EXHIBIT 1.3
EXECUTION COPY
ONEOK, INC.
14,000,000 Equity Units
(Initially Consisting of 14,000,000 Corporate Units)
8.50% Equity Units
UNDERWRITING AGREEMENT
January 23, 2003
UBS WARBURG LLC
BANC OF AMERICA SECURITIES LLC
J.P. MORGAN SECURITIES INC.
as Representatives of the Several
Underwriters Named in Schedule I hereto
c/o UBS WARBURG LLC
299 Park Avenue
New York, New York 10171
c/o BANC OF AMERICA SECURITIES LLC
9 West 57th Street
New York, New York 10019
c/o J.P. MORGAN SECURITIES INC.
277 Park Avenue
New York, New York 10172
Ladies and Gentlemen:
ONEOK, Inc., an Oklahoma corporation (the "Company"), proposes to issue and
sell an aggregate of 14,000,000 of the Company's 8.50% Equity Units ("Initial
Units") to you and to the other underwriters named in Schedule I hereto
(collectively, the "Underwriters"), for whom you are acting as representatives
(collectively, the "Representatives"). The Initial Units will initially consist
of 14,000,000 aggregate units ("Corporate Units") with a stated amount per
Corporate Unit of $25.00 (the "Stated Amount"). The Company has also agreed to
grant to the Underwriters an option (the "Option") to purchase up to an
additional 2,100,000 Corporate Units (the "Option Units") on the terms and for
the purposes set forth in Section 1(b). The Initial Units, the Treasury Units
(as hereinafter defined) and the Option Units are hereinafter collectively
referred to as the "Units."
Each Corporate Unit will consist of (a) a stock purchase contract (a
"Purchase Contract") for the purchase of shares of the Company's common stock,
$0.01 par value per share (together with each associated preferred stock
purchase right under the Rights Agreement, dated as of November 26, 1997 (the
"Rights Agreement"), between the Company and Bank One, N.A.,
formerly known as Liberty Bank and Trust Company of Oklahoma, N.A., as Rights
Agent, the "Common Stock"), and (b) initially, a senior note due February 16,
2008 (a "Senior Note," which will be issued pursuant to an Indenture, dated as
of December 28, 2001, between the Company and SunTrust Bank, as trustee (the
"Indenture Trustee") (said Indenture, together with any amendments or
supplements thereto being hereinafter referred to as the "Indenture") and a
supplemental indenture establishing the terms of the Senior Notes to be dated on
or about January 28, 2003, in each case, with the material terms described in
the Prospectus (as hereinafter defined)). Holders of Corporate Units will be
entitled to substitute Treasury Securities (as hereinafter defined) for the
Senior Notes that comprise the Corporate Units (as so substituted, the "Treasury
Units"). Each Treasury Unit will consist of (a) a Purchase Contract and (b) a
2.5% undivided beneficial interest in zero-coupon U.S. Treasury securities
(CUSIP No. 912803AJ2), each in a principal amount equal to $1,000, payable on
February 15, 2006 (a "Treasury Security"). Under each Purchase Contract,
pursuant to the terms of a Purchase Contract Agreement, to be dated as of
January 28, 2003, between SunTrust Bank, as purchase contract agent,
attorney-in-fact and trustee for the holders of Units from time to time (in any
one or more of such capacities, the "Purchase Contract Agent"), and the Company
(the "Purchase Contract Agreement"), (i) the holder will purchase from the
Company on February 16, 2006 (the "Purchase Contract Settlement Date"), for an
amount of cash equal to the Stated Amount, a number of newly issued shares of
Common Stock determined as provided in the Purchase Contract Agreement and (ii)
the Company will pay to the holder quarterly contract adjustment payments
("Contract Adjustment Payments"), if any, at the rate of 4.5% of the Stated
Amount per annum until the Purchase Contract Settlement Date. The Company will
pay to the holder of (i) a Senior Note constituting a part of the Corporate
Units (A) interest quarterly at the initial annual rate of 4.0% of the Stated
Amount until the earlier of the date of settlement of a successful remarketing
of the Senior Notes or the Purchase Contract Settlement Date, after which the
Company will pay interest at the Reset Rate (as defined in the Remarketing
Agreement (as hereinafter defined)) and (B) quarterly Contract Adjustment
Payments on the Purchase Contract at the annual rate of 4.5% of the Stated
Amount through and including the Purchase Contract Settlement Date (except as
otherwise provided in the Purchase Contract Agreement), and (ii) a Treasury
Security constituting a part of the Treasury Units quarterly Contract Adjustment
Payments on the Purchase Contract at the annual rate of 4.5% of the Stated
Amount through and including the Purchase Contract Settlement Date (except as
otherwise provided in the Purchase Contract Agreement). In accordance with the
terms of the Purchase Contract Agreement, the Senior Notes or the Applicable
Ownership Interest (as defined in the Purchase Contract Agreement) in the
Treasury Portfolio (as defined in the Purchase Contract Agreement), as the case
may be, constituting a part of the Corporate Units and the Treasury Securities
constituting a part of the Treasury Units will be pledged by the Purchase
Contract Agent, on behalf of the holders of the Units, to SunTrust Bank, as
Collateral Agent pursuant to the Pledge Agreement, to be dated as of January 28,
2003 (the "Pledge Agreement"), by and among the Company, the Purchase Contract
Agent and SunTrust Bank, as collateral agent, custodial agent and securities
intermediary, to secure such holders' obligations to purchase Common Stock
pursuant to the Purchase Contracts. Under certain circumstances, the Senior
Notes will be subject to remarketing pursuant to a Remarketing Agreement, to be
dated as of January 28, 2003, by and among SunTrust Bank, the Company, UBS
Warburg LLC, Banc of America Securities LLC and J.P. Morgan Securities Inc. (the
"Remarketing Agreement").
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The term "Representatives" as used herein shall be deemed to mean the firms
or companies addressed hereby. If there are any Underwriters in addition to the
Representatives, you represent that you have been authorized by each of the
Underwriters to enter into this Underwriting Agreement (this "Agreement") on
their behalf and to act for them in the manner herein provided in all matters
relating to carrying out the provisions of this Agreement. All obligations of
the Underwriters hereunder are several and not joint.
The initial public offering price per unit for the Units and the purchase
price per unit for the Units to be paid by the several Underwriters shall be
agreed upon by the Company and the Representatives, acting on behalf of the
several Underwriters, and such agreement shall be set forth in a separate
written instrument substantially in the form of Exhibit A hereto (the "Price
Determination Agreement"). The Price Determination Agreement may take the form
of an exchange of any standard form of written telecommunication between the
Company and the Representatives and shall specify such applicable information as
is indicated in Exhibit A hereto. The offering of the Units will be governed by
this Agreement, as supplemented by the Price Determination Agreement. From and
after the date of the execution and delivery of the Price Determination
Agreement, this Agreement shall be deemed to incorporate, and, unless the
context otherwise indicates, all references contained herein to "this Agreement"
and to the phrase "herein" shall be deemed to include the Price Determination
Agreement.
The Company confirms as follows its agreements with the Representatives and
the several other Underwriters.
