STOCKHOLDERS AGREEMENT OF ONSITE ENERGY CORPORATION
THIS STOCKHOLDERS AGREEMENT, dated October 28, 1997 (the "Agreement"),
is made and entered into by and among the following parties: (i) the
shareholders of Onsite Energy Corporation identified in Exhibit A hereto (the
"Onsite Shareholders"); and (ii) Westar Capital, Inc., a Kansas corporation
("Capital").
RECITALS
WHEREAS, Capital and Onsite Energy Corporation, a Delaware corporation
("Onsite") have entered into a Stock Subscription Agreement dated October 28,
1997 (the "Stock Subscription Agreement") pursuant to which, among other things,
Westar shall acquire shares of the Class A Common Stock of Onsite, par value
$0.001 ("Onsite Common Stock"), and shares of the Series C Convertible Preferred
Stock of Onsite, par value $0.001 ("Onsite Preferred Stock");
WHEREAS, Section 4.5(a) of the Stock Subscription Agreement provides as
a condition precedent to closing that the Onsite Shareholders and Capital shall
have entered into a voting agreement wherein Capital shall have the right to
elect one director, upon the initial issuance of the Onsite Common Stock, with
rights to elect additional directors accruing as set forth herein;
WHEREAS, Capital and Onsite are parties to that certain Plan and
Agreement of Reorganization dated October 28, 1997 (the "Reorganization
Agreement") pursuant to which, among other things, Westar shall receive shares
of the Class A Common Stock of Onsite, par value $0.001 ("Onsite Common Stock");
WHEREAS, Section 2.4 of the Reorganization Agreement also
provides for a Stockholders Agreement; and
WHEREAS, the parties desire to enter into this Stockholders Agreement
for the purpose of effectuating the intent of Section 4.5(a) of the Stock
Subscription Agreement and Section 2.4 of the Reorganization Agreement.
NOW, THEREFORE, for the mutual promises contained herein and in the
Stock Subscription Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the Onsite Shareholders
and Capital hereby AGREE AS FOLLOWS:
1. Shares Subject to Agreement. The number of shares of
Onsite Common Stock listed opposite the names of the Onsite
Shareholders in Exhibit A hereto shall be subject to this
1058(4).nks 1 November 10, 1997
Agreement. Exhibit A is incorporated herein and made a part of this Agreement by
this reference. In addition, the number of shares of Onsite Common Stock listed
opposite the name of Capital in Exhibit B hereto, and all Onsite Class A Common
shares underlying the number of shares of Onsite Preferred Stock listed opposite
the name of Capital in Exhibit B shall be subject to this Agreement. Exhibit B
is incorporated herein and made a part of this Agreement by this reference.
2. Right to Nominate Directors. Upon the initial issuance
of the Onsite Common Stock and Onsite Preferred Stock pursuant to
the Stock Subscription Agreement, Capital shall have the right to
recommend one director to the nominating committee of the Onsite
board of directors. Thereafter, except as provided in this
Agreement, Capital shall be entitled to recommend additional
directors, calculated as if all of its stockholdings, and the
stockholdings of its sister corporation, Westar Energy, Inc., a
Kansas corporation ("Energy") had been converted into Onsite Common
Stock and were voted cumulatively with all classes of Onsite's
voting stock and as if the board of directors were not classified
and all director terms were expiring; provided, however, that prior
to conversion of Capital's preferred stock into Onsite Common
Stock, the number of directors Capital shall be entitled to
recommend shall be reduced by one below the number Capital would be
entitled to recommend under cumulative voting, and provided
further, that, during the term of this Agreement, the number of
directors Capital is entitled to recommend in no event shall be
reduced below one.
Provided, however, that nothing provided herein shall reduce the right
of the holders of the Series C Preferred Stock to elect additional directors in
the event of default in payment of preferred dividends as provided in the
Certificate of Designation of Series C Convertible Preferred Stock.
3. Agreement to Nominate Directors and Vote Shares. The parties agree
that the nominating committee of the Onsite board of directors shall have the
right to nominate the remaining directors for the board of Onsite. All shares
subject to this Agreement as identified in Section 1 above shall vote in favor
of all of the nominees of both Capital and the Onsite nominating committee at
all elections of directors of Onsite held during the term of this Agreement.
