Onsite as of the Offer Acceptance Deadline. Where such transfer is
prohibited by law, this provision is intended to establish that primary
responsibility as between Westar Energy and Onsite for any liabilities, other
than those liabilities which Westar Energy has agreed to retain, shall be borne
by Onsite.
(i) Separation Arrangements. Effective as of the Offer
Acceptance Deadline, Onsite shall establish and adopt the Separation Plan, as
set forth in Exhibit F attached hereto, for the benefit of all Continuing
Employees. Onsite shall maintain the Separation Plan for a period of at least
one year from the Closing Date. The costs incurred, directly or indirectly,
under the Separation Plan in connection with the termination of any Continuing
Employee after the Closing Date, shall be borne exclusively by Onsite. "Years of
Service" for each Continuing Employee as such term is used in the Separation
Plan is set forth in Schedule 8.1(a). If, at any time within 12 calendar months
after the date of
1039(6).nks November 10, 1997
17
termination of employment of any Continuing Employee, Westar Energy hires such
Continuing Employee, then Westar Energy shall promptly pay to Onsite an amount
equal to the total amount paid by Onsite to such terminated Continuing Employee
under the Separation Plan.
8.2 Offices. Onsite shall cause WBS to maintain offices in Topeka and
Kansas City, Kansas as long as it makes good business sense.
8.3 Covenant Not to Compete. To secure the interests of Onsite
hereunder, Westar Energy covenants and agrees that it will employ best efforts
to not, directly or indirectly, for the five years following the Closing Date,
anywhere in the states of Kansas, Missouri, Oklahoma, California, New Jersey,
New York, Massachusetts, Pennsylvania, Maryland, Virginia, Florida, Washington,
Arizona, Texas and Illinois, unless otherwise authorized by Onsite in writing:
(a) solicit any customer of WBS or Onsite for services of the
Businesses, either directly or indirectly, or any current customer, regardless
of where located; or
(b) participate in the ownership, management, operation or
control of, or have any financial interest in or be connected with, or engage in
or aid or knowingly assist anyone else, in the conduct of the following
activities (collectively referred to as the "Businesses"):
(i) Reverse osmosis water treatment except for
Western Resources facilities not currently served by WBS;
(ii) construction and installation of electric
substations and other electrical equipment for use by
industrial and governmental entities within systems owned by
them, other than for emergency repairs and maintenance
performed by Western Resources and its regulated affiliates
for such entities or for its own system. This does not include
services provided by Western Resources and its regulated
affiliates as part of its electric and gas business as
currently regulated; or
(iii) comprehensive design and installation of
equipment and services for the purpose of reducing energy
costs.
Provided, however, that, during such five year period, if Westar Energy
or any of its affiliates should acquire a company which engages in the
Businesses, Westar Energy or such affiliate will offer to sell such Businesses
to Onsite, and Onsite and Westar Energy or such affiliate will negotiate in good
faith to consummate such sale. In the event Onsite and Westar Energy or such
affiliate are unable to agree to the terms of such sale, the parties shall
retain a third-party appraiser to set the sale price. In the event Onsite and
Westar Energy or such affiliate do not consummate a sale based on the price
recommended by the third-party
1039(6).nks November 10, 1997
18
appraiser, Westar Energy or its affiliate may retain and operate such Businesses
and will not by virtue of such activities be deemed to be in violation of this
covenant not to compete.
It is not a violation of this Agreement for Western Resources or an
affiliate to acquire or hold a passive interest not in excess of 5% of the
outstanding equity in an entity engaged in the Businesses.
8.4 Taxes. Westar Energy shall pay, to Onsite or to the appropriate
taxing authority, any and all tax liability incurred by WBS prior to the Closing
Date, including taxes which have been incurred but are not yet assessed, due
and/or payable.
8.5 Cooperation. WBS, Westar Energy, and Onsite will cooperate with
each other and their respective agents in carrying out the transactions
contemplated by this Agreement, and in delivering all documents and instruments
deemed reasonably necessary or useful by the other party.
8.6 Expenses. Each of the parties hereto shall pay all of its
respective costs and expenses (including attorneys' and accountants' fees,
finder's and consultant's fees, costs and expenses) incurred in connection with
this Agreement and the consummation of the transactions contemplated herein.