1. Agreement to Sell and Purchase.
(a) On the basis of the representations, warranties and agreements
of the Company herein contained and subject to all the terms and
conditions of this Agreement, the Company agrees to sell to each
Underwriter, and each Underwriter, severally and not jointly, agrees
to purchase from the Company at the purchase price per unit for the
Initial Units to be agreed upon by the Underwriters and the Company in
accordance with Section 1(d) or 1(e) hereof and set forth in the Price
Determination Agreement, the number of the Initial Units set forth
opposite the name of such Underwriter in Schedule I, plus such
additional number of Initial Units which such Underwriter may become
obligated to purchase pursuant to Section 10 hereof. If the Company
elects to rely on Rule 430A of the Rules and Regulations (as
hereinafter defined), Schedule I may be attached to the Price
Determination Agreement.
(b) Subject to all the terms and conditions of this Agreement, the
Company grants the Option to the Underwriters to purchase, severally
and not jointly, up to 2,100,000 Option Units from the Company at the
same price per share as the Underwriters will pay for the Initial
Units. The Option may be exercised only to cover over-allotments in
the sale of the Initial Units by the Underwriters and may be exercised
in whole or in part at any time (but not more than once) on or before
the 13th day after the date of this Agreement (or, if the Company has
elected to rely on Rule 430A, on or before the 13th day after the date
of the Price Determination Agreement), upon written or telegraphic
notice (the "Option Units
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Notice") by the Representatives to the Company no later than 12:00
noon, New York City time, at least two and no more than five business
days before the date specified for closing in the Option Unit Notice
(the "Option Closing Date") setting forth the aggregate number of
Option Units to be purchased and the time and date for such purchase.
On the Option Closing Date, the Company will issue and sell to the
Underwriters the number of Option Units set forth in the Option Units
Notice and each Underwriter will purchase such percentage of the
Option Units as is equal to the percentage of Initial Units that such
Underwriter is purchasing, as adjusted as the Representatives deem
advisable to avoid fractional shares.
(c) The Senior Notes or the Applicable Ownership Interest in the
Treasury Portfolio, as the case may be, and Treasury Securities
constituting a part of the Corporate Units and Treasury Units,
respectively, will be pledged to the Collateral Agent to secure
holders' obligations to purchase Common Stock under the Purchase
Contracts. Such pledge shall be effected by: (i) the delivery to the
Collateral Agent of the Senior Notes to be pledged in certificated
form endorsed in blank and (ii) the transfer to the Collateral Agent
of the Treasury Securities to be pledged, in each case in accordance
with the Pledge Agreement.
(d) If the Company has elected not to rely on Rule 430A of the Rules
and Regulations, the initial public offering price per unit for the
Initial Units and the purchase price per unit for the Initial Units to
be paid by the several Underwriters shall be agreed upon and set forth
in the Price Determination Agreement, which shall be dated as of the
date hereof, and an amendment to the Registration Statement (as
hereinafter defined) containing such per unit price information shall
be filed before the Registration Statement becomes effective.
(e) If the Company has elected to rely on Rule 430A of the Rules and
Regulations, the initial public offering price per unit for the
Initial Units and the purchase price per unit for the Initial Units to
be paid by the several Underwriters shall be agreed upon and set forth
in the Price Determination Agreement.
2. Delivery and Payment.
(a) Delivery of the Initial Units shall be made to the
Representatives for the accounts of the Underwriters against payment
of the purchase price by wire transfer in immediately available funds
to an account designated in writing and against delivery to the
Collateral Agent of the Senior Notes constituting a part of the
Corporate Units by the Company to the Representatives. Such payment
shall be made at 10:00 a.m., New York City time, on the third business
day after the date on which the first bona fide offering of the
Initial Units to the public is made by the Underwriters or at such
time on such other date, not later than ten business days after such
first offering date, as may be agreed upon by the Company and the
Representatives (such date is hereinafter referred to as the "Closing
Date"). Delivery of the Initial Units shall be made through the
facilities of The Depository Trust Company unless the Representatives
shall otherwise instruct.
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(b) To the extent the Option is exercised, delivery of the Option
Units against payment by the Underwriters (in the manner specified
above) will take place in the manner specified above for the Closing
Date on the Option Closing Date.
(c) Certificates evidencing the Corporate Units shall be in
definitive form and shall be registered in such names and in such
denominations as the Representatives shall request at least two
business days prior to the Closing Date or the Option Closing Date, as
the case may be, by written notice to the Company. For the purpose of
expediting the checking and packaging of certificates for the
Corporate Units, the Company agrees to make such certificates
available for inspection at least 24 hours prior to the Closing Date
or the Option Closing Date, as the case may be.
(d) The cost of original issue tax stamps, if any, in connection
with the issuance and delivery of the Initial Units and Option Units
by the Company to the Underwriters shall be borne by the Company. The
Company will pay and save each Underwriter and any subsequent holder
of the Units harmless from any and all liabilities with respect to or
resulting from any failure or delay in paying federal and state stamp
and other transfer taxes, if any, which may be payable or determined
to be payable in connection with the original issuance or sale to such
Underwriter of the Initial Units and Option Units.
(e) Not later than 12:00 p.m. on the second business day following
the date the Initial Units are first released by the Underwriters for
sale to the public, the Company shall deliver or cause to be
delivered, copies of the Prospectus (as hereinafter defined) in such
quantities and at such places as the Representatives shall request.
3. Representations and Warranties of the Company. The Company represents,
warrants and covenants to each Underwriter that:
(a) The Company meets the requirements for use of Form S-3 and a
registration statement (Registration No. 333-102105) on Form S-3, as
amended, relating to the Units, including a preliminary prospectus and
such amendments to such registration statement as may have been
required to the date of this Agreement, has been prepared by the
Company under the provisions of the Securities Act of 1933 (the
"Act"), and the rules and regulations (collectively referred to as the
"Rules and Regulations") of the Securities and Exchange Commission
(the "Commission") thereunder, and has been filed with the Commission.
The term "preliminary prospectus" as used herein means a preliminary
prospectus as contemplated by Rule 430 or Rule 430A ("Rule 430A") of
the Rules and Regulations included at any time as part of the
registration statement. Copies of such registration statement and
amendments and of each related preliminary prospectus have been
delivered to each Underwriter. The term "Registration Statement" means
the registration statement described above, as amended at the time it
became effective (the "Effective Date"), including financial
statements and all exhibits and any information deemed to be included
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by Rule 430A or Rule 434 of the Rules and Regulations. If the Company
files a registration statement to register a portion of the Units and
relies on Rule 462(b) of the Rules and Regulations for such
registration statement to become effective upon filing with the
Commission (the "Rule 462 Registration Statement"), then any reference
to the "Registration Statement" shall be deemed to include the Rule
462 Registration Statement, as amended from time to time. The Company
will file with the Commission a prospectus supplement (the "Prospectus
Supplement") relating to the Units pursuant to Rule 424 or Rule 434
under the Act. The term "Prospectus" means the form of final
prospectus included in the Registration Statement at the Effective
Date, as amended and supplemented prior to the date of this Agreement
and as supplemented by the Prospectus Supplement, and shall be deemed
to include the "electronic Prospectus" provided for use in connection
with the offering of the Units as contemplated by Section 4(l) of this
Agreement. Any reference herein to the Registration Statement, any
preliminary prospectus or the Prospectus shall be deemed to refer to
and include (i) the documents incorporated by reference therein
pursuant to Item 12 of Form S-3 that were filed under the Securities
Exchange Act of 1934 (the "Exchange Act"), on or before the Effective
Date or the date of such preliminary prospectus or the Prospectus, as
the case may be, and (ii) any copy thereof filed with the Commission
pursuant to its Electronic Data Gathering, Analysis and Retrieval
System ("EDGAR"). Any reference herein to the terms "amend,"
"amendment" or "supplement" with respect to the Registration
Statement, any preliminary prospectus or the Prospectus shall be
deemed to refer to and include the filing of any document under the
Exchange Act after the Effective Date, or the date of any preliminary
prospectus or the Prospectus, as the case may be, and deemed to be
incorporated therein by reference.
