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Title: |
Asset Allocation and Separation Agreement |
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Entities: |
HVOLT Enterprises, Inc.; Public Service Company of New Mexico; Westar Energy, Inc.; Western Resources, Inc.; LeBoeuf, Lamb, Greene & MacRae LLP |
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Date: |
2000 |
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Size: |
Preview shows 17KB of 117KB total |
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Price: |
$63 |
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ID: |
#295871 |
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ASSET ALLOCATION AND
SEPARATION AGREEMENT
between
Western Resources, Inc.
and
Westar Industries, Inc.
-----------------------
Dated as of November 8, 2000
{PAGE}
TABLE OF CONTENTS
-----------------
PAGE
ARTICLE I DEFINITIONS..........................................................2
SECTION 1.01. DEFINITIONS...................................................2
ARTICLE II CONTRIBUTIONS AND ASSUMPTION OF LIABILITIES........................12
SECTION 2.01. TRANSFERS OF CERTAIN ASSETS TO WESTAR GROUP..................12
SECTION 2.02. INTERCOMPANY TRANSFERS AND SETTLEMENT OF INTERCOMPANY DEBT...12
SECTION 2.03. AGREEMENT RELATING TO CONSENTS NECESSARY TO TRANSFER ASSETS..13
SECTION 2.04. CERTAIN OFFICER LOANS........................................14
SECTION 2.05. SHARED SERVICES..............................................14
SECTION 2.06. SUBLEASE.....................................................14
ARTICLE III REPRESENTATIONS AND WARRANTIES....................................15
SECTION 3.01. REPRESENTATIONS AND WARRANTIES OF WESTAR.....................15
SECTION 3.02. REPRESENTATIONS AND WARRANTIES OF WESTERN....................15
ARTICLE IV THE SPLIT-OFF......................................................16
SECTION 4.01. COOPERATION PRIOR TO THE SPLIT-OFF...........................16
SECTION 4.02. WESTERN BOARD ACTION; CONDITIONS PRECEDENT TO THE SPLIT-OFF..17
SECTION 4.03. THE SPLIT-OFF................................................18
SECTION 4.04. FRACTIONAL SHARES............................................18
ARTICLE V INDEMNIFICATION AND OTHER MATTERS...................................18
SECTION 5.01. WESTAR INDEMNIFICATION OF WESTERN GROUP......................18
SECTION 5.02. WESTERN INDEMNIFICATION OF WESTAR GROUP......................20
SECTION 5.03. INSURANCE AND THIRD PARTY OBLIGATIONS; LIMITATION ON
LIABILITY..................................................20
SECTION 5.04. NOTICE AND PAYMENT OF CLAIMS.................................21
SECTION 5.05. NOTICE AND DEFENSE OF THIRD-PARTY CLAIMS.....................21
SECTION 5.06. EXCLUSIVITY OF REMEDIES......................................24
ARTICLE VI EMPLOYEE MATTERS AND TRANSITION SERVICES...........................24
SECTION 6.01. EMPLOYEE MATTERS GENERALLY...................................24
SECTION 6.02. SHARED SERVICES MATTERS GENERALLY............................24
ARTICLE VII ACCESS TO INFORMATION.............................................24
SECTION 7.01. PROVISION OF CORPORATE RECORDS...............................24
SECTION 7.02. ACCESS TO INFORMATION........................................24
SECTION 7.03. LITIGATION COOPERATION.......................................25
SECTION 7.04. REIMBURSEMENT................................................25
SECTION 7.05. RETENTION OF RECORDS.........................................26
SECTION 7.06. CONFIDENTIALITY..............................................26
SECTION 7.07. PRESERVATION OF PRIVILEGE....................................27
SECTION 7.08. INAPPLICABILITY OF ARTICLE VII TO TAX MATTERS................27
ARTICLE VIII CERTAIN OTHER AGREEMENTS.........................................27
SECTION 8.01. USE OF PROCEEDS AND INTERCOMPANY MATTERS.....................27
SECTION 8.02. TRADEMARKS; TRADE NAMES......................................28
SECTION 8.03. FURTHER ASSURANCES AND CONSENTS..............................28
SECTION 8.04. THIRD PARTY BENEFICIARIES....................................28
SECTION 8.05. INTELLECTUAL PROPERTY RIGHTS AND LICENSES....................29
SECTION 8.06. INSURANCE CLAIMS.............................................29
ARTICLE IX MISCELLANEOUS......................................................29
SECTION 9.01. NOTICES......................................................29
SECTION 9.02. AMENDMENTS; NO WAIVERS.......................................30
SECTION 9.03. EXPENSES.....................................................31
SECTION 9.04. SUCCESSORS AND ASSIGNS.......................................31
SECTION 9.05. GOVERNING LAW................................................31
