AMENDED AND RESTATED ASSET PURCHASE AGREEMENT
This AMENDED AND RESTATED ASSET PURCHASE AGREEMENT, dated as of June
30, 1998 (the "Agreement"), is made and entered into by and among: (i)
Onsite Energy Corporation, a Delaware corporation ("Onsite"); (ii) SYCOM
ONSITE Corporation, a Delaware corporation and wholly-owned subsidiary of
Onsite ("SYCOM ONSITE") (together Onsite and SYCOM ONSITE shall be referred
to herein as the "Onsite Companies"); (iii) Sycom Enterprises, LLC, a
Delaware limited liability company ("Sycom LLC") and (iv) SSBKK Corp, a
Delaware corporation and sole member of Sycom LLC ("SSBKK").
RECITALS
WHEREAS, the parties have agreed that Onsite shall form a Delaware
subsidiary corporation, SYCOM ONSITE to acquire all of Sycom LLC's assets
and assume specific Sycom LLC liabilities for the consideration set forth
herein; and
WHEREAS, the Board of Directors of Onsite deems it advisable and in
the best interests of the stockholders of Onsite to effect such
transactions under the terms set forth herein and in the ancillary
agreements attached hereto, and therefore have approved and authorized such
transactions; and
WHEREAS, SSBKK, as the sole member of Sycom LLC, deems it advisable
and in the best interest of Sycom LLC to sell Sycom LLC's assets to SYCOM
ONSITE for the consideration set forth herein; and
WHEREAS, this Agreement amends and restates that certain "Asset
Purchase Agreement" originally entered into by the parties hereto as of May
19, 1998;
NOW, THEREFORE, in consideration of the foregoing, the mutual
covenants and agreements set forth herein, and for good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged,
the parties agree as follows:
I. SALE AND PURCHASE OF ASSETS.
1.1 PURCHASE OF ASSETS. On the terms and conditions of this
Agreement, Onsite agrees that it will cause SYCOM ONSITE to buy from Sycom
LLC, and Sycom LLC agrees to sell, transfer, assign, and convey to SYCOM
ONSITE, all of the project assets, properties, and rights of Sycom LLC as
of the Closing Date (as defined in Section 5.2), which assets are more
particularly set forth in Schedule 1.1 hereto (the "Assets"). For purposes
of this Agreement, the Assets shall include all of the project assets of
Sycom LLC, and all property rights and businesses of every type and
description attributable to Sycom LLC as of the Closing Date, whether or
not listed in Schedule 1.1, including, but not limited to, all rights under
contracts, cash, tangible and intangible personal property wherever located
or by whomever possessed, inventory, equipment, tools, supplies, notes,
accounts receivable, prepaid costs and deposits, goodwill, claims of all
kinds, licenses, patents, copyrights, patent and copyright applications,
trademarks, service marks, trademark and servicemark applications, know-
how, customer lists, telephone numbers, brand names, inventions, trade
secrets, discounts and adjustments of any kind, any express or implied
warranties of third parties related to the Assets or in favor of Sycom LLC,
and all information, books, and records (whether reduced to physical form
or otherwise, in original form or copies) for use in or related to the
business conducted by Sycom LLC.
1.2 ASSUMPTION OF LIABILITIES. In connection with the transfer of
all of Sycom LLC's right, title, and interest in and to the Assets, SYCOM
ONSITE will accept the assignment of, and also agrees to assume the duties
and obligations of performance under, those specific contracts and
liabilities to which Sycom LLC is a party as identified in Schedule 1.2
hereto (the "Liabilities").
II. CONSIDERATION.
2.1 ISSUANCE AND DELIVERY OF COMMON SHARES. As consideration for the
transfer, assignment, conveyance, and delivery of the Assets hereunder, and
for the assumption by SYCOM ONSITE of the Liabilities (along with the
consideration set forth in the Ancillary Agreements attached hereto (as
defined below in Section 3.4 hereof)), on the Closing Date, Onsite shall
issue and deliver to Sycom LLC a total of one million seven hundred fifty
thousand (1,750,000) shares of Onsite's Class A Common Stock, $.001 par
value (the "Common Stock" or "Common Shares").
2.2 NO LIEN OR ENCUMBRANCES ON COMMON STOCK. The issuance and
transfer of the Common Stock shall be made free and clear of all liens,
mortgages, pledges, encumbrances, or charges, whether disclosed or
undisclosed, except as Sycom LLC and SYCOM ONSITE shall have otherwise
agreed in writing.
2.3 UNREGISTERED STOCK. None of the Common Stock issued to Sycom LLC
shall, on the Closing Date, be registered under federal or state
securities laws, but rather, the Common Shares shall be issued to Sycom LLC
pursuant to an exemption therefrom and shall be considered "restricted
securities" within the meaning of Rule 144 promulgated under the Securities
Act of 1933, as amended (the "Securities Act"). All of such stock
certificates representing Common Shares shall bear a legend worded
substantially as follows:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933 (the "Securities
Act") and are `restricted securities' as that term is defined in
Rule 144 under the Securities Act. The shares may not be offered
for sale, sold, or otherwise transferred except pursuant to
registration or an exemption from registration under the
Securities Act, the availability of which is to be established to
the satisfaction of the Company."
Onsite's transfer agent shall annotate its records to reflect the
restrictions on transfer embodied in the legend set forth above.
2.4 REGISTRATION RIGHTS. Following the Closing Date, the Common
Shares shall be entitled to those demand and piggyback registration rights
more particularly set forth in the Registration Rights Agreement (as
defined below).
III. ADDITIONAL AGREEMENTS.
3.1 REGISTRATION RIGHTS AGREEMENT. As an integral part of the
transactions contemplated hereunder, Onsite, Sycom LLC, Sycom Corp., a
Delaware corporation ("Sycom Corp"), and SSBKK, shall have entered into
those additional covenants and agreements set forth in the "Registration
Rights Agreement" attached hereto as EXHIBIT A and incorporated herein by
this reference (the "Registration Rights Agreement").
3.2 SALE AND NONCOMPETITION AGREEMENT. As an integral part of the
transactions contemplated hereunder, Onsite, SYCOM ONSITE, Sycom Corp,
Sycom Enterprises, Limited Partnership, a Delaware limited partnership
("Sycom LP"), and Public Service Conservation Resources Corporation
("PSCRC") shall have entered into those additional covenants and agreements
set forth in the "Sale and Noncompetition Agreement" attached hereto as
EXHIBIT B and incorporated herein by this reference (the "Sale and
Noncompetition Agreement"),
3.3 ESCROW AGREEMENT. As an integral part of the transactions
contemplated hereunder, Onsite, SYCOM ONSITE, Sycom Corp, PSCRC, and Xxxxxx
Eng Xxxx & Xxxxxxxx as escrow agent, shall have entered into those
additional covenants and agreements set forth in the "Escrow Agreement"
attached hereto as EXHIBIT C and incorporated herein by this reference (the
"Escrow Agreement")
3.4 VOTING AGREEMENT. As an integral part of the transactions
contemplated hereunder, certain Onsite shareholders, Sycom LLC and Sycom
Corp shall have entered into those additional covenants and agreements set
forth in the "Voting Agreement" attached hereto as EXHIBIT D and
incorporated herein by this reference (the "Voting Agreement").
Collectively, the Registration Rights Agreement, the Sale and
Noncompetition Agreement, the Escrow Agreement, the Voting Agreement, and
any additional agreements, instruments, exhibits, schedules attached
thereto, shall collectively be referred to herein as the "Ancillary
Agreements."
3.5 LOAN OF FUNDS. In order to enable the shareholders of Sycom Corp
and SSBKK to pay anticipated federal and state taxes, if any, resulting
from the sale of the Assets of Sycom LLC and/or the consideration received
for the Sale and Noncompetition Agreement, the Onsite Companies agree to
loan to Sycom LLC, for distribution to such shareholders, up to one million
dollars ($1,000,000) immediately prior to the time that such taxes are due.
Such loan shall be at the option of Sycom LLC and shall accrue interest at
the rate of 9.75% per annum, and shall have such further terms and
conditions as are set forth herein and in a form of promissory note
substantially similar to that attached hereto as EXHIBIT E (the "Note").
Sycom LLC shall secure the repayment of the principal and interest of the
Note by pledging to Onsite 1.75 Common Shares for each $1.00 loaned
pursuant to the terms of a "Stock Pledge Agreement" substantially similar
to that attached hereto as EXHIBIT F (the "Stock Pledge Agreement"). The
Note shall be payable in advance at any time, without penalty, and shall
mature and be fully due two years from the Closing Date. At the sole
election of Sycom LLC, the Note shall be payable in either cash or Onsite
Common Stock. If repayment in Common Stock is elected, then the Common
Shares shall have a value equal to the average closing market price for the
twenty (20) trading days immediately preceding the date of repayment, and
the share certificates evidencing the Common Shares tendered in repayment
shall be surrendered to Onsite. In the case Sycom LLC elects to repay the
Note with Common Shares, Onsite's sole recourse shall be the Common Shares
pledged pursuant to the Stock Pledge Agreement and no recourse shall be had
against any other assets of Sycom LLC.
IV. CONDITIONS.
4.1 CONDITIONS OF THE OBLIGATIONS OF EACH PARTY. The obligations of
Sycom LLC, on the one hand, and Onsite on the other hand, to consummate the
transactions contemplated by this Agreement are subject to the satisfaction
(or, if permissible, waiver by the party for whose benefit such conditions
exist) of the following conditions:
(a) Each of the Ancillary Agreements, as more specifically
provided for in Sections 3.1, 3.2, 3.3, and 3.4 of this Agreement, shall
have been executed by the appropriate parties;
(b) The Schedules as set forth under Articles VI and VII hereof,
as may be amended by the parties prior to the Closing, shall be acceptable
to the parties;
(c) No court, arbitrator, or governmental body, agency, or
official shall have issued any order, and there shall not be any statute,
rule, or regulation, restraining or prohibiting the consummation of the
asset purchase or the effective operation of the business of Onsite after
the Closing Date;
(d) The parties shall have agreed upon the allocation of the
sales price and prepared an Asset Acquisition Statement on Form 8594 as
required by Section 1060 of the Internal Revenue Code of 1986, as amended
(the "Code");
(e) All actions by or in respect of or filings with any court,
arbitral tribunal, administrative agency, commission, or other governmental
or regulatory authority or agency (a "Governmental Entity") required to
permit the consummation of the asset purchase shall have been obtained;
(f) All material consents of third parties (other than
Governmental Entities), if applicable, shall have been obtained; and
(g) No claim or threat of legal action by any third party as a
result of this transaction has been communicated to Onsite, which claim or
threat remains unresolved as of the Closing Date.
4.2 CONDITIONS TO THE OBLIGATIONS OF ONSITE. The obligations of
Onsite to consummate the transactions contemplated by this Agreement are
subject to the satisfaction (or waiver by Onsite) of the following further
conditions:
(a) The representations and warranties of Sycom LLC which are
subject to limitations, as more fully set forth therein, as to
"materiality" or "material adverse effect" shall be true and accurate
(except for those representations and warranties that address matters only
as of a particular date, which need only be true and accurate as of such
date) as of the Closing Date as if made at and as of such time, and the
representations and warranties of Sycom LLC which are not subject to such
limitations shall be true and accurate in all material respects (except for
those representations and warranties that address matters only as of a
particular date, which need only be true and accurate in all material
respects as of such date) as of the Closing Date as if made at and as of
such time;
(b) Sycom LLC shall have performed in all material respects all
of its obligations hereunder required to be performed by it at or prior to
the Closing Date; and
(c) Since the date of this Agreement, there shall not have
occurred any event, change, or effect having, or which would be reasonably
likely to have, individually or in the aggregate, a material adverse effect
on Sycom LLC.
4.3 CONDITIONS TO THE OBLIGATIONS OF SYCOM LLC. The obligations of
Sycom LLC to consummate the asset purchase are subject to the satisfaction
(or waiver by Sycom LLC) of the following further conditions:
(a) The representations and warranties of Onsite which are
subject to limitations, as more fully set forth therein, as to
"materiality" or "material adverse effect" shall be true and accurate
(except for those representations and warranties that address matters only
as of particular date, which need only be true and accurate as of such
date) as of the Closing Date as if made at and as of such time, and the
representations and warranties of Onsite which are not subject to such
limitations shall be true and accurate in all material respects (except for
those representations and warranties that address matters only as of a
particular date, which need only be true and accurate in all material
respects as of such date) as of the Closing Date as if made at and as of
such time;
(b) Onsite shall have performed in all material respects all of
the respective obligations hereunder required to be performed by Onsite at
or prior to the Closing Date; and
(c) Since the date of this Agreement, there shall not have
occurred any event, change or effect having, or which would be reasonably
likely to have, individually or in the aggregate, a material adverse effect
on Onsite.
V. SIGNING AND CLOSING
5.1 DELIVERIES AT SIGNING OF AGREEMENT. Prior to or substantially
contemporaneous with the execution this Agreement, Onsite and Sycom LLC, as
applicable, shall deliver or cause to be delivered to the other party the
following:
(a) evidence of the corporate or limited liability company
authorizations approving the terms of this Agreement and the Ancillary
Agreements and the transactions contemplated herein and therein; and
(b) the executed Ancillary Agreements as more specifically
provided for in Sections 3.1, 3.2, 3.3, and 3.4 of this Agreement.
5.2 CLOSING OF TRANSACTION. The closing of the transactions
contemplated hereby (the "Closing") shall take place when all of the
conditions precedent provided for in Article IV hereof shall have been
satisfied or waived and all deliveries provided for in this Article V shall
have been made, which shall occur on Tuesday, June 30, 1998, at or before
11:00 p.m., Pacific Daylight Time, (the "Closing Date"). The Closing shall
take place simultaneously at the offices of Onsite, Sycom Corp, PSCRC,
Xxxxxx Eng Linn & Schroder, LeBoeuf, Lamb, Xxxxxx & XxxXxx, L.L.P., and/or
at such other places or time as the parties hereto may mutually agree in
writing.
5.3 DELIVERIES ON THE CLOSING DATE BY SYCOM LLC. Provided that all
of the terms and conditions of this Agreement have been satisfied, Sycom
LLC shall deliver or cause to be delivered to SYCOM ONSITE the following on
or before the Closing Date:
(a) (i) Bills of sale or documents of assignment as shall be
required to vest in SYCOM ONSITE good and marketable title to all the
Assets, and (ii) operating control of the Assets;
(b) a copy of a Certificate of Good Standing for Sycom LLC
issued not more than ten (10) days prior to the Closing Date by the
Delaware Secretary of State;
(c) a certificate signed by the President of SSBKK as the sole
member of Sycom LLC dated as of the Closing Date stating that the
financial statements of Sycom LLC for the fiscal year ended December 31,
1997, were prepared in accordance with generally accepted accounting
principles ("GAAP"), that such financial statements continue to reflect
accurately the financial condition of Sycom LLC as of the time periods
covered, and nothing has occurred since the last balance sheet date
(December 31, 1997) which would render such financial statements to be
misleading or incorrect in any material respect; and
(d) a certificate signed by the President of SSBKK as the sole
member of Sycom LLC dated as of the Closing Date stating that all of the
representations and warranties of the Sycom LLC set forth in this Agreement
are true and correct in all material respects and that all of the
conditions of this Agreement applicable to the Closing Date have been
satisfied or waived; and
(e) the executed Ancillary Agreements as more specifically
provided for in Sections 3.1, 3.2, 3.3, and 3.4 of this Agreement.
5.4 DELIVERIES ON THE CLOSING DATE BY ONSITE AND SYCOM ONSITE.
Provided that all of the terms and conditions of this Agreement have been
satisfied, and with the exception of the Form D under Section 5.4(e) hereof
which may be delivered within fifteen (15) after the Closing Date, Onsite
shall deliver, or cause to be delivered to Sycom LLC, the following on or
before the Closing Date:
(a) certificates representing 1,750,000 Common Shares, in the
name of Sycom LLC;
(b) a copy of a Certificate of Good Standing for Onsite issued
not more than ten (10) days prior to the Closing Date by the Delaware
Secretary of State;
(c) a certificate signed by the Chief Executive Officer of
Onsite dated as of the Closing Date stating that the financial statements
of Onsite, as determined in accordance with GAAP, as of the Closing Date,
continue to reflect accurately the financial condition of Onsite as of the
time periods covered, and nothing has occurred since the last balance sheet
date (March 31, 1998) which would render such financial statements to be
misleading or incorrect;
(d) a certificate signed by the Chief Executive Officer of
Onsite 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 originally signed SEC Form D relating to this
transaction; and
(f) the executed Ancillary Agreements as more specifically
provided for in Sections 3.1, 3.2, 3.3, and 3.4 of this Agreement.
5.5 FILINGS; COOPERATION. Onsite and Sycom LLC 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. Unless otherwise provided herein, all such
instruments so delivered shall be dated the Closing Date.
VI. REPRESENTATIONS AND WARRANTIES OF SYCOM.
Each of Sycom LLC and SSBKK represents and warrants to Onsite as
follows:
6.1 TITLE TO PROPERTY. Schedule 1.1 accurately identifies all of the
Assets of Sycom LLC. Sycom LLC has good and marketable title to the Assets
free and clear of all liens, encumbrances, security interests, charges,
restrictions, options, mortgages, easements, rights-of-way, or other
encumbrances and restrictions of any nature whatsoever, except as described
in Schedule 6.1 and upon consummation of the transactions contemplated
hereby, Sycom LLC shall transfer, assign, and convey to SYCOM ONSITE, and
SYCOM ONSITE shall receive from Sycom LLC, good and marketable title to all
of the Assets free and clear of any and all liens, encumbrances, security
interests, charges, or restrictions against transfer except as disclosed in
Schedule 6.1.
6.2 ORGANIZATION. Sycom LLC is a limited liability corporation, and
each of its affiliates is a corporation, partnership, or limited liability
company, duly organized, validly existing, duly qualified or licensed to do
business, and in good standing under the laws of the jurisdiction of its
incorporation or organization and in each jurisdiction in which the nature
of the business conducted by it makes such qualification or licensing
necessary, and has all requisite corporate or other power and authority and
all necessary governmental approvals to own, lease, and operate its
properties and to carry on its business as now being conducted, except
where the failure to be so organized, existing, and in good standing or to
have such power, authority, and governmental approvals would not have a
material adverse effect on Sycom LLC or its affiliates taken as a whole.
As used in this Agreement, a "Person" is a natural person, corporation,
trust, association, company, partnership, limited liability company, joint
venture, or other entity or any government, governmental agency,
instrumentality, or political subdivision. Also as used in this Agreement,
any reference to any event, change, or effect having a material adverse
effect on or with respect to any Person (or group of Persons taken as a
whole) means such event, change, or effect, individually or in the
aggregate with such other events, changes, or effects, which is materially
adverse to the financial condition, businesses, results of operations,
assets, liabilities, or properties of such Person (or, if used with respect
thereto, of such group of Persons taken as a whole).
6.3 CORPORATE AUTHORIZATION; VALIDITY OF AGREEMENT. Each of Sycom
LLC and SSBKK has full corporate power and authority to execute and deliver
this Agreement and the Ancillary Agreements to which each is a party and to
consummate the transactions contemplated hereby and thereby. The execution
and delivery by each of Sycom LLC and SSBKK of this Agreement and the
Ancillary Agreements and the consummation by them of the transactions
contemplated hereby and thereby have been duly and validly authorized.
Each of this Agreement and the Ancillary Agreements has been duly executed
and delivered by Sycom LLC and SSBKK and constitutes a valid and binding
obligation of Sycom LLC and SSBKK, enforceable against each of them as
applicable in accordance with its terms, except that (i) such enforcement
may be subject to applicable bankruptcy, insolvency, or other similar laws,
now or hereafter in effect, affecting creditors' rights generally, and (ii)
the remedy of specific performance and injunctive and other forms of
equitable relief may be subject to equitable defenses and to the discretion
of the court before which any proceeding therefor may be brought.
