AMENDMENT NO. 2 TO
CONTRIBUTION AGREEMENT
THIS AMENDMENT NO. 2 dated as of February 29, 2000 (this "Amendment") to
the Contribution Agreement, dated as of July 30, 1997 and amended on October 2,
1997 (the "Contribution Agreement"), by and between Protection One, Inc., a
Delaware corporation ("Protection One"), and Western Resources, Inc., a Kansas
corporation ("Western").
Capitalized terms used but not defined in this Amendment shall have the
meaning given such terms in the Contribution Agreement.
W I T N E S S E T H :
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WHEREAS, pursuant to the Agreement dated the date hereof among Westar
Capital, Inc., a subsidiary of Western ("Westar"), Protection One and Protection
One Alarm Monitoring, Inc. (the "Agreement"), Westar will purchase and acquire
all of the issued and outstanding shares of capital stock of Protection One (UK)
plc ("P1 UK" and such stock, "P1 UK Stock"), Protection One International, Inc.
("P1 International" and such stock, "P1 International Stock"), and Protection
One Investments, Inc. ("P1 Investments" and such stock, "P1 Investments Stock");
and
WHEREAS, P1 Investments holds certain marketable securities (the
"Portfolio") listed on Schedule A hereto, and certain securities of Guardian
International Inc. ("Guardian" and such stock, "Guardian Stock") listed on
Schedule B hereto; and
WHEREAS, Section 3.15(a) of the Contribution Agreement, among other
things, restricts Western and its Subsidiaries (other than Protection One and
its Subsidiaries) from engaging in, or investing in, or acquiring any equity
securities of, or entering into any material business relationship with, any
person engaged in the Business (the "Section 3.15 Restriction"); and
WHEREAS, P1 UK, P1 International and Guardian are, and certain issuers of
the securities in the Portfolio may be, engaged in the Business; and
WHEREAS, pursuant to the Agreement, it is necessary for Protection One to
deliver to Westar this Amendment of the Section 3.15(a) Restriction at the
closing of the Agreement on the date hereof in order to consummate the
transactions contemplated in the Agreement; and
WHEREAS, pursuant to Section 6.2 of the Contribution Agreement, Protection
One may not amend, supplement or otherwise modify any provision of the
Contribution Agreement unless such amendment, supplement or modification shall
have been approved by the affirmative vote of a majority of the Continuing
Directors; and
Schedule B
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WHEREAS, Messrs. Xxxx and Xxxxxx constitute all of the Continuing
Directors and desire to authorize the parties to amend the Contribution
Agreement as contemplated herein; and
WHEREAS, Western is agreeable to amending the Contribution Agreement as
contemplated 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 Contribution Agreement. Section 3.15 of the
Contribution Agreement is hereby amended to add a new Section 3.15(c) as
follows:
"(i) Notwithstanding anything to the contrary contained in Section
3.15(a) hereof, and subject to the limitations contained in this Section
3.15(c), Western or any subsidiary of Western shall be permitted to acquire and
own the Pl UK Stock, the P1 International Stock, the PI Investments Stock, the
Portfolio and the Guardian Stock (each as defined in the Agreement dated as of
February 29, 2000, among Westar Capital, Inc., Protection One Alarm Monitoring,
Inc. and Protection One) and to exercise and enjoy all rights incident to the
ownership of such securities, including the right to receive dividends, to vote
as a stockholder and to nominate persons to serve on the board of directors of
the issuers of such securities (the "Stock Rights").
(ii) Notwithstanding anything to the contrary contained in Section
3.15(a) hereof, and subject to the limitations contained in this Section
3.15(c), Western or any Subsidiary of Western shall not be prohibited from
engaging in, or investing in, acquiring any equity securities of, or entering
into any material business relationship with, any person engaged in the Business
solely in the United Kingdom or any of the countries of continental Europe.