(b) The Company has not received, and has no notice of, any order of
the Commission preventing or suspending the use of any preliminary
prospectus, or instituting proceedings for that purpose. Each
preliminary prospectus and the Prospectus when filed complied in all
material respects with the Act and, if filed by electronic
transmission pursuant to EDGAR (except as may be permitted by
Regulation S-T under the Act), was identical to the copy thereof
delivered to the Underwriters for use in connection with the offer and
sale of the Corporate Units. On the Effective Date, the date the
Prospectus is first filed with the Commission pursuant to Rule 424(b)
of the Rules and Regulations, at all times subsequent to and including
the Closing Date and when any post-effective amendment to the
Registration Statement becomes effective or any amendment or
supplement to the Prospectus is filed with the Commission, the
Registration Statement, the Prospectus (as amended or as supplemented
if the Company shall have filed with the Commission any amendment or
supplement thereto), including the financial statements included or
incorporated by reference in the Prospectus, and the Indenture and the
Purchase Contract Agreement, did or will comply with all applicable
provisions of the Act, the Rules and Regulations, the Exchange Act,
the rules and regulations thereunder (the "Exchange Act Rules and
Regulations"), the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act"), and the rules and regulations thereunder (the "Trust
Indenture Act Rules and
6
Regulations") and will contain all statements required to be stated
therein in accordance with the Act, the Exchange Act, the Trust
Indenture Act, the Rules and Regulations, the Exchange Act Rules and
Regulations and the Trust Indenture Act Rules and Regulations. On the
Effective Date and when any post-effective amendment to the
Registration Statement becomes effective, no part of the Registration
Statement or any such amendment did or will contain any untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary in order to make the statements
therein not misleading. At the Effective Date, the date the Prospectus
or any amendment or supplement to the Prospectus is filed with the
Commission and at the Closing Date and, if later, the Option Closing
Date, the Prospectus did not and will not contain any untrue statement
of a material fact or omit to state a material fact necessary to make
the statements therein, in the light of the circumstances under which
they were made, not misleading. The foregoing representations and
warranties in this Section 3(b) do not apply to any statements or
omissions made in reliance on and in conformity with information
relating to any Underwriter furnished in writing to the Company by the
Representatives specifically for inclusion in the Registration
Statement or Prospectus or any amendment or supplement thereto. For
all purposes of this Agreement, the amounts of the selling concession
and reallowance set forth in the Prospectus constitute the only
information relating to any Underwriter furnished in writing to the
Company by the Representatives specifically for inclusion in the
Registration Statement or the Prospectus. The Company has not
distributed any offering material in connection with the offering or
sale of the Units other than the Registration Statement, the
preliminary prospectus, the Prospectus or any other materials, if any,
permitted by the Act.
(c) The documents that are incorporated by reference in the
Prospectus or from which information is so incorporated by reference,
when they became effective or were filed with the Commission, as the
case may be, complied in all material respects with the requirements
of the Act, the Exchange Act, the Trust Indenture Act, as applicable,
the Rules and Regulations, the Exchange Act Rules and Regulations and
the Trust Indenture Act Rules and Regulations; and any documents so
filed and incorporated by reference subsequent to the date hereof
shall, when they are filed with the Commission, conform in all
material respects with the requirements of the Act, the Exchange Act
and the Trust Indenture Act, as applicable, the Rules and Regulations,
the Exchange Act Rules and Regulations and the Trust Indenture Act
Rules and Regulations.
(d) The only subsidiaries (as defined in the Rules and Regulations)
of the Company are the subsidiaries named on Schedule II hereto (the
"Subsidiaries"). The Company and each of its Subsidiaries is, and at
the Closing Date will be, a corporation, limited liability company,
general partnership or limited partnership duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation or organization. The Company and each of its
Subsidiaries have, and at the Closing Date will have, full power and
authority to conduct all the activities conducted by it, to own or
lease all the assets owned or leased by it and to conduct its business
as described in the Registration Statement
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and the Prospectus. The Company and each of its Subsidiaries is, and
at the Closing Date will be, duly licensed or qualified to do business
and in good standing as a foreign corporation, limited liability
company, general partnership or limited partnership in all
jurisdictions in which the nature of the activities conducted by it or
the character of the assets owned or leased by it makes such licensing
or qualification necessary, except to the extent that the failure to
so qualify or be in good standing would not have a material adverse
effect on the condition (financial or otherwise), earnings, cash flow,
business affairs or business prospects of the Company and its
Subsidiaries, considered as one enterprise (a "Material Adverse
Effect"). Except as set forth on Schedule II hereto, all of the
outstanding shares of capital stock, capital interests or partnership
interests of the Subsidiaries have been duly authorized and validly
issued and, as to capital stock, are fully paid and non-assessable,
and are owned by the Company free and clear of all security interests,
liens, encumbrances and claims whatsoever. Except for (i) the stock of
or interests in the Subsidiaries disclosed on Schedule II hereto and
(ii) as disclosed in the Registration Statement and the Prospectus,
the Company does not own, and at the Closing Date will not own,
directly or indirectly, any shares of stock or any other equity or
long-term debt securities of any corporation or have any equity
interest in any firm, partnership, joint venture, association or other
entity. Complete and correct copies of the certificate of
incorporation and of the by-laws or other organizational documents of
the Company and each of its significant subsidiaries (as defined in
Rule 1-02(w) of Regulation S-X of the Rules and Regulations) and all
amendments thereto have been delivered to the Underwriters, and no
changes therein will be made subsequent to the date hereof and prior
to the Closing Date or, if later, the Option Closing Date, except that
the Company may file a Certificate of Designations with the Secretary
of State of the State of Oklahoma related to the Series D Convertible
Preferred Stock of the Company as contemplated by the Transaction
Agreement, dated as of January 9, 2003 (the "Transaction Agreement"),
among the Company, Westar Energy, Inc., a Kansas corporation, and
Westar Industries, Inc., a Delaware corporation.
(e) None of the Subsidiaries is currently prohibited, directly or
indirectly, from paying any dividends to the Company, from making any
other distribution on such Subsidiary's capital stock, from repaying
to the Company any loans or advances to such Subsidiary from the
Company or from transferring any of such Subsidiary's property or
assets to the Company or any other Subsidiary, except as described or
contemplated by the Registration Statement and the Prospectus.
(f) The Corporate Units, including the Senior Notes, have been duly
authorized, executed and delivered by the Company; the Corporate
Units, when issued against payment therefor as contemplated by this
Agreement, will be entitled to the benefits of the Purchase Contract
Agreement; the Senior Notes, when authenticated by the Trustee and
issued against payment therefor as contemplated by this Agreement,
will be entitled to the benefits of the Indenture; and the Corporate
Units and the Senior Notes (when so issued) are legal, valid and
binding obligations of the Company, enforceable against the Company in
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accordance with their respective terms, subject to the effect of
bankruptcy, insolvency, reorganization, receivership, moratorium and
other laws affecting the rights and remedies of creditors generally
and general equitable principles; provided, however, that upon the
occurrence of a Termination Event (as defined in the Purchase Contract
Agreement), the Bankruptcy Code (11 U.S.C. (SS) 101-1330, as amended)
should not substantively limit the provisions of Sections 3.15 and
5.06 of the Purchase Contract Agreement or Section 4.04 of the Pledge
Agreement that require termination of the Purchase Contracts and
release of the Collateral Agent's security interest in (a) the Senior
Notes, (b) the Treasury Securities or (c) the applicable ownership
interest of the Treasury Portfolio, as applicable, and the transfer of
such securities to the Purchase Contract Agent, for benefit of the
holders of the Units; provided further, however, the Company makes no
representation as to whether a court exercising bankruptcy
jurisdiction might issue a temporary restraining order or provide
other interim relief that would delay the exercise of such termination
right for a period of time pending final adjudication of any challenge
to the exercise of such right during a bankruptcy case involving the
Company.