8.7 Publicity. Prior to the Closing Date, any written news releases
and/or other shareholder communication by any party pertaining to this Agreement
or the transactions contemplated herein shall be submitted to the other parties
for their review and approval prior to such news release and/or other
shareholder communication; provided, however, that (a) such approval shall not
be unreasonably withheld, and (b) such review and approval shall not be required
of disclosures required to comply, in the judgment of counsel, with federal or
state securities or corporate laws or policies.
Each party shall provide the other reasonable opportunity, considering
the urgency of the disclosure of a particular matter, to review and comment upon
disclosures required to comply, in the judgment of counsel, with federal or
state securities or corporate laws or policies.
8.8 Confidentiality. While each party is obligated to provide access to
and furnish information in accordance with this Agreement, it is understood and
agreed that such disclosure and information obtained as a result of such
disclosure are proprietary and confidential in nature. Each party agrees to hold
such information in confidence and not to reveal any such information to any
person who is not a party to this Agreement, or an officer, director or key
employee thereof, and not to use the information obtained for any purpose other
than assisting in its due diligence inquiry, unless such information was
obtained without restriction from an alternative source or if the disclosure of
such information is required by law. This Section shall survive the execution
and delivery of this Agreement, the Closing and the consummation of the
transaction called for by this
1039(6).nks November 10, 1997
19
Agreement and shall not be limited to the time period otherwise set forth in
Section 10 below.
SECTION 9
TERMINATION
9.1 Mutual Termination. WBS and Onsite may agree to mutually terminate
this Agreement prior to Closing without any liability to each other.
9.2 Termination upon Breach. Either party may terminate this Agreement
upon a material breach of this Agreement by the other.
SECTION 10
SURVIVAL OF REPRESENTATIONS AND
WARRANTIES
10.1 As to WBS. The representations and warranties of WBS contained
herein shall survive the execution and delivery of this Agreement, the Closing
and the consummation of the transactions called for by this Agreement for a
period of 2 years from the date of this Agreement unless a lesser time period is
specified.
10.2 As to Westar Energy. The representations and warranties of Westar
Energy contained herein shall survive the execution and delivery of this
Agreement, the Closing and the consummation of the transactions called for by
this Agreement for a period of 2 years from the date of this Agreement unless a
lesser time period is specified.
10.3 As to Onsite. The representations and warranties of Onsite
contained herein shall survive the execution and delivery of this Agreement, the
Closing and the consummation of the transactions called for by this Agreement
for a period of 2 years from the date of this Agreement unless a lesser time
period is specified.
SECTION 11
MISCELLANEOUS
11.1 Entire Agreement, Amendments. This Agreement (including the
Exhibits and Schedules hereto) contains the entire agreement between the parties
with respect to the transactions contemplated hereby, and supersedes all
negotiations, representations, warranties, commitments, offers, contracts, and
writings prior to the date hereof.
11.2 Binding Agreement. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective assigns and
successors in interest; provided
1039(6).nks November 10, 1997
20
that neither this Agreement nor any right hereunder shall be assignable by
Onsite or WBS without the prior written consent of the other parties.
11.3 Indemnification.
(a) By Onsite. Onsite covenants and agrees to defend,
indemnify and hold harmless WBS and each of its officers, directors, employees,
agents, advisors and shareholders and affiliates, as such persons existed prior
to the Closing Date (collectively, the "WBS Indemnitees") from and against, any
loss, liability, damage or expense (including reasonable attorneys' fees and
costs) which any WBS Indemnitee may suffer, sustain or become subject to as a
result of a breach of any representation, warranty or covenant by Onsite
contained in this Agreement.
(b) By WBS. WBS covenants and agrees to defend, indemnify and
hold harmless Onsite and each of its officers, directors, employees, agents,
advisors and shareholders and affiliates, as such persons existed prior to the
Closing Date (collectively, the "Onsite Indemnitees") from and against any loss,
liability, damage or expense (including reasonable attorneys' fees and costs)
which any Onsite Indemnitee may suffer, sustain or become subject to, as a
result of a breach of any representation, warranty or covenant by WBS contained
in this Agreement.
