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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------------------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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December 12, 1996
Date of Report (Date of earliest event reported)
WESTERN RESOURCES, INC.
(Exact name of registrant as specified in its charter)
STATE OF KANSAS 1-3523 48-0290150
(State or other jurisdiction of (Commission (IRS Employer
incorporation) File Number) Identification No.)
818 Kansas Avenue, Topeka, Kansas
(Address of principal executive offices)
66612
(Zip code)
(913) 575-6300
(Registrant's telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
Items 1-4. Not Applicable.
- ---------- ---------------
Item 5. Other Events.
- ------- -------------
On December 12, 1996, Western Resources, Inc. (the "Company")
announced that it had entered into a strategic alliance (the "Alliance")
combining the natural gas assets of the Company and ONEOK, Inc. ("ONEOK").
On December 12, 1996, the Company issued a press release relating to
the Alliance, a copy of which is attached hereto as Exhibit 99.1 and is
incorporated herein by reference. Copies of the principal Agreements with
respect to the Alliance, an Agreement relating to the merger of ONEOK and a
subsidiary of the Company, dated as of December 12, 1996, and a form of
Shareholder Agreement between ONEOK and the Company, are attached hereto as
Exhibits 99.2 and 99.3, respectively.
Item 6. Not Applicable.
- ------- ---------------
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
- ------- -------------------------------------------------------------------
Exhibit
No. Description
- --- -----------
99.1 Press Release issued by Western Resources, Inc. on December 12, 1996.
99.2 Agreement between Western Resources, Inc. and ONEOK, Inc., dated as
of December 12, 1996.
99.3 Form of Shareholder Agreement between New Oneok and Western
Resources, Inc.
Item 8. Not Applicable.
- ------- ---------------
-2-
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
WESTERN RESOURCES, INC.
(Registrant)
Date: December 18, 1996 By: /s/ Jerry D. Courington
-----------------------
Jerry D. Courington
Controller
-3-
EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
99.1 Press Release issued by Western Resources, Inc.
on December 12, 1996.
99.2 Agreement between Western Resources, Inc. and ONEOK, Inc.,
dated as of December 12, 1996.
99.3 Form of Shareholder Agreement between New Oneok and Western
Resources, Inc.
-4-
Exhibit No. 99.1
The following employee update and press release was issued on December 12, 1996:
WESTERN RESOURCES, ONEOK INC. ANNOUNCE STRATEGIC ALLIANCE: STOCK TRANSACTION
VALUED AT $660 MILLION; ONEOK BECOMES NINTH LARGEST GAS DISTRIBUTOR IN NATION;
WESTERN RESOURCES BECOMES LARGEST ONEOK SHAREOWNER
TOPEKA, Kan. and TULSA, December 12, 1996 (8:27 a.m. EST) -- ONEOK
Inc., (NYSE: OKE) and Western Resources (NYSE: WR) today announced a strategic
alliance combining the natural gas assets of both companies. According to terms
of the $660 million transaction, ONEOK will own and operate the natural gas
assets of Western Resources located in Kansas and northeast Oklahoma. Western
Resources will become the largest equity holder of ONEOK through a combination
of common and convertible preferred stock. The strategic alliance will position
each company to maximize its respective strengths as energy service companies.
Western Resources will provide electric energy products, security products and
other unregulated services and ONEOK will provide natural gas. The agreement,
expected to be positive to earnings for shareowners of both Western Resources
and ONEOK in the first year, has received approval from both companies' boards
of directors.
"As we continue to grow our respective companies, it is important to
innovate," said John E. Hayes, Jr., Western Resources chairman of the board and
chief executive officer. "This strategic alliance allows us to market
electricity, security and other unregulated services to a new set of customers
- -- ONEOK's 735,000 customers. In addition, Western Resources will pursue its
plan to market electricity, security and natural gas nationally. Under this
plan, ONEOK will procure natural gas for Western Resources' national marketing
effort." "The strategic alliance positions the respective strengths of each
management team to capitalize on the opportunities in a marketplace that is
becoming more competitive," said Larry Brummett, ONEOK chairman of the board,
president and chief executive officer. "Western Resources is an excellent
company, with competitive electric costs and an innovative management. We are
extremely pleased with this agreement and look forward to making it happen."
Specific transaction terms include:
ONEOK Inc. will receive all the natural gas assets of Western
Resources, making it the ninth largest gas distribution company in the United
States serving 1.4 million customers. ONEOK's independence is preserved by
standstill provisions which define the rights and responsibilities of the
respective companies. The standstill has an initial term of 15 years.
Western Resources will receive approximately 3 million new shares of ONEOK
common stock and preferred stock convertible upon necessary regulatory approvals
into approximately another 19.3 million shares of ONEOK common stock. Western
Resources will receive a preferred dividend of 1.5 times the underlying common
dividend, but in no event less than $1.80 per preferred share per year for the
first five years under the terms of the preferred stock.
Upon closing, Western Resources will nominate two directors to the
ONEOK board of directors. If the preferred stock converts to common, Western
Resources may designate an additional two directors. The agreement requires
approvals from ONEOK shareholders, the Oklahoma Corporation Commission, the
Kansas Corporation Commission, and the Securities and Exchange Commission, and
anticipated the transaction will close by mid-1997.
Brummett said the transaction confirms ONEOK's strategy of pursuing
strategic alliances or acquisition opportunities in natural gas distribution and
energy-related businesses. Additionally, it strengthens ONEOK's balance sheet
for future cash transactions. According to Hayes, the transaction significantly
strengthens Western Resources' annual cash flow and provides the company access
to more than 735,000 new customers. The natural gas assets of Western Resources
include natural gas distribution properties serving 624,000 customers
encompassing two-thirds of Kansas and 36,000 customers in the northeastern
corner of Oklahoma with 10,068 miles of pipeline; a natural gas transmission and
gathering system with 976 miles of pipeline; a Kansas gas processing plant with
a 15 million cubic feet per day capacity and a 42 percent interest in a New
Mexico plant with a 200 million cubic feet per day capacity; and a natural gas
marketing company with a retail marketing focus.
The assets of ONEOK Inc. include Oklahoma Natural Gas Company, a local
natural gas distribution company providing gas service to 75 percent of Oklahoma
with more than 735,000 customers and 18,520 miles of distribution, transmission
and gathering pipeline; a natural gas wholesale marketing company serving the
mid-continent region of the United States; and ownership interest in 15 Oklahoma
gas processing plants with a net daily capacity of 335 million cubic feet; and a
production company with more than 85.2 Bcf of natural gas reserves. Western
Resources (NYSE: WR) is a full-service, diversified energy company with total
assets of almost $6 billion. Its utilities, KPL and KGE, operating in Kansas and
Oklahoma, provide natural gas service to approximately 650,000 customers and
electric service to approximately 600,000 customers. Through its subsidiaries,
Westar Energy, Westar Security, Westar Capital, and The Wing Group, a full range
of energy and energy-related products and services are developed and marketed in
the continental U.S., and offshore.
For more information about Western Resources and its operating
companies, visit us on the Internet at http://www.wstnres.com.
-5-
NOTE TO EDITORS: Western Resources and ONEOK will conduct a news
conference call at 2 p.m. CST today. Media may call (1-800) 946-0705 to
participate. Confirmation number is 297268.
CONTACT: Media contract: Michel' Philipp, (913) 575-1927, or investor
contact: Rick Kready, (913) 575-8226, both of Western Resources.
-6-
AGREEMENT
between
WESTERN RESOURCES INC.
and
ONEOK Inc.
Dated as of December 12, 1996
TABLE OF CONTENTS
Page
ARTICLE I THE ASSET TRANSACTION..............................................2
1.1 Certain Definitions...........................................2
1.2 Transactions..................................................6
1.3 Liabilities Assumed...........................................6
1.4 Retained Liabilities..........................................6
1.5 Instruments of Transfer.......................................6
1.6 Condition on Assignment or Assumption of
Contracts and Rights..........................................7
1.7 Certain Adjustments...........................................7
1.8 Certain Taxes.................................................9
ARTICLE II THE MERGER........................................................9
2.1 The Merger; Effective Time of Merger.........................9
2.2 Closing......................................................9
2.3 Effect of the Merger.........................................9
ARTICLE III CONVERSION OF SHARES AND EXCHANGE OF
CERTIFICATES............................................................10
3.1 Effect of Merger on Capital Stock...........................10
(a) NewCorp Capital Stock Unchanged........................10
(b) Cancellation of Treasury Stock.........................10
(c) Exchange of ONEOK Common Stock.........................10
3.2 Exchange of Certificates....................................11
(a) Exchange of Certificates...............................11
(b) Exchange Procedures....................................11
(c) Distributions with Respect to Unexchanged
Shares...............................................12
(d) No Further Ownership Rights in ONEOK
Common Stock.........................................12
(e) Termination of Exchange Agent..........................12
(f) No Liability...........................................12
ARTICLE IV REPRESENTATIONS AND WARRANTIES...................................13
4.1 Representations and Warranties of ONEOK.....................13
(a) Organization, Standing and Power.......................13
(b) Capital Structure......................................13
(c) Authority; No Violations; Consents and
Approvals............................................14
(d) SEC Documents..........................................16
(e) Information Supplied...................................17
(f) Absence of Certain Changes or Events...................18
(g) No Undisclosed Material Liabilities....................18
(h) No Default.............................................19
(i) Compliance with Applicable Laws........................19
(j) Litigation.............................................19
(k) Taxes..................................................20
(l) Employee Matters; ERISA................................21
(1) Benefit Plans....................................21
(2) Contributions....................................22
(3) Qualification; Compliance........................22
(4) Pension Benefit Plan; Liabilities................24
(5) Welfare Plans....................................24
(6) Documents Made Available.........................24
(7) Payments Resulting From Merger...................24
(8) Funded Status of Plans...........................25
(9) Multiemployer Plans..............................25
(10) Modification or Termination of Plans............25
(11) Reportable Events; Claims.......................26
(m) Labor Matters..........................................26
(n) Intangible Property....................................27
(o) Environmental Matters..................................27
(1) Definitions....................................27
(2) Compliance.....................................28
(3) Environmental Permits..........................29
(4) Environmental Claims...........................29
(5) Releases.......................................30
(6) Underground Storage Tanks
or Surface Impoundments........................30
(p) Insurance...........................................30
(q) Contracts...........................................30
(r) Regulatory Proceedings..............................31
(s) Regulation as a Utility.............................31
(t) Opinion of Financial Advisor........................32
(u) Vote Required.......................................32
(v) Beneficial Ownership of WRI Common Stock............32
(w) Brokers.............................................32
(x) Related Party Transactions..........................32
(y) Takeover Provisions.................................32
(z) Rights Plan.........................................32
(aa) Title to Properties.................................33
(ab) Condition of Assets.................................33
(ac) Accounts Receivable.................................34
4.2 Representations and Warranties of WRI.......................34
(a) Organization, Standing and Power....................34
(b) Capital Structure...................................34
(c) Sufficiency of Assets...............................35
(d) Authority; No Violations; Consents and
Approvals.........................................35
(e) SEC and Other Documents.............................37
(f) Information Supplied................................38
(g) Absence of Certain Changes or Events................38
(h) No Undisclosed Material Liabilities.................39
(i) No Default..........................................39
(j) Compliance with Applicable Laws.....................39
(k) Litigation..........................................40
(l) Taxes...............................................40
(m) Employee Matters; ERISA.............................42
(1) Benefit Plans................................42
(2) Contributions................................43
(3) Qualification; Compliance....................43
(4) Pension Benefit Plan; Liabilities............44
(5) Welfare Plans................................44
(6) Documents Made Available.....................44
(7) Payments Resulting From Merger...............45
(8) Funded Status of Plans.......................45
(9) Multiemployer Plans..........................46
(10) Modification or Termination of Plans.........46
(11) Reportable Events; Claims....................46
(n) Labor Matters.......................................47
(o) Intangible Property.................................47
(p) Environmental Matters...............................48
(1) Compliance...................................48
(2) Environmental Permits........................48
(3) Environmental Claims.........................49
(4) Releases.....................................49
(5) Underground Storage Tanks
or Surface Impoundments....................49
(q) Contracts and Certain Obligations...................50
(r) Regulatory Proceedings..............................51
(s) Regulation as a Utility.............................51
(t) Opinion of Financial Advisor........................51
(u) Title to Properties.................................51
(v) Condition of Assets.................................52
(w) Accounts Receivable.................................52
(x) Beneficial Ownership of ONEOK Common
Stock.............................................52
(y) Brokers.............................................52
(z) Insurance...........................................52
(aa) Business of NewCorp.................................53
(ab) Intercompany Liabilities............................53
(ac) Related Party Transactions..........................53
ARTICLE V CONDUCT OF BUSINESS PENDING THE MERGER............................53
5.1 Conduct of Gas Business Pending the Merger..................53
(a) Ordinary Course.....................................53
(b) Changes in Stock....................................53
ii
(c) Issuance of Securities..............................54
(d) No Acquisitions.....................................54
(e) No Dispositions.....................................54
(f) No Dissolution, Etc.................................54
(g) Certain Employee Matters............................54
(h) Leases; Capital Expenditures........................55
(i) Affiliate Transactions..............................55
(j) Rate Matters........................................55
(k) Contracts...........................................55
(l) Insurance...........................................56
(m) Permits.............................................56
(n) Tax Matters.........................................56
(o) Discharge of Liabilities............................56
(p) Other Actions...56
(q) Agreements..........................................56
(r) Business of NewCorp.................................56
(s) Shareholder Agreement...............................56
(t) Rights Agreement....................................57
(u) Material Information................................57
(v) Intercompany Liabilities............................57
5.2 Certain Restrictions in Respect of ONEOK...............................57
(a) Changes in Stock....................................57
(b) Governing Documents; Other Material
Transactions......................................57
(c) Other Actions.......................................58
(d) Rights; Redemption of Capital Stock.................58
(e) Material Information................................58
(f) Other Agreements....................................58
(g) Agreements..........................................58
(h) Stock Options.......................................58
5.3 No Solicitation.............................................58
ARTICLE VI ADDITIONAL AGREEMENTS............................................59
6.1 Preparation of Form S-4 and the Proxy Statement.............59
6.2 Letter of ONEOK's Accountants...............................59
6.3 Letter of WRI's Accountants.................................60
6.4 Access to Information.......................................60
6.5 ONEOK Stockholders' Meeting.................................60
6.6 Regulatory and Other Approvals..............................60
(a) HSR Act.............................................60
(b) Other Regulatory Approvals..........................61
(c) Other Approvals.....................................61
6.7 Authorization for Shares and Stock Exchange Listing.........61
6.8 Stock Options...............................................61
6.9 Agreement to Defend.........................................61
6.10 Public Announcements....................................61
iii
6.11 Other Actions...........................................62
6.12 Advice of Changes; SEC Filings..........................62
6.13 Reorganization..........................................62
6.14 Disclosure Schedules....................................63
6.15 Preparation and Filing of Returns; Payment of
Taxes.................................................63
6.16 Access to Information...................................64
6.17 Non-Competition.........................................65
6.18 Use of Name.............................................66
6.19 Standstill..............................................66
6.20 Further Assurances......................................66
6.21 Insurance...............................................67
6.22 Schedules...............................................67
ARTICLE VII CONDITIONS PRECEDENT............................................67
7.1 Conditions to Each Party's Obligation to Effect the
Merger...................................................67
(a) ONEOK Stockholder Approval....................67
(b) NYSE Listing..................................67
(c) Other Approvals...............................67
(d) Form S-4......................................68
(e) No Injunctions or Restraints..................68
(f) Other Agreements..............................68
(g) Shareholder Agreement.........................68
(h) Schedules.....................................68
(i) 1935 Act......................................68
7.2 Conditions of Obligations of WRI............................69
(a) Representations and Warranties................69
(b) Performance of Obligations of ONEOK...........69
(c) Tax Opinion...................................69
(d) Required Consents.............................69
(e) KCC Order.....................................69
(f) Pooling of Interests..........................70
(g) OCC Order.....................................70
7.3 Conditions of Obligations of ONEOK..........................70
(a) Representations and Warranties................70
(b) Performance of Obligations of NewCorp and
WRI........................................70
(c) Tax Opinion...................................70
(d) Required Consents.............................71
(e) Asset Transactions............................71
(f) OCC Order.....................................71
(g) KCC Order.....................................71
iv
ARTICLE VIII EMPLOYEE AND EMPLOYEE MATTERS;
ENVIRONMENTAL MATTERS...................................................71
ARTICLE IX TERMINATION AND AMENDMENT........................................71
9.1 Termination.................................................71
9.2 Effect of Termination.......................................73
9.3 Expenses....................................................73
9.4 Amendment...................................................74
9.5 Extension; Waiver...........................................74
ARTICLE X INDEMNIFICATION...................................................74
10.1 General Indemnification..................................74
10.2 Tax Indemnification and Audits...........................75
ARTICLE XI GENERAL PROVISIONS...............................................77
11.1 Confidentiality Agreements...............................77
11.2 Notices..................................................77
11.3 Interpretation...........................................77
11.4 Counterparts.............................................78
11.5 Entire Agreement; No Third Party Beneficiaries...........78
11.6 Governing Law............................................79
11.7 No Remedy in Certain Circumstances.......................79
11.8 Assignment...............................................79
11.9 Bulk Sales Law...........................................79
11.10 Non-Survival of Representations and Warranties...........79
v
GLOSSARY OF TERMS
SECTION
1935 Act................................................................4.1(c)
Accounts Receivable.....................................................1.1(b)
Accounting Firm.........................................................1.7(a)
Acquisition Proposal....................................................5.3(c)
Affiliate...............................................................5.1(i)
Agreement.............................................................Preamble
Ancillary Documents.....................................................4.1(c)
Assets..................................................................1.1(a)
Asset Transaction.....................................................Recitals
Assumed Debt............................................................1.1(c)
Assumed Liabilities.....................................................1.1(c)
Certificates............................................................3.2(b)
Closing....................................................................2.2
Closing Date...............................................................2.2
Closing Working Capital.................................................1.7(a)
Code .................................................................Recitals
Confidentiality Agreements.................................................6.4
Consolidated Financial Information of the Gas Business..................4.2(e)
Constituent Corporations................................................2.3(a)
Continuing Employees....................................................1.1(d)
Current Assets..........................................................1.7(c)
Current Liabilities.....................................................1.7(c)
Deficient Amount........................................................1.7(b)
DGCL ......................................................................2.1
Disclosure Schedules......................................................6.14
Easements...............................................................1.1(e)
Effective Date.............................................................2.1
Effective Time.............................................................2.1
Employee Agreement...........................................................8
Environmental Claims....................................................4.1(o)
Environmental Indemnity Agreement............................................8
Environmental Laws......................................................4.1(o)
Environmental Permits...................................................4.1(o)
ERISA ..................................................................1.1(f)
Excess Amount...........................................................1.7(b)
Exchange Act............................................................4.1(c)
Exchange Agent..........................................................3.2(a)
Exchange Fund...........................................................3.2(a)
Excluded Assets.........................................................1.1(g)
Expense Reimbursement Letter............................................9.2(b)
vi
Financial Information Statements........................................4.2(e)
Form S-4................................................................4.1(e)
GAAP ...................................................................4.1(d)
Gas ...................................................................1.1(h)
Gas Business..........................................................Recitals
....................................................Gas Contracts 4.1(q)(4)(i)
Gas Business Intangible Property........................................4.2(o)
Gas Pipelines...........................................................1.1(i)
Governmental Entity.....................................................4.1(c)
Hazardous Materials.....................................................4.1(o)
HSR Act.................................................................4.1(c)
Income Tax Contest.....................................................10.2(b)
Income Taxes............................................................4.1(k)
indemnified party......................................................10.1(c)
Initial Termination Date................................................9.1(c)
Injunction..............................................................7.1(e)
Inventory...............................................................1.1(j)
IRS ..................................................................4.1(aa)
Lien ...................................................................4.2(u)
Liens......................................................................1.2
Losses ................................................................10.1(a)
Marketing Agreement.....................................................7.1(f)
Material Adverse Change.................................................1.1(k)
Material Adverse Effect.................................................1.1(k)
Material Contract.......................................................4.1(q)
MCMC .................................................................Recitals
Merger................................................................Recitals
Merger Effective Time......................................................2.1
Net Amount..............................................................1.7(c)
NewCorp...............................................................Recitals
NewCorp Bylaws..........................................................2.3(a)
NewCorp Charter.........................................................2.3(a)
NewCorp Common Stock....................................................3.1(c)
NewCorp Preferred Stock....................................................6.1
NewCorp Rights Agreement................................................3.1(c)
NewCorp Stock...........................................................3.1(c)
NewCorp Stock Purchase Rights...........................................3.1(c)
Notice of Disagreement..................................................1.7(a)
OCC ...................................................................4.1(c)
OGCA ......................................................................2.1
ONEOK.................................................................Preamble
ONEOK Affiliate.........................................................1.1(l)
ONEOK Balance Sheet.....................................................4.1(g)
ONEOK Benefit Plan......................................................1.1(m)
ONEOK Capital Expenditure Amount........................................1.7(a)
ONEOK Common Stock......................................................3.1(c)
ONEOK Disclosure Schedule..................................................4.1
ONEOK Intangible Property...............................................4.1(n)
ONEOK Inc...............................................................2.3(a)
vii
ONEOK Litigation........................................................4.1(j)
ONEOK Options...........................................................4.1(b)
ONEOK Order.............................................................4.1(j)
ONEOK Pension Benefit Plan..............................................1.1(n)
ONEOK Permits...........................................................4.1(i)
ONEOK Preferred Stock...................................................4.1(b)
ONEOK Representatives...................................................5.3(a)
ONEOK Required Consents.................................................4.1(c)
ONEOK Rights Agreement..................................................4.1(b)
ONEOK SEC Documents.....................................................4.1(d)
ONEOK Stock Plans.......................................................4.1(b)
ONEOK Stockholder Approval..............................................4.1(c)
ONEOK Stockholders' Meeting................................................6.5
PaineWebber Opinion.....................................................4.1(t)
PBGC ...................................................................1.1(o)
Permitted Liens........................................................4.1(aa)
Plants..................................................................1.1(p)
PP&E Schedules..........................................................4.2(e)
Pre-Closing Straddle Period Income Taxes...............................6.15(c)
Proxy Statement.........................................................4.1(c)
Reimbursed Expenses.....................................................9.2(b)
Release.................................................................4.1(o)
Reportable Event........................................................1.1(q)
Retained Gas Manufacturing Plants.......................................1.1(r)
Retained Liabilities....................................................1.1(s)
Retired Employees.......................................................1.1(t)
Returns.................................................................4.1(k)
Salomon.................................................................4.2(t)
SEC ...................................................................1.1(u)
Securities Act..........................................................4.1(c)
Shared Services Agreement...............................................7.1(f)
Shareholder Agreement...................................................2.3(a)
Significant Subsidiary..................................................1.1(u)
Statement...............................................................1.7(a)
Stock Consideration.....................................................3.2(a)
Straddle Period........................................................6.15(c)
Subsidiary..............................................................1.1(v)
Surviving Corporation.................................................Recitals
Takeover Statute........................................................4.1(y)
Taxes...................................................................4.1(k)
Third Party Claim......................................................10.1(c)
Transactions..........................................................Recitals
Transfer Documents.........................................................1.5
Transferred Stock.....................................................Recitals
Transferred Subsidiaries..............................................Recitals
Westar................................................................Recitals
Working Capital.........................................................1.7(c)
WRI .................................................................Preamble
WRI Affiliate...........................................................1.1(w)
viii
WRI Benefit Plan........................................................1.1(x)
WRI Capital Expenditure Amount..........................................1.7(a)
WRI Disclosure Schedule....................................................4.2
WRI Litigation..........................................................4.2(k)
WRI Orders..............................................................4.2(k)
WRI Pension Benefit Plan................................................1.1(y)
WRI Permits.............................................................4.2(j)
WRI Required Consents...................................................4.2(d)
WRI SEC Documents.......................................................4.2(e)
WRI's Refunds..........................................................10.2(c)
ix
AGREEMENT
THIS AGREEMENT, dated as of December 12, 1996 (the "Agreement"), by
and between ONEOK Inc., a Delaware corporation ("ONEOK") and Western Resources,
Inc., a Kansas corporation ("WRI").
WHEREAS, WRI is engaged in the business of local natural gas
distribution in the States of Kansas and Oklahoma (such business, other than the
Excluded Assets and the Retained Liabilities (as such terms are hereinafter
defined) associated therewith, and the business and operations of the
Transferred Subsidiaries (as such term is hereinafter defined), shall be
referred to herein as the "Gas Business");
WHEREAS, WRI owns, either directly or indirectly, 100% of the
outstanding capital stock of Westar Gas Marketing, Inc. ("Westar") and Mid
Continent Marketing Center, Inc. ("MCMC"; and, together with Westar, the
"Transferred Subsidiaries") (such stock shall be referred to herein as the
"Transferred Stock");
WHEREAS, ONEOK and WRI have determined to engage in a strategic
business combination in which the Gas Business will be combined with the
business and assets of ONEOK;
WHEREAS, in furtherance thereof, (i) immediately prior to the Merger
Effective Time (as such term is hereinafter defined), WRI will transfer or cause
to be transferred to WAI, Inc., a corporation to be organized by WRI under the
laws of the state of Oklahoma prior to the Closing (as such term is hereinafter
defined) ("NewCorp") all of the Assets (as such term is hereinafter defined) and
WRI will cause NewCorp to assume all of the Assumed Liabilities (as such term is
hereinafter defined (such transfer and assumption, the "Asset Transaction")),
and (ii) at the Merger Effective Time, ONEOK will be merged with and into
NewCorp (the "Merger," and, together with the Asset Transaction, the
"Transactions"), with NewCorp as the surviving corporation (NewCorp, in its
capacity as such, the "Surviving Corporation");
WHEREAS, the respective Boards of Directors of ONEOK and WRI have
approved this Agreement and the Transactions and have determined that it is in
the best interests of their respective shareholders that the Transactions be
effected under the terms and conditions of this Agreement;
WHEREAS, for federal income tax purposes, it is intended that (i) the
Asset Transaction will be a transfer described in Section 351 of the Internal
Revenue Code of 1986, as amended (the "Code"), and (ii) the Merger will qualify
as a reorganization within the meaning of Section 368(a) of the Code; and
WHEREAS, ONEOK and WRI desire to make certain representations,
warranties, covenants and agreements in connection with the Transactions and the
other transactions contemplated hereby and by the Ancillary Documents (as
hereinafter defined) and also to prescribe various conditions to the
Transactions and the other transactions contemplated hereby and thereby.
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements herein contained, the
parties agree as follows:
ARTICLE I
THE ASSET TRANSACTION
1.1 Certain Definitions. As used in this Agreement, the following
terms shall have the following meanings:
(a) "Assets" shall mean all of the assets, property and interests
owned by WRI that are primarily used in, or primarily related to or primarily
generated by, the field operations of the Gas Business, of every type and
description, tangible and intangible, wherever located and whether or not
reflected on the books and records of WRI and its Subsidiaries (as such term is
hereinafter defined) as of the Closing Date (as such term is hereinafter
defined), including, but not limited to, the following types, categories or
items of assets, properties and interests, in each case, to the extent primarily
used in, or primarily related to, or primarily generated by the field operations
of the Gas Business:
(i) all Gas Pipelines (as such term is hereinafter defined) and
Plants (as such term is hereinafter defined) and construction work in
progress on the Gas Pipelines and Plants;
(ii) all Gas and other substances and materials located in the
Gas Pipelines or at the Plants;
(iii) all gauges, meters and other measuring equipment, telemetry
equipment, regulators, motors, compressors, storage tanks, fittings,
valves, equipment, machinery, tooling, furniture, fixtures, vehicles,
supplies, spare parts, repair parts, materials, fuel, computer
hardware and other tangible personal property;
(iv) all rights under agreements, sales and purchase orders,
contracts, product warranties, guarantees, service agreements and
other commitments;
(v) all leasehold interests of equipment, machinery, furniture,
and tangible personal property;
(vi) all government permits, authorizations, franchises,
certificates and licenses to the extent transferable, in whole or in
part;
(vii) all leases of real property;
(viii) all intangible personal property rights and regulatory
assets as described in Schedule 1.1(a)(viii);
(ix) all Accounts Receivable (as such term is hereinafter
defined);
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(x) all of the outstanding capital stock of Westar and MCMC;
(xi) copies of all customer and vendor lists relating to the
operation of the Gas Business or ownership of the Assets, copies of
all files and documents (including lists and credit information)
relating to customers and vendors related to the Gas Business, copies
of all financial books and records of the Gas Business, copies of all
continuing property records for the Plants and the Gas Pipelines,
copies of all other records, files, books, documents, and data bases,
or portions thereof, including, but not limited to, real property
instruments (originals where available), rate case files and records,
system maps and operational manuals, sales materials and
correspondence;
(xii) all Easements (as such term is hereinafter defined);
(xiii) all Inventory (as such term is hereinafter defined);
(xiv) all rights and claims relating to the Assets or the Gas
Business under insurance policies (but not the policies themselves),
all rights against third parties arising out of the Assets or the Gas
Business, and the right to maintain or commence suits against such
parties and the right to carry on the Gas Business as successor to WRI
and its Subsidiaries, as applicable, in any and all respects; and
(xv) all other properties and assets of every kind and nature,
real or personal, tangible or intangible, to the extent used primarily
in connection with, or primarily related to or primarily generated by
the field operations of the Gas Business; provided, however, that
Assets shall not include Excluded Assets.
(b) "Accounts Receivable" shall mean the accounts and other
receivables, including unbilled revenues, of WRI and the Transferred
Subsidiaries to the extent arising out of the Gas Business, or ONEOK, as
applicable.
(c) "Assumed Liabilities" shall mean any and all debts, claims, losses,
liabilities, leases and obligations whatsoever, including, without limitation,
debts, liabilities, obligations, Environmental Claims (as such term is
hereinafter defined) and claims with respect to any contracts included in the
Assets, that arise primarily out of, or relate primarily to or are primarily
generated by, the Assets or field operations of the Gas Business, whether
arising before or after the Asset Transaction and whether known or unknown,
fixed or contingent, other than Retained Liabilities. Assumed Liabilities shall
also include $35 million aggregate principal amount of debt of WRI, with terms
which permit prepayment with no more than 30 days' prior notice without penalty
(other than breakage fees with respect to LIBOR loans) and with a maturity of no
more than 3 years (the "Assumed Debt"), subject to adjustment pursuant to
Section 1.7.
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(d) "Continuing Employees" shall mean all employees who are hired by
NewCorp pursuant to the Employee Agreement (as such term is hereinafter
defined).
(e) "Easements" shall mean all easements, rights-of-way, permits,
licenses, franchises, leases, surface leases, prescriptive rights and ways of
necessity, whether or not of record.
(f) "ERISA" means the Employee Retirement Income Security Act of 1974,
as amended;
(g) "Excluded Assets" shall mean those assets of WRI and/or any of its
Subsidiaries used in the Gas Business or owned by the Transferred Subsidiaries
which are not being transferred to NewCorp as set forth on Schedule 1.1(g),
including, without limitation, the Retained Gas Manufacturing Plants, and any
intellectual property rights relating to the names "Westar", "Western
Resources", "KPL" or "KGE".
(h) "Gas" shall mean gas, gas liquids and other substances and
materials associated therewith.
(i) "Gas Pipelines" shall mean the gas gathering, distribution and
transmission system and related properties of the Gas Business, including but
not limited to the assets and properties described in Schedule 1.1(i).
(j) "Inventory" shall mean the following:
(i) Gas. The (1) Gas purchased for the Gas Business but not yet
delivered to customers of the Gas Business and unrecovered Gas costs
allocable to the Gas Business, less Gas delivered to customers but not
yet purchased by customers, in each case, limited to those amounts of
FERC Account 191; and (2) Gas in storage purchased for the Gas
Business.
(ii) Other Assets. The inventory of WRI and the Transferred
Subsidiaries of materials and supplies and merchandise that are
primarily used in, or primarily relate to or are primarily generated
by, the field operations of the Gas Business.
(k) a "Material Adverse Effect" or "Material Adverse Change" shall
mean, in respect of ONEOK, the Gas Business or NewCorp, as applicable, any
effect or change that is or, is reasonably likely to be, materially adverse to
the business, operations, assets, condition (financial or otherwise), results of
operations or prospects of ONEOK and its Subsidiaries, NewCorp, or the Gas
Business, as applicable, in each case taken as a whole.
(l) "ONEOK Affiliate" means any Subsidiary of ONEOK, and any other
trade or business, whether or not incorporated, that is under control by or
treated as a single employer with ONEOK under Sections 414(b), (c), (m) or (o)
of the Code.
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(m) "ONEOK Benefit Plan" means each benefit plan, program, policy, or
arrangement described in Section 4.1(l)(1) (whether or not terminated).
(n) "ONEOK Pension Benefit Plan" means each employee pension benefit
plan (within the meaning of Section 3(2) of ERISA) subject to Title IV of ERISA
or the minimum funding requirements of Section 302 of ERISA that is or was
maintained or contributed to by ONEOK or any ONEOK Affiliate at any time during
the six calendar years immediately preceding the date hereof.
(o) "PBGC" means the Pension Benefit Guaranty Corporation.
(p) "Plants" shall mean the real property interests of WRI, including
Easements, together with the buildings and improvements of WRI located on such
real property, in each case to the extent primarily used in or primarily related
to the Gas Business.
(q) "Reportable Event" means an event constituting a "reportable event"
within the meaning of Section 4043(c) of ERISA for which the 30-day notice
requirement or penalty has not been waived by the PBGC.
(r) "Retained Gas Manufacturing Plants" shall mean the manufactured gas
plants specified in Schedule 1.1(r).
(s) "Retained Liabilities" shall mean (i) all debts, liabilities,
leases and obligations whatsoever of WRI and its Subsidiaries that do not arise
primarily out of, do not relate primarily to, or are not primarily generated by,
the Assets and the field operations of the Gas Business, (ii) liabilities of WRI
and its Subsidiaries other than the Transferred Subsidiaries for Income Taxes
(as such term is hereinafter defined), (iii) all liabilities, including
environmental liabilities, relating to the Retained Gas Manufacturing Plants,
(iv) all liabilities relating to or resulting from, the divestiture by WRI of
the Missouri Gas assets to Southern Union Company, and (v) all liabilities of
WRI and its Subsidiaries, whether or not relating to the Gas Business, relating
to indebtedness for borrowed money or guarantees, other than the Assumed Debt
and other than capital leases primarily related to the Gas Business.
(t) "Retired Employees" shall mean all vested former employees of the
Gas Business and the Gas Business' predecessors, such other individuals who were
independent contractors and are recharacterized as former employees, and the
surviving beneficiaries of all such former employees and other individuals all
who are entitled to pension benefits from NewCorp pursuant to the Employee
Agreement.
(u) "Significant Subsidiary" means any Subsidiary of ONEOK or WRI, as
applicable, that would constitute a Significant Subsidiary of such party within
the meaning of Rule 1-02 of Regulation S-X of the Securities and Exchange
Commission (the "SEC").
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(v) "Subsidiary" shall mean, with respect to any party, any corporation
or other organization, whether incorporated or unincorporated, of which: (i)
such party or any other Subsidiary of such party is a general partner or
managing member (excluding partnerships or limited liability companies, the
general partnership or membership interests of which are held by such party or
any Subsidiary of such party that do not have a majority of the voting interest
in such partnership or limited liability company); or (ii) at least a majority
of the securities or other interests having by their terms ordinary voting power
to elect a majority of the Board of Directors or others performing similar
functions with respect to such corporation or other organization is, directly or
indirectly, owned or controlled by such party or by any one or more of its
Subsidiaries, or by such party and any one or more of its Subsidiaries.
(w) "WRI Affiliate" means any Subsidiary of WRI, or any other trade or
business, whether or not incorporated, that is under control by or treated as a
single employer with WRI under Section 414(b), (c), (m) or (o) of the Code.
(x) "WRI Benefit Plan" means each benefit plan, program, policy, or
arrange- ment described in Section 4.2(m)(1) (whether or not terminated).
(y) "WRI Pension Benefit Plan" means each employee pension benefit
(within the meaning of Section 3(2) of ERISA) subject to Title IV of ERISA or
the minimum funding requirements of Section 302 of ERISA that is or was
maintained or contributed to by WRI or any WRI Affiliate at any time during the
six calendar years immediately preceding the date hereof.
1.2 The Asset Transaction. Immediately prior to the Merger Effective
Time and as a condition precedent to the Merger, WRI shall transfer, or cause to
be transferred, to NewCorp, and WRI shall cause NewCorp to acquire, all of the
right, title and interest of WRI in, to and under the Assets, free and clear of
all Liens (as such term is hereinafter defined) other than Permitted Liens (as
such term is hereinafter defined).
1.3 Liabilities Assumed. Concurrently with the transfer of the Assets
to NewCorp pursuant to Section 1.2, WRI will cause NewCorp to assume and agree
to pay, perform and discharge when due the Assumed Liabilities.
