SHARE REPURCHASE AGREEMENT
This SHARE REPURCHASE AGREEMENT (the "Agreement"), dated as of June
30, 1998, is made and entered into by and among: (1) Onsite Energy
Corporation, a Delaware corporation ("Onsite"), and (2) Sycom Corp, a
Delaware corporation.
RECITALS
WHEREAS, pursuant to that certain "Amended and Restated Asset Purchase
Agreement" (the "Purchase Agreement"){1} dated as of June 30, 1998, SYCOM
ONSITE is acquiring all of the project assets of Sycom LLC; and
WHEREAS, Onsite and SYCOM ONSITE (together, the "Onsite Companies"),
Sycom Corp, and Sycom LP have also entered into the Sale and Noncompetition
Agreement pursuant to which, among other things, SYCOM ONSITE will obtain
both the services of Sycom Corp and certain non-competition protections in
exchange for 157,500 Onsite Preferred Shares as more fully set forth
therein; and
WHEREAS, under the terms of the Sale and Noncompetition Agreement, the
Preferred Shares serving as consideration thereunder are to be paid to
Sycom Corp in the form of a single lump sum installment payment due eight
(8) years from the Closing Date (the "installment payment"), and until such
time such Preferred Shares shall be placed in escrow (both as Preferred
Shares or as converted into shares of common stock, the "Escrow Shares");
and
WHEREAS, the parties have agreed that under certain circumstances,
Onsite shall have the right, but not the obligation, to repurchase the
Escrow Shares;
WHEREAS, on or about January 8, 1998, Sycom LP entered into a
Settlement Agreement with PSCRC with respect to the indebtedness owed by
Sycom LP to PSCRC in the original principal amount of $14,910,915, plus
interest (the "PSCRC Debt"), and Sycom LP may pay a portion of the PSCRC
Debt in the form of Escrow Shares as provided in the Escrow Agreement and
the Sale and Noncompetition Agreement;
NOW, THEREFORE, based on the foregoing premises, and for good and
valuable consideration, and receipt and sufficiency of which is hereby
acknowledged, the parties 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. REPURCHASE OF ESCROW SHARES. Under the terms and conditions set forth
in this Agreement, if, at any time during the thirty (30) day period prior
to the Escrow Share Release Date, as defined in the Escrow Agreement, ANY
ONE (1) of the following circumstances exists:
a. All amounts owed to PSCRC under the Settlement Agreement have not
been satisfied; or
b. 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
have not been repaid in full; or
c. (i) The average closing market price of the Onsite Common Shares
over a period of ten (10) consecutive trading days never exceeded $2.00 per
share, with such minimum average share price requirement increasing by ten
percent (10%) per year each year thereafter (i.e., $2.20 per share from
January 1, 2000 through December 31, 2000, $2.42 per share from January 1,
2001 through December 31, 2001, etc.); AND, as measured on the same date,
(ii) The total after-tax earnings per share of Onsite Common
Shares over any four consecutive quarters from the Closing Date through
December 31, 1999 (taking into account the Common Shares issued to Sycom
LLC under the Purchase Agreement and that number of 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) never exceeded $0.15, with such minimum earnings per share
requirement increasing by ten percent (10%) per year each year thereafter
(i.e., $0.165 per share from January 1, 2000 through December 31, 2000,
$0.1815 per share from January 1, 2001 through December 31, 2001, etc.);
then Onsite, in the reasonable business judgment of its Board, may require
that it be allowed to repurchase the Escrow Shares.
2. REPURCHASE UPON TERMINATION. If, (a) the Sale and Noncompetition
Agreement is terminated, and (b) after the second (2{nd}) anniversary
following the Closing Date, then Onsite may repurchase all of the Escrow
Shares based on the exercise of its Board of Directors' reasonable business
judgment, and in consideration of the following factors: (i) the key
employees of Sycom Corp, as identified in the attached SCHEDULE 2, are no
longer being retained by SYCOM ONSITE, and (ii) there is no reasonably
foreseeable likelihood that the following conditions shall be satisfied:
(x) the PSCRC Debt shall be satisfied, (y) 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 shall be repaid in full, and (z) that
both share performance benchmarks identified in Section 1(c) hereof shall
be achieved.
3. REPURCHASE NOTICE. Onsite shall repurchase the Escrow Shares by
delivering a notice of repurchase in the form attached hereto as ATTACHMENT
A (the "Repurchase Notice") to Sycom Corp, with a courtesy copy delivered
to PSCRC. Upon receipt by Sycom Corp of the Repurchase Notice, Sycom Corp
shall immediately send, via facsimile, a confirmation of receipt of such
Repurchase Notice to Onsite, and indicate that it will forthwith proceed to
obtain the signatures of all required parties in order to direct the Escrow
Agent to deliver all of the Escrow Shares immediately to Onsite.
4. REPURCHASE PRICE. In the event Onsite elects to repurchase the Escrow
Shares, Onsite shall pay to Sycom Corp $.001 per Preferred Share (or a
corresponding amount for converted Preferred Shares) within thirty (30)
days of the delivery of the Repurchase Notice.
5. ADDITIONAL DELIVERIES. The parties shall execute and deliver such
additional documents and take such additional steps as they or their
counsel may reasonably request in order to carry out the transactions
contemplated by this Agreement.
6. 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 Linn & Xxxxxxxx
000 Xxxxxxx Xxxx, Xxxxx 0000
Xxxxxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxx, Esq.
Facsimile No.: (000) 000-0000
(b) if to Sycom Corp, to:
SYCOM Corporation
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
7. TERMINATION. This Agreement shall terminate in the event of an
accelerated release under the Escrow Agreement.
8. MODIFICATION. Except as provided in Section 7 hereof or Article IX of
the Purchase Agreement, this Agreement shall not be terminated or amended
unless the same shall be in writing and signed by Onsite, Sycom Corp, and
PSCRC.
9. 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.
10. 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.
11. DISPUTE RESOLUTION. No party to this Agreement shall be entitled to
take legal action with respect to any dispute relating hereto until it has
complied in good faith with the following alternative dispute resolution
procedures. This Section shall not apply to the extent it is deemed
necessary to take legal action immediately to preserve a party's adequate
remedy.
(a) NEGOTIATION. The parties shall attempt promptly and in good
faith to resolve any dispute arising out of or relating to this Agreement
through negotiations between 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 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 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. 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 hereto have caused this Share
Repurchase Agreement to be signed the day and year first above written.
ONSITE ENERGY CORPORATION
By: __________________________
Xxxxxxx X. Xxxxxxxx
Chief Executive Officer
SYCOM CORP.
By: __________________________
S. Xxxx Xxxxxxxxx
President
ATTACHMENT A
NOTICE OF REPURCHASE
In accordance with the terms of that "Share Repurchase Agreement"
dated as of June 30, 1998 between ONSITE ENERGY CORPORATION ("Onsite") and
SYCOM CORPORATION ("Sycom Corp"), Onsite hereby exercises its right to
repurchase all Onsite Series D Convertible Preferred Stock, par value $.001
per share (the "Preferred Shares"), and all Common Shares into which such
Preferred Shares may have been converted, as remain in escrow (the "Escrow
Shares"), and directs that the Escrow Shares be delivered to the
undersigned as soon as practicable.
ONSITE ENERGY CORPORATION
By:___________________________________
Xxxxxxx X. Xxxxxxxx
President