6.4 CONSENTS AND APPROVALS; NO VIOLATIONS. Except as disclosed in
Schedule 6.4, and for filings, permits, authorizations, consents, and
approvals as may be required under, and other applicable requirements of,
the Securities Act and the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and the approval of this Agreement by Sycom LLC's member
and the approval of the Ancillary Agreements by Sycom LLC's affiliates,
neither the execution nor delivery of this Agreement or the Ancillary
Agreements by each of Sycom LLC and SSBKK nor the consummation by each of
Sycom LLC and SSBKK of the transactions contemplated hereby and thereby
nor compliance by each of Sycom LLC and SSBKK with any of the provisions
hereof or thereof will (i) conflict with or result in any beach of any
provision of the articles, bylaws, partnership agreement, certificate of
formation, operating agreement, or similar organizational documents of each
of Sycom LLC or SSBKK, (ii) require any filing with, or permit,
authorization, consent, or approval of, any Governmental Entity, (iii)
result in a violation or breach of, or constitute (with or without due
notice or lapse of time or both) a default (or give rise to any right of
termination, amendment, cancellation, or acceleration) under, or require
any consent or waiver under, any of the terms, conditions, or provisions of
any note, bond, mortgage, indenture, guarantee, other evidence of
indebtedness, lease, license, contract, agreement (including, without
limitation, project or customer agreements) or other instrument or
obligation to which Sycom LLC is a party or by which it or any of its
properties or assets may be bound (a "Sycom LLC Agreement") or (iv) violate
any order, writ, injunction, decree, statute, rule, or regulation
applicable to Sycom LLC or any of its properties or assets, except in the
case of clause (ii), (iii) or (iv) where the failure to obtain such
permits, authorizations, consents, or approvals or to make such filings, or
where such violations, breaches, or defaults, or the failure to obtain such
consents or waivers would not, individually or in the aggregate, have a
material adverse effect on Sycom LLC or its affiliates and will not
materially impair the ability of Sycom LLC or its affiliates to consummate
the transactions contemplated hereby or by the Ancillary Agreements.
6.5 FINANCIAL STATEMENTS. Sycom LLC has heretofore made available to
Onsite true and complete copies of all financial statements prepared by or
on behalf of Sycom LLC since the time of its formation to December 31,
1997. Such financial statements have been prepared from, and are in
accordance with, the books and records of Sycom LLC, comply in all material
respects with applicable accounting requirements and have been applied on a
consistent basis during the periods involved (except as may be indicated in
the notes thereto), and fairly present the financial position and the
results of operations and cash flows of Sycom LLC, as of the dates thereof
or for the periods presented therein. Sycom LLC maintains a system of
internal accounting controls sufficient to provide reasonable assurances
that (i) transactions are executed in accordance with management's general
or specific authorization; (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with GAAP and to
maintain accountability of assets; (iii) access to assets is permitted only
in accordance with management's general or specific authorization; and (iv)
the recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
6.6 ABSENCE OF CERTAIN CHANGES. Except to the extent disclosed in
Schedule 6.6, since January 1, 1998, Sycom LLC has conducted its business
and operations consistent with past practice only in the ordinary and usual
course. From January 1, 1998 through the date of this Agreement, there has
not occurred (i) any events, changes, or effects (including the incurrence
of any liabilities of any nature, whether or not accrued, contingent, or
otherwise) having, or which would be reasonably likely to have,
individually or in the aggregate, a material adverse effect on Sycom LLC;
(ii) any declaration, setting aside, or payment of any dividend or other
distribution (whether in cash, stock, or property) with respect to the
equity interests of Sycom LLC; or (iii) any change by Sycom LLC in
accounting principles or methods, except insofar as may be required by a
change in GAAP. Since January 1, 1998, Sycom LLC has not taken any of the
actions prohibited by Section 8.1 hereof.
6.7 NO UNDISCLOSED LIABILITIES. Except (a) as reflected in Schedule
1.2 or on Sycom LLC's balance sheet for the fiscal year ending December 31,
1997, (b) to the extent disclosed in Schedule 6.7 and (c) for liabilities
and obligations incurred in the ordinary course of business, consistent
with past practice and not in excess of $25,000 in the aggregate since
January 1, 1998, Sycom LLC has not incurred any liabilities or obligations
of any nature, whether or not accrued, contingent, or otherwise, that have,
or would be reasonably likely to have, a material adverse effect on Sycom
LLC, or the liabilities set forth in Schedule 1.2, or would be required to
be reflected or reserved against on a balance sheet of Sycom LLC (including
the notes thereto) prepared in accordance with GAAP as applied in preparing
the balance sheet of Sycom LLC as of December 31, 1997.
6.8 NO EMPLOYEES. Sycom LLC currently does not have nor has had
since the time of its formation any employees or employee benefit plans.
6.9 LITIGATION; COMPLIANCE WITH LAW. Except to the extent disclosed
in Schedule 6.9:
(a) There is no suit, claim, action, proceeding or investigation
pending or, to the best knowledge of Sycom LLC, threatened against or
affecting, Sycom LLC or its affiliates; and
(b) Sycom LLC has complied in a timely manner and in all
material respects with all laws, statutes, regulations, rules, ordinances,
judgements, decrees, orders, writs, and injunctions, of any court or
Governmental Entity relating to any of the property owned, leased, or used
by them, or applicable to their business, including, but not limited to,
equal employment opportunity, discrimination, occupational safety and
health, environmental, interstate commerce, and antitrust laws.
6.10 NO DEFAULT. The business of Sycom LLC is not being conducted in
default or in violation of any term, condition, or provision of (i) its
respective Articles of Incorporation or Bylaws or similar organizational
documents, (ii) any Sycom LLC Agreement, or (iii) any federal, state,
local, or foreign law, statute, regulation, rule, ordinance, judgment,
decree, order, writ, injunction, concession, grant, franchise, permit, or
license or other governmental authorization or approval applicable to Sycom
LLC, excluding from the foregoing clauses (ii) and (iii), defaults or
violations that would not, individually or in the aggregate, have a
material adverse effect on Sycom LLC, or materially impair the ability of
Sycom LLC to consummate the transactions contemplated hereby.
6.11 TAXES.
(a) Except as set forth in Schedule 6.11:
(i) Sycom LLC has (x) duly filed (or there has been filed
on its behalf) with the appropriate federal, state, local, and foreign
Governmental Entitles all Tax Returns (as hereinafter defined) required to
be filed by it on or prior to the date hereof, and such Tax Returns are
true, correct, and complete in all material respects, and (y) duly paid in
full or made provision in accordance with GAAP (or there has been paid or
provision has been made on their behalf) for the payment of all taxes (as
hereinafter defined) for all periods ending on or before the Closing Date;
(ii) Sycom LLC has made provision for all Taxes payable (x)
for any periods that end before the Closing Date for which no Tax Returns
have yet been filed and (y) for all periods that begin before the Closing
Date and end after the Closing Date to the extent that such Taxes are
attributable to the portion of any such periods ending on or before the
Closing Date;
(iii) There are no liens for Taxes upon any property or
assets of Sycom LLC, except for liens for Taxes not yet due;
(iv) Sycom LLC has not made any change in accounting
methods, received a ruling from any taxing authority, or signed an
agreement likely to have a material adverse effect on Sycom LLC;
(v) Sycom LLC has complied in all respects with all
applicable laws, rules, and regulations relating to the payment and
withholding of Taxes (including, without limitation, withholding of Taxes
pursuant to Sections 1441 and 1442 of the Code or similar provisions under
any foreign laws) and has, within the time and the manner prescribed by
law, withheld and paid over to the proper federal, state, local, and
foreign Governmental Entities all amounts required to be so withheld and
paid over under applicable laws;
(vi) No deficiency for any taxes has been proposed,
asserted, or assessed against Sycom LLC which has not been resolved and
paid in full;
(vii) No federal, state, local, or foreign audits or other
administrative proceedings or court proceedings are presently pending with
regard to any Taxes or Tax Returns of Sycom LLC, and Sycom LLC has not
received a written notice of any pending audits or proceedings;
(viii) The federal income Tax Returns of Sycom LLC have not
been audited by the Internal Revenue Service or any state, local, or
foreign Governmental Entity (or the applicable statutes of limitation for
the assessment of federal income Taxes for such periods have expired) for
any period through and including December 31, 1997;
(ix) There are no outstanding requests, agreements,
consents, or waivers to extend the statutory period of limitations
applicable to the assessment of any Taxes or deficiencies against Sycom
LLC, and no power of attorney granted by Sycom LLC with respect to any
Taxes is currently in force;
(x) Sycom LLC is not a party to any agreement providing for
the allocation or sharing of Taxes; and
(xi) Sycom LLC is not required to be, nor has been,
included in (and has not, and will not, consent to be included in) a
consolidated, combined, unitary, or affiliated Tax Return for any period
under any federal, state, local, or foreign law, and Sycom LLC is not nor
will be subject to liability for any taxes of any other Person, including,
without limitation, liability arising from the application of section
1.1502-6 of the U.S. Treasury regulations promulgated pursuant to section
1502 of the Code or any analogous provision of any state, local, or foreign
law.
(b) "Taxes" (including, with correlative meaning, the term
"Tax") shall mean any and all taxes, charges, fees, levies or other
assessments, including, without limitation, income, gross receipts, excise,
real or personal property, sales, withholding, social security, railroad
retirement, railroad unemployment, occupation, use, service, service use,
license, net worth, payroll, franchise, transfer and recording taxes, real
property transfer taxes, fees and charges, imposed by the Internal Revenue
Service or any taxing authority (whether domestic or foreign including,
without limitation, any state, county, local or foreign government or any
subdivision or taxing agency thereof (including a United States
possession)), whether computed on a separate, consolidated, unitary,
combined or any other basis; and such term shall include any interest,
fines, penalties, or additional amounts attributable to, or imposed upon,
or with respect to, any such amounts. "Tax Return" shall mean any report,
return, document, declaration, or other information or filing required to
be filed with or supplied to any taxing authority or jurisdiction (foreign
or domestic) with respect to Taxes, including, without limitation,
information returns, any documents with respect to or accompanying payments
of estimated Taxes, or with respect to or accompanying requests for the
extension of time in which to file any such report, return, document,
declaration or other information.
6.12 CONTRACTS. Each Sycom LLC Agreement is valid, binding,
enforceable, and in full force and effect, except where failure to be
valid, binding, enforceable, and in full force and effect would not have a
material adverse effect on Sycom LLC, and there are no defaults thereunder,
except those defaults that would not have a material adverse effect on
Sycom LLC. Schedule 6.12 sets forth a true and complete list of all (i)
non-competition agreements imposing restrictions on the ability of Sycom
LLC to conduct business in any jurisdiction or territory, (ii) agreements
of Sycom LLC relating to indebtedness for borrowed money (whether incurred,
assumed, guaranteed or secured by any asset), except any such agreement
with an aggregate outstanding principal amount not exceeding $25,000, (iii)
leases or subleases of real property to which Sycom LLC is a party, (iv)
partnership, joint venture, or other similar agreements or arrangements to
which Sycom LLC is a party, (v) material agreements to which Sycom LLC is a
party providing for agency, dealer, or sales representation arrangements,
(vi) agreements to which Sycom LLC is a party which contain provisions
relating to "change of control" situations or similar provisions, (vii)
material project or customer agreements, and (viii) agreements of Sycom LLC
with or for the benefit of any affiliate of Sycom LLC.
6.13 ENVIRONMENTAL MATTERS.
(a) Except as set forth in Schedule 6.13(a) and except for
matters which would not, individually or in the aggregate, be reasonably
expected to result in a material adverse effect on Sycom LLC: (i) Sycom LLC
is and has been in compliance with, and there are no outstanding
allegations by any Person or entity that Sycom LLC has not been in
compliance with, all applicable laws, rules, regulations, common law,
ordinances, decrees, orders, or other binding legal requirements relating
to pollution (including the treatment, storage, and disposal of wastes and
the remediation of releases and threatened releases of materials), the
preservation of the environment, and the exposure of materials in the
environment or workplace ("Environmental Laws"), and (ii) Sycom LLC
currently holds all permits, licenses, registrations, and other
governmental authorizations (including exemptions, waivers, and the like)
and financial assurance required under Environmental Laws for Sycom LLC to
operate its business as currently conducted.
(b) Except as set forth in Schedule 6.13(b), to the knowledge of
Sycom LLC, (i) there is no friable asbestos-containing material in or on
any real property currently or previously owned, leased, or operated by
Sycom LLC, and (ii) there are and have been no underground storage tanks
(whether or not required to be registered under any applicable law), dumps,
landfills, lagoons, surface impoundments, injection xxxxx or other land
disposal units in or on any property currently or previously owned, leased,
or operated by Sycom LLC.
(c) Except as set forth on Schedule 6.13(c), (i) Sycom LLC has
not received (x) any written communication from any Person stating or
alleging that it may be a potentially responsible party under any
Environmental Law (including, without limitation, the Federal Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as
amended) with respect to any actual or alleged environmental contamination,
or (y) any request for information under any Environmental Law from any
Governmental Entity with respect to any actual or alleged material
environmental contamination; and (ii) neither Sycom LLC nor any
Governmental Entity is conducting nor has conducted (nor, to the knowledge
of Sycom LLC, is threatening to conduct) any environmental remediation or
investigation which could result in a material liability of Sycom LLC under
any Environmental Law.
6.14 PURCHASE FOR OWN ACCOUNT. Sycom LLC is acquiring the Common
Stock for its own accounts, for investment purposes and not for resale or
with a view to any distribution, or in connection with any distribution
thereof, until the Common Stock is registered. Sycom LLC is able to (i)
bear the economic risk of the investment in Onsite, (ii) hold the Common
Stock for an indefinite period of time, and (iii) afford a complete loss of
the investment.
6.15 INVESTMENT EXPERIENCE. Sycom LLC has the requisite knowledge and
experience in financial and business matters, including investments of this
type, to be capable of evaluating the merits and risks of an investment in
the Common Stock and of making an informed investment decision with respect
thereto.
6.16 RECEIPT OF INFORMATION. Sycom LLC has received, read carefully,
considered and fully understood the SEC Documents, as that term is defined
in Section 7.5 hereof, and has received from Onsite all of the information
concerning Onsite that it considers to be material in making the investment
decision, which information has been requested by Sycom LLC if not already
furnished by Onsite. Sycom LLC has had full access to the books and records
of Onsite and to its officers, directors and accountants for the purpose of
obtaining and verifying such information and Sycom LLC has had an
opportunity to ask questions and receive answers from the officers of
Onsite regarding the terms and conditions of this transaction and Onsite's
business and financial condition.
Except as set forth in the SEC Documents provided and in this
Agreement, no representations or warranties, oral or otherwise, have been
made to Sycom LLC, including without limitation, any representations
concerning the future prospects of Onsite, by Onsite or any agent, employee
or affiliate of Onsite, or any other person whether or not associated with
this transaction, and in entering into this transaction Sycom, LLC is not
relying upon any information, other than that contained in the documents
provided, and the results of its own independent investigation. Sycom LLC
has obtained sufficient information to evaluate the merits and risks of the
investment and to make an informed investment decision.
6.17 RESTRICTED SECURITIES. Sycom LLC understands and acknowledges
that the Common Shares it is receiving hereunder are "restricted
securities" under federal and state securities laws insofar as they have
not been registered under the Securities Act or the securities laws of any
other jurisdiction, that they may not be resold or transferred without
compliance with the registration or qualification provisions of the
Securities Act or applicable federal and state securities laws of any state
or other jurisdiction or an opinion of counsel that an exemption from such
registration and qualification requirements is available. Sycom LLC is
familiar with SEC Rule 144 as presently in effect and the resale
limitations imposed thereby and by the Securities Act.
VII. REPRESENTATIONS AND WARRANTIES OF ONSITE
Onsite represents and warrants to Sycom LLC as follows:
7.1 ORGANIZATION. Onsite is a corporation duly organized, validly
existing, duly qualified or licensed to do business, and in good standing
under the laws of the jurisdiction of its incorporation or organization and
in each jurisdiction in which the nature of the business conducted by it
makes such qualification or licensing necessary, and has all requisite
corporate or other power and authority and all necessary governmental
approvals to own, lease, and operate its properties and to carry on its
business as now being conducted, except where the failure to be so
organized, existing, and in good standing or to have such power, authority,
and governmental approvals would not have a material adverse effect on
Onsite. Following its organization, SYCOM ONSITE shall be a corporation
duly organized, validly existing, duly qualified or licensed to do
business, and in good standing under the laws of the jurisdiction of its
incorporation or organization and in each jurisdiction in which the nature
of the business to be conducted by it makes such qualification or licensing
necessary, and shall have all requisite corporate or other power and
authority and all necessary governmental approvals to own, lease, and
operate its properties and to carry on its business as proposed to be
conducted, except where the failure to be so organized, existing, and in
good standing or to have such power, authority, and governmental approvals
would not have a material adverse effect on SYCOM ONSITE.
7.2 CAPITALIZATION.
(a) The authorized capital stock of Onsite consists of
24,000,000 shares of common stock, comprised of 23,999,000 shares of Class
A Common Stock, par value $.001 per share, 1,000 shares of Class B Common
Stock, par value $.001 per share (the "Class B Common"), and 1,000,000
shares of preferred stock, par value $.001 per share (the "Onsite Preferred
Stock"). As of the date hereof, (i) 16,418,240 shares of Onsite Common
Stock were issued and outstanding, (ii) no shares of Class B Common were
issued and outstanding, (iii) 208,205 shares of Series C Convertible Stock
were issued and outstanding, (iv) options ("Onsite Options") to acquire
approximately 2,986,591 shares of Onsite Common Stock were outstanding
under the employee stock option plans of Onsite, and (v) 3,300,000 total
shares of Onsite Common Stock were reserved for issuance pursuant to the
employee stock option plans of Onsite and all other employee benefit plans
of Onsite. All of the issued and outstanding shares of Onsite Common stock
are validly issued, fully paid, and nonassessable.
(b) Except as disclosed in Schedule 7.2(b), (i) there is no
outstanding right to purchase or otherwise to receive from Onsite any of
the outstanding authorized but unissued or treasury shares of the capital
stock or any other security of Onsite, (ii) there is no outstanding
security of any kind convertible into or exercisable or exchangeable for
such capital stock, (iii) there is no right to demand that Onsite register
securities, and (iv) except as provided in the Voting Agreement
contemplated hereunder, there is no voting trust or other agreement or
understanding to which Onsite is a party or is bound with respect to the
voting of the capital stock of Onsite.
(c) The authorized capital stock of SYCOM ONSITE shall consist
of 1,000 shares of Common Stock, par value $.001 per share and all the
issued and outstanding shares of SYCOM ONSITE's common stock will be owned
by Onsite free and clear of any lien, encumbrance, security interest or
claim of any person.
(d) The Common Shares, when issued pursuant to this Agreement,
shall be validly issued, fully paid, and nonassessable.
7.3 CORPORATE AUTHORIZATION; VALIDITY OF AGREEMENT.
(a) Onsite has full corporate power and authority to execute and
deliver this Agreement and the Ancillary Agreements and to consummate the
transactions contemplated hereby and thereby. The execution, delivery, and
performance by Onsite of this Agreement and the Ancillary Agreements and
the consummation by it of the transactions contemplated hereby have been
duly and validly authorized by Onsite's Board of Directors and no other
corporate action on the part of Onsite is necessary to authorize the
execution and delivery by Onsite of this Agreement and the Ancillary
Agreements and the consummation by it of the transactions contemplated
hereby and thereby. This Agreement has been duly executed and delivered by
Onsite and constitutes a valid and binding obligation of Onsite enforceable
against Onsite in accordance with its terms, except that (i) such
enforcement may be subject to applicable bankruptcy, insolvency, or other
similar laws, now or hereafter in effect, affecting creditors' rights
generally, and (ii) the remedy of specific performance and injunctive and
other forms of equitable relief may be subject to equitable defenses and to
the discretion of the court before which any proceeding therefor may be
brought.