1.4 Retained Liabilities. Except for the Assumed Liabilities, WRI
shall or shall cause its Subsidiaries (other than Westar and MCMC) to, retain
and have full responsibility for and obligation with respect to the Retained
Liabilities.
1.5 Instruments of Transfer. The conveyance, transfer, assignment and
delivery of the Assets to NewCorp and the assumption of Assumed Liabilities by
NewCorp shall be effected by one or more Assignments, assumption agreements,
bills of sale, and regulatory orders (collectively, the "Transfer Documents"),
as may be necessary or as ONEOK or the Surviving Corporation may reasonably
require. As to the real property interests included in the Assets, the
conveyance shall be by general warranty deed for those interests for which WRI
received a general warranty deed and the remainder shall be by special warranty
deed.
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1.6 Condition on Assignment or Assumption of Contracts and Rights.
Anything in this Agreement to the contrary notwithstanding, this Agreement shall
not constitute an agreement to assign or assume any claim, contract, lease,
commitment or any claim or right or any benefit arising thereunder or resulting
therefrom if an attempted assignment or assumption thereof, without the consent
of a third party thereto, would constitute a breach thereof. If such consent is
not obtained, or if an attempted assignment thereof would be ineffective or
would affect the rights of WRI or its Subsidiaries thereunder so that NewCorp or
the Surviving Corporation would not in fact receive all such rights, WRI will,
and will cause its Subsidiaries to, cooperate with the Surviving Corporation in
any arrangement reasonably designed to provide for the Surviving Corporation, at
the expense of the Surviving Corporation, the benefits under any such claims,
contracts, licenses, leases or commitments including, without limitation,
enforcement for the benefit of the Surviving Corporation of any and all rights
of WRI and its Subsidiaries against a third party thereto arising out of the
breach or cancellation by such third party or otherwise; and any transfer or
assignment to NewCorp or the Surviving Corporation by WRI or its Subsidiaries of
any property or property rights or any contract or agreement which shall require
the consent or approval of any third party, shall be made subject to such
consent or approval being obtained; provided, however, that any third party
consents to the assignment of such contracts shall provide that WRI shall be
released in full from its obligations under such contracts.
1.7 Certain Adjustments. (a) 45 days before the Closing Date, WRI
shall prepare and deliver to ONEOK a statement (the "Statement"), certified by
an officer of WRI, setting forth the anticipated Working Capital (as such term
is hereinafter defined) of the Gas Business as of the close of business on the
Closing Date (the "Closing Working Capital"), and the dollar amount anticipated
to be expended by WRI with respect to capital expenditures and construction work
in progress relating to the Gas Business for the period from December 1, 1996,
through the Closing Date (the "WRI Capital Expenditure Amount"). ONEOK shall
prepare and deliver to WRI for inclusion on the Statement, the dollar amount
anticipated to be expended by ONEOK with respect to capital expenditures and
construction work in progress for the period from December 1, 1996, through the
Closing Date (the "ONEOK Capital Expenditure Amount") and, based on the
foregoing, WRI shall include on the Statement, the Net Amount (as such term is
hereinafter defined).
During the 10-day period following ONEOK's receipt of the Statement,
WRI and ONEOK and their respective independent auditors shall be permitted to
review the working papers relating to the Statement. The Statement shall become
final and binding upon the parties on the tenth day following delivery thereof,
unless WRI or ONEOK gives written notice of its disagreement with the Statement
("Notice of Disagreement") to the other party prior to such date. Any Notice of
Disagreement shall specify in reasonable detail the nature of any disagreement
so asserted. If a Notice of Disagreement is received in a timely manner, then
the Statement (as revised in accordance with clause (A) or (B) below) shall
become final and binding upon ONEOK and WRI on the earlier of (A) the date ONEOK
and WRI resolve in writing any differences they have with respect to the matters
specified in each Notice of Disagreement or (B) the date any disputed matters
are finally resolved in writing by the Accounting Firm (as such term is
hereinafter defined).
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During the 5-day period following the delivery of a Notice of
Disagreement, ONEOK and WRI shall seek in good faith to resolve in writing any
differences which they may have with respect to the matters specified in each
Notice of Disagreement. During such period, WRI and ONEOK and their respective
auditors shall have access to the working papers of each other and its auditors
prepared in connection with the Notice of Disagreement. At the end of such 5-day
period, ONEOK and WRI shall submit to an independent accounting firm (the
"Accounting Firm") for review and resolution any and all matters which remain in
dispute and which were properly included in any Notice of Disagreement. The
Accounting Firm shall be a nationally recognized independent public accounting
firm as shall be reasonably agreed upon by ONEOK and WRI in writing. In the
event ONEOK and WRI are unable to agree upon the choice of Accounting Firm
within 2 days after the end of such 5-day period, either party may request the
American Arbitration Association to promptly choose the Accounting Firm, and the
American Arbitration Association shall promptly choose an Accounting Firm which
has not performed services for ONEOK or WRI in the last two years. Promptly, but
no later than 10 days after its acceptance of its appointment as Accounting Firm
hereunder, the Accounting Firm shall determine, based solely on presentations by
ONEOK and WRI, and not by independent review, only those issues in dispute and
shall render a report as to the dispute and the resulting computation of the
Statement, which shall be conclusive and binding upon the parties. The cost of
any dispute resolution (including the fees and expenses of the Accounting Firm
and reasonable attorney fees and expenses of the parties) pursuant to this
Section 1.7 shall be borne by ONEOK and WRI in inverse proportion to the extent
to which they may prevail on matters resolved by the Accounting Firm, which
proportionate allocations shall also be determined by the Accounting Firm at the
time the determination of the Accounting Firm is rendered on the merits of the
matters submitted.
(b) To the extent that the Net Amount (as such term is hereinafter
defined), as specified in a Statement which becomes final pursuant to Section
1.7(a) exceeds, $40,000,000 (such excess shall be referred to herein as the
"Excess Amount"), the Surviving Corporation shall correspondingly assume at the
Closing additional debt of WRI with terms comparable to the terms of the Assumed
Debt in an aggregate principal amount equal to the Excess Amount. To the extent
the Net Amount as specified in a Statement which becomes final pursuant to
Section 1.7(a) is less than $40,000,000 (such deficiency being referred to
herein as the "Deficient Amount"), the aggregate principal amount of Assumed
Debt to be assumed by the Surviving Corporation shall be correspondingly reduced
by an amount equal to the Deficient Amount.
(c) The term "Working Capital" shall mean Current Assets minus Current
Liabilities. The terms "Current Assets" and "Current Liabilities," for the
purpose of this Section 1.7, shall mean the current assets (exclusive of cash
and cash equivalents) and current liabilities of the Gas Business, calculated
consistently with WRI's past practice based upon the books and records of WRI
and the Consolidated Financial Information of the Gas Business. The term "Net
Amount" shall mean the Working Capital of the Gas Business as of the close of
business on the Closing Date minus the amount, if any, by which the ONEOK
Capital Expenditure Amount exceeds the WRI Capital Expenditure Amount and plus
the amount, if any, by which the WRI Capital Expenditure Amount exceeds the
ONEOK Capital Expenditure Amount, as applicable.
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1.8 Certain Taxes. ONEOK shall pay all transfer, stamp, sales or use
taxes and any filing, recording, regulatory or similar fees or assessments
payable or determined to be payable in connection with the execution, delivery
or performance of this Agreement or the transfer to NewCorp of the Assets
contemplated hereby pursuant to the Transfer Documents.
ARTICLE II
THE MERGER
2.1 The Merger; Effective Time of Merger. Upon, and pursuant to the
terms and subject to the conditions of this Agreement, at the Merger Effective
Time, ONEOK will be merged into NewCorp in accordance with the Delaware General
Corporation Law ("DGCL") and the Oklahoma General Corporation Act ("OGCA"), the
separate existence of ONEOK shall thereupon cease and NewCorp shall continue as
the surviving corporation in the Merger. Subject to the terms and conditions
hereof, the Merger shall be consummated as promptly as practicable after
satisfaction or, to the extent permitted hereunder, waiver of all of the
conditions to each party's obligation to consummate the Merger specified in
Article VII, by filing appropriate certificates of merger, in such form as is
required by, and executed in accordance with, the relevant provisions of the
laws of the States of Delaware and Oklahoma, as applicable. The Merger shall be
effective at such time as the foregoing certificates of merger are duly filed
with the Secretaries of State of the States of Delaware and Oklahoma, in
accordance with Delaware or Oklahoma law, as applicable, or at such later times
as specified in the foregoing certificates of merger (the "Merger Effective
Time" or "Effective Time"). The date on which the Merger Effective Time shall
occur is referred to herein as the "Merger Effective Date" or the "Effective
Date".
2.2 Closing. The closing of the Merger (the "Closing") shall take
place at the offices of WRI as promptly as practicable after satisfaction or, to
the extent permitted hereunder, waiver of all of the conditions to each party's
obligation to consummate the Merger contained in Article VII, or at such other
place or time as the parties hereto shall agree (the date of the Closing being
referred to herein as the "Closing Date").
2.3 Effect of the Merger. (a) At the Merger Effective Date: (i) ONEOK
shall be merged with and into NewCorp, the separate existence of ONEOK shall
cease and NewCorp shall continue as the surviving corporation (ONEOK and NewCorp
being sometimes referred to hereinafter as the "Constituent Corporations"); (ii)
the Certificate of Incorporation of NewCorp in effect immediately prior to the
Merger, which shall be in a form to be reasonably mutually agreed upon in good
faith by WRI and ONEOK prior to the Merger, which shall include the provisions
summarized in Exhibit A hereto and which shall not contain other provisions
inconsistent with the terms of the Shareholder Agreement (as such term is
hereinafter defined), shall be the Certificate of Incorporation of the Surviving
Corporation (the "NewCorp Charter"), provided, however, that the Certificate of
Incorporation of NewCorp shall be amended immediately prior to the Merger to
change the name of NewCorp to "ONEOK Inc."; and (iii) the Bylaws of NewCorp in
effect immediately prior to the Merger, which shall be in a form to be
reasonably mutually agreed upon in good faith by WRI and ONEOK prior to the
Merger and which shall include the provisions summarized in Exhibit A hereto and
which shall not contain other provisions inconsistent with the terms of the
Shareholder Agreement, shall be the Bylaws of the Surviving Corporation (the
"NewCorp Bylaws").
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(b) The directors and officers of the Surviving Corporation will be
those of ONEOK immediately prior to the Merger Effective Time, provided,
however, that the Surviving Corporation shall add additional directors to the
Board of Directors of the Surviving Corporation as contemplated by the
Shareholder Agreement and 5 persons who are currently officers of WRI with
respect to the Gas Business (inclusive of the officers of the Transferred
Subsidiaries referred to in the next sentence) will be appointed as officers,
with comparable responsibilities, of the Surviving Corporation. The current
officers of the Transferred Subsidiaries will either retain their positions
post-Closing as officers of the Transferred Subsidiaries or be granted
comparable positions with the Surviving Corporation.
(c) The Merger shall have the effect provided for in the DGCL and the
OGCA and the provisions of this Section 2.3.
ARTICLE III
CONVERSION OF SHARES AND
EXCHANGE OF CERTIFICATES
3.1 Effect of Merger on Capital Stock. At the Merger Effective Time,
by virtue of the Merger and without any action on the part of the owners of the
capital stock of ONEOK or NewCorp:
(a) NewCorp Capital Stock Unchanged. Each issued and outstanding share
of the capital stock of NewCorp shall not be converted or otherwise affected by
the Merger and shall remain outstanding after the Merger.
(b) Cancellation of Treasury Stock. All shares of the capital stock of
ONEOK, if any, that are owned by ONEOK as treasury stock and any share of
capital stock of ONEOK owned by any wholly-owned Subsidiary of ONEOK shall be
canceled and retired and shall cease to exist and no stock of NewCorp or other
consideration shall be delivered in exchange therefor.
(c) Exchange of ONEOK Common Stock. Each share of Common Stock,
without par value, of ONEOK ("ONEOK Common Stock") issued and outstanding
immediately prior to the Merger Effective Time (other than shares canceled in
accordance with Section 3.1(b) above) shall be converted into one share of
common stock, no par value, of the Surviving Corporation ("NewCorp Common
Stock"), together with the corresponding number of associated rights ("NewCorp
Stock Purchase Rights") to purchase one one-hundredth of a share of NewCorp
Series A Participation Preference Stock, without par value, of the Surviving
Corporation ("NewCorp Preference Stock") pursuant to a Shareholder Protection
Rights Agreement entered into prior to the Closing between NewCorp and Liberty
Bank and Trust Company of Oklahoma City, N.A., as Rights Agent (the "NewCorp
Rights Agreement"), in a form to be reasonably mutually agreed upon in good
faith by ONEOK and WRI prior to the Merger, which shall include the provisions
summarized in Exhibit A hereto and which shall not contain other provisions
inconsistent with the terms of the Shareholder Agreement. All references in this
Agreement to the NewCorp Common Stock shall be deemed to include the associated
NewCorp Stock Purchase Rights. All such shares of ONEOK Common Stock, when so
converted, shall no longer be outstanding and shall automatically be canceled
and retired and shall cease to exist, and each holder of a certificate
representing any such shares shall cease to have any rights with respect
thereto, except the right to receive shares of NewCorp Common Stock in
accordance herewith.
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3.2 Exchange of Certificates.
(a) Exchange of Certificates. As of the Merger Effective Time, WRI
shall cause NewCorp to deposit with such bank or trust company (the "Exchange
Agent") to be designated by ONEOK with the consent of WRI (such consent not to
be unreasonably withheld or delayed), for the benefit of the holders of shares
of ONEOK Common Stock, for exchange in accordance with this Article III, through
the Exchange Agent, certificates representing shares of NewCorp Common Stock
(such shares representing the "Stock Consideration", and together with any
dividends or distributions with respect thereto, being hereinafter referred to
as the "Exchange Fund") issuable pursuant to this Article III in exchange for
outstanding shares of ONEOK Common Stock.
(b) Exchange Procedures. As soon as reasonably practicable after the
Merger Effective Time, the Exchange Agent shall mail to each holder of record of
a certificate or certificates which, immediately prior to the Merger Effective
Time, represented outstanding shares of ONEOK Common Stock (the "Certificates"),
which holder's shares of ONEOK Common Stock were converted into the right to
receive the same number of shares of NewCorp Common Stock (Stock Consideration):
(i) a letter of transmittal (which shall specify that delivery shall be effected
and risk of loss and title to the Certificates shall pass only upon delivery of
the Certificates to the Exchange Agent, and shall be in such form and have such
other provisions as ONEOK or the Surviving Corporation may reasonably specify);
and (ii) instructions for use in effecting the surrender of the Certificates in
exchange for the Stock Consideration. Upon surrender of a Certificate for
cancellation to the Exchange Agent, together with such letter of transmittal,
duly executed, and any other required documents, the holder of such Certificate
shall be entitled to receive in exchange therefor a certificate representing
that number of whole shares of NewCorp Common Stock which such holder has the
right to receive pursuant to the provisions of this Article III and the
Certificate so surrendered shall forthwith be canceled. In the event of a
transfer of ownership of ONEOK Common Stock which is not registered in the
transfer records of ONEOK, a certificate representing the appropriate number of
shares of NewCorp Common Stock may be issued to a transferee if the Certificate
representing such shares is presented to the Exchange Agent accompanied by all
documents required to evidence and effect such transfer and by evidence that any
applicable stock transfer taxes have been paid. Until surrendered as
contemplated by this Section 3.2, each Certificate shall be deemed at any time
after the Merger Effective Time to represent only the right to receive upon such
surrender the Stock Consideration. The Exchange Agent shall not be entitled to
vote or exercise any rights of ownership with respect to the NewCorp capital
stock held by it from time to time hereunder, except that it shall receive and
hold all dividends or other distributions paid or distributed with respect
thereto for the account of persons entitled thereto.
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(c) Distributions with Respect to Unexchanged Shares. No dividends or
other distributions with respect to NewCorp Common Stock declared or made after
the Merger Effective Time with a record date after the Merger Effective Time
shall be paid to the holder of any unsurrendered Certificate until the holder of
such Certificate shall surrender such Certificate. Subject to the effect of
applicable laws, following surrender of any such Certificate, there shall be
paid to the holder thereof, without interest, if such holder is entitled to
receive the Stock Consideration: (i) at the time of such surrender, the amount
of dividends or other distributions with a record date after the Merger
Effective Time theretofore paid with respect to such whole shares of such Stock
Consideration; and (ii) at the appropriate payment date, the amount of dividends
or other distributions with a record date after the Merger Effective Time but
prior to surrender and a payment date subsequent to surrender payable with
respect to such whole shares of NewCorp Common Stock.
(d) No Further Ownership Rights in ONEOK Common Stock. All shares of
NewCorp Common Stock issued upon the surrender for exchange of shares of ONEOK
Common Stock in accordance with the terms hereof shall be deemed to have been
issued in full satisfaction of all rights pertaining to such shares of ONEOK
Common Stock, subject, however, to the Surviving Corporation's right to pay any
dividends or make any other distributions with a record date on or prior to the
Merger Effective Time that may have been declared or made by ONEOK on such
shares of ONEOK Common Stock in accordance with the terms of this Agreement and
which remain unpaid at the Merger Effective Time, and after the Merger Effective
Time there shall be no further registration of transfers on the stock transfer
books of the Surviving Corporation of the shares of ONEOK Common Stock that were
outstanding immediately prior to the Merger Effective Time. If, after the Merger
Effective Time, Certificates are presented to the Surviving Corporation for any
reason, they shall be canceled and exchanged as provided in this Article III.
(e) Termination of Exchange Agent. Any portion of the Exchange Fund
that remains undistributed to the former stockholders of ONEOK for one year
after the Merger Effective Time shall be delivered to the Surviving Corporation
which shall after the Merger Effective Time act as the Exchange Agent, and any
former stockholders of ONEOK who have not complied with this Article III prior
to the Merger Effective Time shall thereafter look only as a general creditor to
the Surviving Corporation for payment of their claim for the Stock Consideration
and any dividends or distributions with respect to NewCorp Common Stock if such
holder is entitled to receive the Stock Consideration.
(f) No Liability. None of ONEOK, WRI or the Surviving Corporation
shall be liable to any holder of shares of ONEOK Common Stock for such shares
(or dividends or distributions with respect thereto), delivered to a public
official pursuant to any applicable abandonment, escheat or similar law. Any
amounts remaining unclaimed by holders of any such shares six years after the
Merger Effective Time (or such earlier date immediately prior to the time at
which such amounts would otherwise escheat to or become property of any
governmental entity) shall, to the extent permitted by applicable law, become
the property of the Surviving Corporation free and clear of any claims or
interest of any such holders or their successors, assigns or personal
representatives previously entitled thereto.
12
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.1 Representations and Warranties of ONEOK. ONEOK represents and
warrants to WRI as follows, except as set forth in the disclosure schedule to be
signed by an authorized officer of ONEOK and delivered to WRI by ONEOK (the
"ONEOK Disclosure Schedule") pursuant to Section 6.22, each of which exceptions
shall specifically identify the relevant Section hereof to which it relates:
(a) Organization, Standing and Power. Each of ONEOK and its
Significant Subsidiaries is a corporation or partnership duly organized, validly
existing and in good standing under the laws of its state of incorporation or
organization, has all requisite power and authority to own, lease and operate
its properties and to carry on its business as now being conducted, and is duly
qualified and in good standing to do business in each jurisdiction in which the
business it is conducting, or the operation, ownership or leasing of its
properties, makes such qualification necessary, other than in such jurisdictions
where the failure so to qualify would not have a Material Adverse Effect on
ONEOK. ONEOK has heretofore delivered to WRI complete and correct copies of
ONEOK's and its Significant Subsidiaries' certificates of incorporation and
bylaws, each as amended and in full force and effect on the date hereof. All
Significant Subsidiaries of ONEOK and their respective jurisdictions of
incorporation or organization are identified on Section 4.1(a) of the ONEOK
Disclosure Schedule.
(b) Capital Structure. As of the date hereof, the authorized capital
stock of ONEOK consists of 60,000,000 shares of ONEOK Common Stock, without par
value, 340,000 shares of ONEOK Preferred Stock, par value of $50 per share
("ONEOK Preferred Stock"), and 3,000,000 shares of ONEOK Preference Stock,
without par value ("ONEOK Preference Stock"). As of the date hereof, (i)
27,304,870 shares of ONEOK Common Stock and 180,000 shares of ONEOK Preferred
Stock were issued and outstanding, and 4,350,000 shares of ONEOK Common Stock
were reserved for issuance as follows:
ONEOK Employee Stock Purchase Plan................................350,000
ONEOK Key Employee Stock Plan...................................1,000,000
Thrift Plan for Employees of
ONEOK Inc. and Subsidiaries...................................3,000,000
(collectively, the "ONEOK Stock Plans"; the options outstanding pursuant to the
ONEOK Stock Plans being referred to herein as the "ONEOK Options"); (ii) no
shares of ONEOK Preference Stock are outstanding; (iii) 148,482 shares of ONEOK
Series A Participating Preference Stock have been reserved for issuance pursuant
to the Shareholder Protection Rights Agreement, dated as of March 21, 1988
between ONEOK and The Chase Manhattan Bank, N.A. (the "ONEOK Rights Agreement");
(iv) no shares of ONEOK Common Stock were held by ONEOK in its treasury; and (v)
no bonds, debentures, notes or other indebtedness having the right to vote (or
13
convertible into securities having the right to vote) on any matters on which
ONEOK stockholders may vote were issued or outstanding. All such issued and
outstanding shares of ONEOK Common Stock and ONEOK Preferred Stock are validly
issued, fully paid and nonassessable and are not subject to preemptive rights.
Other than 148,482 shares of Preference Stock, ONEOK has no shares of Common
Stock, Preferred Stock or Preference Stock reserved for issuance pursuant to the
ONEOK Rights Agreement. Section 4.1(b) of the ONEOK Disclosure Schedule contains
a correct and complete list as of December 12, 1996 of each outstanding option
to purchase shares of capital stock of ONEOK outstanding pursuant to the ONEOK
Stock Plans, including the holder, date of grant, exercise price and number of
shares subject thereto. All outstanding shares of capital stock of the
Subsidiaries of ONEOK are owned by ONEOK, or a direct or indirect wholly owned
Subsidiary of ONEOK, free and clear of all Liens, and are validly issued, fully
paid and nonassessable and are not subject to preemptive rights. Except (i) as
set forth above and as contemplated by the ONEOK Rights Agreement, (ii) for
changes since December 12, 1996 resulting from the exercise of employee stock
options granted pursuant to, or from issuance or purchases under, the ONEOK
Stock Plans and ONEOK's Direct Stock Purchase and Dividend Reinvestment Plan,
(iii) as contemplated by this Agreement, and (iv) for transactions effected by
ONEOK after the date of this Agreement without breaching the terms hereof, there
are, as of the date of this Agreement, outstanding: (A) no shares of capital
stock; (B) no securities of ONEOK or any Subsidiary of ONEOK convertible into or
exchangeable for shares of capital stock, or other voting securities of ONEOK or
any Subsidiary of ONEOK; and (C) no options, warrants, calls, subscriptions,
convertible securities, or other rights (including preemptive rights),
commitments or agreements to which ONEOK or any Subsidiary of ONEOK is a party
or by which it is bound in any case obligating ONEOK or any Subsidiary of ONEOK
to issue, deliver, sell, purchase, redeem or acquire, or cause to be issued,
delivered, sold, purchased, redeemed or acquired, additional shares of its
capital stock or any securities of ONEOK or any Subsidiary of ONEOK exercisable
for, exchangeable for or convertible into such capital stock, or obligating
ONEOK or any Subsidiary of ONEOK to grant, extend or enter into any such option,
warrant, call, subscription, convertible securities, or other right, commitment
or agreement. Except with respect to the Shareholder Agreement, there are not as
of the date hereof and there will not be at the Merger Effective Time any
stockholder agreements, voting trusts or other agreements or understandings to
which ONEOK is a party or by which it is bound relating to the voting of any
shares of the capital stock of ONEOK that will limit in any way the solicitation
of proxies by or on behalf of ONEOK from, or the casting of votes by, the
stockholders of ONEOK with respect to the Merger. There are no restrictions on
ONEOK to vote the stock of any of its Subsidiaries.
(c) Authority; No Violations; Consents and Approvals.
(1) The Board of Directors of ONEOK has approved the Merger and
this Agreement, and declared the Merger and this Agreement to be in
the best interest of the stockholders of ONEOK. ONEOK has and will
have all requisite corporate power and authority to enter into this
Agreement and the other agreements contemplated hereby, including the
14
Marketing Agreement (as such term is hereinafter defined), the Shared
Services Agreement (as such term is hereinafter defined), the Transfer
Documents, the Shareholder Agreement, the Employee Agreement (as such
term is hereinafter defined) and the Environmental Indemnity Agreement
(as such term is hereinafter defined) (collectively, the "Ancillary
Documents") to the extent it is a party thereto, to perform its
obligations hereunder and thereunder and to consummate the
Transactions and the other transactions contemplated hereby and
thereby, subject to the approval of this Agreement and the Merger by
the holders of a majority of the voting power of the ONEOK Common
Stock, assuming the redemption of the ONEOK Preferred Stock as
contemplated by Section 5.2(d), in accordance with the DGCL and
ONEOK's certificate of incorporation and bylaws, as amended (the
"ONEOK Stockholder Approval"). The execution and delivery of this
Agreement and each Ancillary Document to which ONEOK is a party, the
performance of obligations hereunder and thereunder by ONEOK and the
consummation of the Transactions and the other transactions
contemplated hereby and thereby have been duly authorized by all
necessary corporate action on the part of ONEOK, subject to the ONEOK
Stockholder Approval. This Agreement has been duly executed and
delivered by ONEOK and, subject to the ONEOK Stockholder Approval,
constitutes and the Ancillary Documents to which ONEOK is a party,
when executed and delivered by ONEOK, will constitute, valid and
binding obligations of ONEOK, enforceable against ONEOK in accordance
with their respective terms, subject, in each case, as to
enforceability, to bankruptcy, insolvency, reorganization and other
laws of general applicability relating to or affecting creditors'
rights and to general principles of equity (assuming such documents
constitute a valid and binding obligation on the other parties
thereto).
(2) The execution and delivery of this Agreement and the
Ancillary Documents to which ONEOK is a party do not, and the
consummation of the Transactions and the other contemplated hereby and
thereby and compliance with the provisions hereof and thereof will
not, conflict with, or result in any violation of, or default (with or
without notice or lapse of time, or both) under, or change the rights
or obligations of any party under, or give rise to a right of
termination, cancellation or acceleration of any obligation or to the
loss of a material benefit under, or result in the creation of any
Lien, upon any of the properties or assets of ONEOK or any of its
Subsidiaries under, any provision of (A) the certificate of
incorporation or bylaws of ONEOK, as amended, or any provision of the
charter or other organizational documents of any of its Subsidiaries,
(B) subject to obtaining the third-party consents set forth in Section
4.1(c)(2) of the ONEOK Disclosure Schedule (the "ONEOK Required
Consents"), any loan or credit agreement, note, bond, mortgage,
indenture, lease or other material agreement, instrument, permit,
franchise or license applicable to ONEOK or any of its Subsidiaries or
(C) assuming the consents, approvals, authorizations or permits and
filings or notifications referred to in Section 4.1(c)(3) of the ONEOK
Disclosure Schedule are duly and timely obtained or made and the ONEOK
Stockholder Approval has been obtained, any judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to ONEOK or any
of its Subsidiaries or any of their respective properties or assets,
other than, in the case of clause (B) or (C), any such conflicts,
violations, defaults, rights, or Liens, that, individually or in the
aggregate, would not have a Material Adverse Effect on ONEOK,
materially impair the ability of ONEOK to perform its obligations
hereunder or under any Ancillary Document to which ONEOK is a party or
prevent the consummation of any of the Transactions and the other
transactions contemplated hereby or thereby.
15
(3) No notice, report, consent, approval, order or authorization
of, or registration, declaration or filing with, or permit from any
court, governmental, regulatory or administrative agency or commission
or other governmental authority or instrumentality, domestic or
foreign (a "Governmental Entity"), is required by or with respect to
ONEOK or any of its Subsidiaries in connection with the execution and
delivery by ONEOK of this Agreement or any Ancillary Documents to
which ONEOK is a party or the consummation by ONEOK of the
Transactions and the other transactions contemplated hereby or
thereby, as to which the failure to obtain or make would have a
Material Adverse Effect on ONEOK or prevent or materially burden or
materially impair the ability of ONEOK to consummate the Transactions
and the other transactions contemplated by this Agreement or by the
Ancillary Documents, except for: (A) the filing of a premerger
notification report by ONEOK under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), and the
expiration or termination of the applicable waiting period with
respect thereto; (B) the filing with the Securities and Exchange
Commission ("SEC") of (x) a proxy statement in preliminary and
definitive form relating to the meeting of the holders of ONEOK
capital stock to be held in connection with the Merger (the "Proxy
Statement") and (y) such reports under Section 13(a) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and such other
compliance with the Exchange Act and the Securities Act of 1933, as
amended (the "Securities Act") and the rules and regulations
thereunder, as may be required in connection with this Agreement and
the Transactions and the other transactions contemplated hereby; (C) a
filing for a determination by the SEC or its Staff in the form of an
order or a no-action letter that NewCorp will not be a subsidiary
company under Section 2(a)(8) of the Public Utility Holding Company
Act of 1935 (the "1935 Act"), for the purposes of the 1935 Act as a
result of the Merger and the obtaining of such an order or no-action
letter from the SEC or its Staff to such effect; (D) the approval of
the Merger by the SEC under Section 9(a)(2)of the 1935 Act; (E) the
filing of the Certificate of Merger with the Secretary of State of the
State of Delaware; (F) filings with, and the approval of, or notices
to, the Oklahoma Corporation Commission (the "OCC") and the Kansas
Corporation Commission (the "KCC"); (G) such filings and approvals as
are set forth on Section 4.1(c)(3) of the ONEOK Disclosure Schedule in
connection with the transfer of ONEOK's municipal franchises; (H) such
filings and approvals as may be required by any applicable state
securities, "blue sky" or takeover laws; and (I) such filings and
approvals as may be required by any other premerger notification,
securities, corporate or other law, rule or regulation.
(d) SEC Documents. ONEOK has made available to WRI a true and complete
copy of each report, schedule, registration statement and definitive proxy
16
statement or information statement filed by ONEOK with the SEC and/or prepared
by ONEOK since August 31, 1993 and prior to the date of this Agreement (the
"ONEOK SEC Documents") which are all the documents (other than preliminary
material) that ONEOK was required to file with the SEC since such date. As of
their respective dates, the ONEOK SEC Documents complied in all material
respects with the requirements of the Securities Act, or the Exchange Act, as
the case may be, and the rules and regulations of the SEC thereunder applicable
to such ONEOK SEC Documents, and none of the ONEOK SEC Documents contained any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, for the applicable periods, not
misleading. The financial statements (including the related notes and schedules)
of ONEOK included in the ONEOK SEC Documents complied as to form in all material
respects with the published rules and regulations of the SEC with respect
thereto, were prepared in accordance with generally accepted accounting
principles ("GAAP") applied on a consistent basis during the periods involved
(except as may be indicated in the notes thereto or, in the case of the
unaudited statements, as permitted by Rule 10-01 of Regulation S-X of the SEC)
and fairly present in accordance with applicable requirements of GAAP (subject,
in the case of the unaudited statements, to normal, recurring adjustments, none
of which will be material) the consolidated financial position of ONEOK and its
consolidated Subsidiaries as of their respective dates and the consolidated
results of operations, the consolidated cash flows, the retained earnings and
the changes in financial position of ONEOK and its consolidated Subsidiaries for
the periods presented therein. Except as disclosed in the ONEOK SEC Documents,
there are no agreements, arrangements or understandings between ONEOK and any
party who is at the date of this Agreement or was at any time prior to the date
hereof but after August 31, 1993 an Affiliate of ONEOK that are required to be
disclosed in the ONEOK SEC Documents.
(e) Information Supplied. None of the information supplied or to be
supplied by ONEOK for inclusion or incorporation by reference in the
Registration Statement on Form S-4 to be filed with the SEC by NewCorp in
connection with the issuance of shares of NewCorp Common Stock in the Merger
(the "Form S-4") will, at the time the Form S-4 becomes effective under the
Securities Act or at the Merger Effective Time, contain any untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, and none of the information supplied or to
be supplied by ONEOK and included or incorporated by reference in the Proxy
Statement will, at the date mailed to stockholders of ONEOK or at the time of
the meeting of such stockholders to be held in connection with the Merger or at
the Merger Effective Time, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not misleading. If at any time prior to the Merger Effective Time
any event with respect to ONEOK or any of its Subsidiaries, or with respect to
other information supplied by ONEOK for inclusion in the Proxy Statement or the
Form S-4, shall occur which is required to be described in an amendment of, or a
supplement to, the Proxy Statement or the Form S-4, such event shall be so
described, and such amendment or supplement shall be promptly filed with the SEC
and, as required by law, disseminated to the stockholders of ONEOK. The Proxy
Statement, insofar as it relates to ONEOK or its Subsidiaries or other
information supplied by ONEOK for inclusion therein, will comply as to form in
all material respects with the provisions of the Exchange Act and the rules and
regulations thereunder.
17
(f) Absence of Certain Changes or Events. Except (I) as disclosed in,
or reflected in the financial statements included in, the ONEOK SEC Documents
and/or Section 4.1(f) of the ONEOK Disclosure Schedule, (II) as contemplated by
this Agreement, or (III) for transactions effected or actions taken by ONEOK or
its Subsidiaries after the date of this Agreement without breaching the terms
hereof, in the case of clauses (iv) through (xi) below, since August 31, 1996,
ONEOK has conducted its business in the ordinary course of such business
consistent with past practice, and since August 31, 1996, there has not been:
(i) any event or events which, individually or in the aggregate, have had or
would have a Material Adverse Effect on ONEOK, (ii) any declaration, setting
aside or payment of any dividend or other distribution (whether in cash, stock
or property) with respect to any of ONEOK's capital stock, except for regular
quarterly cash dividends on ONEOK Common Stock or the regular quarterly cash
dividend on ONEOK Preferred Stock (or a pro rata amount for any dividend less
than a full quarter) with usual record and payment dates for such dividends;
(iii) any amendment of any material term of any outstanding equity security of
ONEOK or any Subsidiary of ONEOK; (iv) any repurchase, redemption or other
acquisition by ONEOK or any Subsidiary of ONEOK of any outstanding shares of
capital stock or other equity securities of, or other ownership interests in,
ONEOK or any Subsidiary of ONEOK, except as contemplated by any ONEOK Benefit
Plans; (v) any material change in any method of accounting or accounting
practice by ONEOK or any Significant Subsidiary of ONEOK; (vi) any increase in
the salaries or other compensation payable to any officer or employee of ONEOK
or any of its Subsidiaries (except for normal increases in the ordinary course
of business consistent with past practice) or any increase in, or addition to,
other benefits to which any officer or employee may be entitled (except as
required by the terms of plans as in effect on the date of this Agreement or as
required by law); (vii) any incurrence of indebtedness for borrowed money
(except in the ordinary course of business consistent with past practice);
(viii) any Material Adverse Change or threat of a Material Adverse Change in
ONEOK's or any of its Subsidiaries' relations with, or any loss or, to the
knowledge of ONEOK, threat of loss of, any of ONEOK's or any of its
Subsidiaries' material suppliers or customers, except to the extent such loss
does not and would not have a Material Adverse Effect on ONEOK; (ix) any
termination, cancellation or waiver of any contract or other right material to
the operation of the business of ONEOK and its Subsidiaries taken as a whole,
except to the extent such termination, cancellation or waiver does not and would
not have a Material Adverse Effect on ONEOK; (x) any amendment of any material
term of the respective certificates of incorporation or bylaws of ONEOK or any
Subsidiary of ONEOK; or (xi) any other transaction, commitment, dispute or other
event or condition (financial or otherwise) of any character (whether or not in
the ordinary course of business) that does have or would have a Material Adverse
Effect on ONEOK.
(g) No Undisclosed Material Liabilities. Except as disclosed in the
ONEOK SEC Documents and/or Section 4.1(g) of the ONEOK Disclosure Schedule, to
the knowledge of ONEOK, there are no liabilities or obligations, including
Environmental Claims, of ONEOK or any of its Subsidiaries of any kind
whatsoever, whether accrued, contingent, absolute, determined, determinable or
otherwise, and whether or not required to be disclosed, nor are there any facts
or circumstances of which ONEOK has or its Subsidiaries have knowledge that
could result in obligations or liabilities of ONEOK, its Subsidiaries or any of
their Affiliates, that have or would have a Material Adverse Effect on ONEOK,
other than: (i) liabilities adequately provided for on the balance sheet of
ONEOK dated as of August 31, 1996 (including the notes thereto) contained in
ONEOK's Annual Report on Form 10-K for the year ended August 31, 1996 (the
"ONEOK Balance Sheet"); and (ii) liabilities under this Agreement or the
Ancillary Documents.
