-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, SWPwZjNT9ewrer/C6MaDEuV8+hpacYHisXll8bVKo53froI7xB2gDRpaz81tKkWt 3MEAqwFZO0wvMhJfhML+Ag== 0000950134-97-005508.txt : 19970729 0000950134-97-005508.hdr.sgml : 19970729 ACCESSION NUMBER: 0000950134-97-005508 CONFORMED SUBMISSION TYPE: S-3/A PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 19970728 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: ONEOK INC CENTRAL INDEX KEY: 0000074154 STANDARD INDUSTRIAL CLASSIFICATION: NATURAL GAS TRANSMISSION & DISTRIBUTION [4923] IRS NUMBER: 730383100 STATE OF INCORPORATION: DE FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: S-3/A SEC ACT: 1933 Act SEC FILE NUMBER: 333-26005 FILM NUMBER: 97646106 BUSINESS ADDRESS: STREET 1: 100 W FIFTH ST CITY: TULSA STATE: OK ZIP: 74103 BUSINESS PHONE: 9185887000 FORMER COMPANY: FORMER CONFORMED NAME: OKLAHOMA NATURAL GAS CO DATE OF NAME CHANGE: 19810111 S-3/A 1 AMENDMENT NO. 1 TO FORM S-3 1 As filed with the Securities and Exchange Commission on July 28, 1997. Registration No. 333-26005 - ------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 Amendment 1 to FORM S - 3 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 --------------- ONEOK INC. (Exact name of registrant as specified in its charter) Delaware 73-0383100 (State or other jurisdiction of (IRS Employer incorporation or organization) Identification No.) 100 West Fifth Street Tulsa, Oklahoma 74103 918-588-7000 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) J. D. NEAL DONALD A. KIHLE, ESQ. VICE PRESIDENT and GABLE GOTWALS MOCK SCHWABE KIHLE CHIEF FINANCIAL OFFICER GABERINO, P.C. ONEOK INC. 100 WEST FIFTH STREET 100 WEST FIFTH STREET SUITE 1000 TULSA, OKLAHOMA 74013 TULSA, OKLAHOMA 74103-4219 918-588-7000 918-585-8141 (Names, addresses, including zip codes, and telephone numbers, including area codes, of agents for service) Approximate date of commencement of proposed sale to the public: From time to time after the effective date of this registration statement. If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box.|_| If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box.|X| If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. |_| If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. |_| If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. |_| CALCULATION OF REGISTRATION FEE
=========================================================================================== Proposed Proposed Maximum Maximum Title of Each Amount Offering Aggregate Amount of Class of Securities to be price Offering Registration to be Registered Registered Per Unit(1) Price(2) Fee - ------------------------------------------------------------------------------------------- Common Stock, without par value 334,252 shs. $ 29.250 $ 9,776,871 $ 3,371 ===========================================================================================
(1) Based on price of $29.250 per share of the Common Stock, the average of the high and low sales price of the Common Stock published in the Wall Street Journal report of the New York Stock Exchange for April 22, 1997. (2) Estimated solely for purposes of calculating the registration fee pursuant to Rule 457(c). The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. - ------------------------------------------------------------------------------- 2 =============================================================================== Information contained herein is subject to completion or amendment. A registration statement relating to these securities has been filed with the Securities and Exchange Commission. These securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. This prospectus shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these securities in any State in which such offer, solicitation, or sale would be lawful prior to registration or qualification under the securities laws of any such state. =============================================================================== SUBJECT TO COMPLETION PRELIMINARY PROSPECTUS DATED APRIL 23, 1997 334,252 Shares ONEOK Inc. Common Stock Up to 334,252 presently outstanding shares of common stock of ONEOK Inc. (the "Company") may be offered for sale from time to time by certain stockholders of the Company (the "Selling Stockholders"). See "Selling Stockholders." The Company will not receive any of the proceeds from the sale of shares in this offering. Sales of shares by the Selling Stockholders may be effected from time to time in one or more transactions on the New York Stock Exchange or other exchange on which the common stock may be listed, in negotiated transactions or in a combination of any such methods of sale. The selling price of the shares may be at the market price prevailing at the time of sale, at a price related to such prevailing market price, or at a negotiated price. The Selling Stockholders may be deemed to be "underwriters" within the meaning, of the Securities Act of 1933, as amended (the "Securities Act"). See "Plan of Distribution." The Company has agreed to indemnify the Selling Stockholders against certain civil liabilities, including liabilities under the Securities Act. The Company's common stock is traded on the New York Stock Exchange under the trading symbol "OKE". On April 22, 1997, the last reported sale price of the common stock on the New York Stock Exchange was $29.125 per share. See "Common Stock Dividends and Price Range." ------------------- THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. The Date of this Prospectus is ______________________ 2 3 AVAILABLE INFORMATION The Company is subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance therewith, files reports, proxy statements, and other information with the Securities and Exchange Commission (the "Commission"). Such reports, proxy statements, and other information can be inspected and copied at the public reference facilities maintained by the Commission at 450 Fifth Street, N.W., Room 1024, Judiciary Plaza, Washington, D.C. 20549, and at the following regional offices of the Commission: Chicago Regional Office, CitiCorp Center, 500 West Madison Avenue, Suite 1400, Chicago, Illinois 60661-2511; and New York Regional Office, Seven World Trade Center, Suite 1300, New York, New York 10048. Copies of such material can also be obtained (at prescribed rates) from the Public Reference Section of the Commission at 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549. The Company's filings with the Commission are also available to the public from commercial document retrieval services and at the Website maintained by the Commission at "http://www.sec.gov." The common stock of the Company is also listed on the New York Stock Exchange, and such reports, proxy material, and other information concerning the Company also can be inspected and copied at the offices of the New York Stock Exchange, 20 Broad Street, New York, New York 10005. The Company has filed with the Commission a registration statement on Form S-3 (the "Registration Statement") under the Securities Act with respect to the shares of common stock offered by this prospectus. This prospectus, which constitutes a part of the Registration Statement, does not contain all of the information set forth in the Registration Statement and the exhibits and schedules thereto, to which reference is made. Statements made in this prospectus as to the contents of any contract, agreement, or other document referred to are not necessarily complete, and in each instance reference is made to the copy of such contract, agreement, or other document filed as an exhibit to the Registration Statement, and each such statement is qualified in its entirety by such reference. Any interested party may inspect the Registration Statement, and the exhibits and schedules thereto, without charge, at the public reference facilities of the Commission and may obtain copies of all or any portion of the Registration Statement from the Commission upon payment of the prescribed fees. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The following documents, which have been filed by, the Company with the Commission pursuant to the Exchange Act (Commission File No. 1-2572), are incorporated in this prospectus by reference and shall be deemed to be a part hereof: (a) The Company's Annual Report on Form 10-K for the fiscal year ended August 31, 1996; (b) The Company's Quarterly Reports on Form 10-Q for the quarters ended November 30, 1996, February 28, 1997, and May 31, 1997; (c) The Company's Current Reports on Form 8-K dated December 23, 1996; (d) The Company's Proxy Statement dated November 7, 1996, in connection with the Annual Meeting of Shareholders held on December 12, 1996; and (e) The description of the Company's common stock contained in the Company's Form S-16, Registration Statement under the Securities Act, Registration Number 2-74435, filed October 16, 1981, including any amendment or report filed for the purpose of updating such description. (f) The Company's Annual Report on Form 10-K/A, for the fiscal year ended August 31, 1996. 3 4 All other documents filed by the Company pursuant to Section 13(a), 13(c), 14, or 15(d) of the Exchange Act subsequent to the date of this prospectus and prior to the termination of the offering made hereby shall be deemed to be incorporated by reference in this prospectus and to be a part hereof from the date of the filing of such documents. Any statement contained in this prospectus, in a supplement to this prospectus, or in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this prospectus to the extent that a statement contained herein or in any subsequently filed supplement to this prospectus or in any document that also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this prospectus. The Company will provide without charge to each person to whom a copy of this prospectus has been delivered, on the written or oral request of any such person, a copy of any or all of the documents referred to above, which have been or may be incorporated in this prospectus by reference, other than exhibits to such documents unless such exhibits are specifically incorporated by reference in such documents. Written or telephone requests for such copies should be directed to Weldon Watson, Manager of Investor Relations, ONEOK Inc., 100 West Fifth Street, Post Office Box 871, Tulsa, Oklahoma 74102-0871, telephone number (918) 588-7000. 4 5 PROSPECTUS SUMMARY The following summary is qualified in its entirety by the more detailed information appearing elsewhere in the prospectus and by the more detailed information and the financial statements and notes appearing in the incorporated documents. THE COMPANY ONEOK Inc. and its subsidiaries (collectively, the "Company") engage in several aspects of the energy business. The Company purchases, gathers, compresses, transports, and stores natural gas for distribution to consumers. It transports gas for others, leases pipeline capacity to others for their use in transporting gas, and leases a small intrastate transmission system in Texas to others. The Company explores for and produces oil and gas, extracts and sells natural gas liquids, and is engaged in the gas marketing business. In addition, it leases and operates a headquarters office building (leasing excess space to others) and owns and operates a related parking facility. As a regulated natural gas utility, the Company distributes natural gas to approximately 715,000 customers in a geographic service area comprising approximately three-fourths of the State of Oklahoma, thereby meeting the natural gas needs of over two million people. The Company is a Delaware corporation with its principal executive offices located at 100 West Fifth Street, P.O. Box 871, Tulsa, Oklahoma 74103-0871, and its telephone number is (918) 588-7000. The Company was incorporated in Delaware on November 10, 1933. The principal executive offices of the Company are located at 100 West Fifth Street, Tulsa, Oklahoma, and the telephone number is (918) 588-7000. As of January 9, 1997, a certain Stock Purchase Agreement was entered into between ONEOK Resources Company, a Delaware Corporation ("Resources') of which the Company is the sole shareholder and the entities and individuals who owned all of the issued and outstanding shares of the capital stock of PSEC, Inc. and PSPC, Ltd., both Oklahoma Corporations (the"Selling Shareholders"), pursuant to which the shareholders received shares of the Common Stock of the Company in exchange for such issued and outstanding shares of capital stock (the "Stock Transaction"). As a result of the Stock Transaction the Shareholders received shares of the common stock of the Company, as follows:
Individual or Entity Number of Shares -------------------- ---------------- Ray H. Potts, Trustee for Ray H. Potts Living Trust 140,147 Ray H. Potts 71,804 Robert L. Stephenson, Trustee for Robert L. Stephenson Living Trust 75,455 Robert L. Stephenson 38,659 R. L. Hilbun 5,848 Roger A. Rose 2,339
USE OF PROCEEDS The Company will not receive any of the proceeds from the sale of shares of common stock in this offering. 5 6 COMMON STOCK DIVIDENDS AND PRICE RANGE The Company has paid regular quarterly dividends on its common stock for the past six years, since February 1989. Dividends declared per share on common stock (adjusted for a 2 for 1 stock split effective February 1990) for each fiscal year beginning with the 1992 fiscal year are as follows:
1992 1993 1994 1995 1996 1997 $.96 $1.06 $1.11 $1.12 $1.18 $1.20*
*Estimated Future dividends will depend on the Company's earnings, its financial condition, and other factors. The Company's common stock is traded on the New York Stock Exchange. The following table sets forth the high and low sales prices of the Company's common stock for the periods indicated, as reported by "The Wall Street Journal" as New York Stock Exchange--Composite Transactions, and dividends declared during such periods.
Price Range ----------- Dividends Declared per Fiscal Year Ended August 31 High Low Share - --------------------------- ---- --- ------------ 1995 1st Quarter ..................... $ 18 $ 15 7/8 $0.28 2nd Quarter ..................... 18 3/8 16 5/8 $0.28 3rd Quarter ..................... 19 5/8 17 1/4 $0.28 4th Quarter ..................... 23 5/8 18 3/4 $0.28 1996 1st Quarter ..................... $ 24 13/16 $ 22 $0.29 2nd Quarter ..................... 23 5/8 20 $0.29 3rd Quarter ..................... 27 1/2 21 1/8 $0.30 4th Quarter ..................... 28 5/8 24 3/8 $0.30 1997 1st Quarter ..................... $ 28 5/8 $ 25 1/4 $0.30 2nd Quarter ..................... 30 5/8 26 $0.30 3rd Quarter ..................... 31 1/8 25 7/8 $0.30
The last reported sale price of the common stock on April 22, 1997, on the New York Stock Exchange was $ 29.125 per share. There were approximately 8,400 beneficial owners of the common stock on March 30, 1997. MATERIAL CHANGES On December 12, 1996, Western Resources Inc. ("Western Resources") and the Company entered into an agreement (the "Agreement") providing for the transactions (the "Transactions") described below. First, Western Resources will transfer to a new corporation to be formed by Western Resources ("New ONEOK") (i) all of the assets, property and interests owned by Western Resources that are primarily used in, primarily related to or primarily generated by the field operations of Western Resources's local natural gas distribution business in the States of Kansas and Oklahoma, including: the gas gathering, distribution and transmission system and related properties; inventory in the form of gas, gas liquids and other related substances and materials; computer hardware, measuring equipment, telemetry equipment, machinery, furniture, vehicles and other tangible personal property; rights under agreements, sales and purchase orders, contracts and other commitments; leasehold interests; intangible personal 6 7 property; government permits, franchises and licenses; real property leases; accounts receivable; copies of customer and vendor lists, system maps and sales materials; easements; rights and claims under insurance policies; and other properties and assets; (ii) all of the capital stock of Western Resources' wholly-owned subsidiaries, Mid Continent Market Center, Inc. and Westar Gas Marketing, Inc. and (iii) all of the debts, claims and liabilities that arise primarily out of, relate primarily to or are primarily generated by, the field operations of Western Resources' local natural gas distribution business in the States of Kansas and Oklahoma (such liabilities and debts to include an aggregate principal amount of debt of Western Resources of $35 million, subject to adjustment) and of the wholly-owned subsidiaries. Immediately thereafter, the Company will merge with and into New ONEOK with New ONEOK being the surviving corporation, and each outstanding share of common stock of the Company will be exchanged for one share of New ONEOK Common Stock. Upon consummation of the merger, (i) the current Company stockholders will hold 27,304,870 shares of New ONEOK Common Stock, representing 90.1% of the voting power and 55% of the capital stock of New ONEOK, and (ii) Western Resources will hold 2,996,702 shares of New ONEOK Common Stock, representing 9.9% of the voting power of New ONEOK, and 19,317,584 shares of New ONEOK Preferred Stock, which shares will not be entitled to vote in the election of directors, such shares of New ONEOK Common Stock and New ONEOK Preferred Stock together representing in the aggregate up to 45% of the capital stock of New ONEOK. Each share of New ONEOK Preferred Stock will be convertible at Western Resources' option into one share of New ONEOK Common Stock, subject to adjustment, following the occurrence of a "regulatory change," which is defined in the shareholder agreement to be entered into by Western Resources and New ONEOK prior to the closing of the Transactions (the "Shareholder Agreement") as (i) a repeal, modification, amendment or other change of the Public Utility Holding Company Act of 1935 (the "1935 Act") and/or (ii) the receipt by Western Resources of an exemption, unqualified opinion or no-action letter from the Securities and Exchange Commission or its staff under the 1935 Act, or Western Resources's registration under the 1935 Act, either or both of which has the result of permitting Western Resources to convert its shares of New ONEOK Preferred Stock into New ONEOK Common Stock. Upon such conversion, Western Resources will hold up to 45% of the then outstanding shares of New ONEOK Common Stock. The Shareholder Agreement will impose certain standstill, transfer and voting restrictions on Western Resources with respect to its beneficial ownership of New ONEOK capital stock both before and after the regulatory change and will entitle Western Resources to designate a number of directors (not exceeding one-third of the entire Board) to be nominated to the New ONEOK Board. The Company and New ONEOK filed a Registration Statement on Form S-4 in connection with the Transactions pursuant to the Securities and Exchange Act of 1934 on March 17, 1997. The stockholders of the Company are expected to vote on the proposed merger not more than 45 days after the Registration Statement becomes effective. Consummation of the merger, expected to occur on or about the third calendar quarter 1997, is conditioned upon the satisfaction or waiver of all of the conditions to closing specified in the Agreement, including receipt of state corporation commission orders in reasonably satisfactory form, receipt of certain orders of the Securities and Exchange Commission pursuant to the 1935 Act, receipt of certain third-party consents, entry of Western Resources and the Company into certain ancillary agreements, including the Shareholder Agreement, and expiration or early termination of waiting periods required under the Hart-Scott-Rodino Antitrust Improvement Act of 1976. The description of the Transactions contained herein is qualified in its entirety by reference to the Agreement and the agreements ancillary thereto, including the Shareholder Agreement. The Agreement is filed as Exhibit A to the Company's Form 8-K, dated December 23, 1996, and is incorporated herein by reference. 7 8 SELLING STOCKHOLDERS The following table sets forth certain information as of the date of this Prospectus with respect to the Selling Stockholders. If all the shares offered pursuant to this prospectus are sold, none of the Selling Stockholders will beneficially own any shares of the Company's common stock. Any or all of the shares offered hereby may be offered for sale by any of the Selling Shareholders from time to time. Unless otherwise noted, each Selling Stockholders has sole voting and investment power with respect to such shares.
Number of Shares Owned Number of Shares Prior to Offering Which May be Sold Pursuant to Selling Stockholder Shares Percent of Class this Prospectus - ------------------- ------ ---------------- --------------- Ray H. Potts, Trustee for 140,147 less than 1% 140,147 Ray H. Potts Living Trust 71,804 less than 1% 71,804 Ray H. Potts Robert L. Stephenson, Trustee for Robert L 75,455 less than 1% 75,455 Stephenson Living Trust 38,659 less than 1% 38,659 Robert L. Stephenson 5,848 less than 1% 5,848 R. L. Hilbun 2,339 less than 1% 2,339 Roger A. Rose
In connection with the Stock Transaction, the Company and the Selling Stockholders executed a Shelf Registration Agreement dated February 28, 1997 (the "Registration Agreement"), pursuant to which the Company agreed to prepare and file a "shelf" registration statement on Form S-3 pursuant to Rule 415 under the Securities Act or any similar rule that may be adopted by the Commission with respect to the shares acquired by the Selling Stockholders in the Stock Transaction (together with any amendments, including post-effective amendments and supplements thereto, to the "Shelf Registration"), to use its reasonably best efforts to cause the Shelf Registration to be declared effective by the Commission within 60 days of the date of the Registered Statement, and keep the Shelf Registration continuously effective for a period of 24 months from the date it becomes effective or, if earlier, until (i) all the shares are sold in accordance with the Shelf Registration, or (ii) in the opinion of Counsel for the Company, satisfactory to the Selling Stockholders, registration of the shares is no longer required under the Securities Act and the holder may sell all remaining shares in the open market without limitation as to volume and without being required to file any forms or reports with the Commission under the Securities act or the regulations thereunder. The Company has also agreed to cause all the shares covered by the Shelf Registration, to be listed on the New York Stock Exchange and any other exchange on which the Company's common stock becomes listed. This Prospectus constitutes a part of the Shelf Registration filed by the Company in accordance with the Registration Agreement. The Company is responsible for and will bear the costs and expenses of preparing and maintaining the Shelf Registration. PLAN OF DISTRIBUTION Shares of common stock may be sold pursuant to this prospectus from time to time, in one or more transactions, by the Selling Stockholders, or by pledgees, donees, transferees, or other successors in interest. Such sales may be made on the New York Stock Exchange or any other exchange on which the Company's common stock is listed, in negotiated transactions, or in a combination of any such methods of sale. The selling price of the shares of common stock may be at the market price prevailing at the time of sale, at a price related to the prevailing market price, or at a negotiated price. Any shares which qualify for sale under Rule 144 or Rule 144A 8 9 under the Securities Act may be sold under Rule 144 or Rule 144A rather than pursuant to this prospectus. EXPERTS The consolidated financial statements of ONEOK Inc. and subsidiaries as of August 31, 1996 and 1995, and for each of the years in the three-year period ended August 31, 1996, have been incorporated by reference herein and in the Registration Statement in reliance upon the report of KPMG Peat Marwick LLP, independent certified public accountants, incorporated by reference herein, and upon the authority of said firm as experts in accounting and auditing. The report of KPMG Peat Marwick LLP covering the August 31, 1996, financial statements refers to the adoption of Statement of Financial Accounting Standards No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of. LEGAL MATTERS The legality of the common stock offered hereby will be passed upon for the Company by Messrs. Gable Gotwals Mock Schwabe Kihle Gaberino, P. C., Tulsa, Oklahoma. 9 10 ------------------ No person has been authorized to give any information or make any representations in connection with this offering other than those contained in this prospectus and, if given or made, such other information and representations must not be relied upon as having been authorized. This prospectus does not constitute an offer to sell or a solicitation of an offer to buy any securities other than the registered securities to which it relates or any offer to sell or the solicitation of an offer to buy such securities in any circumstances in which such offer or solicitation is unlawful. Neither the delivery of this prospectus nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the Company since the date hereof or that the information contained herein is correct as of any time subsequent to its date. ------------------ TABLE OF CONTENTS
Page ---- Available Information ................................................... 3 Incorporation of Certain Documents by Reference ................................................ 3 The Company ............................................................. 5 Use of Proceeds ......................................................... 5 Common Stock Dividends and Price Range ....................................................... 6 Material Changes ........................................................ 6 Selling Stockholders .................................................... 8 Plan of Distribution .................................................... 8 Experts ................................................................. 9 Legal Matters ........................................................... 9
------------------ ------------------ 334,252 Shares Common Stock ONEOK Inc. ------------------------ P R O S P E C T U S ------------------------ __________, ____ ------------------ 10 11 PART II INFORMATION NOT REQUIRED IN PROSPECTUS Item 14. Other Expenses of Issuance and Distribution All amounts, except SEC registration fees, are estimates.