4. Agreement to Take Necessary Steps. In the event the nominating
committee of the Onsite board of directors does not implement the
recommendations of Capital as provided in Section 2, the parties to this
Agreement shall take all necessary steps to nominate and elect Capital's
representatives.
1058(4).nks 2 November 10, 1997
5. Share Certificate Legend. Each certificate representing the Onsite
Common Stock and Onsite Preferred Stock held by the Onsite Shareholders and by
Capital and subject to this Agreement shall be stamped or otherwise imprinted
with a legend in the following form (in addition to any legend required under
applicable securities laws):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A
STOCKHOLDERS AGREEMENT DATED OCTOBER 28, 1997 BY AND BETWEEN CERTAIN
SHAREHOLDERS OF ONSITE ENERGY CORPORATION AND WESTAR CAPITAL, INC., A
COPY OF WHICH MAY BE OBTAINED FREE OF CHARGE FROM THE COMPANY UPON
REQUEST.
Upon the sale of the Onsite Common Stock and/or the Onsite Preferred
Stock subject to this Agreement (i) by any of the Onsite Shareholders and with
the written consent of Capital (which consent shall not be unreasonably withheld
or delayed) or, (ii) by Capital and with the written consent of the Onsite
Shareholders holding a majority of the shares subject to this Agreement (which
consent shall not be unreasonably withheld or delayed), each new share
certificate issued in connection with such sale and receipt of the appropriate
written consent shall be free of the foregoing legend.
6. Termination of Agreement. This Agreement shall terminate the earlier
of: (i) five (5) years after the date first written above, or (ii) the date upon
which the stockholdings of Capital and its affiliates counted as if converted to
Onsite Common Stock, falls below 10% of the outstanding Common Stock of the
Company on a fully-diluted basis, calculated by adding the total number of
shares of common stock then issued and outstanding to the number of shares of
underlying common stock represented by all then outstanding (i) preferred stock
convertible into common stock, and (ii) any other outstanding securities
convertible into or exercisable for shares of common stock held by any Person,
which are at a price below the then Average Closing Price, as that term is
defined in Section 7.1 of the Stock Subscription Agreement.
7. 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 Onsite Shareholders and
Capital 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 Onsite
Shareholders and Capital may, at their discretion, substitute for these voting
certificates new certificates in appropriate form.
1058(4).nks 3 November 10, 1997
8. 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.
9. Entire Agreement. This Agreement and the Exhibits and other
documents referred to herein constitute the entire agreement among the parties
and no party shall be liable or bound to any other party in any manner by any
warranties, representations, or covenants except as specifically set forth
herein or therein.
10. Assignment. Neither this Agreement nor any duties, rights or
obligations under this Agreement may be assigned by either party without the
prior written consent of the other, which consent shall not be unreasonably
withheld or delayed, except Capital may assign this Agreement to an affiliate
without consent.
11. Successors and Assigns. Except as otherwise provided herein, the
terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective successors, heirs and assigns of the parties.
Nothing in this Agreement, express or implied, is intended to confer upon any
party other than the parties hereto or their respective successors, heirs and
assigns any rights, remedies, obligations, or liabilities under or by reason of
this Agreement, except as expressly provided in this Agreement.
12. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of California.
13. Titles and Subtitles. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
14. Notices. All notices or other communications required hereunder
shall be in writing and shall be sufficient in all respects and shall be deemed
delivered after 5 days if sent via registered or certified mail, postage
prepaid; the next day if sent by overnight courier service; or one business day
after transmission, if sent by facsimile to the following:
If to an Onsite Shareholder:
The address appearing for him or her
on Exhibit A attached hereto
with copies to: Onsite Energy Corporation
000 Xxxxxxx Xxxxxxx Xxxx, Xxxxx 000
Xxxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxxx
Fax: (000) 000-0000
1058(4).nks 4 November 10, 1997
Xxxxxx Eng Linn & Xxxxxxxx
000 Xxxxxxx Xxxx, Xxxxx 0000
Xxxxxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxx, Esq.
Fax: (000) 000-0000
If to Capital: Westar Capital, Inc.