(g) The outstanding shares of Common Stock have been duly
authorized, validly issued, fully paid and nonassessable and will not
be subject to any preemptive or similar right. The shares of Common
Stock issuable pursuant to the Purchase Contracts have been duly
authorized and, when issued and paid for in accordance with the terms
of the Purchase Contracts, will be validly issued, fully paid and
nonassessable and will not be subject to any preemptive or similar
right. The description of the Units in the Registration Statement and
the Prospectus, including the Purchase Contract Agreement, the
Purchase Contracts, the Pledge Agreement, the Remarketing Agreement
and the Senior Notes, is, and at the Closing Date and the Option
Closing Date, as applicable, will be, complete and accurate in all
respects. Except (i) as set forth in the Registration Statement and
the Prospectus and (ii) with respect to (A) stock options or other
employee and director compensation arrangements pursuant to the terms
of a plan in effect on the date of this Agreement or (B) direct stock
purchase or dividend investment plans in place on the date of this
Agreement, the Company does not have outstanding, and at the Closing
Date and the Option Closing Date, as applicable, will not have
outstanding, any options to purchase, or any rights or warrants to
subscribe for, or any securities or obligations convertible into, or
any contracts or commitments to issue or sell, any shares of Common
Stock, any shares of capital stock of any Subsidiary or any such
warrants, convertible securities or obligations.
(h) The financial statements and schedules included or incorporated
by reference in the Registration Statement or the Prospectus, and any
amendment or supplement thereto, present fairly the consolidated
financial condition of the Company, as of the date thereof and the
consolidated results of operations and cash flows of the Company for
the period covered thereby, in conformity with generally accepted
accounting principles applied on a consistent basis throughout the
entire period involved. KPMG LLP (the "Accountant"), the accounting
firm that has certified the financial statements and schedules
included or incorporated by reference in the Registration Statement or
the Prospectus, and any amendment or supplement thereto, is an
independent public accounting firm within the meaning of the Act and
the Rules and Regulations and the Accountant is not in violation of
the auditor independence requirements of Section 201 of the
Sarbanes-Oxley Act of 2002 (the "Sarbanes-Oxley Act") with respect to
the Company. There are no pro forma financial statements or other pro
forma financial information required to be included or incorporated by
reference in the Registration Statement or the Prospectus. No other
financial statements or schedules of the Company are required by the
Act, the Exchange Act or the Rules and Regulations to be included or
incorporated by reference in the Registration Statement or the
Prospectus. The financial data set forth in the Prospectus under the
captions "Summary -- Summary Consolidated Financial Data" and
"Capitalization" fairly present the information set forth therein on a
basis
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consistent with that of the audited financial statements incorporated
by reference in the Registration Statement. The Company's ratios of
earnings to fixed charges and earnings to combined fixed charges and
preferred stock dividend requirements set forth in the Prospectus
under the captions "Summary -- Summary Consolidated Financial Data,"
"Ratio of Earnings to Fixed Charges" and "Ratio of Earnings to
Combined Fixed Charges and Preferred Stock Dividend Requirements" and
in Exhibits 12.1 and 12.2 to the Registration Statement have been
calculated in compliance with Item 503(d) of Regulation S-K under the
Act.
(i) The books, records and accounts of the Company and its
Subsidiaries accurately and fairly reflect, in reasonable detail, the
transactions in and dispositions of the assets of the Company and its
Subsidiaries. The Company and each of its Subsidiaries maintain an
adequate internal control structure, procedures for financial
reporting and a system of internal accounting control sufficient to
provide reasonable assurance that (i) transactions are executed in
accordance with management's general or specific authorization; (ii)
transactions are recorded as necessary to permit the preparation of
the Company's consolidated financial statements in conformity with
generally accepted accounting principles and to maintain
accountability for the assets of the Company and its Subsidiaries;
(iii) access to the assets of the Company and its Subsidiaries is
permitted only in accordance with management's general or specific
authorization; and (iv) the recorded accounts of the assets of the
Company and its Subsidiaries is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to
any differences.
(j) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus and prior to
the Closing Date and the Option Closing Date, as applicable, except as
set forth in or contemplated by the Registration Statement and the
Prospectus, (i) there has not been and will not have been any material
change in the capitalization of the Company, or in the business,
properties, business prospects, condition (financial or otherwise) or
results of operations of the Company and its Subsidiaries arising for
any reason whatsoever, (ii) neither the Company nor any of its
Subsidiaries has incurred nor will it incur any material liabilities
or obligations, direct or contingent nor has it entered into nor will
it enter into any material transactions other than pursuant to this
Agreement and the transactions referred to herein and (iii) the
Company has not and will not have paid or declared any dividends or
other distributions of any kind on any class of its capital stock,
other than the ordinary quarterly dividend paid or payable by the
Company to holders of the Common Stock and preferred stock consistent
with past practices.
(k) The Company is not an "investment company" or a company
"controlled by" or an "affiliated person" of, or "promoter" or
"principal underwriter" for, an "investment company," as such terms
are defined in the Investment Company Act of 1940, as amended (the
"Investment Company Act"). After receipt of the payment for the
Corporate Units, the Company will not be an "investment company"
within the meaning of the Investment Company Act and will conduct
10
its business in a manner so that it will not become subject to the
Investment Company Act.
(l) Except as set forth in the Registration Statement and the
Prospectus, there are no actions, suits or proceedings pending or
threatened against or affecting the Company or any of its Subsidiaries
or any of their respective directors or officers in their capacity as
such, before or by any federal or state court, commission, regulatory
body, administrative agency or other governmental body, domestic or
foreign, wherein an unfavorable ruling, decision or finding would have
a Material Adverse Effect.
(m) The Company and each of its Subsidiaries has, and at the Closing
Date and the Option Closing Date, as applicable, will have, (i) all
governmental licenses, permits, consents, orders, approvals and other
authorizations (collectively, "Governmental Licenses") necessary to
carry on its business as contemplated in the Prospectus, except for
the Governmental Licenses the absence of which would not have a
Material Adverse Effect, (ii) complied in all material respects with
all laws, regulations and orders applicable to it or its business,
including the Sarbanes-Oxley Act, other than noncompliance that would
not, individually or in the aggregate, result in a Material Adverse
Effect, and (iii) performed all its obligations required to be
performed by it, and is not, and at the Closing Date and the Option
Closing Date, as applicable, will not be, in default, under any
indenture, mortgage, deed of trust, voting trust agreement, loan
agreement, bond, debenture, note agreement, lease, contract or other
agreement or instrument (collectively, a "contract or other
agreement") to which it is a party or by which its property is bound
or affected, other than defaults that would not, individually or in
the aggregate, result in a Material Adverse Effect. To the knowledge
of the Company and each of its Subsidiaries, except as described in
the Registration Statement and the Prospectus, no other party under
any material contract or other agreement to which it is a party is in
material default in any respect thereunder. Neither the Company nor
any of its Subsidiaries is, nor at the Closing Date or the Option
Closing Date, as applicable, will any of them be, in violation of any
provision of its certificate of incorporation, by-laws or other
organizational documents.