(c) By Westar Energy. Westar Energy covenants and agrees to
defend, indemnify and hold harmless Onsite and each of its officers, directors,
employees, agents, advisors and shareholders and affiliates, as such persons
existed prior to the Closing Date (collectively, the "Onsite Indemnitees") from
and against any loss, liability, damage or expense (including reasonable
attorneys' fees and costs) which any Onsite Indemnitee may suffer, sustain or
become subject to, as a result of a breach of any representation, warranty or
covenant by WBS and/or Westar Energy contained in this Agreement.
(d) By Westar Capital. Westar Capital covenants and agrees to
defend, indemnify and hold harmless Onsite and each of its officers, directors,
employees, agents, advisors and shareholders and affiliates, as such persons
existed prior to the Closing Date (collectively, the "Onsite Indemnitees") from
and against any loss, liability, damage or expense (including reasonable
attorneys' fees and costs) which any Onsite Indemnitee may suffer, sustain or
become subject to, as a result of a breach of any representation, warranty or
covenant by Westar Capital contained in this Agreement.
11.4 Dispute Resolution. No party to this Agreement shall be entitled
to take legal action with respect to any dispute relating hereto until it has
complied in good faith with the following alternative dispute resolution
procedures. This Section shall not apply to the extent it is deemed necessary to
take legal action immediately to preserve a party's adequate remedy.
(a) Negotiation. The parties shall attempt promptly and in
good faith to resolve any dispute arising out of or relating to this Agreement,
through negotiations between
1039(6).nks November 10, 1997
21
representatives who have authority to settle the controversy. Any party may give
the other party written notice of any such dispute not resolved in the normal
course of business. Within 20 days after delivery of the notice, representatives
of both parties shall meet at a mutually acceptable time and place, and
thereafter as often as they reasonably deem necessary, to exchange information
and to attempt to resolve the dispute, until the parties conclude that the
dispute cannot be resolved through unassisted negotiation. Negotiations
extending sixty days after notice shall be deemed at an impasse, unless
otherwise agreed by the parties.
If a negotiator intends to be accompanied at a meeting by an attorney,
the other negotiator(s) shall be given at least three working days' notice of
such intention and may also be accompanied by an attorney. All negotiations
pursuant to this clause are confidential and shall be treated as compromise and
settlement negotiations for purposes of the Federal and state Rules of Evidence.
(b) ADR Procedure. If a dispute with more than $20,000.00 at
issue has not been resolved within 60 days of the disputing party's notice, a
party wishing resolution of the dispute ("Claimant") shall initiate assisted
Alternative Dispute Resolution ("ADR") proceedings as described in this Section.
Once the Claimant has notified the other party ("Respondent") of a desire to
initiate ADR proceedings, the proceedings shall be governed as follows: By
mutual agreement, the parties shall select the ADR method they wish to use. That
ADR method may include arbitration, mediation, mini-trial, or any other method
which best suits the circumstances of the dispute. The parties shall agree in
writing to the chosen ADR method and the procedural rules to be followed within
30 days after receipt of notice of intent to initiate ADR proceedings. To the
extent the parties are unable to agree on procedural rules in whole or in part,
the current Center for Public Resources, Inc. ("CPR") Model Procedure for
Mediation of Business Disputes, CPR Model Mini-trial Procedure, or CPR
Commercial Arbitration Rules--whichever applies to the chosen ADR method--shall
control, to the extent such rules are consistent with the provisions of this
Section. If the parties are unable to agree on an ADR method, the method shall
be arbitration.
The parties shall select a single Neutral (as defined by CPR) third
party to preside over the ADR proceedings, by the following procedure: Within 15
days after an ADR method is established, the Claimant shall submit a list of 5
acceptable Neutrals to the Respondent. Each Neutral listed shall be sufficiently
qualified, including demonstrated neutrality, experience and competence
regarding the subject matter of the dispute. A Neutral who is an attorney or
former judge shall be deemed to have adequate experience. None of the Neutrals
may be present or former employees, attorneys, or agents of either party. The
list shall supply information about each Neutral, including address, and
relevant background and experience (including education, employment history and
prior ADR assignments). Within 15 days after receiving the Claimant's list of
Neutrals, the Respondent shall select one Neutral from the list, if at least one
individual on the list is acceptable to the Respondent. If none on the list are
acceptable to the Respondent, the Respondent shall submit a list of 5 Neutrals,
together with the above background information, to the Claimant. Each of the
Neutrals shall meet the conditions stated above regarding the Claimant's
1039(6).nks November 10, 1997
22
Neutrals. Within 15 days after receiving the Respondent's list of Neutrals, the
Claimant shall select one Neutral, if at least one individual on the list is
acceptable to the Respondent. If none on the list are acceptable to the
Claimant, then the parties shall request assistance from the CPR to select a
Neutral.