(b) The Board of Directors of Onsite has duly and validly
approved and taken all corporate action required to be taken by such Board
of Directors for the consummation of the transactions contemplated by this
Agreement, including, but not limited to, all actions necessary to render
the provisions of Section 203 of the Delaware General Corporation Law
inapplicable to such transactions.
7.4 CONSENTS AND APPROVALS; NO VIOLATIONS. Except as disclosed in
Schedule 7.4 and for filings, permits, authorizations, consents, and
approvals as may be required under, and other applicable requirements of,
the Securities Act and the Exchange Act, neither the execution, delivery,
or performance of this Agreement, nor the consummation by Onsite or SYCOM
ONSITE of the transactions contemplated hereby nor compliance by Onsite or
SYCOM ONSITE with any of the provisions hereof will (i) conflict with or
result in any breach of any provision of the Articles of Incorporation or
Bylaws or similar organizational documents of Onsite or SYCOM ONSITE, (ii)
require any filing with, or permit, authorization, consent, or approval of,
any Governmental Entity, (iii) result in a violation or breach of, or
constitute (with or without due notice or lapse of time or both) a default
(or give rise to any right of termination, amendment, cancellation, or
acceleration) under, or require any consent or waiver under, any of the
terms, conditions, or provisions of any note, bond, mortgage, indenture,
guarantee, other evidence of indebtedness, lease, license, contract,
agreement (including, without limitation, project or customer agreements)
or other instrument or obligation to which Onsite or SYCOM ONSITE is a
party or by which they or any of their properties or assets may be bound
(an "Onsite Agreement"), or (iv) violate any order, writ, injunction,
decree, statute, rule, or regulation applicable to Onsite or SYCOM ONSITE
or any of their properties or assets, except in the case of clause (ii),
(iii) or (iv) where the failure to obtain such permits, authorizations,
consents, or approvals or to make such filings, or where such violation,
breaches, or defaults or the failure to obtain such consents or waivers
would not, individually or in the aggregate, have a material adverse effect
on Onsite or SYCOM ONSITE, and will not materially impair the ability of
Onsite or SYCOM ONSITE to consummate the transactions contemplated hereby.
7.5 SEC REPORTS AND FINANCIAL STATEMENTS. Onsite has filed with the
Securities and Exchange Commission (the "SEC"), and has heretofore made
available to Sycom LLC, true and complete copies of, all forms, reports,
schedules, statements, and other documents required to be filed by it
since January 1, 1996, under the Exchange Act or the Securities Act (as
such documents have been amended since the time of their filing,
collectively, the "SEC Documents"). As of their respective dates or, if
amended, as of the date of the last such amendment, the SEC Documents,
including, without limitation, any financial statements (including the
notes thereto) or schedules included therein, (a) did not contain any
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, and (b) complied in all material respects with the applicable
requirements of the Exchange Act and the Securities Act, as the case may
be, and the applicable rules and regulations of the SEC thereunder. The
consolidated financial statements included in the SEC Documents have been
prepared from, and are in accordance with, the books and records of Onsite
and its consolidated Subsidiaries, comply in all material respects with
applicable accounting requirements and with the published rules and
regulations of the SEC with respect thereto, have been prepared in
accordance with GAAP applied on a consistent basis during the periods
involved (except as may be indicated in the notes thereto) and fairly
present the consolidated financial position and the consolidated results of
operations and cash flows of Onsite and its consolidated Subsidiaries as at
the dates thereof or for the periods presented therein. Onsite maintains a
system of internal accounting controls sufficient to provide reasonable
assurances that (i) transactions are executed in accordance with
management's general or specific authorization; (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with GAAP and to maintain accountability for assets; (iii)
access to assets is permitted only in accordance with management's general
or specific authorization; and (iv) the recorded accountability for assets
is compared with existing assets at reasonable intervals and appropriate
action is taken with respect to any differences.
7.6 ABSENCE OF CERTAIN CHANGES. Except to the extent disclosed in
(a) the SEC Documents filed prior to the date of this Agreement or (b)
Schedule 7.6, since January 1, 1998, Onsite has conducted its business and
operations consistent with past practice only in the ordinary and usual
course. From January 1, 1998, through the date of this Agreement, there
has not occurred (i) any events, changes, or effects (including the
incurrence of any liabilities of any nature, whether or not accrued,
contingent or otherwise) having or, which would be reasonably likely to
have, individually or in the aggregate, a material adverse effect on
Onsite; (ii) any declaration, setting aside or payment of any dividend or
other distribution (whether in cash, stock or property) with respect to the
equity interests of Onsite; or (iii) any change by Onsite in accounting
principles or methods, except insofar as may be required by a change in
GAAP. Since January 1, 1998, Onsite has not taken any of the actions
prohibited by Section 8.2 hereof.
7.7 NO UNDISCLOSED LIABILITIES. Except (a) as reflected on Onsite's
consolidated balance sheet for the fiscal year ended June 30, 1997, (b) to
the extent disclosed in Onsite SEC Documents filed prior to the date of
this Agreement, (c) for liabilities and obligations incurred in the
ordinary course of business, consistent with past practice and not in
excess of $400,000 in the aggregate since June 30, 1997, and (d) as
disclosed in Schedule 7.7, neither Onsite nor any of its subsidiaries has
incurred any liabilities or obligations of any nature, whether or not
accrued, contingent or otherwise, that have or would be reasonably likely
to have, material adverse effect on Onsite and its subsidiaries taken as a
whole or would be required to be reflected or reserved against on a
consolidated balance sheet of Onsite and its subsidiaries (including the
notes thereto) prepared in accordance with GAAP as applied in preparing the
consolidated balance sheet of Onsite and its subsidiaries as of June 30,
1997.
7.8 LITIGATION; COMPLIANCE WITH LAW.
(a) Except to the extent disclosed in the SEC Documents filed
prior to the date of this Agreement, there is no suit, claim, action,
proceeding, or investigation pending or, to the best knowledge of Onsite,
threatened against or affecting, Onsite.
(b) Onsite has complied in a timely manner and in all material
respects, with all laws, statutes, regulations, rules, ordinances, and
judgments, decrees, orders, writs, and injunctions, of any court or
Governmental Entity relating to any of the property owned, leased or used
by them, or applicable to their business, including, but not limited to,
equal employment opportunity, discrimination, occupational safety and
health, environmental, interstate commerce and antitrust laws.
VIII. COVENANTS.
8.1 INTERIM OPERATIONS OF SYCOM LLC. Sycom LLC covenants and agrees
that, except (i) as expressly provided in this Agreement, or (ii) with the
prior written consent of Onsite, after the date hereof and prior to the
Closing Date:
(a) The business of Sycom LLC shall be conducted only in the
ordinary and customary course consistent with past practice and, to the
extent consistent therewith, Sycom LLC shall use its reasonable best
efforts to preserve its business organization intact and maintain its
existing relations with customers, suppliers, employees, creditors, and
business partners;
(b) Sycom LLC shall not: (i) amend its Articles of Incorporation
or Bylaws or similar organizational documents; (ii) declare, set aside, or
pay any dividend or other distribution payable in cash, stock, or property
with respect to its capital stock; (iii) issue, sell, transfer, pledge,
dispose of, or encumber any additional shares of, or securities convertible
into or exchangeable for, or options, warrants, calls, commitments, or
rights of any kind to acquire, any shares of capital stock of any class of
Sycom LLC; (iv) transfer, lease, license, sell, mortgage, pledge, dispose
of, or encumber any material assets other than in the ordinary and usual
course of business and consistent with past practice; provided, however,
that in no event may Sycom LLC undertake any such action involving an
amount greater than $25,000; or (v) redeem, purchase or otherwise acquire
directly or indirectly any of its capital stock;
(c) Sycom LLC shall not modify, amend, or terminate any of the
Sycom LLC Agreements or waive, release, or assign any material rights or
claims, except in the ordinary course of business and consistent with past
practice;
(d) Sycom LLC shall not permit any material insurance policy
naming it as a beneficiary or a loss payable payee to be cancelled or
terminated without notice to Onsite;
(e) Sycom LLC shall not: (i) incur or assume any long-term debt
or incur or assume any short-term indebtedness not in the ordinary course
of business; (ii) assume, guarantee, endorse or otherwise become liable or
responsible (whether directly, contingently or otherwise) for the
obligations of any other Person; (iii) make any loans, advances or capital
contributions to, or investments in, any other Person; (iv) enter into any
material commitment or transaction (including, but not limited to, any
borrowing, capital expenditure or purchase, sale or lease of assets) other
than capital expenditures that do not exceed $25,000 in the aggregate; or
(v) enter into any contract or agreement which provides for total
consideration to be paid by Sycom LLC in an amount greater than $25,000;
(f) Sycom LLC shall not pay, discharge, or satisfy any claims,
liabilities, or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise) in an aggregate amount greater than $25,000,
without the written consent of Onsite;
(g) Unless and until this Agreement shall have been terminated
pursuant to the provisions of Article IX hereof, Sycom LLC shall not adopt
a plan of complete or partial liquidation, dissolution, merger,
consolidation, restructuring, recapitalization, or other reorganization of
Sycom LLC;
(h) Sycom LLC shall not knowingly take, or knowingly agree to
take, any action that would make any representation or warranty of Sycom
LLC contained herein inaccurate in any material respect at, or as of any
time prior to, the Closing Date;
(i) Sycom LLC shall not voluntarily make, or agree to make, any
changes in Tax accounting methods, waive or consent to the extension of any
statute of limitations with respect to Taxes, or consent to any assessment
of Taxes, or settle any judicial proceeding affecting Taxes; and
(j) Sycom LLC shall not enter into an agreement, contract,
commitment, or arrangement to do any of the foregoing, or to authorize,
recommend, propose, or announce an intention to do any of the foregoing.
8.2 INTERIM OPERATIONS OF ONSITE. Onsite covenants and agrees that,
except (i) as expressly provided in this Agreement, or (ii) with the prior
written consent of Sycom LLC, after the date hereof and prior to the
Closing Date:
(a) The business of Onsite shall be conducted only in the
ordinary and customary course consistent with past practice and, to the
extent consistent therewith, Onsite shall use its reasonable best efforts
to preserve its business organization intact and maintain its existing
relations with customers, suppliers, employees, creditors, and business
partners;
(b) Onsite will not, directly or indirectly, split, combine, or
reclassify the outstanding Onsite Common Stock;
(c) Onsite shall not:
(i) amend its Articles of Incorporation or Bylaws or
similar organizational documents;
(ii) declare, set aside or pay any dividend or other
distribution payable in cash, stock or property with respect to its capital
stock, except as required by the Series C Convertible Preferred Stock
Certificate of Designation;
(iii) issue, sell, transfer, pledge, dispose of or encumber
any additional shares of, or options, warrants, calls, commitments, or
rights of any kind to acquire any shares of capital stock of any class of
Onsite, except (w) in connection with the exercise of any option, warrant,
or convertible security outstanding as of the date hereof, (x) option
grants pursuant to the Onsite Stock Option Plan, as in effect on the date
hereof, (y) in connection with Onsite's 401(k) Plan, as in effect on the
date hereof and (z) with respect to the proposed acquisition by Onsite of
Lighting Technology Services, Inc.;
(iv) transfer, lease, license, sell, mortgage, pledge,
dispose of, or encumber any material assets other than in the ordinary and
usual course of business and consistent with past practice; or
(v) redeem, purchase, or otherwise acquire directly or
indirectly any of its capital stock;
(d) Neither Onsite nor any of its Subsidiaries will knowingly
take, or knowingly agree to take, any action that would make any
representation or warranty of Onsite contained herein inaccurate in any
respect at, or as of any time prior to, the Closing Date;
8.3 ACCESS TO INFORMATION. Sycom LLC shall, upon reasonable prior
notice, afford to the officers, employees, accountants, counsel, financing
sources, and other representatives of Onsite, reasonable access, during
normal business hours, during the period prior to the Closing Date, to all
of its properties, books, contracts, commitments, and records and, during
such period, Sycom LLC shall furnish promptly to Onsite all information
concerning its business, properties, and personnel as Onsite may reasonably
request. Unless otherwise required by law, until the Closing Date, Onsite
will hold any such information which is nonpublic in confidence, subject to
the requirements of applicable law; provided that Onsite shall not disclose
any such information without the written permission of Sycom LLC.
8.4 CONSENTS AND APPROVALS. Each of Sycom LLC and Onsite shall take
all reasonable actions necessary to comply promptly with all legal
requirements which may be imposed on it with respect to this Agreement and
the transactions contemplated hereby (which actions shall include, without
limitation, furnishing all information in connection with any necessary
approvals of or filings with any Governmental Entity) and will promptly
cooperate with and furnish information to each other in connection with any
such requirements imposed upon them in connection with this Agreement and
the transactions contemplated hereby.
8.5 ADDITIONAL AGREEMENTS. Subject to the terms and conditions
herein provided, the parties hereto agree to use all reasonable efforts to
take, or cause to be taken, all action and to do, or cause to be done, all
things necessary, proper, or advisable, whether under applicable laws and
regulations or otherwise (including, without limitations, such actions as
may be required to be taken under applicable state securities or Blue Sky
laws in connection with the issuance of the Onsite Common Shares as
contemplated hereby), or to remove any injunctions or other impediments or
delays, legal or otherwise, to consummate and make effective the asset
purchase and the other transactions contemplated by this Agreement and the
Ancillary Agreements to which it is a party. In case at any time after the
Closing Date any further action is necessary or desirable to carry out the
purposes of this Agreement or the Ancillary Agreements to which it is a
party, the proper officers and directors of each of Sycom LLC and Onsite
shall use all reasonable efforts to take, or cause to be taken, all such
necessary actions, including, without limitation, cooperating with and
assisting the parties' auditors in the auditing of the parties' financial
statements, which may include the providing of a reasonable letter of
representation regarding the financial statements of the parties.
8.6 NOTIFICATION OF CERTAIN MATTERS. Sycom LLC shall give prompt
notice to Onsite and Onsite shall give prompt notice to Sycom LLC, of (i)
the occurrence or non-occurrence of any event the occurrence or non-
occurrence of which would cause any representation or warranty contained in
this Agreement to be untrue or inaccurate in any material respect at or
prior to the Closing Date, and (ii) any material failure of Sycom LLC or
Onsite, as the case may be, to comply with or satisfy any covenant,
condition, or agreement to be complied with or satisfied by it hereunder;
PROVIDED, HOWEVER, that the delivery of any notice pursuant to this Section
8.6 shall not limit or otherwise affect the remedies available hereunder to
the party receiving such notice.
8.7 COOPERATION. Onsite and Sycom LLC shall together, or pursuant to
an allocation of responsibility to be agreed upon between them, coordinate
and cooperate (i) in determining whether any action by or in respect of, or
filing with, any Governmental Entity is required, or any actions, consents,
approvals, or waivers are required to be obtained from parties to any
material contracts, in connection with the consummation of the transactions
contemplated by this Agreement, and (ii) in seeking any such actions,
consents, approvals, or waivers or making any such filings, furnishing
information required in connection therewith, and timely seeking to obtain
any such actions, consents, approvals, or waivers. Onsite and Sycom LLC
shall, subject to applicable law, confer on a regular and frequent basis
with one or more representatives of one another to report operational
matters of significance to the asset purchase and the general status of
ongoing operations insofar as relevant to the asset purchase, provided that
the parties will not confer on any matter to the extent inconsistent with
law.
IX. TERMINATION.
9.1 TERMINATION BY MUTUAL CONSENT. Anything herein or elsewhere to
the contrary notwithstanding, this Agreement and the Ancillary Agreements
may be terminated and the asset purchase and other transactions
contemplated herein and therein may be abandoned at any time prior to the
Closing Date (a) by the mutual written consent of Onsite and Sycom LLC; or
(b) by either Sycom LLC or Onsite if any Governmental Entity shall have
issued an order, decree, or ruling or taken any other action (which order,
decree, ruling, or other action the parties hereto shall use their
reasonable efforts to lift), in each case permanently restraining,
enjoining, or otherwise prohibiting the transactions contemplated by this
Agreement and such order, decree, ruling, or other action shall have become
final and non-appealable.
9.2 TERMINATION FOR UNDISMISSED COMPLAINT. If a complaint is filed
by any third party as a result of the transactions contemplated hereby
which names Onsite or SYCOM ONSITE as a defendant and such complaint is not
dismissed within ninety (90) days of its filing, Onsite may, at its sole
option, terminate and unwind the transactions under this Agreement and the
Ancillary Agreements with no penalty or liability.
9.3 EFFECT OF TERMINATION. In the event of the termination of this
Agreement and the Ancillary Agreements as provided in Section 9.1 or
Section 9.2 hereof, written notice thereof shall forthwith be given to the
other party, and this Agreement and the Ancillary Agreements shall
forthwith become null and void, and there shall be no liability on the part
of Onsite or Sycom LLC or its affiliates hereunder or thereunder except for
breach of this Agreement or the Ancillary Agreements.
X. SURVIVAL OF REPRESENTATIONS, WARRANTIES, AND COVENANTS.
10.1 AS TO SYCOM LLC. The representations, warranties, and covenants
of Sycom LLC 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 three months from the date of this Agreement
unless a lesser time period is specified.
10.2 AS TO ONSITE. The representations, warranties, and covenants 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 three months from the date of this
Agreement unless a lesser time period is specified.
XI. INDEMNIFICATION.
11.1 INDEMNIFICATION OBLIGATIONS OF SYCOM LLC AND SSBKK. Sycom LLC
and SSBKK agree to pay Onsite the amount of any "Loss" (as defined herein)
which Onsite may incur or suffer by reason of or on account of any material
breach of any representation or warranty by, or material nonfulfillment of
any covenant on the part of, Sycom LLC under this Agreement. For purposes
of Sections 11.1 and 11.2, the term "Loss" shall mean any loss, damage,
costs, taxes, interest, penalties, liabilities, and expenses, including,
without limitation, reasonable attorneys' fees.
11.2 INDEMNIFICATION OBLIGATIONS OF ONSITE. Onsite agrees to pay
Sycom LLC the amount of any Loss which Sycom LLC may incur or suffer by
reason of or on account of any material breach of any representation or
warranty by, or material nonfulfillment of any covenant on the part of,
Onsite under this Agreement.
11.3 LIABILITIES OF SYCOM LLC AND SSBKK. With respect to any
liability of Sycom LLC and SSBKK to Onsite based on the representations,
warranties, and covenants made by Sycom LLC and/or SSBKK in this Agreement,
the total liability of Sycom LLC and SSBKK, jointly and severally, to
Onsite shall not exceed $3.5 million.
11.4 NOTIFICATION REQUIREMENTS. In case any claim is made or any suit
or action is commenced pursuant to this Article XI, the indemnified party
or parties ("Indemnitee") shall promptly give written notice thereof to the
indemnifying party or parties ("Indemnitor"). Within thirty (30) days
after such notice, the Indemnitor shall be entitled to assume the defense
thereof with counsel of Indemnitor's choice and reasonably satisfactory to
the Indemnitee.
11.5 BINDING NATURE OF SETTLEMENT OR COMPROMISE. Any settlement or
compromise made or caused to be made by the Indemnitee of any claim, suit,
or action under this Article XI, the defense of which shall not have been
assumed by the Indemnitor within 90 days of notice to the Indemnitor of the
action, shall be binding upon the Indemnitor in the same manner as if a
final judgment or decree had been entered by a court of competent
jurisdiction in the amount of such settlement or compromise.
11.6 ACCESS TO BOOKS AND RECORDS. Upon written request by the
Indemnitor, Indemnitee will cooperate reasonably in the defense of any
claim, suit, or action, including, at the Indemnitor's cost during normal
business hours, access to Indemnitee, officers, agents, employees, and
legal counsel, and to pertinent books and records for purposes of
inspection and making copies.