SECTION 9.06. COUNTERPARTS; EFFECTIVENESS..................................32
SECTION 9.07. ENTIRE AGREEMENT.............................................32
SECTION 9.08. TAX DISAFFILIATION AGREEMENT; SET-OFF; PAYMENT OF AFTER-TAX
TAXES......................................................32
SECTION 9.09. JURISDICTION.................................................33
SECTION 9.10. PRE-LITIGATION DISPUTE RESOLUTION............................33
SECTION 9.11. SEVERABILITY.................................................33
SECTION 9.12. SURVIVAL.....................................................33
SECTION 9.13. CAPTIONS.....................................................33
SECTION 9.14. SPECIFIC PERFORMANCE.........................................33
Schedules and Exhibits
Schedule 1.01(a) Group Insurance Policies
Schedule 1.01(b) Westar Trademark Rights
Schedule 1.01(c) Westar Litigation
Schedule 1.01(d) Western Balance Sheet
Schedule 1.01(e) Westar Balance Sheet
Schedule 1.01(g) Western Subsidiaries
Schedule 1.01(h) Westar Subsidiaries
Schedule 2.01 Transferred Assets
Schedule 3.02(c) Required Western Consents
Schedule 3.02(d) Required Western Government Authorizations
Schedule 4.02 Schedule of Split Dollar Life Insurance
Schedule 8.01(b) Intercompany Agreements Not to Survive Closing
Schedule 8.05 Software Licenses
Exhibit A Shared Services Agreement between Western and Westar
Exhibit B Option Agreement between Westar and Western
Exhibit C Sublease Term Sheet
Exhibit D Tax Disaffiliation Agreement between Western and Westar
Exhibit E Trademark Assignment Agreement
{PAGE}
ASSET ALLOCATION AND SEPARATION AGREEMENT
ASSET ALLOCATION AND SEPARATION AGREEMENT, dated as of November 8, 2000
(this "Agreement"), between WESTERN RESOURCES, INC., a Kansas corporation
("Western"), and WESTAR INDUSTRIES, INC., a Kansas corporation ("Westar").
W I T N E S S E T H:
WHEREAS, Westar is presently a wholly owned subsidiary of Western;
WHEREAS, the Board of Directors of Western has approved (i) the issuance of
non-transferable rights (the "Rights") to purchase up to 9.9% of the outstanding
shares of Westar Common Stock (as defined herein) issuable pursuant to the
Rights (the "Rights Offering Shares") and (ii) the terms and conditions of the
distribution and exercise of Rights as provided by the registration statement
filed by Westar under the Securities Act in connection therewith (the "Rights
Offering");
WHEREAS, the Board of Directors of Western has determined that it is in the
best interests of Western, its shareholders and Westar that all outstanding
shares of Westar Common Stock then held by Western be distributed to Western's
shareholders in exchange for a portion of the shares of Western common stock
held by such shareholders (provided that all conditions precedent to the
Split-Off (as defined herein) have been satisfied) and that, pursuant to an
agreement and plan of restructuring and merger, dated as of November 8, 2000
(the "Merger Agreement"), among Western, Public Service Company of New Mexico, a
New Mexico corporation ("PNM"), HVOLT Enterprises, Inc., a corporation organized
under the laws of Delaware ("Parent"), HVK, Inc.,. a Kansas corporation and a
wholly owned subsidiary of Parent ("Merger Sub-1") and HVNM, Inc., a New Mexico
corporation ("Merger Sub-2"), Merger Sub-1 be merged with and into Western, as a
result of which Western will become a wholly owned subsidiary of Parent (the
"Merger");
WHEREAS, for United States federal income Tax (as defined below) purposes,
it is intended that (i) the Split-Off will be treated as a taxable exchange of
the Split-Off Portion (as defined below) of the Western Common Stock for Westar
Common Stock, and (ii) the Mergers taken together will be treated as a
transaction described in Section 351 of the Internal Revenue Code of 1986, as
amended (the "Code");
WHEREAS, Western and Westar are concurrently herewith entering into, or
propose to enter into prior to or on the Separation Date (as defined below), the
Ancillary Agreements (as defined below); and
WHEREAS, the parties hereto desire to set forth herein the principal
corporate transactions to be effected in connection with the Rights Offering and
the Split-Off and certain other matters relating to the relationship and the
respective rights and obligations of the parties following the completion of the
Rights Offering and, subsequently, following the Split-Off.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. The following terms, as used herein, have the
following meanings:
"Action" means any claim, suit, action, arbitration, inquiry, investigation
or other proceeding of any nature (whether criminal, civil, legislative,
administrative, regulatory, prosecutorial or otherwise) by or before any
arbitrator or Governmental Entity or similar Person or body.