The ADR proceeding shall take place within 30 days after the Neutral
has been selected. The Neutral shall issue a written decision within 30 days
after the ADR proceeding is complete. Each party shall be responsible for an
equal share of the costs of the ADR proceeding. The parties agree that any
applicable statute of limitations shall be tolled during the pendency of the ADR
proceedings, and no legal action may be brought in connection with this
Agreement during the pendency of an ADR proceeding.
The Neutral's written decision shall become final and binding on the
parties, unless a party objects in writing within 30 days of receipt of the
decision. The objecting party may then file a lawsuit in any court allowed by
this Agreement. The Neutral's written decision shall be admissible in the
objecting party's lawsuit.
11.5 Amendments and Waivers. Any term of this Agreement may be amended
and the observance of any term of this Agreement may be waived (either generally
or in a particular instance and either retroactively or prospectively), only
with the written consent of the parties. Any amendment or waiver effected in
accordance with this paragraph shall be binding upon all of the parties. A
waiver by any party hereto of a default in the performance of this Agreement
shall not operate as a waiver of any future or other default, whether of a like
or different kind.
11.6 Severability. If one or more provisions of this Agreement are held
to be unenforceable under applicable law, such provision shall be excluded from
this Agreement and the parties shall use their efforts to substitute provisions
of substantially the same effect. The balance of the Agreement shall be
interpreted as if such provision were so excluded and shall be enforceable in
accordance with its terms.
11.7 Governing Law. This Agreement shall be construed in
accordance with the laws of the State of California.
11.8 Notices. All notices or other communications required hereunder
shall be in writing and shall be sufficient in all respects and shall be deemed
delivered after 5 days if sent via registered or certified mail, postage
prepaid; the next day if sent by overnight courier service; or one business day
after transmission, if sent by facsimile to the following:
(i) If to Onsite: Onsite Energy Corporation
000 Xxxxxxx Xxxxxxx Xx., Xxxxx 000
Xxxxxxxx, XX 00000
Fax: (000) 000-0000
Attn: Xxxxxxx X. Xxxxxxxx
1039(6).nks November 10, 1997
23
with a copy to: Xxxxxx Eng Linn & Xxxxxxxx
000 Xxxxxxx Xxxx, Xxxxx 0000
Xxxxxxxxxx, XX 00000
Fax: (000) 000-0000
Attn: Xxxxx X. Xxxxxx, Esq.
(ii) If to WBS, Westar Energy and/or Westar Capital:
Westar Energy, Inc.
XX Xxx 000
000 Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Fax: (000) 000-0000
Attn: Xxxx X. Xxxxxx
with a copy to: Westar Energy, Inc.
XX Xxx 000
000 Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Fax: (000) 000-0000
Attn: Xxxx X. Xxxxxxxxx
Any party hereto may change its address for purposes hereof by notice to all
other parties hereto.