XX Xxx 000
000 Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: Xxxx X. Xxxxxx
Fax: (000) 000-0000
with copies to: Westar Capital, Inc.
XX Xxx 000
000 Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: Xxxx X. Xxxxxxxxx
Fax: (000) 000-0000
Any party hereto may change its address for purposes hereof by notice to all
other parties hereto.
15. Remedies. The parties agree that in addition to all other remedies
available at law or in equity, the parties shall be entitled to specific
performance of the obligations of each party to this Agreement and immediate
injunctive relief. The parties also agree that if an action is brought in equity
to enforce a party's obligations, no party shall argue, as a defense, that there
is an adequate remedy at law.
16. Dispute Resolution. Notwithstanding Section 15 above with respect
to immediate injunctive relief, no party to this Agreement shall be entitled to
take legal action with respect to any dispute relating hereto until it has
complied in good faith with the following alternative dispute resolution
procedures. This Section shall not apply to the extent it is deemed necessary to
take legal action immediately to preserve a party's adequate remedy.
a. Negotiation. The parties shall attempt
promptly and in good faith to resolve any dispute arising out of or relating to
this Agreement, through negotiations between representatives who have authority
to settle the controversy. Any party may give the other party written notice of
any such dispute not resolved in the normal course of business. Within 20 days
after delivery of the notice, representatives of both parties shall meet at a
mutually acceptable time and place, and thereafter as often as they reasonably
deem necessary, to exchange information and to attempt to resolve the dispute,
until the parties conclude that the dispute cannot be resolved through
unassisted negotiation.
1058(4).nks 5 November 10, 1997
Negotiations extending sixty days after notice shall be deemed at an impasse,
unless otherwise agreed by the parties.
If a negotiator intends to be accompanied at a meeting by an attorney,
the other negotiator(s) shall be given at least three working days' notice of
such intention and may also be accompanied by an attorney. All negotiations
pursuant to this clause are confidential and shall be treated as compromise and
settlement negotiations for purposes of the Federal and state Rules of Evidence.
b. ADR Procedure. If a dispute with more than
$20,000.00 at issue has not been resolved within 60 days of the disputing
party's notice, a party wishing resolution of the dispute ("Claimant") shall
initiate assisted Alternative Dispute Resolution ("ADR") proceedings as
described in this Section. Once the Claimant has notified the other
("Respondent") of a desire to initiate ADR proceedings, the proceedings shall be
governed as follows: By mutual agreement, the parties shall select the ADR
method they wish to use. That ADR method may include arbitration, mediation,
mini-trial, or any other method which best suits the circumstances of the
dispute. The parties shall agree in writing to the chosen ADR method and the
procedural rules to be followed within 30 days after receipt of notice of intent
to initiate ADR proceedings. To the extent the parties are unable to agree on
procedural rules in whole or in part, the current Center for Public Resources
("CPR") Model Procedure for Mediation of Business Disputes, CPR Model Mini-trial
Procedure, or CPR Commercial Arbitration Rules--whichever applies to the chosen
ADR method--shall control, to the extent such rules are consistent with the
provisions of this Section. If the parties are unable to agree on an ADR method,
the method shall be arbitration.
The parties shall select a single Neutral (as defined by CPR) third
party to preside over the ADR proceedings, by the following procedure: Within 15
days after an ADR method is established, the Claimant shall submit a list of 5
acceptable Neutrals to the Respondent. Each Neutral listed shall be sufficiently
qualified, including demonstrated neutrality, experience and competence
regarding the subject matter of the dispute. A Neutral who is an attorney or
former judge shall be deemed to have adequate experience. None of the Neutrals
may be present or former employees, attorneys, or agents of either party. The
list shall supply information about each Neutral, including address, and
relevant background and experience (including education, employment history and
prior ADR assignments). Within 15 days after receiving the Claimant's list of
Neutrals, the Respondent shall select one Neutral from the list, if at least one
individual on the list is acceptable to the Respondent. If none on the list are
acceptable to the Respondent, the Respondent shall submit a list of 5 Neutrals,
together with the above background information, to the Claimant. Each of the
Neutrals shall meet the conditions stated
1058(4).nks 6 November 10, 1997
above regarding the Claimant's Neutrals. Within 15 days after receiving the
Respondent's list of Neutrals, the Claimant shall select one Neutral, if at
least one individual on the list is acceptable to the Respondent. If none on the
list are acceptable to the Claimant, then the parties shall request assistance
from the Center for Public Resources, Inc., to select a Neutral.