18
(h) No Default. Neither ONEOK nor any of its Subsidiaries is in
default or violation (and no event has occurred which, with notice or the lapse
of time or both, would constitute a default or violation) of any term, condition
or provision of (i) their respective charters, bylaws or other respective
organizational documents, (ii) any material note, bond, mortgage, indenture,
license, agreement or other instrument or obligation to which ONEOK or any of
its Subsidiaries is now a party or by which ONEOK or any of its Subsidiaries or
any of their respective properties or assets may be bound, or (iii) any order,
writ, injunction, decree, statute, rule or regulation applicable to ONEOK or any
of its Subsidiaries, except in the case of (ii) and (iii) for defaults or
violations which in the aggregate do not and would not have a Material Adverse
Effect on ONEOK.
(i) Compliance with Applicable Laws. Except as specifically addressed
in other representations in this Section 4.1 or set forth in Section 4.1(i) of
the ONEOK Disclosure Schedule, ONEOK and its Subsidiaries hold all permits,
licenses, variances, exemptions, orders, franchises and approvals of all
Governmental Entities necessary for the lawful conduct of their respective
businesses (the "ONEOK Permits"), except where the failure so to hold does not
and would not have a Material Adverse Effect on ONEOK. Except as set forth in
Section 4.1(i) of the ONEOK Disclosure Schedule, ONEOK and its Subsidiaries are
in compliance with the terms of the ONEOK Permits, except where the failure so
to comply does not and would not have a Material Adverse Effect on ONEOK. Except
as disclosed in the ONEOK SEC Documents or set forth in Section 4.1(i) of the
ONEOK Disclosure Schedule, the businesses of ONEOK and its Subsidiaries are not
being conducted in violation of any law, ordinance, regulation of any
Governmental Entity, except for violations which do not and would not have a
Material Adverse Effect on ONEOK. Except as set forth in Section 4.1(i) of the
ONEOK Disclosure Schedule, neither ONEOK nor any of its Subsidiaries has been
notified of any pending investigation or review by any Governmental Entity nor,
to the knowledge of ONEOK and its Subsidiaries, is any investigation or review
by any Governmental Entity with respect to ONEOK or any of its Subsidiaries
pending or threatened, other than those the outcome of which does not and is not
reasonably likely to have a Material Adverse Effect on ONEOK.
(j) Litigation. Except as disclosed in the ONEOK SEC Documents and/or
Section 4.1(j) of the ONEOK Disclosure Schedule or otherwise within this Section
4.1, as of the date hereof, there is no suit, action or proceeding pending, or,
to the knowledge of ONEOK and its Subsidiaries, threatened against or affecting
ONEOK or any Subsidiary of ONEOK ("ONEOK Litigation"), at law or in equity, or
before or by any federal or state commission, board, bureau, agency or
instrumentality, that, individually or in the aggregate, has had or would have a
Material Adverse Effect on ONEOK, and ONEOK and its Subsidiaries have no
knowledge of any facts that are likely to give rise to any ONEOK Litigation,
that (in any case) would have a Material Adverse Effect on ONEOK, nor is there
any judgment, decree, injunction, rule or order of any Governmental Entity or
arbitrator outstanding against ONEOK or any Subsidiary of ONEOK ("ONEOK Order")
that has or would have a Material Adverse Effect on ONEOK or ONEOK's ability to
consummate the transactions contemplated by this Agreement or any of the
Ancillary Documents.
19
(k) Taxes. Except as, individually or in the aggregate, do not and
would not have a Material Adverse Effect on ONEOK:
(1) ONEOK and each of its Subsidiaries has (A) timely (taking
into account any extensions) filed all material federal, state, local
and foreign returns, declarations, reports, estimates, information
returns and statements ("Returns") required to be filed or sent by or
with respect to it in respect of any Taxes (as hereinafter defined),
(B) timely paid all Taxes that are shown to be due thereon, (C)
established reserves that are adequate for the payment of all Taxes
not yet due and payable with respect to the results of operations of
ONEOK and its Subsidiaries, and (D) to the knowledge of ONEOK or any
Subsidiary of ONEOK, timely withheld from employee wages and paid over
to the proper governmental authorities all amounts required to be so
withheld and paid over.
(2) Section 4.1(k)(2) of the ONEOK Disclosure Schedule sets forth
the last taxable period through which the federal Income Tax Returns
of ONEOK and its Subsidiaries have been examined by the Internal
Revenue Service ("IRS") or otherwise closed. No material Tax audits or
other administrative proceedings or court proceedings are presently
pending with regard to any Taxes for which ONEOK or any of its
Subsidiaries could be liable, and except as provided for in the ONEOK
Balance Sheet, no material deficiency for any such Taxes has been
proposed, asserted or assessed pursuant to such examination against
ONEOK or any of its Subsidiaries by any Governmental Entity with
respect to any period.
(3) Neither ONEOK nor any of its Subsidiaries has executed or
entered into with the IRS or any taxing authority (A) any agreement or
other document extending or having the effect of extending the period
for assessments or collection of any federal Income Taxes for which
ONEOK or any of its Subsidiaries could be liable or (B) a closing
agreement pursuant to Section 7121 of the Code, or any predecessor
provision thereof or any similar provision of state or local Tax law
that relates to the assets or operations of ONEOK or any of its
Subsidiaries.
(4) Neither ONEOK nor any of its Subsidiaries has made an
election under Section 341(f) of the Code or agreed to have Section
341(f)(2) of the Code apply to any disposition of a subsection (f)
asset (as such term is defined in Section 341(f)(4) of the Code) owned
by ONEOK or any of its Subsidiaries.
20
(5) Except as set forth in the ONEOK SEC Documents or Section
4.1(k)(5) of the ONEOK Disclosure Schedule, neither ONEOK nor any of
its Subsidiaries is a party to, is bound by or has any obligation
under any tax sharing agreement or similar agreement or arrangement
which has as a party a person other than ONEOK or any of its
Subsidiaries.
(6) Section 4.1(k)(6) of the ONEOK Disclosure Schedule sets forth
a list of federal, state, local or foreign jurisdictions in which
ONEOK and its Subsidiaries have paid any Taxes or filed any Returns
during the past 3 years. No jurisdiction not listed on Section
4.1(k)(6) of the ONEOK Disclosure Schedule has made a claim, assertion
or, to the knowledge of ONEOK and its Subsidiaries, threat that ONEOK
or its Subsidiaries is subject to taxation in such jurisdiction.
(7) Except as disclosed in Section 4.1(k)(7) of the ONEOK
Disclosure Schedule, neither ONEOK nor any of its Subsidiaries
maintains any compensation plans, programs, or arrangements the
payments under which would not be expected to be deductible as a
result of the limitation of Section 162(m) of the Code and the
regulations issued thereunder.
(8) Except as disclosed in Section 4.1(k)(8) of the ONEOK
Disclosure Schedule, as a result, directly or indirectly, of the
Transactions or the other transactions contemplated by this Agreement
(including without limitation, any terminations of employment prior to
or following the Merger Effective Time), none of ONEOK, its
Subsidiaries or NewCorp will be obligated to make a payment (including
without limitation any acceleration of vesting or payment) with
respect to employees of ONEOK or its Subsidiaries who are
"disqualified individuals" that would be characterized as an "excess
parachute payment" (as such terms are defined in Section 280G of the
Code).
For purposes of this Agreement, (i) "Taxes" shall mean any federal, state, local
or foreign taxes, charges, fees, levies or other assessments, without
limitation, all net income, gross income, sales and use, valorem, transfer,
gains, profits, excise, franchise, real and personal gross receipts, capital
stock, production, business and disability, employment, payroll, license,
estimated, stamp, duties, severance or withholding taxes or charges imposed by
any Governmental Entity, and (ii) "Income Taxes" shall mean any federal, state,
local or foreign income or franchise taxes, or other taxes measured in whole or
in part by income, and in each of (i) and (ii), any interest, penalties and
additions to any such taxes, charges, fees or levies and any expenses incurred
in connection with the settlement or litigation of any liability for any of the
foregoing.
(l) Employee Matters; ERISA.
(1) Benefit Plans. Section 4.1(l)(1) of the ONEOK Disclosure
Schedule contains a true and complete list, as of the date hereof, of
each item described below, whether formal or informal, written or
unwritten, legally binding or not:
21
a. each material "employee benefit plan" within the meaning of
Section 3(3) of ERISA that is or was maintained or
contributed to at any time during the six calendar year
period immediately preceding the date hereof by ONEOK or any
ONEOK Affiliate and each similar plan, program, policy or
arrangement maintained for non-employee directors or other
non-employees who have provided services to ONEOK or any
ONEOK Affiliate;
b. each material plan, program, policy, payroll practice or
arrangement not listed in a. above that provides for
bonuses, profit-sharing, incentive compensation, deferred
compensation, equity-based compensation (including stock
options or other stock purchases, restricted stock, stock
appreciation rights, performance units and dividend
equivalents), holiday pay, vacation pay, sick pay, dependent
care benefits, flexible benefits (including any cafeteria
plan governed by Section 125 of the Code), paid or unpaid
leave (including sick leave, parental leave, military leave
and bereavement leave), tuition assistance, relocation or
any similar type of benefits, that has been adopted or
implemented by ONEOK or any ONEOK Affiliate (including any
such plan, program, policy or arrangement that has been
terminated before the date hereof); and
c. each material employment contract, severance contract,
parachute agreement, option agreement, stock appreciation
right agreement, bonus or other incentive award agreement,
deferred compensation agreement, supplemental benefit
agreement, split dollar agreement or other personal service
or benefit contract or arrangement with or covering a
current or former officer, director, employee or independent
contractor of ONEOK or any ONEOK Affiliate.
(2) Contributions. All material contributions and other material
payments required to have been made by ONEOK or any ONEOK Affiliate
under Section 412 of the Code or pursuant to any ONEOK Benefit Plan
(or to any person pursuant to the terms thereof) have been timely made
or will be timely made in accordance with Section 404(a)(6) of the
Code.
(3) Qualification; Compliance. The following representations
apply to ONEOK Benefit Plans being continued by NewCorp or for which
NewCorp may have liability.
a. Each ONEOK Benefit Plan that is intended to be "qualified"
within the meaning of Section 401(a) of the Code (1)
currently meets all qualification requirements under the
Code both in form and in operation, except any failure that
can be corrected without material liability, and (2) has
received a favorable determination letter from the IRS on
its qualification or application for such a determination
has been made prior to the expiration of the applicable
remedial amendment period, and to the knowledge of ONEOK
there are no circumstances existing likely to result in
revocation of any such favorable determination letter.
22
b. Each ONEOK Benefit Plan is and has been operated in
compliance with, all applicable laws, rules and regulations
governing such plan, including, without limitation, ERISA
and the Code, and all filings, disclosures and notices
required have been timely made, except for violations that
would not have a Material Adverse Effect on ONEOK. All
amendments and actions required to bring each of the ONEOK
Benefit Plans into conformity with all of the applicable
provisions of ERISA and the Code and other applicable legal
requirements have been made or taken except to the extent
that such amendments or actions are not required by law to
be made or taken until a date after the Merger Effective
Time and except for actions the failure of which to take
would not have a Material Adverse Effect on ONEOK.
c. To the knowledge of ONEOK, no individual or entity has
engaged in any transaction in connection with which ONEOK or
any ONEOK Affiliate, or any ONEOK Benefit Plan or any trust,
trustee or administrator thereof, could be subject to
liability pursuant to Section 409 or Section 502 of ERISA,
or subject to an excise tax pursuant to Section 4975 of the
Code, which could in either case have a Material Adverse
Effect on ONEOK.
d. Except for matters that would not have a Material Adverse
Effect on ONEOK:
1. To the knowledge of ONEOK, no ONEOK Benefit Plan is
subject to any ongoing audit, investigation or other
administrative proceeding of the IRS, the Department of
Labor or any other Governmental Entity or, to the
knowledge of ONEOK, is scheduled to be subject to such
an audit, investigation or proceeding; and
2. No ONEOK Benefit Plan is the subject of any pending
application for administrative relief under any
voluntary compliance program of any Governmental Entity
(including, without limitation, the IRS' Voluntary
Compliance Resolution Program or Walk-in Closing
Agreement Program, or the Department of Labor's
Delinquent Filer Voluntary Compliance Program).
23
(4) Pension Benefit Plan; Liabilities. Except as set forth in
Section 4.1(l)(4) of the ONEOK Disclosure Schedule, with respect to
the ONEOK Pension Benefit Plans, individually and in the aggregate, no
termination or partial termination of any ONEOK Pension Benefit Plan
has occurred and no event has occurred that would be reasonably
expected to subject ONEOK or any ONEOK Affiliate to any liability
arising under the Code, ERISA or any other applicable law (including,
without limitation, any liability to or under any such plan or to the
PBGC, or under any indemnity agreement to which ONEOK or any ONEOK
Affiliate is a party), which liability could have a Material Adverse
Effect on ONEOK (excluding liability for benefit claims and funding
obligations payable in the ordinary course and liability for PBGC
insurance premiums payable in the ordinary course).
(5) Welfare Plans. To the knowledge of ONEOK, no circumstances
exist that could subject ONEOK or any ONEOK Affiliate to an excise tax
under Section 4976 of the Code that would have a Material Adverse
Effect on ONEOK.
(6) Documents Made Available. ONEOK has made available to WRI a
true and correct copy of each collective bargaining agreement to which
ONEOK or any ONEOK Affiliate is a party and under which ONEOK has
obligations or joint and several liability; and, with respect to each
ONEOK Benefit Plan, ONEOK has made available to WRI a true and correct
copy of each of the following, as applicable:
a. the current plan document (including all amendments adopted
since the most recent restatement) and its most recently
prepared summary plan description and all summaries of
material modifications prepared since the most recent
summary plan description;
b. annual reports or Code Section 6039D information returns
(IRS Form 5500 Series), including financial statements, for
the last two years;
c. the most recent IRS determination letter or other opinion
letter with respect to the qualified status under Code
Section 401(a) of such plan or under Code Section 501 of the
related trust;
d. actuarial reports or valuations for the last two years; and
e. trust instruments and insurance contracts; any Form 5310 or
Form 5330 filed with the IRS during the last six years.
(7) Payments Resulting From Merger. Except as set forth on
Section 4.1(l)(7) of the ONEOK Disclosure Schedule or as provided
under any ONEOK Benefit Plan or any agreement described in Section
4.1(l)(1)c. above, the consummation or announcement of any transaction
contemplated by this Agreement will not directly or indirectly (either
alone or upon the occurrence of any additional or further acts or
events) result in any:
24
a. payment (whether of severance pay or otherwise) becoming due
from ONEOK or any ONEOK Affiliate to any current or former
officer, director, employee or independent contractor of
ONEOK or any ONEOK Affiliate or to the trustee under any
"rabbi trust" or other funding arrangement, which would
reasonably be expected to result in liability to NewCorp; or
b. benefit under any ONEOK Benefit Plan being established or
increased or becoming accelerated, vested or payable, except
for a payment or benefit that would have been payable under
the same terms and conditions without regard to the
transactions contemplated by this Agreement, which would
reasonably be expected to result in liability to NewCorp.
(8) Funded Status of Plans. Except as disclosed in Section
4.1(l)(8) of the ONEOK Disclosure Schedule, (A) each ONEOK Pension
Benefit Plan has been maintained in compliance with the minimum
funding standards of ERISA and the Code, (B) no ONEOK Pension Benefit
Plan has incurred any "accumulated funding deficiency" (within the
meaning of Section 302 of ERISA or Section 412 of the Code) and (C)
all required payments to the PBGC with respect to each ONEOK Pension
Benefit Plan have been made on or before their due dates, in each case
with respect to ONEOK Pension Benefit Plans which would reasonably be
expected to result in liability to ONEOK or any ONEOK Subsidiary.
Except as disclosed in Section 4.1(l)(8) of the ONEOK Disclosure
Schedule, neither ONEOK nor any of its Subsidiaries has provided, or
is required to provide, security to any ONEOK Pension Benefit Plan
pursuant to Section 401(a)(29) of the Code.
(9) Multiemployer Plans. Except as disclosed in Section 4.1(l)(9)
of the ONEOK Disclosure Schedule, no ONEOK Benefit Plan is a
"multiemployer plan" (within the meaning of Section 4001(a)(3) of
ERISA), a multiple employer plan described in Section 413(c) of the
Code or a "multiple employer welfare arrangement" (within the meaning
of Section 3(40) of ERISA); and none of ONEOK or any ONEOK Affiliate
is obligated to contribute to, has incurred or is expected to incur
any withdrawal liability or has had any liability under Title IV of
ERISA with respect to, or any liability in connection with the
reorganization or termination of, any multiemployer plan, multiple
employer plan, or multiple employer welfare arrangement.
(10) Modification or Termination of Plans. Except as disclosed in
Section 4.1(l)(10) of the ONEOK Disclosure Schedule or as required
pursuant to a collective bargaining agreement or as required to secure
a favorable determination letter from the IRS, neither ONEOK nor any
ONEOK Affiliate is subject to any legal obligation, or has any formal
plan, to enter into any form of material compensation or employment
agreement or to establish any employee benefit plan of any nature,
including (without limitation) any pension, profit sharing, welfare,
post-retirement welfare, stock option, stock or cash award,
non-qualified deferred compensation or executive compensation plan,
policy or practice or to modify or change any existing ONEOK Benefit
Plan and, to the knowledge of ONEOK, there has been no communication
to employees by ONEOK or any ONEOK Affiliate that would reasonably be
expected to promise or guarantee such employees retiree health or life
insurance benefits on a permanent basis.
25
(11) Reportable Events; Claims. Except as disclosed in Section
4.1(l)(11) of the ONEOK Disclosure Schedule:
a. No Reportable Event has occurred with respect to any ONEOK
Pension Benefit Plan that would reasonably be expected to
result in a liability to ONEOK, and
b. No liability, claim, action or litigation exists, has been
made, commenced or, to the actual knowledge of ONEOK,
threatened, by or against ONEOK or any ONEOK Affiliate with
respect to any ONEOK Benefit Plan (other than for benefits
or PBGC premiums payable in the ordinary course) that would
reasonably be expected to result in a liability to ONEOK,
and
c. The PBGC has not instituted proceedings to terminate any
ONEOK Pension Benefit Plan, and, to the knowledge of ONEOK,
no condition exists that presents a likely risk that such
proceedings will be instituted.
(m) Labor Matters. Except as set forth in Section 4.1(m) of the ONEOK
Disclosure Schedule or the ONEOK SEC Documents:
(1) Neither ONEOK nor any of its Subsidiaries is a party to, or
bound by, any collective bargaining agreement or other current labor
agreement with any labor union or organization, and there is no
current union representation question involving employees of ONEOK or
any of its Subsidiaries, nor does ONEOK or its Subsidiaries have
knowledge of any activity or proceeding of any labor organization (or
representative thereof) or employee group (or representative thereof)
to organize or threaten to organize any such employees;
(2) There is no unfair labor practice charge or grievance arising
out of a collective bargaining agreement or other grievance procedure
against ONEOK or any of its Subsidiaries pending, or, to the knowledge
of ONEOK or its Subsidiaries, threatened, that would have a Material
Adverse Effect on ONEOK;
(3) There is no strike, dispute, slowdown, work stoppage or
lockout pending or, to the knowledge of ONEOK or its Subsidiaries,
threatened, against or involving ONEOK or any of its Subsidiaries that
would have a Material Adverse Effect on ONEOK; and
(4) ONEOK and each of its Subsidiaries is in compliance with all
applicable laws respecting employment and employment practices, terms
and conditions of employment, wages, hours of work and occupational
safety and health, except for non-compliance that would not have a
Material Adverse Effect on ONEOK.
26
(n) Intangible Property. ONEOK and its Subsidiaries possess or have
adequate rights to use all trademarks, trade names, patents, service marks,
brand marks, brand names, computer programs, databases, industrial designs and
copyrights necessary for the operation of the businesses of each of ONEOK and
its Subsidiaries (collectively, the "ONEOK Intangible Property"), except where
the failure to possess or have adequate rights to use such properties would not
have a Material Adverse Effect on ONEOK.
(o) Environmental Matters.
(1) Definitions. For purposes of this Agreement:
a. "Environmental Claims" means, with respect to any person,
(x) any and all administrative, regulatory or judicial
actions, suits, demands, demand letters, directives, claims,
Liens, investigations, proceedings or notices of
non-compliance or violation in writing by or from any person
or entity (including any Governmental Entity), or (y) oral
notification provided by a Governmental Entity that written
action of the type described in the foregoing clause is in
process, which (in case of either (x) or (y)) alleges
potential liability (including, without limitation,
potential liability for enforcement, investigatory costs,
cleanup costs, governmental response costs, removal costs,
remedial costs, natural resources damages, property damages,
personal injuries or penalties) arising out of, based on or
resulting from (1) the presence, or Release (as such term is
hereinafter defined) or threatened Release into the
environment, of any Hazardous Materials (as such term is
hereinafter defined) at any location, whether or not owned,
operated, leased or managed by ONEOK or any of its
Subsidiaries (for purposes of Section 4.1(o)) or by WRI or
any of its Subsidiaries (for purposes of Section 4.2(p)),
(2) pollution, protection of the environment and human
health or safety from the effects of Hazardous Materials,
health or safety of employees or sanitation, (3)
circumstances forming the basis of any violation, or alleged
violation, of any Environmental Law (as hereinafter
defined), or (4) any and all claims by any third party
seeking damages, civil or criminal fines or penalties,
contribution, indemnification, cost recovery, compensation
or injunctive relief resulting from the presence, Release,
manufacture, processing, distributing, use, treatment,
storage, disposal, transport or handling of any Hazardous
Materials.
b. "Environmental Laws" means all federal, state and local
laws, rules, regulations and guidances, as well as common
law causes of action or contractual obligations, relating to
pollution or the protection of human health or the
environment (including, without limitation, ambient air,
surface water, groundwater, land surface or subsurface
strata), including, without limitation, laws and regulations
relating to Releases or threatened Releases of Hazardous
Materials or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Materials.
27
c. "Hazardous Materials" means (x) any petroleum or petroleum
products, radioactive materials, asbestos in any form that
is or could become friable, urea formaldehyde foam
insulation and transformers or other equipment that contain
dielectric fluid containing polychlorinated biphenyls, (y)
any chemicals, materials, substances or wastes which are now
defined as or included in the definition of "hazardous
substances," "hazardous wastes," "hazardous materials,"
"extremely hazardous wastes," "restricted hazardous wastes,"
"toxic substances" or "toxic pollutants," or words of
similar import, under any applicable Environmental Law, and
(z) any other chemical, material, substance or waste,
exposure to which is now prohibited, limited or regulated
under any applicable Environmental Law in a jurisdiction in
which ONEOK or any of its Subsidiaries operates (for
purposes of Section 4.1(o)) or in which WRI or any of its
Subsidiaries operates (for purposes of Section 4.2(p)).
d. "Release" means any release, spill, emission, leaking,
injection, deposit, disposal, discharge, dispersal, leaching
or migration into the atmosphere, soil, subsurface, surface
water, groundwater or property.
(2) Compliance.
a. To the actual knowledge of the executive officers of ONEOK
and the officer or employee of ONEOK with responsibility for
environmental matters, after due inquiry, except as set
forth in the ONEOK SEC Documents or Section 4.1(o)(2)(a) of
the ONEOK Disclosure Schedule, ONEOK and each of its
Subsidiaries is in compliance with all applicable
Environmental Laws, except where the failure to be so in
compliance would not have a Material Adverse Effect on
ONEOK.
b. To the actual knowledge of the executive officers of ONEOK
and the officer or employee of ONEOK with responsibility for
environmental matters, after due inquiry, except as set
forth in the ONEOK SEC Documents or Section 4.1(o)(2)(b) of
the ONEOK Disclosure Schedule, neither ONEOK nor any of its
Subsidiaries has received any Environmental Claim from any
person or Governmental Entity that alleges that ONEOK or any
of its Subsidiaries is not in compliance with applicable
Environmental Laws, except where the failure to be so in
compliance would not have a Material Adverse Effect on
ONEOK.
c. Except as set forth in Section 4.1(o)(2)(c) of the ONEOK
Disclosure Schedule, to the actual knowledge of the
executive officers of ONEOK and the officer or employee of
ONEOK with responsibility for environmental matters, after
due inquiry, neither ONEOK nor any of its Subsidiaries has
used any waste disposal site, or otherwise disposed of,
transported, or arranged for the transportation of, any
Hazardous Materials to any place or location, in violation
of any Environmental Laws.
28
(3) Environmental Permits. To the actual knowledge of the
executive officers of ONEOK and the officer or employee of ONEOK with
responsibility for environmental matters, after due inquiry, except as
set forth in the ONEOK SEC Documents or Section 4.1(o)(3) of the ONEOK
Disclosure Schedule, ONEOK and each of its Subsidiaries has obtained
or applied for all environmental, health and safety permits and
authorizations (collectively, "Environmental Permits") necessary for
the construction of their facilities and the operation of their
respective businesses, as presently conducted and for the use,
storage, treatment, transportation, release, emission and disposal of
raw materials, by-products, wastes and other substances used or
produced by or otherwise relating to its business, and all such
permits are in good standing and in all material respects in full
force and effect or, where applicable, a renewal application has been
timely filed, is pending and agency approval is expected to be
obtained, and ONEOK and its Subsidiaries are in compliance in all
material respects with all terms and conditions of all such
Environmental Permits and are not required to make any expenditure in
order to obtain or renew any Environmental Permits necessary for the
operation of their respective businesses, as presently conducted,
except where the failure to obtain or be in compliance with such
Environmental Permits and the requirement to make such expenditures
would not have a Material Adverse Effect on ONEOK.
(4) Environmental Claims. To the actual knowledge of the
executive officers of ONEOK and the officer or employee of ONEOK with
responsibility for environmental matters, after due inquiry, except as
set forth in the ONEOK SEC Documents or Section 4.1(o)(4) of the ONEOK
Disclosure Schedule, there is no Environmental Claim pending or, to
the actual knowledge of the executive officers of ONEOK and the
officer or employee of ONEOK with responsibility for environmental
matters, threatened:
a. against ONEOK or any of its Subsidiaries,
b. against any person or entity whose liability for such
Environmental Claim ONEOK or any of its Subsidiaries has
retained or assumed, either contractually or by operation of
law, or
c. against any real or personal property or operations that
ONEOK or any of its Subsidiaries owns, leases or manages, in
whole or in part,
that, in the case of a., b., or c., if adversely determined, would
have a Material Adverse Effect on ONEOK.
29
(5) Releases. To the actual knowledge of the executive officers
of ONEOK and the officer or employee of ONEOK with responsibility for
environmental matters, after due inquiry, except as set forth in the
ONEOK SEC Documents or Section 4.1(o)(5) of the ONEOK Disclosure
Schedule, and except for Releases of Hazardous Materials the liability
for which would not have a Material Adverse Effect on ONEOK, ONEOK and
its Subsidiaries have not caused any Release of any Hazardous
Materials at any place or property, including, but not limited to,
properties owned, leased or occupied by ONEOK or any Subsidiary of
ONEOK or any predecessor of ONEOK or any Subsidiary of ONEOK, nor has
it transported or arranged for the transportation of any Hazardous
Materials to any place or property where a Release has occurred or
allegedly has occurred, where such transportation or arrangement has
had, or would have, a Material Adverse Effect on ONEOK.
(6) Underground Storage Tanks or Surface Impoundments. To the
actual knowledge of the executive officers of ONEOK and the officer or
employee of ONEOK with responsibility for environmental matters, after
due inquiry, except as set forth in Section 4.1(o)(6) of the ONEOK
Disclosure Schedule, there are no underground storage tanks or surface
impoundments at, on, under or within any real property owned, leased
or occupied by ONEOK or any of its Subsidiaries, or any portion
thereof, other than those liabilities which would not have a Material
Adverse Effect on ONEOK.
(p) Insurance. ONEOK and its Subsidiaries maintain insurance coverage
as is customary for the industry in which ONEOK and each of its Subsidiaries
operates, respectively (taking into account the cost and availability of such
insurance), and the Transactions and the other transactions contemplated hereby
and by the Ancillary Documents will not materially adversely affect such
coverage. All such insurance policies are with reputable insurance carriers.
There are no claims pending under any of such policies as to which coverage has
been questioned, denied or disputed by the underwriters of such policies or in
respect of which such underwriters have reserved their rights, except for claims
that would not have a Material Adverse Effect on ONEOK. All premiums payable
under all such policies have been paid and ONEOK and its Subsidiaries have
otherwise complied fully with the terms and conditions of all such policies.
(q) Contracts.
(1) Except as set forth in Section 4.1(q)(1) of ONEOK Disclosure
Schedule, neither ONEOK nor any of its Subsidiaries is a party to or
bound by any Material Contract. "Material Contract" shall mean any
contract or obligation pursuant to which any party thereto would be
required to pay $5,000,000 or more. Except as set forth in Section
4.1(q)(1) of the ONEOK Disclosure Schedule, all Material Contracts are
in full force and effect, and each of ONEOK and its Subsidiaries which
is a party to or bound by such Material Contract has performed its
obligations thereunder to date and, to the knowledge of ONEOK and its
Subsidiaries, each other party thereto has performed its obligations
thereunder to date, other than any failure of a Material Contract to
be in full force and effect or any nonperformance thereof that would
not have a Material Adverse Effect on ONEOK.
30
(2) Neither ONEOK nor any of its Subsidiaries engages in any
natural gas or other futures or options trading or is a party to any
price swaps, hedges, futures or similar instruments, except for
transactions and agreements entered into or hedge contracts for the
purchase or sale of hydrocarbons to which ONEOK or any of its
Subsidiaries is a party which are commercially reasonable and in
accordance with the general practices of other similarly situated
companies in the industry.
(3) Neither ONEOK nor any of its Subsidiaries have been given
notice of any default under, or action to alter, terminate, rescind or
procure a judicial reformation of, any material provisions of any
Material Contract.
(4) (i) Section 4.1(q)(4)(i) of the ONEOK Disclosure Schedule
sets forth a list of (a) all Gas purchase contracts which are Material
Contracts, (b) all gathering, exchange and transportation contracts
which are Material Contracts, and (c) all other contracts relating to
Gas supply and transportation which are Material Contracts, in each
case, to the extent ONEOK or any of its Subsidiaries is a party
thereto, (collectively, the "ONEOK Gas Contracts"). (ii) Except as set
forth in Section 4.1(q)(4)(ii) of the ONEOK Disclosure Schedule, (a)
all ONEOK Gas Contracts to which ONEOK or any of its Subsidiaries is a
party have been approved or reviewed by the OCC to the extent such
approval or review is required, (b) all costs under the ONEOK Gas
Contracts are currently being passed through to the customers and (c)
ONEOK and its Subsidiaries have no reason to believe that (a) and (b)
will not continue in the future.
(r) Regulatory Proceedings. Except as set forth in the ONEOK SEC
Documents or in Section 4.1(r) of the ONEOK Disclosure Schedule, other than
purchase gas adjustment provisions, neither ONEOK nor any of its Subsidiaries
all or part of whose rates or services are regulated by a Governmental Entity
(i) has rates which have been or are being collected subject to refund, pending
final resolution of any rate proceeding pending before a Governmental Entity or
on appeal to the courts or (ii) is a party to any rate proceeding before a
Governmental Entity or on appeal from orders of a Governmental Entity which
could result in orders having a Material Adverse Effect on ONEOK.
(s) Regulation as a Utility.
(1) Neither ONEOK nor any of its Subsidiaries is a "holding
company," a "subsidiary company" or an "affiliate" of any public
utility company (other than ONEOK) within the meaning of Section
2(a)(7), 2(a)(8) or 2(a)(11) of the 1935 Act, respectively, and none
of the Subsidiaries of ONEOK is a "public utility company" within the
meaning of Section 2(a)(5) of the 1935 Act.
(2) ONEOK and certain of its Subsidiaries are regulated as public
utilities in the State of Oklahoma and in no other state. Neither
ONEOK nor any "subsidiary company" or "affiliate" (as each such term
is defined in any relevant statute, rule or regulations) of ONEOK is
subject to regulation as a public utility or public service company
(or similar designation) by any other state in the United States or
any foreign country.
31
(t) Opinion of Financial Advisor. The Board of Directors of ONEOK has
received the opinion of PaineWebber Incorporated to the effect that, as of the
date on which the Board of Directors of ONEOK approved this Agreement, the
Transactions are fair to ONEOK and its shareholders from a financial point of
view.
(u) Vote Required. The ONEOK Stockholder Approval is the only vote of
the holders of any class or series of capital stock of ONEOK necessary to
approve this Agreement, the Transactions and the other transactions contemplated
hereby.
(v) Beneficial Ownership of WRI Common Stock. Neither ONEOK nor any of
its Subsidiaries "beneficially owns" (as defined in Rule 13d-3 under the
Exchange Act) any outstanding shares of WRI Common Stock.
(w) Brokers. Except for the fees and expenses payable to PaineWebber
Incorporated, which fees are reflected in its agreement with ONEOK, no broker,
investment banker or other person is entitled to any broker's, finder's or other
similar fee or commission in connection with the negotiations leading to this
Agreement or the consummation of the Transactions or the other transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
ONEOK or any of its Subsidiaries.
(x) Related Party Transactions. There are no contracts, arrangements
or transactions in effect between ONEOK or any of its Subsidiaries, on the one
hand, and any officer, director or 5% stockholder of ONEOK, or any Affiliate or
immediate family member of any of the foregoing persons, on the other hand,
except as set forth in Section 4.1(x) of the ONEOK Disclosure Schedule.
(y) Takeover Provisions. No "fair price," "moratorium," "control share
acquisition" or other similar anti-takeover statute or regulation (each a
"Takeover Statute") or any applicable anti-takeover provision in ONEOK's
certificate of incorporation or bylaws, as amended, is, or at the Merger
Effective Time will be, applicable to ONEOK, the shares of ONEOK's capital
stock, the Merger or the other transactions contemplated by this Agreement or
any of the Ancillary Documents. The Board of Directors of ONEOK has taken all
action necessary so that WRI will not become an "Interested Stockholder" within
the meaning of Section 203 of the DGCL.
(z) Rights Plan. ONEOK has taken such action as may be necessary to
provide under the ONEOK Rights Agreement that WRI shall not be deemed an
Acquiring Person (as defined therein), the Distribution Date (as defined
therein) shall not be deemed to occur, and the Rights will not separate from
ONEOK's shares of capital stock, as a result of entering into this Agreement or
consummating the Merger and/or the other transactions contemplated hereby or by
any of the Ancillary Documents.
32
(aa) Title to Properties.
(1) ONEOK and its Subsidiaries, individually or together, have
good and sufficient title to all of the assets that they purport to
own, including all of the properties and assets reflected in the
balance sheet as of August 31, 1996, included in the ONEOK Balance
Sheet, and all properties and assets purchased or otherwise acquired
since August 31, 1996. Such assets are sufficient to enable ONEOK and
its Subsidiaries to conduct the business of ONEOK or its Subsidiaries
as currently conducted without material interference, free and clear
of Liens, other than Permitted Liens. ONEOK and its Subsidiaries,
individually or together, hold under valid lease agreements all of
their real and personal properties reflected in the ONEOK Balance
Sheet, and all real and personal property that is subject to the
operating leases to which reference is made in the notes to the ONEOK
Balance Sheet, and enjoy peaceful and undisturbed possession of such
properties under such leases, other than any properties as to which
such leases will have terminated in the ordinary course since the date
of the ONEOK Balance Sheet. None of ONEOK, its Subsidiaries or any of
their predecessors has received any written notice of any adverse
claim to the title to any properties owned by them or with respect to
any lease under which any properties are held by them, other than any
claims that, individually or in the aggregate, would not have a
Material Adverse Effect on ONEOK. For the purposes hereof, the term
"Lien" shall mean any mortgage, pledge, security interest,
encumbrance, lien, claim, condition, equity interest, option, right of
first refusal, charge or restriction of any kind (including any
agreement to give any of the foregoing), any conditional sale or other
title retention agreement, any lease in the nature thereof or the
filing of or agreement to give any financing statement under the
Uniform Commercial Code of any jurisdiction, and the term "Permitted
Liens" shall mean (i) Liens for taxes and assessments, general and
special, not yet due and payable, and (ii) Liens, encumbrances and
other defects which, individually or in the aggregate, do not and will
not materially interfere with or impair the continued ownership,
possession, use or operation of the assets as such assets are used in
the business of ONEOK or the Gas Business, as applicable.
(2) Neither ONEOK nor any of its Subsidiaries is in violation of
the terms of any Easement except any such violations that,
individually or in the aggregate, would not have a Material Adverse
Effect on ONEOK. Except as would not have a Material Adverse Effect on
ONEOK, all Easements in favor of ONEOK are valid and enforceable and
grant the rights purported to be granted thereby and all rights
necessary thereunder for the operation of the business of ONEOK.