SEC registration fee ......................... $ 3,371 Printing and copying expenses ................ 1,000 Legal fees and expenses ...................... 10,000 Accounting, fees and expenses ................ 5,000 Miscellaneous ................................ 1,000 ------------ Total ............................... $ 20,371
Item 15. Indemnification of Directors and Officers The Registrant, as a Delaware corporation, is empowered by section 145 of the Delaware General Corporation Act of the State of Delaware (the "DGCA"), subject to the procedures and limitations stated therein, to indemnify any person against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with any threatened, pending or completed action, suit or proceeding in which such person is made or threatened to be made a party by reason of his being or having been a director, officer, employee or agent of the Registrant. The statute provides that indemnification pursuant to its provisions is not exclusive of other rights of indemnification to which a person may be entitled under any bylaw, agreement, vote of shareholders or disinterested directors, or otherwise. Article VIII of the By-laws of the Company provides that directors and officers of the Company shall be indemnified by the Company to the fullest extent permitted by Delaware law as now or hereafter enforce, including the advance of related expenses. If any determination is required under applicable law as to whether a director or officer is entitled to indemnification, such determination shall be made by the Board, by vote of a quorum of disinterested directors, or by independent legal counsel by written opinion or by shareholders. The Certificate of Incorporation of the Company provides that a director of the corporation shall not be personally liable to the corporation or its shareholders for monetary damages for breach of fiduciary duty as a director, except for liability for (i) any breach of the director's duty of loyalty to the corporation or its shareholders, (ii) acts or omissions not in good faith or which would involve intentional misconduct or a knowing violation of law, (iii) payment of unlawful dividends or unlawful stock purchases or redemptions, or (iv) any transaction from which the director derived an improper personal benefit. Pursuant to Article VIII of the bylaws of the Company, upon authorization and determination either (1) by the board of directors by a majority of a quorum consisting of directors who were not parties to the action, suit, or proceeding involved; (2) if such a quorum is not obtainable, or event if obtainable and a quorum of disinterested directors so directs, by independent counsel in a written opinion; or (3) by the stockholders, the Company is obligated to indemnify any person who incurs liability by reason of the fact that he is or was a director, officer, employee, or agent of the Company, or is or was serving at its request as a director, officer, employee, or agent of another corporation, partnership, joint venture, trust or other enterprise, or as a member of any committee or similar body, if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Company, and with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. However, in an action by or in the right of the Company, no indemnification will II-1 12 be made if such person shall be adjudged to be liable to the Company, unless such indemnification is allowed by a court of competent jurisdiction. Under an insurance policy obtained by the Company, coverage of Company officers and directors against liability for neglect, errors, omissions, or breaches of duty in their capacities as such as provided for both the Company, to the extent that it is obligated to indemnify such officers and directors, and the officers and directors themselves. Such coverage is provided in the amount of $85,000,000, with a retained limit by the Company of $200,000. The insurance company is obligated to pay any loss in excess of the $200,000 retained limit and defense costs from the first dollar, up to the policy limit of $85,000,000. Among the policy exclusions are those which exclude coverage for accounting for profits made within the meaning of Section 16(b) of the Securities Exchange Act of 1934, claims based upon or attributable to directors and officers gaining any personal profit or advantage to which such individuals are not legally entitled, and for any claims brought about or attributable to the dishonesty of an officer or director. The registrant has been advised that, in the opinion of the Securities and Exchange Commission, provisions providing for the indemnification by a corporation of its officers, directors, and controlling persons against liabilities imposed by the Securities Act of 1933 are against public policy as expressed in said Act and are therefore unenforceable. It is recognized that the above-summarized provisions of the registrant's bylaws and the applicable Delaware General Corporation Law may be sufficiently broad to indemnify officers, directors, and controlling persons of the registrant against liabilities arising under said Act. Therefore, in the event that a claim of indemnification against liability under said Act (other than the payment by the registrant of expenses incurred or paid by a director, officer, or controlling person of the registrant in the successful defense of any action, suit, or proceeding) shall be asserted by an officer, director, or controlling person under said provisions, the registrant will, unless in the opinion of its counsel the question has already been settled by controlling precedent, submit to a court of appropriate jurisdiction the question of whether or not such indemnification by it is against public policy as expressed in said Act and will be governed by the final adjudication of such issue.
Item 16. Exhibits* (2)(a)** Stock Purchase Agreement, dated January 9, 1997, between entities and individuals listed on Exhibit A, attached thereto, and ONEOK Resources Company (2)(b)***** Agreement between Western Resources, Inc. and ONEOK Inc., dated as of December 12, 1996 (3)(a)*** Third Restated Certificate of Incorporation of ONEOK Inc. (3)(b)**** By-Laws of ONEOK Inc., as Amended (5)** Opinion and consent of Gable Gotwals Mock Schwabe Kihle Gaberino, a Professional Corporation (23)(a)** Consent of KPMG Peat Marwick LLP, Independent Certified Public Accountants (23)(b)** Consent of Gable Gotwals Mock Schwabe Kihle Gaberino, a Professional Corporation (included in Exhibit 5) (24)** Powers of attorney (Included on pages II-5 and II-6)
II-2 13 - --------------------- * Exhibits excluded are not applicable ** Filed herewith *** Incorporated by reference to Exhibit (3)(a) to Annual Report on Form 10-K dated August 31, 1996 **** Incorporated by reference to Exhibit (3)(b) to Annual Report on Form 10-K dated August 31, 1996 ***** Incorporated by reference to Exhibit 99.b to Current Report on Form 8-K dated December 23, 1996 Item 17. Undertakings 1. The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant's annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 that is incorporated by reference in the Registration Statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. 2. Insofar as indemnification of liabilities arising under the Securities Act of 1933 may be permitted to directors, officers, and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that, in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in said Act and is therefore unenforceable. In the event that a claim of indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer, or controlling person of the registrant in the successful defense of any action, suit, or proceeding) is asserted by such director, officer, or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has already been settled by controlling precedent, submit to a court of appropriate jurisdiction the question of whether or not such indemnification by it is against public police as expressed in said Act and will be governed by the final adjudication of such issue. 3. The undersigned registrant hereby undertakes: (a) To file, during any period in which offers or sales are being made, a post-effective amendment to the Registration Statement: (i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii) To reflect in the prospectus any facts or events arising after the effective date of the Registration Statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the Registration Statement; and (iii) To include any material information with respect to the plan of distribution not previously disclosed in the Registration Statement or any material change to such information in the Registration Statement; provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed by the Company pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the Registration Statement. II-3 14 (b) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (c) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. II-4 15 POWER OF ATTORNEY The person whose signature appears below hereby authorizes David L. Kyle and J. D. Neal, or either of them, as attorneys-in-fact with full power of substitution, to execute in the name and on behalf of such person, in the capacity stated below, and to file any and all amendments to this Registrations Statement, including any and all post-effective amendments and all instruments necessary or incidental in connection therewith. SIGNATURE Pursuant to the requirements of the Securities Act of 1933, the registrant has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Tulsa and the State of Oklahoma, on this 28th day of April, 1997. ONEOK Inc. By: Larry W. Brummett ----------------------------- Larry W. Brummett Chairman of the Board, President, and Chief Executive Officer II-5 16 POWER OF ATTORNEY Each person whose individual signature appears below hereby authorizes Larry W. Brummett, David L. Kyle or J. D. Neal, or any of them, as attorneys-in-fact with full power of substitution, to execute in the name and on behalf of each person, individually and in each capacity stated below, and to file any and all amendments to this Registration Statement, including any and all post-effective amendments and all instruments necessary or incidental in connection therewith. SIGNATURES Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed below by the following persons in the capacities indicated, in the City of Tulsa and the State of Oklahoma, on this 28th day of April, 1997.
Larry W. Brummett J. D. Neal - ---------------------------------------- ---------------------------------------- Larry W. Brummett J. D. Neal Chairman of the Board, President Vice President, Chief Financial Officer, Chief Executive Officer, and Director and Treasurer (Principal Financial and Accounting Officer) Edwyna G. Anderson Douglas Ann Newsom - ---------------------------------------- ---------------------------------------- Edwyna G. Anderson Douglas Ann Newsom Director Director William M. Bell Gary D. Parker - ---------------------------------------- ---------------------------------------- William M. Bell Gary D. Parker Director Director Douglas R. Cummings J. D. Scott - ---------------------------------------- ---------------------------------------- Douglas R. Cummings J. D. Scott Director Director William L. Ford Deceased April 20, 1997 - ---------------------------------------- ---------------------------------------- William L. Ford G. Rainey Williams Director Director J. M. Graves Stanton L. Young - ---------------------------------------- ---------------------------------------- J. M. Graves Stanton L. Young Director Director Stephen J. Jatras David L. Kyle - ---------------------------------------- ---------------------------------------- Stephen J. Jatras David L. Kyle Director Director Bert H. Mackie - ---------------------------------------- Bert H. Mackie Director
II-6 17 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing Amendment 1 of Form S-3 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized in the City of Tulsa and the State of Oklahoma, on July 28, 1997. J. D. Neal ---------------------------------------- J. D. Neal Vice President, Chief Financial Officer, and Treasurer (Principal Financial and Accounting Officer) II-7 18 EXHIBIT INDEX
EXHIBIT NUMBER DESCRIPTION PAGE NO. - ------- ----------- -------- (2)(a)* Stock Purchase Agreement 2a-1 (2)(b)**** Agreement between Western Resources, Inc. and ONEOK Inc., dated as of December 12, 1996 (3)(a)** Third Restated Certificate of Incorporation of ONEOK Inc. (3)(b)*** Bylaws of ONEOK Inc., as Amended (5)* Opinion and consent of Gable Gotwals Mock Schwabe Kihle Gaberino, a Professional Corporation 5-1 (23)(a)* Consent of KPMG Peat Marwick LLP, independent Certified Public Accountants 23a-1 (23)(b)* Consent of Gable Gotwals Mock Schwabe Kihle Gaberino, a Professional Corporation 23b-1 (24)* Powers of Attorney (Included on pages II-5 and II-6)
- ---------------- * Filed herewith ** Incorporated by reference to Exhibit (3)(a) to Annual Report on Form 10-K dated August 31, 1996 *** Incorporated by reference to Exhibit (3)(b) to Annual Report on Form 10-K dated August 31, 1996 **** Incorporated by reference to Exhibit 99.b to Current Report on Form 8-K dated December 23, 1996 II-8 EX-2.(A) 2 STOCK PURCHASE AGREEMENT 1 EXHIBIT 2(a) STOCK PURCHASE AGREEMENT THIS STOCK PURCHASE AGREEMENT (this "Agreement") is made and entered as of the 9th day of January, 1997, by and among the entities and individuals listed in Exhibit A, attached hereto and made a part hereof (collectively the "Sellers" and individually a "Seller"), and ONEOK Resources Company, a Delaware corporation (hereinafter referred to as "Buyer" or "Resources"). WITNESSETH THAT: WHEREAS, Sellers are the owners of (i) all of the outstanding shares (the "PSEC Shares") of the capital stock of PSEC, Inc., an Oklahoma corporation ("PSEC"), and (ii) all of the outstanding shares (the "PSPC Shares") of the capital stock of PSPC, Ltd., an Oklahoma corporation ("PSPC") (the PSEC Shares and the PSPC Shares are sometimes hereinafter referred to collectively as the "Shares"); and WHEREAS, Sellers desire to sell to Buyer and Buyer desires to purchase from Sellers the Shares on the terms and conditions set forth herein. NOW THEREFORE, in consideration of the premises and of the mutual covenants of the parties hereinafter expressed, it is hereby agreed as follows: ARTICLE 1 CORPORATE STRUCTURE; ASSETS 1.1 Corporate Structure. The corporate structure of PSEC, PSPC and their affiliated entities is as shown in Exhibit B. PSEC presently is the Manager of N.E. 23rd, L.L.C., an Oklahoma limited liability company ("NE 23rd"). NE 23rd will be liquidated and dissolved promptly after execution of this Agreement and undivided interests in the properties presently owned of record by NE 23rd equal to PSEC's interest in NE 23rd will be distributed to PSEC. The cost of the NE 23rd liquidation and dissolution allocable to PSEC's interest shall be borne and paid for by Sellers. PSPC is the managing general partner of Sycamore Gas System ("Sycamore"), a general partnership formed under the Oklahoma Uniform Partnership Act. PSEC and PSPC are sometimes hereinafter referred to collectively as the "Companies." For purposes of this Agreement, (i) PSEC shall be deemed to own "directly" all of the assets owned by PSEC and "indirectly" an interest in NE 23rd's properties equal to PSEC's interest in NE 23rd (which properties will be owned directly by PSEC following the dissolution of NE 23rd and the assignment of such properties to PSEC), and (ii) PSPC shall be deemed to own "directly" all assets owned by PSPC and "indirectly" an interest in all of the assets owned by Sycamore equal to PSPC's interest in Sycamore. 2a-1 2 1.2 Assets. The principal assets owned directly and indirectly by the Companies are (i) producing and non-producing oil and gas leasehold interests, together with the wells, personal property, fixtures and equipment located on the lands covered thereby or used or obtained in connection with the production and development thereof, and together with all contracts, agreements, licenses, permits, easements, orders of regulatory agencies and other rights and interests relating thereto (collectively, the "Properties"), and (ii) PSPC's indirect interest in the gas gathering system, processing plant and storage facilities described in Exhibit C, together with all real property, easements, rights of way, surface use agreements and other interests in real property related or appurtenant thereto, all personal property, fixtures and equipment comprising or used in connection therewith, and all contracts and agreements of every nature whatsoever relating thereto (the "Sycamore System"). The Properties and the Sycamore System, together with all other assets, properties, rights, contracts, claims and interests of every kind, whether real, personal or mixed, owned directly or indirectly by the Companies are hereinafter referred to collectively as the "Assets." 1.3 Reserve Report Properties. Substantially all of the Properties described by well or unit name in Exhibit D are included in that certain Reserve Report dated as of August 23, 1996, prepared by the Companies and heretofore furnished to Buyer. The Properties described in Exhibit D, whether or not listed in the Reserve Report, are hereinafter referred to collectively as the "Reserve Report Properties." ARTICLE 2 SALE AND PURCHASE OF THE SHARES 2.1 Agreement for Sale and Purchase. Sellers hereby agree to sell to Buyer and Buyer hereby agrees to purchase from Sellers on the Closing Date (as hereinafter defined) all, but not less than all, of the Shares. 2.2 Purchase Price; Exchange Shares. The purchase price for the Shares (the "Purchase Price") shall be the sum of (i) $10,133,977 (the "Base Price"), which shall be allocated $6,789,180 to the PSEC Shares and $3,344,797 to the PSPC Shares, plus or minus, as appropriate (ii) the Net Adjustment (as hereinafter defined). The Purchase Price shall be paid by the delivery by Buyer or by ONEOK Inc. ("ONEOK", the corporate parent of Buyer) to Sellers of that number of shares (the "Exchange Shares") of the common stock (no par value) of ONEOK ("ONEOK Stock") having an aggregate Closing Value (hereinafter defined) equal to the Purchase Price. The Closing Value of each Exchange Share shall be the average of the daily closing prices of ONEOK Stock as reported in the Wall Street Journal for the (10) consecutive trading days beginning fifteen (15) trading days prior to the Closing Date (the "Valuation Period"). No fractional shares shall be issued to Sellers pursuant to the 2a-2 3 terms hereof. In lieu of fractional shares, the value of any fractional share shall be paid in cash to the Sellers based on the value of the shares established as stated above. Buyer agrees that ONEOK will reserve a sufficient number of shares of ONEOK Stock necessary to effect the transaction contemplated by this Agreement. 2.3 Net Adjustment. The Net Adjustment shall be the sum of the adjustment amounts described in Sections 3.3 and 3.4 (Title Defects), Section 8.5 (Gas Imbalances), Section 8.6 (Disapproved Operations), Section 8.8 (Working Capital) and Section 9.5 (Environmental Defects). 2.4 Deposit. Contemporaneously with the execution of this Agreement, Buyer is delivering to Boatmen's First National Bank of Oklahoma ("Deposit Holder"), in immediately available funds in accordance with wire instructions furnished by Deposit Holder, the sum of $1,000,000 as a deposit toward the Purchase Price (the "Deposit"). The Deposit shall be held by Deposit Holder pursuant to the terms of that certain Deposit Agreement of even date herewith by and among Sellers, Buyer and Deposit Holder in the form attached hereto as Exhibit E. The Deposit shall be returned to Buyer at the Closing. In the event that Buyer shall fail to close the transaction contemplated hereby in accordance with the terms of this Agreement, and provided that the conditions precedent to the obligations of Buyer as set forth in Article 10 hereof have been fulfilled or Sellers are ready, willing and able to comply with all such conditions precedent, Sellers shall be entitled to retain the Deposit as liquidated damages pursuant to Section 12.2. 2.5 Agreed Values. A portion of the Base Price has been allocated by the parties among the Reserve Report Properties and PSPC's interest in Sycamore as set out in Exhibit D. The amounts so allocated and are referred to herein as the "Agreed Values" of such Assets. ARTICLE 3 TITLE EXAMINATION; ADJUSTMENTS 3.1 Title Materials. From the date hereof to the Closing Date, Sellers shall cause the Companies to provide Buyer full opportunity to examine the books, records and files of the Companies . Sellers make no warranty or representation, express or implied, with respect to the accuracy or completeness of any title information, records or other data made available to Buyer in connection with this Agreement. 3.2 Title Defects; Defensible Title. (a) Adjustments to the Base Price for failure of title shall be made only with respect to the Sycamore System and the Reserve Report Properties (collectively, the "Examined Interests"). As used herein, the term "Title Defect" shall mean any lien, claim, 2a-3 4 defect, encumbrance, security interest, burden or deficiency such that the Companies (directly or indirectly) do not have Defensible Title (hereinafter defined), as distinguished from technically marketable title, to any item of the Examined Interests; provided, no Permitted Encumbrance (hereinafter defined) shall constitute a Title Defect. (b) As used herein, the term "Defensible Title" (i) with respect to the Sycamore System means clear, unencumbered and uncontested title of record in Sycamore to the real and personal property comprising the Sycamore System, and (ii) with respect to the Reserve Report Properties means clear, unencumbered and uncontested title of record in PSEC, PSPC or NE 23rd to the Reserve Report Properties such that (A) after giving effect to existing spacing orders, operating agreements, unit agreements, unitization orders and pooling designations, and subject to the limitations, if any, described in Exhibit D, and after taking into account all royalty interests, overriding royalty interests, net profit interests, production payments and other burdens on production, the Companies (directly or indirectly) are entitled to a share (expressed as a decimal) of all oil, gas and other minerals produced from each well described in Exhibit D which is not less than the Net Revenue Interest set out in Exhibit D in connection with the description of such well, (B) the Companies own an undivided interest (expressed as a decimal) equal to the Working Interest set out in Exhibit D in connection with the description of each such well in and to all property and rights incident thereto, including all rights in, to and under all agreements, leases, permits, easements, licenses and orders in any way relating thereto, and in and to all wells, personal property, fixtures and improvements thereon, appurtenant thereto or used or obtained in connection therewith or with the production or treatment or sale or disposal of hydrocarbons or water produced therefrom or attributable thereto, (C) the Companies are obligated for a fraction of the costs relating to the exploration, development and operation of such well no greater than the Working Interest set out in Exhibit D in connection with the description of such well, (D) except as shown in Exhibit D, the Companies' interests in such wells and the production therefrom are not subject to being reduced by virtue of reversionary interests owned by third parties and (E) any material failure on the part of Sellers to comply with the terms and conditions of the agreements, leases, permits, easements, licenses and orders relating to such wells and the personal property, fixtures and improvements thereon. (c) As used herein, the term "Permitted Encumbrances" means (i) matters described without material omission in any of the Exhibits or Schedules attached hereto, (ii) royalties, overriding royalties, net profits interests, production payments and other burdens on production which do not reduce the Companies' Net Revenue Interest in any of the Reserve Report Properties to less than that described in Exhibit D, (iii) liens for taxes, assessments, labor and materials where payment is not due, (iv) 2a-4 5 operating agreements, unit agreements, unitization and pooling designations and declarations, gathering and transportation agreements, processing agreements, gas, oil and liquids purchase, sale and exchange agreements, and other similar agreements which are not required by the terms of this Agreement to be disclosed on any Schedule hereto, provided (A) they contain terms and conditions customary in the oil and gas industry, (B) they do not adversely affect or burden the ownership of the Sycamore System or the Reserve Report Properties (C) all amounts due and payable by the Companies thereunder have been paid in full, and (D) the Companies are not in material default thereunder, (v) regulatory authority of governmental agencies not presently or previously violated, easements, surface leases and rights, plat restrictions and similar encumbrances, provided that they do not materially detract from the value, materially increase the cost of operation of any item of the Examined Interests or otherwise adversely affect the operation thereof, and (vi) liens, charges, encumbrances and irregularities in the chain of title which, because of remoteness in or passage of time, statutory cure periods, marketable title acts or other similar reasons, have not affected or interrupted, and are not reasonably expected to affect or interrupt, the claimed ownership of the Companies or their predecessors in title or the receipt of production revenues from the Properties affected thereby. 3.3 Title Examination; Notice of Defects. (a) Promptly after execution of this Agreement, Buyer shall, at Buyer's sole cost and expense, commence and pursue such examination of title to the Examined Interests as Buyer deems necessary or proper. Buyer will conclude its title review and give notice to Sellers of any asserted Title Defects affecting the Examined Interests not later than fourteen (14) days prior to the date scheduled for the Closing in Section 13.1 hereof (the "Title Notice Date"). Each such notice shall include a brief description of each Title Defect of which notice is being given, the action required to cure such Title Defect and the proposed adjustment to the Base Price by reason of the existence of such Title Defect. Buyer shall be deemed to have waived any Title Defects existing with respect to the Examined Interests except to the extent such Title Defects are set out in a notice given on or prior to the Title Notice Date. (b) Sellers shall have a period of eleven (11) days after the Title Notice Date to cure or cause the Companies to cure all or any portion of the Title Defects described in any notice(s) of Title Defects affecting Examined Interests properly given by Buyer prior to such date. All costs and expenses incurred by the Companies in curing Title Defects so noticed by Buyer shall result in a downward adjustment of the Base Price at the Closing. In the event Sellers are unable or unwilling to cure or cause the Companies to cure any of the asserted Title Defects prior to the expiration 2a-5 6 of each cure period, the parties shall proceed in accordance with Section 3.4. 