1039(6).nks November 10, 1997
24
11.9 Counterparts; Signatures. This Agreement may be executed in one or
more counterparts, each of which may be deemed an original, but all of which
together shall constitute one and the same instrument. This Agreement may be
executed by a party and sent to the other parties via facsimile transmission and
the facsimile transmitted copy shall have the same integrity, force and effect
as an original document.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
ONSITE ENERGY CORPORATION, WESTAR BUSINESS SERVICES,
a Delaware corporation INC., a Kansas corporation
By: By:
Xxxxxxx X. Xxxxxxxx, Xxxx X. Xxxxxx,
President President
WESTAR ENERGY, INC.,
a Kansas corporation
By:
,
President
WESTAR CAPITAL, INC.,
a Kansas corporation
By: ,
President
1039(6).nks November 10, 1997
25
EXHIBITS
Exhibit A-- Escrow Agreement and Instructions
Exhibit B-- Non-compete Agreement (Western Resources)
Exhibit C-- Opinion of Counsel
Exhibit D-- Purchase Agreement (Mid-States)
Exhibit E-- Transition Agreement
Exhibit F-- Separation Plan
1039(6).nks November 10, 1997
26
SCHEDULE LIST
WBS
Schedule 8.1(a) Employees
Onsite
Schedule 5.1(d) Subsidiaries and Affiliates
1039(6).nks November 10, 1997
27
EXHIBIT F
SEPARATION PLAN
1. SCOPE. This Plan shall be effective for a twelve (12) month period following
the Closing as defined in the Plan and Agreement of Reorganization by and among
Onsite Energy Corporation ("Onsite"), Westar Business Services, Inc. ("WBS"),
and Westar Energy, Inc. (the "Agreement"). Any rights to benefits under this
Plan shall expire at the end of such twelve (12) month period. This Plan is
limited to Continuing Employees, as that term in defined in the Agreement. A
copy of this Plan will be provided to each Continuing Employee.
2. DEFINITIONS. The following terms are defined for the purpose of this
Plan only.
a. TERMINATION FOR CAUSE. "Termination for Cause" shall mean
termination by Onsite upon any ground for which disciplinary action, including
termination, is prescribed under any of Onsite's procedures or practices.
b. TERMINATION FOR GOOD REASON. Termination by the Continuing Employee
of employment with Onsite for "Good Reason" shall mean termination based on one
of the following events which Onsite has not corrected following thirty days'
notice by the Continuing Employee:
(1) a reduction by Onsite in the Continuing Employee's
compensation and benefits as specified in the Offer of Employment, as that term
is defined in the Agreement;
(2) Onsite's requiring the Continuing Employee to report to a
work location which is more than 35 miles from his/her work location immediately
prior to the Closing (provided such new work location is not actually closer to
the Continuing Employee's residence), except for reasonably required travel on
Onsite's business.
In no event shall the Continuing Employee claim Termination for Good
Reason more than thirty (30) days after the first occurrence of one of the
events above.
c. CONTINUING EMPLOYEE. Each employee of WBS who accepts an Offer of
Employment from Onsite and commences active full-time employment is referred to
in this Agreement as a "Continuing Employee." An individual who rejects an Offer
of Employment shall not become a "Continuing Employee," and Onsite shall have no
obligation to such individual.
d. ELIGIBLE EMPLOYEE. "Eligible Employees" are determined under
Section 3 and shall include only "Continuing Employees."
1039(6).nks November 10, 1997
1
e. YEARS OF SERVICE. "Years of Service" shall mean, for the purpose of
determining severance pay under this Plan, the number of years that an Eligible
Employee has been employed by WBS or its subsidiaries or predecessor companies.
This includes total years of employment with WBS, excluding any breaks in
service. Partial years of service of more than six months shall be counted as
full years, provided any single calendar year will be counted only once.
3. ELIGIBILITY. Continuing Employees shall be eligible for the benefits provided
in Section 4 if, within 12 months after the Closing, their employment is
terminated (other than by reason of death or disability entitling the employee
to long-term disability benefits under Onsite's long-term disability plan) by
the Continuing Employee for Good Reason, or by Onsite, other than for
Termination for Cause. The benefits provided in this severance plan shall not
accrue in the case of any employee termination (including voluntary termination)
except as specified in this paragraph.
4. BENEFITS. Continuing Employees who become Eligible Employees pursuant
to Section 3 above, shall be eligible for the following:
a. For Continuing Employees who were in WBS pay-grades 33, 32, 31 and
30, a payment in an amount equal to three (3) weeks of salary for each Year of
Service, payable over time as such payment would have become due if the
Continuing Employee had not been terminated. In no event shall such payments be
less than thirteen (13) weeks of salary nor more than fifty-two (52) weeks of
salary. For Continuing Employees in these pay-grades who remain unemployed at
the end of the period that begins with the date of termination and continues for
a number of weeks (including partial weeks if applicable) equal to the number of
weeks of salary used to compute the Continuing Employee's severance described
above, an additional payment in the amount equal to one week of salary for each
Year of Service shall be paid over time as such payment would have become due if
the Continuing Employee had not been terminated. In no event shall such
additional payment be less than six (6) weeks of salary, nor more than thirteen
(13) weeks of salary.