Except as would not have a Material Adverse Effect on ONEOK, to the
knowledge of ONEOK, there are no spatial gaps in the Easements in
favor of ONEOK that would have a Material Adverse Effect on ONEOK and
all parts of the pipeline assets which constitute a portion of the
assets of ONEOK and its Subsidiaries are located either on property
which is owned in fee by ONEOK or its Subsidiaries or on property
which is subject to an Easement in favor of ONEOK or its Subsidiary.
(ab) Condition of Assets. To the knowledge of ONEOK and its
Subsidiaries, the buildings, plants, structures, and equipment of ONEOK and its
Subsidiaries are structurally sound, are in good operating condition and repair,
and are adequate for the uses to which they are being put, and none of such
buildings, plants, structures, or equipment is in need of maintenance or repairs
except for ordinary, routine maintenance and repairs that are not material in
nature or cost.
33
(ac) Accounts Receivable. All Accounts Receivable of ONEOK represent
or will represent valid obligations arising from sales actually made or services
actually performed in the ordinary course of the business of ONEOK. Unless paid
prior to the Closing, the Accounts Receivable are or will be, as of the Closing,
collectible, subject only to allowance for doubtful accounts, and calculated
consistently with past practice. There is no contest, claim or right of set-off,
under any contract or with any obligor of an Account Receivable relating to the
amount or validity of such Accounts Receivable, which would have a Material
Adverse Effect on ONEOK.
4.2 Representations and Warranties of WRI. WRI represents and warrants
to ONEOK as follows, except as set forth in the disclosure schedule to be signed
by an authorized officer of WRI and delivered to ONEOK by WRI (the "WRI
Disclosure Schedule") pursuant to Section 6.22, each of which exceptions shall
specifically identify the relevant Section hereof to which it relates:
(a) Organization, Standing and Power. Each of WRI, Westar, MCMC and
the Significant Subsidiaries of Westar and MCMC, is, and NewCorp at the Closing
will be, a corporation duly organized, validly existing and in good standing
under the laws of its respective state of incorporation or organization, has,
and NewCorp at the Closing will, subject, with respect to NewCorp, to the
satisfaction of the closing conditions, have, all requisite power and authority
to own, lease and operate its properties and to carry on its business as now
being conducted, and is, and NewCorp at the Closing will be, duly qualified and
in good standing to do business in each jurisdiction in which the business it is
conducting, or the operation, ownership or leasing of its properties, makes such
qualification necessary, other than in such jurisdictions where the failure so
to qualify would not have a Material Adverse Effect on the Gas Business. WRI has
heretofore delivered to ONEOK complete and correct copies of its articles of
incorporation and bylaws, as amended to the date hereof. WRI has heretofore
delivered to ONEOK complete and correct copies of the certificate of
incorporation and bylaws of each of Westar and MCMC each, as amended and in full
force and effect as of the date hereof.
(b) Capital Structure. Subject to the provisions of the Shareholder
Agreement, after giving effect to the Asset Transaction and the Merger and the
other transactions contemplated by this Agreement, immediately after the
Closing, (i) 2,996,702 shares of NewCorp Common Stock will be issued and
outstanding and owned by WRI and the remaining then outstanding shares of
NewCorp Common Stock shall constitute the Stock Consideration issued and/or
issuable to the shareholders of ONEOK pursuant to Article III and (ii)
19,317,584 shares of Convertible Preferred Stock, Series A will be issued and
outstanding and owned by WRI. As of the date hereof, the authorized capital
stock of Westar consists of 1,000 shares of common stock, without par value, of
which 1,000 shares of common stock are issued and outstanding and owned by
Westar Energy Inc., a wholly-owned Subsidiary of WRI. As of the date hereof, the
authorized capital stock of MCMC consists of 1,000 shares of common stock,
without par value, of which 1,000 shares of common stock are issued and
outstanding and owned by WRI. All issued and outstanding shares of the
Transferred Stock are validly issued, fully paid and nonassessable and are not
subject to preemptive rights. Upon the transfer by WRI of the Transferred Stock
to NewCorp at the Closing, pursuant to the Transfer Documents, NewCorp will own
the Transferred Stock, free and clear of all Liens.
34
(c) Sufficiency of Assets. Except as disclosed in Section 4.2(c) of
the WRI Disclosure Schedule, the Assets to be transferred to NewCorp pursuant to
the Asset Transaction will constitute all of the assets and properties of WRI
and its Subsidiaries (other than the Excluded Assets) that are primarily used
in, or primarily related to, or primarily generated by the field operations of
the Gas Business as conducted by WRI immediately prior to the Asset Transaction.
(d) Authority; No Violations; Consents and Approvals.
(1) The Board of Directors of WRI has approved the Merger and
this Agreement. WRI has and will have all requisite corporate power
and authority to enter into this Agreement and the Ancillary Documents
to the extent it is a party thereto, to perform its obligations
hereunder and thereunder and to consummate the transactions
contemplated hereby and thereby. The execution and delivery of this
Agreement and each Ancillary Document to which WRI is a party, the
performance of obligations hereunder and thereunder by WRI and the
consummation of the Transactions and the other contemplated hereby and
thereby have been duly authorized by all necessary corporate action on
the part of WRI. This Agreement has been duly executed and delivered
by WRI and constitutes, and the Ancillary Documents to which WRI is a
party when executed and delivered by WRI, will constitute, valid and
binding obligations of WRI, enforceable against WRI in accordance with
their respective terms, subject, in each case, as to enforceability,
to bankruptcy, insolvency, reorganization and other laws of general
applicability relating to or affecting creditors' rights and to
general principles of equity (assuming such documents constitute a
valid and binding obligation on the other parties thereto).
(2) The execution and delivery of this Agreement and the
Ancillary Documents to which WRI is a party do not, and the
consummation of the Transactions and the other transactions
contemplated hereby and thereby and compliance with the provisions
hereof and thereof will not, conflict with, or result in any violation
of, or default (with or without notice or lapse of time, or both)
under, or change the rights or obligations of any party under, or give
rise to a right of termination, cancellation or acceleration of any
obligation or to the loss of a material benefit under, or result in
the creation of any Lien upon any of the properties or assets of the
Gas Business under, any provision of (A) the certificates of
incorporation or bylaws of WRI, Westar, MCMC, as amended, or any
provision of the charters or organizational documents of any of the
respective Subsidiaries of Westar or MCMC, (B) subject to obtaining
the third-party consents set forth in Section 4.2(d)(2) of the WRI
Disclosure Schedule and the assignments of contracts, in the manner
contemplated by Section 1.6 of this Agreement (the "WRI Required
Consents"), any loan or credit agreement, note, bond, mortgage,
indenture, lease or other material agreement, instrument, permit,
franchise or license applicable to WRI with respect to the Gas
Business and/or the Transferred Subsidiaries, or (C) assuming the
consents, approvals, authorizations or permits and filings or
notifications referred to in Section 4.2(d)(3) are duly and timely
obtained or made, any judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to WRI with respect to the
Gas Business and/or any of the Transferred Subsidiaries or any of
their respective properties or assets, other than, in the case of
clause (B) or (C), any such conflicts, violations, defaults, rights or
Liens, that, individually or in the aggregate, would not have a
Material Adverse Effect on the Gas Business, materially impair the
ability of WRI to perform its obligations hereunder or under any
Ancillary Document to which WRI is a party or prevent the consummation
of any of the Transactions and the other transactions contemplated
hereby or thereby.
35
(3) Except as set forth in Section 4.2(d)(3) of the ONEOK
Disclosure Schedule no notice, report, consent, approval, order or
authorization of, or registration, declaration or filing with, or
permit from any Governmental Entity is required by or with respect to
WRI relating to the Gas Business and/or any of the Transferred
Subsidiaries or NewCorp in connection with the execution and delivery
by WRI of this Agreement or any Ancillary Document to which WRI is a
party, or the consummation by WRI of the Transactions and the other
transactions contemplated hereby or thereby, as to which the failure
to obtain or make would have a Material Adverse Effect on the Gas
Business or prevent or materially burden or materially impair the
ability of WRI or the Transferred Subsidiaries to consummate the
transactions contemplated by this Agreement, except for: (A) the
filing of a premerger notification report by WRI under the HSR Act and
the expiration or termination of the applicable waiting period with
respect thereto; (B) the filing with the SEC of the Form S-4, such
reports under Section 13(a) of the Exchange Act and such other
compliance with the Securities Act and the Exchange Act and the rules
and regulations thereunder as may be required in connection with this
Agreement and the Transactions and the other transactions contemplated
hereby, and the obtaining from the SEC of such orders as may be so
required; (C) a filing for a determination by the SEC or its Staff in
the form of an order or a no-action letter that WRI will not be a
holding company under Section 2(a)(7) of the 1935 Act for the purposes
of the 1935 Act as a result of the Merger and the obtaining of such an
order or no-action letter from the SEC or its Staff to such effect;
(D) the approval of the Merger by the SEC under Section 9(a)(2) of the
1935 Act; (E) filings with, and the approvals of, or notices to, the
KCC and the OCC, (F) in the case of NewCorp, the filing of the
Certificate of Merger with the Secretary of State of the State of
Oklahoma; (G) filings with, and approval of, the New York Stock
Exchange ("NYSE") in connection with the listing of the NewCorp Stock;
(H) such filings and approvals as may be required by any applicable
state securities, "blue sky" or takeover laws; (I) such filings and
approvals as may be required in connection with the transfer of WRI's
municipal franchises with respect to the Gas Business; and (J) such
filings and approvals as may be required by any other premerger
notification, securities, corporate or other law, rule or regulation.
36
(e) SEC and Other Documents.
(1) WRI has made available to ONEOK a true and complete copy of
each Form 10-K and Form 10-Q filed by WRI with the SEC since January
1, 1994 and prior to the date of this Agreement (the "WRI SEC
Documents"). As of their respective dates, the WRI SEC Documents as
they relate to the Gas Business complied in all material respects with
the requirements of the Securities Act or the Exchange Act, as the
case may be, and the rules and regulations of the SEC thereunder
applicable to such WRI SEC Documents, and none of the WRI SEC
Documents as they relate to the Gas Business contained any untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, for
the applicable periods, not misleading.
(2) The unaudited consolidated financial information of the Gas
Business included as Exhibit B hereto for the three years ended
December 31, 1995 and for the twelve-month period ended September 30,
1996 (the "Consolidated Financial Information of the Gas Business")
were prepared, consistent with WRI's past practices, based upon the
books and records of WRI, and fairly present, in all material
respects, as they relate to the Assets of the Gas Business, the
matters indicated therein. Section 4.2(e)(2) of the WRI Disclosure
Schedule specifies all accounting principles utilized in connection
with the preparation of the Consolidated Financial Information of the
Gas Business which are not in conformity with GAAP. Except as
disclosed in the WRI SEC Documents, there are no agreements,
arrangements or understandings with respect to the Gas Business
between WRI or the Transferred Subsidiaries and any party who is at
the date of this Agreement or was at the time prior to the date hereof
but after January 1, 1996 an Affiliate of WRI or the Transferred
Subsidiaries that are required to be disclosed in the WRI SEC
Documents.
(3) WRI has delivered to ONEOK a true and correct copy of WRI's
FERC Form 2 for the years ended December 31, 1995, December 31, 1994,
and December 31, 1993, required to be filed with the OCC and KCC,
which includes the appropriate Supplement containing certain financial
information related to the gas utility business of WRI (the "Financial
Information Statements"). The Financial Information Statements: (i)
have been prepared, consistent with WRI's past practices, based upon
the books and records of WRI (ii) fairly present, in all material
respects, the matters indicated for the periods indicated therein, in
conformity with the regulations of the OCC, KCC and the FERC (subject
to normal recurring adjustments, none of which are material). WRI has
also delivered to ONEOK the unaudited PP&E Schedules "Intangible
Personal Property; Regulatory Assets; Miscellaneous Debits," and "Gas
Pipelines and Plants," in each case relating to the gas utility
business as of September 30, 1996 (together, the "PP&E Schedules").
The PP&E Schedules: (i) have been prepared consistent with WRI's past
practices based on the books and records of WRI, and (ii) fairly
present, in all material respects, the matters indicated, as of the
date indicated (subject to normal recurring adjustments, none of which
are material). The financial records, ledgers and subledgers, account
books and other accounting records of WRI relating to the Gas Business
have been maintained in accordance with good business practice and are
current, complete, accurate and correct, except for normal month end
adjustments, in all material respects.
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(4) The unaudited financial information of Westar and MCMC
delivered to ONEOK were prepared consistent with WRI's past practices,
based upon the books and records of WRI and the Transferred
Subsidiaries, and fairly present, in all material respects, the
matters indicated therein. Section 4.2(e)(4) of the WRI Disclosure
Schedule specifies all accounting principles utilized in connection
with the preparation of the financial information of Westar and MCMC
which are not in conformity with GAAP.
(f) Information Supplied. None of the information supplied or to be
supplied by WRI or NewCorp for inclusion or incorporation by reference in the
Form S-4 will, at the time the Form S-4 becomes effective under the Securities
Act or at the Merger Effective Time, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, and none of the information supplied or to
be supplied by WRI or NewCorp and included or incorporated by reference in the
Proxy Statement will, at the date mailed to the shareholders of ONEOK or at the
time of the meeting of such shareholders to be held in connection with the
Merger or at the Merger Effective Time, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. If at any time prior to
the Merger Effective Time any event with respect to the Gas Business, or with
respect to other information supplied by WRI or NewCorp for inclusion in the
Proxy Statement or the Form S-4, shall occur which is required to be described
in an amendment of, or a supplement to, the Proxy Statement or the Form S-4,
such event shall be so described, and such amendment or supplement shall be
promptly filed with the SEC.
(g) Absence of Certain Changes or Events. Except (I) as disclosed in,
or reflected in the financial statements included in, the WRI SEC Documents
and/or Section 4.2(g) of the WRI Disclosure Schedule, (II) as contemplated by
this Agreement, or (III) for transactions effected or actions taken by WRI or
the Transferred Subsidiaries after the date of this Agreement without breaching
the terms hereof in the case of clauses (iii) through (viii) below, since August
31, 1996, the Gas Business has been conducted in the ordinary course of business
consistent with past practice, and since August 31, 1996 there has not been: (i)
any event or events which, individually or in the aggregate have had or would
have a Material Adverse Effect on the Gas Business, (ii) any amendment of any
material term of any outstanding equity security or the respective certificates
of incorporation or bylaws of Westar or MCMC; (iii) any non-cash dividend or
distribution by Westar or MCMC or any repurchase, redemption or other
acquisition by Westar or MCMC of any outstanding shares of capital stock or
other equity securities of, or other ownership interests in, Westar or MCMC or
any Significant Subsidiary of Westar or MCMC; (iv) any material change in any
method of accounting or accounting practice by WRI relating to the Gas Business
and the Transferred Subsidiaries; (v) any increase in the salaries or other
compensation payable to any such officer or employee of WRI relating to the Gas
Business or any of the Transferred Subsidiaries (except for normal increases in
the ordinary course of business consistent with past practice) or any increase
in, or addition to, other benefits to which any such officer or employee may be
entitled (except as required by the terms of plans as in effect on the date of
this Agreement or as required by law), (vi) any Material Adverse Change or
threat of a Material Adverse Change in the relations of WRI relating to the Gas
Business or the Transferred Subsidiaries with, or any loss or, to the knowledge
of WRI, threat of loss of, any of the material suppliers or customers of the Gas
Business or the Transferred Subsidiaries, except to the extent such loss does
not and would not have a Material Adverse Effect on the Gas Business, (vii) any
termination, cancellation or waiver of any contract or other right material to
the operation of the Gas Business taken as a whole, except to the extent such
termination, cancellation or waiver does not and would not have a Material
Adverse Effect on the Gas Business, or (viii) any other transaction, commitment,
dispute or other event or condition (financial or otherwise) of any character
(whether or not in the ordinary course of business) that does have or would have
a Material Adverse Effect on the Gas Business.
38
(h) No Undisclosed Material Liabilities. Except as disclosed in the
WRI SEC Documents and/or Section 4.2(h) of the WRI Disclosure Schedule, to the
knowledge of WRI, WRI with respect to the Gas Business and the Transferred
Subsidiaries do not have any liabilities or obligations, including Environmental
Claims, of any kind whatsoever, whether accrued, contingent, absolute,
determined, determinable or otherwise, and whether or not required to be
disclosed, nor are there any facts or circumstances of which WRI has or the
Transferred Subsidiaries have knowledge that could result in obligations or
liabilities of WRI, the Transferred Subsidiaries or any of their Affiliates,
that have or would have a Material Adverse Effect on the Gas Business, other
than: (i) liabilities adequately provided for in the Consolidated Financial
Information of the Gas Business; and (ii) liabilities under this Agreement or
the Ancillary Documents.
(i) No Default. With respect to the Gas Business, neither WRI nor any
of the Transferred Subsidiaries is in default or violation (and no event has
occurred which, with notice or the lapse of time or both, would constitute a
default or violation) of any term, condition or provision of (i) their
respective charters, bylaws or other respective organizational documents, (ii)
any material note, bond, mortgage, indenture, license, agreement or other
instrument or obligation to which WRI or any of the Transferred Subsidiaries is
now a party or by which WRI or any of the Transferred Subsidiaries or any of
their respective properties or assets may be bound, or (iii) any order, writ,
injunction, decree, statute, rule or regulation applicable to WRI or any of the
Transferred Subsidiaries, except in the case of (ii) and (iii) for defaults or
violations which in the aggregate do not and would not have a Material Adverse
Effect on the Gas Business.
(j) Compliance with Applicable Laws. Except as specifically addressed
in other representations in this Section 4.2 or as disclosed in, or reflected in
the financial statements included in, the WRI SEC Documents, or as disclosed or
reflected in the Consolidated Financial Information of WRI and/or as set forth
in Section 4.2(j) of the WRI Disclosure Schedule, WRI and the Transferred
Subsidiaries hold, and subject to the terms of this Agreement and the Ancillary
Documents, will transfer, to the extent transferable, to NewCorp on or before
the Closing, all permits, licenses, variances, exemptions, orders, franchises
and approvals of all Governmental Entities necessary for the lawful conduct of
the Gas Business (the "WRI Permits"), except where the failure so to hold does
not and would not have a Material Adverse Effect on the Gas Business. Except as
disclosed in, or reflected in the financial statements included in, the WRI SEC
Documents, or as disclosed or reflected in the Consolidated Financial
Information of WRI and/or as set forth in Section 4.2(j) of the WRI Disclosure
Schedule, WRI and the Transferred Subsidiaries are in compliance with the terms
of the WRI Permits, except where the failure so to comply does not and would not
have a Material Adverse Effect on the Gas Business. Except as disclosed in the
WRI SEC Documents as disclosed in, or reflected in the financial statements
included in, the WRI SEC Documents, or as disclosed or reflected in the
Consolidated Financial Information of WRI and/or as set forth in Section 4.2(j)
of the WRI Disclosure Schedule, the Gas Business is not being conducted in
violation of any law, ordinance or regulation of any Governmental Entity, except
for violations which do not and would not have a Material Adverse Effect on the
Gas Business. Except as disclosed in, or reflected in the financial statements
included in, the WRI SEC Documents, or as disclosed or reflected in the
Consolidated Financial Information of WRI and/or as set forth in Section 4.2(j)
of the WRI Disclosure Schedule, neither WRI nor any of the Transferred
Subsidiaries has been notified of any pending investigation or review by any
Governmental Entity nor, to the knowledge of WRI or the Transferred
Subsidiaries, is any investigation or review by any Governmental Entity with
respect to WRI and/or any of the Transferred Subsidiaries, in each case, to the
extent relating to the Gas Business, pending or, to the knowledge of WRI,
threatened, other than those the outcome of which does not and is not reasonably
likely to have a Material Adverse Effect on the Gas Business.
39
(k) Litigation. Except as disclosed in the WRI SEC Documents and/or
Section 4.2(k) of the WRI Disclosure Schedule or otherwise within this Section
4.2, as of the date hereof, there is no suit, action or proceeding pending, or,
to the knowledge of WRI or any of the Transferred Subsidiaries, threatened
against or affecting WRI relating to the Gas Business or any of the Transferred
Subsidiaries ("WRI Litigation"), at law or in equity, or before or by any
federal or state commission board, bureau, agency or instrumentality, that,
individually or in the aggregate, has had or would have a Material Adverse
Effect on the Gas Business, and WRI and the Transferred Subsidiaries have no
knowledge of any facts that are likely to give rise to any WRI Litigation, that
(in any case) would have a Material Adverse Effect on the Gas Business, nor is
there any judgment, decree, injunction, rule or order of any Governmental Entity
or arbitrator outstanding against WRI or any of the Transferred Subsidiaries
("WRI Orders") that has or would have a Material Adverse Effect on the Gas
Business or the ability of WRI to consummate the transactions contemplated by
this Agreement or any of the Ancillary Documents.
(l) Taxes. Except as, individually or in the aggregate, do not and
would not have a Material Adverse Effect on the Gas Business:
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(1) WRI, NewCorp (as of the Closing) and each of the Transferred
Subsidiaries has (A) timely (taking into account any extensions) filed
all material federal, state, local and foreign Returns required to be
filed or sent by or with respect to it in respect of any Taxes, (B)
timely paid all Taxes that are shown to be due thereon, (C)
established reserves that are adequate for the payment of all Taxes
not yet due and payable with respect to results of operations, and (D)
to the knowledge of WRI or any of the Transferred Subsidiaries timely
withheld from employee wages and paid over to the proper governmental
authorities all amounts required to be so withheld and paid over.
(2) Section 4.2(l)(2) of the WRI Disclosure Schedule sets forth
the last taxable period through which the Returns of WRI, NewCorp and
each of the Transferred Subsidiaries have been examined by the IRS or
otherwise closed. No material Tax audits or other administrative
proceedings or court proceedings are presently pending with regard to
any Taxes for which WRI, NewCorp, or any of the Transferred
Subsidiaries could be liable, and except as provided for in the
Consolidated Financial Information of the Gas Business, no material
deficiency for any such Taxes has been proposed, asserted or assessed
pursuant to such examination against WRI, NewCorp or any of the
Transferred Subsidiaries by any Governmental Entity with respect to
any period.
(3) Neither WRI, NewCorp (as of the Closing) nor any of the
Transferred Subsidiaries has executed or entered into with the IRS or
any taxing authority (A) any agreement or other document extending or
having the effect of extending the period for assessments or
collection of any federal Income Taxes for which NewCorp or any of the
Transferred Subsidiaries could be liable or (B) a closing agreement
pursuant to Section 7121 of the Code, or any predecessor provision
thereof or any similar provision of state or local Tax law that
relates to the assets or operations of NewCorp or any of the
Transferred Subsidiaries or the Gas Business.
(4) Neither NewCorp (as of the Closing) nor any of the
Transferred Subsidiaries has made an election under Section 341(f) of
the Code or agreed to have Section 341(f)(2) of the Code apply to any
disposition of a subsection (f) asset (as such term is defined in
Section 341(f)(4) of the Code) owned by NewCorp or any of the
Transferred Subsidiaries.
(5) Except as set forth in the WRI SEC Documents, as of the
Closing Date, neither NewCorp nor any of the Transferred Subsidiaries
will be a party to, will be bound by or will have any obligation under
any tax sharing agreement or similar agreement or arrangement.
(6) Section 4.2(l)(6) of the WRI Disclosure Schedule sets forth a
list of federal, state, local or foreign jurisdictions in which WRI,
with respect to the Gas Business, or the Transferred Subsidiaries has
paid any Taxes or filed any Returns during the past 3 years. No
jurisdiction not listed on Section 4.2(l)(6) of the WRI Disclosure
Schedule has made a claim, assertion or, to the knowledge of WRI and
the Transferred Subsidiaries, threat that WRI, with respect to the Gas
Business, or any of the Transferred Subsidiaries is subject to
taxation in such jurisdiction.
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(7) For purposes of subsections (1) and (2) of Section 4.2(l),
the use of the terms "Tax" or "Taxes" in conjunction with WRI shall
refer only to (i) Taxes which are reported on a consolidated, combined
or unitary basis with respect to a group that includes NewCorp or
either of the Transferred Subsidiaries or (ii) Taxes which arise
primarily out of or relate primarily to the Gas Business.
(8) Except as disclosed in Section 4.2(l)(8) of the WRI
Disclosure Schedule, as a result, directly or indirectly, of the
Transactions or the other transactions contemplated by this Agreement
(including without limitation, any terminations of employment prior to
or following the Effective Time), NewCorp will not be obligated to
make a payment (including without limitation any acceleration of
vesting or payment) with respect to Continuing Employees or Retired
Employees who are "disqualified individuals" that would be
characterized as an "excess parachute payment" (as such terms are
defined in Section 280G of the Code).
(m) Employee Matters; ERISA.
(1) Benefit Plans. Section 4.2(m)(1) of the WRI Disclosure
Schedule contains a true and complete list, as of the date hereof, of
each item described below, whether formal or informal, written or
unwritten, legally binding or not, each of which have been or will be
made available to ONEOK:
a. each material "employee benefit plan" within the meaning of
Section 3(3) of ERISA that is or was maintained or
contributed to at any time during the six calendar year
period immediately preceding the date hereof by WRI or any
WRI Affiliate in which Continuing Employees or Retired
Employees participate and each similar plan, program, policy
or arrangement maintained for non-employee directors or
other non-employees who have provided services to WRI or any
WRI Affiliate;
b. each material plan, program, policy, payroll practice or
arrangement not listed in a. above that provides for
bonuses, profit-sharing, incentive compensation, deferred
compensation, equity-based compensation (including stock
options or other stock purchases, restricted stock, stock
appreciation rights, performance units and dividend
equivalents), holiday pay, vacation pay, sick pay, dependent
care benefits, flexible benefits (including any cafeteria
plan governed by Section 125 of the Code), paid or unpaid
leave (including sick leave, parental leave, military leave
and bereavement leave), tuition assistance, relocation or
any similar type of benefits, that has been adopted or
implemented by WRI or any WRI Affiliate and in which
Continuing Employees or Retired Employees participate
(including any such plan, program, policy or arrangement
that has been terminated before the date hereof); and
42
c. each material employment contract, severance contract,
parachute agreement, option agreement, stock appreciation
right agreement, bonus or other incentive award agreement,
deferred compensation agreement, supplemental benefit
agreement, split dollar agreement or other personal service
or benefit contract or arrangement with or covering a
Continuing Employee or Retired Employee.
(2) Contributions. All material contributions and other material
payments required to have been made by WRI or any WRI Affiliate under
Section 412 of the Code in respect of any WRI Pension Benefit Plan
which covers Continuing Employees or Retired Employees or pursuant to
the terms of any WRI Pension Benefit Plan which covers Continuing
Employees or Retired Employees (or to any person pursuant to the terms
thereof) have been timely made or will be timely made in accordance
with Section 404(a)(6) of the Code.
(3) Qualification; Compliance. The following representations
apply to WRI Benefit Plans for which NewCorp may have joint and
several liability or with respect to which assets are being
transferred from the WRI Benefit Plans to plans established by NewCorp
pursuant to the Employee Agreement.
a. Each WRI Benefit Plan that is intended to be "qualified"
within the meaning of Section 401(a) of the Code (1)
currently meets all qualification requirements under the
Code both in form and in operation, except any failure that
can be corrected without material liability, and (2) has
received a favorable determination letter from the IRS on
its qualification or application for such a determination
has been made prior to the expiration of the applicable
remedial amendment period, and to the knowledge of WRI there
are no circumstances existing likely to result in revocation
of any such favorable determination letter.
b. Each WRI Benefit Plan is and has been operated in compliance
with, all applicable laws, rules and regulations governing
such plan, including, without limitation, ERISA and the
Code, and all filings, disclosures and notices required have
been timely made, except for violations that would not have
a Material Adverse Effect on NewCorp. All amendments and
actions required to bring each of the WRI Benefit Plans into
conformity with all of the applicable provisions of ERISA
and the Code and other applicable legal requirements have
been made or taken except to the extent that such amendments
or actions are not required by law to be made or taken until
a date after the Merger Effective Time and except for
actions the failure of which to take would not have a
Material Adverse Effect on NewCorp.
c. To the knowledge of WRI, no individual or entity has engaged
in any transaction in connection with which WRI or any WRI
Affiliate, or any WRI Benefit Plan or any trust, trustee or
administrator thereof, could be subject to liability
pursuant to Section 409 or Section 502 of ERISA, or subject
to an excise tax pursuant to Section 4975 of the Code, which
could in either case have a Material Adverse Effect on
NewCorp.
43
d. Except for matters that would not have a Material Adverse
Effect on NewCorp:
1. To the knowledge of WRI, no WRI Benefit Plan is subject
to any ongoing audit, investigation or other
administrative proceeding of the IRS, the Department of
Labor or any other Governmental Entity or, to the
knowledge of WRI, is scheduled to be subject to such an
audit, investigation or proceeding; and
2. No WRI Benefit Plan is the subject of any pending
application for administrative relief under any
voluntary compliance program of any Governmental Entity
(including, without limitation, the IRS' Voluntary
Compliance Resolution Program or Walk-in Closing
Agreement Program, or the Department of Labor's
Delinquent Filer Voluntary Compliance Program).
(4) Pension Benefit Plan; Liabilities. Except as disclosed in
Section 4.2(m)(4) of the WRI Disclosure Schedule, with respect to the
WRI Pension Benefit Plans, individually and in the aggregate, no
termination or partial termination of any WRI Pension Benefit Plan has
occurred and no event has occurred that would be reasonably expected
to subject the Gas Business or NewCorp, by reason of joint and several
liability, to any liability arising under the Code, ERISA or any other
applicable law (including, without limitation, any liability to or
under any such plan or to the PBGC, or under any indemnity agreement
to which WRI or any WRI Affiliate is a party), which liability could
have a Material Adverse Effect on the Gas Business or NewCorp, by
reason of joint and several liability (excluding liability for benefit
claims and funding obligations payable in the ordinary course and
liability for PBGC insurance premiums payable in the ordinary course).
(5) Welfare Plans. To the knowledge of WRI, no circumstances
exist that could subject WRI or any WRI Affiliate to an excise tax
under Section 4976 of the Code that would have a Material Adverse
Effect on the Gas Business or NewCorp by reason of joint and several
liability.
(6) Documents Made Available. WRI has made available to ONEOK, or
will make available to ONEOK upon request, a true and correct copy of
each collective bargaining agreement to which WRI or any WRI Affiliate
is a party or under which WRI has obligations relating to the Gas
Business or to NewCorp by reason of joint and several liability; and,
with respect to each such WRI Benefit Plan relating to the Gas
Business or to NewCorp by reason of joint and several liability, WRI
has made available or will make available upon request to ONEOK a true
and correct copy of each of the following, as applicable:
44
a. the current plan document (including all amendments adopted
since the most recent restatement) and its most recently
prepared summary plan description and all summaries of
material modifications prepared since the most recent
summary plan description;
b. annual reports or Code Section 6039D information returns
(IRS Form 5500 Series), including financial statements, for
the last two years;
c. the most recent IRS determination letter or other opinion
letter with respect to the qualified status under Code
Section 401(a) of such plan under Code Section 501 of the
related trust;
d. actuarial reports or valuations for the last two years; and
e. trust instruments and insurance contracts; any Form 5310 or
Form 5330 filed with the IRS during the last six years.
(7) Payments Resulting From Merger. Except as set forth on
Section 4.2(m)(7) of the WRI Disclosure Schedule or as provided under
any WRI Benefit Plan or any agreement described in Section 4.2(m)(1)c.
above, the consummation or announcement of any transaction
contemplated by this Agreement will not directly or indirectly (either
alone or upon the occurrence of any additional or further acts or
events) result in any:
a. payment (whether of severance pay or otherwise) becoming due
from WRI or any WRI Affiliate to any current or former
officer, director, employee or independent contractor of WRI
or any WRI Affiliate or to the trustee under any "rabbi
trust" or other funding arrangement, which would reasonably
be expected to result in liability to NewCorp; or
b. benefit under any WRI Benefit Plan being established or
increased or becoming accelerated, vested or payable, except
for a payment or benefit that would have been payable under
the same terms and conditions without regard to the
transactions contemplated by this Agreement, which would
reasonably be expected to result in liability to NewCorp.
(8) Funded Status of Plans. Except as disclosed in Section
4.2(m)(8) of the WRI Disclosure Schedule, (A) each WRI Pension Benefit
Plan has been maintained in compliance with the minimum funding
standards of ERISA and the Code, (B) no WRI Pension Benefit Plan has
incurred any "accumulated funding deficiency" (within the meaning of
Section 302 of ERISA or Section 412 of the Code) and (C) all required
payments to the PBGC with respect to each WRI Pension Benefit Plan
have been made on or before their due dates in each case with respect
to such WRI Pension Benefit Plans covering Continuing Employees or
45
Retired Employees or which would reasonably be expected to result in
liability to NewCorp. Except as disclosed in Section 4.2(m)(8) of the
WRI Disclosure Schedule, neither WRI nor any of its Subsidiaries has
provided, or is required to provide, security to any WRI Pension
Benefit Plan pursuant to Section 401(a)(29) of the Code in each case
with respect to such WRI Pension Benefit Plans covering Continuing
Employees or Retired Employees or which would reasonably be expected
to result in liability to NewCorp.
(9) Multiemployer Plans. Except as disclosed in Section 4.2(m)(9)
of the WRI Disclosure Schedule, no WRI Benefit Plan is a
"multiemployer plan" (within the meaning of Section 4001(a)(3) of
ERISA), a multiple employer plan described in Section 413(c) of the
Code or a "multiple employer welfare arrangement" (within the meaning
of Section 3(40) of ERISA); and none of WRI or any WRI Affiliate is
obligated to contribute to, has incurred or is expected to incur any
withdrawal liability or has had any liability under Title IV of ERISA
with respect to, or any liability in connection with the
reorganization or termination of, any multiemployer plan, multiple
employer plan, or multiple employer welfare arrangement which relates
to the Gas Business or which would reasonably be expected to result in
liability to NewCorp by reason of joint and several liability.
(10) Modification or Termination of Plans. Except as disclosed in
Section 4.2(m)(10) of the WRI Disclosure Schedule or as required
pursuant to a collective bargaining agreement or as required to secure
a favorable determination letter from the IRS, neither WRI nor any WRI
Affiliate is subject to any legal obligation, or has any formal plan,
to enter into any form of material compensation or employment
agreement or to establish any employee benefit plan of any nature
which would reasonably be expected to result in liability to NewCorp
or in which Continuing Employees or Retired Employees may participate,
including (without limitation) any pension, profit sharing, welfare,
post-retirement welfare, stock option, stock or cash award,
non-qualified deferred compensation or executive compensation plan,
policy or practice or to modify or change any existing WRI Benefit
Plan in which Continuing Employees or Retired Employees participate
and, to the knowledge of WRI, there has been no communication to
Continuing Employees or Retired Employees by WRI or any WRI Affiliate
that would reasonably be expected to promise or guarantee such
employees retiree health or life insurance benefits on a permanent
basis.
(11) Reportable Events; Claims. Except as disclosed in Section
4.2(m)(11) of the WRI Disclosure Schedule:
a. No Reportable Event has occurred with respect to any WRI
Pension Benefit Plan that would reasonably be expected to
result in liability to NewCorp, and
b. No liability, claim, action or litigation exists, has been
made, commenced or, to the actual knowledge of WRI,
threatened, by or against WRI or any WRI Affiliate with
respect to any WRI Benefit Plan (other than for benefits or
PBGC premiums payable in the ordinary course) that would
reasonably be expected to result in liability to NewCorp,
and
46
c. The PBGC has not instituted proceedings to terminate any WRI
Pension Benefit Plan, and, to the knowledge of WRI, no
condition exists that presents a likely risk that such
proceedings will be instituted.
(n) Labor Matters. Except as set forth in Section 4.2(n) of the WRI
Disclosure Schedule or the WRI SEC Documents, to the extent related to the Gas
Business:
(1) Neither WRI nor any of the Transferred Subsidiaries is a
party to, or bound by, any collective bargaining agreement or other
current labor agreement with any labor union or organization, and
there is no current union representation question involving employees
of WRI relating to the Gas Business or any of the Transferred
Subsidiaries, nor does WRI or the Transferred Subsidiaries have
knowledge of any activity or proceeding of any labor organization (or
representative thereof) or employee group (or representative thereof)
to organize or threaten to organize any such employees;
(2) There is no unfair labor practice charge or grievance arising
out of a collective bargaining agreement or other grievance procedure
against WRI relating to the Gas Business or any of the Transferred
Subsidiaries pending, or, to the knowledge of WRI or any of the
Transferred Subsidiaries, threatened, that would have a Material
Adverse Effect on the Gas Business;
(3) There is no strike, dispute, slowdown, work stoppage or
lockout pending, or, to the knowledge of WRI or any of the Transferred
Subsidiaries, threatened, against or involving WRI with respect to the
Gas Business and/or any of the Transferred Subsidiaries that would
have a Material Adverse Effect on the Gas Business; and
(4) WRI and the Transferred Subsidiaries are in compliance with
all applicable laws respecting employment and employment practices,
terms and conditions of employment, wages, hours of work and
occupational safety and health, except for non-compliance that would
not have a Material Adverse Effect on the Gas Business.