3.4 Adjustments. (a) If any uncured Title Defect is based on Buyer's notice that the Companies own a Net Revenue Interest less than that shown on Exhibit D with respect to a particular Reserve Report Property, then provided the working interest owned by the Companies in such Property remains proportionate to that set out in Exhibit D, the Agreed Value of such Property shall be reduced in the same proportion that the actual Net Revenue Interest bears to the Net Revenue Interest shown therefor on Exhibit D and the amount of such reduction shall constitute the approved adjustment amount with respect to such Title Defect. (b) If any uncured Title Defect involves a claim against or uncertainty with respect to the Companies' title to a particular item of the Examined Interests, the parties shall attempt to negotiate a mutually acceptable reduction in the Agreed Value of such Property by reason of such defect. In the event the parties agree on an appropriate reduction in the Agreed Value, such amount shall constitute the principal amount of Buyer's approved claim with respect to such Title Defect. If the parties are unable to agree on an appropriate reduction and Buyer elects not to waive the Title Defect, then Sellers shall have the option of (i) proceeding to Closing but reducing the Base Price by the Agreed Value of such Property if acceptable to Buyer, or (ii) proceeding to Closing but prior thereto causing the Companies to assign the affected Property to a third party (which may be owned by Sellers) and reducing the Base Price by the Agreed Value of such Property, or (iii) proceeding to Closing but directing the Buyer to separately deposit under an escrow agreement to be established pursuant to Section 3.5 hereof that number of Exchange Shares having a Closing Value equal to not less than the Agreed Value of the affected Property and referring to arbitration (to be conducted in accordance with the procedures set out in Section 3.6 hereof) the dispute concerning the proper amount, if any, of the reduction of the Base Price (not to exceed the Agreed Value) by reason of such Title Defect. Option (i) and (ii) of this subparagraph 3.4(b) shall not be applicable with respect to unresolved Title Defects affecting the Sycamore System. In the event the aggregate adjustment for Title Defects exceeds the sum of $1,000,000, either Sellers or Buyer may terminate this Agreement prior to the Closing by written notice to the other without further liability to Buyer or Sellers other than return of the Deposit. (c) If, prior to the Title Notice Date, either Sellers or Buyer determine that the Net Revenue Interest owned by the Companies in any Reserve Report Property is greater than that set forth on Exhibit D, then provided the Working Interest owned by the Companies in such Property remains proportionate to that set out 2a-6 7 in Exhibit D, the Agreed Value of such Property shall be increased in the same proportion that the actual Net Revenue Interest bears to the Net Revenue Interest shown therefor in Exhibit D and such increase shall constitute an upward adjustment to the Base Price. The party discovering any such error promptly shall notify the other so that the appropriate adjustment may be made. 3.5 Title Escrow. In the event the Base Price adjustment by reason of any asserted Title Defect is not determined at or prior to the Closing pursuant to the provisions of Section 3.4 hereof and Sellers elect to refer the determination of the appropriate adjustment, if any, to arbitration, then at the Closing Sellers, Buyer and the Deposit Holder shall execute an escrow agreement in the form attached hereto as Exhibit F (the "Escrow Agreement"), and Buyer will deposit with the Deposit Holder (defined under the Escrow Agreement as the "Escrow Agent") that number of Exchange Shares having a Closing Value equal to not less than the Agreed Values of the interests in the Properties affected by said asserted Title Defects (such Exchange Shares being referred to herein as the "Title Escrow"), with said Title Escrow to be held, administered and distributed pursuant to the terms of the Escrow Agreement. 3.6 Arbitration. In the event any Title Defect claim timely and properly noticed by Buyer is referred by Sellers to arbitration, a binding arbitration proceeding promptly shall be conducted in Oklahoma City, Oklahoma, in accordance with the Commercial Arbitration Rules of the American Arbitration Association ("AAA"). The arbitration proceeding shall be conducted by a single arbitrator agreed to by the parties, or if they are unable to agree, selected by the AAA. The arbitrator shall be a licensed attorney experienced in oil and gas title examination or systems such as the Sycamore System, as appropriate. The decision of the arbitrator with respect to the amount, if any, of the allowed claim for each Title Defect referred to arbitration shall be conclusive and binding upon the parties; provided, however, that in no event shall the allowed claim exceed the Agreed Value of the Property subject to the claimed Title Defect. The general expenses of arbitration, including the fees of the AAA if necessitated by reason of the failure of the parties to agree upon an arbitrator, shall be borne equally by Sellers and Buyers; however, each party shall bear and pay the fees and expenses of its own witnesses, legal counsel and of the collection and presentation of its evidence. The decision of the arbitrator shall be effected by joint written instructions from the parties to the Escrow Agent, subject to the threshold requirements of Section 3.5 hereof. ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF SELLERS RELATING TO THE COMPANY Each Seller does hereby severally, and not jointly with any other Seller, represent and warrant to Buyer as of the date 2a-7 8 hereof as follows (the following representations and warranties relating to NE 23rd must be considered with reference to the fact that between the date of this Agreement and the Closing Date, NE 23rd will be liquidated and dissolved, so that certain representations and warranties concerning NE 23rd, for example those concerning its legal existence and status, while made by Sellers and true of the date of this Agreement will not be made and will not be true as of the Closing Date): 4.1 Compliance With Agreements and Laws. No material default exists under any of the terms and provisions, express or implied, of any material agreement, contract or commitment to which any of the Companies, Sycamore or NE 23rd is a party or to which any part of the Assets is subject, and the Companies have not received any notice of any claim of such default. All wells included in the Properties have been drilled, completed and operated, and all production therefrom has been accounted for and paid to the persons entitled thereto, and the Properties and the Sycamore System have been operated, in substantial compliance with all applicable Federal, state and local laws and applicable rules and regulations of the Federal, state and local regulatory authorities having jurisdiction thereof. Seller has made available to Buyer for examination all material agreements to which the Companies, Sycamore or NE 23rd is a party or is obligated in any way. 4.2 Sale of Production. Except as disclosed in Schedule 4.2, neither of the Companies nor Sycamore nor NE 23rd is obligated by virtue of any prepayment made under any production sales contract or any other contract containing a take-or-pay clause, or under any other arrangement whether similar or not, to deliver oil, gas or other minerals produced from or allocated to any of the Properties at any time after September 1, 1996, without receiving full payment therefor at the time of delivery. Except for routine suspense on new wells, proceeds from the sale of oil and gas from the Reserve Report Properties are being received by the Companies in a timely manner and are not being held in suspense for any reason. Sellers have described in Schedule 4.2 and made available to Buyer for examination all agreements having a term extending beyond July 1, 1997 (other than agreements terminable upon less than sixty (60) days' notice) pursuant to which hydrocarbons produced from the Properties are sold, transported, processed or otherwise disposed of or marketed. 4.3 Production and Ad Valorem Taxes. All ad valorem, property, production, severance and similar taxes based on or measured by the ownership of property or the production or removal of hydrocarbons or the receipt of proceeds therefrom have been timely paid and all required returns and reports related thereto filed. 4.4 Claims or Litigation. There is no suit, action or other proceeding pending before any court or governmental agency, 2a-8 9 nor to the knowledge of Seller has any claim, dispute, suit, action or other proceeding been threatened, against the Companies, Sycamore or NE 23rd or affecting any of the Assets. 4.5 Material Executory Contracts Relating to the Assets. Sellers have described in Schedule 4.5 all agreements and other obligations of the Companies, Sycamore and NE 23rd which, after the Closing, will (i) require an expenditure by any of the Companies, Sycamore or NE 23rd in excess of $50,000 with respect to any one project, failing which the Companies, Sycamore or NE 23rd may be liable for damages, (ii) entitle a third party to earn or purchase any of the Reserve Report Properties or the Sycamore System, or (iii) require payments for leased office space, leased equipment, surface use, salt water disposal or similar lease or license obligations in excess of $50,000 per year. 4.6 Consummation of Transactions. The consummation of the transactions contemplated hereby will not constitute a violation or breach of, or an event of default under, the organizational documents of the Companies, Sycamore or NE 23rd or under any contract or agreement to which either of the Companies, Sycamore or NE 23rd is a party, or constitute the happening of a condition upon which any other party to such a contract may exercise any right or option which will adversely affect any of the Assets; nor will the happening of such event result in any liability of the Companies, Sycamore or NE 23rd to any person under the terms of any contracts of employment, consultancy or for services of any kind. 4.7 Existence and Qualification. Each of the Companies is a corporation duly organized, validly existing and in good standing under the laws of the State of Oklahoma, and is qualified to carry on its business and in good standing in each jurisdiction where Reserve Report Properties are located. No other qualification in any other jurisdiction is required. Each of the Companies has the corporate power and authority to own and use its properties and to transact the business in which it is engaged, and holds all franchises, licenses and permits necessary and required therefor. Sellers have furnished to Buyer true and correct copies of the organizational documents of the Companies. NE 23rd is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Oklahoma. NE 23rd has the power and authority to own and use its properties and to transact the business in which it is engaged, and holds all franchises, licenses and permits necessary and required therefor. Sellers have furnished to Buyer true and correct copies of the organizational documents of NE 23rd. Prior to the Closing, NE 23rd will be liquidated, by distribution of its assets to its members, and dissolved in accordance with the laws of the State of Oklahoma. 4.8 Sycamore Existence and Qualification. Sycamore is a partnership duly organized, validly existing and in good standing under the laws of the State of Oklahoma, and is duly qualified to 2a-9 10 carry on its business as a partnership in Oklahoma. Sycamore has the power and authority under its partnership agreement and applicable law to own and use its properties and to transact the business in which it is engaged, and holds all franchises, licenses and permits necessary and required therefor. All of the operations and business of Sycamore are carried on in the State of Oklahoma. Sellers have furnished to Buyer true and correct copies of the organizational documents of Sycamore. 4.9 Capitalization. The entire authorized capital stock (i) of PSEC consists of 10,000,000 shares of common stock, par value $.10 per share (the "PSEC Common Stock"), and (ii) of PSPC consists of 200,000 shares of common stock, par value $1.00 per share (the "PSPC Common Stock"). There are presently outstanding (i) 8,200,514 shares of PSEC Common Stock, and (ii) 171,000 shares of PSPC Common Stock, all of which shares are duly authorized, validly issued, fully paid and nonassessable, and all of which shares are owned by Sellers. There are no outstanding warrants, options, contracts, calls, or other rights of any kind or restriction on the right of transfer with regard to any issued and outstanding, authorized and unissued, or issued but not outstanding, shares of stock or any other security of the Companies of any kind. 4.10 Subsidiaries and Other Activities. The Companies have no subsidiaries and, except for Sycamore and NE 23rd, do not own any interest in any other corporation, partnership, joint venture, limited liability company or other entity. PSEC's interest in NE 23rd and PSPC's interest in Sycamore are not subject to any options, contracts or rights of any other person nor are there any restrictions on the right to transfer such interests other than as specified in the respective organizational documents. The interests are free and clear or all liens, claims, encumbrances, security interests or burdens of any kind or description. 4.11 Financial Statements. (a) Attached hereto as Schedule 4.11(a) are copies of the following financial statements of the Companies (the "Financial Statements"), each of which presents fairly the financial position of the reporting entity as of the date stated and the results of operations for the period then ended and except as disclosed in Schedule 4.11 have been prepared in accordance with generally accepted accounting principles, consistently applied: (i) The unaudited Balance Sheet of PSEC as at December 31, 1995, and the Statement of Revenues and Expenses for the year then ended; (ii) The unaudited Balance Sheet of PSEC as at August 31, 1996 (the "Balance Sheet Date") and the Statement of Revenues and Expenses for the eight-month period then ended; 2a-10 11 (iii) The unaudited Balance Sheet of PSPC as at December 31, 1995 and the Statement of Revenues and Expenses for the year then ended; and (iv) The unaudited Balance Sheet of PSPC as at the Balance Sheet Date, and the Statement of Revenues and Expenses for eight-month period then ended. (b) Neither PSEC nor PSPC has, and as of the Closing Date will have, any material liabilities or obligations except for those (i) reflected or reserved against in the Financial Statements described at (a)(ii) and (iv) above, (ii) otherwise disclosed in this Agreement, or (iii) incurred in the ordinary course of business since the Balance Sheet Date. (c) Neither Sycamore nor NE 23rd has, and as of the Closing Date will have, any material liabilities or obligations except for those incurred in the ordinary course of business . 4.12 Absence of Certain Changes and Events. Since the Balance Sheet Date, and except as permitted by Section 8.7, 8.8 or disclosed on Schedule 4.12 or any other Schedule attached hereto, there has not/have not been: (a) Any change in the affairs, business, financial condition, or operations of the Companies, Sycamore or NE 23rd which has had or is expected to have a material adverse effect on the business or financial condition of the Companies, Sycamore or NE 23rd; (b) Any damage, destruction or casualty loss (whether or not covered by insurance) to any of the Assets which has had or is expected to have a material adverse effect on the business or financial condition of the Companies, Sycamore or NE 23rd; (c) Any change in the Articles of Incorporation or Bylaws of the Companies or in the partnership agreement of Sycamore or in the Articles of Organization or Operating Agreement of NE 23rd, except as provided above with respect to the liquidation and dissolution of NE 23rd; (d) Any dividends declared or paid or other distribution with respect to, or any issuance or delivery of any stocks, bonds or corporate securities (whether authorized and unissued or held in treasury) by either of the Companies, or any grant by either of the Companies of any options, warrants or other rights calling for the issuance thereof by either of the Companies; (e) Any sale, assignment or transfer of any part of the Assets other than (i) in the ordinary course of business for fair consideration, or (ii) transfers of certain oil and gas properties from PSEC to Ray H. Potts, Trustee of the Ray H. Potts 2a-11 12 Living Trust ("Potts"), as of September 1, 1996, all of which properties are being acquired by Buyer from Potts effective as of September 1, 1996; (f) Any borrowing of money by either of the Companies, or by Sycamore or NE 23rd, or the incurrence of any material obligation by either of the Companies, or by Sycamore or NE 23rd, other than in the ordinary course of business; (g) Any capital expenditure or commitment by either of the Companies, or by Sycamore or NE 23rd, to make a capital expenditure (exclusive of expenditures for normal repair or maintenance of equipment) other than in the ordinary course of business; (h) Any incurrence of losses or knowing waiver of any rights of value by either of the Companies, or by Sycamore or NE 23rd, in connection with any aspect of its business which has had or is expected to have a material adverse effect on the business or financial condition of said Company, Sycamore or NE 23rd; (i) Any material change in or any cancellation, termination or substantive amendment of any material contract, agreement, license or other instrument to which either of the Companies, Sycamore or NE 23rd is a party which has had or is expected to have a material adverse effect on the business or financial condition of said Company, Sycamore or NE 23rd; (j) Any lending or advancement (other than in the ordinary course of business) of money by either of the Companies, Sycamore or NE 23rd; (k) Any mortgage, pledge, lien, security interest or encumbrance created or perfected on any of the Assets, other than a Permitted Encumbrance; (l) Any material increase in the compensation of any officer or the rate of pay of its employees as a group, except as part of regular compensation increases in the ordinary course of business; (m) Any agreement by or commitment of either of the Companies, Sycamore or NE 23rd to do any of the foregoing; (n) Any transactions, other than those described in or permitted by the terms of this Agreement, entered into other than in the ordinary course of business; (o) Any resignation or termination of employment of any officer or key employee of the Companies; or 2a-12 13 (p) Any other event or condition of any character which, in any one case or in the aggregate, has materially adversely affected, or which might reasonably be expected to materially adversely affect, the condition (financial or otherwise), Assets, operations, liabilities, or business of either of the Companies, Sycamore or NE 23rd, except as hereinabove provided with respect to the liquidation and dissolution of NE 23rd. 4.13 Accounts Receivable. All accounts receivable of the Companies existing on the Closing Date (net of the allowance for doubtful accounts reflected on Schedule 4.13 as updated to the Closing Date) will be (i) valid, genuine and subsisting, (ii) subject to no known defenses, setoffs or counterclaims, and (iii) to Seller's knowledge, collectible. 4.14 Tax Returns and Audit. All federal and state income tax returns and reports required by law to be filed on or prior to the Closing Date relating to the income or operations of the Companies, Sycamore or NE 23rd shall have been filed on or prior to the Closing Date, and all taxes shown on such returns and reports shall have been paid in full. The Companies, Sycamore and NE 23rd have not received any notice of any audit, investigation, or action by any taxing authority relating to a redetermination of previously reported income, deductions, tax credits, or tax liabilities of either of the Companies or for Sycamore or NE 23rd for any taxable period ended on or prior to the Closing Date which remains open for assessment or redetermination at Closing. All income, profits, franchise, sales, use, occupation, property, excise, ad valorem and other taxes due prior to the Closing Date have been fully paid. There has not been any intentional disregard of any applicable statute, regulation, rule, or published ruling in the preparation of any tax returns or reports filed by or on behalf of the Companies or of Sycamore or NE 23rd. 4.15 No Restrictions. There exists no restriction or reservation affecting either of the Company's or of Sycamore's or NE 23rd's title to or the utility of its Assets which would prevent it from occupying or utilizing such Assets, or any part thereof, after the Closing, to the same full extent that it might continue to do so if the transaction contemplated hereby did not take place. 4.16 Other Contracts and Commitments. Neither of the Companies nor Sycamore nor NE 23rd has outstanding (i) any contract, bid or offer to provide services to third parties which (A) Sellers know or have reason to believe is at a price which would result in a net loss in providing such services, or (B) includes terms and conditions the Companies, Sycamore or NE 23rd cannot reasonably expect to satisfy or fulfill in their entirety; (ii) any revocable or irrevocable power of attorney to any person, firm or corporation for any purpose whatsoever; (iii) any loan agreement, indenture, promissory note, conditional sales agreement or other similar type of agreement, except to the extent the indebtedness thereunder is 2a-13 14 reflected on the August 31, 1996 Financial Statements (including inter-Company indebtedness eliminated by principles of consolidation); or (iv) except as disclosed on Schedule 4.5, any other material contract or commitment not directly related to operations on the Properties which is not cancelable without liability or penalty on sixty (60) days notice or less. 4.17 Indebtedness to and from Officers, Directors and Others. Neither Company is indebted to any of its shareholders, directors, officers, employees or agents, or their respective heirs, legatees, beneficiaries or legal representatives, except for amounts due as normal salaries, wages, bonuses, commissions and in reimbursement of ordinary expenses, all on a current basis and consistent with historical practices. All obligations, whether arising by operation of law, contract, agreement, or otherwise, for payments to trusts or other funds or to any governmental agency or to any employees, directors, officers, agents, or any other individual (or any of their respective heirs, legatees, beneficiaries, or legal representatives) with respect to profit sharing, pension or retirement benefits, or any other employee benefit of any kind whatsoever have been paid, if due, or adequate accruals for such payments, if such accruals are required in accordance with generally accepted accounting principles, are reflected on the August 31, 1996 Financial Statements. No present or former shareholder, director, officer, employee or agent of either of the Companies is indebted to the Companies other than for advancements for ordinary business expenses in a normal amount. 4.18 Employees. The employees of the Companies are listed in Schedule 4.18. Sycamore and NE 23rd have no employees. Sellers have made available to Buyer copies of all OSHA citations, EEOC claims and workers' compensation claims received by the Companies for the five (5) year period prior to the date of this Agreement. 4.19 Labor Agreements, Employee Benefit Plans, and Employment Agreements. Except as disclosed in Schedule 4.19, neither of the Companies is a party to (i) any union collective bargaining or similar agreement, (ii) any profit sharing, deferred compensation, bonus, stock option, stock purchase, retainer, consulting, health, welfare or incentive plan, agreement, policy or arrangement of any kind whatsoever, whether legally binding or not, which will continue or be binding in any way on either of the Companies beyond the Closing (such existing plans, policies and arrangements are referred to herein as the "Benefit Plans"), or (iii) any agreement relating to employment or severance from employment which will continue beyond the Closing. Copies of all documents relating to the Benefit Plans and of all existing employment and severance agreements have been furnished to Buyer. 4.20 Overtime, Back Wages, Vacation and Minimum Wages. No present or former employee of the Company has any material claim 2a-14 15 against the Companies on account of or for (i) overtime pay, other than overtime pay for the current payroll period, (ii) wages or salary for any period other than the current payroll period, (iii) vacation, time off or pay in lieu of vacation or time off other than that earned in respect of the current year, or (iv) any violation of any statute, ordinance or regulation relating to minimum wages or minimum hours of work. 4.21 Insurance Policies. Set forth on Schedule 4.21 is a list of all material insurance policies in force covering the Companies, Sycamore and NE 23rd and any of their respective properties, operations or personnel. All such insurance or equivalent insurance shall be maintained through the Closing Date. 4.22 Short-Term Investments, Bank Accounts and Safe Deposit Boxes. Set forth on Schedule 4.22 is a list of (i) all short-term investments of the Companies together with the location of the certificate(s) or other evidence of such investments, and (ii) all bank accounts maintained by the Companies together with the names of authorized signatories on each such account and the location of all safe deposit boxes maintained by the Companies together with the names of the persons authorized access thereto. Sycamore and NE 23rd have no short-term investments. 4.23 Other Assets. The Assets other than the Properties and the Sycamore System, title to which is covered by Article 3 hereof, are free and clear of all liens, encumbrances, security interests, claims or charges of every kind or description, other than routine maintenance agreements and Permitted Encumbrances. 4.24 Permits and Authorizations. The Companies, Sycamore and NE 23rd possess all governmental licenses, permits, certificates, orders, consents, approvals, franchises and authorizations (collectively, the "Permits") required to enable them to conduct their business and operations as historically conducted. The Companies, Sycamore and NE 23rd are in compliance in all material respects with the Permits. 4.25 Securities Laws. To Seller's knowledge, there has been compliance in all material respects with all applicable state and federal securities laws in respect of the offer and sale of interests in Sycamore and NE 23rd. 4.26 Disclosure. Except as specifically provided in this Agreement, to Seller's knowledge none of the information furnished to Buyer in writing in connection with the transaction contemplated hereby, including, without limitation, information contained in the reports, financial statements and documents described in this Article IV and in the Schedules attached hereto, includes an untrue statement of a material fact or omits to state a material fact necessary in order to make the facts stated, in light of the circumstances under which they were made, not false or misleading. 