(n) No consent, approval, authorization or order of, or any filing
or declaration with, any court or governmental agency or body is
required in connection with the authorization, issuance, transfer,
sale or delivery of the Units by the Company, in connection with the
execution, delivery and performance of this Agreement by the Company
or in connection with the taking by the Company of any action
contemplated hereby, except such (i) as have been obtained under the
Act or the Rules and Regulations, (ii) as may be required under state
securities or Blue Sky laws or the by-laws and rules of the National
Association of Securities Dealers, Inc. (the "NASD") in connection
with the purchase and distribution by the Underwriters of the
Corporate Units and (iii) that the failure to obtain would not result
in a Material Adverse Effect.
11
(o) The Company has full corporate power and authority to enter into
this Agreement and the Transaction Agreement and to perform its
obligations under this Agreement, the Transaction Agreement, the
Purchase Contract Agreement, the Pledge Agreement and the Remarketing
Agreement. This Agreement, the Transaction Agreement, the Purchase
Contract Agreement, the Purchase Contracts, the Pledge Agreement, the
Remarketing Agreement and the Indenture have been duly authorized,
executed and delivered by the Company and constitute legal, valid and
binding obligations of the Company, enforceable against the Company in
accordance with the terms hereof and thereof, subject to the effect of
bankruptcy, insolvency, reorganization, receivership, moratorium and
other laws affecting the rights and remedies of creditors generally
and general equitable principles and subject to any principles of
public policy limiting the rights to enforce any indemnification
provisions contained herein and therein; provided, however, that upon
the occurrence of a Termination Event (as defined in the Purchase
Contract Agreement), the Bankruptcy Code (11 U.S.C. (SS) 101-1330, as
amended) should not substantively limit the provisions of Sections
3.15 and 5.06 of the Purchase Contract Agreement or Section 4.04 of
the Pledge Agreement that require termination of the Purchase
Contracts and release of the Collateral Agent's security interest in
(a) the Senior Notes, (b) the Treasury Securities or (c) the
applicable ownership interest of the Treasury Portfolio, as
applicable, and the transfer of such securities to the Purchase
Contract Agent, for benefit of the holders of the Units; provided
further, however, the Company makes no representation as to whether a
court exercising bankruptcy jurisdiction might issue a temporary
restraining order or provide other interim relief that would delay the
exercise of such termination right for a period of time pending final
adjudication of any challenge to the exercise of such right during a
bankruptcy case involving the Company. The performance of this
Agreement, the Transaction Agreement, the Purchase Contract Agreement,
the Purchase Contracts, the Pledge Agreement, the Remarketing
Agreement, the Indenture and the Corporate Units, including the Senior
Notes, and the consummation of the transactions contemplated hereby
and thereby and the application of the net proceeds from the offering
and sale of the Corporate Units in the manner set forth in the
Prospectus under "Use of Proceeds" will not result in the creation or
imposition of any lien, charge or encumbrance upon any of the assets
of the Company or any of its Subsidiaries pursuant to the terms or
provisions of, or result in a breach or violation of any of the terms
or provisions of, or constitute a default under, or give any other
party a right to terminate any of its obligations under, or result in
the acceleration of any obligation under, the certificate of
incorporation or by-laws of the Company or any of its Subsidiaries,
any material contract or other agreement to which the Company or any
of its Subsidiaries is a party or by which the Company or any of its
Subsidiaries or any of its properties is bound or affected, or violate
or conflict with any judgment, ruling, decree, order, statute, rule or
regulation of any court or governmental agency or body applicable to
the business or properties of the Company or any of its Subsidiaries.
(p) The Company and each of its Subsidiaries has good and valid
title to all properties and assets described in the Prospectus as
owned by it, free and clear of all liens, charges, encumbrances or
restrictions, except such as are described in the Prospectus or would
not have a Material Adverse Effect. The Company and each of its
Subsidiaries have valid, subsisting and enforceable leases for the
properties described in the Prospectus as leased by it, with such
exceptions as are not material and do not materially interfere with
the use made and proposed to be made of such properties by the Company
and such Subsidiaries.
(q) All legal or governmental proceedings, affiliate transactions,
contracts, licenses, agreements, leases or documents of a character
required to be described in the Registration Statement or the
Prospectus or to be filed as an exhibit to the Registration Statement
have been so described or filed as required. All such contracts to
which the Company or any Subsidiary is a party have been duly
authorized, executed and delivered by the Company or such Subsidiary,
constitute
12
valid and binding agreements of the Company or such Subsidiary and are
enforceable against the Company or such Subsidiary in accordance with
the terms thereof, subject to the effect of bankruptcy, insolvency,
reorganization, receivership, moratorium and other laws affecting the
rights and remedies of creditors generally and general equitable
principles and subject to any principles of public policy limiting the
rights to enforce any indemnification provisions contained herein and
therein; provided, however, that upon the occurrence of a Termination
Event (as defined in the Purchase Contract Agreement), the Bankruptcy
Code (11 U.S.C. (SS) 101-1330, as amended) should not substantively
limit the provisions of Sections 3.15 and 5.06 of the Purchase
Contract Agreement or Section 4.04 of the Pledge Agreement that
require termination of the Purchase Contracts and release of the
Collateral Agent's security interest in (a) the Senior Notes, (b) the
Treasury Securities or (c) the applicable ownership interest of the
Treasury Portfolio, as applicable, and the transfer of such securities
to the Purchase Contract Agent, for benefit of the holders of the
Units; provided further, however, the Company makes no representation
as to whether a court exercising bankruptcy jurisdiction might issue a
temporary restraining order or provide other interim relief that would
delay the exercise of such termination right for a period of time
pending final adjudication of any challenge to the exercise of such
right during a bankruptcy case involving the Company.
(r) No statement, representation, warranty or covenant made by the
Company in this Agreement or made in any certificate or document
required by this Agreement to be delivered to the Underwriters was or
will be, when made, inaccurate, untrue or incorrect in any material
respect. Any certificate signed by any officer of the Company and
delivered to the Underwriters or counsel for the Underwriters in
connection with the offering of the Corporate Units shall be deemed a
representation and warranty by the Company to the Underwriters as to
the matters covered thereby.
(s) Neither the Company nor any of its Subsidiaries or any of their
respective directors, officers, affiliates or controlling persons has
taken, directly or indirectly, any action designed, or that might
reasonably be expected, to cause or result, under the Exchange Act or
otherwise, in, or which has constituted, stabilization or manipulation
of the price of any security of the Company to facilitate the sale or
resale of the Units.
(t) No holder of securities of the Company has rights to the
registration of any securities of the Company because of the filing of
the Registration Statement or the consummation of the transactions
contemplated by this Agreement.
(u) The Corporate Units have been approved for listing on the
New York Stock Exchange, subject only to official notice of issuance.
(v) The Company and its Subsidiaries are in substantial compliance
with all federal, state and local employment and labor laws,
including, but not limited to, laws relating to non-discrimination in
hiring, promotion and pay of employees; no labor dispute with the
employees of the Company or any Subsidiary exists or, to the knowledge
of the Company, is imminent or threatened; and the Company is not
aware of any existing, imminent or threatened labor disturbance by the
employees of any of its principal suppliers, manufacturers or
contractors that could result in a Material Adverse Effect.