(o) Intangible Property. WRI and the Transferred Subsidiaries possess
or have adequate rights to use all trademarks, trade names, patents, service
marks, brand marks, brand names, computer programs, databases, industrial
designs and copyrights necessary for the operation of the Gas Business, except
where the failure to possess or have adequate rights to use such properties
would not have a Material Adverse Effect on the Gas Business.
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(p) Environmental Matters.
(1) Compliance.
To the extent related to the Gas Business,
a. To the actual knowledge of the executive officers of WRI and
the officer or employee of WRI with responsibility for
environmental matters, after due inquiry, except as set
forth in the WRI SEC Documents or Section 4.2(p)(1)(a) of
the WRI Disclosure Schedule, WRI and each of the Transferred
Subsidiaries is in compliance with all applicable
Environmental Laws, except where the failure to be so in
compliance would not have a Material Adverse Effect on the
Gas Business.
b. To the actual knowledge of the executive officers of WRI and
the officer or employee of WRI with responsibility for
environmental matters, after due inquiry, except as set
forth in the WRI SEC Documents or Section 4.2(p)(1)(b) of
the WRI Disclosure Schedule, neither WRI nor any of the
Transferred Subsidiaries have received any Environmental
Claim from any person or Governmental Entity that alleges
that WRI or any of the Transferred Subsidiaries is not in
compliance with applicable Environmental Laws, except where
the failure to be so in compliance would not have a Material
Adverse Effect on the Gas Business.
c. Except as set forth in Section 4.2(p)(1)(c) of the WRI
Disclosure Schedule, to the actual knowledge of the
executive officers of WRI and the officer or employee of WRI
with responsibility for environmental matters, after due
inquiry, neither WRI nor any of the Transferred Subsidiaries
has used any waste disposal site, or otherwise disposed of,
transported, or arranged for the transportation of, any
Hazardous Materials to any place or location, in violation
of any Environmental Laws.
(2) Environmental Permits. To the actual knowledge of the
executive officers of WRI and the officer or employee of WRI with
responsibility for environmental matters, after due inquiry, except as
set forth in the WRI SEC Documents or Section 4.2(p)(2) of the WRI
Disclosure Schedule, WRI with respect to the Gas Business has, and the
Transferred Subsidiaries have, obtained or applied for all
Environmental Permits necessary for the construction of their
facilities and the operation of their respective businesses, as
presently conducted, and for the use, storage, treatment,
transportation, release, emission and disposal of raw materials,
by-products, wastes and other substances used or produced by or
otherwise relating to the Gas Business, and all such permits are in
good standing and in all material respects in full force and effect
or, where applicable, a renewal application has been timely filed, is
pending and agency approval is expected to be obtained, and WRI, with
respect to the Gas Business, is and the Transferred Subsidiaries are
in compliance in all material respects with all terms and conditions
of all such Environmental Permits and are not required to make any
expenditure in order to obtain or renew any Environmental Permits
necessary for the operation of the Gas Business, as presently
conducted, except where the failure to obtain or be in compliance with
such Environmental Permits and the requirement to make such
expenditures would not have a Material Adverse Effect on the Gas
Business.
48
(3) Environmental Claims. To the actual knowledge of the
executive officers of WRI and the officer or employee of WRI with
responsibility for environmental matters, after due inquiry, except as
set forth in the WRI SEC Documents or Section 4.2(p)(3) of the WRI
Disclosure Schedule, there is no Environmental Claim pending or, to
the actual knowledge of the executive officers of WRI and the officer
or employee of WRI with responsibility for environmental matters,
threatened
a. against WRI relating to the Gas Business, or any of the
Transferred Subsidiaries,
b. against any person or entity whose liability for such
Environmental Claim WRI in connection with the Gas Business
or any of the Transferred Subsidiaries has retained or
assumed either contractually or by operation of law, or
c. against any real or personal property or operations that
WRI, relating to the Gas Business, or any of the Transferred
Subsidiaries owns, leases or manages, in whole or in part,
that, in the case of a., b. or c., if adversely determined, would
have a Material Adverse Effect on the Gas Business.
(4) Releases. To the actual knowledge of the executive officers
of WRI and the officer or employee of WRI with responsibility for
environmental matters, after due inquiry, except as set forth in
Section 4.2(p)(4) of the WRI Disclosure Schedule or the WRI SEC
Documents, and except for Releases of Hazardous Materials the
liability for which would not have a Material Adverse Effect on the
Gas Business, with respect to the Gas Business, neither WRI, with
respect to the Gas Business, nor any of the Transferred Subsidiaries
has caused any Release of any Hazardous Materials at any place or
property, including but not limited to, properties owned, leased or
occupied by WRI or any of the Transferred Subsidiaries or any
predecessor of WRI or any of the Transferred Subsidiaries, nor has it
transported or arranged for the transportation of any Hazardous
Materials to any place or property where a Release has occurred or
allegedly has occurred, where such transportation or arrangement has
had, or would have, a Material Adverse Effect on the Gas Business.
(5) Underground Storage Tanks or Surface Impoundments. To the
actual knowledge of the executive officers of WRI and the officer or
employee of WRI with responsibility for environmental matters, after
due inquiry, except as set forth in Section 4.2(p)(5) of the WRI
Disclosure Schedule, with respect to the Gas Business, there are no
underground storage tanks or surface impoundments at, on, under or
within any of real property owned, leased or occupied by WRI or any of
the Transferred Subsidiaries, or any portion thereof, other than those
liabilities which would not have a Material Adverse Effect on the Gas
Business.
49
(q) Contracts and Certain Obligations.
(1) Except as set forth in Section 4.2(q)(1) of WRI's Disclosure
Schedule, neither WRI nor any of the Transferred Subsidiaries is a
party to or bound by any Material Contract with respect to the Gas
Business. Except as set forth in Section 4.2(q)(1) of the WRI
Disclosure Schedule, all Material Contracts relating to the Gas
Business are in full force and effect, and each of WRI and the
Transferred Subsidiaries which is a party to or bound by such Material
Contract has performed its obligations thereunder to date and, to the
knowledge of WRI and the Transferred Subsidiaries, each other party
thereto has performed its obligations thereunder to date, other than
any failure of a Material Contract to be in full force and effect or
any nonperformance thereof that would not have a Material Adverse
Effect on the Gas Business.
(2) With respect to the Gas Business, neither WRI nor any of the
Transferred Subsidiaries engages in any natural gas or other futures
or options trading or is a party to any price swaps, hedges, futures
or similar instruments, except for transactions and agreements entered
into or hedge contracts for the purchase or sale of hydrocarbons to
which WRI with respect to the Gas Business or any of the Transferred
Subsidiaries is a party which are commercially reasonable and in
accordance with the general practices of other similarly situated
companies in the industry.
(3) With respect to the Gas Business, neither WRI nor any of the
Transferred Subsidiaries have been given notice of any default under,
or action to alter, terminate, rescind or procure a judicial
reformation of, any material provisions of any Material Contract
relating to the Gas Business.
(4) (i) Section 4.2(q)(4)(i) of the WRI Disclosure Schedule sets
forth a list of (a) all gas purchase contracts which are Material
Contracts (b) all gathering, exchange and transportation contracts
which are Material Contracts, and (c) all other contracts relating to
Gas supply and transportation which are Material Contracts, in each
case, to the extent WRI or any of the Transferred Subsidiaries is a
party thereto and to the extent to which they relate to the Gas
Business (collectively, the "WRI Gas Contracts") (ii) Except as set
forth in Section 4.2(q)(4)(ii) of the WRI Disclosure Schedule, (a) all
WRI Gas Contracts which relate to the Gas Business have been approved
or reviewed by the KCC, to the extent such approval or review is
required, (b) all costs under the WRI Gas Contracts which relate to
the Gas Business are currently being passed through to the customers
and (c) neither WRI nor any of the Transferred Subsidiaries has any
reason to believe that (a) and (b) will not continue in the future.
50
(r) Regulatory Proceedings. Except as set forth in the WRI SEC
Documents or Section 4.2(r) of the WRI Disclosure Schedule and other than
purchase gas adjustment provisions, no portion of the Gas Business in relation
to which all or part of the rates or services are regulated by a Governmental
Entity (i) has rates which have been or are being collected subject to refund,
pending final resolution of any rate proceeding pending before a Governmental
Entity or on appeal to the courts or (ii) is a party to any rate proceeding
before a Governmental Entity or on appeal from orders of a Governmental Entity
which could result in orders having a Material Adverse Effect on the Gas
Business.
(s) Regulation as a Utility.
(1) WRI is an exempt Holding Company under Section 3(a) of
the 1935 Act and as such is exempt from all provisions of the 1935 Act
except Section 9(a)(2) thereof.
(2) The Gas Business of WRI is regulated as a public utility in
the States of Kansas and Oklahoma and in no other states. MCMC is a
regulated utility in the State of Kansas.
(t) Opinion of Financial Advisor. The Board of Directors of WRI has
received the opinion of Salomon Brothers Inc ("Salomon") to the effect that, as
of the date on which the Board of Directors of WRI approved this Agreement, the
Transactions are fair to WRI from a financial point of view.
(u) Title to Properties.
(1) WRI with respect to the Gas Business and the Transferred
Subsidiaries, individually or together, have good and sufficient title
to all of the Assets that they purport to own, including all of the
properties and assets reflected in the balance sheet as of September
30, 1996, included in the Consolidated Financial Information of the
Gas Business and all properties and assets purchased or otherwise
acquired since September 30, 1996. Such assets are sufficient to
enable WRI with respect to the Gas Business and the Transferred
Subsidiaries to conduct the Gas Business as currently conducted
without material interference, and, at the Closing, will be free and
clear of Liens, other than Permitted Liens. WRI, with respect to the
Gas Business, and the Transferred Subsidiaries, individually or
together, hold under valid lease agreements all real and personal
properties which constitute part of the Assets or are reflected in the
Consolidated Financial Information of the Gas Business as being held
under capitalized leases and enjoy peaceful and undisturbed possession
of such properties under such leases, other than any properties as to
which such leases will have terminated in the ordinary course of
business since the date of such financial information. Neither WRI,
with respect to the Gas Business, nor any of the Transferred
Subsidiaries, nor any of their predecessors has received any written
notice of any adverse claim to the title to any properties owned by
them or with respect to any lease under which any properties are held
by them, other than any claims that, individually or in the aggregate,
would not have a Material Adverse Effect on the Gas Business.
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(2) With respect to the Gas Business, neither WRI nor any of the
Transferred Subsidiaries is in violation of the terms of any Easement
except any such violations that, individually or in the aggregate,
would not have a Material Adverse Effect on the Gas Business. Except
as would not have a Material Adverse Effect on the Gas Business, all
Easements in favor of the Gas Business are valid and enforceable and
grant the rights purported to be granted thereby and all rights
necessary thereunder for the operation of the Gas Business. Except as
would not have a Material Adverse Effect on the Gas Business, to the
knowledge of WRI, there are no spatial gaps in the Easements in favor
of the Gas Business that would have a Material Adverse Effect on the
Gas Business and all parts of the pipeline assets which constitute a
portion of the Assets are located either on property which is owned in
fee by WRI or the Transferred Subsidiaries or on property which is
subject to an Easement in favor of WRI or a Transferred Subsidiary.
(v) Condition of Assets. To the knowledge of WRI and the Transferred
Subsidiaries, the buildings, plants, structures, and equipment of WRI relating
to the Gas Business and the Transferred Subsidiaries are structurally sound, are
in good operating condition and repair, and are adequate for the uses to which
they are being put, and none of such buildings, plants, structures, or equipment
is in need of maintenance or repairs except for ordinary, routine maintenance
and repairs that are not material in nature or cost.
(w) Accounts Receivable. All Accounts Receivable with respect to the
Gas Business represent or will represent, as of the Closing, valid obligations
arising from sales actually made or services actually performed in the ordinary
course of business of WRI with respect Gas Business and of the Transferred
Subsidiaries. Unless paid prior to the Closing, the Accounts Receivable relating
to the Gas Business are or will be, as of the Closing, collectible, subject only
to allowance for doubtful accounts, and calculated consistently with past
practice. There is no contest, claim or right of set-off, under any contract or
with any obligor of an Account Receivable relating to the Gas Business relating
to the amount or validity of such Account Receivable which would have a Material
Adverse Effect on the Gas Business.
(x) Beneficial Ownership of ONEOK Common Stock. Neither WRI nor any of
its Subsidiaries "beneficially owns" (as defined in Rule 13d-3 under the
Exchange Act) any of the outstanding ONEOK Common Stock or ONEOK Preferred
Stock.
(y) Brokers. Except for the fees and expenses payable to Salomon,
which fees are reflected in its agreement with WRI and will be for the account
of and paid by WRI and not by NewCorp, no broker, investment banker or other
person is entitled to any broker's, finder's or other similar fee or commission
in connection with the negotiations leading to this Agreement or the
consummation of the Transactions and the other transactions contemplated by this
Agreement based upon arrangements made by or on behalf of WRI or any of the
Transferred Subsidiaries.
(z) Insurance. With respect to the Gas Business, WRI and the
Transferred Subsidiaries maintain insurance coverage as is customary for the
industry in which the Gas Business operates (taking into account the cost and
availability of such insurance). All such insurance policies are with reputable
insurance carriers. There are no claims pending under any of such policies as to
which coverage has been questioned, denied or disputed by the underwriters of
such policies or in respect of which such underwriters have reserved their
rights, except for claims that would not have a Material Adverse Effect on the
Gas Business. All premiums payable under all such policies have been paid and
WRI and the Transferred Subsidiaries have otherwise complied fully with the
terms and conditions of all such policies.
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(aa) Business of NewCorp. Prior to the Closing, NewCorp shall not have
engaged in any business or incurred any liabilities, except as expressly
contemplated by this Agreement.
(ab) Intercompany Liabilities. Prior to the Closing, all liabilities
of the Transferred Subsidiaries to WRI and its Subsidiaries shall have been
discharged.
(ac) Related Party Transactions. With respect to the Gas Business,
there are no contracts, arrangements or transactions in effect between WRI or
any of the Transferred Subsidiaries, on the one hand, and any officer, director
or 5% stockholder of WRI, or any Affiliate or immediate family member of any of
the foregoing persons, on the other hand, except as set forth in Section 4.2(ac)
of the WRI Disclosure Schedule.
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER
5.1 Conduct of Gas Business Pending the Merger. During the period from
the date of this Agreement and continuing until the Merger Effective Time, WRI
agrees as to itself and the Transferred Subsidiaries that (except as expressly
contemplated or permitted by this Agreement, as provided in Section 5.1 of the
WRI Disclosure Schedule (each of which exceptions shall specifically identify
the relevant subsection hereof to which it relates) or to the extent that ONEOK
shall consent in writing, which consent will not be unreasonably withheld or
delayed):
(a) Ordinary Course. WRI and each of the Transferred Subsidiaries
shall carry on the Gas Business in the usual, regular and ordinary course in
substantially the same manner as heretofore conducted and, to the extent
consistent therewith, shall use all commercially reasonable efforts to preserve
intact the present business organizations of the Gas Business, keep available
the services of the current officers and employees of the Gas Business, and
endeavor to preserve the relationships of the Gas Business with customers,
suppliers, distributors, creditors, lessors, employees and business associates
to the end that the goodwill and ongoing business of the Gas Business shall not
be impaired in any material respect at the Merger Effective Time.
(b) Changes in Stock. WRI shall not permit Westar or MCMC to (i)
split, combine or reclassify any of the outstanding shares of capital stock of
Westar or MCMC or issue or authorize or propose the issuance of any other
securities in respect of, in lieu of or in substitution for shares of capital
stock of Westar or MCMC or pay or declare any dividends; or (ii) repurchase,
redeem or otherwise acquire, any shares of the capital stock of Westar or MCMC.
53
(c) Issuance of Securities. Except for the issuance of capital stock
as contemplated by Article III hereof, NewCorp shall not issue, deliver, pledge,
dispose of, encumber or sell, or authorize or propose to issue, deliver, pledge,
dispose of, encumber or sell, any shares of its capital stock of any class, or
other voting securities of NewCorp or any securities convertible into, or any
rights, warrants or options to acquire, any such shares, or other voting
securities or convertible securities.
(d) No Acquisitions. Except as provided for in Article I of this
Agreement, WRI shall not, and it shall not permit any of the Transferred
Subsidiaries to, acquire or agree to acquire by merging or consolidating with,
or by purchasing an equity interest in or a portion of the assets of, or by any
other manner, any business or any corporation, partnership, association or other
business organization or division thereof in the local natural gas distribution
business in the States of Kansas, Missouri or Oklahoma which will form a part of
the Assets with an aggregate book value of $6,500,000 or more.
(e) No Dispositions. Other than dispositions in the ordinary course of
business consistent with past practice that are not material to the Gas Business
and other dispositions with an aggregate of inventory and equipment book value
not to exceed $6,500,000, WRI shall not, and it shall not permit any of the
Transferred Subsidiaries to, sell, lease, encumber or otherwise dispose of, or
agree to sell, lease (whether such lease is an operating or capital lease),
encumber or otherwise dispose of, any of the Assets.
(f) No Dissolution, Etc. Once organized, NewCorp shall not authorize,
recommend, propose or announce an intention to adopt a plan of complete or
partial liquidation or dissolution of NewCorp.
(g) Certain Employee Matters. Except as specified in Section 5.1(g) of
the WRI Disclosure Schedule, as required by collective bargaining agreements, as
may be required by applicable law or as expressly contemplated by this
Agreement, including Section 5.1(c) hereof, WRI, with respect to employees of
the Gas Business, shall not, nor shall it permit any of the Transferred
Subsidiaries with respect to employees of the Gas Business, other than in the
ordinary course of business that, in the aggregate, does not result in a
material increase in benefits or compensation expense to the Gas Business, to:
(1) amend, or increase the amount of (or accelerate the payment
or vesting of) any benefit or amount payable under, any employee
benefit plan or any other contract, agreement, commitment,
arrangement, plan or policy providing for compensation or benefits to
any current or former officer or employee, and maintained by,
contributed to or entered into by, WRI or any of the Transferred
Subsidiaries with respect to employees of the Gas Business;
(2) increase (or enter into any contract, agreement, commitment
or arrangement to increase in any manner) the compensation or fringe
benefits, or otherwise to extend, expand or enhance the engagement,
employment or any related rights, of any current or former officer or
employee, except for normal increases in the ordinary course of
business consistent with past practice that, in the aggregate, do not
result in a material increase in benefits or compensation expense to
the Gas Business;
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(3) adopt, establish or implement any plan, policy or other
arrangement providing for any form of benefits or other compensation
to any current or former officer or employee;
(4) enter into or amend any employment agreement, severance
agreement, or other contract, agreement or arrangement with any
current or former officer or employee; or
(5) pay or agree to pay any pension, retirement allowance or
other benefit not required or contemplated by any of the existing WRI
Benefit Plans as in effect on the date of this Agreement to any
current or former officer or employee.
(h) Leases; Capital Expenditures. With respect to the Gas Business,
WRI shall not, nor shall WRI permit any of the Transferred Subsidiaries to, (i)
except in the ordinary course of business, enter into any lease (whether such
lease is an operating or capital lease) or (ii) incur Liens on the Assets, other
than Permitted Liens, or (iii) make or commit to make capital expenditures
outside the ordinary course of business or in excess of budgeted amounts
previously disclosed to ONEOK, except to the extent necessary to meet applicable
legal or regulatory requirements or to maintain the safety of the operations.
(i) Affiliate Transactions. WRI shall not, nor shall it permit any of
the Transferred Subsidiaries to, enter into any agreement or arrangement with
respect to the Gas Business with any of their respective Affiliates (as such
term is defined in Rule 405 under the Securities Act, an "Affiliate"), on terms
materially less favorable to the Gas Business than could be reasonably expected
to have been obtained with an unaffiliated third party on an arm's-length basis.
(j) Rate Matters. Except as required by statute, regulation or
judicial rule or order, with respect solely to the Gas Business, WRI shall not,
and shall not permit any of the Transferred Subsidiaries to, make any filing
with any Governmental Entity regarding any changes in rates or charges (other
than pass-through fuel and gas rates or charges under existing tariffs or rate
schedules), standards of service, accounting, or the services provided by the
Gas Business (or any amendment thereto).
(k) Contracts. With respect to the Gas Business, WRI shall not, nor
shall it permit any of the Transferred Subsidiaries to, except in the ordinary
course of business consistent with past practice, modify, amend, terminate,
renew or fail to use reasonable business efforts to renew any Material Contract
or agreement to which it or any of the Transferred Subsidiaries is a party or
waive, release or assign any material rights or claims. With respect to the Gas
Business, WRI shall not, nor shall it permit any of the Transferred Subsidiaries
to, enter into any contract involving total consideration of $10,000,000 or
more, with a term longer than one year which is not terminable by WRI or any
such Transferred Subsidiary without penalty upon no more than 90 days' prior
notice.
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(l) Insurance. WRI shall, and shall cause the Transferred Subsidiaries
to, maintain with financially responsible insurance companies insurance with
respect to the Gas Business, in such amounts and against such risks and losses
as are consistent with the past practices of WRI.
(m) Permits. WRI shall, and shall cause the Transferred Subsidiaries
to, use reasonable efforts to maintain in effect all existing WRI Permits which
are material to the operations of the Gas Business.
(n) Tax Matters. WRI shall not and shall not permit any of the
Transferred Subsidiaries to (i) make or rescind any material express or deemed
election relating to Taxes with respect to the Gas Business, unless it is
reasonably expected that such action will not adversely affect the Gas Business,
including elections for any and all joint ventures, partnerships, limited
liability companies, working interests or other investments, (ii) settle or
compromise any material claim, action, suit, litigation, proceeding,
arbitration, investigation, audit or controversy relating to Taxes with respect
to the Gas Business, except where such settlement or compromise will not
adversely affect the Gas Business, or (iii) change in any material respect any
of the methods utilized by the Gas Business in reporting income or deductions
for federal income tax purposes, except as may be required by applicable law or
except for such changes that are reasonably expected not to adversely affect the
Gas Business.
(o) Discharge of Liabilities. With respect to the Gas Business, WRI
shall not, nor shall it permit any of the Transferred Subsidiaries to, pay,
discharge or satisfy any material claims, liabilities or obligations (absolute,
accrued, asserted or unasserted, contingent or otherwise), other than the
payment, discharge or satisfaction, in the ordinary course of business
consistent with past practice (which includes the payment of final and
unappealable judgments) or in accordance with their terms, of liabilities
reflected or reserved against in, or contemplated by, the Consolidated Financial
Information of the Gas Business, or incurred in the ordinary course of business
consistent with past practice.
(p) Other Actions. WRI shall not, and shall not permit any of the
Transferred Subsidiaries to, take or fail to take any other action which would
reasonably be expected to prevent or materially impede, interfere with or delay
the Merger or the Transactions or the other transactions contemplated by this
Agreement, the Ancillary Documents, or the Transfer Documents.
(q) Agreements. WRI shall not, nor shall it permit any of the
Transferred Subsidiaries to, agree in writing or otherwise to take any action
inconsistent with the foregoing.
(r) Business of NewCorp. WRI shall not permit NewCorp to engage in any
business or incur any liabilities or be a party to any contract or agreement,
other than as contemplated by this Agreement or the Ancillary Documents.
(s) Shareholder Agreement. At the Closing, WRI and NewCorp shall enter
into the Shareholder Agreement, in the form attached hereto as Exhibit C (the
"Shareholder Agreement").
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(t) Rights Agreement. WRI shall use best efforts to take or cause to
be taken, all actions and to do or cause to be done, all things necessary to
adopt the NewCorp Rights Agreement.
(u) Material Information. With respect to the Gas Business, without
limiting other obligations imposed by this Agreement, WRI will use best efforts
to keep ONEOK informed of any material business developments of WRI and the
Transferred Subsidiaries, including but not limited to significant Gas
contracts, material acquisitions and dispositions.
(v) Intercompany Liabilities. WRI will use best efforts to take or
cause to be taken, all actions and to do or cause to be done, all things
necessary to discharge any liabilities of the Transferred Subsidiaries to WRI or
its other Subsidiaries prior to Closing.
5.2 Certain Restrictions in Respect of ONEOK. During the period from
the date of this Agreement and continuing until the Merger Effective Time, ONEOK
agrees as to itself and its Subsidiaries that (except as expressly contemplated
or permitted by this Agreement, as provided in Section 5.2 of the ONEOK
Disclosure Schedule (each of which exceptions shall specifically identify the
relevant subsection hereof to which it relates) or to extent that WRI shall
otherwise consent in writing):
(a) Changes in Stock. ONEOK shall not (i) engage in any repurchase,
recapitalization, restructuring, redemption, other acquisition or reorganization
with respect to its capital stock, including, without limitation, by way of any
extraordinary dividends on or other extraordinary distributions in respect of
any of its capital stock, (ii) split, combine or reclassify any of the
outstanding shares of capital stock of ONEOK or issue, authorize or propose the
issuance of any other securities in respect of, in lieu of or in substitution
for shares of capital stock of ONEOK, or (iii) amend any material term or
provision of the ONEOK Common Stock or ONEOK Preferred Stock. Notwithstanding
the foregoing, ONEOK shall have the right to cause the ONEOK Preferred Stock to
be redeemed or repurchased at any time prior to the Merger Effective Time
pursuant to Section 5.2(d) hereof provided that the aggregate redemption or
repurchase price shall not exceed the redemption price required to be paid under
the ONEOK Certificate of Incorporation upon such redemption.
(b) Governing Documents; Other Material Transactions. ONEOK shall not
amend or propose to amend its articles of incorporation or bylaws, as amended
through the date hereof. ONEOK shall not effect any transactions which if
effected after Closing would constitute a "Change of Control" as defined in
Section 1.1 of the Shareholder Agreement. For any matter that is being presented
to the Board of Directors of ONEOK, other than with respect to an Acquisition
Proposal and the enforcement or interpretation by ONEOK of its rights under the
Agreement or the Ancillary Documents, ONEOK shall (i) provide written notice to
WRI 10 days prior to the time of such presentation or, if not possible, at the
same time that the Board of Directors will receive such notice and (ii) deliver
to WRI any written materials to be provided to the Board of Directors of ONEOK
at the same time they are provided to the members of the Board of Directors of
ONEOK relating thereto and, if not possible, prior to the applicable meeting of
the Board of Directors.
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(c) Other Actions. ONEOK shall not, and shall not permit any of its
Subsidiaries to, take or fail to take any other action which would reasonably be
expected to prevent or materially impede, interfere with or delay the
Transactions or the other transactions contemplated hereby or by the Ancillary
Documents.
(d) Rights; Redemption of Capital Stock. ONEOK shall (i) cause the
rights contemplated by the ONEOK Rights Agreement to be redeemed prior to the
Merger Effective Time and (ii) repurchase or redeem all of the outstanding
shares of the ONEOK Preferred Stock with the result that the holders of the
ONEOK Preferred Stock will not have the right to vote on the Merger.
(e) Material Information. Without limiting other obligations imposed
by this Agreement, ONEOK will use its best efforts to keep WRI informed of any
material business developments, including but not limited to significant Gas
contracts, material acquisitions and dispositions.
(f) Other Agreements. Prior to Closing, ONEOK and its Subsidiaries
will use their best efforts, take or cause to be taken all actions and do or
cause to be done all things necessary, to enter into the Shared Services
Agreement and the Marketing Agreement.
(g) Agreements. ONEOK shall not agree, nor shall it permit any of its
Subsidiaries to agree, in writing or otherwise to take any action inconsistent
with the foregoing.
(h) Stock Options. ONEOK will not issue any ONEOK Options.
(i) ONEOK shall not issue any equity securities except in connection
with the acquisition, by merger or otherwise, of any third party or the assets
of any third party.
5.3 No Solicitation.
(a) From and after the date hereof, ONEOK will not, and will not
authorize or permit any of its officers, directors, employees, investment
bankers, attorney or agents and other representatives or those of any of its
Subsidiaries (collectively, "ONEOK Representatives") to, directly or indirectly,
solicit, initiate or encourage (including by way of providing information to any
prospective buyer) the making of any proposal that constitutes, or may
reasonably be expected to lead to, an Acquisition Proposal (as hereinafter
defined) from any person or engage in any discussions or negotiations or
providing any non-public information or data with respect thereto or otherwise
cooperate with or assist or participate in, or facilitate any effort or attempt
to make or implement, any such proposal; provided, however, that,
notwithstanding any other provision of this Agreement, (i) ONEOK's Board of
Directors may take and disclose to ONEOK's stockholders a position contemplated
by Rule 14e-2(a) promulgated under the Exchange Act, and (ii) prior to approval
of this Agreement by ONEOK's stockholders and following receipt from a third
party (without any solicitation, initiation, encouragement, discussion or
negotiation, directly or indirectly, by or with ONEOK or any ONEOK
Representatives) of an unsolicited bona fide Acquisition Proposal, (x) ONEOK may
engage in discussions or negotiations with such third party and/or may furnish
such third party information concerning ONEOK and its business, properties and
assets if such third party executes a confidentiality agreement in favor of
ONEOK and (y) the Board of Directors of ONEOK may withdraw, modify or not make
its recommendation referred to in Section 6.5. In the event ONEOK or the Board
of Directors of ONEOK takes any of the actions specified in clauses (x) or (y)
of the immediately preceding sentence, WRI shall be notified of the taking of
such action contemporaneously with the taking of such action and the provisions
of Section 6.19 shall thereupon terminate without any further action on the part
of WRI or ONEOK.
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(b) ONEOK shall immediately cease and cause to be terminated any
existing solicitation, initiation, encouragement, activity, discussion or
negotiation with any parties conducted heretofore by ONEOK or any ONEOK
Representatives with respect to any Acquisition Proposal existing on the date
hereof.
(c) As used in this Agreement, "Acquisition Proposal" means any
proposal or offer, other than the Merger, for, or that could be reasonably
expected to lead to, a tender or exchange offer, a merger, consolidation or
other business combination involving ONEOK or any proposal to acquire in any
manner a substantial equity interest in, or any substantial portion of, the
assets of ONEOK.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 Preparation of Form S-4 and the Proxy Statement. As promptly as
practicable after the date hereof, ONEOK shall prepare and file with the SEC the
Proxy Statement and WRI shall prepare and file with the SEC the Form S-4, in
which the Proxy Statement will be included as a prospectus. WRI shall use its
best efforts to have the Form S-4 declared effective under the Securities Act as
promptly as practicable after filing. ONEOK shall use its best efforts to cause
the Proxy Statement to be mailed to the shareholders of ONEOK at the earliest
practicable date. WRI shall use its best efforts to obtain all necessary state
securities laws or "blue sky" permits, approvals and registrations in connection
with the issuance of NewCorp Common Stock and, if applicable, NewCorp Preferred
Stock, Series A and NewCorp Preferred Stock, Series B ("NewCorp Preferred
Stock"), in the Merger and shall furnish all information concerning ONEOK and
the holders of ONEOK Common Stock as may be reasonably requested in connection
with obtaining such permits, approvals and registrations. ONEOK shall bear 55%
and WRI shall bear 45% of the final cost of preparing and filing the Form S-4
and requisite financial statements filed with the Form S-4 and all other filings
required to be made under the Securities Act and the Exchange Act, including,
without limitation, the Consolidated Financial Information of the Gas Business.
Upon the consummation of the Merger, the Surviving Corporation shall reimburse
WRI in full for that portion of the expenses borne by WRI as contemplated by
this Section 6.1 (other than the fees and expenses of counsel and fees and
expenses payable to financial advisors).
6.2 Letter of ONEOK's Accountants. ONEOK shall use its best efforts to
cause to be delivered to NewCorp a letter of KPMG Peat Marwick, L.L.P., ONEOK's
public accountants, dated a date within two business days before the date on
which the Form S-4 shall become effective and addressed to WRI and ONEOK, in
form and substance reasonably satisfactory to WRI and customary in scope and
substance for letters delivered by independent public accountants in connection
with registration statements similar to Form S-4.
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6.3 Letter of WRI's Accountants. WRI shall use its best efforts to
cause to be delivered to ONEOK a letter of Arthur Andersen, L.L.P., WRI's public
accountants, dated a date within two business days before the date on which the
Form S-4 shall become effective and addressed to ONEOK and WRI, in form and
substance reasonably satisfactory to ONEOK and customary in scope and substance
for letters delivered by independent public accountants in connection with
registration statements similar to the Form S-4.
6.4 Access to Information. Upon reasonable notice, and in all events
to the extent reasonably related to the Transactions and the other transactions
contemplated by this Agreement and the Ancillary Documents, WRI and ONEOK shall
each (and WRI shall cause the Transferred Subsidiaries and ONEOK shall cause its
Subsidiaries to) afford to the officers, employees, accountants, counsel and
other representatives of the other, access, during normal business hours during
the period prior to the Merger Effective Time, to all its properties, books,
contracts, commitments and records and, during such period, each of WRI and
ONEOK shall (and WRI shall cause the Transferred Subsidiaries and ONEOK shall
cause its Subsidiaries to) furnish promptly to the other (a) a copy of each
report, schedule, registration statement and other document filed or received by
it during such period pursuant to SEC requirements and (b) all other information
concerning its business, properties and personnel as such other party may
reasonably request. Each of WRI and ONEOK agrees that it will not and will cause
its respective representatives not to, use any information obtained pursuant to
this Section 6.4 for any purpose unrelated to the consummation of the
Transactions and the other transactions contemplated by this Agreement and the
Ancillary Documents. The Confidentiality Agreement dated June 17, 1996 between
WRI and ONEOK (the "Confidentiality Agreement") shall apply with respect to
information furnished thereunder or hereunder and any other activities
contemplated thereby.
6.5 ONEOK Stockholders' Meeting. ONEOK shall (i) call a meeting of its
common stockholders (the "ONEOK Stockholders' Meeting") to be held as promptly
as possible after the date hereof for the purpose of voting upon this Agreement
and the Merger, (ii) through its Board of Directors, recommend to its
stockholders approval of such matters and, subject to the provisions of Section
5.3, not rescind such recommendation, (iii) use its best efforts to obtain
approval and adoption of this Agreement and the Merger by its common
stockholders, and (iv) use all reasonable efforts to hold such meeting as soon
as practicable after the date upon which the Form S-4 becomes effective,
provided, however, that nothing herein obligates ONEOK to take any action that
would cause its Board of Directors to act inconsistently with their fiduciary
duties as determined by the Board of Directors of ONEOK in good faith. The ONEOK
Stockholders' Meeting shall be held on such date as soon as practicable after
the date upon which the Form S-4 becomes effective as ONEOK and WRI shall
mutually determine.
6.6 Regulatory and Other Approvals.
(a) HSR Act. Each party hereto shall file or cause to be filed with
the Federal Trade Commission and the Department of Justice any notifications
required to be filed by their respective "ultimate parent" within the meaning of
the HSR Act companies under the HSR Act and the rules and regulations
promulgated thereunder with respect to the Transactions and the other
transactions contemplated hereby and by the Ancillary Documents. Such parties
will use all commercially reasonable efforts to make such filing promptly and to
respond on a timely basis to any requests for additional information made by
either of such agencies.
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(b) Other Regulatory Approvals. Each party hereto shall cooperate and
use its best efforts to promptly prepare and file all necessary documentation,
to effect all necessary applications, notices, petitions, filings and other
documents, and to use all commercially reasonable efforts to obtain (and will
cooperate with each other in obtaining) any consent, acquiescence,
authorization, order or approval of, or any exemption or nonopposition by, any
Governmental Entity required to be obtained or made by ONEOK, WRI or any of
their respective Subsidiaries in connection with the Transactions and the other
transactions contemplated by the Ancillary Documents and hereby or the taking of
any action contemplated thereby or by this Agreement, including without
limitation the ONEOK Required approvals and the WRI Required Approvals. Each
party shall have the right to review and approve in advance (such approvals not
to be unreasonably withheld based upon the economic benefits expected to be
realized by such party from the Transactions and the other transactions
contemplated by the Ancillary Documents and this Agreement) all applications for
approvals to be filed by the other party. Each party shall consult with the
other with respect to the obtaining of all such necessary or advisable permits,
consents, approvals and authorizations of Governmental Authorities.
(c) Other Approvals. Each party hereto will, and will cause its
Subsidiaries to, take all commercially reasonable actions necessary to obtain
(and will cooperate with each other in obtaining) all ONEOK Required Consents
and all WRI Required Consents, as the case may be.
6.7 Authorization for Shares and Stock Exchange Listing. Prior to the
Merger Effective Time, WRI shall have caused NewCorp to take all action
necessary to permit it to issue the number of shares of NewCorp Common Stock
required to be issued pursuant to Sections 3.1 and 3.2. Prior to the Closing
Date, WRI shall cause NewCorp to take all reasonable efforts to cause the shares
of NewCorp Common Stock and NewCorp Preferred Stock to be issued in the Merger
and the shares of NewCorp Common Stock to be reserved for issuance upon exercise
of the ONEOK Options assumed by NewCorp pursuant to Section 6.8 and issuances
under the ONEOK Stock Plans to be approved for listing on the NYSE, subject to
official notice of issuance.