b. For Continuing Employees who were in WBS pay-grades 29, 28, 27, 26,
25, 24, 23, 22, 21 and 20, a payment in an amount equal to two (2) weeks of
salary for each Year of Service, payable over time as such payment would have
become due if the Continuing Employee had not been terminated. In no event shall
such payment be less than thirteen (13) weeks of salary, nor more than
thirty-nine (39) weeks of salary.
c. For non-exempt or hourly Continuing Employees, a payment in an
amount equal to one and one-half (1 1/2) weeks of wages for each Year of
Service, payable over time as such payment would have become due if the
Continuing Employee had not been terminated. In no event shall such payment be
less than eight (8) weeks of wages, nor more than twenty-six (26) weeks of
wages.
d. Continued medical and dental insurance coverage by Onsite on
the same basis as other Continuing Employees of Onsite for a period of time
equal to the Eligible
1039(6).nks November 10, 1997
2
Employee's total weeks of severance pay. Such coverage may be discontinued
earlier by Onsite in the event that the Eligible Employee becomes employed and
the Eligible Employee's new employer has a comparable insurance program. The
comparability of the new employer's program to that of Onsite is to be
determined by Onsite.
5. NON-MITIGATION. No Continuing Employee shall be required to mitigate, by
seeking employment or otherwise, the amount of any payment that Onsite becomes
obligated to make under this plan. However, the benefits accruing pursuant to
this Plan to an Eligible Employee shall cease upon the employment of such
Eligible Employee by Westar Energy, Inc. or Western Resources, Inc. within
twelve months of termination of employment with Onsite.
6. MISCELLANEOUS. Onsite may deduct from all severance payments any taxes
required by law to be withheld therefrom and any required employee contributions
for medical or dental coverage for the period of time that it is continued.
7. COST OF ENFORCEMENT. Onsite will pay all attorneys' fees and other
costs incurred by a Continuing Employee to enforce any provision of this
Separation Plan.
NOTHING IN THIS SEPARATION PLAN NOR THE AGREEMENT AND PLAN OF REORGANIZATION
SHALL BE CONSTRUED AS GIVING ANY PERSON THE RIGHT TO BE RETAINED IN THE
EMPLOYMENT OF ONSITE, WBS OR WESTAR ENERGY. NOTHING IN THIS SEPARATION PLAN OR
THE AGREEMENT AND PLAN OF REORGANIZATION SHALL AFFECT THE RIGHT OF ONSITE OR WBS
TO DISMISS AN EMPLOYEE FOR ANY REASON WITHOUT LIABILITY. THE EMPLOYEES SUBJECT
TO THIS PLAN ARE EMPLOYEES AT WILL OF WBS OR ONSITE AND NOTHING IN THIS PLAN OR
THE EMPLOYMENT AGREEMENT SHALL BE CONSTRUED AS A CONTRACT OF EMPLOYMENT, IMPLIED
OR OTHERWISE.
1039(6).nks November 10, 1997
3
Plan and Agreement of Reorganization
Schedule 5.1(d)
Onsite Subsidiaries and Affiliates
Current Subsidiaries:
1) Western Energy Management, Inc. (Inactive)
Current Partnerships/Joint Ventures:
1) American Private Power II -- Onsite is General Partner of an
inactive partnership
2) Silent Joint Venture with X. X. Xxxxxxx Co., Inc. for
performance bond related to contract with State of Washington
3) Joint Venture Letter of Agreement with NESI - joint
development of energy performance contracts with specific customers
4) PRM Alliance Agreement - Agreement to provide marketing
services and jointly develop opportunities for power
management services and energy efficiency projects
Ownership Interests:
1) National Energy Service Companies Preferred Product Group, LLC
- Onsite is a founding member of an LLC which is negotiating
purchasing agreements with manufacturers of energy efficient
equipment
October 31, 1997
Westar Energy, Inc.