(w) The Company and its Subsidiaries own, or are licensed or
otherwise have the full exclusive right to use, all material
trademarks, service marks and trade names that are used in or
necessary for the conduct of their respective businesses as described
in the Prospectus, except for failures of ownership or use that would
not cause a Material Adverse Effect. To the knowledge of the Company,
no claims have been asserted by any person to the use of any such
trademarks or trade names or challenging or questioning the validity
or effectiveness of any such
13
trademark or trade name. The use, in connection with the business and
operations of the Company and its Subsidiaries of such trademarks and
trade names does not, to the Company's knowledge, infringe on the
rights of any person.
(x) Neither the Company nor any of its Subsidiaries nor, to the
Company's knowledge, any employee or agent of the Company or any
Subsidiary has made any payment of funds of the Company or any
Subsidiary or received or retained any funds in violation of any law,
rule or regulation or of a character required to be disclosed in the
Prospectus.
(y) All United States federal income tax returns of the Company and
its Subsidiaries required by law to be filed have been filed or
extensions have been granted, and all other franchise and income tax
returns of the Company and its Subsidiaries required to be filed
pursuant to applicable foreign, state or local law have been filed,
and all taxes shown by such returns or otherwise assessed, which are
due and payable, have been paid, except tax assessments, if any, as
are being contested in good faith and as to which adequate reserves
have been provided and taxes that are currently payable without
penalty or interest. The charges, accruals and reserves on the books
of the Company and its Subsidiaries in respect of any income and
corporate franchise tax liability for any years not finally determined
are adequate to meet any assessments or reassessments for additional
income or corporate franchise tax for any years not finally
determined.
(z) The Company and its Subsidiaries (i) are in compliance with any
and all applicable foreign, federal, state and local laws and
regulations relating to the protection of human health and safety, the
environment or imposing liability or standards of conduct concerning
any Hazardous Material (as hereinafter defined) ("Environmental
Laws"), (ii) have received all permits, licenses or other approvals
required of them under applicable Environmental Laws to conduct their
respective businesses and (iii) are in compliance with all terms and
conditions of any such permit, license or approval, except as set
forth in the Registration Statement and the Prospectus and except
where such noncompliance with Environmental Laws, failure to receive
required permits, licenses or other approvals or failure to comply
with the terms and conditions of such permits, licenses or approvals
would not, individually or in the aggregate result in a Material
Adverse Effect. The term "Hazardous Material" means (A) any "hazardous
substance" as defined by the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, (B) any "hazardous
waste" as defined by the Resource Conservation and Recovery Act, as
amended, (C) any petroleum or petroleum product, (D) any
polychlorinated biphenyl and (E) any pollutant or contaminant or
hazardous, dangerous, or toxic chemical, material, waste or substance
regulated under or within the meaning of any other Environmental Law.
(aa) In the ordinary course of its business, the Company conducts a
periodic review of the effect of Environmental Laws on the business,
operations and properties of the Company and its Subsidiaries, in the
course of which it identifies
14
and evaluates associated costs and liabilities (including, without
limitation, any capital or operating expenditures required for
clean-up, closure of properties or compliance with Environmental Laws
or any permit, license or approval, any related constraints on
operating activities and any potential liabilities to third parties).
Except as set forth in the Registration Statement and the Prospectus
there are no costs and liabilities associated with or arising in
connection with Environmental Laws as currently in effect (including,
without limitation, costs of compliance therewith) which would, singly
or in the aggregate have a Material Adverse Effect.
(bb) Except as disclosed in the Registration Statement and the
Prospectus, neither the Company nor any of its Subsidiaries has
received any written communication, whether from a governmental
authority, citizens' group, employee or otherwise, asserting that the
Company or any of its Subsidiaries or any other person or entity for
whom any of them is or may be liable is not in compliance with any
Environmental Laws or permit or authorization required under
applicable Environmental Laws where such failure to comply would have
a Material Adverse Effect, and, to the knowledge of the Company, there
are no circumstances that may prevent or interfere with such full
compliance in the future, except where failure so to comply would not
have a Material Adverse Effect.
(cc) The Company has obtained for the benefit of the Underwriters the
agreement (a "Lock-Up Agreement"), of each of the Company's directors
and executive officers. The Company will not release or purport to
release any person from any Lock-Up Agreement without the prior
written consent of the Representatives.
(dd) The Company and each of its Subsidiaries maintains insurance
covering its properties, operations, personnel and businesses as the
Company deems adequate. Such insurance insures against such losses and
risks to an extent which is adequate in accordance with customary
industry practice to protect the Company and its subsidiaries and
their businesses. All such insurance is outstanding and fully in force
on the date hereof and will be outstanding and fully in force on the
Closing Date and the Option Closing Date, as applicable. Neither the
Company nor any of its subsidiaries has sustained since the date of
the last financial statements included in the Prospectus any material
loss or interference with their respective business from fire,
explosion, flood or other calamity, whether or not covered by
insurance, or from any labor dispute or court or governmental action,
order or decree.
(ee) With respect to each employee benefit plan, program and
arrangement (including, without limitation, any "employee benefit
plan" as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")) maintained or contributed
to by the Company, or with respect to which the Company could incur
any liability under ERISA (collectively, the "Benefit Plans"), no
event has occurred and, to the knowledge of the Company,
15
there exists no condition or set of circumstances, in connection with
which the Company could be subject to any liability under the terms of
such Benefit Plan, applicable law (including, without limitation,
ERISA and the Internal Revenue Code of 1986, as amended) or any
applicable agreement, in any such case, that could have a Material
Adverse Effect.
(ff) The statements in the Prospectus under the captions "Summary --
Recent Developments," "Our Company -- Our Business Strategy," "Our
Company -- Our Business Segments" and "Transactions with Westar" (i)
are within the coverage of Rule 175(b) under the Act to the extent
such statements and data constitute forward-looking statements as
defined in Rule 175(c) and (ii) were made by the Company with a
reasonable basis and reflect the Company's good faith estimate of the
matters described therein.
(gg) There are no business relationships or related-party
transactions involving the Company or any of its Subsidiaries or any
other person required to be described in the Registration Statement or
the Prospectus that have not been described as required.
(hh) There are no outstanding loans (except for immaterial loans
related to appliance purchases pursuant to a discontinued program
under which no new loans have been made since the enactment of the
Sarbanes-Oxley Act), advances (except normal advances for business
expenses in the ordinary course of business) or guarantees of
indebtedness by the Company to or for the benefit of any of the
officers or directors of the Company or any of the members of any of
them.
(ii) Any statistical or market-related data included in the
Prospectus are based on or derived from sources that the Company
believes to be reliable and accurate, and the Company has obtained the
written consent to the use of such data from such sources to the
extent required.
(jj) The Company has not offered, or caused the Underwriters to
offer, Units to any person with the specific intent to influence
unlawfully (i) a customer or supplier of the Company or any of its
Subsidiaries to alter the customer's or supplier's level or type of
business with the Company or any of its Subsidiaries or (ii) a trade
journalist or publication to write or publish favorable information
about the Company or any of the subsidiaries or any of their
respective products or services.
(kk) There is no broker, finder or other party that is entitled to
receive from the Company any brokerage or finder's fee or other fee or
commission as a result of the transactions contemplated by this
Agreement.
(ll) The Company is in substantial compliance with the applicable
provisions of the Sarbanes-Oxley Act that are effective and is
actively taking steps to ensure that it will be in compliance with
other applicable provisions of the Sarbanes-Oxley Act upon the
effectiveness of such provisions.