11.7 NO RELEASE FOR FAILURE OF INDEMNITOR TO DEFEND. If Indemnitor
does not elect to assume the defense of any claim, suit, or action, then
any failure of the Indemnitee to defend or to participate in the defense of
any claim, suit, or action, or to cause the same to be done, shall not
relieve the Indemnitor of its obligations hereunder.
XII. MISCELLANEOUS.
12.1 FEES AND EXPENSES. Except as contemplated by this Agreement, all
costs and expenses incurred in connection with this Agreement and the
consummation of the transactions contemplated hereby shall be paid by the
party incurring such expenses.
12.2 FINDERS' FEES.
(a) There is no investment banker, broker, finder, or other
intermediary which has been retained by or is authorized to act on behalf
of Sycom LLC who might be entitled to any fee or commission from Sycom LLC
upon whose consummation of the transactions contemplated by this Agreement.
(b) Except for XxXxxxxxxx, Xxxx & Co., there is no investment
banker, broker, finder or other intermediary which has been retained by or
is authorized to act on behalf of Onsite who might be entitled to any fee
or commission from Onsite upon consummation of the transactions
contemplated by this Agreement.
12.3 AMENDMENT AND MODIFICATION. Subject to applicable law, this
Agreement may be amended, modified, and supplemented in any and all
respects by written agreement of the parties hereto at any time prior to
the Closing Date with respect to any of the terms contained herein.
12.4 NOTICES. All notices and other communications hereunder shall be
in writing and shall be deemed given if delivered personally, telecopied
(which is confirmed) or sent by a nationally recognized overnight courier
service to the parties at the following addresses (or at such other address
for a party as shall be specified by like notice):
(a) if to Onsite:
Onsite Energy Corporation
000 Xxxxxxx Xxxxxxx Xxxx, Xxxxx 000
Xxxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxxx
Facsimile: (000) 000-0000
with a copy to:
Xxxxxx Eng Xxxx & Xxxxxxxx
000 Xxxxxxx Xxxx, Xxxxx 0000
Xxxxxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxx, Esq.
Facsimile No.: (000) 000-0000
(b) if to Sycom LLC, to:
SYCOM Enterprises LLC
Attn: S. Xxxx Xxxxxxxxx
00 Xxxxxx Xxxx Xxxxx
Xxxxxxxx, X.X. 00000
Facsimile No.: (000) 000-0000
with a copy to:
Xxxxx X. Xxxxxx, Esq.
Paul, Hastings, Xxxxxxxx & Xxxxxx LLP
000 Xxxx Xxxxxx, 00{xx} Xxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Facsimile No.: (000) 000-0000
12.5 INTERPRETATION. When a reference is made in this Agreement to
Sections, such reference shall be to a Section of this Agreement unless
otherwise indicated. Whenever the words "include", "includes" or
"including" are used in this Agreement they shall be deemed to be followed
by the words "without limitation". The phrase "made available" in this
Agreement shall mean that the information referred to has been made
available if requested by the party to whom such information is to be made
available. The phrases "the date of this Agreement", "the date hereof",
and the terms of similar import, unless the context otherwise requires,
shall be deemed to refer to June 30, 1998. As used in this agreement, the
term "affiliate(s)" shall have the meaning set forth in Rule 12b-2 of the
Exchange Act.
12.6 ASSIGNMENT. Neither this Agreement nor any of the rights,
interests, or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other parties. Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of, and be enforceable
by the parties and their respective successors and assigns.
12.7 JURISDICTION AND VENUE. Any and all suits for any breach of this
Agreement or for rescission or specific performance of this Agreement shall
be filed and maintained in any court of competent jurisdiction in San Diego
County, California. This Agreement shall be governed by and construed in
accordance with the laws of the State of California.
12.8 WAIVER OF JURY. It is hereby agreed that the parties waive their
right to a jury trial in any litigation resulting from said Agreement.
12.9 DISPUTE RESOLUTION. No party to this Agreement or the Ancillary
Agreements 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
or the Ancillary Agreements, through negotiations between representatives
who have authority to settle the controversy. Any party may give the other
party(ies) written notice of any such dispute not resolved in the normal
course of business. Within twenty 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 $50,000 at issue
has not been resolved within sixty 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 thirty 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 (a
"Neutral") to preside over the ADR proceedings, by the following procedure:
Within fifteen days after an ADR method is established, the Claimant shall
submit a list of five acceptable Neutrals to the Respondent. Each Neutral
listed shall be sufficiently qualified, including demonstrated neutrality,
experience and competence regarding the subject matter of the dispute. A
Neutral shall be deemed to have adequate experience if an attorney or
former judge. None of the Neutrals may be present or former employees,
attorneys, or agents of either party. The list shall supply information
about each Neutral, including address, and relevant background and
experience (including education, employment history and prior ADR
assignments). Within fifteen 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 five 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 fifteen 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 thirty days after the
Neutral has been selected. The Neutral shall issue a written decision
within thirty 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 thirty 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.
12.10 ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES. This Agreement
(including the documents and the instruments referred to herein): (a)
constitute the entire agreement and supersede all prior agreements and
understandings, both written and oral, among the parties with respect to
the subject matter hereof, and (b) are not intended to confer upon any
Person other than the parties hereto any rights or remedies hereunder.
12.11 SEVERABILITY. If any term, provision, covenant, or restriction
of this Agreement is held by a court of competent jurisdiction or other
authority to be invalid, void, unenforceable or against its regulatory
policy, the remainder of the terms, provisions, covenants and restrictions
of this Agreement shall remain in full force and effect and shall in no way
be affected, impaired or invalidated.
///
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12.12 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, by facsimile signature or otherwise, all of which shall be
considered one and the same agreement and shall become effective when two
or more counterparts have been signed by parties and delivered to the
other parties, it being understood that all parties need not sign the same
counterpart.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
signed by their respective officers or Chairman thereunto duly authorized
as of the date first written above.
ONSITE ENERGY CORPORATION
By:
Xxxxxxx X. Xxxxxxxx,
President and Chief Executive Officer
SYCOM ONSITE CORPORATION
By: _____________________________
Xxxxxxx X. Xxxxxxxx,
Chairman of the Board
SYCOM ENTERPRISES, LLC
By: SSBKK CORP., its sole member
By: ___________________________
S. Xxxx Xxxxxxxxx
President
SSBKK Corp.
By: _____________________________
S. Xxxx Xxxxxxxxx President
EXHIBIT A
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is entered into
as of June 30, 1998, by and between Onsite Energy Corporation ("Onsite"), a
Delaware corporation, and each of the Persons who have executed this
Agreement.
The parties hereto hereby agree as follows:
1. DEFINITIONS. Unless the context otherwise requires, the terms
defined in this Section 1 shall have the meanings herein specified for all
purposes of this Agreement, applicable to both the singular and plural
forms of any of the terms herein defined.
"AGREEMENT" means this Registration Rights Agreement.
"BOARD" means the Board of Directors of Onsite.
"COMMON STOCK" means Onsite's Class A Common Stock, $0.001 par
value.
"COMMISSION" means the Securities and Exchange Commission.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"HOLDER" includes only the undersigned and the equity owners of
the undersigned.
"HOLDERS OF A MAJORITY OF THE REGISTRABLE SECURITIES" means the
Person or Persons who are the Holders of greater than 50% of the shares of
Registrable Securities then outstanding.
"HOLDERS' REPRESENTATIVE" shall mean S. Xxxx Xxxxxxxxx, until the
Holders of a Majority of the Registrable Securities shall select a new
representative and notify Onsite of such change.
"INITIATING HOLDERS" means (i) with respect to the first
registration effected pursuant to Section 2 hereof, other than a
registration on Form S-3, the Holders of a Majority of the Registrable
Securities, and (ii) with respect to a registration on Form S-3, the Holder
or Holders of at least 500,000 shares of Registrable Securities.
"PERSON" includes any natural person, corporation, trust,
association, limited liability company, partnership, joint venture and
other entity and any government, governmental agency, instrumentality or
political subdivision.
"PREFERRED STOCK" means the Series D Convertible Preferred Stock
of Onsite.
The terms "REGISTER," "REGISTERED" and "REGISTRATION" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement.
"REGISTRABLE SECURITIES" means (1) the 1,750,000 shares of Common
Stock issued pursuant to that certain "Amended And Restated Asset Purchase
Agreement" dated June 30, 1998 owned by the Holders, (2) the Common Stock
issued or issuable upon conversion of the Preferred Stock owned by the
Holders, and (3) any securities issued or issuable with respect to the
Common Stock referred to in clauses (1) and (2) above by way of a stock
dividend or stock split or in connection with a combination of shares,
reclassification, recapitalization, merger or consolidation or
reorganization; provided, however, that such shares of Common Stock shall
only be treated as Registrable Securities if and so long as they have not
been (i) sold to or through a broker or dealer or underwriter in a public
distribution or a public securities transaction, or (ii) sold in a
transaction exempt from the registration and prospectus delivery
requirements of the Securities Act under Section 4(1) thereof so that all
transfer restrictions and restrictive legends with respect to such Common
Stock are removed upon the consummation of such sale and the seller and
purchaser of such Common Stock receive an opinion of counsel for Onsite,
which shall be in form and content reasonably satisfactory to the seller
and buyer and their respective counsel, to the effect that such Common
Stock in the hands of the purchaser is freely transferable without
restriction or registration under the Securities Act in any public or
private transaction.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
2. REQUIRED REGISTRATION.
(a) Commencing on June 30, 1998, if and whenever Onsite shall
receive a written request therefor from Initiating Holders, Onsite agrees
to prepare and file promptly a registration statement under the Securities
Act covering the shares of Registrable Securities which are the subject of
such request and agrees to use its best efforts to cause such registration
statement to become effective as expeditiously as possible. Upon the
receipt of such request, Onsite agrees to give promptly written notice to
all Holders of Registrable Securities that such registration is to be
effected. Onsite agrees to include in such registration statement such
shares of Registrable Securities for which it has received written requests
to register such shares by the Holders thereof within thirty (30) days
after the receipt of written notice from Onsite.
(b) Onsite shall be obligated to prepare, file and cause to
become effective one and only one registration statement pursuant to this
Section 2, on a form of registration statement other than Form S-3.
Onsite shall be obligated to effect no more than three registrations on
Form S-3 under this Section 2. Any registration initiated pursuant to this
Section 2 hereof shall not count as a registration for the purposes of the
limitation set forth above in this Section 2(b) unless and until such
registration shall have become effective and sixty-seven percent (67%) of
the Registrable Securities initially included in the first filing by the
Company with the Commission shall have been actually sold; provided however
that all registration statements filed on a "delayed basis" pursuant to
Rule 415 of the Securities Act shall be counted as a registration whether
or not securities are sold thereunder.
(c) The Holders may, before such Registration Statement becomes
effective, withdraw their Registrable Securities from sale, should the
terms of sale not be reasonably satisfactory to it; however, such Demand
Registration shall be deemed to have occurred for the purposes of Section
2(b) hereof, unless such withdrawal is more than 5 days prior to the
effective date of such Registration Statement. If there is no other seller
after the withdrawal of the Holders, the Holders shall pay all of the out-
of-pocket expenses of Onsite incurred in connection with such registration
within thirty (30) days after receipt of a written itemization of such
expenses.
(d) Onsite shall not be required by this Section 2 to effect a
registration of Registrable Securities pursuant to any registration
statement, other than on Form S-3, unless the proposed number of the
securities to be included in such registration shall be at least one
million shares.
(e) If the Holders initiating a request for the registration of
Registrable Securities pursuant to this Section 2 intend to distribute the
Registrable Securities covered by their request by means of an
underwriting, Onsite will select and obtain the investment banker or
investment bankers and manager or managers that will administer the
offering. In such event the right of any Holder to registration pursuant
to this Section 2 shall be conditioned upon such Holder's participation in
such underwriting and the inclusion of such Holder's Registrable Securities
in the underwriting to the extent requested (unless otherwise mutually
agreed by the Holders of a Majority of the Registrable Securities
initiating such request for registration and such Holder) to the extent
provided herein. All Holders proposing to distribute their securities
through such underwriting agree to enter into (together with Onsite) an
underwriting agreement with the underwriter or underwriters selected for
such underwriting, in the manner set forth above, provided that such
underwriting agreement is in customary form and is reasonably acceptable
to the Holders of a majority of the shares of Registrable Securities to be
included in such registration.
(f) Notwithstanding any other provision of this Section 2, if
the managing underwriter of an underwritten distribution advises Onsite and
the Holders of Registrable Securities participating in such registration in
writing that in its good faith judgment the number of shares of Registrable
Securities requested to be included in such registration exceeds the number
of shares of Registrable Securities which can be sold in such offering,
then (i) the number of shares of Registrable Securities so requested to be
included in such registration shall be reduced to that number of shares
which in the good faith judgment of the managing underwriter can be sold in
such offering and (ii) this reduced number of shares shall be allocated
among all Holders thereof in proportion, as nearly as practicable, to the
respective number of shares of Registrable Securities held by such Holders
at the time of filing the registration statement. Those Registrable
Securities and other securities which are excluded from the underwriting by
reason of the managing underwriter's marketing limitation and all other
Registrable Securities not originally requested to be so included shall not
be included in such registration.
(g) If the managing underwriter has not limited the number of
Registrable Securities to be underwritten, Onsite and, subject to the
requirements of Section 7 hereof, other holders of Onsite's securities, may
include securities for its (or their) own account in such registration if
the managing underwriter so agrees and if the number of Registrable
Securities which would otherwise have been included in such registration
and underwriting will not thereby be limited.
3. INCIDENTAL REGISTRATION.
(a) Each time Onsite shall determine to file a registration
statement under the Securities Act (except with respect to a registration
statement (i) on Form S-8 or any successor form to such Form or (ii) filed
in connection with an exchange offer or relating to a transaction pursuant
to Rule 145 of the Securities Act), other than pursuant to Section 2
hereof, in connection with the proposed offer and sale for money of any of
its securities either for its own account or on behalf of any other
security holder, Onsite agrees to give promptly written notice of its
determination to all Holders of Registrable Securities. Upon the written
request of a Holder of any shares of Registrable Securities given within
thirty (30) days after the receipt of such written notice from Onsite,
Onsite agrees to cause all such Registrable Securities, the Holders of
which have so requested registration thereof, to be included in such
registration statement and registered under the Securities Act, all to the
extent requisite to permit the sale or other disposition by the prospective
seller or sellers of the Registrable Securities to be so registered.
(b) If the registration of which Onsite gives written notice
pursuant to Section 3(a) is for a public offering involving an
underwriting, Onsite agrees to so advise the Holders as a part of its
written notice. In such event the right of any Holder to registration
pursuant to this Section 3 shall be conditioned upon such Holder's
participation in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting to the extent provided herein.
All Holders proposing to distribute their Registrable Securities through
such underwriting agree to enter into (together with Onsite and the other
holders distributing their securities through such underwriting) an
underwriting agreement with the underwriter or underwriters selected for
such underwriting by Onsite, provided that such underwriting agreement is
in customary form and is reasonably acceptable to the Holders of a majority
of the shares of Registrable Securities requested to be included in such
registration.
(c) Notwithstanding any other provision of this Section 3, if
the managing underwriter of an underwritten distribution advises Onsite and
the Holders of the Registrable Securities participating in such
registration in writing that in its good faith judgment the number of
shares of Registrable Securities and the other securities requested to be
registered exceeds the number of shares of Registrable Securities and other
securities which can be sold in such offering, then (i) the number of
shares of Registrable Securities and other securities so requested to be
included in the offering shall be reduced to that number of shares which in
the good faith judgment of the managing underwriter can be sold in such
offering, and (ii) Onsite shall register: (A) first, up to the full number
of securities requested to be included therein by holders exercising demand
registration rights which in the opinion of such underwriter can be sold
without adversely affecting the offering or all securities that Onsite
proposes to sell to the public, the proceeds of which shall go to Onsite,
(B) second, up to the full number of shares of Common Stock requested
pursuant to Section 3(a) in excess of the number or dollar amount of
securities to be sold under subparagraph A, which, in the opinion of such
managing underwriter or underwriters, can be sold without adversely
affecting the offering, pro rata among such persons requesting inclusion on
the basis of the aggregate number of shares of Common Stock requested to be
registered by such persons; (C) finally, any additional securities
requested to be included by shareholders which do not otherwise have
incidental nor demand registration rights. All Registrable Securities and
other securities which are excluded from the underwriting by reason of the
underwriter's marketing limitation and all other Registrable Securities not
originally requested to be so included shall not be included in such
registration.
4. REGISTRATION PROCEDURES. If and whenever Onsite is required by
the provisions of Section 2 or 3 hereof to effect the registration of
Registrable Securities under the Securities Act, Onsite, at its expense and
as expeditiously as possible, agrees to:
(a) In accordance with the Securities Act and all applicable
rules and regulations, prepare and file (in the case of a registration
required pursuant to Section 2 hereof, not more than 120 days after the
request therefor) with the Commission a registration statement with respect
to such securities and use its best efforts to cause such registration
statement to become and remain effective until the securities covered by
such registration statement have been sold, and prepare and file with the
Commission such amendments and supplements to such registration statement
and the prospectus contained therein as may be necessary to keep such
registration statement effective and such registration statement and
prospectus accurate and complete until the securities covered by such
registration statement have been sold;
(b) If the offering is to be underwritten in whole or in part,
enter into a written underwriting agreement in form and substance
reasonably satisfactory to the managing underwriter of the public offering
and the Holders of a majority of the Registrable Securities participating
in such offering;
(c) Furnish to the Holders of securities participating in such
registration such number of copies of the registration statement and each
amendment and supplement thereto, preliminary prospectus, final prospectus
and such other documents as the Holders may reasonably request in order to
facilitate the public offering of such securities;
(d) Use its best efforts to register or qualify the securities
covered by such registration statement under such state securities or blue
sky laws of such jurisdictions as may be reasonably requested within ten
(10) days prior to the original filing of such registration statement by
such participating Holders and underwriters, except that Onsite shall not
for any purpose be required to execute a general consent to service of
process or to qualify to do business as a foreign corporation in any
jurisdiction where it is not so qualified;
(e) Notify the Holders participating in such registration,
promptly after it shall receive notice thereof, of the date and time when
such registration statement and each post-effective amendment thereto has
become effective or a supplement to any prospectus forming a part of such
registration statement has been filed;
(f) Notify the Holders' Representative promptly of any request
by the Commission for the amending or supplementing of such registration
statement or prospectus or for additional information;
(g) Upon the request of the Holders' Representative, make
modifications or amendments to such registration statement or prospectus
which, in the opinion of counsel for such Holders, is required under the
Securities Act or the rules and regulations thereunder in connection with
the distribution of the Registrable Securities by such Holders;
(h) Prepare and file promptly with the Commission, and
promptly notify the Holders' Representative of the filing of, such
amendments or supplements to such registration statement or prospectus as
may be necessary to correct any statements or omissions if, at the time
when a prospectus relating to such securities is required to be delivered
under the Securities Act, any event has occurred as the result of which any
such prospectus or any other prospectus as then in effect would include an
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein
not misleading;
(i) In case any of such Holders is required to deliver a
prospectus at a time when the prospectus then in circulation is not in
compliance with the Securities Act or the rules and regulations of the
Commission, prepare promptly upon request such amendments or supplements to
such registration statement and such prospectus as may be necessary in
order for such prospectus to comply with the requirements of the Securities
Act and such rules and regulations;
(j) Advise the Holders' Representative, promptly after it shall
receive notice or obtain knowledge thereof, of the issuance of any stop
order by the Commission suspending the effectiveness of such registration
statement or the initiation or threatening of any proceeding for that
purpose and promptly use its best efforts to prevent the issuance of any
stop order or to promptly obtain its withdrawal if such stop order should
be issued;
(k) Cause all such Registrable Securities to be listed on each
securities exchange on which similar securities issued by Onsite are then
listed; and
(l) Make available for inspection upon request by the Holders'
Representative, all financial and other records, pertinent corporate
documents and properties of Onsite, and cause all of Onsite's officers,
directors and employees to supply all information reasonably requested by
the Holders' Representative in connection with such registration statement;
and
5. EXPENSES.
(a) With respect to each registration effected pursuant to
Section 2 hereof and with respect to each inclusion of shares of
Registrable Securities in a registration statement pursuant to Section 3
hereof, Onsite agrees to bear all fees, costs and expenses of and
incidental to such registration and the public offering in connection
therewith (including all fees, costs and expenses of and incidental to the
retention of one attorney to represent the Holders, in the aggregate,
should Onsite's counsel decide, in its sole discretion, not to represent
the Holders); provided, however, that Holders participating in any such
registration agree to bear their pro rata share of the underwriting
discount and commissions and any legal fees of counsel hired by any
individual Holder.