6.8 Stock Options. (a) At the Merger Effective Time, each outstanding
ONEOK Option, whether vested or unvested, shall be assumed by NewCorp. Each such
option shall be deemed to constitute an option to acquire, on the same terms and
conditions as were applicable under each ONEOK Option, a number of shares of
NewCorp Common Stock equal to the number of shares of ONEOK Common Stock as the
holder of such ONEOK Option would have been entitled to receive pursuant to the
Merger had such holder exercised such option in full immediately prior to the
Merger Effective Time, at a price per share equal to (y) the aggregate exercise
price for ONEOK Common Stock otherwise purchasable pursuant to such ONEOK
Option, divided by (z) the number of full shares of NewCorp Common Stock deemed
purchasable pursuant to such ONEOK Option. In no event shall NewCorp be required
to issue fractional shares of NewCorp Common Stock. In the case of any option
which is an "incentive stock option" (as defined in Section 422 of the Code),
the adjustments made pursuant to this subsection shall be and are intended to be
effected in a manner which is consistent with the requirements of Section 424(a)
of the Code.
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(b) As soon as practicable after the Merger Effective Time, NewCorp
shall file with the SEC a registration statement on Form S-8 (or any successor
form) or another appropriate form with respect to the shares of NewCorp Common
Stock subject to the ONEOK Options assumed in accordance with this Section 6.8
and shall use all commercially reasonable efforts to maintain the effectiveness
of such registration statement or registration statements (and maintain the
current status of the prospectus or prospectuses contained therein) for so long
as the ONEOK Options remain outstanding.
6.9 Agreement to Defend. In the event any claim, action, suit,
investigation or other proceeding by any governmental body or other person or
other legal or administrative proceeding is commenced that questions the
validity or legality of the Transactions and the other transactions contemplated
hereby and by the Ancillary Documents or seeks damages in connection therewith,
the parties hereto agree to cooperate and use their reasonable efforts to defend
against and respond thereto.
6.10 Public Announcements. WRI and ONEOK will consult with each other
before issuing any press release or otherwise making any public statements with
respect to the Transactions and the other transactions contemplated by this
Agreement and the Ancillary Documents, and shall not issue any such press
release or make any such public statement prior to such consultation, except as
may be required by applicable law or by obligations pursuant to any listing
agreement with any national securities exchange or transaction reporting system.
6.11 Other Actions. Except as contemplated by this Agreement, neither
WRI nor ONEOK shall, and none of them shall permit any of their respective
Subsidiaries to, take or agree or commit to take any action that is reasonably
likely to result in any of its respective representations or warranties
hereunder being untrue in any material respect or in any of the conditions to
the Merger set forth in Article VII not being satisfied, in each case as of the
Closing Date.
6.12 Advice of Changes; SEC Filings. WRI and ONEOK shall confer on a
regular basis with each other, report on operational matters and promptly advise
each other orally and in writing of any change or event having, or which,
insofar as can reasonably be foreseen, could have, a Material Adverse Effect on
the Gas Business or ONEOK, as the case may be. ONEOK and WRI shall promptly
provide each other (or their respective counsel) copies of all filings made by
such party with the SEC or any other Governmental Entity in connection with this
Agreement and the Transactions and the other transactions contemplated hereby
and by the Ancillary Documents.
6.13 Reorganization. It is the intention of the parties hereto that
the Merger will qualify as a reorganization described in Section 368(a) of the
Code (and any comparable provisions of applicable state law) and the Asset
Transaction will qualify as a transfer described in Section 351 of the Code (and
any comparable provisions of applicable state law) and the parties will so
characterize the Merger and the Asset Transaction for the purpose of all Returns
and other filings. None of WRI, ONEOK nor NewCorp (nor any of their respective
Subsidiaries) will take or omit to take any action (whether before, on or after
the Closing Date) that would cause the Merger or the Asset Transaction not to be
so treated.
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6.14 Disclosure Schedules. The ONEOK Disclosure Schedule and the WRI
Disclosure Schedule (collectively, the "Disclosure Schedules") are an integral
part of this Agreement and shall modify or otherwise affect the respective
warranties, covenants or agreements of the parties hereto contained in this
Agreement.
6.15 Preparation and Filing of Returns; Payment of Taxes. (a) WRI
shall include Westar and MCMC for all taxable periods of Westar and MCMC ending
on or before the Closing Date in any consolidated, combined or unitary Income
Tax Returns for which they are eligible to do so. WRI shall cause to be timely
prepared and filed all such consolidated, combined or unitary Returns. NewCorp
agrees to cooperate with WRI and its Affiliates in the preparation of the
portions of such Returns pertaining to Westar and MCMC. For purposes of this
Section 6.15(a), WRI shall treat (and shall cause Westar and MCMC to treat) the
Closing Date as the last date of the taxable period of Westar and MCMC in which
they shall be included in such Returns. WRI shall cause to be timely paid all
Taxes to which such Returns relate for all periods covered by such Returns.
(b) WRI shall cause to be timely prepared and filed all required
Income Tax Returns of Westar and MCMC (other than those to be filed by WRI
pursuant to paragraph (a) of this Section 6.15) for any period which ends on or
before the Closing Date for which Income Tax Returns have not been filed as of
the Closing Date. WRI shall pay all Taxes to which such Returns relate for all
periods covered by such Returns (after taking into account any estimated Taxes
paid prior to the Closing).
(c) NewCorp shall cause to be timely prepared and filed, subject to
review by WRI, all required Income Tax Returns of NewCorp, Westar and MCMC for
any period which begins before and ends after the Closing Date (a "Straddle
Period") and shall cause to be paid all Taxes with respect to the Returns to be
caused to be filed by NewCorp pursuant to this Section 6.15(c). Such Taxes to be
caused to be paid by NewCorp, to the extent attributable to the portion of a
Straddle Period ending on the Closing Date, shall be referred to herein as
"Pre-Closing Straddle Period Income Taxes." Except to the extent taken into
account as a Current Liability in the calculation of the Closing Working
Capital, WRI shall pay to NewCorp an amount equal to the Pre-Closing Straddle
Period Income Taxes due with respect to any such Returns caused to be filed by
NewCorp (after taking into account any estimated Taxes paid prior to the
Closing). Such Pre-Closing Straddle Period Income Taxes shall be calculated as
though the taxable year of NewCorp, Westar and MCMC terminated at the close of
business on the Closing Date; provided, however, that, in the case of a
franchise Tax not based on income, sales, receipts, or other transactions,
Pre-Closing Straddle Period Income Taxes shall be equal to the amount of
franchise Tax for the taxable year which would have been imposed if such Tax
were determined based on the assets and liabilities of NewCorp, Westar and MCMC
(as applicable) as of the Closing, multiplied by a fraction, the numerator of
which shall be the number of days from the beginning of the taxable year through
the Closing Date and the denominator of which shall be the number of days in the
taxable year. Any amounts owed by WRI to NewCorp pursuant to this Section
6.15(c) shall be paid by WRI within five days of NewCorp's request therefor or
five days prior to the date on which NewCorp is required to cause to be paid the
related Tax liability, whichever is later.
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(d) To the extent permitted by applicable Law, all Returns prepared
pursuant to this Section 6.15 shall be prepared in all material respects, and
all elections with respect to such Returns shall be made, consistent with prior
practice with respect to Westar and MCMC, except as may be mutually agreed by
NewCorp and WRI.
(e) NewCorp shall, with the assistance of WRI, prepare and file or
cause to be prepared and filed all Returns with respect to Taxes described in
Section 1.8.
6.16 Access to Information. From and after the Closing:
(a) WRI and each of its Affiliates shall grant to the Surviving
Corporation (or its designees) access at all reasonable times to all of the
information, books and records relating to the Surviving Corporation and its
Subsidiaries within the possession of WRI or any of its Affiliates (including
work papers and correspondence with taxing authorities), shall afford to the
Surviving Corporation (or its designees) the right (at the Surviving
Corporation's expense) to take extracts therefrom and to make copies thereof,
and shall render other reasonable assistance, to the extent reasonably necessary
to permit the Surviving Corporation or any of its Affiliates (or its designees)
to prepare Returns, to conduct negotiations with Tax authorities, to fulfill an
obligation to any Governmental Authority imposed by law, regulation or order and
to implement the provisions of, or to investigate or defend any claims between
the parties arising under, this Agreement.
(b) The Surviving Corporation shall grant or cause its Subsidiaries to
grant to WRI or any of its Affiliates (or its designees) access at all
reasonable times to all of the information, books and records relating to the
Gas Business within the possession of the Surviving Corporation, or its
Subsidiaries (including work papers and correspondence with taxing authorities),
shall afford to WRI (or its designees) the right (at WRI's expense) to take
extracts therefrom and to make copies thereof, and shall render other reasonable
assistance, to the extent reasonably necessary to permit WRI (or its designees)
to prepare Returns, to conduct negotiations with Tax authorities, to fulfill an
obligation to any Governmental Authority imposed by law, regulation or order and
to implement the provisions of, or to investigate or defend any claims between
the parties arising under, this Agreement or otherwise.
(c) Each of the parties hereto will preserve and retain all schedules,
work papers and other documents relating to any Returns of or with respect to
the Gas Business or to any claims, audits or other proceedings affecting the Gas
Business until the expiration of the statute of limitations (including
extensions) applicable to the taxable period to which such documents relate or
until the final determination of any controversy with respect to such taxable
period, and until the final determination of any payments that may be required
with respect to such taxable period under this Agreement.
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(d) Notwithstanding the foregoing provisions of this Section, neither
the Surviving Corporation nor WRI shall be required to grant or cause to be
granted to the other access to information, books and records or to furnish
extracts or copies thereof if such information, books and records also include
information regarding such party or any of its Affiliates unrelated to the Gas
Business. In such circumstances, such party shall either (i) provide
appropriately detailed summaries of the information contained therein, or (ii)
in providing extracts or copies thereof, redact the information relating to such
party or its Affiliates unrelated to the Gas Business.
(e) The information received by a party pursuant to this Section shall
be treated as if it were "Evaluation Material," and the receiving party
hereunder were the receiving party, under the Confidentiality Agreement.
6.17 Non-Competition. (a) In order to induce ONEOK to enter into this
Agreement, WRI covenants and agrees that from the Closing Date until the fifth
(5th) anniversary of the Closing Date, it shall not, and shall not permit any of
its Subsidiaries to, directly or indirectly,
(i) own, manage, operate, join, control, finance or participate
in the ownership, management, operation, control or financing, of, or
be connected as a partner, principal, agent, representative,
consultant or otherwise with, or use or permit its name to be used in
connection with, any local natural gas distribution business or
enterprise in the States of Kansas, Oklahoma, or Missouri; or
(ii) solicit any contracts or business relationships involving
local natural gas distribution in the States of Kansas, Oklahoma, or
Missouri.
Notwithstanding the foregoing, nothing in this Section 6.17 shall
prohibit WRI or its Subsidiaries from: (A) acquiring and retaining any entity
which engages (at the time of such acquisition or thereafter) in one or more
business(es) which compete(s) with the Surviving Corporation in the business of
local natural gas distribution in the States of Kansas, Oklahoma and/or
Missouri, provided that the assets of such competing business(es) do not
constitute more than 20% of the consolidated assets of such acquired entity at
the time of such acquisition (or thereafter, during the term of this Agreement);
or (B) acquiring, in the aggregate, "beneficial ownership" (as defined under the
Exchange Act) of not more than 20% of any class of publicly-traded equity
securities or any profit or loss interest in any publicly-held entity which
competes with the Surviving Corporation in the business of local natural gas
distribution, in the States of Kansas, Oklahoma and/or Missouri.
(b) If any part of the restrictions set forth in Section 6.17(a)
should, for any reason whatsoever, be declared invalid by a court of competent
jurisdiction, the validity or enforceability of the remainder of such
restriction shall not thereby be adversely affected and shall be enforced to the
full extent permitted by law. If any of such restrictions are deemed to be
unreasonable by a court of competent jurisdiction, then WRI shall submit to the
reduction or modification thereof as said court deems reasonable.
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(c) The parties hereto agree that irreparable damage would occur in
the event that any of the provisions of this were not performed in accordance
with its specific terms or were otherwise breached. It is accordingly agreed
that the parties shall be entitled to an injunction or injunctions to prevent
breaches of this Section 6.17, Section 6.18 or Section 6.20 and to enforce
specifically the terms and provisions hereof in any court of the United States
or any state having jurisdiction, this being in addition to any other remedy to
which they are entitled at law or in equity.
6.18 Use of Name. From and after the Closing, neither WRI nor any of
its Subsidiaries shall use the name "Mid Continent Market Center," or any
similar name.
6.19 Standstill. WRI agrees that, for the period from the date hereof
through the Closing, except as expressly contemplated by the Asset Transaction
or as permitted by this Agreement, including without limitation Section 5.2(b)
hereof, it shall not, and shall not permit any of its Subsidiaries to, (a) in
any manner acquire, agree to acquire or make any proposal to acquire, directly
or indirectly, any securities or property of ONEOK or any of its Subsidiaries,
(b) except at the specific written request of ONEOK, propose to enter into,
directly or indirectly, any merger or business combination involving ONEOK or
any of its Subsidiaries or to purchase, directly or indirectly, a material
portion of the assets of ONEOK or any of its Subsidiaries, (c) make, or in any
way participate, directly or indirectly, in any "solicitation" or "proxies" (as
such terms are used in the proxy rules of the SEC) to vote, or seek to advise or
influence any person with respect to the voting of, any voting securities of
ONEOK or any of its Subsidiaries, (d) form, join or in any way participate in a
"group" (within the meaning of Section 13(d)(3) of the Exchange Act) with
respect to any voting security of ONEOK or any of its Subsidiaries, (e)
otherwise act, alone or in concert with others, to seek to control or influence
the management, Board of Directors or policies of ONEOK, (f) disclose any
intention, plan or arrangement inconsistent with the foregoing or (g) advise,
assist or encourage any other persons in connection with any of the foregoing.
WRI also agrees during such period not to (i) request ONEOK (or its directors,
officers, employees or agents), directly or indirectly, to amend or waive any
provision of this Section 6.19 (including this sentence), or (ii) take any
action which might require ONEOK to make a public announcement regarding the
possibility of a business combination or merger.
6.20 Further Assurances. Subject to the terms and conditions of this
Agreement, each of ONEOK and WRI shall use all reasonable efforts to take, or
cause to be taken, all action and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the Transactions and the other transactions
contemplated by this Agreement, including the satisfaction of the conditions
specified in Article VII of this Agreement. In case at any time after the Merger
Effective Time any further action is necessary or desirable to carry out the
purposes of this Agreement, the proper officers and directors of each party to
this Agreement shall take all necessary actions to the extent not inconsistent
with their other duties and obligations or applicable law.
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6.21 Insurance. To the extent reasonably requested by the Surviving
Corporation, at the direction and expense of the Surviving Corporation, WRI will
assist the Surviving Corporation in pursuing any claims under insurance policies
relating to the Gas Business and enforcing any claims or rights under such
policies.
6.22 Schedules. (a) Notwithstanding anything to the contrary in this
Agreement, the parties hereto acknowledge and agree that the Schedules hereto
and the Schedules to the Exhibits hereto will be delivered and attached to this
Agreement and to the applicable Exhibits within 30 days after the date hereof.
In addition, the parties hereto may from time to time within such 30-day period,
update Schedules to this Agreement and to the Exhibits hereto delivered on the
date hereof. Upon the delivery of such Schedules and such updates to the parties
hereto, such Schedules and such updates shall be deemed the Schedules of this
Agreement and of the Exhibits hereto for all purposes of this Agreement.
(b) Notwithstanding anything to the contrary in this Agreement, to the
extent any representation or warranty specified in this Agreement refers to, or
is modified by, a Schedule which is to be delivered after the date hereof
pursuant to Section 6.22(a), such representation and warranty shall be deemed
made, and first made, as of the date of the delivery of the applicable Schedules
pursuant to Section 6.22(a) (it being understood and agreed that any
representation or warranty, or any portion of any representation or warranty,
which does not refer to, or is not modified by, such Schedules shall be deemed
made as of the date hereof).
ARTICLE VII
CONDITIONS PRECEDENT
7.1 Conditions to Each Party's Obligation to Effect the Transactions.
The respective obligation of each party to consummate the Transactions and the
other transactions contemplated hereby and by the Ancillary Documents shall be
subject to satisfaction prior to the Closing Date of the following conditions:
(a) ONEOK Stockholder Approval. This Agreement and the Merger shall
have been approved and adopted by the affirmative vote of the holders of a
majority of the outstanding votes of ONEOK Common Stock.
(b) NYSE Listing. The shares of NewCorp Common Stock issuable to ONEOK
shareholders pursuant to this Agreement and such other shares of NewCorp Common
Stock required to be reserved for issuance in connection with the Merger shall
have been authorized for listing on the NYSE upon official notice of issuance.
(c) Other Approvals. The waiting period applicable to the consummation
of the Transactions and the other transactions contemplated by the Transfer
Documents, this Agreement and the Ancillary Documents shall have expired or been
terminated and all filings required to be made prior to the relevant Merger
Effective Time with, and all consents, approvals, permits and authorizations
required to be obtained prior to the relevant Merger Effective Time from, any
Governmental Entity in connection with the execution and delivery of this
Agreement and the consummation of the Transactions and the other transactions
contemplated hereby and by the Ancillary Documents by ONEOK, WRI and NewCorp
shall have been made or obtained (as the case may be), except for such consents,
approvals, permits and authorizations the failure of which to be obtained would
not, in the aggregate, be reasonably likely to result in a Material Adverse
Effect on ONEOK or the Gas Business or to materially adversely affect the
consummation of the Transactions and the other transactions contemplated hereby
and by the Ancillary Documents or the economic and strategic benefits to be
achieved by the party invoking these conditions, and no such consent, approval,
permit or authorization shall impose terms or conditions that would have, or
would be reasonably likely to have, a Material Adverse Effect on ONEOK or the
Gas Business.
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(d) Form S-4. The Form S-4 shall have become effective under the
Securities Act and shall not be the subject of any stop order or proceedings
seeking a stop order.
(e) No Injunctions or Restraints. No temporary restraining order,
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction, no order of any Governmental Entity having jurisdiction
over ONEOK, WRI or the Gas Business, and no other legal restraint or prohibition
shall be in effect (an "Injunction") preventing or making illegal the
consummation of the Transactions or the other transactions contemplated hereby
and by the Ancillary Documents; provided, however, that prior to any party
invoking this condition, such party shall have complied fully with its
obligations under Sections 6.6 and 6.20.
(f) Other Agreements. WRI and ONEOK shall have entered into a Shared
Services Agreement (the "Shared Services Agreement") relating to functions and
services where synergies can be achieved between the parties to avoid
unnecessary duplication of expenses and a Marketing Agreement (the "Marketing
Agreement") in form, scope and substance reasonably satisfactory to WRI and
ONEOK.
(g) The Shareholder Agreement shall be executed and delivered by the
parties thereto.
(h) Schedules. On the date of the delivery of the Schedules to this
Agreement pursuant to Section 6.22(a), such Schedules shall be reasonably
satisfactory to WRI and ONEOK; provided, however, that any matters disclosed in
the ONEOK SEC Documents or the WRI SEC Documents shall be deemed reasonably
satisfactory, and the Schedules or updates thereto delivered by each party shall
be deemed reasonably satisfactory to the other party unless the Schedules or
updates thereto delivered by a party hereto disclose matters which, in the
aggregate, are materially inconsistent with the other party's good faith
expectation on the date hereof with regard to the business, operations and
prospects of ONEOK or the Gas Business, as applicable.
(i) 1935 Act. Receipt of and order of the SEC under Section 9(a)(2) of
the 1935 Act authorizing the Merger and receipt of an order or no-action letter
from the SEC or its Staff that WRI will not be a holding company under Section
2(a)(7) of the 1935 Act and that NewCorp will not be a subsidiary company under
Section 2(a)(8) of the 1935 Act for the purposes of the 1935 Act as a result of
the Merger, in each case, not materially impairing the economic and strategic
benefits of the Transactions and the other transactions contemplated by this
Agreement to WRI or ONEOK.
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7.2 Conditions of Obligations of WRI. The obligations of WRI to
consummate the Transactions and the other transactions contemplated hereby and
by the Ancillary Documents is subject to the of the following conditions, any or
all of which may be waived in whole or in part by WRI.
(a) Representations and Warranties. Each of the representations and
warranties of ONEOK set forth in this Agreement shall be true and correct in all
material respects as of the date of this Agreement or the date of delivery of
the Schedules or updates thereto and (except to the extent such representations
and warranties speak as of an earlier date) as of the Closing Date as though
made on and as of the Closing Date, except where the failure to be so true and
correct (without giving effect to the individual materiality qualifications and
thresholds otherwise contained in Section 4.1 hereof) could not reasonably be
expected to have a Material Adverse Effect on ONEOK or as otherwise contemplated
by this Agreement, and WRI shall have received a certificate signed by the Chief
Executive Officer and the Chief Financial Officer of ONEOK to such effect.
(b) Performance of Obligations of ONEOK. ONEOK shall have performed in
all material respects all obligations required to be performed by it under this
Agreement at or prior to the Closing Date, and WRI shall have received a
certificate signed on behalf of ONEOK by the Chief Executive Officer and the
Chief Financial Officer of ONEOK to such effect.
(c) Tax Opinion. WRI shall have received (x) either (i) an opinion of
Sullivan & Cromwell, counsel to WRI, in form and substance reasonably
satisfactory to WRI, dated the Closing Date, or (ii) a private letter ruling
from the IRS, in each case to the effect that, if the Asset Transaction is
consummated in accordance with the terms of this Agreement the Asset Transaction
will be treated for federal Income Tax purposes as a transfer described in
Section 351 of the Code and (y) the opinion of Fried, Frank, Harris, Shriver &
Jacobson delivered to ONEOK pursuant to Section 7.3(c), to the effect that, if
the Merger is consummated in accordance with the terms of this Agreement, the
Merger will be treated for federal Income Tax purposes as a reorganization
within the meaning of Section 368(a) of the Code. In rendering such opinion,
Sullivan & Cromwell may receive and rely upon appropriate representations of
fact, including facts contained in certificates of WRI and ONEOK, which
representations are in form and substance reasonably satisfactory to such
counsel.
(d) Required Consents. The ONEOK Required Consents and the WRI
Required Consents shall have been obtained, except for such ONEOK Required
Consents or WRI Required Consents the failure of which to be obtained would not
have a Material Adverse Effect on ONEOK or WRI, as the case may be.
(e) KCC Order. The KCC Order shall be in such form and substance and
shall cover such matters as shall be reasonably satisfactory to WRI.
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(f) Pooling of Interests. WRI shall have received a letter from Arthur
Andersen, L.L.P., its independent public accountants (based on consultation with
the office of the Chief Accountant of the SEC) stating that, as a result of the
consummation of the Transactions and the other transactions contemplated by this
Agreement, WRI shall not be precluded from accounting for any potential business
combination between WRI and Kansas City Power & Light Company as a "pooling of
interests" as defined by Accounting Principles Bulletin No. 16 (APB 16)
regarding Accounting for Business Combinations and SEC or SEC Staff
interpretations thereunder.
(g) OCC Order. The OCC Order shall be in such form and substance and
shall cover such matters as shall be reasonably satisfactory to WRI.
7.3 Conditions of Obligations of ONEOK. The obligation of ONEOK to
effect the Transactions and the other transactions contemplated hereby and by
the Ancillary Documents is subject to the satisfaction of the following
conditions, any or all of which may be waived in whole or in part by ONEOK:
(a) Representations and Warranties. Each of the representations and
warranties of WRI set forth in this Agreement shall be true and correct in all
material respects as of the date of this Agreement or the date of delivery of
the Schedules or updates thereto (except to the extent such representations and
warranties speak as of an earlier date) and as of the Closing Date as though
made on and as of the Closing Date, except where the failure to be so true and
correct (without giving effect to the individual materiality qualifications and
thresholds otherwise contained in Section 4.2 hereof) could not reasonably be
expected to have a Material Adverse Effect on the Gas Business or as otherwise
contemplated by this Agreement, and ONEOK shall have received a certificate
signed by the Chief Executive Officer and the Chief Financial Officer of WRI to
such effect.
(b) Performance of Obligations and WRI. WRI shall have performed in
all material respects all obligations required to be performed by it under this
Agreement at or prior to the Closing Date, and ONEOK shall have received a
certificate signed on behalf of WRI by the Chief Executive Officer and the Chief
Financial Officer of WRI to such effect.
(c) Tax Opinion. ONEOK shall have received (x) an opinion of Fried,
Frank, Harris, Shriver & Jacobson, counsel to ONEOK, in form and substance
reasonably satisfactory to ONEOK, dated the Closing Date, to the effect that, if
the Merger is consummated in accordance with the terms of this Agreement, the
Merger will be treated for federal Income Tax purposes as a reorganization
within the meaning of Section 368(a) of the Code and (y) either (i) the opinion
of Sullivan & Cromwell delivered to WRI pursuant to Section 7.2(c) or (ii) a
private letter ruling from the IRS, in each case to the effect that, if the
Asset Transaction is consummated in accordance with the terms of this Agreement,
the Asset Transaction will be treated for federal Income Tax purposes as a
transfer described in Section 351 of the Code, a copy of each of which will be
furnished to Donald A. Kihle of Arrington Kihle Gaberino & Dunn, counsel to
ONEOK. In rendering such opinion, Fried, Frank, Harris, Shriver & Jacobson may
receive and rely upon appropriate representations of fact, including facts
contained in certificates of NewCorp, WRI and ONEOK and certain stockholders and
members of management of ONEOK and NewCorp, which representations are in form
and substance reasonably satisfactory to such counsel.
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(d) Required Consents. The WRI Required Consents and the ONEOK
Required Consents shall have been obtained, except for such WRI Required
Consents or ONEOK Required Consents the failure of which to be obtained would
not have a Material Adverse Effect on the Gas Business or ONEOK, as the case may
be.
(e) Asset Transaction. The Asset Transaction shall have been
consummated pursuant to this Agreement, the Ancillary Documents and the other
Transfer Documents in form and substance reasonably satisfactory to ONEOK.
(f) OCC Order. The OCC Order shall be in such form and substance and
cover such matters as shall be reasonably satisfactory to ONEOK.
(g) KCC Order. The KCC Order shall be in such form and substance and
shall cover such matters as shall be reasonably satisfactory to ONEOK.
ARTICLE VIII
EMPLOYEE AND EMPLOYEE MATTERS; ENVIRONMENTAL MATTERS
The terms of the Employee Agreement, in the form attached hereto as
Exhibit D (the "Employee Agreement") and the Environmental Indemnity Agreement,
in the form attached hereto as Exhibit E (the "Environmental Indemnity
Agreement") are hereby incorporated herein by reference as if fully set forth
herein.
ARTICLE IX
TERMINATION AND AMENDMENT
9.1 Termination. This Agreement may be terminated and the Merger may
be abandoned at any time prior to the Merger Effective Time, whether before or
after the matters presented in connection with the Merger have been approved by
the shareholders of NewCorp and the stockholders of ONEOK:
(a) by mutual written consent of ONEOK and WRI, or by mutual action of
their respective Boards of Directors;
(b) by either ONEOK or WRI if (i) any Governmental Entity shall have
issued any Injunction or taken any other action permanently restraining,
enjoining or otherwise prohibiting the consummation of the Transactions or the
other transactions contemplated by this Agreement and the Ancillary Documents
and such Injunction or other action shall have become final and nonappealable;
or (ii) the ONEOK Stockholders' Approval shall not have been obtained by reason
of the failure to obtain the required vote upon a vote held at the ONEOK
Stockholders' Meeting, or at any adjournment thereof;
(c) by either ONEOK or WRI if the Merger shall not have been
consummated by the first anniversary of the date hereof (the "Initial
Termination Date"); provided, however, that the right to terminate this
Agreement under this Section 9.1(c) shall not be available to any party whose
breach of any representation or warranty or failure to fulfill any covenant or
agreement under this Agreement has been the cause of or resulted in the failure
of the Merger to occur on or before such date; and provided, further, that if on
the Initial Termination Date the conditions to the Closing set forth in Section
7.1(d) shall not have been fulfilled but all other conditions to the Closing
shall have been fulfilled or shall be capable of being fulfilled, then the
Initial Termination Date shall be extended to June 30, 1998;
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(d) by WRI if (i) for any reason ONEOK fails to call and hold the
ONEOK Stockholders' Meeting for the purpose of voting upon this Agreement and
the Merger by April 30, 1997 (provided that the right to terminate this
Agreement under this Section 9.1(d) shall not be available to WRI if (x) the
Form S-4 shall not have been declared effective by the SEC at least 45 days
prior to the date of termination or (y) ONEOK would be entitled to terminate
this Agreement under Section 9.1(e)); (ii) ONEOK shall have failed to comply in
any material respect with any of the covenants or agreements contained in this
Agreement to be complied with or performed by ONEOK at or prior to such date of
termination (provided such breach has not been cured within 30 days following
receipt by ONEOK of notice of such breach and is existing at the time of
termination of this Agreement); (iii) any representation or warranty of ONEOK
contained in this Agreement shall not be true in all material respects when made
or on or at the time of termination as if made on such date of termination
(except to the extent it relates to a particular date) provided such breach has
not been cured within 30 days following receipt by ONEOK of notice of such
breach and is existing at the time of termination of this Agreement, except
where the failure to be so true and correct (without giving effect to the
individual materiality qualifications and thresholds otherwise contained in
Section 4.1 hereof) could not reasonably be expected to have a Material Adverse
Effect on ONEOK; (iv) after the date hereof there has been any Material Adverse
Change with respect to ONEOK; or (v) any Governmental Entity shall have issued
any Injunction or taken any other action permanently imposing, prohibiting or
compelling any of the limitations, prohibitions or compulsions specified in
Section 7.1(e) and such Injunction or other action shall have become final and
nonappealable;
(e) by ONEOK if (i) WRI shall have failed to comply in any material
respect with any of the covenants or agreements contained in this Agreement to
be complied with or performed by it at or prior to such date of termination
(provided such breach has not been cured within 30 days following receipt by
NewCorp of notice of such breach and is existing at the time of termination of
this Agreement); (ii) any representation or warranty of WRI contained in this
Agreement shall not be true in all material respects when made or on or at the
time of termination as if made on such date of termination (except to the extent
it relates to a particular date) provided such breach has not been cured within
30 days following receipt by WRI of notice of such breach and is existing at the
time of termination of this Agreement, except where the failure to be so true
and correct (without giving effect to the individual materiality qualifications
and thresholds otherwise contained in Section 4.2 hereof) could not reasonably
be expected to have a Material Adverse Effect on the Gas Business; (iii) after
the date hereof there has been any Material Adverse Change with respect to the
Gas Business; or (iv) any Governmental Entity shall have issued any Injunction
or taken any other action permanently imposing, prohibiting or compelling any of
the limitations, prohibitions or compulsions specified in Section 7.1(e) and
such Injunction or other action shall have become final and nonappealable.
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9.2 Effect of Termination.
(a) In the event of termination of this Agreement by any party hereto
as provided in Section 9.1, this Agreement shall forthwith become void and there
shall be no liability or obligation on the part of WRI or ONEOK except (i) with
respect to this Section 9.2, the second and third sentences of Section 6.4,
Section 9.3 and Article X, and (ii) a party shall be liable to the extent that
such termination results from the willful breach by such party hereto of any of
its representations or warranties or of any of its covenants or agreements
contained in this Agreement.
(b) If WRI or ONEOK terminates this Agreement pursuant to Section
9.1(b)(ii) and, at the time of the ONEOK Stockholders' Meeting, there shall be
outstanding and publicly announced, an Acquisition Proposal, ONEOK shall, within
3 days after WRI delivers to ONEOK the Expense Reimbursement Letter (as such
term is herein defined), reimburse WRI for all expenses incurred by WRI and its
Subsidiaries in connection with the Transactions and the other transactions
contemplated hereby and by the Ancillary Documents, up to $1,500,000, as
specified in writing by WRI to ONEOK (such writing shall be referred to herein
as the "Expense Reimbursement Letter"), by a payment in cash by wire transfer of
immediately available funds to an account designated by WRI (the "Reimbursed
Expenses"). In addition, upon the consummation of an Acquisition Proposal which
was entered into within 12 months after termination of the Agreement pursuant to
Section 9.1(b), whereby ONEOK shall be obligated to reimburse WRI for expenses
pursuant to this Section 9.2(b), ONEOK shall pay WRI, by a payment in cash by
wire transfer of immediately available funds to an account designated by WRI, an
amount equal to $20,000,000 less the amount of the Reimbursed Expenses.
(c) If WRI terminates this Agreement as a result of the failure to be
satisfied of the condition specified in Section 7.2(e) or, if ONEOK terminates
this Agreement as a result of the failure to be satisfied of the condition
specified in Section 7.3(f), then the terminating party shall promptly reimburse
the non-terminating party for expenses reasonably incurred by the
non-terminating party in connection with this Agreement in an amount not to
exceed $1,500,000.
9.3 Expenses. The parties agree that the agreements contained in
Section 9.2 are an integral part of the Transactions and the other the
transactions contemplated by this Agreement and by the Ancillary Documents and
represent liquidated damages and are not a penalty. Notwithstanding anything to
the contrary contained in Section 9.2, if one party fails to promptly pay to the
other any fee due under Section 9.2, in addition to any amounts paid or payable
pursuant to such Section, the defaulting party shall pay the costs and expenses
(including legal fees and expenses) in connection with any action, including the
filing of any lawsuit or other legal action, taken to collect payment, together
with interest on the amount of any unpaid fee at the publicly announced prime
interest rate of Citibank, N.A. from the date such fee was required to be paid.
Except as otherwise provided in this Agreement, ONEOK shall pay its fees and
expenses, and WRI shall pay its fees and expenses and the fees and expenses of
NewCorp, incurred in connection with the Transactions and the other transactions
contemplated hereby and by the Ancillary Documents.
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9.4 Amendment. This Agreement may be amended by mutual agreement of
ONEOK and WRI, by action taken or authorized by their respective Boards of
Directors, at any time prior to the Merger Effective Time. This Agreement may
not be amended except by an instrument in writing signed on behalf of each the
parties hereto.
9.5 Extension; Waiver. At any time prior to the Merger Effective Time,
the parties hereto, by action taken or authorized by their respective Boards of
Directors, may, to the extent legally allowed: (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto;
(ii) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto; and (iii) waive compliance
with any of the agreements or conditions contained herein. Any agreement on the
part of a party hereto to any such extension or waiver shall be valid only if
set forth in a written instrument signed on behalf of such party.
ARTICLE X
INDEMNIFICATION
10.1 General Indemnification. (a) WRI hereby agrees to indemnify ONEOK
and its Affiliates (including from and after the Closing, the Surviving
Corporation) and their respective officers, directors, employees, stockholders,
agents and representatives against, and agrees to hold them harmless from, any
loss, liability, claim, damage or expense (including reasonable legal fees and
expenses) ("Losses"), as incurred (payable quarterly upon written request), for
or on account of or arising from or in connection with or otherwise with respect
to (i) any breach of any covenant of WRI contained in this Agreement or any
document delivered in connection herewith and (ii) the Retained Liabilities.
(b) ONEOK, and from and after the Closing, the Surviving Corporation,
hereby agrees to indemnify WRI and its Affiliates and their respective officers,
directors, employees, stockholders, agents and representatives against, and
agrees to hold them harmless from, any Losses, as incurred (payable quarterly
upon written request), for or on account of or arising from or in connection
with or otherwise with respect to (i) any breach of any covenant of ONEOK
contained in this Agreement or any document delivered in connection herewith and
(ii) the Assumed Liabilities.
(c) In order for a party (the "indemnified party"), to be entitled to
any indemnification provided for under this Agreement in respect of, arising out
of or involving a claim made by any person against the indemnified party (a
"Third Party Claim"), such indemnified party must notify the indemnifying party
in writing of the Third Party Claim within a reasonable time after receipt by
such indemnified party of written notice of the Third Party Claim unless the
indemnifying party shall have previously obtained actual knowledge thereof.
Thereafter, the indemnified party shall deliver to the indemnifying party,
within a reasonable time after the indemnified party's receipt thereof, copies
of all notices and documents (including court papers) received by the
indemnified party relating to the Third Party Claim.