16
4. Agreements of the Company. The Company agrees with each Underwriter as
follows:
(a) The Company will not, during such period as the Prospectus is
required by law to be delivered in connection with sales of the Units
by an Underwriter or a dealer (the "Prospectus Delivery Period"), file
any amendment or supplement to the Registration Statement or the
Prospectus, unless a copy thereof shall first have been submitted to
the Underwriters within a reasonable period of time prior to the
filing thereof and the Underwriters shall not have objected thereto in
good faith.
(b) The Company will notify the Underwriters promptly, and will
confirm such advice in writing, (i) when any post-effective amendment
to the Registration Statement becomes effective, (ii) of any request
by the Commission for amendments or supplements to the Registration
Statement or the Prospectus or for additional information, (iii) of
the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or the initiation of any
proceedings for that purpose or the threat thereof, (iv) of the
happening of any event during the period mentioned in the second
sentence of Section 4(e) that in the judgment of the Company makes any
statement made in the Registration Statement or the Prospectus untrue
or that requires the making of any changes in the Registration
Statement or the Prospectus in order to make the statements therein,
in light of the circumstances in which they are made, not misleading
and (v) of receipt by the Company or any representative or attorney of
the Company of any other communication from the Commission relating to
the Company, the Registration Statement, any preliminary prospectus or
the Prospectus. If at any time the Commission shall issue any order
suspending the effectiveness of the Registration Statement, the
Company will make every reasonable effort to obtain the withdrawal of
such order at the earliest possible moment. The Company will use its
best efforts to comply with the provisions of and make all requisite
filings with the Commission pursuant to Rule 430A and to notify the
Underwriters promptly of all such filings.
(c) The Company has furnished, or will furnish, to the Underwriters,
without charge, two conformed copies of the Registration Statement and
of any post-effective amendment thereto, including financial
statements and schedules, and all exhibits thereto (including any
document filed under the Exchange Act and deemed to be incorporated by
reference into the Prospectus).
(d) The Company will comply with all the provisions of any
undertakings contained in the Registration Statement.
(e) On the Effective Date, and thereafter from time to time, the
Company will deliver to the Representatives, without charge, as many
copies of the Prospectus or any amendment or supplement thereto as the
Representatives may reasonably request. The Company consents to the
use of the Prospectus or any amendment or supplement thereto by the
Underwriters and by all dealers to whom the Units may be sold, both in
connection with the offering or sale of the Units and during
17
the Prospectus Delivery Period. If, during the Prospectus Delivery
Period any event shall occur that in the judgment of the Company or
counsel to the Underwriters should be set forth in the Prospectus in
order to make any statement therein, in the light of the circumstances
under which it was made, not misleading, or if it is necessary to
supplement or amend the Prospectus to comply with law, the Company
will forthwith prepare and duly file with the Commission an
appropriate supplement or amendment thereto, and will deliver to the
Representatives, without charge, such number of copies thereof as the
Representatives may reasonably request. The Company shall not file any
document under the Exchange Act before the termination of the offering
of the Units by the Underwriters if such document would be deemed to
be incorporated by reference into the Prospectus and if such document
is not approved by the Representatives after reasonable notice
thereof.
(f) Prior to any public offering of the Units by the Underwriters,
the Company will cooperate with the Representatives and counsel to the
Underwriters in connection with the registration or qualification of
the Units for offer and sale under the securities or Blue Sky laws of
such jurisdictions as the Representatives may request; provided, that
in no event shall the Company be obligated to qualify to do business
in any jurisdiction where it is not now so qualified or to take any
action which would subject it to general service of process in any
jurisdiction where it is not now so subject.
(g) During the period of two years commencing on the date of the
Price Determination Agreement, the Company will furnish to the
Representatives copies of such financial statements and other periodic
and special reports as the Company may from time to time distribute
generally to the holders of any class of its capital stock, and will
furnish to the Representatives a copy of each annual or other report
it shall be required to file with the Commission.
(h) The Company will make generally available to holders of its
securities as soon as may be practicable but in no event later than
the last day of the 15th full calendar month following the calendar
quarter in which the "effective date of the Registration Statement"
(as defined in Rule 158 of the Rules and Regulations) falls, an
earnings statement (which need not be audited but shall be in
reasonable detail) for a period of 12 months ended commencing after
such "effective date of the Registration Statement" and satisfying the
provisions of Section 11(a) of the Act (including Rule 158 of the
Rules and Regulations).
(i) Whether or not the transactions contemplated by this Agreement
are consummated or this Agreement is terminated, the Company will pay,
or reimburse if paid by the Underwriters, all costs and expenses
incident to the performance of the obligations of the Company under
this Agreement, including but not limited to costs and expenses of or
relating to (i) the preparation, printing and filing of the
Registration Statement and exhibits to it, each preliminary
prospectus, the Prospectus and any amendment or supplement to the
Registration Statement or the Prospectus, (ii) the preparation and
delivery of certificates
18
representing the Units, (iii) the word processing, printing and
reproduction of this Agreement, the Agreement Among Underwriters, any
Dealer Agreements and any Underwriter's Questionnaire, (iv) furnishing
(including costs of shipping, mailing and courier) such copies of the
Registration Statement, the Prospectus and any preliminary prospectus,
and all amendments and supplements thereto, as may be requested for
use in connection with the offering and sale of the Units by the
Underwriter or by dealers to whom Units may be sold, (v) the listing
of the Corporate Units on the New York Stock Exchange, (vi) any
filings required to be made by the Underwriters with the NASD, and the
reasonable fees, disbursements and other charges of counsel to the
Underwriters in connection therewith, (vii) the registration or
qualification of the Units for offer and sale under the securities or
Blue Sky laws of such jurisdictions designated pursuant to Section
4(f), including the reasonable fees, disbursements and other charges
of counsel to the Underwriters in connection therewith, and the
preparation and printing of preliminary, supplemental and final Blue
Sky memoranda, (viii) counsel to the Company, (ix) the transfer agent
for the Units and (x) the Accountant.
(j) The Company will not at any time, directly or indirectly, take
any action intended, or that might reasonably be expected, to cause or
result in, or which will constitute, stabilization of the price of the
shares of Common Stock to facilitate the sale or resale of any of the
Units.
(k) The Company will apply the net proceeds from the offering and
sale of the Units to be sold by the Company in the manner set forth in
the Prospectus under "Use of Proceeds." The Company shall not invest,
or otherwise use the proceeds received by the Company from its sale of
the Units in such a manner as would require the Company or any of its
Subsidiaries to register as an investment company under the Investment
Company Act.
(l) The Company shall cause to be prepared and delivered, at its
expense, within one business day from the effective date of this
Agreement, to the Representatives an "electronic Prospectus" to be
used by the Underwriters in connection with the offering and sale of
the Units. As used herein, the term "electronic Prospectus" means a
form of Prospectus, and any amendment or supplement thereto, that
meets each of the following conditions: (i) it shall be encoded in an
electronic format, satisfactory to the Representatives, that may be
transmitted electronically by the Representatives and the other
Underwriters to offerees and purchasers of the Units for at least the
Prospectus Delivery Period; (ii) it shall disclose the same
information as the paper Prospectus and Prospectus filed pursuant to
EDGAR, except to the extent that graphic and image material cannot be
disseminated electronically, in which case such graphic and image
material shall be replaced in the electronic Prospectus with a fair
and accurate narrative description or tabular representation of such
material, as appropriate; and (iii) it shall be in or convertible into
a paper format or an electronic format, satisfactory to the
Representatives, that will allow investors to store and have
continuously ready access to the Prospectus at any future time,
without charge to investors (other than any fee charged for
subscription to the Internet as a whole
19
and for on-line time). The Company hereby confirms that it has
included or will include in the Prospectus filed pursuant to EDGAR or
otherwise with the Commission and in the Registration Statement at the
time it was declared effective an undertaking that, upon receipt of a
request by an investor or his or her representative within the
Prospectus Delivery Period, the Company shall transmit or cause to be
transmitted promptly, without charge, a paper copy of the Prospectus.