(b) The fees, costs and expenses of registration to be borne as
provided in paragraph 5(a) above, shall include, without limitation, all
registration, filing and NASD fees, printing expenses, fees and
disbursements of counsel and accountants for Onsite (including the expenses
relating to the preparation and delivery of any cold comfort letters), fees
and disbursements of counsel for the underwriter or underwriters of such
securities (if Onsite and/or selling security holders are otherwise
required to bear such fees and disbursements), all legal fees and
disbursements and other expenses of complying with state securities or blue
sky laws of any jurisdictions in which the securities to be offered are to
be registered or qualified, reasonable fees and disbursements of one firm
of counsel for the selling security holders, selected by the Holders of a
majority of the shares of Registrable Securities to be included in such
registration, and the premiums and other costs of policies of insurance
against liability arising out of such public offering.
6. INDEMNIFICATION.
(a) Onsite hereby agrees to indemnify and hold harmless each
Holder of Registrable Securities which are included in a registration
statement pursuant to the provisions of this Agreement and each of such
Holder's officers, directors, partners, legal counsel and accountants, and
each Person who controls such Holder within the meaning of the Securities
Act, from and against, and agrees to reimburse such Holder, its officers,
directors, partners, legal counsel, accountants and controlling Persons
with respect to, any and all claims, actions (actual or threatened),
demands, losses, damages, liabilities, costs and expenses to which such
Holder, its officers, directors, partners, legal counsel, accountants or
controlling Persons, may become subject under the Securities Act or
otherwise, insofar as such claims, actions, demands, losses, damages,
liabilities, costs or expenses arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in
such registration statement, any prospectus contained therein, or any
amendment or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not
misleading; provided, however, that Onsite will not be liable in any such
case to the extent that any such claim, action, demand, loss, damage,
liability, cost or expense is caused by an untrue statement or alleged
untrue statement or omission or alleged omission so made in conformity with
written information furnished by such Holder or such controlling Person
specifically for use in the preparation thereof.
(b) Each Holder of shares of Registrable Securities which are
included in a registration statement pursuant to the provisions of this
Agreement hereby agrees, severally and not jointly, to indemnify and hold
harmless Onsite, its officers, directors, legal counsel and accountants and
each Person who controls Onsite within the meaning of the Securities Act,
from and against, and agrees to reimburse Onsite, its officers, directors,
legal counsel, accountants and controlling Persons with respect to, any and
all claims, actions, demands, losses, damages, liabilities, costs or
expenses to which Onsite, its officers, directors, legal counsel,
accountants or such controlling Persons may become subject under the
Securities Act or otherwise, insofar as such claims, actions, demands,
losses, damages, liabilities, costs or expenses are caused by any untrue or
alleged untrue statement of any material fact contained in such
registration statement, any prospectus contained therein or any amendment
or supplement thereto, or are caused by the omission or the alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances in
which they were made, not misleading, in each case to the extent, but only
to the extent, that such untrue statement or alleged untrue statement or
omission or alleged omission was so made in reliance upon and in conformity
with written information furnished by such Holder specifically for use in
the preparation thereof. Notwithstanding the foregoing, no Holder of
Registrable Securities shall be obligated hereunder to pay more than the
net proceeds realized by it upon its sale of Registrable Securities
included in such registration statement.
(c) Promptly after receipt by a party indemnified pursuant to
the provisions of subsection (a) or (b) of this Section 6 of notice of the
commencement of any action involving the subject matter of the foregoing
indemnity provisions, such indemnified party will, if a claim therefor is
to be made against the indemnifying party pursuant to the provisions of
subsection (a) or (b), notify the indemnifying party of the commencement
thereof; but the omission so to notify the indemnifying party will not
relieve it from any liability which it may have to an indemnified party
otherwise than under this Section 6 and shall not relieve the indemnifying
party from liability under this Section 6 unless such indemnifying party is
materially prejudiced by such omission. In case any such action is brought
against any indemnified party, and it notifies the indemnifying party of
the commencement thereof, the indemnifying party will be entitled to
participate therein and, to the extent that it may wish, jointly with any
other indemnifying parties similarly notified, to assume the defense
thereof, with counsel satisfactory to such indemnified party; provided,
however, that if the defendants in any such action include both the
indemnified party and the indemnifying party and the indemnified party
shall have reasonably concluded that there may be legal defenses available
to it and/or other indemnified parties which are different from or
additional to those available to the indemnifying party, the indemnified
party or parties shall have the right to select separate counsel (in which
case the indemnifying party shall not have the right to direct the defense
of such action on behalf of the indemnified party or parties). Upon the
permitted assumption by the indemnifying party of the defense of such
action, and approval by the indemnified party of counsel, the indemnifying
party shall not be liable to such indemnified party under subsection (a) or
(b) for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof (other than
reasonable costs of investigation) unless (i) the indemnified party shall
have employed separate counsel in connection with the assertion of legal
defenses in accordance with the proviso to the immediately preceding
sentence, (ii) the indemnifying party shall not have employed counsel
satisfactory to the indemnified party to represent the indemnified party
within a reasonable time, (iii) the indemnifying party and its counsel do
not actively and vigorously pursue the defense of such action, or (iv) the
indemnifying party has authorized the employment of counsel for the
indemnified party at the expense of the indemnifying party. No
indemnifying party shall be liable to an indemnified party for any
settlement of any action or claim by the indemnified party without the
consent of the indemnifying party and no indemnifying party may
unreasonably withhold its consent to any such settlement. No indemnifying
party will consent to entry of any judgment or enter into any settlement
which does not include as an unconditional term thereof the giving by the
claimant or plaintiff to such indemnified party of a release from all
liability with respect to such claim or litigation.
(d) If the indemnification provided for in subsection (a) or (b)
of this Section 6 is held by a court of competent jurisdiction to be
unavailable to a party to be indemnified with respect to any claims,
actions, demands, losses, damages, liabilities, costs or expenses referred
to therein, then each indemnifying party under any such subsection, in lieu
of indemnifying such indemnified party thereunder, hereby agrees to
contribute to the amount paid or payable by such indemnified party as a
result of such claims, actions, demands, losses, damages, liabilities,
costs or expenses in such proportion as is appropriate to reflect the
relative fault of the indemnifying party on the one hand and of the
indemnified party on the other in connection with the statements or
omissions which resulted in such claims, actions, demands, losses, damages,
liabilities, costs or expenses, as well as any other relevant equitable
considerations. The relative fault of the indemnifying party and of the
indemnified party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to
information supplied by the indemnifying party or by the indemnified party
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
Notwithstanding the foregoing, the amount any Holder of Registrable
Securities shall be obligated to contribute pursuant to this subsection (d)
shall be limited to an amount equal to the per share public offering price
(less any underwriting discount and commissions) multiplied by the number
of shares of Registrable Securities sold by such Holder pursuant to the
registration statement which gives rise to such obligation to contribute
(less the aggregate amount of any damages which such Holder has otherwise
been required to pay in respect of such claim, action, demand, loss,
damage, liability, cost or expense or any substantially similar claim,
action, demand, loss, damage, liability, cost or expense arising from the
sale of such Registrable Securities).
No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution hereunder from any person who was not guilty of such
fraudulent misrepresentation.
(e) In addition to its other obligation under this Section 6,
Onsite further agrees to reimburse each Holder of Registrable Securities
included in a registration statement pursuant to this Agreement (and each
of such Holder's controlling Persons, officers, directors, parties, legal
counsel and accountants) on a monthly basis for all reasonable legal fees
and other expenses incurred in connection with investigating or defending
any claim, action, investigation, inquiry or other proceeding arising out
of or based upon any statement or omission, or any alleged statement or
admission, described in subsection (a) of this Section 6, notwithstanding
the possibility that such payments might later be held to be improper. To
the extent that any payment is ultimately held to be improper, each Person
receiving such payment shall promptly refund such payment.
7. FUTURE REGISTRATION RIGHTS. Onsite hereby represents and
warrants that it is not a party to or bound in any manner under, and
covenants that it will not enter into at any time after the date hereof,
any agreement or contract (whether written or oral) with respect to any of
its securities which prevents Onsite from complying in any respect with the
registration rights granted by Onsite to the Holders hereunder.
8. REPORTING REQUIREMENTS UNDER THE EXCHANGE ACT. Onsite agrees to
file timely (whether or not it shall then be required to do so) such
information, documents and reports as the Commission may require or
prescribe under Section 13 or 15(d) (whichever is applicable) of the
Exchange Act. Onsite upon request agrees to furnish to any Holder of
Registrable Securities (a) a written statement by Onsite that it has
complied with the reporting requirements of the Exchange Act, (b) a copy of
the most recent annual or quarterly report of Onsite and (c) such other
reports and documents filed by Onsite with the Commission as such Holder
may reasonably request in availing itself of an exemption for the sale of
Registrable Securities without registration under the Securities Act.
Onsite acknowledges and agrees that the purposes of the requirements
contained in this Section 8 are (a) to enable any such Holder to comply
with the current public information requirement contained in paragraph (c)
of Rule 144 under the Securities Act should such Holder ever wish to
dispose of any of the securities of Onsite acquired by it without
registration under the Securities Act in reliance upon Rule 144 (or any
other similar exemptive provision) and (b) to qualify Onsite for the use of
registration statements on Form S-3. In addition, Onsite agrees to take
such other measures and file such other information, documents and reports,
as shall be required of it hereafter by the Commission as a condition to
the availability of Rule 144 under the Securities Act (or any similar
exemptive provision hereafter in effect) and the use of Form S-3. Onsite
also covenants to use its best efforts, to the extent that it is reasonably
within its power to do so, to qualify for the use of Form S-3.
9. SHAREHOLDER INFORMATION. Onsite may request each Holder of
Registrable Securities as to which any registration is to be effected
pursuant to this Agreement to furnish Onsite with such information with
respect to such Holder and the distribution of such Registrable Securities
as Onsite may from time to time reasonably request in writing and as shall
be required by law or by the Commission in connection therewith, and each
Holder of Registrable Securities as to which any registration is to be
effected pursuant to this Agreement agrees to furnish Onsite with such
information.
10. FORMS. All references in this Agreement to particular forms of
registration statements are intended to include, and shall be deemed to
include, references to all successor forms which are intended to replace,
or to apply to similar transactions as, the forms herein referenced.
11. MISCELLANEOUS.
(a) WAIVERS AND AMENDMENTS. The provisions of this Agreement,
including the provisions of this Section 11(a), may not be amended,
modified or supplemented, and any waiver or consent to or any departure
from any of the provisions of this Agreement may not be given and shall not
become or be effective, unless and until (in each case) Onsite shall have
received the prior written consent of the Holders of a Majority of the
Registrable Securities to any such amendment, modification, supplement,
waiver or consent; PROVIDED, HOWEVER, that any amendment, modification or
waiver of any provision of this Agreement that affects only one or more
particular parties hereto to this Agreement may become effective only with
the written approval of such party or parties.
(b) NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally,
telecopied (which is confirmed) or sent by a nationally recognized
overnight courier service to the parties at the following addresses (or at
such other address for a party as shall be specified by like notice):
(i) if to Onsite:
Onsite Energy Corporation
000 Xxxxxxx Xxxxxxx Xxxx, Xxxxx 000
Xxxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxxx
Facsimile: (000) 000-0000
with a copy to:
Xxxxxx Eng Linn & Xxxxxxxx
000 Xxxxxxx Xxxx, Xxxxx 0000
Xxxxxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxx, Esq.
Facsimile No.: (000) 000-0000
(ii) if to the Holders' Representative, to:
S. Xxxx Xxxxxxxxx
00 Xxxxxx Xxxx Xxxxx
Xxxxxxxx, X.X. 00000
Facsimile No.: (000) 000-0000
(iii) If to any Holder, to:
Such Holder at its address shown on the signature page
hereto
with a copy to:
Xxxxx X. Xxxxxx, Esq.
Paul, Hastings, Xxxxxxxx & Xxxxxx LLP
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Facsimile No.: (000) 000-0000
(c) SEVERABILITY. Should any one or more of the provisions of
this Agreement or of any agreement entered into pursuant to this Agreement
be determined to be illegal or unenforceable, all other provisions of this
Agreement and of each other agreement entered into pursuant to this
Agreement, shall be given effect separately from the provision or
provisions determined to be illegal or unenforceable and shall not be
affected thereby.
(d) PARTIES IN INTEREST. All the terms and provisions of this
Agreement shall be binding upon and inure to the benefit of and be
enforceable by the respective successors and assigns of the parties hereto,
whether so expressed or not and, in particular, shall inure to the benefit
of and be enforceable by the Holder or Holders at the time of any of the
Registrable Securities. Subject to the immediately preceding sentence,
this Agreement shall not run to the benefit of or be enforceable by any
Person other than a party to this Agreement and its successors and assigns.
(e) HEADINGS. The headings of the sections, subsections and
paragraphs of this Agreement have been inserted for convenience of
reference only and do not constitute a part of this Agreement.
(f) CHOICE OF LAW. It is the intention of the parties that
the internal substantive laws, and not the laws of conflicts, of the State
of California should govern the enforceability and validity of this
Agreement, the construction of its terms and the interpretation of the
rights and duties of the parties.
(g) EXPENSES. Onsite agrees to pay and hold the Holders and
Holders of the Registrable Securities harmless from liability for the
payment of, (i) the fees and expenses incurred in connection with any
requested waiver of the right of any Holder or the consent of any Holder to
contemplated acts of Onsite not otherwise permissible by the terms of this
Agreement, (ii) the fees and expenses incurred with respect to any
amendment to this Agreement proposed by Onsite (whether or not the same
becomes effective), (iii) the fees and expenses incurred in respect of the
enforcement of the rights granted under this Agreement, and (iv) all costs
of Onsite's performance of and compliance with this Agreement.
(h) COUNTERPARTS. This Agreement may be executed in any number
of counterparts and by different parties hereto in separate counterparts,
with the same effect as if all parties had signed the same document. All
such counterparts shall be deemed an original, shall be construed together
and shall constitute one and the same instrument.
///
///
///
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed personally or by a duly authorized representative
thereof as of the day and year first above written.
ONSITE ENERGY CORPORATION
By: ____________________________
Xxxxxxx X. Xxxxxxxx
Chief Executive Officer
SYCOM ENTERPRISES, LLC
By: SSBKK CORP., its sole member
By: ____________________________
S. Xxxx Xxxxxxxxx
President of SSBKK Corp.
SYCOM CORP.
By: _____________________________
S. Xxxx Xxxxxxxxx
President
SSBKK CORP.
By: ______________________________
S. Xxxx Xxxxxxxxx
President and Chief Executive Officer
Exhibit B
SALE AND
NONCOMPETITION AGREEMENT
This "Sale And Noncompetition Agreement" (the "Agreement"), dated as
of June 30, 1998, is made and entered into by and among: (1)(i) Onsite
Energy Corporation, a Delaware corporation ("Onsite"), and (ii) SYCOM
ONSITE Corporation, a Delaware corporation and wholly-owned subsidiary of
Onsite ("SYCOM ONSITE"); and (2)(i) Sycom Corp., a Delaware corporation
("Sycom Corp"), and (ii) Sycom Enterprises Limited Partnership ("Sycom
LP"), a Delaware limited partnership; and (3) Public Service Conservation
Resources Corporation ("PSCRC").
RECITALS
WHEREAS, pursuant to that certain "Amended And Restated Asset Purchase
Agreement" (the "Purchase Agreement"){1} dated as of June 30, 1998 to which
this Agreement is attached as Exhibit B, SYCOM ONSITE is acquiring all of
the project assets and assuming specific liabilities of Sycom LLC; and
WHEREAS, it is an integral part of the transactions contemplated by
the Purchase Agreement that SYCOM ONSITE acquire the right to obtain the
services of the employees of Sycom Corp and related know-how, and other
related rights, in exchange for a loan to Sycom Corp and Sycom LP, and
shares of Onsite Series D Convertible Preferred Stock convertible into
15,750,000 shares of Class A Common Stock of Onsite (the "Common Shares",
and together with the Preferred Shares prior to their conversion, the
"Escrow Shares"); and
WHEREAS, it is the intention of the parties that the employees of
Sycom Corp, upon the repayment of that certain indebtedness owed by Sycom
LP to PSCRC under the terms of that Settlement Agreement dated January 8,
1998 (the "PSCRC Debt"), shall become the employees of SYCOM ONSITE;
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing, the mutual
covenants and agreements set forth herein, and for good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged,
the parties agree as follows:
----------------------
{1} Unless indicated otherwise, the capitalized terms used herein shall
have the same meanings as ascribed to them in the Purchase Agreement.
I. SERVICES AND KNOW-HOW.
1.1 SERVICES OF SYCOM CORP EMPLOYEES. While this Agreement is in
effect, SYCOM ONSITE shall be entitled, to the exclusion of all other
persons and entities except both Sycom LP and XX Xxxxxx LLC, to receive the
full services of the employees of Sycom Corp and to benefit from certain
know-how of such employees. The roster of Sycom Corp employees covered by
this Agreement as of the date of this Agreement is attached hereto as
Schedule 1.1.
1.2 SALARIES, FRINGE BENEFITS, AND RECURRING EXPENSES.
(a) Subject to normal tax withholding and insurance deductions,
during the term of this Agreement, Sycom Corp shall continue to administer
the payroll of the Sycom Corp employees pursuant to Sycom Corp's regular
payroll schedule and current salary and fringe benefit levels, including,
but not limited to, the making of all regular health plan, dental plan,
401(k) plan, and other pension or retirement plan contributions. From time
to time, SYCOM ONSITE shall reimburse Sycom Corp to the extent provided in
and consistent with the terms of the Financial Plan (as defined in Section
3.1 hereof) for the payroll and fringe benefits of the Sycom Corp employees
providing services and know-how to SYCOM ONSITE.
(b) SYCOM ONSITE shall also reimburse Sycom Corp in accordance
with the terms of the Financial Plan for Sycom Corp's recurring expenses,
including, but not limited to, rent, furniture and equipment leases,
commissions, and all other reasonable general and administrative expenses,
such as travel, car allowances, marketing expenses, and office expenses.
1.3 APPORTIONMENT BY CLOSING DATE. All salaries and other fringe
benefit payments relating to the Sycom Corp employees shall be borne by
Sycom Corp up to the Closing Date (as defined in the Purchase Agreement),
and by SYCOM ONSITE in conformity with the Financial Plan thereafter.
Sycom Corp shall indemnify SYCOM ONSITE against each and every cost, claim,
liability, expense, or demand which relates to or arises out of any act,
event, or omission by Sycom Corp prior to the Closing Date, which SYCOM
ONSITE may incur in relation to any Sycom Corp employee. SYCOM ONSITE
shall indemnify Sycom Corp against each and every cost, claim, liability,
expense, or demand which relates to or arises out of any act, event, or
omission by SYCOM ONSITE after the Closing Date, which Sycom Corp may incur
in relation to any Sycom Corp employee whose services are provided to SYCOM
ONSITE pursuant to the terms of this Agreement. The indemnity by Sycom
Corp hereunder shall terminate when and if the employees of Sycom Corp
become the direct employees of SYCOM ONSITE. The indemnity by SYCOM ONSITE
hereunder shall terminate when and if this Agreement is terminated pursuant
to Section 1.4 or Section 7.1 hereof (incorporating by reference Article IX
of the Asset Purchase Agreement).