P. O. Box 889
000 Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Re: Onsite Energy Corporation
Opinion Letter Pursuant to Plan and Agreement of
Reorganization
Ladies and Gentlemen:
We act as counsel for Onsite Energy Corporation, a Delaware corporation
(the "Company"), in connection with the Plan and Agreement of Reorganization
dated October 28, 1997, by and among the Company, Westar Business Services,
Inc., a Kansas corporation ("WBS"), Westar Energy, Inc. ("Westar Energy"), and
Westar Capital, Inc. ("Agreement"). This letter is delivered to Westar Energy at
the request of the Company pursuant to Section 3.3(e) of the Agreement. Except
as otherwise defined herein, the capitalized terms in this letter shall have the
meanings ascribed to them in the Agreement.
This Opinion Letter is governed by, and shall be interpreted in
accordance with, the Legal Opinion Accord (the "Accord") of the ABA Section of
Business Law (1991). As a consequence, it is subject to a number of
qualifications, exceptions, definitions, limitations on coverage and other
limitations, all as more particularly described in the Accord, and this Opinion
Letter should be read in conjunction therewith. In addition, this Opinion Letter
shall be governed by, and shall be interpreted in accordance with, the
"California Provisions" and the "California Generic Exception" as defined in the
Business Law Section of the California State Bar Report on the Third-Party Legal
Opinion Report of the ABA Section of Business Law (dated May 1992), and is
therefore subject to a number of additional qualifications, exceptions, and
understandings, all as more particularly described in the California Provisions
and California Generic Exception, and this Opinion Letter should also be read in
conjunction therewith. The law covered by the opinions expressed herein is
limited to the Federal Law of the United States and the Law of the States of
California and Delaware.
Westar Energy, Inc.
October 31, 1997
Page 2
Whenever our opinion herein with respect to the existence or absence of
facts or circumstances is qualified by the phrase "to the best of our
knowledge", it is intended to indicate that during the course of our
representation, no information has come to our attention that would give us
actual knowledge of the existence of such facts or circumstances. However, we
have not undertaken any special or independent investigation to determine the
existence or absence of such facts or circumstances, and no inference as to our
knowledge of the existence of such facts or circumstances should be drawn merely
from our representation herein.
Based upon and subject to the foregoing, as of the date hereof, we are
of the opinion that:
1. The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware, has all requisite
corporate power and authority to carry on its business as now conducted, and to
own, lease and operate any properties related to its business, except where the
failure to have such power and authority would not have a material adverse
effect. The Company is qualified to do business as a foreign corporation in the
State of California, and to our knowledge, in all other jurisdictions in which
such qualification is required other than those in which failure to qualify
would not have a material adverse effect on the Company's operations or
financial condition.
2. The Company has all requisite legal and corporate power to execute
and deliver the Agreement and to carry out and perform its obligations under the
Agreement.
3. The Agreement, when executed and delivered, constitutes a valid,
legally binding and enforceable obligation of the Company, except as the
enforceability may be subject to or limited by laws of general application
relating to bankruptcy, insolvency or the relief of debtors and other laws of
general application affecting enforcement of creditors' rights generally, or
rules of law and principles of equity governing specific performance, injunctive
relief or other equitable remedies, regardless of whether such enforceability is
considered in a proceeding in equity or at law.
4. The execution, delivery and performance of the Agreement
by the Company will not result in a violation of any provision of
Westar Energy, Inc.
October 31, 1997
Page 3
its Certificate of Incorporation or Bylaws as in effect on and as of the Closing
Date or, to our knowledge, of any provision of any material mortgage, indenture,
agreement, instrument or contract to which it is a party, of any provision of
any federal or state judgment, writ, decree, order, statute, rule or
governmental regulation applicable to the Company in any manner which would be
material to the Agreement, the conduct of the Company's business or its
financial condition.
5. The Common Stock, when sold, issued, and delivered for the
consideration expressed in, and in compliance with, the provisions of the
Agreement will be duly authorized, validly issued, fully paid and nonassessable.
The phrase "Primary Lawyer Group," as used in the Accord, is hereby
modified and for purposes of applying the Accord to this Opinion Letter the
Primary Lawyer Group means Xxxxx X. Xxxxxx, Esq.
and Xxxxxx X. Eng, Esq. of our firm.
Our opinion is limited solely to matters set forth herein. This letter
is provided to you solely for your benefit and in connection with the
transactions provided for in or contemplated by the Agreement, and shall not be
relied upon by any other person or for any other purpose without our prior
written consent.
Very truly yours,