2a-15 16 ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF SELLERS RELATING TO THIS AGREEMENT AND THE SHARES Each Seller, severally and not jointly, hereby represents and warrants to Buyer as of the date hereof, and by proceeding with the Closing will be deemed to represent and warrant to Buyer as of the Closing Date, as follows: 5.1 Agreement Valid. This Agreement constitutes the valid and binding agreement of Seller enforceable against Seller in accordance with its terms. All instruments required hereunder to be executed and delivered by Seller at the Closing will constitute valid and binding agreements of Seller enforceable against Seller in accordance with their terms. 5.2 Ownership. Seller is, and at the Closing Date will be, the record and beneficial owner of the number of Shares set forth opposite the name of such Seller in Exhibit A. 5.3 Title. Seller now has, and at the Closing Date will have, good and marketable title to the number of Shares set forth opposite name of such Seller in Exhibit A, free and clear of all adverse claims, options, liens, security interests, restrictions and other encumbrances. 5.4 Right to Transfer. Seller now has, and at the Closing Date will have, full legal right and power to transfer and deliver to Buyer the number of Shares set forth opposite the name of such Seller in Exhibit A in the manner provided in this Agreement, and upon delivery of such Shares pursuant to the terms of this Agreement, Buyer will receive good and marketable title thereto, free and clear of all adverse claims, options, liens, security interests, restrictions and other encumbrances. 5.5 Brokers and Finders. Neither Seller nor the Companies have incurred any liability, contingent or otherwise, for brokers' or finders' fees in respect of this transaction for which Buyer or the Companies shall have any responsibility whatsoever. 5.6 No Breach; Consents. Neither the execution and delivery of this Agreement or of the instruments or documents contemplated hereby nor the consummation of the transactions contemplated herein or therein will directly or indirectly (i) violate any provision of any applicable law, rule or regulation to which Seller is subject, (ii) violate any order, judgment or decree applicable to Seller, or (iii) conflict with or result in breach under any organizational documents of Seller, or any agreement to which Seller is a party or by which it may be bound. 2a-16 17 ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF BUYER Buyer hereby represents and warrants to Sellers as follows: 6.1 Organization. Each of Resources and ONEOK is a corporation duly organized and validly existing under the laws of the State of Delaware. Resources is a wholly-owned, first tier subsidiary of ONEOK. 6.2 Agreement Authorized. This Agreement has been duly authorized, executed and delivered by Buyer and all instruments and agreements required hereunder to be extended and delivered by Buyer or ONEOK at the Closing will be duly authorized, executed and delivered by Buyer or ONEOK and all requisite corporate action has been taken to authorize the execution hereof, the transactions contemplated hereby and all things necessary or desirable in order to accomplish the purchase of the Shares, and Buyer or ONEOK has all necessary authority under its charter, bylaws and other governing documents and otherwise has good right and lawful authority to consummate the same. 6.3 Valid Agreement. This Agreement constitutes the valid and binding agreement of Buyer enforceable against Buyer in accordance with its terms, and all instruments required hereunder to be executed and delivered by Buyer at the Closing will constitute valid and binding agreements of Buyer enforceable against Buyer in accordance with their terms. 6.4 Brokers and Finders. Buyer has incurred no liability, contingent or otherwise, for brokers' or finders' fees in respect of this transaction for which Sellers shall have any responsibility whatsoever. 6.5 Securities Law Matters. Buyer hereby acknowledges that the Shares will not be registered under the Securities Act of 1933 or any applicable state securities laws. Buyer represents and warrants to Sellers that Buyer (i) has reviewed such information as Buyer has deemed relevant in connection with Buyer's acquisition of the Shares, and (ii) is acquiring the Shares for investment purposes only and not for resale with a view to, or in connection with, a distribution. 6.6 Capital Structure. As of the date hereof, the authorized capital stock of ONEOK consists of 60,000,000 shares of common stock, without par value ("ONEOK Common Stock"), 340,000 shares of preferred stock, par value of $50 per share ("ONEOK Preferred Stock"), and 3,000,000 shares of preference stock, without par value ("ONEOK Preference Stock"). At the close of business on January 3, 1997: (i) 27,311,617 shares of ONEOK Common Stock and 2a-17 18 180,000 shares of ONEOK Preferred Shares were issued and outstanding and 3,848,886 shares of ONEOK Common Stock were reserved for issuance pursuant to ONEOK's Employee Stock Purchase Plan, Key Employee Stock Plan, and Thrift Plan for Employees of ONEOK and subsidiaries, (collectively, the "ONEOK Stock Plans"); (ii) no shares of ONEOK Preference Stock are outstanding; (iii) 200,000 shares of ONEOK Participating Preference Stock have been reserved for issuance pursuant the exercise of ONEOK Stock Purchase rights; (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 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. 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, charges, encumbrances, claims and options of any nature (collectively, "Liens"), other than those which would not have a Material Adverse Effect. Except (i) as set forth above and as contemplated by that certain Shareholder Protection Rights Agreement dated as of March 21, 1998 between ONEOK and The Chase Manhattan Bank, as rights agent (the "ONEOK Rights Agreement"), (ii) for changes since August 31, 1996 resulting from the exercise of employee stock options granted pursuant to, or from issuances or purchases under, the ONEOK Stock Plans and ONEOK's Direct Stock Purchase and Dividend Reinvestment Plan, and (iii) as contemplated by this Agreement, there are 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. As used herein, a "Material Adverse Effect" or "Material Adverse Change" shall mean, in respect of ONEOK or its business, as the case may be, 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 or their business, in each case taken as a whole. 6.7 SEC Documents. ONEOK has furnished to Seller a true and complete copy of each report, schedule, registration statement 2a-18 19 and definitive proxy statement or information statement filed by ONEOK with the Securities and Exchange Commission ("SEC") since August 31, 1995 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 of 1933, as amended (the "Securities Act") or the Securities and Exchange Act of 1934, as amended (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, 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 and the consolidated cash flows of ONEOK and its consolidated Subsidiaries for the periods presented herein. 6.8 Litigation. Except as disclosed in the ONEOK SEC Documents, there is no suit, action or proceeding pending, or, to the actual knowledge of the executive officers of ONEOK, threatened against or affecting ONEOK or any subsidiary of ONEOK ("ONEOK Litigation"), at law or 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 the executive officers of ONEOK and its subsidiaries have no actual 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 that has had or would have a Material Adverse Effect on ONEOK or its ability to consummate the transactions contemplated by this Agreement. 6.9 No Undisclosed Material Liabilities. Except as disclosed in the ONEOK SEC Documents, there are no liabilities of ONEOK or any of its subsidiaries of any kind whatsoever, whether accrued, contingent, absolute, determined, determinable or 2a-19 20 otherwise, that does 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 the thereto) contained in ONEOK's Annual Report on Form 10-K for the year ended August 31, 1996; and (ii) liabilities under this Agreement. 6.10 Disclosure. None of the information furnished to Sellers in connection with the transaction contemplated hereby, including, without limitation, the information contained in the reports, financial statements and documents described in this Article 6, is false or misleading in any material respect, omits to state any material fact required to be stated therein, or omits to state any fact necessary in order to make the facts stated therein not false or misleading. ARTICLE 7 COVENANTS OF SELLERS PENDING CLOSING Sellers covenant and agree with Buyer that from and after the date of this Agreement and until the Closing, Sellers will cause the Companies to conduct their business and that of Sycamore and NE 23rd in strict compliance with the following provisions and limitations: 7.1 Ordinary Course. The Properties and the Sycamore System will be maintained and operated in a good and workmanlike manner consistent with historical practices, and the Companies will timely pay or cause to be paid all costs and expenses incurred in connection therewith. 7.2 Restrictions on Operations. Subject to the provisions of Section 8.6 hereof, no operations will be conducted for the drilling of any new well, the reworking or redrilling of any existing well or the making of any other capital expenditure on the Properties or the Sycamore System requiring an expenditure by the Companies in excess of $25,000 for any single project. Neither of the Companies nor Sycamore will waive any rights or enter into any new agreements or commitments other than in the ordinary course of business, abandon any well capable of commercial production (based upon prevailing economic conditions), release or abandon any of the Reserve Report Properties, or encumber, sell or otherwise dispose of any of the Reserve Report Properties other than personal property thereon which is replaced by equivalent property or consumed in the operation of such Properties in the ordinary course of business. 7.3 Maintenance of Files. The Companies will exercise reasonable diligence in safeguarding and maintaining secure all files, books and records currently maintained. 7.4 Access of Buyer. Buyer shall have access to the employees, offices, properties, records, files, geological and 2a-20 21 geophysical data, engineering reports and evaluations, books of account, and all other information of the Companies, Sycamore and NE 23rd pertaining to the business, properties and affairs of the Companies and Sycamore; provided, however, that such investigation shall be conducted during normal business hours and in a manner that does not unreasonably interfere with the Companies' normal operations and employee relationships. Sellers shall cause the Companies' personnel to reasonably assist Buyer in making such investigation and shall cause the counsel, accountants, employees and other representatives of the Companies, Sycamore and NE 23rd to be reasonably available to Buyer for such purposes. During such investigation, Buyer shall have the right, at Buyer's sole cost and expense, to make copies of such records, files and other materials as Buyer may deem advisable. ARTICLE 8 ADDITIONAL AGREEMENTS OF THE PARTIES 8.1 Return of Informational Material. If this Agreement is not consummated, Buyer shall return to Sellers or the Companies all of the items of information which Sellers or the Companies have delivered to Buyer hereunder, including all copies of same made by Buyer. 8.2 Confidentiality of Information. If the purchase and sale of the Shares as contemplated by this Agreement is not completed, Buyer (i) will keep the information furnished to Buyer hereunder or in contemplation hereof strictly confidential, except to the extent such information (A) becomes public other than as a result of dissemination by Buyer, (B) was already known to Buyer other than as a result of a breach of a confidentiality restriction, or (C) is furnished to Buyer by a third party independently of Buyer's investigation pursuant to this Agreement, and (ii) will not use any of such information to Buyer's financial advantage or in competition with the Companies or Sycamore. Notwithstanding the provisions of Section 14.6 hereof, this provision shall not be construed as superseding or limiting the provisions of any confidentiality agreement heretofore executed by and between Buyer and the Companies. 8.3 Compliance with Conditions. Buyer and Sellers, respectively, will proceed diligently using all reasonable efforts to cause all of the conditions to the obligations of Sellers and Buyer, respectively, to be timely satisfied. 8.4 Condemnation or Casualty Loss. Buyer's obligation to close shall not be excused and no adjustment to the Purchase Price shall be required if, after the execution of this Agreement and prior to the Closing Date, any item of the Assets is damaged or destroyed by fire or other casualty or is taken under the right of eminent domain. Prior to the Closing Date, neither of the Companies nor Sycamore shall voluntarily compromise, settle or adjust any 2a-21 22 claims, causes of action or demands against third parties, arising out of such damage, destruction or taking, or commit, use or apply any insurance proceeds or payments toward the repair, restoration or replacement of the affected property without the prior written consent of Buyer. Notwithstanding the above to the contrary, in the event that the Assets are damaged or destroyed by fire or other casualty or is taken under the right of eminent domain and the value of the Assets as a result thereof is reduced by an amount exceeding the sum of Five Million and No/100 Dollars ($5,000,000), Buyer may terminate this Agreement in its entirety without further liability to Seller and Buyer's deposit will be promptly returned to Buyer. If the parties cannot agree on such values, the matter shall be referred to arbitration (to be conducted in accordance with the procedures set forth in Section 3.6 hereof). 8.5 Gas Imbalances. Sellers acknowledge that there are certain gas imbalances with respect to production from or attributable to certain of the Reserve Report Properties as set forth on Schedule 8.6. The Base Price shall be adjusted at the Closing by an amount equal to $2.00 per Mcf for the net gas imbalance (that is, the difference between aggregate overproduction attributable to the Companies' interest in Properties and the aggregate underproduction attributable to such interest) existing at the Closing Date. The adjustment may be either a positive or negative number. 8.6 Capital Expenditures. During the period from the execution of this Agreement to the Closing Date, Sellers will cause representatives of the Companies to consult with Buyer from time to time with respect to any operation on the Properties or the Sycamore System proposed by either of the Companies, or by a third party and recommended for approval by the Companies, reasonably expected to require an expenditure by either of the Companies in excess of $25,000 for any single project, and will provide Buyer with all information reasonably available to the Companies with respect thereto. Buyer shall, within ten (10) days after receipt of the Companies' recommendation for conducting or participating in any such project, or within such lesser period as may be required by the terms of any applicable agreement, approve or disapprove such project. Failure of Buyer to respond within the time required will be deemed to constitute disapproval by Buyer of the project. In the event Buyer approves such project, the Company shall conduct, propose or elect to participate in such project and shall incur and pay as they become due the expenditures associated therewith. In the event the project or operation is a well proposed by an unrelated third party and the affected Company must, by operation of an applicable agreement or order of a regulatory agency, elect either to participate in such well or lose the right to participate in such well and/or other rights in the unit in which such well is proposed (for example, but not by way of limitation, a non-consent penalty under a joint operating agreement, requirement to accept consideration in lieu of participation under a pooling order or 2a-22 23 forfeiture of the right to participate in future development under an area of mutual interest agreement), and Buyer disapproves or is deemed to have disapproved participation by the affected Company in such well, then, upon five (5) days written notice to Buyer (during which time Buyer may reverse its decision and approve participation by the Company), Sellers may elect to cause the affected Company to assign the entire Property on which such operation is to be conducted to an affiliate of Sellers and reduce the Base Price by the Agreed Value of such Property. 8.7 Liquidating Distribution of NE 23rd Properties. Prior to the Closing, NE 23rd will distribute to its members all of NE 23rd's interests in its oil and gas properties. The Properties expected to be distributed to and received by PSEC by reason of its "indirect" ownership of such properties are included in Exhibit D and have been taken into account in determining the Base Price under this Agreement. 8.8 Working Capital Distribution. Prior to the Closing Date, Sellers shall cause PSEC and PSPC to distribute to those Sellers who were stockholders of the Companies on the Balance Sheet Date an amount equal to the working capital (that is, total current assets less total current liabilities) of each of PSEC and PSPC as of the Balance Sheet Date as reflected in the Financial Statements attached as Schedules 4.11(a)(ii) and 4.11(a)(iv), less all cash distributions with respect to stock made to the stockholders of PSEC and PSPC after August 31, 1996. In the event there is insufficient cash in the Companies to make the authorized distribution prior to the Closing Date, the Base Price shall be adjusted upward at the Closing by the amount authorized but not distributed due to such shortfall. 8.9 Conduct of Buyer's Business During the Valuation Period. During the period from the beginning of the Valuation Period until the Closing, Buyer shall conduct its business in accordance with historical practices, not issue new stock or rights with respect to stock, distribute or dispose of any material assets, declare any extraordinary dividends, or take any other action that would cause the value of the Exchange Shares to be less than such value would have been if Buyer had not taken such action. 8.10 Severance Payments. Sellers shall reimburse the Companies for all severance payments made by the Companies under the severance policy of the Companies in effect as of the Closing Date for employees of the Companies terminated at or within ninety (90) days after the Closing Date. ARTICLE 9 ENVIRONMENTAL MATTERS 9.1 Physical Condition of the Properties. The Properties (solely for purposes of this Article, the term "Properties" shall 2a-23 24 include the Sycamore System) have been used for oil and gas drilling, production, gathering and processing operations, related oil field operations and possibly for other operations, whether of a similar or dissimilar nature. Physical changes in or under the Properties or adjacent lands may have occurred as a result of such uses. The Properties also may contain buried pipelines and other equipment, whether or not of a similar nature, the locations of which may not be known to Sellers or be readily apparent by a physical inspection of the Properties. Third parties may have used the Properties or the surface rights thereon for other purposes as well. Buyer understands that the Companies do not have the requisite information with which to determine the exact nature or condition of the Properties nor the effect any such use has had on the physical condition of the Properties. Buyer is hereby notified that detectable amounts of regulated and unregulated chemicals and other substances which may pose a threat to health or to plants or wildlife, or which are known to cause illnesses, diseases, cancer, birth defects and other reproductive harm, may be found in, on or around the Properties. Adverse physical conditions, including the presence of such chemicals and other substances, may not be revealed by Buyer's investigation. In addition, Buyer acknowledges that some oil field production equipment may contain various contaminants or hazardous substances, including without limitation, asbestos and/or naturally-occurring radioactive material ("NORM"). In this regard, Buyer expressly understand that NORM may affix or attach itself to the inside of wells, materials, pipes and equipment as scale or in other forms, and that wells, materials, pipes and equipment located on the Properties described herein may contain NORM and that NORM- containing materials may be buried or have been otherwise disposed of on the Properties. Buyer also expressly understands that special procedures may be required for the removal and disposal of various contaminants or hazardous substances, including without limitation asbestos and NORM, from the Properties where it may be found. The statements in this Section 9.1 are intended as disclosures and acknowledgments of possible conditions existing on the Properties. 9.2 Environmental Assessment. Buyer shall have the right, at Buyer's sole cost, risk, and expense, to undertake an environmental assessment of the Properties during the period ending on the Title Notice Date (the "Inspection Period"). Buyer and its agents shall have the same right as the Companies to enter upon the Properties, inspect the same, conduct soil and water sampling, analysis and monitoring, including soil borings (and, after notice and consultation with the Companies, drilling groundwater monitoring wells), an generally conduct such tests, examinations, investigations and studies as Buyer deems necessary or appropriate for preparing appropriate engineering and other reports and making judgments relating to the Properties, their condition, and the presence of chemicals and other substances. Sellers shall cooperate with any efforts of Buyer and its agents to obtain third party consents for access to those parcels of land within the Properties to which the Companies may not presently have access. Buyer and its 2a-24 25 agents shall have reasonable access to the Companies' agents and employees in the course of conducting Buyer's environmental assessment. Seller has caused to be provided to Buyer copies of all reports, citations, notices and complaints relating to environmental matters affecting the Properties or the Sycamore System received by the Companies, Sycamore and NE 23rd (i) within the five (5) year period prior to the date of this Agreement, or (ii) that remain outstanding, unremedied or unresolved. Buyer agrees to provide to Sellers a copy of all facts discovered in the course of conducting Buyer's environmental assessment, including all direct observations (if in writing or other tangible or transferable medium), data and summaries thereof. Buyer shall keep any data or information acquired in the course of such examinations and the results of all analyses of such data and information strictly confidential and not disclose same to any person or agency without the prior written approval of the Companies, except that Buyer may disclose to authorities having jurisdiction such information as is required by law or by court order at the same time that Buyer provides such information to Sellers. If Buyer determines that conditions on a Property do not satisfy the environmental standards set forth in Section 9.4 below in a material respect, then Buyer may notify Sellers of such condition by providing Sellers, on or prior to the Title Notice Date, a written "Notice of Environmental Defect" setting forth in detail the facts giving rise to the claimed defect, the environmental standard which Buyer claims is not satisfied, any Applicable Environmental Law (hereinafter defined) which Buyer contends has been breached or violated and, if the claimed defect arises from information contained in a document, a copy of such document or the relevant parts thereof. Buyer shall be deemed to have accepted without objection the environmental conditions described in Schedule 9.4. 9.3 Access; Indemnification. Access to the Properties to conduct Buyer's environmental assessment shall be subject to the following conditions: Buyer waives and releases all claims against Sellers, the Companies, and their directors, officers, employees and agents, for injury to or death of persons or damage to property arising in any way from the exercise of rights granted to Buyer hereby or the activities of Buyer or its employees, agents or contractors on the Properties, provided that Buyer does not hereby assume the risk of damage, injury or death attributable to the willful misconduct or gross negligence of Sellers or the Companies. Buyer shall indemnify Sellers, the Companies, and their directors, officers, employees, and agents, and shall hold each and all of said indemnities harmless from and against any and all loss whatsoever arising out of (i) any and all statutory or common-law liens or other encumbrances for labor or materials furnished in connection with such tests, samplings, studies or surveys as Buyer may conduct with respect to the Properties, and (ii) any injury to or death of persons or damage to property occurring in, on or about the Properties as a result of such exercise or activities (except for any such injuries or damages caused by the gross negligence or willful 2a-25 26 misconduct of any said indemnities). Notwithstanding any provision of this Agreement to the contrary, the foregoing obligation of indemnity shall survive the Closing or the termination of this Agreement without Closing. 