1.4 TERMINATION.
(a) Onsite, in the exercise of the reasonable business judgment
of its Board of Directors, may terminate this Agreement without liability
by delivering written notice at least thirty (30) days prior to the date of
termination to Sycom Corp and PSCRC notifying them of such termination.
Upon termination, the provisions of Article IV hereof shall also be
terminated. Article V hereof shall survive the termination of this
Agreement.
(b) Upon the repayment in full of the PSCRC Debt, this Agreement
shall terminate forthwith, and the employees of Sycom Corp providing
services to SYCOM ONSITE hereunder shall become the employees of SYCOM
ONSITE.
II. CONSIDERATION.
2.1 PREFERRED SHARES. In consideration for the agreement of Sycom
Corp to allow its employees to perform services and to supply know-how for
the benefit of Onsite, on the Closing Date, or as soon as practicable
thereafter, Onsite shall deposit into escrow one hundred fifty-seven
thousand five hundred (157,500) shares of its Series D Convertible
Preferred Stock, $0.001 par value (the "Preferred Stock" or "Preferred
Shares"). Sycom Corp and Onsite acknowledge that the sale of workforce in
place and know-how shall be treated as an installment sale under Section
453 of the Internal Revenue Code of 1986, as amended. The purchase price
set forth hereunder shall be allocated entirely to the workforce in place
and know-how transfer to Onsite. Each Preferred Share shall be convertible
into one hundred (100) Common Shares, and shall have such further terms and
conditions as are stated in the Certificate of Designations of Preferred
Stock attached hereto as EXHIBIT B-1 (the "Certificate of Designation").
Such Preferred Shares shall be released to Sycom Corp no later than the
date eight (8) years after the Closing Date, and until such time shall be
held in escrow subject to the terms and conditions of the Escrow Agreement
attached to the Purchase Agreement.
2.2 VALIDLY ISSUED; NO LIEN OR ENCUMBRANCES. The Preferred Shares,
when issued in accordance with this Agreement, shall be validly issued,
fully-paid, and non-assessable. The issuance and transfer of the Preferred
Stock shall be made free and clear of all liens, mortgages, pledges,
encumbrances, or charges, whether disclosed or undisclosed.
2.3 NO REGISTRATION OF THE PREFERRED STOCK. None of the Preferred
Stock shall, at the Closing Date, be registered under federal or state
securities laws, but rather, the Preferred Stock shall be issued to Sycom
Corp pursuant to an exemption therefrom and shall be considered "restricted
securities" within the meaning of Rule 144 promulgated under the Securities
Act of 1933, as amended (the "Act"). All of such Preferred Shares shall
bear a legend worded substantially as follows:
"The preferred shares represented by this certificate have not
been registered under the Securities Act of 1933 (the "Act") and
are `restricted securities' as that term is defined in Rule 144
under the Act. The preferred shares may not be offered for sale,
sold, or otherwise transferred except pursuant to registration or
an exemption from registration under the Act, the availability of
which is to be established to the satisfaction of the Company."
Onsite's transfer agent shall annotate its records to reflect the
restrictions on transfer embodied in the legend set forth above. The
Preferred Shares shall not be entitled to any demand or piggyback
registration rights.
2.4 REGISTRATION RIGHTS. The Common Shares into which the Preferred
Shares may be converted shall be entitled to those demand and piggyback
registration rights more particularly set forth in the Registration Rights
Agreement attached to the Purchase Agreement.
III. LOAN AND REPAYMENT.
3.1 LOAN. In addition to SYCOM ONSITE's reimbursement obligation
under Section 1.2, Onsite agrees to loan to Sycom Corp and Sycom LP from
time to time and consistent with the terms of the Financial Plan (as
defined below) an amount equal to the general and administrative expenses
and third-party debt payments of both Sycom Corp and Sycom LP, including
the monthly debt service payments for the PSCRC Debt remaining after
payment pursuant to Section 1.2, that cannot otherwise be paid by Sycom
Corp or Sycom LP utilizing the cash resources of Sycom Corp and Sycom LP
available to them from time to time. The outstanding loan balance shall
include any loans made by Onsite to Sycom Corp or Sycom LP prior to the
Closing Date, shall accrue interest at the rate of 9.75% per annum, and
shall have such further terms and conditions as are set forth herein and in
a form of promissory note substantially similar to that attached hereto as
EXHIBIT B-2 (the "Onsite Loan"). Following the Closing Date, advances
under such loan commitment shall be made pursuant to the consolidated
financial plan mutually agreed upon and prepared by Onsite, SYCOM ONSITE,
and Sycom Corp (the "Financial Plan"). The parties hereto shall provide
PSCRC with a copy of such Financial Plan. The initial Financial Plan,
attached hereto as EXHIBIT B-3, shall cover the period from the Closing
Date through December 31, 1998, and its terms shall be subject to the
existing contractual obligations of Sycom Corp and Sycom LP. Prior to
October 31, 1998, Onsite, SYCOM ONSITE and Sycom Corp shall agree upon and
prepare a second Financial Plan covering the period January 1, 1999 through
June 30, 1999. Subsequent six-month Financial Plans shall continue to be
prepared by the above-identified parties as necessary approximately two (2)
months prior to the end of each period covered by the preceding Financial
Plan.
3.2 EARNINGS BENCHMARKS; PARI PASSU Repayment.
(a) If the actual consolidated financial results through
December 31, 1998 of the combined Onsite and SYCOM ONSITE ("Consolidated
Onsite"), without consideration of any acquisitions or mergers subsequent
to the Closing Date, are less than eighty percent (80%) of the amounts
projected in the initial Financial Plan, Onsite may require the immediate
repayment of all or a portion of the outstanding balance to be repaid of
the Onsite Loan as of December 31, 1998. If Onsite requires the immediate
repayment of all or a portion of the outstanding balance of the Onsite
Loan, then the PSCRC Debt shall also be repaid in an amount equal to such
repayment amount with respect to the Onsite Loan. At the sole election of
Sycom Corp, such indebtedness owing to Onsite and to PSCRC may be paid
either: (i) in the form of cash to either party; or (ii)(A) if to Onsite,
by a reduction in the number of the Escrow Shares as determined by dividing
the outstanding balance of the Onsite Loan as of December 31, 1998 by the
average closing price of Onsite Common Stock for the ten (10) trading days
immediately following the release of earnings figures of Consolidated
Onsite for the period ending December 31, 1998; and (B) if to PSCRC, by
transferring from the escrow to PSCRC that number of Escrow Shares equal in
value to the repayment amount as determined by dividing the repayment
amount by the average closing price of Onsite Common Stock for the ten (10)
trading days immediately following the release of earnings figures of
Onsite for the period ending December 31, 1998. For the purposes of the
foregoing calculations, each Preferred Share shall be equal in value to one
hundred (100) Common Shares pursuant to the terms of the Certificate of
Designation.
(b) If the actual financial results of Consolidated Onsite
exceed the Financial Plan, the outstanding principal of the Onsite Loan
shall be reduced on a dollar for dollar basis by the difference in the
actual Consolidated Onsite earnings before interest, tax, depreciation, and
amortization (EBITDA) and the EBITDA as identified in the Financial Plan,
subject to audit by Onsite's auditors.
3.3 DIRECT PAYMENT. The parties hereto acknowledge that a portion of
the proceeds of the Onsite Loan is for the direct benefit of PSCRC. As
such, the parties agree that the proceeds of the Onsite Loan equal to the
monthly debt service payments for the PSCRC Debt (as set forth in Section
1(a) of the Promissory Note attached as Exhibit B to the Settlement
Agreement) shall be paid directly by Onsite to PSCRC. Onsite has agreed to
make such payments solely as an accommodation to PSCRC, and nothing herein
shall be construed as an assumption of any liability whatsoever by Onsite.
IV. NONCOMPETITION.
4.1 While this Agreement is in effect, each of Sycom Corp and Sycom
LP agrees that it shall not knowingly, directly or indirectly, whether as a
principal, agent, or otherwise, or alone or in association with any
individual or other entity, carry on, be engaged or employed by, take part
in, consult or advise for personal gain, own, share in the earnings of, or
finance, whether as a lender, investor, or otherwise, any other entity
which is engaged in any business which engages, anywhere in the United
States of America, in any business which is competitive with the then-
current actual or intended business of Onsite, SYCOM ONSITE, or any
affiliate of Onsite at the time, including, but not limited to, competing
in the developing or providing of xxxx auditing, tariff analysis,
transmission and distribution, energy efficiency, load management,
distributed generation, emission reduction credit, or energy outsourcing
services. Nothing in this paragraph shall prohibit Sycom Corp or Sycom LP
from performing its maintenance or measurement and verification duties with
respect to any of its existing projects, or with respect to any of its
obligations relating to that certain XX Xxxxxx LLC project.
4.2 In connection with and in addition to the foregoing, each of
Sycom Corp and Sycom LP agrees, during the term hereof, not directly or
indirectly, and whether as a principal, agent, or otherwise, or alone or in
association with any individual or other entity, to (i) solicit in
competition with Onsite or any affiliate of Onsite any customer of Onsite
or any such affiliate; (ii) do or say anything which is deliberately
intended to be harmful to the reputation of Onsite or any affiliate of
Onsite at the time, or which is deliberately intended to lead any Person to
cease to deal with Onsite or any such affiliate on substantially similar
terms to those previously offered to Onsite or such affiliate; (iii) cause
or induce, or attempt to cause or induce, any present or future employee of
Onsite to terminate his or her employment with Onsite; (iv) solicit,
induce, or influence any licensor, sales representative, supplier, lender,
lessor, factor, or any other Person which has an existing or potential
business relationship with Onsite or any affiliate of Onsite, to
discontinue, reject, or otherwise adversely modify such relationship; or
(v) make use of any corporate or business name which is identical or
similar to or is likely to be confused with the corporate name or any
business name of Onsite or any affiliate of Onsite and which is used by any
such company at any time during the term of this Agreement or which might
suggest a connection with the same.
4.3 Notwithstanding the foregoing, neither Sycom Corp nor Sycom LP
shall be deemed to be in violation of this Agreement solely by reason of
its investing in stock, bonds, or other securities of any business engaged
in a competing activity (but without otherwise participating in such
business), if (i) such stock, bonds, or other securities are listed on any
national securities exchange or have been registered under Section 12(g) of
the Securities Exchange Act of 1934, and (ii) such investment by Sycom Corp
and/or Sycom LP does not exceed, in the case of the capital stock of any
one issuer, 1% of the issued and outstanding shares of such capital stock,
or, in the case of bonds or other securities, 1% of the aggregate principal
amount thereof issued and outstanding.
V. CONFIDENTIALITY AND TRADE SECRETS.
None of the entities of SYCOM ONSITE, Sycom Corp, or Sycom LP shall,
while this Agreement is in effect and for a period of two (2) years after
termination of this Agreement, exploit, use for any purpose, or disclose,
directly or indirectly, to any Person (except as required by law after
first notifying Onsite and giving it an opportunity to object) any
confidential information, including, without limitation, price lists,
pricing information, marketing plans or strategies, customer lists,
customer names, non-public financial information, trade secrets, know-how,
unprinted or printed data, technical information or descriptions, and
related intangible property developed during or prior to the term of this
Agreement, belonging to, used by, or developed by or for the benefit of
Onsite or any affiliate of Onsite (collectively, "Trade Secrets");
provided, however, that the foregoing restrictions shall not apply to Trade
Secrets which become generally known by the public other than by reason or
breach of this provision by SYCOM ONSITE, Sycom Corp, and/or Sycom LP, or
are required to be disclosed by law or any governmental authority or other
authority with relevant powers (in which case SYCOM ONSITE, Sycom Corp,
and/or Sycom LP shall, before making the disclosure, consult with Onsite or
the affiliate of Onsite as to the timing, contents, and manner of
disclosure).
VI. INJUNCTIVE RELIEF.
Each of SYCOM ONSITE, Sycom Corp, and Sycom LP hereby recognizes,
acknowledges, and agrees that in the event of any breach by it of any of
the covenants, agreements, duties, or obligations hereunder, Onsite or its
affiliate would suffer great and irreparable harm, injury, and damage,
Onsite or its affiliate would encounter extreme difficulty in attempting to
prove the actual amount of damages suffered by Onsite or its affiliate as a
result of such breach, and Onsite or its affiliate would not be reasonably
or adequately compensated by an award of damages in any action at law.
Each of SYCOM ONSITE, Sycom Corp, and Sycom LP therefore acknowledges and
agrees that, in addition to any other remedy Onsite or Onsite's affiliates
may have at law, in equity, by statute, or otherwise, in the event of any
breach by any of SYCOM ONSITE, Sycom Corp, or Sycom LP of any of their
covenants, agreements, duties, or obligations hereunder, Onsite or Onsite's
affiliate, as applicable, shall be entitled to seek temporary, preliminary,
and permanent injunctive and other equitable relief from any court of
competent jurisdiction to enforce any of the rights of Onsite or Onsite's
affiliate, or any of the covenants, agreements, duties, or obligations of
SYCOM ONSITE, Sycom Corp, and/or Sycom LP hereunder, and/or otherwise to
prevent the violation of any of the terms or provisions hereof, all without
the necessity of proving the amount of any actual damage to Onsite or any
affiliate of Onsite resulting therefrom; provided, however, that nothing
contained herein shall be deemed or construed in any manner whatsoever as a
waiver by Onsite or Onsite's affiliate of any of the rights which Onsite or
Onsite's affiliate may have against any of SYCOM ONSITE, Sycom Corp, or
Sycom LP at law, in equity, by statute, or otherwise, arising out of, in
connection with, or resulting from the breach by any of SYCOM ONSITE, Sycom
Corp, or Sycom LP or of any of their covenants, agreements, duties, or
obligations hereunder.
VII. DEFINITIONS AND MISCELLANEOUS PROVISIONS.
7.1 To the extent not inconsistent with the terms hereof, the
provisions of both Article IX and Article XII of the Purchase Agreement,
which provisions are hereby incorporated by reference, shall be applicable
to this Agreement.
7.2 For purposes of this Agreement and except where the context
indicates otherwise, references herein to Onsite and its affiliates shall
be deemed to be references, without limitation, both to Onsite and to SYCOM
ONSITE, and to both of them.
7.3 For the purposes of this Agreement, "affiliate" shall mean, with
respect to any Person: (i) such Person who is an "affiliate" of such Person
as defined in Rule 12b-2 of the Securities and Exchange Act of 1934, as
amended, (ii) any Person who is a director, officer, or partner or holds a
similar position with any entity in which such Person has a 10% or greater
equity or profit interest, and (iii) any family member of a person referred
to in (i) or (ii).
7.4 So long as the PSCRC Debt is outstanding, Sycom Corp and Sycom LP
shall conduct their respective businesses as currently conducted (except as
contemplated under the Purchase Agreement and Ancillary Agreements) and
shall not in any way transfer, assign, or sell their assets. In addition,
so long as the PSCRC Debt is outstanding, Sycom Corp and Sycom LP shall not
file a voluntary petition for bankruptcy relief.
7.5 Except as provided in Section 1.4 hereof or Section 9.2 of the
Purchase Agreement, this Agreement shall not be modified or amended unless
the same shall be in writing and signed by Onsite, Sycom Corp, and PSCRC.
///
///
///
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
ONSITE ENERGY CORPORATION
By:
Xxxxxxx X. Xxxxxxxx
Chief Executive Officer
SYCOM ONSITE CORPORATION
By:
Xxxxxxx X. Xxxxxxxx
Chairman of the Board
SYCOM CORP.
By:
S. Xxxx Xxxxxxxxx
President and Chief Executive Officer
SYCOM ENTERPRISES, L.P.
By: Sycom Corp., its general partner
By:
S. Xxxx Xxxxxxxxx
President and Chief Executive Officer
PUBLIC SERVICE CONSERVATION RESOURCES
CORPORATION, for the sole purpose of
enforcing its third party beneficiary
rights hereunder,
By:_________________________________
Name:
Title:
EXHIBIT C
ESCROW AGREEMENT
This "Escrow Agreement" (the "Escrow Agreement"), dated as of June 30,
1998, is made and entered into by and among: (1)(i) Onsite Energy
Corporation, a Delaware corporation ("Onsite"), and (ii) SYCOM ONSITE
Corporation, a Delaware corporation and wholly-owned subsidiary of Onsite
("SYCOM ONSITE") (together, Onsite and SYCOM ONSITE shall be referred to
herein as the "Onsite Companies"); (2) Sycom Corp, a Delaware corporation;
(3) Public Service Conservation Resources Corporation ("PSCRC"); and (4)
Xxxxxx Eng Xxxx & Xxxxxxxx, the escrow agent hereunder (the "Escrow
Agent").
RECITALS
WHEREAS, pursuant to that certain "Amended And Restated Asset Purchase
Agreement" (the "Purchase Agreement"){1} dated as of June 30, 1998 to which
this Escrow Agreement is attached as Exhibit C, SYCOM ONSITE is acquiring
all of the project assets and assuming specific liabilities of Sycom LLC;
and
WHEREAS, the Onsite Companies and Sycom Corp and Sycom Enterprises
Limited Partnership ("Sycom LP"), as part of the overall transaction
contemplated by the Purchase Agreement, have entered into that certain
"Sale and Noncompetition Agreement", dated as of June 30, 1998 (the "Sale
and Noncompetition Agreement") pursuant to which, among other things, SYCOM
ONSITE will obtain the services and know-how of the work force of Sycom
Corp in exchange for shares of Onsite Series D Convertible Preferred Stock,
par value $.001 per share (the "Preferred Shares") as more fully set forth
therein; and
WHEREAS, under the terms of the Sale and Noncompetition Agreement, the
Preferred Shares and/or Common Shares into which such Preferred Shares are
converted serving as consideration are to be paid to Sycom Corp in the form
of a single lump sum installment payment pursuant to an installment sale
within the meaning of Section 453 of the Internal Revenue Code of 1986, as
amended, that is due and payable eight (8) years from the Closing Date, and
until such time such Preferred Shares and/or Common Shares shall be
maintained in escrow; and
WHEREAS, on or about January 8, 1998, Sycom LP, an affiliate of Sycom
Corp, entered into a "Settlement Agreement" (the "Settlement Agreement")
with Public Service Conservation Resources Corporation ("PSCRC"),
including, among other things, an annexed Security Agreement and Promissory
Note in the original principal amount of $14,910,915 plus interest (the
"PSCRC Debt"); and
-------------------------
{1} Unless indicated otherwise, the capitalized terms used herein shall have
the same meanings ascribed to them in the Purchase Agreement.
WHEREAS, the Escrow Agent is willing to act as escrow agent pursuant
to the terms of this Agreement with respect to the receipt and delivery of
the Preferred Shares;
NOW, THEREFORE, in consideration of the foregoing, the mutual
covenants and agreements set forth herein, and for good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged,
the parties agree as follows:
I. DEPOSIT OF PREFERRED SHARES.
1.1 On the Closing Date, Onsite shall deliver to the Escrow Agent the
Preferred Shares, issued in the name of Sycom Corp, in accordance with
Section 2.1 of the Sale and Noncompetition Agreement. Such Preferred
Shares, and all Common Shares into which such Preferred Shares may be
converted, shall be maintained in the escrow subject to the terms hereof
(the "Escrow Shares"). The Escrow Shares shall be delivered to the Escrow
Agent at the following address:
Xxxxxx Eng Linn & Xxxxxxxx
000 Xxxxxxx Xxxx, Xxxxx 0000
Xxxxxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxx
XX. TERMS OF ESCROW.
2.1 Except as otherwise provided herein, all Escrow Shares shall be
held in escrow by the Escrow Agent no later than the eighth (8{th})
anniversary of the Closing Date, at which time, if not previously released
hereunder, the Escrow Shares shall be delivered to Sycom Corp (the "Escrow
Share Release Date") in satisfaction of Onsite's obligation to make an
installment payment to Sycom Corp under the Sale and Noncompetition
Agreement.