(iii) Notwithstanding anything to the contrary contained in Section
3.15(a) hereof, and subject to the limitations contained in this Section
3.15(c), Western or any Subsidiary of Western shall be permitted to acquire and
own common securities of the issuers whose securities are included in the
Portfolio and would otherwise be subject to the restrictions contained in
Section 3.15(a) hereof and to exercise and enjoy all rights incident to the
ownership of such securities, including Stock Rights, provided that Western and
its Subsidiaries shall not at any time be permitted to acquire or own common
securities of any such issuer otherwise subject to the restrictions contained in
Section 3.15(a) hereof organized under the laws of Canada in an aggregate amount
exceeding ten percent (10%) of the outstanding common securities of such issuer
or to acquire or own common securities of any such issuer otherwise subject to
the restrictions contained in Section 3.15(a) hereof organized under the laws of
the United States or any state thereof in an aggregate amount exceeding five
percent (5%) of the outstanding common securities of such issuer.
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(iv) Notwithstanding anything to the contrary contained in Section
3.15(a) hereof, and subject to the limitations contained in this Section
3.15(c), Western or any subsidiary of Western shall be permitted to acquire and
own securities issued by the issuer listed on Schedule C hereto (the "Issuer")
and to exercise and enjoy all rights incident to the ownership of such
securities, including the Stock Rights, provided that (except as provided in
clauses (v) and (vi) hereof) Western and its Subsidiaries shall not be permitted
to acquire or own securities of the Issuer constituting in the aggregate an
amount exceeding either (x) securities issued by the Issuer having the right in
the aggregate to cast 50% of the votes entitled to be cast at meetings of the
stockholders of the Issuer or (y) common securities issued by the Issuer and
securities convertible into or exchangeable for common securities of the Issuer
constituting in the aggregate 50% of the common securities of the Issuer
calculated based on the assumption that all securities convertible into or
exchangeable for common securities of the Issuer owned by Western and its
Subsidiaries or any other person have been so converted or exchanged (the first
to occur of (x) and (y), the "Issuer Ownership Threshold").
(v) Notwithstanding anything to the contrary contained in Section
3.15(a) hereof, and subject to the limitations contained in this Section
3.15(c)(v), Western or any Subsidiary of Western shall be permitted to acquire
and own securities issued by the Issuer and to exercise and enjoy all rights
incident to the ownership of such securities, including the Stock Rights, in an
aggregate amount in excess of the Issuer Ownership Threshold. Prior to entering
into any acquisition agreement with Issuer to acquire and own its securities in
an aggregate amount in excess of the Issuer Threshold Ownership, Western or any
Subsidiary, as the case may be, shall ensure that Protection One or any
Subsidiary of Protection One is afforded the opportunity to review all
information received by Western or any Subsidiary from Issuer. Promptly
following the date on which Western and its Subsidiaries acquire securities of
the Issuer exceeding the Issuer Ownership Threshold, Western shall so notify
Protection One. For a period of 180 days following receipt of such notice by
Western to Protection One, Protection One shall (A) have the right to review all
of the same financial and other information made available to or generated by
Western or any of its representatives or advisors in connection with its review
of Issuer and to receive from Issuer and Western and its Subsidiaries such
additional information as it may reasonably request in connection with its due
diligence review, and (B) have the right, exercisable by the vote of a majority
of the Directors of Protection One not affiliated with Western or its other
Subsidiaries, to require Western and its Subsidiaries to transfer, without
recourse to Western or any of its Subsidiaries or affiliates, all of Western's
and its Subsidiaries' rights, title and interest in the equity securities of the
Issuer, as well as all rights and obligations of Western or its Subsidiaries
under the acquisition agreement, if any, entered into with respect to the
securities of Issuer, to Protection One or any Subsidiary of Protection One. In
the event that Protection One or a Subsidiary of Protection One purchases all of
Western's and its Subsidiaries' rights, title and interest in the equity
securities of the Issuer as contemplated by the immediately preceding sentence,
promptly following the date on which Western and its Subsidiaries subsequently
acquire securities of the Issuer constituting in the aggregate an amount
exceeding either (x) securities issued by the Issuer having the right in the
aggregate to cast 5% of the votes entitled to be cast at meetings of the
stockholders of the Issuer or (y) common securities issued by the Issuer and
securities convertible into