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(d) If a Third Party Claim is made against an indemnified party, the
indemnifying party will be entitled to participate in the defense thereof and,
if is so chooses, to assume the defense thereof with counsel selected by the
indemnifying party; provided such counsel is not reasonably objected to by the
indemnified party; and provided further that the indemnifying party first admits
in writing its liability to the indemnified party with respect to all material
elements of such claim. Should the indemnifying party so elect to assume the
defense of a Third Party Claim, the indemnifying party will not be liable to the
indemnified party for any legal expenses subsequently incurred by the
indemnified party in connection with the defense thereof. If the indemnifying
party elects to assume the defense of a Third Party Claim, the indemnified party
will (i) cooperate in all reasonable respects with the indemnifying party in
connection with such defense, (ii) not admit any liability with respect to, or
settle, compromise or discharge, any Third Party Claim without the indemnifying
party's prior written consent and (iii) agree to any settlement, compromise or
discharge of a Third Party Claim which the indemnifying party may recommend and
which by its terms obligates the indemnifying party to pay the full amount of
the liability in connection with such Third Party Claim, which releases the
indemnified party completely in connection with such Third Party Claim and which
would not adversely affect the business carried on by the indemnified party. In
the event the indemnifying party shall assume the defense of any Third Party
Claim, the indemnified party shall be entitled to participate in (but not
control) such defense with its own counsel at its own expense. If the
indemnifying party does not assume the defense of any such Third Party Claim,
the indemnified party may defend the same in such manner as it may deem
appropriate, including but not limited to settling such claim or litigation
after giving notice to the indemnifying party of such terms and the indemnified
party will promptly reimburse the indemnified party upon written request.
Anything contained in this Agreement to the contrary notwithstanding, the
indemnifying party shall not be entitled to assume the defense of any Third
Party Claim if the Third Party Claim seeks an order, injunction or other
equitable relief or relief for other than money damages against the indemnified
party which, if successful, would adversely affect the business of the
indemnified party.
10.2 Tax Indemnification and Audits. (a) From and after the Closing,
WRI shall indemnify and hold harmless the Surviving Corporation, Westar and MCMC
against (i) any and all liability assessed against the Surviving Corporation,
Westar or MCMC for Income Taxes with respect to taxable periods ending on or
before the Closing Date; (ii) any liability assessed against the Surviving
Corporation, Westar or MCMC by reason of the Surviving Corporation, Westar or
MCMC being severally liable for Income Taxes of WRI or any of its Affiliates
pursuant to Treasury Regulation Section 1.1502-6 (or any analogous provision of
state, local or foreign tax law); and (iii) except to the extent taken into
account as a Current Liability in the calculation of Closing Working Capital,
any liability for Pre-Closing Straddle Period Income Taxes assessed against the
Surviving Corporation, Westar or MCMC (other than Pre-Closing Straddle Period
Income Taxes for which WRI has paid the Surviving Corporation pursuant to
Section 6.15(c)), including without limitation in each of (i) through (iii)
above, any liability resulting from changes made on audit. For purposes of
clauses (i) and (iii) of the preceding sentence, the taxable year of any
partnership or other pass-through entity in which WRI, the Surviving Corporation
or any of the Transferred Subsidiaries is a partner or other beneficial interest
holder shall be deemed to terminate at the close of business on the Closing
Date. Any indemnification payable by WRI to the Surviving Corporation, Westar or
MCMC pursuant to this Section 10.2(a) shall be paid within the later of five
days of the Surviving Corporation's request therefor and five days prior to the
date on which the liability upon which the indemnification is based is required
to be satisfied by the Surviving Corporation or Westar and MCMC, as the case may
be.
75
(b) Each party shall promptly notify the other in writing upon receipt
of notice of any pending or threatened federal, state, local or foreign Tax
audits or assessments which may affect the Tax liabilities of the Surviving
Corporation, Westar or MCMC with respect to periods ending on or before the
Closing Date; provided, however, that the failure of the Surviving Corporation
to give WRI prompt notice as provided herein shall not relieve WRI of any of its
obligations hereunder, except to the extent that WRI's position is actually and
materially prejudiced as a result of such failure. WRI shall, at its own
expense, control any audit or determination by any authority, initiate any claim
for refund or amended return, and contest, resolve and defend against any
assessment, notice of deficiency, or other adjustment or proposed adjustment of
Income Taxes of the Surviving Corporation, Westar or MCMC (collectively, an
"Income Tax Contest") attributable to taxable periods ending on or before the
Closing Date, and shall be responsible for the timely payment of any liability
for Income Taxes that relate to such periods; provided, however, that to the
extent such audit or assessment relates to an Income Tax for which the Surviving
Corporation, Westar or MCMC could be held liable or affects the amount of Income
Taxes to be paid or caused to be paid by the Surviving Corporation, the
Surviving Corporation shall have the right to participate in any such Income Tax
Contest in the manner it deems appropriate and WRI shall be prohibited from
reaching a settlement with regard to such Income Tax Contest without the
Surviving Corporation's consent, which consent shall not be unreasonably
withheld. the Surviving Corporation shall, at its own expense, control all
Income Tax Contests attributable to taxable periods ending after the Closing
Date, and shall be responsible for the timely payment of any liability for
Income Taxes that relate to such periods; provided, however, that to the extent
such audit or assessment relates to an Income Tax for which WRI could be held
liable or affects the amount of Income Taxes to be paid or caused to be paid by
WRI, WRI shall have the right to participate in any such Income Tax Contest in
the manner it deems appropriate and the Surviving Corporation shall be
prohibited from reaching a settlement with regard to such Income Tax Contest
without WRI's consent, which consent shall not be unreasonably withheld.
(c) Any refunds or credits of Income Taxes of Westar or MCMC received
by or credited to the Surviving Corporation or Westar and MCMC attributable to
periods ending on or before the Closing Date or to such portions of Straddle
Periods ending at the close of business on the Closing Date, (collectively,
"WRI's Refunds"), shall be for the benefit of WRI. the Surviving Corporation
shall cause any such refund (net of any Tax liability resulting from such
refund) to be paid to WRI within ten days of the Surviving Corporation's or
Westar and MCMC's receipt thereof.
76
(d) WRI agrees that if Westar or MCMC carries back any item of loss,
deduction or credit which arises in any taxable period ending after the Closing
Date into any taxable period beginning before the Closing Date, then Westar or
MCMC (as appropriate) shall be entitled to any Tax benefit or refund of Taxes
realized as a result thereof (after giving priority to any existing Tax
attributes of WRI). The Surviving Corporation and WRI shall negotiate in good
faith to resolve any dispute with respect to the calculation of any such
benefit. Any unresolved disputes with respect to the calculation of any such Tax
benefits shall be submitted to a "Big Six" accounting firm for arbitration, the
costs of which shall be shared equally by the Surviving Corporation and WRI.
ARTICLE XI
GENERAL PROVISIONS
11.1 Confidentiality Agreement. The Confidentiality Agreement shall
survive the execution and delivery of this Agreement and the provisions of the
Confidentiality Agreement shall apply to all information and material delivered
hereunder.
11.2 Notices. Any notice or communication required or permitted
hereunder shall be in writing and either delivered personally, telegraphed or
telecopied or sent by certified or registered mail, postage prepaid, and shall
be deemed to be given, dated and received when so delivered personally,
telegraphed or telecopied, if mailed, five business days after the date of
mailing to the following address or telecopy number, or to such other address or
addresses as such person may subsequently designate by notice given hereunder:
(a) if to WRI:
Western Resources, Inc.
818 Kansas Avenue
Topeka, Kansas 66612
Attention: President
with copies to:
Western Resources, Inc.
818 Kansas Avenue
Topeka, Kansas 66612
Attention: John K. Rosenberg, Esq.
and
77
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Attention: Francis J. Aquila, Esq.
(b) if to ONEOK or the Surviving Corporation, to:
ONEOK Inc.
100 West Fifth Street
Tulsa, Oklahoma 74103
Attention: President
with copies to:
Arrington Kihle Gaberino & Dunn
100 W. Fifth Street, Suite 1000
Tulsa, Oklahoma 74103
Attention: Donald A. Kihle, Esq.
and
Fried, Frank, Harris, Shriver & Jacobson
One New York Plaza
New York, New York 10004
Attention: F. William Reindel, Esq.
11.3 Interpretation. When a reference is made in this Agreement to
Sections, such reference shall be to a Section of this Agreement unless
otherwise indicated. The table of contents, glossary of defined terms and
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement. Whenever
words "include," "includes" or "including" are used in this Agreement, they
shall be deemed to be followed by the words "without limitation." Unless the
context otherwise requires, "or" is disjunctive but not necessarily exclusive,
and words in the singular include the plural and in the plural include the
singular.
11.4 Counterparts. This Agreement may be executed in two or more
counterparts all of which shall be considered one and the same agreement and
become effective when two or more counterparts have been signed by each of
parties and delivered to the other parties, it being understood that all parties
need not sign the same counterpart.
11.5 Entire Agreement; No Third Party Beneficiaries. This Agreement
(together with the Confidentiality Agreements, the Ancillary Documents and any
other documents and instruments referred to herein) (a) constitutes the entire
agreement and supersedes all prior agreements and understandings, both written
and oral, among the parties with respect to the subject matter hereto, and (b)
except as expressly provided herein, is not intended to confer upon any person
other than the parties hereto any rights or remedies hereunder.
78
11.6 Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of Delaware, without giving effect to the
principles of conflicts of law thereof.
11.7 No Remedy in Certain Circumstances. Each party agrees that,
should any court or other competent authority hold any provision of this
Agreement or part to be null, void or unenforceable, or order any party to take
any action inconsistent herewith or not to take an action consistent herewith or
required hereby, the validity, legality and enforceability of the remaining
provisions and obligations contained or set forth herein shall not in any way be
affected or impaired thereby, unless the foregoing inconsistent action or the
failure to take an action constitutes a material breach of this Agreement or
makes this Agreement impossible to perform, in which case this Agreement shall
terminate pursuant to Article IX hereof. Except as otherwise contemplated by
this Agreement, to the extent that a party hereto took an action inconsistent
herewith or failed to take action consistent herewith or required hereby
pursuant to an order or judgment of a court or other competent authority, such
party shall not incur any liability or obligation unless such party breached its
obligations under Section 6.6 or did not in good faith seek to resist or object
to the imposition or entering of such order or judgment.
11.8 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.
11.9 Bulk Sales Law. The parties hereto each waive compliance by the
other with the provisions of any applicable bulk transfer law and the provisions
of any statute of any other state or jurisdiction regulating bulk sales or
transfers which may be applicable to the transfer of assets.
11.10 Non-Survival of Representations and Warranties. The
representations and warranties of the parties hereto specified in this Agreement
shall not survive the Closing.
79
IN WITNESS WHEREOF, each party has caused this Agreement to be signed
by respective officers thereunto duly authorized, all as of the date first
above.
ONEOK INC.
By: /s/ Larry W. Brummett
----------------------
Name: Larry W. Brummett
Title: Chairman, President
and Chief Executive
Officer
WESTERN RESOURCES INC.
By: /s/ John E. Hayes, Jr.
-----------------------
Name: John E. Hayes, Jr.
Title: Chairman of the Board
and Chief Executive
Officer
79
Exhibit C
---------
SHAREHOLDER AGREEMENT
between
New Oneok,
an Oklahoma corporation
and
Western Resources, Inc.,
a Kansas corporation
Dated as of ______________, 1997
TABLE OF CONTENTS
Page
ARTICLE I
Certain Definitions
Section 1.1.............................................................. 1
ARTICLE II
Representations and Warranties
Section 2.1. Representations and Warranties of the Company.............. 9
Section 2.2. Representations and Warranties of the Shareholder.......... 10
ARTICLE III
Shareholder and Company Conduct
Section 3.1. Standstill Provision....................................... 10
Section 3.2. Required Reduction of Ownership Percentage................. 11
Section 3.3. Top-Up Rights; Dilutive Issuance Right..................... 12
Section 3.4. Restrictions on Transfer................................... 14
Section 3.5. Buy-Back Options........................................... 16
Section 3.6. Buy/Sell Option............................................ 17
Section 3.8. Rights Agreement........................................... 18
Section 3.9. Agreement Not to Convert................................... 18
Section 3.10. Taxes Upon Conversion or Exchange.......................... 19
Section 3.11. Make Whole Payment......................................... 19
Section 3.12. Prohibition on Senior Securities........................... 19
ARTICLE IV
Board Representation and Voting
Section 4.1. Directors Designated by the Shareholder.................... 19
Section 4.2. Resignation of Shareholder Nominees........................ 22
Section 4.3. Voting..................................................... 22
i
ARTICLE V
Effectivenss and Termination
Section 5.1. Effectiveness.............................................. 23
Section 5.2. Termination................................................ 23
ARTICLE VI
Miscellaneous
Section 6.1. Compliance With Law........................................ 25
Section 6.2. Regulatory Matters......................................... 25
Section 6.3. Injunctive Relief.......................................... 25
Section 6.4. Successors and Assigns..................................... 26
Section 6.5. Amendments; Waiver......................................... 26
Section 6.6. Notices.................................................... 26
Section 6.7. APPLICABLE LAW............................................. 27
Section 6.8. Headings................................................... 27
Section 6.9. Integration................................................ 27
Section 6.10. Severability............................................... 27
Section 6.11. Consent to Jurisdiction.................................... 28
Section 6.12. Counterparts............................................... 28
Exhibit A Registration Rights Agreement
Exhibit B Shareholder Protection Rights Agreement
Exhibit C Initial Shareholder Nominee Notice
-ii-
SHAREHOLDER AGREEMENT, dated as of ________, 1997 (this "Agreement"),
between New Oneok, an Oklahoma corporation (the "Company"), and Western
Resources, Inc., a Kansas corporation (the "Shareholder").
W I T N E S S E T H:
WHEREAS, the Company, the Shareholder, and ONEOK, Inc., a Delaware
corporation ("ONEOK") have entered into an Agreement, dated as of December 12,
1996 (the "Merger Agreement"), pursuant to which ONEOK has been merged with and
into the Company (the "Merger") and the Shareholder has acquired pursuant to the
transactions contemplated thereby Beneficial Ownership (as defined in Article I
hereof) of 2,996,702 shares of common stock of the Company, par value $.01 per
share (the "Common Stock") and 19,317,584 shares of Series A Convertible
Preferred Stock of the Company, par value $.01 per share (together with the
Company's Series B Convertible Preferred Stock, the "Convertible Preferred
Stock");
WHEREAS, concurrently with the consummation of the Merger (the
"Closing"), the Company and the Shareholder desire to establish in this
Agreement certain terms and conditions concerning the acquisition and
disposition of securities of the Company by the Shareholder, and related
provisions concerning the Shareholder's relationship with and investment in the
Company; and
WHEREAS, concurrently with the execution and delivery hereof, the
Company and the Shareholder are entering into a Registration Rights Agreement,
dated as of the date hereof (the "Registration Rights Agreement"), in the form
attached hereto as Exhibit A;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth herein and for other good and valuable consideration, receipt and
sufficiency of which is hereby acknowledged, the parties hereto hereby agree as
follows:
ARTICLE I
Certain Definitions
Section 1.1. In addition to other terms defined elsewhere in this
Agreement, as used in this Agreement, the following terms shall have the
meanings ascribed to them below:
"Adjusted Maximum Ownership Percentage" shall mean the Maximum
Ownership Percentage minus 10.0%.
"Affiliate" shall mean, with respect to any person, any other person
that directly or indirectly through one or more intermediaries controls or is
controlled by or is under common
control with such person. For the purposes of this definition, "control," when
used with respect to any particular person, means the power to direct the
management and policies of such person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
"Agreement" shall have the meaning assigned to such term in the
introduction hereto.
"Beneficial Owner" (and, with correlative meanings, "Beneficially Own"
and "Beneficial Ownership") of any interest means a Person who, together with
his or its Affiliates, is or may be deemed a beneficial owner of such interest
for purposes of Rule 13d-3 or 13d-5 under the Exchange Act, or who, together
with his or its Affiliates, has the right to become such a beneficial owner of
such interest (whether such right is exercisable immediately or only after the
passage of time) pursuant to any agreement, arrangement or understanding, or
upon the exercise, conversion or exchange of any warrant, right or other
instrument, or otherwise.
"Board" shall mean the Board of Directors of the Company in office at
the applicable time, as elected in accordance with the By-laws of the Company
and with the provisions of this Agreement.
"Buy-Back Offer" shall have the meaning assigned to such term in
Section 3.5(a) hereof.
"Buyout Tender Offer" shall have the meaning assigned to such term in
Section 3.6(b) hereof.
"Buy/Sell Notice" shall have the meaning assigned to such term in
Section 3.6(a) hereof.
"Buy/Sell Option" shall have the meaning assigned to such term in
Section 3.6(a) hereof.
"Buy/Sell Price" shall have the meaning assigned to such term in
Section 3.6(a) hereof.
"By-laws" shall mean the by-laws of the Company, in the form specified
in the Merger Agreement, as they may be amended from time to time.
-2-
"Change in Control" shall mean the occurrence of any one of the
following events:
(1) any Person (other than the Shareholder Group) becoming the
Beneficial Owner, directly or indirectly, of Voting Securities,
pursuant to the consummation of a merger, consolidation, sale of
all or substantially all of the Company's assets, share exchange
or similar form of corporate transaction involving the Company or
any of its subsidiaries that requires the approval of the
Company's shareholders, whether for such transaction or the
issuance of securities in such transaction, so as to cause such
Person's Voting Ownership Percentage to exceed the Control
Percentage (as defined below); provided, however, that the event
described in this paragraph (1) shall not be deemed to be a Change
in Control if it occurs as the result of any of the following
acquisitions: (A) by any employee benefit plan sponsored or
maintained by the Company or any Affiliate, or (B) by any
underwriter temporarily holding securities pursuant to an offering
of such securities;
(2) the consummation of a merger, consolidation, sale of all or
substantially all of the Company's assets, share exchange or
similar form of corporate transaction involving the Company or any
of its subsidiaries that requires the approval of the Company's
shareholders, whether for such transaction or the issuance of
securities in such transaction, unless immediately following such
transaction more than 50% of the total voting power of (x) the
corporation resulting from such transaction, or (y) if applicable,
the ultimate parent corporation that directly or indirectly has
Beneficial Ownership of 100% of the voting securities eligible to
elect directors of such resulting corporation, is represented by
Voting Securities that were outstanding immediately prior to such
transaction (or, if applicable, shares into which such Voting
Securities were converted pursuant to such transaction), and such
voting power among the holders of such Voting Securities that were
outstanding immediately prior to such transaction is in
substantially the same proportion as the voting power of such
Voting Securities among the holders thereof immediately prior to
such transaction; or
(3) the consummation of a plan of complete liquidation or dissolution
of the Company.
"Charter" shall mean the Certificate of Incorporation of the Company,
in the form specified in the Merger Agreement, as it may be amended from time to
time.
-3-
"Clearly Credible Tender Offer" shall mean any bona fide offer, tender
offer or exchange offer that is subject to Section 14 of the Exchange Act, other
than any such offer with respect to which (i) the Board of Directors of the
Company is advised in writing by outside counsel of recognized standing that the
consummation of such offer would be in violation of applicable law, or (ii) the
party making such offer has not obtained as of the date of the commencement of
such offer definitive commitment letters from reputable financial institutions
in customary form with respect to the financing of such offer.
"Closing" shall have the meaning assigned in the second recital of this
Agreement.
"Commission" shall mean the United States Securities and Exchange
Commission.
"Common Stock" shall have the meaning assigned in the first recital of
this Agreement.
"Company" shall have the meaning assigned in the introduction of this
Agreement.
"Company Decision Period" shall have the meaning assigned in Section
3.6(c)(i) hereof.
"Company Repurchase Notice" shall have the meaning assigned to such
term in Section 3.5(b) hereof.
"Control Percentage" shall mean a Voting Ownership Percentage of 15%,
during the period prior to a Regulatory Change, and a Voting Ownership
Percentage of 35% thereafter.
"Conversion" shall mean the conversion of shares of Convertible
Preferred Stock into shares of Common Stock pursuant to the Charter.
"Convertible Preferred Stock" shall have the meaning assigned in the
first recital of this Agreement.
"Dilutive Issuance" shall have the meaning assigned in Section
3.3(a)(iii)of this Agreement.
"Dilutive Issuance Right" shall have the meaning assigned in Section
3.3(a)(iii) of this Agreement.
"Director" shall mean any member of the Board of Directors of the
Company in office at the applicable time, as elected in accordance with the
provisions of the By-laws of the Company.
-4-
"Dividend Premium" with respect to any share of Series A Convertible
Preferred Stock calculated at any time, shall be equal to the aggregate of the
present values as of the date of the Closing (assuming a discount rate of 9.25%)
of the excess of (x) each quarterly dividend actually paid by the Company to the
Shareholder Group with respect to such share of Series A Convertible Preferred
Stock over (y) $0.45.
"Excess Buy-Back Shares" shall have the meaning assigned to such term
in Section 3.5(a) hereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Independent Director" shall mean any person who is not a Shareholder
Nominee and is independent of and otherwise unaffiliated with any member of the
Shareholder Group, and who is not a director, officer, employee, consultant or
advisor (financial, legal or other) of any member of the Shareholder Group and
has not served in any such capacity in the previous three (3) years.
"Initial Shareholder Nominee Notice" shall have the meaning assigned in
Section 4.1(b) of this Agreement.
"Initial Shareholder Nominees" shall have the meaning assigned in
Section 4.1(b) of this Agreement.
"Market Price" for a Security of the Company shall mean the average of
the closing prices for such Security for the twenty (20) Trading Days
immediately prior to the date on which the Market Price is being determined;
provided, however, that in the event that the current per share market price of
such security is determined during a period following the announcement by the
Company of (a) a dividend or distribution on such security payable in shares of
such security or securities convertible into such shares, or (b) any
subdivision, combination or reclassification of such security and prior to the
expiration of 20 Trading Days after the ex-dividend date for such dividend or
distribution, or the record date for such subdivision, combination or
reclassification, then, and in each such case, the current per share market
price shall be appropriately adjusted to take into account ex-dividend trading
or the effects of such subdivision, combination or reclassification. The closing
price for each day shall be the last sale price, regular way, or, in case no
such sale takes place on such day, the average of the closing bid and asked
prices, regular way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if such security is not listed or
admitted to trading on the New York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to securities listed on
the principal national securities exchange on which such security is listed or
admitted to trading or, if such security is not listed or admitted to trading on
any national securities exchange, the last quoted price or, if not so quoted,
the average of the high bid and low asked prices in the over-the-counter market,
as reported by the National
-5-
Association of Securities Dealers, Inc. Automated Quotations System or such
other system then in use, or, if on any such date such security is not quoted by
any such organization, the average of the closing bid and asked prices as
furnished by a professional market maker making a market in such security
selected by a majority of the Board or, if on any such date no market maker is
making a market in such security, the fair value as determined in good faith by
a majority of the Board based upon the opinion of an independent investment
banking firm of recognized standing.
"Make Whole Payment" shall have the meaning assigned to such term in
Section 3.11 hereof.
"Maximum Ownership Percentage" shall mean, calculated at a particular
point in time, a Total Ownership Percentage of 45.0%, less the Voting Power
represented by all Voting Securities Transferred by the Shareholder Group during
the term of this Agreement (including the Voting Power represented by any shares
of Convertible Preferred Stock which were converted into shares of Common Stock
contemporaneously with such Transfer pursuant to the terms of this Agreement).
"Merger" shall have the meaning set forth in the first recital of this
Agreement.
"Merger Agreement" shall have the meaning set forth in the first
recital of this Agreement.
"1935 Act" shall mean the Public Utility Holding Act of 1935, as
amended.
"NYSE" shall mean the New York Stock Exchange.
"ONEOK" shall have the meaning assigned in the first recital of this
Agreement.
"Person" shall mean any individual, partnership, joint venture,
corporation, trust, unincorporated organization, government or department or
agency of a government.
"Quarterly Pay Down Amount" shall mean the Total Per Share Pay Down
Amount divided by 20.
"Registration Rights" shall mean the rights and obligations of the
Shareholder Group and the corresponding rights and obligations of the Company
set forth in the Registration Rights Agreement.
"Registration Rights Agreement" shall have the meaning assigned in the
third recital of this Agreement.
A "Regulatory Change" will be deemed to have occurred, with respect to
all or any one of the provisions of this Agreement, upon the receipt by the
Shareholder of an opinion
-6-
of the Shareholder's counsel (which counsel must be reasonably acceptable to the
Company) to the effect that either (1) the 1935 Act has been repealed, modified,
amended or otherwise changed or (2) the Shareholder has received an exemption,
or, in the unqualified opinion of such counsel, is entitled without any
regulatory approval to claim an exemption, or has received an approval or
no-action letter from the Securities and Exchange Commission or its staff under
the 1935 Act or has registered under the 1935 Act, or any combination of the
foregoing, and as a consequence of (1) and/or (2) the Shareholder may fully and
legally exercise the rights set forth in such provision(s) of this Agreement
which take effect in the period after a Regulatory Change has occurred.
"Repurchase" shall have the meaning assigned in Section 3.5(a) of this
Agreement.
"Rights Agreement" means the Shareholder Protection Rights Agreement,
dated as of the date hereof, attached hereto as Exhibit B.
"Sale Notice" shall have the meaning assigned in Section 3.4(b)(i)
of this Agreement.
"Sale Option" shall have the meaning assigned in Section 3.4(b) of this
Agreement.
"Sale Period" shall have the meaning assigned in Section ? of this
Agreement.
"Sale Securities" shall have the meaning assigned in Section 3.4(b)(i)
of this Agreement.
"Securities" shall mean any equity securities of the Company.
"Securities Act" shall mean the Securities Act of 1993, as amended.
"Seller" shall have the meaning assigned in Section 3.4 of this
Agreement.
"Series A Convertible Preferred Stock" shall mean the Series A
Convertible Preferred Stock, par value $.01 per share, of the Company.
"Series B Convertible Preferred Stock" shall mean the Series B
Convertible Preferred Stock, par value $.01 per share, of the Company.
"Shareholder" shall have the meaning assigned in the introduction to
this Agreement.
"Shareholder Affiliate" shall mean any Affiliate of the Shareholder.
-7-
"Shareholder Group" shall mean the Shareholder, any Shareholder
Affiliate and any Person with whom any Shareholder or any Affiliate of any
Shareholder is part of a 13D Group.
"Shareholder Nominees" shall have the meaning set forth in Section
4.1(d) of this Agreement.
"Successor Shareholder Nominee Notice" shall have the meaning assigned
in Section 4.1(d) of this Agreement.
"Successor Shareholder Nominees" shall have the meaning assigned in
Section 4.1(d) of this Agreement.
"13D Group" shall mean any group of Persons acquiring, holding, voting
or disposing of any Voting Security which would be required under Section 13(d)
of the Exchange Act and the rules and regulations thereunder to file a statement
on Schedule 13D with the Commission as a "person" within the meaning of Section
13(d)(3) of the Exchange Act.
"Total Make Whole Amount" shall mean, with respect to any share of
Series A Convertible Preferred Stock calculated at any time, an amount equal to
the Total Per Share Pay Down Amount minus the sum of (I) the product of (x) the
Quarterly Pay Down Amount and (y) the number of quarters since the date of the
Closing in which the Company has paid a dividend on the Series A Convertible
Preferred Stock of at least $0.45 per share plus (II) the Dividend Premium with
respect to such share through such time.
"Total Ownership Percentage" shall mean, calculated at a particular
point in time, the Voting Power which would be represented by the Securities
Beneficially Owned by the Person whose Total Ownership Percentage is being
determined if all shares of Convertible Preferred Stock (or other Securities
convertible into Voting Securities) Beneficially Owned by such Person were
converted into shares of Common Stock (or other Voting Security).
"Total Per Share Paydown Amount" shall mean the product of (i)
$35,000,000 divided by (ii) the total number of shares of Series A Preferred
Stock issued at the Closing.
"Total Voting Power" shall mean, calculated at a particular point in
time, the aggregate Votes represented by all then outstanding Voting Securities.
"Trading Day", with respect to a Voting Security, shall mean a day on
which the principal national securities exchange on which such Voting Security
is listed or admitted to trading is open for the transaction of business or, if
such security is not listed or admitted to trading on any national securities
exchange, any day other than a Saturday, Sunday or a day on which banking
institutions in the City of New York are authorized or obligated to close.
-8-
"Transfer" shall mean any sale, transfer, pledge, encumbrance or other
disposition to any Person, and to "Transfer" shall mean to sell, transfer,
pledge, encumber or otherwise dispose of to any Person.
"Unrestricted Ownership Percentage" shall mean a Voting Ownership
Percentage of 9.9%.
"Votes" shall mean votes entitled to be cast generally in the election
of Directors, not including the votes that would be able to be cast by holders
of shares of Convertible Preferred Stock upon Conversion to shares of Common
Stock unless such Conversion shall occur or be deemed to occur.
"Voting Ownership Percentage" shall mean, calculated at a particular
point in time, the Voting Power represented by the Voting Securities
Beneficially Owned by the Person whose Voting Ownership Percentage is being
determined.
"Voting Power" shall mean, calculated at a particular point in time,
the ratio, expressed as a percentage, of (a) the Votes represented by the Voting
Securities with respect to which the Voting Power is being determined to (b)
Total Voting Power.
"Voting Securities" shall mean the Common Stock and shares of any other
class of capital stock of the Company then entitled to vote generally in the
election of Directors, and shall not include Convertible Preferred Stock (or
other Securities convertible into Voting Securities) prior to Conversion into
Common Stock (or other Voting Security).
ARTICLE II
Representations and Warranties
Section 2.1. Representations and Warranties of the Company. The Company
represents and warrants to the Shareholder as of the date hereof as follows:
(a) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Oklahoma and has all
necessary corporate power and authority to enter into this Agreement and to
carry out its obligations hereunder.
(b) This Agreement has been duly and validly authorized by the Company
and all necessary and appropriate action has been taken by the Company to
execute and deliver this Agreement and to perform its obligations hereunder.
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(c) This Agreement has been duly executed and delivered by the Company
and assuming due authorization and valid execution and delivery by the
Shareholder, this Agreement is a valid and binding obligation of the Company,
enforceable in accordance with its terms.
Section 2.2. Representations and Warranties of the Shareholder. The
Shareholder represents and warrants to the Company as of the date hereof as
follows:
(a) The Shareholder has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the State of Kansas and has
all necessary corporate power and authority to enter into this Agreement and to
carry out its obligations hereunder.
(b) This Agreement has been duly and validly authorized by the
Shareholder and all necessary and appropriate action has been taken by the
Shareholder to execute and deliver this Agreement and to perform its obligations
hereunder.
(c) This Agreement has been duly executed and delivered by the
Shareholder and assuming due authorization and valid execution and delivery by
the Company, this Agreement is a valid and binding obligation of the
Shareholder, enforceable in accordance with its terms.
(d) As of the effectiveness of this Agreement, the Shareholder Group
Beneficially Owns 2,996,702 shares of Common Stock and 19,317,584 shares of
Series A Convertible Preferred Stock and does not Beneficially Own any other
Voting Security, warrant, option, convertible security or other similar right to
acquire Common Stock or shares of any other class of capital stock of the
Company which are entitled to vote generally in the election of directors.
ARTICLE III
Shareholder and Company Conduct
Section 3.1. Standstill Provision. Subject to the provisions of this
Agreement, during the term of this Agreement, the Shareholder agrees with the
Company that, without the prior approval of a majority of the Board, the
Shareholder will not, and will cause each Shareholder Affiliate not to, take any
of the following actions:
(a) prior to the occurrence of a Regulatory Change, but not thereafter,
singly or as part of a partnership, limited partnership, syndicate or other 13D
Group, directly or indirectly, acquire Beneficial Ownership of any Voting
Security so as to cause the Shareholder Group's Voting Ownership Percentage to
exceed the Unrestricted Ownership Percentage.
(b) singly or as part of a partnership, limited partnership, syndicate
or other 13D Group, directly or indirectly, acquire, propose to acquire, or
publicly announce or otherwise
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disclose an intention to propose to acquire, or offer or agree to acquire, by
purchase or otherwise, Beneficial Ownership of any Security so as to cause the
Shareholder Group's Total Ownership Percentage to exceed the Maximum Ownership
Percentage;
(c) deposit (either before or after the date of the execution of this
Agreement) any Security in a voting trust or subject any Security to any similar
arrangement or proxy with respect to the voting of such Security;
(d) make, or in any way participate, directly or indirectly, in any
"solicitation" of "proxies", or become a "Participant" in a "solicitation" (as
such terms are used in Regulation 14A under the Exchange Act) to seek to advise
or influence any person to vote against any proposal or director nominee
recommended to the shareholders of the Company or any of its subsidiaries by at
least a majority of the Board of Directors;
(e) form, join or in any way participate in a 13D Group with respect to
any Security of the Company or any securities of its subsidiaries;
(f) commence (including by means of proposing or publicly announcing or
otherwise disclosing an intention to propose, solicit, offer, seek to effect or
negotiate) a merger, acquisition or other business combination transaction
relating to the Company;
(g) initiate a "proposal," as such term is used in Rule 14a-8 under the
Exchange Act, "propose", or otherwise solicit the approval of, one or more
stockholders for a "proposal" or induce or attempt to induce any other person to
initiate a "proposal";
(h) otherwise act, alone or in concert with others, to seek to control
or influence the management, the Board or policies of the Company;
(i) take any other action to seek or effect control of the Company
other than in a manner consistent with the terms of this Agreement.
This Section 3.1 shall not be interpreted to restrict the Shareholder
or any Shareholder Affiliate from taking any action or exercising any right
consistent with the terms of this Agreement, including engaging in private and
confidential discussions with the Board or the management of the Company. In
addition, this section shall not be deemed to restrict the Shareholder Nominees
from participating as board members in the direction of the Company.
Section 3.2. Required Reduction of Ownership Percentage. If at any time
the Shareholder becomes aware that the Shareholder Group's Total Ownership
Percentage (excluding Excess Buy-Back Securities) exceeds the Maximum Ownership
Percentage and/or, prior to the occurrence of a Regulatory Change and not
thereafter, that the Shareholder Group's Voting Ownership Percentage (excluding
Excess Buy-Back Securities) exceeds the Unrestricted
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Ownership Percentage, in each case other than as permitted pursuant to the terms
of this Agreement, then the Shareholder shall, or shall cause the Shareholder
Affiliates to, consistent with the provisions of Section 3.4 of this Agreement,
promptly take all action necessary to reduce the amount of Securities or Voting
Securities, as the case may be, Beneficially Owned by the Shareholder Group such
that the Shareholder Group's Total Ownership Percentage (excluding Excess
Buy-Back Securities) is not greater than the Maximum Ownership Percentage and
that the Shareholder Group's Voting Ownership Percentage (excluding Excess
Buy-Back Securities) is not greater than the Unrestricted Ownership Percentage,
as the case may be.
Section 3.3. Top-Up Rights; Dilutive Issuance Right. (a) During the
term of this Agreement and prior to the occurrence of a Regulatory Change, but
not thereafter:
(i) If the Shareholder Group's Voting Ownership Percentage falls below
the Unrestricted Ownership Percentage, the Shareholder may at its option (A)
purchase Voting Securities from time to time in the open market or otherwise
or (B) convert shares of Convertible Preferred Stock into shares of Common
Stock pursuant to the terms of the Charter, in each case in an amount
sufficient in order to restore the Shareholder Group's Voting Ownership
Percentage to the Unrestricted Ownership Percentage.
(ii) If the Shareholder Group's Total Ownership Percentage falls below
the Maximum Ownership Percentage, the Shareholder may at its option purchase
Voting Securities from time to time in the open market or otherwise in an
amount sufficient in order to restore the Shareholder Group's Total
Ownership Percentage to the Maximum Ownership Percentage; provided, however
that the Shareholder shall present for exchange, and the Company shall
exchange at no cost to the Shareholder, Common Stock purchased pursuant to
this paragraph for shares of Series B Convertible Preferred Stock (at a
ratio of one share of Series B Convertible Preferred Stock in exchange for
each share of Common Stock (as appropriately adjusted to reflect any stock
split, stock dividend, reverse stock split, reclassification or any other
transaction with a comparable effect)) in an amount sufficient to ensure
that the Shareholder Group is in compliance with its obligations under
Section 3.1(a) hereof.
(iii) If the Shareholder Group's Total Ownership Percentage would fall
below the Maximum Ownership Percentage as a result of any security issuance
(a "Dilutive Issuance") by the Company, except as provided in paragraph
3.3(a)(v) below, the Shareholder shall have the right (the "Dilutive
Issuance Right") to require the Company to issue to the Shareholder (A)
additional Common Stock, up to the maximum number of such shares that would
permit the Shareholder Group to remain in compliance with Section 3.1(a)
hereof, and (B) additional shares of Series B Convertible Preferred Stock,
up to an amount of such shares of Common Stock and Series B Convertible
Preferred Stock as may be necessary to restore the Shareholder Group's Total
Ownership Percentage to the Maximum Ownership Percentage. Shares of Common
Stock or Series B Preferred Stock issued pursuant to the exercise of a
Dilutive Issuance Right shall be
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issued for cash concurrently with the closing of the Dilutive Issuance. The
issue price per share for shares of Common Stock and shares of Series B
Convertible Preferred Stock issued pursuant to the Dilutive Issuance Right
shall be equal to the issue price per share of the Dilutive Issuance. Such
issue price shall in turn be equal to the aggregate amount of cash plus the
fair market value of any other property received by the Company in
consideration of the Dilutive Issuance, divided by the number of shares
being issued in such Dilutive Issuance, with such fair market value being
determined in good faith by the Board of Directors of the Company, provided
that if the Shareholder shall object to such valuation within 30 days of its
receipt of notice thereof, then the fair market value of such property shall
be determined at the Company's sole expense by an independent nationally
recognized financial advisor mutually acceptable to the Shareholder and the
Company.