2.2 At the request of Sycom Corp, and subject to the concurrence of a
majority of those directors of Onsite who were not elected by Sycom LLC
(under the terms of the Voting Agreement), with such concurrence of
directors not to be unreasonably withheld, at any time prior to the Escrow
Share Release Date, a portion of the Escrow Shares may be used directly or
as collateral for a loan to pay all or a portion of: (i) the PSCRC Debt,
or (ii) the Onsite Loan after the PSCRC Debt has been paid in full.
2.3 Except as otherwise provided in Sections 2.2 or 2.4 hereof, the
release of all or a portion of the Escrow Shares to Sycom Corp may only be
accelerated, and the Escrow Shares may only be released to Sycom Corp prior
to the Escrow Share Release Date, if either all of the following
circumstances exist or such accelerated release would directly and
immediately result in all of the following:
(a) Payment in full of all amounts owed to PSCRC under the
Settlement Agreement (as used herein, "payment in full" shall include all
discounts and reductions to the amounts owing to PSCRC as provided in the
Settlement Agreement and the ancillary agreements attached thereto); and
(b) Payment in full of all loans made by Onsite and/or SYCOM
ONSITE to Sycom Corp and/or Sycom LP pursuant to Section 3.1 of the Sale
and Noncompetition Agreement; and
(c) (i) The average closing market price of the Onsite Common
Shares over a period of ten (10) consecutive trading days meets or exceeds
$2.00 per share; AND, as determined on the same date, (ii) over any four
consecutive quarters after the Closing Date through December 31, 1999, the
total after-tax earnings per share of Onsite Common Shares (taking into
account the Common Shares issued to Sycom LLC under the Purchase Agreement
and the Common Shares into which the Preferred Shares issued under the Sale
and Noncompetition Agreement are convertible, but not taking into account
earnings from acquisitions subsequent to the Closing Date or shares issued
for those acquisitions) meets or exceeds $0.15; provided, however, that
both such minimum share price requirement and minimum earnings per share
requirement shall increase by ten percent (10%) per year each year
thereafter (i.e., $2.20 per share and $0.165 per share, respectively, from
January 1, 2000 through December 31, 2000, $2.42 per share and $0.1815 per
share, respectively, from January 1, 2001 through December 31, 2001, etc.).
2.4 Notwithstanding Section 2.3 hereof, in the event Sycom Corp
elects, pursuant to the provisions of Section 3.2 of the Sale and
Noncompetition Agreement, to satisfy all or a portion of the PSCRC Debt and
any amounts owing to Onsite by means of a release of Escrow Shares, the
release of Escrow Shares to Sycom Corp shall be accelerated, and the Escrow
Agent shall both transfer the appropriate number of Escrow Shares to PSCRC
and shall reduce and cancel an equal number of Escrow Shares with respect
to the amounts owing to Onsite. As stated in Section 3.2 of the Sale and
Noncompetition Agreement, the value of the Escrow Shares shall be based on
the average closing price of Onsite Common Shares for the ten (10) trading
days immediately following the release of earnings figures of the combined
Onsite and SYCOM ONSITE for the period ending December 31, 1998.
2.5 On or immediately after the Closing Date, Sycom Corp covenants
and agrees to execute an irrevocable proxy, and to re-execute an
irrevocable proxy as often as may be required by law, naming the designee
of Onsite's Board of Directors as proxy agent until such time as the Escrow
Shares are repurchased or released from escrow.
2.6 Upon receipt of a letter, in a form substantially similar to that
attached hereto as ATTACHMENT A, officially signed on behalf of Onsite,
SYCOM ONSITE, Sycom Corp, and PSCRC (which PSCRC shall not be required to
assent to as a signatory in the event the PSCRC Debt has been satisfied or
will immediately be satisfied), the Escrow Agent shall dispose of the
Escrow Shares as such parties shall jointly direct. A disposition of the
Escrow Shares shall terminate this Agreement.
III. DUTIES AND OBLIGATIONS OF THE ESCROW AGENT.
3.1 The parties hereto agree that the duties and obligations of the
Escrow Agent are only such as are herein specifically provided and no
other. The Escrow Agent's duties are as a depositary only, and the Escrow
Agent shall incur no liability whatsoever, except as a direct result of its
willful misconduct.
3.2 The Escrow Agent may consult with counsel of its choice, and
shall not be liable for any action taken, suffered, or omitted by it in
accordance with the advice of such counsel.
3.3 The Escrow Agent shall not be bound in any way by the terms of
any other agreement to which the Onsite Companies, Sycom Corp, Sycom LLC,
Sycom LP, or PSCRC are parties, whether or not it has knowledge thereof,
and the Escrow Agent shall not in any way be required to determine whether
or not any other agreement has been complied with by the Onsite Companies,
Sycom Corp, Sycom LLC, Sycom LP, or PSCRC, or any other party thereto. The
Escrow Agent shall not be bound by any modification, amendment,
termination, cancellation, rescission or supersession of this Agreement
unless the same shall be in writing and signed by Onsite, Sycom Corp, and
PSCRC, and agreed to in writing by the Escrow Agent.
3.4 This Escrow Agreement shall not be modified or amended unless the
same shall be in writing and signed by Onsite, Sycom Corp, and PSCRC, and
agreed to in writing by the Escrow Agent.
3.5 If the Escrow Agent, prior to delivering or causing to be
delivered the Escrow Shares in accordance herewith, receives notice of
objection, dispute, or other assertion in accordance with any of the
provisions of this Agreement, the Escrow Agent shall continue to hold the
Escrow Shares until such time as the Escrow Agent shall receive (i) written
instructions jointly executed by Onsite, Sycom Corp, and PSCRC, directing
distribution of such Escrow Shares, or (ii) a certified copy of a judgment,
order, or decree of a court of competent jurisdiction, final beyond the
right of appeal, directing the Escrow Agent to distribute said Escrow
Shares to any party hereto or as such judgment, order, or decree shall
otherwise specify (including any such order directing the Escrow Agent to
deposit the Escrow Shares into the court rendering such order, pending
determination of any dispute between any of the parties). In addition, the
Escrow Agent shall have the right to deposit any of the Escrow Shares with
a court of competent jurisdiction pursuant to Section 386 of the California
Code of Civil Procedure without liability to any party if said dispute is
not resolved within thirty (30) days of receipt of any such notice of
objection, dispute, or otherwise.
3.6 The Escrow Agent shall be fully protected in relying upon any
written notice, demand, certificate, or document which it, in good faith,
believes to be genuine. The Escrow Agent shall not be responsible for the
sufficiency or accuracy of the form, execution, validity, or genuineness of
documents or securities now or hereafter deposited hereunder, or of any
endorsement thereon, or for any lack of endorsement thereon, or for any
description therein; nor shall the Escrow Agent be responsible or liable in
any respect on account of the identity, authority, or rights of the persons
executing or delivering or purporting to execute or deliver any such
document, security, or endorsement.
3.7 The Escrow Agent shall not be required to institute legal
proceedings of any kind and shall not be required to defend any legal
proceedings which may be instituted against it or in respect of the Escrow
Shares.
3.8 If the Escrow Agent at any time, in its sole discretion, deems it
necessary or advisable to relinquish custody of the Escrow Shares, it may
do so by giving five (5) days written notice to the parties of its
intention and thereafter delivering the Escrow Shares to any other escrow
agent mutually agreeable to Onsite, Sycom Corp, and PSCRC, and, if no such
escrow agent shall be selected within three (3) days of the Escrow Agent's
notification to Onsite and Sycom Corp of its desire to so relinquish
custody of the Escrow Shares, then the Escrow Agent may do so by delivering
the Escrow Shares (a) to any bank or trust companies in the County of San
Diego, State of California, which is willing to act as escrow agent
thereunder in place and instead of the Escrow Agent, or (b) to the clerk or
other proper officer of a court of competent jurisdiction as may be
permitted by law within San Diego County. The fee of any such bank or
trust company or court officer shall be borne one-third by the Onsite
Companies, one-third by Sycom Corp, and one-third by PSCRC. Upon such
delivery, the Escrow Agent shall be discharged from any and all
responsibility or liability with respect to the Escrow Shares and Onsite,
Sycom Corp, and PSCRC shall promptly pay to the Escrow Agent all monies
which may be owed it for its services hereunder, including, but not limited
to, reimbursement of its out-of-pocket expenses pursuant to Section 3.10
below.
3.9 This Escrow Agreement shall not create any fiduciary duty on the
Escrow Agent's part to the Onsite Companies, to Sycom Corp or Sycom LP, or
to PSCRC, nor disqualify the Escrow Agent from representing Onsite in any
dispute with any other party hereto, including any dispute with respect to
the Escrow Shares. Both Sycom Corp and PSCRC understand that the Escrow
Agent has acted as counsel to Onsite and will continue to act as counsel to
the Onsite Companies.
3.10 The reasonable out-of-pocket expenses paid or incurred by the
Escrow Agent in the administration of its duties hereunder, including, but
not limited to, all counsel and advisors' and agents' fees and all taxes or
other governmental charges, if any, shall be paid one-half by Onsite and
one-half by Sycom Corp.
IV. INDEMNIFICATION
4.1 The Onsite Companies and Sycom Corp (and PSCRC only to the extent
that the liability arises from an act or omission involving PSCRC as
determined by a court of competent jurisdiction) jointly and severally
indemnify and hold the Escrow Agent, its employees, partners, members, and
representatives, harmless from and against any and all losses, damages,
taxes, liabilities, and expenses that may be incurred, directly or
indirectly, by the Escrow Agent and/or any such person, arising out of or
in connection with its acceptance of appointment as the Escrow Agent
hereunder and/or the performance of its duties pursuant to this Escrow
Agreement, including, but not limited to, all legal costs and expenses of
the Escrow Agent and any such person incurred defending itself against any
claim or liability in connection with its performance hereunder and the
costs of recovery of amounts pursuant to this Section 4.1.
V. MISCELLANEOUS.
5.1 All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally, telecopied
(which is confirmed), or sent by a nationally recognized overnight courier
service to the parties at the following addresses (or at such other address
for a party as shall be specified by like notice):
If to the Onsite Companies:
Onsite Energy Corporation
000 Xxxxxxx Xxxxxxx Xxxx, Xxxxx 000
Xxxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxxx
Facsimile No.: (000) 000-0000
with a copy to:
Xxxxxx Eng Linn & Xxxxxxxx
000 Xxxxxxx Xxxx, Xxxxx 0000
Xxxxxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxx, Esq.
Facsimile No.: (000) 000-0000
If to Sycom Corp, to:
SYCOM Corp
Attn: S. Xxxx Xxxxxxxxx
00 Xxxxxx Xxxx Xxxxx
Xxxxxxxx, X.X. 00000
Facsimile No.: (000) 000-0000
with a copy to:
Xxxxx X. Xxxxxx, Esq.
Paul, Hastings, Xxxxxxxx & Xxxxxx LLP
000 Xxxx Xxxxxx, 00{xx} Xxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Facsimile No.: (000) 000-0000
If to PSCRC, to:
Public Service Conservation Resources Corporation
000 Xxxxxxxx Xxxxx
Xxxxxx, Xxx Xxxxxx 00000
Facsimile No.: (000) 000-0000
Attn: Xxxxx X. Xxxxxx, Esq.
General Counsel
with a copy to:
LeBoeuf, Lamb, Xxxxxx & XxxXxx, LLP
Xxx Xxxxxxxxxx Xxxxx
Xxxxxx, Xxx Xxxxxx 00000
Facsimile No.: (000) 000-0000
Attn: Xxxxxxx Xxxxx, Xx.
If to the Escrow Agent (the Escrow Agent shall receive copies of
all communications under this Escrow Agreement), to:
Xxxxxx Eng Xxxx & Xxxxxxxx
000 Xxxxxxx Xxxx, Xxxxx 0000
Xxxxxxxxxx, XX 00000
Facsimile No.: (000) 000-0000
Attn: Xxxxx X. Xxxxxx
or at such other address as any of the parties to this Agreement may
hereafter designate in the manner set forth above to the others.
5.2 This Agreement shall be construed and enforced in accordance with
the law of the State of California applicable to contracts entered into and
performed entirely within California.
5.3 By signing this Agreement, PSCRC acknowledges and consents to the
transactions contemplated by the Purchase Agreement and ancillary
agreements. However, such acknowledgment and consent by PSCRC shall not be
construed as a consent to any other transaction among the parties thereto
or a consent to any modification or amendment to the Purchase Agreement;
and nothing herein shall be construed as an amendment, modification, or
termination of the Settlement Agreement between PSCRC and Sycom LP.
IN WITNESS WHEREOF, the parties hereto have caused this Escrow
Agreement to be signed the day and year first above written.
ONSITE ENERGY CORPORATION
By:__________________________
Xxxxxxx X. Xxxxxxxx
Chief Executive Officer
SYCOM ONSITE CORPORATION
By:__________________________
Xxxxxxx X. Xxxxxxxx
Chairman of the Board
SYCOM CORP.
By:___________________________
S. Xxxx Xxxxxxxxx
President
PUBLIC SERVICE CONSERVATION RESOURCES CORPORATION
By:____________________________
Name:
Title:
XXXXXX ENG LINN & XXXXXXXX,
as Escrow Agent
By:_____________________________
A Member of the Firm
ATTACHMENT A
Xxxxxx Eng Linn & Xxxxxxxx
Attn: Xxxxx X. Xxxxxx, Esq.
000 Xxxxxxx Xxxx, Xxxxx 0000
Xxxxxxxxxx, XX 00000
RE: ONSITE ESCROW SHARES
Dear Xx. Xxxxxx:
Please distribute all Escrow Shares in your possession via Federal
Express deliver to ______________________________________________________.
Very truly yours,
ONSITE ENERGY CORPORATION
By: __________________________
Xxxxxxx X. Xxxxxxxx
Chief Executive Officer
SYCOM ONSITE CORPORATION
By: __________________________
Xxxxxxx X. Xxxxxxxx
Chairman of the Board
SYCOM CORP.
By: __________________________
S. Xxxx Xxxxxxxxx
President
(only in the event the PSCRC Debt has not been
satisfied or will not immediately be satisfied):
PUBLIC SERVICE CONSERVATION
RESOURCES CORPORATION
By: __________________________
Name:
Title:
EXHIBIT D
VOTING AGREEMENT
This VOTING AGREEMENT, dated as of June 30, 1998 (the "Voting
Agreement"), is made and entered into by and among the following parties:
(i) the principal shareholders of Onsite Energy Corporation identified in
SCHEDULE 1 hereto (the "Onsite Shareholders"); (ii) SYCOM Enterprises LLC
("Sycom LLC"); and (iii) Sycom Corp., a Delaware corporation ("Sycom Corp";
together, Sycom LLC and Sycom Corp shall be referred to herein as the
Sycom Shareholders, and collectively the Onsite Shareholders and Sycom
Shareholders shall be referred to herein as the "Shareholders" in the
plural and as the "Shareholder" in the singular).
RECITALS
WHEREAS, pursuant to that certain "Amended And Restated Asset Purchase
Agreement" (the "Purchase Agreement"){1} to which this Voting Agreement is
attached as EXHIBIT D, SYCOM ONSITE Corporation, a Delaware corporation and
wholly-owned subsidiary of Onsite ("SYCOM ONSITE") is acquiring all of the
assets of Sycom LLC and assuming specific liabilities; and
WHEREAS, pursuant to that "Sale and Noncompetition Agreement" entered
into by Onsite, SYCOM ONSITE, Sycom Corp, and Sycom Enterprises LP ("Sycom
LP"), SYCOM ONSITE shall acquire the right to obtain the services and know-
how of the employees of Sycom Corp and other related rights; and
WHEREAS, an integral part of the transactions contemplated by the
Purchase Agreement and Sale and Noncompetition Agreement is that the
Shareholders shall have entered into a voting agreement wherein the
Shareholders shall agree to vote at the succeeding annual meetings of
Onsite to elect a certain number of directors in representation of the
Shareholders and to authorize the issuance of additional Class A Common
Stock ("Common Stock") to permit conversion of the Series D Convertible
Preferred Shares to Common Stock; and
WHEREAS, the parties desire to enter into this Voting Agreement
prepared pursuant to Delaware Corporations Code 218 for the
purpose of effectuating the intent of the Purchase Agreement and Ancillary
Agreements;
NOW, THEREFORE, in consideration of the foregoing, the mutual
covenants and agreements set forth herein, and for good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged,
the Onsite Shareholders, Sycom Corp, and Sycom LLC hereby agree as
follows:
--------------------
{1} Unless indicated otherwise, the capitalized terms used herein shall
have the same meanings as ascribed to them in the Purchase Agreement.
1. SHARES SUBJECT TO AGREEMENT. The number of Shares of Common
Stock of Onsite listed opposite the names of the Onsite Shareholders in
SCHEDULE 1 hereto shall be subject to this Agreement. SCHEDULE 1 is
incorporated herein and made a part of this Agreement by this reference.
In addition, the number of shares of Common Stock underlying Onsite Series
D Convertible Preferred Stock of Sycom Corp as listed in SCHEDULE 2 hereto
shall be subject to this Agreement. SCHEDULE 2 is incorporated herein and
made a part of this Agreement by this reference. Finally, the number of
shares of Common Stock held by Sycom LLC listed in SCHEDULE 3 hereto shall
be subject to this Agreement. SCHEDULE 3 is incorporated herein and made a
part of this Agreement by this reference.
2. AGREEMENT TO NOMINATE DIRECTORS AND VOTE SHARES.
a. The parties agree that the Onsite Shareholders shall
collectively have the right to nominate six (6) members of the eight (8)
member board of directors of Onsite, subject to the constraints of the
classification of the Board of Directors, with at least one of such
directors being nominated by the Westar shareholder of Onsite pursuant to
that certain "Stockholders Agreement Of Onsite Energy Corporation" dated as
of October 28,1997. Sycom Shareholders shall have the right to nominate
two (2) members of the eight (8) member board of directors of Onsite.
Initially, one of the two members shall be appointed for a one year term
and the second shall be appointed for a two year term. Once the shares
have been released from the escrow pursuant to the Escrow Agreement, Sycom
Shareholders shall have the right to nominate up to three (3) new members
to add to the eight (8) member board of directors of Onsite. All shares
subject to this Agreement as identified in Section 1 above shall vote in
favor of the eight (8) (or eleven (11)) nominees of the parties hereto at
all elections of directors of Onsite held during the term of this
Agreement.
b. After the Closing, the Board of Directors of Onsite shall
consist of the six (6) existing board members (including one member
representing Westar) and two (2) new members of the board nominated by the
owners of Onsite stock representing Sycom LLC. At the time that the Escrow
Shares are released, up to three additional Board members will be nominated
by the owners of Onsite stock representing Sycom Corp. After the Closing,
and during the term hereof, it is expected that S. Xxxx Xxxxxxxxx shall
serve as the Chairman of the Board of Onsite, and Xxxxxxx X. Xxxxxxxx shall
serve as the President and Chief Executive Officer of Onsite.
c. The Shareholders shall vote at the next Annual Meeting to
authorize the issuance of additional Common Stock to permit the conversion
of the Series D Convertible Preferred Shares to Common Stock.
3. AGREEMENT NOT TO SELL WITHOUT BOARD APPROVAL. During the term of
this Agreement, a Shareholder shall not sell, pledge, hypothecate or
otherwise encumber any of the shares of Common Stock subject to this
Agreement unless the Shareholder first receives the written consent of the
Onsite Board of Directors to the terms of the proposed sale or pledge.
4. TERMINATION OF AGREEMENT. This Agreement shall terminate three
(3) years after the Closing Date of the Purchase Agreement, as that term is
defined therein.