9.4. Environmental Standards. This section sets out the environmental standards applicable to the Properties for purposes of this Agreement and the Sellers do hereby represent and warrant as of the date hereof, as follows: (a) The Properties shall not have been used for the generation, treatment, storage or disposal of a Hazardous Substance (as defined below) in a manner or to an extent that would subject the Companies to a material liability for violation of any Applicable Environmental Laws (as defined below). Except as disclosed in Schedule 9.4, there shall not have been any release or discharge of a Hazardous Substance from the Properties in a manner or to an extent that would subject the Companies to a material liability for violation of any Applicable Environmental Laws. "Hazardous Substance" shall mean any hazardous substance, pollutant, contaminant, solid or hazardous waste, hazardous waste constituents, hazardous material or toxic substance subject to regulation or liability under Applicable Environmental Laws in force as of the date hereof, including asbestos, radioactive substances, and any other substance or material that would constitute or cause a health, safety or environmental hazard on or at the Properties under Applicable Environmental Laws. "Applicable Environmental Laws" shall mean (i) all federal statutes regulating or prescribing restrictions regarding the use of the Properties or other activities affecting the environment (air, water, land, animal and plant life), including but not limited to the following: the Clean Air Act, Clean Water Act, Comprehensive Environmental Response, Compensation and Liability Act, Emergency Planning and Community Right-to-Know Act, Endangered Species Act, Hazardous Materials Transportation Act, Migratory Bird Treaty Act, National Environmental Policy Act, Occupational Safety and Health Act, Oil Pollution Act of 1990, Resource Conservation and Recovery Act, Safe Drinking Water Act, and Toxic Substances Control Act; (ii) any regulations promulgated under such federal statutes, (iii) any state law counterparts of such federal statutes and the regulations promulgated thereunder; (iv) any other state or local statutes, rules, regulations or ordinances regulating the use of or affecting the environment, and (v) all common law rights, duties and obligations regarding the use of or matters affecting the environment. (b) Except as disclosed in Schedule 9.4, there are no agreements, consent or administrative orders, injunctions, decrees, judgments, license or permit conditions, or other directives of governmental authorities based on any Applicable Environmental Laws that require any material change in the present condition of the Properties, and the Companies, Sycamore, and NE 23rd have not received any notice from any governmental authority 2a-26 27 or private or public entity advising the Companies, Sycamore, and NE 23rd that it is or is potentially responsible for response costs under an Applicable Environmental Law as a result of said Company's ownership or activities in connection with the Properties. (c) Except as disclosed in Schedule 9.4, no conditions or circumstances exist on the Properties that would subject the Companies, Sycamore, and NE 23rd to any material damages, penalties, injunctive relief or cleanup or closure costs under any Applicable Environmental Laws or that would require cleanup, removal, remedial or corrective action or other response involving a material expenditure by the Companies pursuant to Applicable Environmental Laws. 9.5 Properties Subject to Environmental Defect. Sellers shall have a period of eleven (11) days after the Title Notice Date to cure or cause the Companies to cure or remediate the environmental defect(s) set out in any Notice of Environmental Defect timely and properly given by Buyer. All costs and expenses incurred by the Companies in curing such environmental defects shall result in a downward adjustment to the Base Price at the Closing. In the event Sellers are unable or unwilling to cure or remediate any such defect prior to Closing, one of the following shall occur: (a) The parties shall agree upon an adjustment to the Purchase Price to compensate Buyer (i) for the defect and all future liability associated therewith or resulting therefrom, and (ii) for agreeing to indemnify, defend and hold harmless Sellers from and against any and all loss, cost, liability or expense associated therewith or resulting therefrom. (b) If the parties are unable to reach agreement pursuant to (a) above, Sellers, at their sole discretion, may elect either (i) to proceed to Closing but prior thereto cause the Companies to assign the affected Property to a third party (which may be owned by Sellers) and reduce the Base Price by the Agreed Value of such Property, or (ii) to proceed to Closing but prior thereto cause the Company to assign to such third party the affected Property together with any other Properties of Sellers' choosing having Agreed Values sufficient to offset, in Sellers' sole judgment and discretion, the estimated cost of remediation or cure of the defect, and to reduce the Base Price by the sum of the Agreed Values thereof, or (iii) if either Party's good faith estimation the cost of remediation or cure of all environmental defects of which notice is timely and properly given by Buyer may exceed $1,000,000, terminate this Agreement in its entirety without further liability to any party. (c) Notwithstanding the provisions of (a) and (b) above, Purchaser shall not be entitled to an adjustment of the Base Price pursuant to the provisions of this Section 9.5 unless the cumulative amount of all such adjustments exceeds $50,000. 2a-27 28 9.6 Indemnification of Sellers. Subject to Sellers' indemnification obligations under this Agreement with respect to representations and warranties concerning environmental matters, all liabilities attributable to conditions existing and operations conducted on the Properties (other than Properties assigned to a third party prior to the Closing pursuant to Section 9.5 hereof) under Applicable Environmental Laws and under all future environmental laws shall be liabilities of the Companies or of Sycamore, as applicable, and Buyer shall indemnify, defend, and hold harmless Sellers from and against all loss, cost, liability or expense attributable thereto or resulting therefrom. ARTICLE 10 CONDITIONS TO OBLIGATIONS OF BUYER The obligation of Buyer to consummate the transactions provided for in this Agreement shall be subject to the satisfaction of each of the following conditions on or before the Closing Date, subject to the right of Buyer to waive any one or more of such conditions: 10.1 Representations and Warranties of Sellers. Each of the representations and warranties of Sellers set forth in this Agreement shall be true and correct in all material respects as of the date of this Agreement (except to the extent such representations and warranties speak to an earlier date), and as of the Closing Date as though made on such date, except where the failure to be so true and correct (without giving effect to the individual materiality, qualification and thresholds otherwise contained in Sections 4 and 5 hereof) would not reasonably be expected to have a Material Adverse Effect on Buyer or as otherwise contemplated by this Agreement and Buyer shall have received a certificate signed by the Chief Executive Officer of PSEC and PSPC to such effect. 10.2 Performance of This Agreement. Sellers shall have duly performed or complied in all material respects with all of the obligations to be performed or complied with by Sellers under the terms of this Agreement on or prior to the Closing Date and Buyer shall have received a certificate signed by the Chief Executive Officer of PSEC and PSPC to such effect. 10.3 Resignations. Buyer shall have received the written resignations of each member of the Board of Directors and each officer of the Companies that is a Seller or an affiliate of a Seller. 10.4 Opinion of Counsel. Buyer shall have received an opinion of McAfee & Taft A Professional Corporation, dated the Closing Date, substantially in the form attached hereto as Exhibit G. 2a-28 29 10.5 Closing of Related Agreements. The contemporaneous, separate but related Sale and Purchase Agreements between Sellers and their affiliates, as Sellers, and Buyer shall close simultaneously with the Closing under this Agreement. ARTICLE 11 CONDITIONS TO OBLIGATIONS OF SELLERS The obligations of Sellers to consummate the transactions provided for in this Agreement shall be subject to the satisfaction of each of the following conditions on or before the Closing Date, subject to the right of Sellers to waive any one or more of such conditions: 11.1 Representations and Warranties of Buyer. The representations and warranties of Buyer contained in this Agreement shall be true and correct in all material respects at and as of the Closing Date, and Sellers shall have received a certificate signed by a Vice President of Buyer to such effect. 11.2 Performance of This Agreement. Buyer shall have duly performed or complied in all material respects with all of the obligations to be performed or complied with by Buyer under the terms of this Agreement on or prior to the Closing Date, and Sellers shall have received a certificate signed by a Vice President of Buyer to such effect. 11.3 Shelf Registration Agreement. ONEOK shall have executed and delivered to the Sellers a Shelf Registration Agreement substantially in the form attached hereto as Exhibit I (the "Shelf Registration Agreement"). 11.4 Opinion of Counsel. Sellers shall have received an opinion of Arrington, Kihle, Gaberino & Dunn, dated as of the Closing Date, substantially in the form attached hereto as Exhibit H. 11.5 Closing of Related Agreements. The contemporaneous, separate but related Sale and Purchase Agreements between Sellers and their affiliates, as Sellers, and Buyer shall close simultaneously with the Closing under this Agreement. ARTICLE 12 TERMINATION 12.1. Noncompliance by Sellers. Buyer may terminate this Agreement by written notice to Sellers if the conditions to Buyer's obligations under this Agreement, as set forth in Article 10 hereof, shall not have been complied with or performed in all material respects (and Sellers shall not be prepared to comply with or 2a-29 30 perform the same) by the date on which the Closing is to occur (as set forth in Section 13.1), and such non-compliance or non-performance shall not have been waived in writing by Buyer. Under such circumstances, Buyer shall be entitled to a return of the Deposit, which shall be Buyer's sole remedy hereunder unless such termination is a result of Sellers' failure or refusal to close the transaction contemplated hereby under circumstances in which all conditions precedent to Sellers' obligations as set forth in Article 11 have been performed or satisfied in all material respects, in which event Buyer shall be entitled to pursue any remedies existing at law or in equity. 12.2. Noncompliance by Buyer. Sellers may terminate this Agreement by written notice to Buyer if the conditions to Sellers' obligations under this Agreement, as set forth in Article 11 hereof, shall not have been complied with or performed in all material respects (and Buyer shall not be prepared to comply with or perform the same) by the date on which the Closing is to occur (as set forth in Section 13.1), and such non-compliance or non-performance shall not have been waived in writing by Sellers. In such event, Sellers shall retain the Deposit as liquidated damages for Buyer's failure to purchase the Shares at the time specified herein. The parties hereto agree that time is of the essence for the consummation of the transactions contemplated hereby, that the amount of damages caused by Buyer's breach would be very difficult to calculate exactly, and that the provision for liquidated damages contained in this Section 12.2 shall not be construed as a penalty provision. Such right to liquidated damages shall be Sellers' sole remedy hereunder. 12.3. Cooperation by Buyer. In the event of termination of this Agreement by mutual agreement of the parties, Sellers shall be free to sell the Shares to any third party without any limitation under or by reason of this Agreement. Buyer shall cooperate with Sellers in effectuating any such sale by promptly executing any instrument reasonably requested by Sellers evidencing the termination of this Agreement or Buyer's right to acquire the Shares. 12.4. Arbitration. In the event this Agreement is terminated by Buyer pursuant to Section 12.1 hereof or by Sellers pursuant to Section 12.2 hereof and a dispute exists between the parties with respect to entitlement to the Deposit, such dispute shall be resolved by binding arbitration conducted in accordance with the Commercial Arbitration Rules of the AAA. The arbitration proceedings shall be conducted in Oklahoma City, Oklahoma, by a single arbitrator agreed to by the parties, or if they are unable to agree, selected by the AAA. The arbitrator shall be a licensed attorney experienced in transactions involving the sale and purchase of the stock or assets of oil and gas companies. The arbitrator shall be instructed to make a determination that either Buyer is entitled to return of the entire Deposit or Sellers are entitled to retain the entire Deposit. The decision of the arbitrator shall be 2a-30 31 conclusive and binding on the parties. The general expenses of arbitration, including the fees of the AAA if necessitated by reason of the failure of the parties to agree upon an arbitrator, shall be borne equally by Sellers and Buyer; however, each party shall bear and pay the fees and expenses of its own witnesses, legal counsel and of the collection and presentation of its evidence. ARTICLE 13 CLOSING; POST-CLOSING 13.1 Date and Place. The Closing shall be held at 10:00 o'clock a.m. on February 27, 1997 (the date on which the Closing actually occurs is referred to herein as the "Closing Date"). The Closing shall take place in the offices of PSEC, 100 N. Broadway, Suite 3200, Oklahoma City, Oklahoma. 13.2 Satisfaction of Conditions. Not later than two (2) business days prior to the Closing Date, each party shall provide the other party such evidence of satisfaction of conditions under Articles 10 and 11 hereof as the other party shall have reasonably and timely requested. 13.3 Transfer of the Shares. At the Closing, Sellers shall deliver to Buyer certificates registered in the name of Sellers, endorsed in blank, representing the Shares, free and clear of all liens, encumbrances, security interests and adverse claims. 13.4 Determination of Purchase Price. On the day that is two (2) business days prior to the Closing Date, Sellers shall furnish to Buyer (i) a summary of the Base Price adjustments to be effected at the Closing pursuant to Sections 3.3, 3.4, 8.5, 8.6, 8.8 and 9.5 hereof, and (ii) based upon the information at (i), a calculation of the Purchase Price. Buyer and Sellers shall work together diligently and in good faith to agree upon the amount of the Purchase Price prior to the Closing, and if they do so agree, the agreed amount shall be conclusively established as the Purchase Price. If they cannot agree, the Closing shall occur as scheduled based on Sellers' reasonable, good faith estimate of the Purchase Price ("Sellers' Estimate") and certificates representing the number of Exchange Shares so determined shall be issued to Sellers; however, all of such certificates shall be deposited in escrow with the Escrow Agent pending a determination of the final Purchase Price. In such event the final Purchase Price shall be determined either (i) by subsequent agreement of the parties, or (ii) by binding arbitration pursuant to an arbitration proceeding initiated and conducted substantially in accordance with the procedures set out in Section 12.4 hereof. In the event arbitration is necessary to determine the Purchase Price, prior to initiating the arbitration, each party shall furnish to the other a statement of such party's calculation of the Purchase Price. All fees and expenses of the arbitration, including attorneys' fees, expert witness fees and all other out-of-pocket expenses of both parties, 2a-31 32 shall be paid by the party whose calculation of the Purchase Price bears the greatest difference from the Purchase Price determined by the arbitrator. The award of the arbitrator shall not be subject to appeal or judicial review of any nature and shall be promptly furnished to the Escrow Agent who shall make distribution of the Exchange Shares in a manner consistent with such award or, if new certificates are required in order to effect the award of the arbitrator, shall deliver the escrowed certificates upon receipt from Buyer of new certificates representing the number of shares corresponding to the Purchase Price determined by such award. In the event new certificates are required and Buyer does not furnish such certificates within ten (10) days after receipt by Escrow Agent of the award, Escrow Agent shall deliver all originally deposited certificates to Sellers. 13.5 Transfer of the Exchange Shares. (a) At the Closing, Buyer shall deliver to Sellers (or to the Escrow Agent if the Purchase Price has not been agreed upon) stock certificates evidencing Exchange Shares having an aggregate Closing Value (less the value of any fractional share which shall be paid in cash) equal to the Purchase Price (or Sellers' Estimate if the Purchase Price has not been agreed upon), together with cash for any fractional shares. If Sellers have referred to arbitration the resolution of a Title Defect pursuant to Section 3.5, the number of Exchange Shares representing the Title Escrow which are delivered to the Escrow Agent under the Title Escrow Agreement shall be deducted from the number of Exchange Shares delivered to Sellers or the Escrow Agent pursuant to the preceding sentences of this Section 13.5. The number of Exchange Shares issued in the name of each Seller shall be determined by multiplying the aggregate number of Exchange Shares to be issued by the percentage set opposite the name of such Seller in Exhibit A. Fractional shares shall not be issued, in which event the number of shares to be issued to a Seller shall be rounded down to the nearest whole share and the cash for any fractional shares resulting from the Purchase Price shall be distributed to Sellers in proportion to the number of shares received. (b) Each of the Sellers represents and warrants to Buyer that the Exchange Shares it will receive under this Agreement are not being acquired with a view to, or in connection with, a distribution of such Exchange Shares in violation of the Securities Act of 1933, as amended (the "Securities Act"). Sellers understand that (i) the Exchange Shares may not be sold or transferred for value except pursuant to an effective registration statement under the Securities Act or an exemption or exception from the registration requirements under the Securities Act, (ii) a stop transfer instruction will be issued with respect to the Exchange Shares, and (iii) the following legend will be placed on the certificates representing the Exchange Shares: 2a-32 33 THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). THE SECURITIES MAY NOT BE SOLD OR TRANSFERRED FOR VALUE EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION UNDER THE ACT, OR AN OPINION OF COUNSEL, WHICH OPINION SHALL BE REASONABLY SATISFACTORY TO THE ISSUER, THAT SUCH REGISTRATION IS NOT REQUIRED. ARTICLE 14 MISCELLANEOUS 14.1 Notices. All communications required or permitted to be given under this Agreement shall be in writing and delivered, mailed or transmitted to the parties at the addresses set out below. Notices shall be deemed given when received except that notices given by facsimile transmission on weekends, holidays or after 5:00 p.m. Central Time, shall be deemed received on the next business day. If delivered by commercial delivery service or mailed by registered or certified mail, the delivery receipt shall be evidence of the date of receipt. Either party may, by written notice so delivered to the other, change the address to which delivery shall thereafter be made. (a) Notices to Buyer: Mr. J. C. Kneale, Vice President ONEOK Resources Company 100 W. Fifth Street Tulsa, Oklahoma 74103 Fax No. (918) 588-7773 With copy to: Donald A. Kihle, Esq. Arrington Kihle Gaberino & Dunn 100 W. Fifth Street, Suite 1000 Tulsa, Oklahoma 74103 Fax No. (918) 588-7873 (b) Notices to Sellers: Mr. Ray Potts PSEC, Inc. 100 N. Broadway, Suite 3200 Oklahoma City, OK 73102 Fax No. (405) 235-1223 2a-33 34 With copy to: C. David Stinson, Esq. McAfee & Taft A Professional Corporation Tenth Floor, Two Leadership Square Oklahoma City, Oklahoma 73102 Fax No. (405) 235-0439 14.2 Binding Effect. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns; provided, however, that Buyer may not assign this Agreement or any of its rights or obligations hereunder without the prior written consent of Sellers, which consent may be withheld in Sellers' sole discretion. 14.3 Counterparts. This Agreement may be executed in any number of counterparts which taken together shall constitute one and the same instrument and each of which shall be considered an original for all purposes. 14.4 Expenses. Each party hereto will bear and pay its own expenses of negotiating and consummating the transactions contemplated hereby. 14.5 Section Headings. The section headings contained in this Agreement are for convenient reference only and shall not in any way affect the meaning or interpretation of this Agreement. 14.6 Superseding Effect. This Agreement supersedes any prior agreement or understanding between the parties with respect to the subject matter hereof. 14.7 Governing Law; Enforcement. This Agreement shall be governed by, construed and enforced in accordance with the laws of the State of Oklahoma applicable to contracts made and to be performed entirely therein. The prevailing party in any litigation initiated to enforce rights under or collect damages for breach of this Agreement shall be entitled to reimbursement from the non-prevailing party of all costs and expenses, including attorneys' fees, incurred by the prevailing party in connection with such litigation. 14.8 Exhibits and Schedules. The Exhibits and Schedules referred to herein are attached hereto and by this reference made a part hereof. 14.9 Announcements. Sellers and Buyer shall consult with each other with regard to all press releases and other announcements issued by either party concerning this Agreement or the transaction contemplated hereby and, except as may be required by applicable laws or the applicable rules and regulations of any governmental agency or stock exchange, neither Buyer nor Sellers shall issue any 2a-34 35 such press release or other publicity without the prior written consent of the other party. 14.10 Survival of Warranties and Representations and Indemnification. Notwithstanding any investigation conducted before or after the closing, the parties shall, subject to any state of facts or limitations set forth in the Schedules attached hereto or otherwise specifically provided in this Agreement, be entitled to rely upon the warranties and representations set forth herein and the obligations of the parties with respect thereto shall survive the Closing and continue in full force and effect until the first anniversary of the Closing Date, at which time all warranties and representations set forth in this Agreement and all liabilities of the parties with respect thereto shall terminate, except for warranties and representations relating to income taxes and except for claims relating to any other warranties or representations which are asserted in writing on or before such first anniversary of the Closing Date. Warranties and representations concerning income taxes and all liabilities of the parties with respect thereto shall continue in effect for a period of five years after the Closing Date. Subject to any applicable statutes of limitation, the liabilities of the parties with respect to all other warranties and representations as to which timely claims have been asserted in writing shall continue until such claims have been finally decided, settled or adjudicated. Each party will indemnify and hold the other party harmless from any and all actual loss, cost, liability and expense (including reasonable attorneys' fees) resulting from such breach of its warranties, representations, and obligations under this Agreement. Each party's liability resulting from any breach of its warranties, representations, or other obligations set forth herein to another party shall be limited, in the aggregate, to the excess of any loss resulting therefrom over $50,000 and Seller's liability shall be limited to the Purchase Price. 14.11 Further Assurances. After the Closing the parties shall, at the sole cost and expense of the requesting party if more than an immaterial expense is involved, (i) furnish such additional information, (ii) execute and deliver such additional documents, and (iii) perform such additional acts, as may be necessary and reasonably requested by the other party or parties to effect the transaction contemplated by this Agreement. 14.12 Waiver. The rights and remedies of the parties to this Agreement are cumulative and not alternative. Neither the failure nor any delay by any party in exercising any right, power or privilege under this Agreement or the documents referred to herein will operate as a waiver of such right, power or privilege, and no single or partial exercise of any such right, power or privilege will preclude any other or further exercise of such right, power or privilege or the exercise of any other right, power or privilege. To the maximum extent permitted by applicable law, (i) no waiver of any claim or right under this Agreement will be valid 2a-35 36 unless evidenced by a writing signed by the waiving party, (ii) no waiver given by a party will be applicable except in the specific instance for which it is given, and (ii) no notice to or demand on a party will be deemed to be a waiver of any obligation of such party or of the right of the party giving such notice or demand to take further action without notice or demand as provided in this Agreement or the documents referred to herein. Executed as of the date first above written. SELLERS: ------- ---------------------------------------- Ray H. Potts, Individually and as Trustee of the Ray H. Potts Living Trust ---------------------------------------- Robert L. Stephenson, Individually and as Trustee of the Robert L. Stephenson Living Trust ---------------------------------------- R. L. Hilbun ---------------------------------------- Roger A. Rose BUYER: ----- ONEOK RESOURCES COMPANY, a Delaware corporation By -------------------------------------- Vice President 2a-36 37 LIST OF EXHIBITS AND SCHEDULES Exhibits - -------- A Sellers and Stock Ownership B Corporate Structure C Sycamore System D Listing of Properties (by well, with WI and NRI), together with Agreed Values E Deposit Agreement F Escrow Agreement G Opinion of Sellers' Counsel H Opinion of Buyer's Counsel Schedules - --------- 4.2 Long term sale/purchase agreements; contracts involving prepayments and makeup rights 4.5 Material executory contracts 4.11 Financial statements 4.12 Changes since the Balance Sheet Date 4.13 Past due/problem accounts receivable 4.18 Employees 4.19 Employee benefits 4.21 Insurance 4.22 Short term investments; bank accounts 8.5 Gas imbalances
2a-37 38 EXHIBIT A
Ownership (Shares and %) ----------------------------------------- Seller PSEC, Inc. PSPC, Ltd. - ------ ---------- ---------- Ray H. Potts, Trustee of 5,200,000 (63.41%) the Ray H. Potts Living Trust Ray H. Potts 108,432 (63.41%) Robert L. Stephenson, 2,800,000 (34.14%) Trustee of the Robert L. Stephenson Living Trust Robert L. Stephenson 58,386 (34.14%) R. L. Hilbun 143,224 ( 1.75%) 2,987 ( 1.75%) Roger A. Rose 57,290 ( 0.70%) 1,195 ( 0.70%) --------- ------- Totals 8,200,514 171,000
2a-38 39 EXHIBIT "B" PSEC, INC. An Oklahoma Sub "S" Corp. PSPC, LTD. | An Oklahoma Sub "S" Corp. | | | | N.E. 23RD L.L.C. | An Oklahoma Limited Liability SYCAMORE GAS SYSTEM Corp. Oklahoma General Partnership PSEC, Inc. Managing Partner PSPC, Inc., General Partner
2a-39 40 EXHIBIT "C" 1. The Sycamore Gas System facilities include, but are not limited to, the following: a. A gas gathering system which consists of 18.9 miles of various sizes and types of pipe, as generally depicted on the attached plat. The pipe ranges in size from 2" to 8". b. Gas processing plant which is currently not in use. c. Two compressors, 200 hp each. d. Four storage tanks: 714 bbl., 238 bbl., 210 bbl., 100 bbl. e. Portable building used as an office. A trailer is used as a warehouse for materials and supplies. 2. The gas plant is located on approximately 10 acres in Section 12-T3S- R1E, Carter County, Oklahoma. The 10 acres is leased under a long term lease dated November 27, 1984, a copy of which has been made available for review by Buyer. 2a-40 41 &A EXHIBIT "D" Exhibit "D-1" PSEC, Inc.