"Affiliate" shall have the meaning ascribed to such term in Rule 12b-2 of
the Exchange Act as of the date hereof, provided, however, that except when
referred to as an "Existing Affiliate," for purposes of this Agreement, no
member of one Group shall be treated as an Affiliate of any member of the other
Group.
"Agreement" has the meaning set forth in the recitals.
"Ancillary Agreements" means each of the Registration Rights Agreement, the
Tax Disaffiliation Agreement, the Shared Services Agreement, the Westar Option,
the Trademark Assignment Agreement and the Sublease Agreement.
"Average Trading Price" means the average of the daily volume-weighted
trading price per share of Western Common Stock or Westar Common Stock, as
applicable, on the New York Stock Exchange, as applicable, as reported by
Bloomberg Financial Markets, or if not reported thereby, another reasonably
agreed authoritative source.
"Business Day" means any day other than a Saturday, Sunday or one on which
banks are authorized or required by law to close in New York, New York.
"Commission" means the Securities and Exchange Commission.
"Company Disclosure Letter" shall have the meaning specified in the Merger
Agreement.
"Confidential Information" has the meaning set forth in Section 7.06.
"Confidentiality Agreements" means the Confidentiality Agreement, dated as
of July 25, 2000, between PNM and Western and the Confidentiality Letter between
Western and PNM dated October 20, 2000.
"Contracts" means any agreement, lease, license, contract, treaty, note,
mortgage, indenture, franchise, permit, concession, arrangement or other
obligation.
"Control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Convertible Preference Stock" means convertible preference stock of
Western, with the terms specified in Exhibit B to the Merger Agreement.
"CPI Western Power Holdings" means CPI Western Power Holdings, Inc., a
Bermuda limited liability company.
"Cut Off Date" means 15 Business Days prior to the Closing Date (as defined
in the Merger Agreement).
"Damages" means, with respect to any Person, any and all damages (including
punitive and consequential damages), losses, Liabilities and expenses incurred
or suffered by such Person (including, but not limited to, all expenses of
investigation, all attorneys' and expert witnesses' fees and all other
out-of-pocket expenses incurred in connection with any Action or threatened
Action).
"Employment Agreements" means the employment agreements listed in Item 10
of Section 7.9 of the Company Disclosure Letter for the Merger Agreement.
"Environmental Law" means any federal, state or local laws (including,
without limitation, common law), regulations, codes, rules, ordinances, permits,
authorizations, decrees, orders, injunctions or judgments and any binding
administrative or judicial interpretations thereof relating to: (a) pollution;
(b) the protection of the environment (including air, water, soil, subsurface
strata and natural resources) or human health and safety from exposure to
Hazardous Substances and (c) the regulation of the generation, use, storage,
handling, transportation, treatment, release, remediation or disposal of
Hazardous Substances.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder.
"Existing Affiliate" means any Affiliate of Western as of the date hereof
and not giving effect to this Agreement, the Restructuring or the Merger.
"Finally Determined" means, with respect to any Action, threatened Action
or other matter, that the outcome or resolution of that Action, threatened
Action or other matter either (i) has been decided through binding arbitration
or by a Governmental Entity of competent jurisdiction by judgment, order, award,
or other ruling or (ii) has been settled or voluntarily dismissed by the parties
pursuant to the dispute resolution procedure set forth in Section 9.10 or
otherwise and, in the case of each of clauses (i) and (ii), the claimants'
rights to maintain that Action, threatened Action or other matter have been
finally adjudicated, waived, discharged or extinguished, and that judgment,
order, ruling, award, settlement or dismissal (whether mandatory or voluntary,
but if voluntary that dismissal must be final, binding and with prejudice as to
all claims specifically pleaded in that Action) is subject to no further appeal,
vacatur proceeding or discretionary review.
"Former Affiliate" means any Person (as defined below) that was, at any
time prior to the date hereof and without giving effect to this Agreement, but
has ceased to be, an Affiliate of Western.
"Governmental Entity" means any U.S. or non-U.S. governmental or regulatory
authority, agency, commission, tribunal, body or other governmental,
quasi-governmental or self-regulatory entity.
"Group" means, as the context requires, the Westar Group (as defined below)
or the Western Group (as defined below).
"Group Policies" means all Policies, current or past, which prior to the
Split-Off Time are or at any time were maintained by or on behalf of or for the
benefit or protection of Western, any Existing Affiliate or any Former Affiliate
(or any of their predecessors) and/or one or more of the current or past
directors, officers, employees or agents of any of the foregoing including,
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