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or exchangeable for common securities of the Issuer constituting in the
aggregate 5% of the common securities of the Issuer calculated based on the
assumption that all securities convertible into or exchangeable for common
securities of the Issuer owned by Western and its Subsidiaries or any other
person have been so converted or exchanged (the first to occur of (x) and (y),
the "Issuer Subsequent Ownership Threshold"), Western shall so notify Protection
One or its Subsidiary. For a period of 90 days following receipt of such notice
by Western to Protection One, Protection One shall have the right, exercisable
by the vote of a majority of the Directors of Protection One not affiliated with
Western or its Subsidiaries, to require Western and its Subsidiaries to
transfer, without recourse to Western or any of its Subsidiaries or affiliates,
all of Western's and its Subsidiaries' rights, title and interest in such equity
securities of the Issuer to Protection One or its Subsidiaries. In consideration
of the transfer of Western's or its Subsidiaries' rights, title and interest in
the securities of Issuer and the acquisition agreement, if any, with respect
thereto as contemplated by this clause (v), Protection One or its Subsidiary
shall pay (as provided below) Western or its Subsidiaries an amount equal to the
sum of (x) the purchase price paid by Western or its Subsidiaries to acquire the
securities of Issuer (the "Purchase Price"), and (y) a carrying charge equal to
the product of (A) the Purchase Price, (B) the average of the prime rates as
announced from time to time by Chase Manhattan Bank, New York, New York in
effect for each day during the period referred to in clause (C) of this Section
3.15(c)(v), and (C) the number of days from and including the date of the
consummation of the acquisition of the Issuer's securities by Western or its
Subsidiaries up to but not including the date of transfer from Western or its
Subsidiaries to Protection One or its Subsidiary of such securities, divided by
365; provided, however, that the parties acknowledge that the foregoing formula
shall be applied separately with respect to each date on which Western or its
Subsidiaries purchased securities of Issuer. The parties hereto agree that any
decision by Protection One or its Subsidiary to finance all or any portion of
the Purchase Price upon exercise of the option shall be made by vote of a
majority of the Directors of Protection One or its Subsidiary not affiliated
with Western or its other Subsidiaries.
(vi) Notwithstanding anything to the contrary contained in Section
3.15(a) hereof, and subject to the limitations contained in this Section
3.15(c), in the event that Protection One or its Subsidiary does not elect to
require Western and its Subsidiaries to transfer to Protection One or its
Subsidiary the equity securities of Issuer following the acquisition by Western
and its Subsidiaries of securities of the Issuer in an aggregate amount
exceeding the Issuer Ownership Threshold, then from and after the date falling
180 days after the date of receipt of the notice by Western that Western and its
Subsidiaries acquired securities of the Issuer in an aggregate amount exceeding
the Issuer Ownership Threshold, Western and its Subsidiaries shall not be
prohibited from engaging in, or investing in, acquiring any equity securities
of, or entering into any material business relationship with the Issuer."
Section 2. Representations and Warranties. Each party hereto hereby
represents and warrants that (i) it/he has the power and authority and the legal
right to make, deliver and perform this Amendment, (ii) it/he 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, it/him.
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Section 3. Continuing Effect. Except as expressly waived or otherwise
agreed hereby, the Contribution Agreement shall continue to be and shall remain
in full force and effect in accordance with its terms. This Amendment shall be
limited precisely as drafted and shall not constitute a waiver or amendment of
any other term, condition or provision of the Contribution Agreement.
Section 4. Governing Law. This Amendment shall be governed by, and
construed and interpreted in accordance with, the laws of the State of Delaware
(without regard to principles of conflict of laws).
Section 5. Counterparts. This Amendment may be executed by the 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.
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IN WITNESS WHEREOF, the parties hereto have executed this instrument as of
the date and year first above written.
PROTECTION ONE, INC.
By: /s/ Xxxx X. Xxxx III
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Name: Xxxx X. Xxxx III
Title: Chief Executive Officer
WESTERN RESOURCES, INC.
By: /s/ Xxxxxxx X. Xxxxx
------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Executive Vice President,
Chief Financial Officer
and Treasurer
AGREED TO AND
APPROVED HEREBY:
/s/ Xxx X. Xxxx
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XXX X. XXXX
/s/ Xxxxx X. Xxxxxx
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XXXXX X. XXXXXX