Well Name nbr def PSEC WI PSEC NRI PSEC RI PSEC ORRI PSEC net Anderson 1-21 pdp 0.04083620 0.03243710 4,401 Beeson 1-23 pdp 0.18883900 0.15052925 496 Bobcat 1-27 pdp 0.02742072 0.02299008 7,513 Boren 1-34 pdp 0.00966795 0.00813228 1,235 Boren 2-34 prb 0.00966795 0.00813228 0 Bowman 2-10 pdp 0.24562500 0.19957040 1,472 Bryan Bolin 1-25 pdp 0.01068750 0.00883970 1,770 Burch * 2-12 pud 0.02862431 0.02215527 0.00715543 0.01741137 70,842 Burch, Arbuckle ** 3-12 pud 0.02862431 0.02215527 0.00715543 0.01741137 0 Burch, Springer ** 1-12 pbp 0.02862431 0.02215527 0.00715543 0.01741137 7,783 Burch, Sycamore * 1-12 pdp 0.02862431 0.02215527 0.00715543 0.01741137 202,832 Burch, Woodford * 1-12 pbp 0.02862431 0.02215527 0.00715543 0.01741137 0 Buzzard 1-26 pdp 0.02250000 0.01771020 943 City of Ardmore 1-13 pdp 0.26214184 0.20597814 121,010 City of Ardmore 2-13 pud 0.26214184 0.20597814 0 City of Ardmore, Arbuckle 3-13 pud 0.26214184 0.20597814 0 City of Ardmore, Springer 1-13 pbp 0.26214184 0.20597814 0 Colorado Coal Prospect 0.01541666 0.01187083 50,000 Condor 1-27 pdp 0.02250000 0.01856310 0 Danker 1-35 pdp 0.02250000 0.01743568 4,492 Davis Unit 1-27 pdp 0.02250000 0.01816227 0.01708985 23,983 Dennis 1-36 pud 0.01107420 0.00927250 4,119 Donald 1-14 pdp 0.10807300 0.08780900 16,948 Downs * 2-07 pud 0.06361801 0.06214500 0.00721585 0.00534640 187,215 Downs * 3-07 pud 0.06361801 0.06214500 0.00721585 0.00534640 50,682 Downs, Arbuckle 4-07 pud 0.06361801 0.06214500 0.00721585 0.00534640 0 Downs, Springer * 1-07 pbp 0.06361801 0.06214500 0.00721585 0.00534640 13,772 Downs, Sycamore 1-07 pdp 0.06361801 0.06214500 0.00721585 0.00534640 146,587 Downs, Woodford * 1-07 pbp 0.06361801 0.06214500 0.00721585 0.00534640 19,138 Eagle 1-27 pdp 0.02250000 0.01816227 0.01708985 2,281 Emily Taylor 2-23 pdp 1.00000000 0.81164560 0.06250000 262,878 Estella George 1-25 pdp 0.00637936 0 Fable # 1-24 pdp 0.01296877 0.01018038 0 Falcon 1-34 pdp 0.02250000 0.01743570 1,052 Festus 1-24 pdp 0.09778590 0.07240261 1,773 Galt, 3 wells ** C unit pdp 0.25000000 0.21875000 0 Goss 1-36 pdp 0.02277859 0.01785728 4,478 Griffith 1-03 pdp 0.06850950 0.05498290 11,839 Guy 1-35 pdp 0.09375000 0.08203000 0 Harper-Stine 1-28 pdp 0.00687500 0.00559270 752 HDS Corp, Cromwell 1-24 pdp 0.47057614 0.37066456 12,624 HDS Corp, Hunton 1-24 pdp 0.47057614 0.41047096 48,740
Page 1 2a-41 42 &A Exhibit "D-1" PSEC, Inc.
Well Name nbr def PSEC WI PSEC NRI PSEC RI PSEC ORRI PSEC net$ Hendricks, Arbuckle 5-01 pud 0.03992804 0.03120732 0.00000842 0.01287641 0 Hendricks, Springer * 1-01 pbp 0.03992804 0.03120732 0.00000842 0.01287641 3,104 Hendricks, Syc & Wdfd * 2-01 pud 0.03992804 0.03120732 0.00000842 0.01287641 107,383 Hendricks, Syc & Wdfd * 3-01 pud 0.03992804 0.03120732 0.00000842 0.01287641 50,606 Hendricks, Syc & Wdfd * 4-01 pud 0.03992804 0.03120732 0.00000842 0.01287641 17,365 Hendricks, Sycamore 1-01 pdp 0.03992804 0.03120732 0.00000842 0.01287641 50,640 Hendricks, Woodford * 1-01 pbp 0.03992804 0.03120732 0.00000842 0.01287641 10,491 Hennessey 1-26 pdp 0.02250000 0.01771490 0 Hennessey 2-26 prb 0.02250000 0.01771490 0 Herndon, Checkerboard * 1-35 pbp 0.01074780 0.00882832 3,127 Herndon, Cleveland 1-35 pdp 0.01074780 0.00882832 885 Hissom 1-18 pdp 0.22727310 0.18151883 0.00525214 21,687 Hissom, Arbuckle 2-18 pud 0.22727310 0.18151883 0.00525214 0 Hissom, Woodford * 1-18 pbp 0.22727310 0.18151883 0.00525214 73,109 Humphries 1-25 pdp 0.01089840 0.00887390 197 Humphries, Chckrd * 1-25 pbp 0.01089840 0.00887390 3,330 Janes 1-26 pdp 0.02250000 0.01901250 1,872 Jimmie B 1-33 pdp 0.24500000 0.19500000 0 Jones 1-11 pdp 0.22257773 0.17786610 0.00203987 0.00216085 163,838 Jones 4-11 pud 0.22257773 0.17786610 0.00203987 0.00216085 0 Jones * 2-11 pud 0.22257773 0.17786610 0.00203987 0.00216085 243,498 Jones * 3-11 pud 0.22257773 0.17786610 0.00203987 0.00216085 135,064 Jones, Arbuckle 5-11 pud 0.22257773 0.17786610 0.00203987 0.00216085 0 Jud Little, Arbuckle 3-06 pud 0.05010000 0.04138286 0.00027866 0 Jud Little, Sycamore 1-06 pdp 0.05010000 0.04138286 0.00027866 229,129 Jud Little, Sycamore * 2-06 pud 0.05010000 0.04138286 0.00027866 140,473 Jud Little, Viola 1-06 pdp 0.05010000 0.04105155 11,479 Jud Little, Woodford * 1-06 pbp 0.05010000 0.04138286 0.00027866 7,145 King Baker ** C115 pdp 0.06293500 0.05507000 0 Kubiak # 1-23 pdp 0.03473690 0.02526320 1,744 Life 1-04 pdp 0.24500000 0.19919110 57,626 Lion 1-34 pdp 0.00966800 0.00811030 2,653 Lion, Checkerboard * 1-34 pbp 0.00966800 0.00811030 2,887 Lowery 1-35 pdp 0.02250000 0.01754390 1,165 Markham 1-05 pdp 0.30430320 0.22565416 0.00016436 77,471 Markham, Arbuckle 2-05 pud 0.30430320 0.22565416 0.00016436 0 Markham, Woodford * 1-05 pbp 0.30430320 0.22565416 0.00016436 55,578 Max Yeager 1-06 pdp 0.05010000 0.04138286 0.00027866 42,197 Max Yeager, Springer * 1-06 pbp 0.05010000 0.04138286 0.00027866 1,437 Max Yeager, Sycamore * 2-06 pud 0.05010000 0.04138286 0.00027866 104,408 Max Yeager, Woodford * 1-06 pbp 0.05010000 0.04138286 0.00027866 10,354 Micheal 1-32 pdp 0.24090066 0.19272052 0 Newbern 1-15 pdp 0.39500000 0.29624990 4,767 Noah 1-08 pdp 0.03333300 0.02588020 0 O'Day 1-25 pdp 0.01187599 0.00973106 121 O'Harro 1-33 pdp 0.24500000 0.19416250 23,751 O'Harro Waterflood pdp 0.24500000 0.19416250 0
Page 2 2a-42 43 &A Exhibit "D-1" PSEC, Inc.
Well Name nbr def PSEC WI PSEC NRI PSEC RI PSEC ORRI PSEC net$ Owl 1-34 pdp 0.00966800 0.00811030 820 Pannell, prod & swd ** 1&2-34 pdp 0.25000000 0.21875000 0 Panther, Checkerboard 1-26 pbp 0.02742072 0.02299008 8,276 Panther, Cleveland 1-26 pdp 0.02742072 0.02299008 7,513 Payne 1-27 pdp 0.02250000 0.01887370 1,281 Payne 2-27 prb 0.02250000 0.01887370 0 Pearl # 1-23 pdp 0.12121330 0.09939491 0 Pletcher * 2-12 pud 0.01633798 0.01319247 0.00715543 0.01741137 43,417 Pletcher, Springer 1-12 pbp 0.01633798 0.01319247 0.00715543 0.01741137 0 Pletcher, Sycamore 1-12 pdp 0.01633798 0.01319247 0.00715543 0.01741137 32,559 PSEC Inc. Income, etc. 1.00000000 1.00000000 2,300,000 Rackley 1-35 pdp 0.01074780 0.00882830 215 Roundup 1-20 pdp 0.10763900 0.08598090 11,096 Roundup, Arbuckle 2-20 pud 0.10763900 0.08598090 0 Shaffner 1-21 pdp 0.01778229 0.01407691 0 Smith 2-01 pdp 0.15997940 0.12314130 5,344 Stansberry 1-31 pdp 0.12500000 0.09954350 0 State 1-16 pdp 0.03333334 0.02497400 452 Stein 2-03 pdp 0.12434940 0.10393110 0.00391721 0 Storey # 1-24 pdp 0.04042665 0.03295464 18,930 Strader 1-08 pdp 0.29825069 0.23835735 0.00501713 1,263 Strader, Arbuckle 3-08 pud 0.29825069 0.23835735 0.00501713 0 Strader, Sycamore 2H-08 prb 0.29825069 0.23835735 0.00501713 0 Strader, Woodford 1-08 pbp 0.29825069 0.23835735 0.00501713 0 Strader,Springer * 1-08 pbp 0.29825069 0.23835735 0.00501713 94,851 Tiger 1-26 pdp 0.02250000 0.01901250 6,225 Tucker 1-35 pdp 0.11538450 0.08913450 0 Tunder A1-11 pdp 0.03749940 0.02915000 28,126 Van Gundy 1-36 pdp 0.01107420 0.00927250 331 Van Gundy ** 2-36 prb 0.01107420 0.00927250 0 Varner 1-02 pdp 0.19040610 0.15043826 0.00327226 0.00392231 439,287 Varner * 2-02 pud 0.19040610 0.15043826 0.00327226 0.00392231 563,567 Varner * 3-02 pud 0.19040610 0.15043826 0.00327226 0.00392231 211,596 Varner, Arbuckle ** 4-02 pud 0.19040610 0.15043826 0.00327226 0.00392231 0 Varner, Woodford * 1-02 pbp 0.19040610 0.15043826 0.00327226 0.00392231 25,642 Way 1-04 pdp 0.24500000 0.19919110 631 Whitnah 1-34 pdp 0.01092360 0.00890360 31 Whitnah 2-34 prb 0.01092360 0.00890360 0 Wilma 1-33 pdp 0.24500000 0.19500000 0 Yates 1-02 pdp 0.08903044 0.06772830 43,496 6,789,180
Page 3 2a-43 44 EXHIBIT E DEPOSIT AGREEMENT THIS DEPOSIT AGREEMENT (this "Agreement") is made and entered into as of the 9th day of January, 1997 by and among the entities and individuals executing this Agreement as Sellers (collectively the "Sellers" and individually a "Seller"), ONEOK RESOURCES COMPANY, a Delaware corporation ("Buyer"), and BOATMEN'S FIRST NATIONAL BANK OF OKLAHOMA ("Escrow Agent"). W I T N E S S E T H: THAT WHEREAS, this Agreement is being executed and delivered contemporaneously with the execution and delivery of that certain Stock Purchase Agreement of even date herewith between Sellers and Buyer (the "Stock Purchase Agreement"), pursuant to which Sellers have agreed to sell and Buyer has agreed to purchase all of the outstanding shares of the capital stock of PSEC, Inc. and PSPC, Ltd.; and WHEREAS, Section 2.4 of the Stock Purchase Agreement provides for the contemporaneous execution and delivery of a deposit agreement substantially in the form of this Agreement; and WHEREAS, Escrow Agent has agreed to execute this Agreement and to hold the amount deposited hereunder in escrow subject to the terms and conditions hereinafter set forth. NOW, THEREFORE, in consideration of the premises and of the mutual covenants and agreements contained herein, and of other good and valuable consideration, the parties to this Agreement hereby agree as follows: 1. Deposit. Simultaneously with the execution of this Agreement, Buyer is delivering to Escrow Agent, by wire transfer of immediately available funds in accordance with instructions received from Escrow Agent, the sum of $1,000,000 (the "Deposit"), which shall be held, administered and distributed by the Escrow Agent as hereinafter provided. 2. Nature of Deposit. Escrow Agent shall hold the Deposit, and all instruments and certificates received by Escrow Agent as a result of investing the Deposit, and all interest and other earnings thereon, in escrow for the benefit of Sellers and Buyer, and the same shall never become part of the general assets of Escrow Agent but shall always be specifically identified as part of the escrow created hereunder. The obligation of Escrow Agent to deliver the Deposit, and all interest and earnings thereon, in accordance with the terms of this Agreement shall never be considered as a general obligation or indebtedness of Escrow Agent, but rather shall be an obligation to return money, certificates, interest and other property held in escrow. 3. Investments. The Deposit shall be invested by Escrow Agent in U.S. government obligations, money market obliga- 2a-44 45 tions, other short-term cash equivalents or fully-insured bank time deposits (which may be issued by Escrow Agent or its affiliates), as Escrow Agent may deem appropriate. All time deposits issued by Escrow Agent or its affiliates shall be registered in the name of Ray H. Potts and Robert L. Stephenson, as Co-trustees; however, for income tax purposes all income earned on the Deposit shall be allocated to and borne by the party or parties receiving such income. Escrow Agent shall reinvest from time to time all income received by it from investment of the Deposit and all such income shall become a part of the Deposit when and as received. 4. Fees and Expenses. For its services hereunder, Escrow Agent shall be entitled to a fee of $750.00 for the period ending March 31, 1997, and an annual fee of $600.00 for each 12-month period after such time that any amounts remain in escrow hereunder (to be reduced prorata for any fractional portion of a year), plus its actual out-of-pocket expenses. All such fees and expenses shall be paid through a charge against the Deposit. 5. Distributions; Termination. The Escrow Agent shall make distribution of the Deposit (i) as directed by written notice to Escrow Agent executed by Sellers and Buyer, or (ii) to either Sellers or Buyer as determined by a written arbitration award certified to Escrow Agent by either Sellers or Buyer as the award issued as the result of arbitration proceedings between Sellers and Buyer concerning entitlement to the Deposit, whichever of (i) or (ii) above first is received by Escrow Agent. This Agreement and the escrow arrangement created hereunder shall terminate at such time as the entire Deposit has been distributed in accordance with the provisions of this Section 5. 6. Agents for Sellers; Authority; Indemnification. By execution of this Agreement, Sellers hereby designate Ray H. Potts and Robert L. Stephenson as their agents for purposes of giving and receiving notices, instructions and other communications to and from the Escrow Agent pursuant to the terms of the Agreement. Sellers do hereby ratify and confirm each such notice, instruction or other communication hereafter given by the said Ray H. Potts or Robert L. Stephenson, and do hereby agree to hold the Escrow Agent harmless with respect to, and waive any claim that may arise by reason of the Escrow Agent treating as valid or complying with the terms of, any such notice, instruction or other communication. All distributions of the Deposit made to Sellers shall be made to a joint account in the name of Ray H. Potts and Robert L. Stephenson, Co- trustees, to be opened and maintained with Escrow Agent's banking department specifically for the purpose of receiving distributions from the Deposit pursuant to the terms of this Agreement. Escrow Agent is specifically authorized by all parties Seller to make all distributions to Sellers pursuant to this Agreement to said joint account, and upon making any such distribution shall be relieved of all liability or responsibility with -2- 2a-45 46 respect to the allocation or further distribution thereof among Sellers. 7. Inspection; Reports. All money or other property held as a part of the Deposit shall at all times be clearly identified as being held by Escrow Agent under and pursuant to the terms of this Agreement. Any party hereto may inspect the Deposit at any time during Escrow Agent's normal business hours. Escrow Agent shall furnish to Sellers and Buyer, within five (5) business days after receipt of a written request therefor, a report which describes all investments made by Escrow Agent with respect to the Deposit and the balance thereof as of the date of such report. A final report shall be furnished by Escrow Agent within ten (10) days after final distribution of the Deposit. 8. Escrow Agent. Escrow Agent hereby accepts its appointment and agrees to act as Escrow Agent on the terms and subject to the conditions set out in this Agreement. In taking any action hereunder, Escrow Agent shall be protected in relying upon any notice, communication or other document believed by it to be genuine and upon any evidence deemed by it to be sufficient, and in no event shall Escrow Agent be liable for any act performed or omitted to be performed by it hereunder in the absence of gross negligence or willful misconduct. The Escrow Agent may consult with counsel of its choosing in connection with its duties hereunder and shall be fully protected with respect to any act taken, suffered or permitted by it in good faith in accordance with the advice of such counsel. Escrow Agent shall be entitled to recover, as an expense pursuant to Section 4 hereof, the reasonable fees and expenses of such counsel. 9. Litigation Involving Escrow Agent. In the event Escrow Agent becomes involved in litigation by reason of the performance of its duties as Escrow Agent hereunder, it is hereby authorized to deposit with the clerk of the court in which the litigation is pending any and all funds, securities or other property held by it pursuant hereto and thereupon shall stand fully relieved and discharged of any further duties hereunder. Also, in the event Escrow Agent is threatened with litigation by reason hereof, or if a successor Escrow Agent is not agreed upon by the parties as provided in Section 10 hereof, it is hereby authorized to interplead all interested parties in any court of competent jurisdiction and deposit with the clerk of such court any funds, securities or other property held by it pursuant hereto and thereupon shall stand fully relieved and discharged of any further duties hereunder. 10. Resignation. Escrow Agent may, in its sole discretion, resign and terminate its position as escrow agent hereunder upon thirty (30) days prior written notice to Buyer and Sellers. Such resignation shall, when effective, terminate all obligations and duties of Escrow Agent hereunder, except as -3- 2a-46 47 hereinafter set forth. On the effective date of such resignation, Escrow Agent shall deliver this Escrow Agreement together with any and all related instruments and documents, and together with the Deposit, to any successor Escrow Agent agreed to by the parties. If the parties are unable to agree, Escrow Agent may proceed under Section 9 hereof. 11. Notices. All notices, instructions and other communications hereunder shall be in writing and shall be deemed to have been duly given if delivered in person or by commercial courier service, or mailed by certified mail, return receipt requested, as follows: (a) If to Sellers: Mr. Ray. H. Potts PSEC, Inc. 3200 Liberty Tower 100 N. Broadway Oklahoma City, OK 73102 Fax No. (405)235-1223 and to: Mr. Robert L. Stephenson PSEC, Inc. 3200 Liberty Tower 100 N. Broadway Oklahoma City, OK 73102 Fax No. (405)235-1223 (b) If to Buyer: Mr. J. C Kneale, Vice President ONEOK Resources Company 100 W. Fifth Street Tulsa, OK 74103 Fax No. (918)588-7773 (c) If to the Escrow Agent: Boatmen's First National Bank of Oklahoma P.O. Box 25189 Oklahoma City, OK 73128 Attn: Ms. Sue Shipman Corporate Trust Department or to such other address as any party hereto may designate by prior written notice to the other parties. -4- 2a-47 48 12. Binding Effect. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective heirs, executors, administrators, successors and assigns. 13. Modification. This Agreement may be amended or modified only by a subsequent written agreement executed by Sellers, Buyer and Escrow Agent. 14. Governing Law. This Agreement shall be governed by construed and enforced in accordance with the laws of the State of Oklahoma applicable to contracts made and to be performed entirely therein. 15. Counterparts. This Agreement may be executed 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. It shall not be necessary for every party hereto to sign each counterpart but only that each party shall sign at least one such counterpart. 16. Headings. Paragraph headings contained in this Agreement are for convenient reference only and shall not affect in any way the meaning or interpretation of any provision of this Agreement. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written. SELLERS: ------- ---------------------------------------- Ray H. Potts, Individually and as Trustee of the Ray H. Potts Living Trust ---------------------------------------- Robert L. Stephenson, Individually and as Trustee of the Robert L. Stephenson Living Trust ---------------------------------------- R. L. Hilbun -5- 2a-48 49 ---------------------------------------- Roger A. Rose BUYER: ----- ONEOK RESOURCES COMPANY, a Delaware corporation By -------------------------------------- Vice President ESCROW AGENT: ------------ BOATMEN'S FIRST NATIONAL BANK OF OKLAHOMA By -------------------------------------- Vice President and Trust Officer -6- 2a-49 50 EXHIBIT F ESCROW AGREEMENT THIS ESCROW AGREEMENT (this "Agreement") is made and entered into as of the ___ day of _______, 1997, by and among the entities and individuals executing this Agreement as Sellers (collectively the "Sellers" and individually a "Seller"), ONEOK RESOURCES COMPANY, a Delaware corporation ("Buyer"), and BOATMEN'S FIRST NATIONAL BANK OF OKLAHOMA ("Escrow Agent"). W I T N E S S E T H: THAT WHEREAS, pursuant to the terms of that certain Stock Purchase Agreement dated as of January __, 1997 between Sellers and Buyer (the "Stock Purchase Agreement"), Sellers agreed to sell and Buyer agreed to purchase all of the outstanding shares of the capital stock of PSEC, Inc. and PSPC, Ltd.; and WHEREAS, Section 3.5 of the Stock Purchase Agreement provides that under certain circumstances an escrow agreement substantially in the form of this Agreement shall be executed and delivered by and among the parties at the closing of the transaction contemplated by the Stock Purchase Agreement; and WHEREAS, Escrow Agent has agreed to execute this Agreement and to hold the stock certificates deposited hereunder in escrow subject to the terms and conditions hereinafter set forth. NOW, THEREFORE, in consideration of the premises and of the mutual covenants and agreements contained herein, and of other good and valuable consideration, the parties to this Agreement hereby agree as follows: 1. Escrow Fund. Simultaneously with and as a part of the closing of the transaction contemplated by the Stock Purchase Agreement, Buyer shall deliver to Escrow Agent stock certificates issued in the names of Sellers representing an aggregate of _____ shares of the common capital stock of ONEOK Inc. (the "Escrow Fund"), which shall be held, administered and distributed by the Escrow Agent as hereinafter provided. 