5. MERGER OR CONSOLIDATION. If Onsite is merged into or
consolidated with another corporation, or all or substantially all of the
assets of Onsite are transferred to another corporation, then the term
"Onsite" shall be construed to include the successor corporation; and the
parties hereto shall receive and hold under this Agreement any shares of
the successor corporation received by them as a result of their ownership
of shares held by them under this Agreement before the merger,
consolidation, or transfer. Certificates issued and outstanding under this
Agreement at the time of the merger, consolidation, or transfer may remain
outstanding, but the parties may, at their discretion, substitute for these
certificates new certificates in appropriate form.
6. NECESSARY ACTS. The parties shall perform any acts, including
executing any documents, that may be reasonably necessary to carry out
fully the provisions and intent of this Agreement.
7. MISCELLANEOUS. Article XII of the Asset Purchase Agreement shall
apply to this Agreement and is incorporated herein by this reference.
///
///
///
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
ONSITE SHAREHOLDERS
_______________________________
Xxxxxxx X. Xxxxxxxx
_______________________________
Pro Active Partners, LP
_______________________________
Lagunitas Partners, LP
_______________________________
Xxxxxxx X. Xxxx, III
_______________________________
X. Xxxx Xxxx
_______________________________
Russ Royal
_______________________________
Xxxxx Xxxxxxx
_______________________________
Xxxxx Xxxxxxx
_______________________________
Xxxxxx Xxxxxx
SYCOM ENTERPRISES, LLC
By: SSBKK CORP., its sole member
By:_________________________
S. Xxxx Xxxxxxxxx
President of SSBKK Corp.
SYCOM CORPORATION
_________________________
By: S. Xxxx Xxxxxxxxx
President & Chief Executive Officer
EXHIBIT E
FORM OF SECURED PROMISSORY NOTE
$1,000,000 Carlsbad, California
______, 199_
In consideration of such loans or advances ("Advances") as Onsite
Energy Corporation, a Delaware corporation ("Onsite") and/or SYCOM ONSITE
Corporation, a Delaware corporation ("SYCOM ONSITE"; together, Onsite and
SYCOM ONSITE shall be referred to herein as the "Onsite Companies"), from
time to time make hereon to or for the benefit or at the request of the
undersigned, the undersigned hereby promises to pay on or before June 30,
2000, (the "Maturity Date") to the Onsite Companies, or order (the
"Holder"), in lawful money of the United States of America, all Advances,
plus interest thereon, at the rate hereinafter provided.
The unpaid principal balance hereon at any time shall not exceed One
Million Dollars ($1,000,000), and shall be equal to the aggregate amount of
all Advances then made less the aggregate amount of all payments then made
thereon.
Any Advances shall be presumed to be made to and for the benefit and
at the request of the undersigned when credited to an account of the
undersigned designated by the undersigned in writing to Onsite, or
otherwise made in accordance with the written instructions of the
undersigned.
Upon any Advances, Maker shall deposit 1.75 shares of Onsite's Class A
Common Stock held in Maker's name (the "Common Stock") for each one dollar
($1.00) loaned by Onsite to Maker hereunder pursuant to that certain Escrow
Agreement dated June 1, 1998 (the "Pledged Shares") and shall execute that
certain Stock Pledge Agreement between Maker and Onsite dated the date
hereof (the "Pledge Agreement").
Interest on this note shall accrue at a per annum rate of interest
equal to nine and three quarters percent (9.75%) per annum. Except as
otherwise provided in this Note, the outstanding principal amount of this
Note, together with accrued interest thereon, shall be due and payable in
full on the Maturity Date. The Maker shall, to the extent permitted by the
terms of that certain "Amended And Restated Asset Purchase Agreement" (the
"Purchase Agreement") between Maker and Holder, dated June 30, 1998, have
the right to require Onsite to make Advances up to the maximum principal
amount.
Payment of this Note is secured by a security interest in the Pledged
Shares. Maker shall at all times maintain a balance in the escrow
established pursuant to the Pledge Agreement of 1.75 shares of the Common
Stock for each one dollar ($1.00) loaned by Onsite to Maker hereunder.
This Note shall, at the option of the Holder, become immediately due
and payable, without notice or demand, and Onsite's obligation to make
advances to the Maker shall terminate as otherwise provided in the Purchase
Agreement.
All payments on this Note shall be applied first to the payment of
late charges and other sums due hereon or pursuant hereto (other than
principal and interest), and then to the payment of accrued and unpaid
interest, and the remainder thereof shall be applied to the reduction of
the principal balance of this Note.
The Maker may, from time to time, prepay this Note either in full or
in part, without penalty or premium.
The Maker and all endorsers and guarantors hereof, if any, severally
waive diligence and the right to plead any statute of limitations,
presentment, grace, protest and demand, and also notice of protest, demand,
dishonor and nonpayment of this Note, and notice of intention to accelerate
the maturity date, and any and all moratorium, appraisement, exemption and
homestead rights now provided or which may hereafter be provided by a
federal or state statute both as to itself personally and as to all of its
or their property, whether real or personal, against the enforcement and
collection of the obligations evidenced by this Note and any and all
extensions, renewals and modifications hereof. The Maker, and every
endorser or guarantor of this Note, regardless of the time, order or place
of signing, hereby assents to any extension or postponement of the time of
payment or any other indulgence, to any substitution, exchange or release
of collateral, and to the addition or release of any other party or person
primarily or secondarily liable with respect to the obligations evidenced
by this Note. No delay or omission on the part of the Holder in exercising
any right or remedy under this Note shall operate as a waiver of such right
or of any other right of such Holder, nor shall any delay, omission or
waiver on any one occasion be deemed to constitute the waiver of the same
or of any other right on any future occasion. Time is of the essence of
each and every provision herein.
The acceptance by the Holder of any payment hereunder which is less
than payment in full of any amount due and payable by the time of such
payment shall not constitute a waiver of the right to exercise any option,
right, or remedy at that time or at any subsequent time, nor shall it
nullify any prior exercise of any such option, right, or remedy without the
express written consent of the Holder.
All amounts payable hereunder are payable in immediately available U.
S. funds, without setoff or deduction. Any payment received by the Holder
after 12:00 noon, prevailing local time at the place designated from time
to time for payment, shall be considered for all purposes (including the
calculation of interest and late charges) as having been made on the next
following day which is not a Saturday, Sunday, or legal holiday ("business
day"); if the date for any payment hereunder falls on a day which is not a
business day, then, for all purposes of this Note, the same shall be deemed
to have fallen on the next following business day, and such extension of
time shall in such case be included in the computation of interest. The
Maker agrees to pay all costs of collection when incurred, including
reasonable attorneys' fees and costs. Interest hereon shall be calculated
on the basis of 360-day years and shall be compounded monthly.
Payments on this Note, as well as any notices to the Holder, are to be
mailed or delivered to the Holder at its address set forth in the Purchase
Agreement or to such other place as the Holder may from time to time direct
by written notice to the Maker. This Note, made in the State of
California, shall be construed according to the laws of the state of
California.
All agreements between the Maker and the Holder are expressly limited
so that in no contingency or event whatsoever, whether by reason or payment
of extension or loan or commitment fees, of advancement of proceeds,
acceleration of maturity of the unpaid principal balance hereof or
otherwise, shall the amount paid or agreed to be paid to the Holder for the
use, forbearance or detention of the principal amount hereof exceed the
maximum legal rate permissible under any law which a court of competent
jurisdiction may deem applicable hereto. If, from any circumstance
whatsoever, fulfillment of any provision of this Note or any instrument
securing this Note, at the time performance of such provision shall be due,
shall involve transcending the maximum legal rate of interest prescribed by
law which a court of competent jurisdiction may deem applicable hereto or
thereto, then, IPSO FACTO, the obligation to be fulfilled shall be reduced
to the limit of such maximum rate, and if from any circumstance the Holder
shall ever receive as interest an amount which would exceed said maximum
legal rate, such amount which would be excessive interest shall be applied
to the reduction of the unpaid principal balance due hereunder and not to
the payment of interest; to the extent that such excessive amount exceeds
the unpaid principal balance hereon, the Holder shall refund it to the
Maker. In determining whether excessive interest would be charged hereon,
to the extent permitted by applicable law all sums paid or agreed to be
paid to the Holder for the use, forbearance, or detention of the
indebtedness evidenced hereby outstanding from time to time shall be
prorated, amortized, allocated and spread from the date of disbursement of
the proceeds of this Note until payment in full of the unpaid principal sum
so that the actual rate of interest on account of such indebtedness is
uniform throughout the term hereof.
The Maker and the Holder intend that all of the provisions hereof
shall be valid and enforceable as specifically set forth herein. If any
provision hereof is declared to be invalid or unenforceable, it is the
intention of the Maker and the Holder that the remainder of this document,
or, if applicable, the remainder of the invalid or unenforceable clause,
sentence, or paragraph, shall be valid and enforced to the fullest extent
permitted.
The Maker agrees to pay on demand all costs of collection, including
reasonable attorneys' fees, incurred by the Holder in enforcing the
obligations of the Maker under this Note.
This Note may not be changed orally but only by an agreement in
writing signed by the party against whom such change is sought to be
enforced.
At the sole election of Maker, this Note shall be payable in either
cash or Onsite Common Stock. If repayment in Common Stock is elected, then
the Common Shares shall have a value equal to the average closing market
price for the twenty (20) trading days immediately preceding the date of
repayment, and the share certificates evidencing the Common Shares tendered
in repayment shall be surrendered to Onsite. Notwithstanding the average
closing market price calculated above, the Maker shall not be required to
pay more than 1.75 Common Shares for each $1.00 of principal and interest
due.
Notwithstanding anything to the contrary contained herein or any other
document or agreement, the Holder's only recourse in full satisfaction of
the obligation hereunder is to foreclose upon and take possession of the
Onsite Common Stock and to exercise Holder's rights under that certain
Security Pledge Agreement of even date herewith.
IN WITNESS WHEREOF, the Maker has executed and delivered this Note as
of the date first above written.
MAKER:
SYCOM ENTERPRISES, LLC
By: SSBKK CORP., its sole member
By:_________________________
S. Xxxx Xxxxxxxxx
President of SSBKK Corp.
EXHIBIT F
STOCK PLEDGE AGREEMENT
THIS STOCK PLEDGE AGREEMENT (the "Agreement") is made as of
____________, 1998, by and between: (1)(i) Onsite Energy Corporation, a
Delaware corporation ("Onsite"), and (ii) SYCOM ONSITE, a Delaware
corporation and wholly-owned subsidiary of Onsite ("SYCOM ONSITE";
together, Onsite and Sycom Onsite shall be referred to herein as the
"Onsite Companies"); and (2) Sycom Enterprises, LLC, a Delaware limited
liability company ("Sycom LLC").
R E C I T A L S
WHEREAS, Onsite and Sycom LLC have entered into that certain "Amended
And Restated Asset Purchase Agreement" dated June 30, 1998 (the "Purchase
Agreement"){1} pursuant to which, among other things, Onsite has agreed to
make certain advances to Sycom LLC pursuant to the terms of a Note which
shall be secured by 1.75 Onsite Common Shares for each one dollar ($1.00)
loaned by Onsite to Sycom LLC;
NOW, THEREFORE, the parties agree as follows:
SECTION 1. PLEDGE OF COMMON SHARES.
1.1 As security for the full and punctual satisfaction, payment, and
performance of all of the obligations of Sycom LLC pursuant to the Note,
including, but not limited to, the payment when and as due and payable of
principal and interest under the Note, and for the due performance and
compliance with the terms and provisions of the Note, Sycom LLC hereby
delivers, sets over, transfers, pledges, hypothecates, and grants to Onsite
a security interest in and to 1.75 Common Shares (collectively the "Pledged
Shares") for each one dollar ($1.00) loaned to Sycom Corp under the Note.
1.2 Simultaneously with the execution of this Agreement, Sycom LLC
has deposited Certificate No(s). _____________, representing
_____________________ Common Shares, with Xxxxxx Eng Linn & Xxxxxxxx as
"Pledge Holder", and has also executed and delivered stock power(s) with
respect to such Common Shares satisfactory in form and substance to the
Pledge Holder.
SECTION 2. VOTING.
Sycom LLC shall be entitled to vote the Pledged Shares and to give
consents, waivers, and ratification in respect thereof, provided that no
vote shall be cast or consent, waiver, or ratification given or action
taken which would violate or not comply with any of the terms, conditions,
covenants, representations, or warranties of this Agreement, the Purchase
Agreement, or the Note.
--------------------
{1} Unless indicated otherwise, all capitalized terms herein shall have the
same meaning as ascribed to them in the Purchase Agreement.
SECTION 3. DIVIDENDS AND OTHER DISTRIBUTIONS.
3.1 All cash dividends payable as an extraordinary, liquidating, or
other distribution in return of capital shall be delivered to Sycom LLC.
Onsite shall deliver to the Pledge Holder and it shall retain as part of
the Pledged Shares:
(a) All other or additional stock or any other securities or
property paid or distributed in respect of the Pledged Shares by way of
stock-split, spin-off, split-up, reclassification, combination of shares or
similar corporate rearrangement; and
(b) All other or additional stock or other securities or
property (including cash) which may be paid or distributed in respect of
the Pledged Shares by reason of any consolidation, merger, exchange of
stock, conveyance of assets, liquidation, or similar corporate
reorganization.
3.2 In the event that, during the term of this Agreement, any share
dividend, reclassification, readjustment, or other change is declared or
made in the capital structure of Onsite, all new, substituted or additional
shares, or other securities, issued by reason of any change shall be
deposited with the Pledge Holder and held under the terms of this Agreement
in the same manner as the original Pledged Shares.
SECTION 4. MAINTENANCE OF PRIORITY OF PLEDGED SHARES.
Sycom LLC shall be liable for and shall from time to time pay and
discharge all taxes, assessments, and governmental charges imposed upon the
Pledged Shares by any federal, state, or local authority, the liens of
which would or might be held prior to the right of Onsite in and to the
Pledged Shares or which are imposed on the holder and/or registered owner
of the Pledged Shares. Sycom LLC will not, at any time while this
Agreement is in effect, do or suffer any act or thing not otherwise
permitted by this Agreement whereby the rights of Onsite in the Pledged
Shares would or might be impaired. Sycom LLC shall execute and deliver
such further documents and take such further actions as may be reasonably
required to confirm the rights of Onsite in and to the Pledged Shares or
otherwise to effectuate the intention of the Agreement.
SECTION 5. REMEDIES UPON DEFAULT.
5.1 The non-payment of all outstanding principal and interest as of
the Maturity Date of the Note shall entitle Onsite to exercise its remedy
as set forth in Section 5.2 below.
5.2 Upon the Maturity Date, if Sycom LLC has not tendered payment for
the full amount of principal and accrued interest pursuant to the Note,
Onsite shall be entitled to exercise all of the rights, powers, and
remedies (whether vested by this Agreement or by law or otherwise
including, without limitation, those of a secured party under the Uniform
Commercial Code) for the protection and enforcement of its rights with
respect to the Pledged Shares, and Onsite shall be entitled, without
limitation:
(a) To take title to or cancel the Pledged Shares; and
(b) To receive all amounts payable in respect of the Pledged
Shares otherwise payable to Sycom LLC.
5.3 Notwithstanding the security interest in the Pledged Shares
granted to Onsite, subject to the following limitations, Sycom LLC shall be
permitted to enter into a written contract for sale of the Pledged Shares,
with a simultaneous satisfaction in full the cash value of all principal
and interest owed to Onsite. Any such contract and sale must specify that
all consideration shall be paid directly by the purchaser to the Pledge
Holder, for disbursement in accordance with the provisions of this
Agreement. Any such contract must further specify that the contract will
terminate and be void, unless the full consideration, in cash or by
certified check, has been received by the Pledge Holder, prior to June 30,
2000. Further, Sycom LLC shall be prohibited from entering into any such
contract unless, at the time of execution, Sycom LLC deposits with the
Pledge Holder, in cash or by certified check, the amount (if any) by which
the principal of the loaned funds, plus accrued interest, exceeds the
contract price. In the event that for any reason the sale is not
completed, and Onsite is not paid in full, by June 30, 2000, Onsite shall
be permitted to pursue all remedies available without any further delay.
At such time as Onsite is paid in full, the Pledged Shares shall be
released to Sycom LLC or such purchaser of the Pledged Shares as directed
by Sycom LLC.
5.4 At any sale, Onsite shall be free to purchase all or any part of
the Pledged Shares, unless prohibited by applicable law. Upon any sale or
other disposition, Onsite shall have the right to deliver, assign, and
transfer to the purchaser thereof the Pledged Shares so sold or disposed
of. Each purchaser at any such sale or other disposition (including
Onsite) shall hold the Pledged Shares free from any claim or right of
whatever kind, including any equity or right of redemption of Sycom LLC.
5.5 Sycom LLC shall not be obligated to make any sale or other
disposition, unless the terms thereof shall be reasonably satisfactory to
it. Sycom LLC may, without notice or publication, adjourn any private or
public sale, and may hold such sale at any time or place to which the same
may be so adjourned. In case of any sale of all the Pledged Shares, on
credit or future delivery, the Pledged Shares so sold may be retained by
Onsite until the selling price is paid by the purchaser thereof, but Onsite
shall incur no liability in case of the failure of such purchaser to take
up and pay for the Pledged Shares so sold and, in case of any such failure,
such Pledged Shares may again be sold as hereinabove provided.
SECTION 6. REMEDIES CUMULATIVE.
Each right, power, and remedy of Onsite provided for in this Agreement
or now or hereafter existing at law or in equity or by statute or otherwise
shall be cumulative and concurrent and shall be in addition to every other
such right, power, or remedy. The exercise or beginning of the exercise by
Onsite of any one or more of the rights, powers, or remedies provided for
in this Agreement or now or hereafter existing at law or in equity or by
statute or otherwise shall not preclude the simultaneous or later exercise
by Onsite of all such other rights, powers or remedies, and no failure or
delay on the part of Onsite to exercise any such right, power or remedy
shall operate as a waiver thereof.
Notwithstanding anything to the contrary contained herein or any other
document or agreement, Onsite's only recourse in full satisfaction of the
obligation under the Note is to foreclose upon and take possession of the
Pledged Shares and to exercise Onsite's rights hereunder.
SECTION 7. FURTHER ASSURANCES.
Each of Sycom LLC and Onsite, at its expense, will execute,
acknowledge, and deliver all such instruments and take all such action as
the other may reasonably request in order to further effectuate the
purposes of this Agreement and to carry out the terms and conditions
hereof.
SECTION 8. TERMINATION AND RELEASE.
Upon the payment in full by Sycom LLC of all principal and interest
payable under the Note, this Agreement shall terminate and Onsite, at the
request and expense of Sycom LLC, will execute and deliver to Sycom LLC a
proper instrument or instruments acknowledging the satisfaction and
termination of this Agreement, and will duly direct the Pledge Holder to
assign, transfer, and deliver to Sycom LLC such of the Pledged Shares as
has not theretofore been delivered, sold, or otherwise applied or released
pursuant to this Agreement.
SECTION 9. MISCELLANEOUS.
9.1 To the extent any provision contained in this Agreement is
inconsistent or in conflict with any applicable provision of the Uniform
Commercial Code, the parties hereby waive any and all protection afforded
by the Uniform Commercial Code pursuant to such provision contained
therein, and the terms and conditions of this Agreement shall govern
notwithstanding such inconsistency or conflict.
9.2 To the extent not inconsistent herewith, the terms and provisions
of Article XII of the Purchase Agreement shall govern and control this
Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered by their duly authorized representatives as of the
date first written above.
ONSITE ENERGY CORPORATION
By:
Xxxxxxx X. Xxxxxxxx
Chief Executive Officer
SYCOM ONSITE CORPORATION
By:
Xxxxxxx X. Xxxxxxxx
Chairman of the Board
SYCOM ENTERPRISES, LLC
By: SSBKK Corp., its sole member
By:
S. Xxxx Xxxxxxxxx
President
