Exhibit 10.1
AMENDMENT NO. 1 TO
ASSET ALLOCATION AND SEPARATION AGREEMENT
THIS AMENDMENT NO. 1 dated as of May 2, 2001 (this "Amendment") to the
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Asset Allocation and Separation Agreement, dated as of November 8, 2000 (the
"Allocation Agreement"), by and between Western Resources, Inc., a Kansas
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corporation ("Western"), and Westar Industries, Inc., a Kansas corporation
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("Westar").
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Capitalized terms used but not defined in this Amendment shall
have the meaning given such terms in the Allocation Agreement.
W I T N E S S E T H :
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WHEREAS, Western and Westar desire to amend certain terms of the
Allocation Agreement as provided herein;
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements herein contained, the parties hereto agree as follows:
Section 1. Amendment to the Allocation Agreement. Section 2.02 of the
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Allocation Agreement is hereby amended by deleting the first sentence of the
first paragraph of such section in its entirety and substituting the following
sentences in its place:
Section 2.02. Intercompany Transfers and Settlement of
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Intercompany Debt. After the date hereof and until the earlier of the
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Cut Off Date or the secured debt of Western's electric utility
operations receiving an investment grade rating from Moody's and
Standard & Poor's Westar shall (a) pay to Western the net cash proceeds
of any sale by Westar of its ownership interest in ONEOK, Inc. and
Western Resources, whether presently owned or hereafter acquired
(including common stock or preference stock of Western Resources issued
to Westar after the date hereof as a result of the conversion of the
Intercompany Receivable as provided herein), (b) pay to Western the net
cash proceeds of any borrowings by Westar secured by a pledge of or
security interest in any of the assets described in the foregoing
clause (a), and (c) pay to Western the net cash proceeds of the Rights
Offering. All such payments shall be for the purposes and subject to
the limits provided in Section 3.2(a)(i) of the Merger Agreement, or to
acquire indebtedness of Western. Net cash proceeds as used herein shall
mean cash proceeds of a sale transaction received by Westar after
deduction of expenses, commission, etc., tax payments for local,
federal or state entities, and any debt owed on the asset sold. Westar
may convert any outstanding amount of the
Intercompany Receivable as provided in Section 3.2(a)(ii) of the Merger
Agreement, provided any remaining balance of the Intercompany
Receivable that has not been converted on or before the Merger
Effective Time shall be so converted at the Effective Time, and Westar
shall provide written notice to Western of its choice of conversion
options on or prior to the Cut Off Date. Western shall use all proceeds
received from Westar as provided above or from the exercise by Westar
of its rights under the Westar Option to reduce or minimize its debt.
This amendment may be terminated if (x) the Kansas Corporation
Commission (the "Commission") issues an order with respect to the
restructuring of Western's assets, debt or the matters covered by this
Section 2.02 which is inconsistent with this amendment, or (y) the
Commission staff (the "Staff") on its own or others initiate a docket
with respect to the restructuring of Western's assets, debt or the
matters covered by this Section 2.02 which is inconsistent with this
amendment and which causes the Rights Offering to be terminated prior
to the successful completion of said Rights Offering or Western and
Westar do not issue the rights contemplated by the Rights Offering or
the Rights Offering is not successfully completed. This amendment may
also be terminated if after successful completion of the Rights
Offering, the Kansas Corporation Commission issues an Order or Orders
attempting to set aside or materially alter this Agreement or the
Rights Offering. If this amendment is terminated, the terms of this
Section 2.02 as in effect prior to this amendment shall automatically
be reinstated and be in full force and effect.
If the Merger is terminated, Western will meet with the Staff
within 60 days following such termination to discuss the appropriate
level of debt for Western. If agreement cannot be reached, Western or
the Staff may submit the matter to the Commission for a hearing and an
order. If the Merger is terminated, Western will reduce its total debt
by at least $100 million per year, until its debt level reaches the
agreed upon debt level, or until it reaches the debt level established
by a final, non-appealable Commission order. Western will raise the
funds needed to make this debt reduction by the following options,
including, but not be limited to, (i) selling Westar stock, (ii)
selling Western stock , (iii) converting the outstanding balance of the
Intercompany Receivable (expected to be approximately $291 million at
the Cut Off Date) to common stock or preference stock of Western, (iv)
selling assets of Westar presently owned or hereafter acquired by
Westar, or (v) taking other actions providing for an orderly reduction
of such debt. The parties acknowledge that multiple methodologies may
be appropriate to achieve such reduction in debt and the methodologies
utilized will be governed by the events existing at the time of the
discussions.
Western and Westar further agree that prior to the Merger,
Western will not sell more than 19.9% of the stock of Westar, and if
the Merger is terminated Western will continue as owner of at least
80.1% of Westar's stock, unless Western first provides not less than 30
days advance notice to the Commission.
Western agrees that other than as allowed in the Merger Agreement, it
will not dividend Westar Industries, Inc. to Western's shareholders
until Western or the Staff will have resolved their issues as herein
provided or will have submitted their issues to the Commission as
provided in this Agreement, or the Commission and the Parties hereto
shall have otherwise agreed.
Western agrees that from the date of this Amendment, excluding
the existing credit facilities between Westar and Protection One ($155
Million Dollar credit facility), it will not incur additional
indebtedness or pledge utility assets for additional indebtedness, for
its unregulated business entities until the issues set forth herein are
resolved pursuant to the Agreement.
Section 2. Representations and Warranties. Each party hereto hereby
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represents and warrants that (i) it has the power and authority and the legal
right to make, deliver and perform this Amendment, (ii) it has taken all
necessary actions to authorize the execution, delivery and performance of this
Amendment, and (iii) this Amendment is legal, valid and binding on, and
enforceable against, such party.
Section 3. Continuing Effect. Except as expressly waived or otherwise
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agreed hereby, the Allocation Agreement shall continue to be and shall remain in
full force and effect in accordance with its terms. This Amendment shall not
constitute a waiver or amendment of any other term, condition or provision of
the Allocation Agreement.
Section 4. Governing Law. This Amendment shall be governed by,
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and construed and interpreted in accordance with, the laws of the State of New
York.
Section 5. Counterparts. This Amendment may be executed by the
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parties hereto on any number of separate counterparts, and all of said
counterparts taken together shall be deemed to constitute one and the same
instrument.
Section 6. Successors and Assigns. The provisions of this Agreement
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shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns; provided that neither party may assign,
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delegate or otherwise transfer any of its rights or obligations under this
Agreement without the prior written consent of the other party, which consent
shall not be unreasonably withheld, and unless the Merger Agreement shall have
been terminated in accordance with its terms, any such assignment shall require
the written consent of Parent. If any party or any of its successors or assigns
(i) shall consolidate with or merge into any other Person and shall not be the
continuing or surviving corporation or entity of such consolidation or merger or
(ii) shall transfer all or substantially all of its properties and assets to any
Person, then, and in each such case, proper provisions shall be made so that the
successors and assigns of such party shall assume all of the obligations of such
party under each of the Split-Off Documents.
IN WITNESS WHEREOF, the parties hereto have executed this instrument as
of the date and year first above written.
WESTERN RESOURCES, INC.
By: /s/ David C. Wittig
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Name: David C. Wittig
Title: Chairman, Chief Executive Officer and
President
WESTAR INDUSTRIES, INC.
By: /s/ Paul R. Geist
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Name: Paul R. Geist
Title: President