2. Nature of Escrow Fund. Escrow Agent shall hold the Escrow Fund, and all dividends, interest and other earnings thereon, in escrow for the benefit of Sellers and Buyer, and the same shall never become part of the general assets of Escrow Agent but shall always be specifically identified as part of the escrow created hereunder. The obligation of Escrow Agent to deliver the Escrow Fund, and all dividends, interest and earnings thereon, in accordance with the terms of this Agreement shall never be considered as a general obligation or indebtedness of Escrow Agent, but rather shall be an obligation to return money, certificates, interest and other property held for the benefit of Sellers and Buyer. 2a-50 51 3. Investments. To the extent the Escrow Fund is comprised of cash, such cash shall be invested by Escrow Agent in U.S. government obligations, money market obligations, other short-term cash equivalents or fully-insured bank time deposits (which may be issued by Escrow Agent or its affiliates). All time deposits issued by Escrow Agent or its affiliates shall be registered in the name of Ray H. Potts and Robert L. Stephenson, as Co-trustees; however, for income tax purposes all income earned on the Escrow Fund shall be allocated to and borne by the party or parties receiving such income. Escrow Agent shall reinvest from time to time all income received by it from investment of the Escrow Fund and all such income shall become a part of the Escrow Fund when and as received. 4. Fees and Expenses. For its services hereunder, Escrow Agent shall be entitled to a fee of $_______ for the period ending May 31, 1997, and an annual fee of $_______ for each 12-month period after such time that any amounts remain in the Escrow Fund (to be reduced prorata for any fractional portion of a year), plus its actual out-of-pocket expenses. All such fees and expenses shall be paid through a charge against the Escrow Fund or equally by Sellers and Buyer if there is no cash in the Escrow Fund. 5. Distributions; Termination. The Escrow Agent shall make distribution of the Escrow Fund (i) as directed by written notice to Escrow Agent executed by Sellers and Buyer, or (ii) to either Sellers or Buyer as determined by a written arbitration award certified to Escrow Agent by either Sellers or Buyer as the award issued as the result of arbitration proceedings between Sellers and Buyer concerning entitlement to the Escrow Fund, whichever of (i) or (ii) above first is received by Escrow Agent. This Agreement and the escrow arrangement created hereunder shall terminate at such time as the entire Escrow Fund has been distributed in accordance with the provisions of this Section 5. 6. Agents for Sellers; Authority; Indemnification. By execution of this Agreement, Sellers hereby designate Ray H. Potts and Robert L. Stephenson as their agents for purposes of giving and receiving notices, instructions and other communications to and from the Escrow Agent pursuant to the terms of the Agreement. Sellers do hereby ratify and confirm each such notice, instruction or other communication hereafter given by the said Ray H. Potts or Robert L. Stephenson, and do hereby agree to hold the Escrow Agent harmless with respect to, and waive any claim that may arise by reason of the Escrow Agent treating as valid or complying with the terms of, any such notice, instruction or other communication. All cash distributions made to Sellers from the Escrow Fund shall be made to a joint account in the name of Ray H. Potts and Robert L. Stephenson, as Co-trustees, to be opened and maintained with Escrow Agent's banking department specifically for the purpose of receiving distributions from the Escrow Fund pursuant to the terms of this Agreement. All stock certificates distributed to Sellers -2- 2a-51 52 from the Escrow Fund shall be delivered to Ray H. Potts and Robert L. Stephenson for further distribution to Sellers. Escrow Agent is specifically authorized by all Sellers to make all distributions to Sellers pursuant to this Agreement in accordance with the foregoing, and upon making any such distribution shall be relieved of all liability or responsibility with respect to the allocation or further distribution thereof to or among Sellers. 7. Inspection; Reports. All money or other property held as a part of the Escrow Fund shall at all times be clearly identified as being held by Escrow Agent under and pursuant to the terms of this Agreement. Any party hereto may inspect the Escrow Fund at any time during Escrow Agent's normal business hours. Escrow Agent shall furnish to Sellers and Buyer, within five (5) business days after receipt of a written request therefor, a report which describes all investments made by Escrow Agent with respect to the Escrow Fund and the balance thereof as of the date of such report. A final report shall be furnished by Escrow Agent within ten (10) days after final distribution of the Escrow Fund. 8. Escrow Agent. Escrow Agent hereby accepts its appointment and agrees to act as Escrow Agent on the terms and subject to the conditions set out in this Agreement. In taking any action hereunder, Escrow Agent shall be protected in relying upon any notice, communication or other document believed by it to be genuine and upon any evidence deemed by it to be sufficient, and in no event shall Escrow Agent be liable for any act performed or omitted to be performed by it hereunder in the absence of gross negligence or willful misconduct. The Escrow Agent may consult with counsel of its choosing in connection with its duties hereunder and shall be fully protected with respect to any act taken, suffered or permitted by it in good faith in accordance with the advice of such counsel. Escrow Agent shall be entitled to recover, as an expense pursuant to Section 4 hereof, the reasonable fees and expenses of such counsel. 9. Litigation Involving Escrow Agent. In the event Escrow Agent becomes involved in litigation by reason of the performance of its duties as Escrow Agent hereunder, it is hereby authorized to deposit with the clerk of the court in which the litigation is pending any and all funds, securities or other property held by it pursuant hereto, less fees and expenses, and thereupon shall stand fully relieved and discharged of any further duties hereunder. Also, in the event Escrow Agent is threatened with litigation by reason hereof, or if a successor Escrow Agent is not agreed upon by the parties as provided in Section 10 hereof, it is hereby authorized to interplead all interested parties in any court of competent jurisdiction and deposit with the clerk of such court any funds, securities or other property held by it pursuant hereto, less fees and expenses, and thereupon shall stand fully relieved and discharged of any further duties hereunder. Upon deposit with the court of all such funds, securities or other -3- 2a-52 53 property held by it hereunder, Escrow Agent shall be indemnified by Sellers and Buyer against any further costs or liabilities arising under this Agreement. 10. Resignation. Escrow Agent may, in its sole discretion, resign and terminate its position as escrow agent hereunder upon thirty (30) days prior written notice to Buyer and Sellers. Such resignation shall, when effective, terminate all obligations and duties of Escrow Agent hereunder, except as hereinafter set forth. On the effective date of such resignation, Escrow Agent shall deliver this Escrow Agreement together with any and all related instruments and documents, and together with the Escrow Fund, to any successor Escrow Agent agreed to by the parties. If the parties are unable to agree, Escrow Agent may proceed under Section 9 hereof. 11. Notices. All notices, instructions and other communications hereunder shall be in writing and shall be deemed to have been duly given if delivered in person or by commercial courier service, or mailed by certified mail, return receipt requested, as follows: (a) If to Sellers: Mr. Ray. H. Potts 3200 Liberty Tower 100 N. Broadway Oklahoma City, OK 73102 Fax No. (405)235-1223 and to: Mr. Robert L. Stephenson 3200 Liberty Tower 100 N. Broadway Oklahoma City, OK 73102 Fax No. (405)235-1223 (b) If to Buyer: Mr. J. C Kneale, Vice President ONEOK Resources Company 100 W. Fifth Street Tulsa, OK 74103 Fax No. (918)588-7773 (c) If to the Escrow Agent: Boatmen's First National Bank of Oklahoma P.O. Box 25189 -4- 2a-53 54 Oklahoma City, OK 73128 Attn: __________________ Corporate Trust Department or to such other address as any party hereto may designate by prior written notice to the other parties. 12. Binding Effect. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective heirs, executors, administrators, successors and assigns. 13. Modification. This Agreement may be amended or modified only by a subsequent written agreement executed by Sellers, Buyer and Escrow Agent. 14. Governing Law. This Agreement shall be governed by construed and enforced in accordance with the laws of the State of Oklahoma applicable to contracts made and to be performed entirely therein. 15. Counterparts. This Agreement may be executed 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. It shall not be necessary for every party hereto to sign each counterpart but only that each party shall sign at least one such counterpart. 16. Headings. Paragraph headings contained in this Agreement are for convenient reference only and shall not affect in any way the meaning or interpretation of any provision of this Agreement. 17. Enforcement. Any litigation involving this Escrow Agreement shall be brought either in the District Court of Oklahoma County, Oklahoma, or the United States District Court for the Western District of Oklahoma. All parties hereby consent to venue in either such court. The prevailing party in any litigation initiated by Sellers or Buyer under or to enforce this Agreement shall be entitled to reimbursement from the non-prevailing party (Sellers or Buyer) of all costs and expenses, including attorneys fees, incurred by the prevailing party in connection with such litigation. By way of example, but not limitation, in the event either Sellers or Buyer assert by written notice given to the other that joint instructions be given to the Escrow Agent to distribute certain certificates or a certain sum from the Escrow Fund in a particular manner pursuant to the terms of the Stock Purchase Agreement, and the other party objects or refuses to join in such written notice, the party seeking to require such notice may initiate litigation seeking a court order requiring the party refusing to sign such joint instructions to sign such instructions, -5- 2a-54 55 or directing the Escrow Agent to make the requested distribution. If such litigation is initiated by either party and an order is entered directing the other party to sign a written notice to the Escrow Agent requesting, or directing Escrow Agent to make, a distribution substantially as requested by the initiating party, such other party shall bear and pay all costs of such litigation, including reasonable attorneys fees. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written. SELLERS: ------- ---------------------------------------- Ray H. Potts, Individually and as Trustee of the Ray H. Potts Living Trust ---------------------------------------- Robert L. Stephenson, Individually and as Trustee of the Robert L. Stephenson Living Trust ---------------------------------------- R. L. Hilbun ---------------------------------------- Roger A. Rose BUYER: ----- ONEOK RESOURCES COMPANY, a Delaware corporation By -------------------------------------- Vice President -6- 2a-55 56 ESCROW AGENT: ------------ BOATMEN'S FIRST NATIONAL BANK OF OKLAHOMA By -------------------------------------- Vice President and Trust Officer -7- 2a-56 57 EXHIBIT G LAW OFFICES MCAFEE & TAFT A PROFESSIONAL CORPORATION TENTH FLOOR, TWO LEADERSHIP SQUARE 211 NORTH ROBINSON OKLAHOMA CITY, OKLAHOMA 73102-7101 (405) 235-9621 FAX (405) 235-0439 February 28, 1997 ONEOK Resources Company 100 West Fifth Street Tulsa, Oklahoma 74103 Re: Stock Purchase Agreement dated as of January 9, 1997, by and among the entities and individuals executing same as Sellers (collectively the "Sellers" and individually a "Seller"), and ONEOK Resources Company, a Delaware corporation ("Buyer") (the "Agreement") Ladies and Gentlemen: We have acted as counsel to Sellers in connection with the negotiation and execution of the Agreement and the Closing of the transactions contemplated thereby. This opinion is being furnished to you pursuant to Section 10.4 of the Agreement. Capitalized terms used but not defined herein have the meanings ascribed to such terms in the Agreement. In rendering this opinion, we have reviewed (i) a fully executed counterpart original of the Agreement, (ii) the Certificate of Incorporation, Bylaws, stock records and minute book of each of PSEC, Inc. and PSPC, Ltd. (the "Companies"), (iii) the partnership agreement of Sycamore Gas System, a general partnership (Sycamore"), and (iv) originals or photocopies, authenticated to our satisfaction, of such records, certificates of public officials, certificates of officers of the Companies, instruments and other documents as we have deemed necessary to render the opinions expressed herein. We have assumed the authenticity of all documents submitted to us as originals and the conformity to the originals of all documents submitted to us as copies. We also have assumed the genuineness of all signatures appearing on all documents reviewed by us, the legal capacity of all natural persons executing such documents and the authority of all persons executing such documents in a representative capacity. 2a-57 58 Based upon the foregoing and subject to the conditions, qualifications and limitations set forth herein, it is our opinion that: 1. Each of the Companies is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Oklahoma and is qualified to do business and is in good standing in each jurisdiction where Reserve Report Properties are located. Each of the Companies has the corporate power and authority to own and use its properties and to transact the business in which it is engaged. 2. Sycamore is a general partnership duly organized and validly existing under the laws of the State of Oklahoma. Sycamore has the power and authority under its partnership agreement and applicable law to own and use its properties and to transact the business in which it is engaged. 3. The entire authorized capital stock of PSEC consists of 10,000,000 shares of common stock, par value $.10 per share. There are presently outstanding 8,200,514 shares of PSEC Common Stock, all of which are duly authorized, validly issued, fully paid and non-assessable. To our knowledge, there are no outstanding warrants, options, contracts, calls or other rights of any kind or restriction on the right of transfer with regard to any shares of PSEC Common Stock. 4. The entire authorized capital stock of PSPC consists of 200,000 shares of common stock, par value $1.00 per share. There are presently outstanding 171,000 shares of PSPC Common Stock, all of which are duly authorized, validly issued, fully paid and non-assessable. To our knowledge, there are no outstanding warrants, options, contracts, calls or other rights of any kind or restriction on the right of transfer with regard to any shares of PSPC Common Stock. 5. Each Seller is the record owner of the number of shares of PSEC Common Stock and PSPC Common Stock set forth opposite the name of such Seller in Exhibit A to the Agreement. 6. With respect to each Seller, the Agreement constitutes the valid and binding agreement of Seller, enforceable against Seller in accordance with its terms, and all certificates, instruments and agreements executed and delivered by Seller at the Closing constitute valid and binding agreements of Seller, enforceable against Seller in accordance with their respective terms. The foregoing opinions are subject to and qualified in all respects by the following: -2- 2a-58 59 A. The opinions expressed herein are limited to matters governed by the laws of the State of Oklahoma and applicable federal law. B. We express no opinion as to PSEC's, PSPC's or Sycamore's title to any of their respective assets or their right to own or operate any of said assets under applicable local, state, federal or Indian laws, rules or regulations. C. We assume no obligation to advise or supplement this opinion to reflect any facts or circumstances which hereafter may come to our attention or any change in any laws or legislative action, judicial decisions or otherwise which hereafter may occur. D. Our opinion in paragraph 2 as to the organization and existence of Sycamore is based solely on our review of the applicable partnership agreement and certificates executed by officers of PSPC. This opinion is being furnished to you solely in connection with the Closing of the transactions contemplated by the Agreement and may be relied upon and used by you solely for such purpose. This opinion may not be filed with any governmental agency or furnished to or relied upon by any other person in any other context or for any other purpose. Very truly yours, -3- 2a-59 60 EXHIBIT H [Arrington, Kihle letterhead] ____________, 1997 Mr. Ray H. Potts, Individually and as Trustee of the Ray H. Potts Living Trust Mr. Robert L. Stephenson, Individually and as Trustee of the Robert L. Stephenson Living Trust Mr. R. L. Hilbun Mr. Roger A. Rose c/o PSEC, Inc. 3200 Liberty Tower 100 N. Broadway Oklahoma City, OK 73102 Re: Stock Purchase Agreement dated as of January __, 1997, by and among the entities and individuals executing same as Sellers (collectively the "Sellers" and individually a "Seller"), and ONEOK Resources Company, a Delaware corporation ("Buyer") (the "Agreement") Ladies and Gentlemen: We have acted as counsel to Buyer and to ONEOK Inc., the corporate parent of Buyer, in connection with the negotiation and execution of the Agreement and the Closing of the transactions contemplated thereby. This opinion is being furnished to you pursuant to Section 11.4 of the Agreement. Capitalized terms used but not defined herein have the meanings ascribed to such terms in the Agreement. In rendering this opinion, we have reviewed (i) a fully executed counterpart original of the Agreement, (ii) the Certificate of Incorporation, Bylaws, stock record and minute book of each of Resources and ONEOK, (iii) the ONEOK SEC Documents, (iv) the agreements (including, without limitation, the Shelf Registration Agreement) and the stock certificates evidencing the Exchange Shares executed and delivered by Buyer at the Closing, and (v) originals or photocopies, authenticated to our satisfaction, of such records, certificates of public officials, certificates of officers of Buyer, instruments and other documents as we have deemed necessary to render the opinions expressed herein. We have assumed the authenticity of all documents submitted to us as originals and the conformity to the originals of all 2a-60 61 documents submitted to us as copies. We also have assumed the genuineness of all signatures appearing on all documents reviewed by us, the legal capacity of all natural persons executing such documents and the authority of all persons executing such documents in a representative capacity. Based upon the foregoing and subject to the conditions, qualifications and limitations set forth herein, it is our opinion that: 1. Each of Resources and ONEOK is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware. Resources is a wholly-owned, first tier subsidiary of ONEOK. 2. The Agreement has been duly authorized, executed and delivered by Buyer. All certificates, instruments and agreements executed and delivered by Buyer at the Closing, including, without limitation, the Shelf Registration Agreement, have been duly authorized, executed and delivered by Buyer and all requisite corporate action has been taken to authorize the execution thereof and the performance of the transactions contemplated thereby. Buyer has all necessary authority under its certificate of incorporation, bylaws and other governing documents and otherwise has good right and lawful authority to consummate the same. 3. The Agreement and all certificates, instruments and agreements executed and delivered by Buyer at the Closing, including, without limitation, the Shelf Registration Agreement, constitute the valid and binding agreements of Buyer, enforceable against Buyer in accordance with their respective terms. 