(iv) The Shareholder must provide the Company with notice of its
intention to exercise the Dilutive Issuance Right sixty (60) days prior to
the expected closing of the Dilutive Issuance, which expected closing date
will be provided to the Shareholder by or on behalf of the Company not less
than ninety (90) days prior to such expected closing date.
(v) The Company shall not be obligated to provide the Shareholder with
a Dilutive Issuance Right (I) in connection with issuances of securities
pursuant to employee benefit plans and programs of the Company in the
ordinary course of business or (II) which would require the issuance of
fewer than 25,000 shares of Series B Convertible Preferred Stock; provided,
however, that any share issuances not required to be made pursuant to this
clause (II) shall be carried forward and taken into account in determining
whether the Company must provide the Shareholder with a subsequent Dilutive
Issuance Right. In addition, in the case of any Dilutive Issuance in
connection with any acquisition or other business combination transaction,
by merger or otherwise, by the Company, the Company shall be required to
provide the Shareholder with a Dilutive Issuance Right only to the extent of
restoring the Shareholder Group's Total Ownership Percentage to the Adjusted
Maximum Ownership Percentage.
(vi) At the Closing, the Shareholder shall be entitled to require the
Company to issue to the Shareholder, at a price per share equal to the
Market Price as of the date of the Closing, additional Common Stock up to
the maximum number of shares that would permit the Shareholder Group to
remain in compliance with Section 3.1(a) and additional shares of Series A
Convertible Preferred Stock so as to restore the Shareholder Group's Total
Ownership Percentage to the Maximum Ownership Percentage.
(b) From time to time following a Regulatory Change and during the term
of this Agreement:
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(i) If the Shareholder Group's Total Ownership Percentage falls below
the Maximum Ownership Percentage, the Shareholder may at its option purchase
Voting Securities from time to time in the open market or otherwise in an
amount sufficient in order to restore the Shareholder Group's Total
Ownership Percentage to the Maximum Ownership Percentage.
(ii) If the Shareholder Group's Total Ownership Percentage would fall
below the Adjusted Maximum Ownership Percentage as a result of a Dilutive
Issuance by the Company pursuant to primary or secondary offerings, mergers,
acquisitions or otherwise, the Shareholder shall have a Dilutive Issuance
Right (for the issuance of Common Stock only and not Series B Convertible
Preferred Stock) to the extent of restoring the Shareholder Group's
Ownership Percentage to the Adjusted Maximum Ownership Percentage.
(iii) The Shareholder must provide the Company with notice of its
intention to exercise the Dilutive Issuance Right sixty (60) days prior to
the expected closing of the Dilutive Issuance, which expected closing date
will be provided to the Shareholder by or on behalf of the Company not less
than ninety (90) days prior to such expected closing date.
(c) All Securities acquired by purchase or conversion pursuant to this
Section 3.3 shall be subject to the terms of this Agreement. In no event shall
the Shareholder Group's exercise of the Dilutive Issuance Right be interpreted
to be a waiver by the Shareholder of its right to make purchases of Securities
pursuant to this Section.
Section 3.4. Restrictions on Transfer. None of the members of the
Shareholder Group shall directly or indirectly Transfer any Voting Securities
without the prior written consent of a majority of the Independent Directors,
except the following Transfers:
(a) Transfers of Securities representing upon Transfer Voting Power of
less than 5.0% to any Transferee, without prior notice to the Company, so
long as such Transferee and any Affiliate of such Transferee and any such
person who is a member of a 13D Group with such Transferee does not have a
Voting Ownership Percentage of 5.0% or more immediately prior to giving
effect to at the time of each such Transfer.
(b) Transfers of Securities representing upon Transfer Voting Power of
5.0% or more pursuant to the following procedure (the "Sale Option"):
(i) The Seller must provide written notice (a "Sale Notice") of
its intention to sell to the Company Securities representing, upon
Transfer, Voting Power of 5.0% or more (the "Sale Securities"). The
Sale Notice shall specify the number of Sale Securities and the cash
price per share at which the Company or its designee may purchase the
Sale Securities, which cash price shall equal
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98.5% of the Market Price of such Sale Securities determined as of the
date of the Sale Notice; provided, however, that the cash price per
share at which the Company or its designee shall purchase shares of
Convertible Preferred Stock pursuant to this subsection shall equal
98.5% of the Market Price of the Common Stock determined as of the date
of the Sale Notice.
(ii) The Company shall have a period ending on the later of ninety
(90) days after the date of the Sale Notice and thirty (30) days from
the date of receipt of all necessary regulatory approvals (the "Sale
Period") (provided, that in no event shall the Sale Period exceed one
hundred eighty (180) days) within which to effect a closing of the
Company's or its designee's purchase of all, but not less than all, of
the Sale Securities.
(iii) If the Company or its designee shall for any reason fail to
effect a closing of the purchase of all, but not less than all, of the
Sale Securities within the Sale Period, the Company shall at its option
inform the Seller in writing that it shall reimburse the Seller for the
aggregate difference between the Market Price of the Sale Securities as
of the date of the Sale Notice and the Market Price of the Sale
Securities as of the date that the Seller completes its transfer of the
Sale Securities, in which event such transfer by the Seller must be
completed within the later of 180 days from the date of the Sale Notice
or 30 days from the receipt of all necessary regulatory approvals.
Otherwise, if the Company shall not have so informed the Seller, the
Seller shall have 16 months from the date of the Sale Notice to
complete such transfer. In the event that such transfer by the Seller
is not so completed within the applicable period, the Sale Securities
shall thenceforth again be subject to this Section 3.4.
(c) Transfers of Securities to the public in a bona fide underwritten
offering pursuant to the Registration Rights Agreement; provided, however,
that the Seller and the representative or representatives of the
underwriters previously agree in writing with the Company that all
reasonable efforts will be made to achieve a wide distribution of the Voting
Securities in such offering and to ensure that no Transferee in such
offering acquires for its own account Beneficial Ownership of Securities
representing upon Transfer Voting Power of 5.0% or more.
(d) Transfers of all or part of the Shareholder Group's Securities
pursuant to a pro rata distribution of Securities among the shareholders of
the Shareholder.
(e) Transfers of Securities among members of the Shareholder Group;
provided, however, that any such transferee shall agree with the Company in
writing prior to each such transfer to be bound by the terms of this
Agreement with respect to its Beneficial Ownership of Securities.
-15-
(f) If a Clearly Credible Tender Offer for the Company has been
commenced, at the Shareholder's option Transfers of Securities by means of
tenders into such Clearly Credible Tender Offer in an amount not exceeding
the percentage (on the basis of total Votes and assuming the conversion of
all shares of Convertible Preferred Stock into shares of Common Stock) of
the Voting Securities of which it is the Beneficial Owner equal to the
highest percentage (on the basis of total Votes) of the aggregate of all
Voting Securities not Beneficially Owned by any member of the Shareholder
Group which has ever been announced to have been tendered into such Clearly
Credible Tender Offer.
Section 3.5. Buy-Back Options. (a) During the term of this Agreement,
if the Company purchases Securities from the public, whether by tender offer,
open market purchase or otherwise (a "Repurchase"), the Company shall
contemporaneously with the Repurchase offer to repurchase from the Shareholder
on the same terms and conditions, including price, as in the Repurchase, a
percentage (on the basis of total Votes and assuming the conversion of all
shares of Convertible Preferred Stock into shares of Common Stock) of those
Securities Beneficially Owned by the Shareholder equal to the percentage (on the
basis of total Votes and assuming the conversion of all shares of Convertible
Preferred Stock into shares of Common Stock) of Securities to be Repurchased
from the Beneficial Owners of Securities other than the Shareholder or any
Shareholder Affiliate (the "Buy-Back Offer"). The Shareholder may accept such
Buy- Back Offer in its sole discretion; provided, however, that in the event of
a Repurchase the Shareholder shall be required to sell Securities or Voting
Securities of which it is the Beneficial Owner to the Company in an amount
sufficient to ensure that its Total Ownership Percentage does not exceed the
Maximum Ownership Percentage and/or, prior to the occurrence of a Regulatory
Change and not thereafter, that the Shareholder Group's Voting Ownership
Percentage does not exceed the Unrestricted Ownership Percentage, in each case
other than as permitted pursuant to the terms of this Agreement; and provided
further that the Shareholder shall not be required to comply with the preceding
mandatory sale requirement (i) during any period when doing so would cause the
Shareholder to incur any liability under Section 16(b) of the Exchange Act or
the rules and regulations promulgated thereunder, and (ii) to the extent that
compliance with such mandatory sale requirement would have an adverse effect on
the availability of pooling-of-interests accounting treatment with respect to
any business combination involving the Shareholder or any of the Shareholder's
subsidiaries that has either been announced or is under bona fide consideration
by the Shareholder at the time of such Repurchase, but the Shareholder shall be
required to comply with such mandatory sale requirement immediately upon the
conditions set forth in (i) and (ii) above no longer being applicable. Any
Securities Beneficially Owned by the Shareholder Group as permitted by the
preceding sentence which cause the Shareholder Group's Total Ownership
Percentage to exceed the Maximum Ownership Percentage and/or, prior to the
occurrence of a Regulatory Change and not thereafter, the Shareholder Group's
Voting Ownership Percentage to exceed the Unrestricted Ownership Percentage
shall be referred to in this Agreement as "Excess Buy-Back Securities."
(b) The Company shall provide notice to the Shareholder of its
intention to engage in a Repurchase not less than 30 days in advance of the date
on which the Repurchase is to begin
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(the "Company Repurchase Notice"). The Shareholder must provide notice to the
Company within ten (10) days of receipt of the Company Repurchase Notice of (i)
whether the Shareholder intends to accept the Buy-Back Offer and (ii) in good
faith whether the Shareholder is aware that the Shareholder would be subject to
any of the conditions set forth in (i) or (ii) above as a result of such
Repurchase.
Section 3.6. Buy/Sell Option. (a) At the fifteenth and at each
succeeding anniversary of the date hereof, if at such times this Agreement
remains in force, each of the Shareholder and the Company may at its option (the
"Buy/Sell Option") provide notice (the "Buy/Sell Notice") to the other party of
a price (the "Buy/Sell Price") at which such notifying party intends in good
faith either to sell to the receiving party all, but not less than all, of the
Securities Beneficially Owned by the notifying party or to buy from the
receiving party all, but not less than all, of the Securities Beneficially Owned
by the receiving party; provided, however, that the Buy/Sell Price shall apply
equally to shares of Convertible Preferred Stock and shares of Common Stock and
provided, further, that all references in this Section 3.6 to Securities
Beneficially Owned by the Company shall be deemed to refer only to outstanding
Securities Beneficially Owned by shareholders of the Company other than the
Shareholder Group.
(b) Upon receipt by the Shareholder of a Buy/Sell Notice from the
Company, the Shareholder Group shall have ninety (90) days (the "Shareholder
Decision Period") within which either to (i) agree to sell for cash all, but not
less than all, of the Securities Beneficially Owned by the Shareholder Group to
the Company at the Buy/Sell Price or (ii) make a bona fide Clearly Credible
Tender Offer (a "Buyout Tender Offer") at the Buy/Sell Price for any and all
Securities Beneficially Owned by the Company, which Buyout Tender Offer the
Company hereby agrees not to oppose. A non-waivable condition to the
consummation of the Buyout Tender Offer shall be the valid tender into such
offer, on or prior to the 20th day following the receipt of all regulatory
approvals required for the consummation of such offer, of Voting Securities
representing in the aggregate two-thirds (2/3) of the Voting Power represented
by all Voting Securities held by shareholders of the Company other than the
Shareholder Group.
(c) (i) Upon receipt by the Company of a Buy/Sell Notice from the
Shareholder, the Company shall have ninety (90) days (the "Company Decision
Period") within which to (A) agree to purchase for cash all but not less than
all of the Securities Beneficially Owned by the Shareholder Group at the
Buy/Sell Price or (B) agree to seek an opinion from an independent,
internationally recognized investment banking firm relating to the fairness to
the Company's shareholders of the Offer Price in the Buyout Tender Offer with
respect to the acquisition by the Shareholder of all Securities Beneficially
Owned by the Company at the Buy/Sell Price.
(ii) If the Company shall not agree to repurchase the Voting
Securities Beneficially Owned by the Shareholder Group pursuant to
Section 3.6(c)(i) above, the Company shall have the right, within
ninety (90) days following the end of the Company Decision Period, to
obtain the fairness opinion and execute a merger agreement between the
Company and any member of the Shareholder Group pursuant to which the
Shareholder or a Shareholder Affiliate shall acquire Beneficial
Ownership of all remaining Securities at the Buy/Sell Price. The terms
of such merger agreement shall include customary provisions regarding
the non- solicitation of alternative transactions by the Company and
the recommendation of the Merger to the Company's shareholders, if
required.
(iii) If the Company fails to satisfy the condition pursuant to
Section 3.6(c)(ii) above by the end of such ninety (90) day period, or
if the Company cannot obtain a fairness opinion by the end of such
ninety (90) day period, this Agreement shall immediately terminate.
(d) If the Shareholder and the Company each provide a Buy/Sell Notice
to the other party on the same day, the Buy/Sell Notice containing the higher
valued Buy/Sell Price shall be the effective and controlling Buy/Sell Notice. In
the event that (i) the Buy/Sell Price set forth in either or both of the
Buy/Sell Notices consists of consideration other than cash, and (ii) the parties
are unable to reach agreement as to which of the Buy/Sell Prices is higher
valued for purposes of this subsection (d), an independent, internationally
recognized investment banking firm mutually agreeable to both parties shall
conclusively make such determination.
(e) Any purchase by the Company of the Shareholder Group's Securities
pursuant to this Section shall be closed within a period ending ninety (90) days
after the end of the Shareholder Decision Period or the Company Decision Period,
as the case may be, or thirty (30) days after the date of receipt of all
necessary regulatory approvals, whichever is later.
Section 3.7 Charter and By-Laws. During the term of this Agreement the
Company shall not amend, alter or repeal, or propose the amendment, alteration
or repeal of, any provision of the Charter or the By-Laws in any manner which is
inconsistent with the terms of this Agreement and which adversely affects the
rights of the Shareholder Group under the terms of this Agreement. If at any
time during the term of this Agreement the provisions of this Agreement shall
conflict with the provisions of the Charter and the By-Laws, the provisions of
this Agreement shall be controlling.
Section 3.8. Rights Agreement. During the term of this Agreement, the
Company hereby agrees not to amend any provision of the Rights Agreement in any
manner which is inconsistent with the terms of this Agreement or the Merger
Agreement and which adversely affects the rights of the Shareholder Group under
the terms of this Agreement.
Section 3.9. Agreement Not to Convert. During the term of this
Agreement and prior to the occurrence of a Regulatory Change, the Shareholder
agrees that it shall not, and shall cause each Shareholder Affiliate not to,
Convert shares of Convertible Preferred Stock Beneficially Owned by the
Shareholder or any Affiliate into shares of Common Stock except to the extent
any such shares of Convertible Preferred Stock are Converted (a) concurrently
with
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the Transfer of such shares to any Person other than the Shareholder or any
Shareholder Affiliate or (b) pursuant to the Shareholder's top-up rights as set
forth in Section 3.3(a)(i)(B).
Section 3.10. Taxes Upon Conversion or Exchange. The Company hereby
agrees to pay any and all stock transfer and documentary stamp taxes that may be
payable in respect of any issuance or delivery of (i) any shares of Convertible
Preferred Stock, (ii) any shares of Common Stock issued in a Conversion of
shares of Convertible Preferred Stock, or (iii) any exchange of shares of Common
Stock for shares of Convertible Preferred Stock, or certificates or instruments
evidencing any of such shares or securities. The Company shall not, however, be
required to pay any such tax which may be payable in respect of any transfer
involved in the issuance or delivery of shares of Common Stock in a Conversion
of shares of Convertible Preferred Stock in a name other than that in which the
shares of such Convertible Preferred Stock were registered.
Section 3.11. Make Whole Payment. Immediately upon the Conversion of
any share of Series A Preferred Stock, the Company shall pay to the Shareholder
an amount (a "Make Whole Payment") with respect to such share equal to the Total
Make Whole Amount for such share as of the date of such Conversion; provided,
however, that the Company shall not be required to make a Make Whole Payment in
respect of the Conversion of fewer than 25,000 shares of Series A Convertible
Preferred Stock; provided, further, that any Make Whole Payments not required to
be made pursuant to this sentence shall be carried forward and taken into
account in determining whether the Company must provide the Shareholder with a
subsequent Make Whole Payment.
Section 3.12. Prohibition on Senior Securities. During the term of this
Agreement, the Company hereby agrees that it shall not create, authorize or
reclassify any authorized stock of the Company into (x) any class or series of
the Company's capital stock ranking prior to the Convertible Preferred Stock as
to dividends or as to distributions of assets upon liquidation, dissolution or
winding up of the Company, whether voluntary or involuntary, or (y) any class or
series of the Company's capital stock entitled to vote separately as a class on
any matter whatsoever, other than an amendment to the Charter which would have
the effect of modifying the voting powers, designations, preferences, rights and
qualifications, limitations or restrictions of such class or series so as to
affect the holders thereof adversely, or (z) any security convertible into
shares of any class or series described in (x) or (y) above.
ARTICLE IV
Board Representation and Voting
Section 4.1. Directors Designated by the Shareholder. (a) Immediately
following the Closing, the Board shall expand the size of the Board by two (2)
Directors and shall appoint as additional Directors the two (2) Initial
Shareholder Nominees (as defined in Section 4.1(b) below) who have been
designated by the Shareholder in the Initial Shareholder Nominee Notice (as
defined in Section 4.1(b)
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below) attached as Exhibit C hereto. One Initial Shareholder Nominee shall be
placed in the class of Directors next standing for election, and the remaining
Initial Shareholder Nominee shall be placed in the class of Directors next but
one standing for election. Immediately following the occurrence of a Regulatory
Change, the Board shall expand the Board as may be necessary and shall appoint
additional Initial Shareholder Nominees as designated by the Shareholder in an
additional Initial Shareholder Nominee Notice in a number sufficient to ensure
that Shareholder Nominees comprise a number of Directors which is (x) 4
Directors if the total size of the Board is 14 or fewer Directors (excluding any
Shareholder Nominees) or (y) one-third (rounding down to the nearest whole
Director) of the Board (if the total size of the Board is more than 14 Directors
(excluding any Shareholder Nominees). Such additional Initial Shareholder
Nominees shall be distributed among the classes of Directors as evenly as
possible. In the event of a vacancy caused by the disqualification, removal,
resignation or other cessation of service of any Initial Shareholder Nominee
from the Board, the Board shall elect as a Director (to serve until the
Company's immediately succeeding annual meeting of shareholders) a new Initial
Shareholder Nominee who has been designated by the Shareholder in an additional
Initial Shareholder Nominee Notice that has been provided to the Company at
least seven (7) days prior to the date of a regular meeting of the Board.
(b) The Shareholder shall provide notice to the Company (the "Initial
Shareholder Nominee Notice") as required by Section 4.1(a) above, which notice
shall contain the following information: (i) the name of the person(s) it has
designated to become Director(s) (the "Initial Shareholder Nominees"), and (ii)
all information required by Regulation 14A and Schedule 14A under the Exchange
Act with respect to each such Initial Shareholder Nominee.
(c) Following the occurrence of a Regulatory Change and during the term
of this Agreement, until such time as the Initial Shareholder Nominees and the
Successor Shareholder Nominees (as defined in Section 4.1(d) below) together
comprise a number of Directors which is one-third (rounding down to the nearest
whole Director) of the Board, at the first annual meeting of shareholders of the
Company following the occurrence of a Regulatory Change and at each subsequent
annual meeting of shareholders of the Company at which (i) the term of any
Director is to expire or (ii) a vacancy is caused by the removal, resignation,
retirement, death, disability or disqualification or other cessation of service
of any Director, the Company shall at its option (i) cause such directorship to
remain vacant, with the size of the Board correspondingly being reduced, or (ii)
designate as a replacement Director a Successor Shareholder Nominee to be
included in the slate of nominees recommended by the Board to the Company's
shareholders for election as Directors and use its best efforts to cause the
election of each such Successor Shareholder Nominee to the Board, including
soliciting proxies in favor of the election of such persons. The Successor
Shareholder Nominees shall be divided as nearly equally as possible among all
the classes of Directors, as specified in the Successor Shareholder Nominee
Notice (as defined in Section 4.1(d) below).
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(d) Following the occurrence of a Regulatory Change and during the term
of this Agreement, until such time as the Initial Shareholder Nominees and the
Successor Shareholder Nominees together comprise a number of Directors which is
one-third (rounding down to the nearest whole Director) of the Board, the
Shareholder shall provide notice to the Company in writing sixty (60) days prior
to each annual meeting of the Company's shareholders ("Successor Shareholder
Nominee Notice"), indicating (i) the name of the person(s) it has designated to
become Director(s) ("Successor Shareholder Nominees" and together with Initial
Shareholder Nominees, "Shareholder Nominees"), if any, (ii) the class of
Directors to which each such Successor Shareholder Nominee shall be assigned,
and (iii) all information required by Regulation 14A and Schedule 14A under the
Exchange Act with respect to each such Successor Shareholder Nominee.
(e) The Shareholder shall consult with the Company in connection with
the identity of any proposed Shareholder Nominee. In the event the Company is
advised in writing by its outside counsel that a proposed Shareholder Nominee
would not be qualified under the Company's Charter or By-Laws or any applicable
statutory or regulatory standards to serve as a Director, or if the Company
otherwise reasonably objects to a proposed Shareholder Nominee, including
without limitation because such Shareholder Nominee either (i) is a director or
officer of a direct competitor of the Company or (ii) has engaged in any adverse
conduct that would require disclosure under Item 7 of Schedule 14A promulgated
under the Exchange Act, the Shareholder agrees to withdraw such proposed
Shareholder Nominee and nominate a replacement therefor (which replacement would
be subject to the requirements of this Section 4.1(e)). Any such objection by
the Company must be made no later than one (1) month after the Shareholder first
informs the Company of the identity of the proposed Shareholder Nominee;
provided, however, that the Company shall in all cases notify the Shareholder of
any such objection sufficiently in advance of the date on which proxy materials
are mailed by the Company in connection with such election of directors to
enable the Shareholder to propose an alternate Shareholder Nominee pursuant to
and in accordance with the terms of this Agreement. Prior to the occurrence of a
Regulatory Change, no more than one Shareholder Nominee may be a director,
officer or employee of the Shareholder. Following the occurrence of a Regulatory
Change, no more than two (2) Shareholder Nominees may be directors, officers or
employees of the Shareholder.
(f) During the term of this Agreement the Company agrees to include
each Shareholder Nominee to be added to or retained on the Board pursuant to
this Agreement in the slate of nominees recommended by the Board to the
Company's shareholders for election as Directors and shall use its best efforts
to cause the election or reelection of each such Shareholder Nominee to the
Board, including soliciting proxies in favor of the election of such persons.
(g) During the term of this Agreement and prior to the occurrence of a
Regulatory Change, but not thereafter, no Shareholder Nominee shall chair a
committee of the Board and no Shareholder Nominee shall serve on the Nominating
Committee of the Board. Following the
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occurrence of a Regulatory Change and during the term of this Agreement, the
Shareholder shall be entitled to designate Shareholder Nominees to be members of
each committee of the Board (including without limitation the executive
committee, the audit committee, the nominating committee and the executive
compensation committee), and to fill any vacancies caused by the departure of
Shareholder Nominees from any such committees if no other Shareholder Nominee is
a member of such committee, for so long as Shareholder Nominees are not
represented pro rata, based on the number of Directors who are Shareholder
Nominees (rounding down to the nearest whole Director), with respect to each
committee of the Board.
Section 4.2. Resignation of Shareholder Nominees. Unless otherwise
agreed by the Company, the Shareholder shall cause each of the Shareholder
Nominees then serving on the Board to offer their resignations from the Board
immediately upon the earlier to occur of the following:
(a) The termination of this Agreement pursuant to and in accordance
with Section 5.2 hereof; and
(b) The Shareholder Group's Total Ownership Percentage falling below
10.0%.
Section 4.3. Voting. During the term of this Agreement, the
Shareholder, as a holder of shares of Voting Securities, agrees that:
(a) The Shareholder shall, and shall cause each Shareholder Affiliate
to, be present, in person or by proxy, at all meetings of shareholders of the
Company so that all Voting Securities having voting rights which are
Beneficially Owned by the Shareholder and the Shareholder Affiliates may be
counted for the purpose of determining the presence of a quorum at such
meetings.
(b) With respect to the election of Directors, the Shareholder shall,
and shall cause each Shareholder Affiliate to, vote all Voting Securities
Beneficially Owned by the Shareholder and any Shareholder Affiliate in favor of
the election of all candidates for Director nominated by the Company's Board
(including the Shareholder Nominees).
(c) With respect to all other matters submitted to a vote of the
Company's shareholders, prior to the occurrence of a Regulatory Change, but not
thereafter, and during the term of this Agreement, the Shareholder and any
member of the Shareholder Group may vote any or all of the Voting Securities
Beneficially Owned by them, in their sole discretion. Following the occurrence
of a Regulatory Change and during the term of this Agreement, (i) the
Shareholder and each member of the Shareholder Group may vote in their sole
discretion a number of Voting Securities Beneficially Owned by the Shareholder
Group having voting rights with respect to such other matters representing in
the aggregate a Voting Ownership Percentage not in excess of the Unrestricted
Ownership Percentage, and (ii) the Shareholder shall, and shall cause each
member of the Shareholder Group to, vote all Voting Securities Beneficially
Owned
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by the Shareholder Group having voting rights with respect to such other matters
representing in the aggregate a Voting Ownership Percentage in excess of the
Unrestricted Ownership Percentage in the same proportion (based on total Votes)
as all Voting Securities voted on any such other matter are voted by the
shareholders of the Company other than the Shareholder or any member of the
Shareholder Group, provided, however, that the Shareholder and any member of the
Shareholder Group may vote any or all of the Voting Securities Beneficially
Owned by them in their sole discretion with respect to a vote of the Company's
shareholders on any transaction or series of transactions which would, if
consummated, constitute a Change in Control of the Company. Notwithstanding the
foregoing, at all times prior to or following the occurrence of a Regulatory
Change, the Shareholder shall, and shall cause each member of the Shareholder
Group to, vote all Excess Buy-Back Securities having voting rights with respect
to any matter (including the election of Directors) in the same proportion
(based on total Votes) as all Voting Securities voted on such matter are voted
by the shareholders of the Company other than the Shareholder or any member of
the Shareholder Group.
(d) At all times the Shareholder Group may exercise in its sole
discretion such voting rights as the Convertible Preferred Stock may have from
time to time pursuant to the Charter and with respect to an amendment to the
Charter which would have the effect of modifying the voting powers,
designations, preferences, rights and qualifications, limitations or
restrictions of such class or series so as to affect the holders thereof
adversely.
ARTICLE V
Effectiveness and Termination
Section 5.1. Effectiveness. This Agreement shall take effect
immediately upon the Closing and shall remain in effect until it is terminated
pursuant to Section 5.2 hereof.
Section 5.2. Termination. Unless otherwise agreed in writing by the
Shareholder, this Agreement shall terminate upon the earliest to occur of the
following:
(a) The Company's quarterly dividend on its Common Stock falling below
$0.30 per share (as appropriately adjusted to reflect any stock split, stock
dividend, reverse stock split, reclassification or any other transaction with a
comparable effect) in any five (5) quarters during the term of this Agreement.
(b) The Company's failure to pay the stated quarterly dividend on any
series of Convertible Preferred Stock in any five (5) quarters during the term
of this Agreement.
(c) The election to the Board of a majority of Directors other than
those nominated by the Nominating Committee of the Board.
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(d) The size of the Board being increased to more than 21 directors.
(e) The Shareholder Group's Voting Ownership Percentage falling below
9.9% at any time.
(f) The Shareholder Group's Total Ownership Percentage falling below
30.0% at any time following the fifteenth (15th) anniversary of the date hereof.
(g) The material breach of this Agreement or the Merger Agreement by
the Company, provided that the Company has not cured the breach within thirty
(30) days after receiving notice of such breach, or if cure within such time is
not possible, the Company has not made reasonable efforts to cure such breach,
provided, further that in no event shall such cure period extend longer than
ninety (90) days from the date of first notice of such breach.
(h) Mutual written agreement of the Company and the Shareholder at any
time to terminate this Agreement, which termination shall occur at a time to be
fixed in such mutual agreement.
(i) The entry by a court having jurisdiction in the premises of (i) a
decree or order for relief in respect of the Company in an involuntary case or
proceeding under any applicable Federal or State bankruptcy, insolvency,
reorganization or other similar law or (ii) a decree or order adjudging the
Company a bankrupt or insolvent, or approving as properly filed a petition
seeking reorganization, arrangement, adjustment or composition of or in respect
of the Company under any applicable Federal or State law, or appointing a
custodian, receiver, liquidator, assignee, trustee, sequestrator or other
similar official of the Company or of any substantial part of the Company's
property, or ordering the winding up or liquidation of the Company's affairs;
and the continuance of any such decree or order for relief or any such other
decree or order unstayed and in effect for a period of sixty (60) consecutive
days.
(j) The commencement by the Company of a voluntary case or proceeding
under any applicable Federal or State bankruptcy, insolvency, reorganization or
other similar law or of any other case or proceeding to be adjudicated a
bankrupt or insolvent, or the consent by the Company to the entry of a decree or
order for relief in respect of the Company in an involuntary case or proceeding
under any applicable Federal or State bankruptcy, insolvency, reorganization or
other similar law or to the commencement of any bankruptcy or insolvency case or
proceeding against the Company, or the filing by the Company of a petition or
answer or consent seeking reorganization or relief under any applicable Federal
or State law, or the consent by the Company to the filing of such petition or to
the appointment of or taking possession by a custodian, receiver, liquidator,
assignee, trustee, sequestrator or other similar official of the Company or of
any substantial part of the Company's property, or the making by the Company of
an assignment for the benefit of creditors, or the admission by the Company in
writing of the Company's inability to pay its debts generally as they become
due, or the taking of corporate action by the Company in furtherance of any such
action.
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ARTICLE VI
Miscellaneous
Section 6.1. Compliance With Law. Notwithstanding anything to the
contrary in this Agreement, no Transfer of Securities shall be deemed to be
required or permitted pursuant to this Agreement if such Transfer would (a)
result in an adverse effect on the exemptions from the 1935 Act of the
Shareholder or any Shareholder Affiliate or the Company or any subsidiary of the
Company, or (b) require regulatory approvals which, individually or in the
aggregate with respect to such Transfer, would have a material adverse impact on
the Company or any of its subsidiaries or the Shareholder or any Shareholder
Affiliate.
Section 6.2. Regulatory Matters. During the term of this Agreement, the
Company agrees to take all commercially reasonable steps to assist the
Shareholder in (a) with respect to each provision of this Agreement, causing a
Regulatory Change which would not reasonably be expected to have an adverse
effect on the Company to occur as soon as reasonably practicable, and (b)
securing such regulatory approvals as would not reasonably be expected to have a
material adverse effect on the Company and as may be necessary to allow the
Shareholder to exercise its rights under the Agreement at all times, including
without limitation the right of the Shareholder to Transfer Securities free of
the restrictions and limitations imposed by Section 6.1. Following the
occurrence of a Regulatory Change, if the Company believes in good faith that
the Shareholder's regulatory status as modified by such Regulatory Change would
place an unreasonable restriction on the Company's implementation of the
Company's strategic business plan, then the Company shall have an immediate
right to exercise its Buy-Sell Option as provided in Section 3.6 hereof, without
regard to whether Section 3.6 would otherwise then be applicable.
Section 6.3. Injunctive Relief. Each party hereto acknowledges that it
would be impossible to determine the amount of damages that would result from
any breach of any of the provisions of this Agreement and that the remedy at law
for any breach, or threatened breach, of any of such provisions would likely be
inadequate and, accordingly, agrees that each other party shall, in addition to
any other rights or remedies which it may have, be entitled to seek such
equitable and injunctive relief as may be available from any court of competent
jurisdiction to compel specific performance of, or restrain any party from
violating, any of such provisions. In connection with any action or proceeding
for injunctive relief, each party hereto hereby waives the claim or defense that
a remedy at law alone is adequate and agrees, to the maximum extent permitted by
law, to have each provision of this Agreement specifically enforced against him
or it, without the necessity of posting bond or other security against him or
it, and consents to the entry of injunctive relief against him or it enjoining
or restraining any breach or threatened breach of such provisions of this
Agreement.
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Section 6.4. Successors and Assigns. This Agreement shall be binding
upon, shall inure to the benefit of and shall be enforceable by the Company and
by the Shareholder and their respective successors and permitted assigns, and no
such term or provision is for the benefit of, or intended to create any
obligations to, any other Person.
Section 6.5. Amendments; Waiver. (a) This Agreement may be amended only
by an agreement in writing executed by the parties hereto. Any approval of an
amendment of this Agreement upon the part of the Company shall require the
approval of a majority of the Independent Directors at a duly convened meeting
thereof or all of the Company's directors by written consent thereto.
(b) Either party may waive in whole or in part any benefit or right
provided to it under this Agreement, such waiver being effective only if
contained in a writing executed by the waiving party. No failure by any party to
insist upon the strict performance of any covenant, duty, agreement or condition
of this Agreement or to exercise any right or remedy consequent upon breach
thereof shall constitute a waiver of any such breach or of any other covenant,
duty, agreement or condition, nor shall any delay or omission of either party to
exercise any right hereunder in any manner impair the exercise of any such right
accruing to it thereafter. Any waiver of any benefit or right provided to the
Company under this Agreement shall require the approval of a majority of the
Board and a majority of the Independent Directors at a duly convened meeting
thereof or all of the Company's directors by written consent thereto.
Section 6.6. Notices. Except as otherwise provided in this Agreement,
all notices, requests, claims, demands, waivers and other communications
hereunder shall be in writing and shall be deemed to have been duly given when
delivered by hand, when delivered personally or by courier, three days after
being deposited in the mail (registered or certified mail, postage prepaid,
return receipt requested), or when received by facsimile transmission if
promptly confirmed by one of the foregoing means, as follows:
If to the Company:
New Oneok, Inc.
100 W. Fifth Street
Tulsa, Oklahoma
Attention: President
Fax: (918) 588-7960
with a copy to:
Arrington Kihle Gaberino & Dunn
100 W. Fifth Street
Suite 1000
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Tulsa, Oklahoma 74103
Attention: Donald A. Kihle, Esq.
Fax: (918) 588-7873
If to the Shareholder:
Western Resources, Inc.
818 Kansas Avenue
Topeka, Kansas 66612
Attention: President
Fax: (913) 575-8061
with a copy to:
Western Resources, Inc.
818 Kansas Avenue
Topeka, Kansas 66612
Attention: General Counsel
Fax: (913) 575-1788
or to such other address or facsimile number as either party may, from time to
time, designate in a written notice given in a like manner.
Section 6.7. APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF OKLAHOMA WITHOUT
GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAW.
Section 6.8. Headings. The descriptive headings of the several sections
in this Agreement are for convenience only and do not constitute a part of this
Agreement and shall not be deemed to limit or affect in any way the meaning or
interpretation of this Agreement.
Section 6.9. Integration. This Agreement and the other writings
referred to herein or delivered pursuant hereto which form a part hereof contain
the entire understanding of the parties with respect to its subject matter. This
Agreement supersedes all prior agreements and understandings between the parties
with respect to its subject matter. There are no restrictions, agreements,
promises, representations, warranties, covenants or undertakings with respect to
its subject matter other than those expressly set forth or referred to herein.
Section 6.10. Severability. If any term or provision of this Agreement
or any application thereof shall be declared or held invalid, illegal or
unenforceable, in whole or in
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part, whether generally or in any particular jurisdiction, such provision shall
be deemed amended to the extent, but only to the extent, necessary to cure such
invalidity, illegality or unenforceability, and the validity, legality and
enforceability of the remaining provisions, both generally and in every other
jurisdiction, shall not in any way be affected or impaired thereby.
Section 6.11. Consent to Jurisdiction. In connection with any suit,
claim, action or proceeding arising out of this Agreement, the Shareholder and
the Company each hereby consent to the in personam jurisdiction of the United
States federal courts and state courts located in Tulsa, Oklahoma; the
Shareholder and the Company each agree that service in the manner set forth in
Section 6.5 hereof shall be valid and sufficient for all purposes; and the
Shareholder and the Company each agree to, and irrevocably waive any objection
based on forum non conveniens or venue not to, appear in any United States
federal court state court located in Tulsa, Oklahoma.
Section 6.12. Counterparts. This Agreement may be executed by the
parties hereto in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
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IN WITNESS WHEREOF, the Company and the Shareholder have caused this
Agreement to be duly executed by their respective authorized officers as of the
date set forth at the head of this Agreement.
NEW ONEOK, INC.
By: _________________________
Name:
Title:
WESTERN RESOURCES, INC.
By: _________________________
Name:
Title:
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