The ADR proceeding shall take place within 30 days after the Neutral
has been selected. The Neutral shall issue a written decision within 30 days
after the ADR proceeding is complete. Each party shall be responsible for an
equal share of the costs of the ADR proceeding. The parties agree that any
applicable statute of limitations shall be tolled during the pendency of the ADR
proceedings, and no legal action may be brought in connection with this
Agreement during the pendency of an ADR proceeding.
The Neutral's written decision shall become final and binding on the
parties, unless a party objects in writing within 30 days of receipt of the
decision. The objecting party may then file a lawsuit in any court allowed by
this Agreement. The Neutral's written decision shall be admissible in the
objecting party's lawsuit.
17. Amendments and Waivers. Any term of this Agreement may be amended
and the observance of any term of this Agreement may be waived (either generally
or in a particular instance and either retroactively or prospectively), only
with the written consent of the parties. Any amendment or waiver effected in
accordance with this paragraph shall be binding upon the parties, their
successors, heirs or assigns, and each future holder of such securities. A
waiver by any party hereto of a default in the performance of this Agreement
shall not operate as a waiver of any future or other default, whether of a like
or different kind.
18. Severability. If one or more provisions of this Agreement are held
to be unenforceable under applicable law, such provision shall be excluded from
this Agreement and the parties shall use their efforts to substitute provisions
of substantially the same effect. The balance of this Agreement shall be
interpreted as if such provision were so excluded and shall be enforceable in
accordance with its terms.
19. Counterparts; Signatures. This Agreement may be executed in one or
more counterparts, each of which may be deemed an original, but all of which
together shall constitute one and the same instrument. This Agreement may be
executed by a party and sent to the other parties via facsimile transmission and
the facsimile transmitted copy shall have the same integrity, force and effect
as an original document.
1058(4).nks 7 November 10, 1997
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
ONSITE SHAREHOLDERS:
By:
Xxxxxxx X. Xxxxxxxx, an individual
By:
Xxxxxxx X. Xxxx, III, an individual
PROACTIVE PARTNERS, L.P.
By:
Xxxxxxx XxXxxxxxxx, General Partner
of ProActive Investment Managers, LP
General Partner
LAGUNITAS PARTNERS, L.P.
By:
Xxx X. Xxxxxx, General Partner of
Xxxxxx & XxXxxxx Capital Management,
General Partner
CAPITAL:
Westar Capital, Inc.
By:
Xxxx X. Xxxxxx, President
1058(4).nks 8 November 10, 1997
EXHIBIT A
ONSITE SHAREHOLDERS AND SHARES SUBJECT TO THIS AGREEMENT
Shareholder and Address Shares
Xxxxxxx X. Xxxxxxxx 1,216,097
0000 Xx Xxxxxx
Xxxxxxxx, XX 00000
Xxxxxxx X. Xxxx 1,159,016
0000 Xxx Xxxxxxxx
Xxx Xxxxx, XX 00000
Proactive Partners, LP 1,073,905
c/o Xxxxxxx XxXxxxxxxx
00 Xxxxxx Xxxxx, Xxxxxxxxx
Xxx Xxxxxxxxx, XX 00000
Lagunitas Partners, LP 550,982
00 Xxxxxx Xxxxx, Xxxxxxxxx
Xxx Xxxxxxxxx, XX 00000
4,000,000
EXHIBIT B
CAPITAL SHARES
Common Shares Purchased Pursuant to
Stock Subscription Agreement 2,000,000
Common Shares Underlying 200,000 Series C
Preferred Shares Purchased Pursuant to
Stock Subscription Agreement 1,000,000
Common Shares to be Exchanged for Westar in accordance with
Business Services Plan and Agreement
Reorganization
Other Common Shares and Preferred Shares in accordance with
Purchased Pursuant to Stock Stock Subscription
Subscription Agreement Agreement