4. The entire authorized capital stock of ONEOK consists of 60,000,000 shares of ONEOK Common Stock, 340,000 shares of ONEOK Preferred Stock, and 3,000,000 shares of Preference Stock. At the close of business on January 3, 1997: (i) 27,311,617 shares of ONEOK Common Stock and 180,000 shares of ONEOK Preferred Shares were issued and outstanding and 3,848,886 shares of ONEOK Common Stock were reserved for issuance pursuant to ONEOK's Employee Stock Purchase Plan, Key Employee Stock Plan, and Thrift Plan for Employees of ONEOK and subsidiaries, (collectively, the "ONEOK Stock Plans"); (ii) no shares of ONEOK Preference Stock were outstanding; (iii) 200,000 shares of ONEOK Participating Preference Stock have been reserved for issuance pursuant the exercise of ONEOK Stock Purchase rights; (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 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. All outstanding shares of capital stock of the subsidiaries of ONEOK are owned by -2- 2a-61 62 ONEOK, or a direct or indirect wholly owned subsidiary of ONEOK. To our knowledge, except (i) as set forth above and as contemplated by the ONEOK Rights Agreement, (ii) for changes since August 31, 1996 resulting from the exercise of employee stock options granted pursuant to, or from issuances or purchases under, the ONEOK Stock Plans and ONEOK's Direct Stock Purchase and Dividend Reinvestment Plan, and (iii) as contemplated by the Agreement, there are 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. 5. The Exchange Shares issued to Sellers at the Closing have been duly authorized and validly issued, are fully paid and non-assessable. The Exchange Shares represent voting stock of ONEOK entitling the holders of such stock to vote on all significant matters as to which stockholders of a corporation normally are entitled to vote, including, without limitation, the election of directors, and to our knowledge no actions have been taken by ONEOK to render the voting power of the ONEOK Stock illusory or insignificant as a class. The foregoing opinions are subject to and qualified in all respects by the following: A. Except as hereinafter provided, the opinions expressed herein are limited to matters governed by the laws of the State of Oklahoma and applicable federal law. While we are not licensed to practice law in the State of Delaware, we have become familiar with and have considerable expertise with respect to those provisions of Delaware corporate law by which matters affecting the governance of Resources and ONEOK, as Delaware corporations, are bound. Accordingly, the opinions expressed herein are intended to extend to, cover and include matters governed by Delaware corporate law. B. The opinions expressed herein are limited to the matters stated herein and no opinion shall be deemed implied or inferred beyond the matters specifically and expressly stated. We assume no obligation to advise or supplement this opinion to -3- 2a-62 63 reflect any facts or circumstances which hereafter may come to our attention or any change in any laws or legislative action, judicial decisions or otherwise which hereafter may occur. C. The opinions expressed herein are subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar laws relating to or affecting creditors' rights generally, general equitable principles (whether considered in a proceeding in equity or at law) or an implied covenant of good faith and fair dealing. This opinion is being furnished to you solely in connection with the Closing of the transactions contemplated by the Agreement and may be relied upon and used by you solely for such purpose. This opinion may not be filed with any governmental agency or furnished to or relied upon by any other person in any other context or for any other purpose. Very truly yours, -4- 2a-63 64 SCHEDULE 4.2 Long-term Sale/Purchase Agreements o Gas Purchase Agreement dated April 1, 1990 and amended to end March 31, 2000, between all working interest owners in Springer Field and Sycamore Gas System. (Applicable to Springer Field, Carter County, OK) o Gas Processing and Gathering Contract between Mobil Natural Gas Inc. (now PanEnergy) and Sycamore Gas System, ending December 31, 2001. (Applicable to Springer Field, Carter County, OK) o Gas Purchase Contract between Unimark L.L.C. (PSEC's gas marketer) and Centoma Gas System, Inc., ending November 1, 1997. (Applicable to Wellston Field, Lincoln County, OK) Contracts Involving Prepayments o Settlement Agreement dated February 15, 1988, between PSEC's principals and Arkla Energy Resources (now NORAM) for prepayment of gas that expires June 30, 1999. (Applicable to Reynolds well, Pittsburg County, OK) 2a-64 65 SCHEDULE 4.5 1. Lease for Office Space 3200 Liberty Tower, Oklahoma City, OK Liberty Property Management Expires 7/31/97 Monthly lease payments of $5,170 (A copy of this contract has been made available for review by Buyer) 2a-65 66 SCHEDULE 4.11(a)(ii) PSEC, INC. BALANCE SHEET AUGUST 31, 1996 (UNAUDITED) ASSETS CURRENT ASSETS CASH 1,170,152 ACCOUNTS RECEIVABLE 569,622 ---------- TOTAL CURRENT ASSETS 1,739,774 ---------- PROPERTY & EQUIPMENT PRODUCING PROPERTIES 990,075 FURNITURE & OFFICE EQUIPMENT 198,341 AUTOMOBILES 27,442 LEASE & WELL EQUIPMENT 136,887 DEPRECIATION & DEPLETION (763,431) ---------- TOTAL PROPERTY & EQUIP 589,314 ---------- OTHER ASSETS PROSPECT INVENTORY 54,359 UNDEVELOPED LEASEHOLD 36,802 OTHER 45,889 ---------- 137,050 ---------- TOTAL ASSETS 2,466,138 ========== LIABILITIES & EQUITY LIABILITIES ACCOUNTS PAYABLE 337,026 OIL & GAS REVENUE PAYABLE 789,776 ADVANCED DRILLING COSTS 31,852 ---------- T0TAL LIABILITIES 1,158,654 ---------- EQUITY COMMON STOCK 820,051 RETAINED EARNINGS 291,333 CURRENT YEAR INCOME 196,100 ---------- TOTAL EQUITY 1,307,484 ---------- TOTAL LIABILITIES & EQUITY 2,466,138 ==========
See Notes to PSEC, Inc. Financial Statements 2a-66 67 PSEC, INC. STATEMENT OF REVENUES AND EXPENSES EIGHT MONTHS ENDED 8/31/96 (UNAUDITED) REVENUES OIL AND GAS SALES $ 501,054 OVERHEAD INCOME 444,638 SALE OF PROSPECTS 14,294 INTEREST & DIVIDEND INCOME 30,687 OTHER (6,828) --------- $ 983,845 --------- EXPENSES INTANGIBLE DRILLING COSTS $ 71,176 LEASE OPERATING EXPENSE 177,695 PRODUCTION TAXES 34,897 DEPRECIATION & DEPLETION EXP 15,000 GENERAL & ADMINISTRATIVE 486,950 OTHER 2,027 --------- $ 787,745 --------- NET INCOME $ 196,100 =========
See Notes to PSEC, Inc. Financial Statements 2a-67 68 Schedule 4.11 (a)(iv) PSPC, LTD. BALANCE SHEET (UNAUDITED) AUGUST 31, 1996 ASSETS CURRENT ASSETS CASH $206,370 INVESTMENT IN SECURITIES 234,571 ACCOUNTS RECEIVABLE 214,509 ----------- TOTAL CURRENT ASSETS $655,450 ----------- OTHER ASSETS INVESTMENT IN PARTNERSHIP $35,739 PRODUCING PROPERTIES 160,441 LEASE & WELL EQUIPMENT 13,613 DEPRECIATION & DEPLETION (45,886) ----------- TOTAL OTHER ASSETS $163,907 ----------- TOTAL ASSETS $819,357 =========== LIABILITIES AND EQUITY LIABILITIES ACCOUNTS PAYABLE $1,794 ----------- EQUITY CAPITAL STOCK $171,000 PAID IN CAPITAL 49,000 RETAINED EARNINGS 190,248 CURRENT YEAR INCOME 407,315 ----------- TOTAL EQUITY $817,563 ----------- TOTAL LIABILITIES AND EQUITY $819,357 ===========
See Notes to PSPC, Ltd. Financial Statements 2a-68 69 PSPC, LTD. STATEMENT OF REVENUES & EXPENSES EIGHT MONTHS ENDED AUGUST 31, 1996 (UNAUDITED) REVENUES OIL AND GAS SALES $47,994 OVERHEAD INCOME 38,621 PARTNERSHIP INCOME-SYCAMORE GAS 287,277 INTEREST & DIVIDEND INCOME 9,528 OTHER INCOME 51,163 ----------- $434,583 ----------- EXPENSES LEASE OPERATING EXPENSE $12,003 PRODUCTION TAXES 3,387 DEPRECIATION & DEPLETION EXP. 5,000 GENERAL & ADMINISTRATIVE 6,878 ----------- $27,268 ----------- NET INCOME $407,315 ===========
See Notes to PSPC, Ltd. Financial Statements 2a-69 70 SCHEDULE 4.12 1. On October 4, 1996, PSPC, Ltd. received a $114,565 cash distribution from Sycamore Gas System. This represented PSPC's share of a $275,000 quarterly cash distribution made by SGS. 2. On October 10, 1996, PSPC, Ltd. made a cash distribution to its shareholders totaling $395,000. 3. PSEC agreed to assign and transfer to Ray Potts, Robert Stephenson, Mark Potts and Saundra Johnson the following described personal property prior to the closing: [Attached] 4. Working capital distribution authorized by Section 8.8. PSEC, Inc. net working capital $ 581,120 12/96 contributions made by shareholders (5,000) --------- Working capital distribution $ 576,120 PSPC, Ltd. net working capital $ 653,656 Distributions made 10/96 to shareholders (395,000) --------- Working capital distribution $ 258,656
2a-70 71 Schedule 4.13
BALANCE OWNER AMOUNT 2/26/97 - ------- ------------ ------------ Premier Development Corp. $19,313 (1) $19,313 R.E. Dawson, Inc. $1,563 (2) $1,343 Robin Sue Perona $1,315 (3) $1,297 ------------ ------------ Total $22,191 $21,953 ============ ============
(1) PSEC has filed a lawsuit in the District Court of Oklahoma County in an effort to collect this past due account. Case no. CJ-96-57-63. A default judgement has been received. (2) PSEC filed a claim in Small Claims Court, however we did not get good service. No further action has been taken. (3) PSEC receives an average of $160 per month from oil revenues from this interest to apply to this account balance as well as the monthly operating expenses. We expect this account to ultimately be collected. 2a-71 72 SCHEDULE 4.18 Office Personnel - ---------------- R.L. Hilbun Roger A. Rose Vice President/Operations Vice President/Finance Date Hired: 11/1/81 Date Hired: 10/1/82 Mark C. Potts S. Janelle Miller Geologist Land Manager Date Hired: 1/1/92 Date Hired: 6/16/86 Saundra L. Johnson Dana Cowns Office Mgr. & Sec. to Pres. & Executive V.P. Revenue Accounting Date Hired: 4/1/81 Date Hired: 5/9/88 Joyce Guilliams Kathy Allen Operations Secretary Accts. Pay./Accts. Rec. Accounting Date Hired: 6/7/95 Date Hired: 2/16/83 Carol Babb Receptionist Date Hired: 12/1/90 - -------------------------------------------------------------------------------- Field Personnel - --------------- Phil Bly Don Guy Pumper - Wellston Field Prod. & Drilling Foreman - Springer Date Hired: 4/1/87 Date Hired: 5/1/88 Paul Stanfield Chris Stanfield Pumper - Featherston Field Pumper - Featherston Field Date Hired: 5/1/80 Date Hired: 6/15/92
2a-72 73 SCHEDULE 4.19 Employee Benefits Listed below are various benefits provided by PSEC for its employees. Some of these benefits are addressed more completely in PSEC's Company Policy. I. Medical Insurance PSEC has a contract with Blue Cross and Blue Shield of Oklahoma (PPO) to provide medical care to its employees at no charge to the employee. However, if the employee elects to have dependent coverage, the employee is responsible for a small portion of the premium. Because of the high deductible, PSEC assumes a portion of this deductible after certain requirements are met. Copy of this benefit summary is available upon request. (PSEC's cost = $2,678.40/month) II. Dental Insurance PSEC has a contract with Delta Dental to provide dental care to its employees at no charge to the employee. However, if the employee elects to have dependent coverage, the employee is responsible for a small portion of the premium. (PSEC's cost = $710.28/month) III. Life Insurance PSEC has a contract with Member Service Life to provide life insurance to its employees at no charge to the employee. This coverage ceases with the termination of employment. PSEC does not provide this coverage for dependents of employees. (PSEC's cost = $86.00/month) IV. Cafeteria Plan PSEC has a contract with The Summit Group to provide a medical cafeteria plan to employees who wish to enroll. Employees are responsible for a small administration fee for this service. V. Savings Plan PSEC has a contract with The Principal Financial Group to offer all eligible employees who meet the necessary requirements the option to participate in a 401(K) savings plan. PSEC matches 50% of savings contributions, up to 6% of employee's salary. Summary of this plan is available upon request. (PSEC's cost currently $925.76/month, but can fluctuate) VI. Bonus Plan PSEC has established a bonus plan for its eligible employees. Copy of PSEC's Bonus Plan is available upon request. VII. Parking Benefits PSEC provides monthly covered parking at no cost to its employees. VIII. Overtime PSEC employees are required to work 37.5 hours per week. However, overtime rate does not become effective until the employee has worked a total of 40 hours per week. IX. Vacations Employees start earning vacation after six months of continuous employment. Further details regarding vacations are addressed in PSEC's Company Policy. Copy of Company Policy is available upon request. X. Other Other benefits such as pay during authorized absences and holidays are addressed in PSEC's Company Policy. Copy of Company Policy is available upon request. 2a-73 74 Schedule 4.21 Insurance Company: Chubb Group - Federal Insurance Company
Effective Expiration Type Policy # Date Date Limits Commercial General Liability 37103734 8/17/96 8/17/97 $2,000,000 Automobile Liability 73167475 8/17/96 8/17/97 $1,000,000 Excess Liability 79073868 8/17/96 8/17/97 $2,000,000 Pollution 73192892 8/17/96 8/17/97 $1,000,000
2a-74 75 Schedule 4.22 INVESTMENTS PSPC, Ltd. -- Merrill Lynch Acct. #84H 07A23 Select Ten 96A Dow Equity Income Fund Merrill Lynch Acct. #753672 Institutional Intermediate Bond Fund Note-These securities were sold in October & November 1996. A portion of the proceeds were deposited in a Merrill Lynch Ready Asset Trust, acct. #063-84H-07A23-9. PSEC, Inc. -- Bancfirst Certificate of Deposit #4007004142 Note-Redeemed and deposited in the PSEC Operating Acct. in 12/96 BANK ACCOUNTS PSEC, Inc. Bancfirst, OKC, OK Operating Account $0400504448 Bancfirst, OKC, OK Revenue Distribution Account #0400504421 Liberty Bank, OKC, OK Payroll Account #0157236 PSPC, Ltd. Bank of Oklahoma, OKC, OK Account #000109520 Sycamore Gas System Bank of Oklahoma, OKC, OK Account #000109509 Authorized signers on all bank accounts are: Ray H. Potts Robert L. Stephenson Roger A. Rose Safe Deposit Boxes PSEC, Inc. Liberty Bank, OKC, OK box #4594C 2a-75 76 Schedule 8.5 GAS IMBALANCES
Statement Well Name Over/(Under) - MCF Date - --------- ------------------ ----- HDS 1-24 (H & C) (1,579) 8/96
2a-76 EX-5 3 OPINION AND CONSENT OF GABLE GOTWALS MOCK SCHWABE 1 EXHIBIT 5 [GABLE GOTWALS MOCK SCHWABE KIHLE GABERINO LETTERHEAD] April 24, 1997 ONEOK Inc. 100 West Fifth Street Tulsa, OK 74103 Re: Form S-3, Registration Statement Under the Securities Act of 1933, relating to 334,252 shares of Common Stock, Without Par Value of ONEOK Inc. Gentlemen: We are retained as regular counsel for ONEOK Inc., a Delaware corporation (hereinafter called the "Company") which will file with the Securities and Exchange Commission under the Securities Act of 1933, as amended, a Registration Statement on Form S-3 (including a Prospectus) relating to the registration of three hundred thirty-four thousand, two hundred fifty- two (334,252) presently outstanding shares of the common stock of the Company (the "Common Stock") held by certain stockholders of the Company ("Selling Stockholders"), as more fully described in the Prospectus. We have examined (a) the above-mentioned Registration Statement which is being filed with the Securities and Exchange Commission; (b) the Third Restated Certificate of Incorporation and the By-laws, as amended, of the Company; (c) the corporate actions taken by the Board of Directors of the Company in connec- tion with the issuance of the Common Stock; and (d) other documents as we have considered relevant to the matters covered by this opinion. In connection with the foregoing, we wish to advise you as follows: 5-1 2 ONEOK Inc. (Date) Page 2 1. The Company is a corporation validly organized and existing under the laws of the State of Delaware and is duly qualified to do business as a foreign corporation in the State of Oklahoma. 2. The filing of the above-mentioned Registration Statement has been duly authorized by the proper corporate action on the part of the Company. 3. The Common Stock when sold by the Selling Shareholders will be legally issued, fully paid and non-assessable in the hands of the owners thereof. We hereby consent to: 1. Being named in the above-mentioned Form S-3 Registration Statement and the Prospectus which is being made a part thereof, and in any amendments thereto, under the caption "Experts," and "Legality," as counsel for the Company, passing upon legal matters in connection with the Common Stock and having reviewed the matters of law and legal conclusions under "Description of Common Stock" contained in said Prospectus which are included therein under our authority as experts. 2. The filing of this opinion as an exhibit to the above-mentioned Form S-3 Registration Statement. Very truly yours, GABLE GOTWALS MOCK SCHWABE KIHLE GABERINO By /s/ DONALD A. KIHLE ----------------------------------- Donald A. Kihle DAK:bb 5-2 EX-23.(A) 4 CONSENT OF KPMG PEAT MARWICK LLP 1 EXHIBIT 23(a) The Board of Directors ONEOK Inc. We consent to the use of our report incorporated herein by reference and to the reference to our firm under the heading "Experts" in the Prospectus. Our report refers to the adoption of Statement of Financial Accounting Standards No. 121, Accounting for the Impairment of Long-lived Assets and Long-lived Assets to be Disposed Of in 1996. KPMG Peat Marwick LLP Tulsa, Oklahoma July 28, 1997 23a-1 EX-23.(B) 5 CONSENT OF GABLE GOTWALS MOCK SCHWABE 1 EXHIBIT 23(b) [GABLE GOTWALS MOCK SCHWABE KIHLE GABERINO LETTERHEAD] April 24, 1997 ONEOK Inc. 100 West Fifth Street Tulsa, OK 74103 Re: Form S-3, Registration Statement Under the Securities Act of 1933, relating to 334,252 shares of Common Stock, Without Par Value of ONEOK Inc. Gentlemen: We are retained as regular counsel for ONEOK Inc., a Delaware corporation (hereinafter called the "Company") which will file with the Securities and Exchange Commission under the Securities Act of 1933, as amended, a Registration Statement on Form S-3 (including a Prospectus) relating to the registration of three hundred thirty-four thousand, two hundred fifty- two (334,252) presently outstanding shares of the common stock of the Company (the "Common Stock") held by certain stockholders of the Company ("Selling Stockholders"), as more fully described in the Prospectus. We have examined (a) the above-mentioned Registration Statement which is being filed with the Securities and Exchange Commission; (b) the Third Restated Certificate of Incorporation and the By-laws, as amended, of the Company; (c) the corporate actions taken by the Board of Directors of the Company in connec- tion with the issuance of the Common Stock; and (d) other documents as we have considered relevant to the matters covered by this opinion. In connection with the foregoing, we wish to advise you as follows: 23b-1 2 ONEOK Inc. (Date) Page 2 1. The Company is a corporation validly organized and existing under the laws of the State of Delaware and is duly qualified to do business as a foreign corporation in the State of Oklahoma. 2. The filing of the above-mentioned Registration Statement has been duly authorized by the proper corporate action on the part of the Company. 3. The Common Stock when sold by the Selling Shareholders will be legally issued, fully paid and non-assessable in the hands of the owners thereof. We hereby consent to: 1. Being named in the above-mentioned Form S-3 Registration Statement and the Prospectus which is being made a part thereof, and in any amendments thereto, under the caption "Experts," and "Legality," as counsel for the Company, passing upon legal matters in connection with the Common Stock and having reviewed the matters of law and legal conclusions under "Description of Common Stock" contained in said Prospectus which are included therein under our authority as experts. 2. The filing of this opinion as an exhibit to the above-mentioned Form S-3 Registration Statement. Very truly yours, GABLE GOTWALS MOCK SCHWABE KIHLE GABERINO By /s/ DONALD A. KIHLE ----------------------------------- Donald A. Kihle DAK:bb 23b-2 -----END PRIVACY-ENHANCED MESSAGE-----