(m) During the 90-day period beginning on the date of this
Agreement, the Company will not without the prior written consent of
the Representatives (which consent may be withheld at the sole
discretion of the Representatives), directly or indirectly, sell,
offer, contract or grant any option to sell, pledge, transfer or
establish an open "put equivalent position" within the meaning of Rule
16a-1(h) under the Exchange Act, or otherwise dispose of or transfer,
or file with the Commission a registration statement under the Act
relating to, any Units, purchase contracts or shares of Common Stock
or securities convertible into or exchangeable for any Units, purchase
contracts or shares of Common Stock, or publicly disclose the
intention to make any such offer, sale, pledge, transfer, disposition
or filing, except for (i) issuances pursuant to employee or director
compensation plans existing on the date of this Agreement, including
issuances pursuant to the exercise of stock options outstanding on the
date of this Agreement, (ii) grants of employee stock options pursuant
to the terms of a plan in effect on the date of this Agreement, (iii)
issuances pursuant to the exercise of such stock options, (iv) the
filing of registration statements on Form S-8 and amendments thereto
in connection with such stock options or the Company's employee stock
purchase plans in existence on the date of this Agreement, (v) the
filing of registration statements in connection with any exercise by
Westar Energy, Inc. or Westar Industries, Inc. of their demand
registration rights, (vi) the filing of an amendment to the Company's
Form 8-A registration statement relating to the preferred stock
purchase rights under the Rights Agreement as contemplated by the
Transaction Agreement, (vii) issuances pursuant to direct stock
purchase or dividend reinvestment plans in place on the date of this
Agreement, (viii) the issuance of shares of Common Stock or options in
acquisitions in which the acquiror of such shares or options agrees to
the foregoing restrictions and (ix) the issuance of shares of the
Company's Series D Convertible Preferred Stock as contemplated by the
Transaction Agreement.
(n) The Company has engaged and shall maintain, at its expense, a
registrar and transfer agent for the Units.
(o) The Company and its Subsidiaries will keep and maintain books,
records and accounts that accurately and fairly reflect, in reasonable
detail, transactions in and dispositions of the assets of the Company
and its Subsidiaries. The Company and each of its Subsidiaries will
maintain an adequate internal control structure, procedures for
financial reporting and a system of internal accounting control
sufficient to provide reasonable assurance that (i) transactions are
executed in accordance with management's general or specific
authorization, (ii) transactions
20
are recorded as necessary to permit the preparation of the Company's
consolidated financial statements in conformity with generally
accepted accounting principles and to maintain accountability for the
assets of the Company and its Subsidiaries, (iii) access to the assets
of the Company and its Subsidiaries is permitted only in accordance
with management's general or specific authorization and (iv) the
recorded accounts of the assets of the Company and its Subsidiaries
are compared with existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
(p) The Company and its Subsidiaries will maintain such controls and
other procedures, including without limitation, those required by
Sections 302 and 906 of the Sarbanes-Oxley Act and the applicable
regulations thereunder, that are designed to ensure that information
required to be disclosed by the Company in the reports that it files
or submits under the Exchange Act is recorded, processed, summarized
and reported within the time periods specified in the Commission's
rules and forms, including, without limitation, controls and
procedures designed to ensure that information required to be
disclosed by the Company in the reports that it files or submits under
the Exchange Act is accumulated and communicated to the Company's
management, including its Chief Executive Officer or officers and
Principal Financial Officer or officers, or persons performing similar
functions, as appropriate, to allow timely decisions regarding
required disclosure and to ensure that material information relating
to the Company, including its Subsidiaries, is made known to them by
others within those entities, particularly during the period in which
such periodic reports are being prepared.
(q) The Company and its Subsidiaries will take all such steps as may
be necessary to enable it to be in substantial compliance with all
effective applicable provisions of the Sarbanes-Oxley Act.
(r) During the period from the date of this Agreement to the Closing
Date, the Company will not, without the prior written consent of the
Representatives, directly or indirectly, publicly issue, sell, offer
or contract to sell, in the market in which the Units are being
offered and sold, any securities of the Company or any of its
subsidiaries which are of the same class as the Units.
5. Conditions of the Obligations of the Underwriters. In addition to the
execution and delivery of the Price Determination Agreement, the
obligations of each Underwriter hereunder are subject to the following
conditions:
(a) (i) No stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for
that purpose shall be pending or threatened by the Commission, (ii) no
order suspending the effectiveness of the Registration Statement or
the qualification or registration of the Units under the securities or
Blue Sky laws of any jurisdiction shall be in effect and no proceeding
for such purpose shall be pending before or threatened or contemplated
by the Commission or the authorities of any such jurisdiction, (iii)
any request for additional information on the part of the staff of the
21
Commission or any such authorities shall have been complied with to
the satisfaction of the staff of the Commission or such authorities
and (iv) after the date hereof no amendment or supplement to the
Registration Statement or the Prospectus shall have been filed unless
a copy thereof was first submitted to the Underwriters and the
Underwriters did not object thereto in good faith, and the
Underwriters will have received certificates, dated the Closing Date
and the Option Closing Date, as applicable, and signed by the Chief
Executive Officer, President or a Vice President of the Company and
the Chief Financial Officer of the Company (who may, as to proceedings
threatened, rely upon the best of their information and belief), to
the effect of clauses (i), (ii) and (iii).
(b) Since the respective dates as of which information is given in
the Registration Statement and the Prospectus (i) there shall not have
been a material adverse change in the general affairs, business,
business prospects, properties, management, condition (financial or
otherwise) or results of operations of the Company and its
Subsidiaries, taken as a whole, whether or not arising from
transactions in the ordinary course of business, in each case other
than as set forth in or contemplated by the Registration Statement and
the Prospectus and (ii) neither the Company nor any of its
Subsidiaries shall have sustained any material loss or interference
with its business or properties from fire, explosion, flood or other
casualty, whether or not covered by insurance, or from any labor
dispute or any court or legislative or other governmental action,
order or decree, which is not set forth in the Registration Statement
and the Prospectus, and in your judgment makes it impracticable or
inadvisable to consummate the sale and delivery of the Units by the
Underwriters in accordance with the terms hereof and thereto.
(c) Since the respective dates as of which information is given in
the Registration Statement and the Prospectus, there shall have been
no litigation or other proceeding instituted against the Company or
any of its Subsidiaries or any of their respective officers or
directors in their capacities as such, before or by any federal, state
or local court, commission, regulatory body, administrative agency or
other governmental body, domestic or foreign, in which litigation or
proceeding an unfavorable ruling, decision or finding would materially
and adversely affect the business, properties, business prospects,
condition (financial or otherwise) or results of operations of the
Company and its Subsidiaries taken as a whole.
(d) Each of the representations and warranties of the Company
contained herein shall be true and correct in all material respects at
the Closing Date and, with respect to the Option Units, at the Option
Closing Date as if made at the Closing Date, and all covenants and
agreements herein contained to be performed on the part of the Company
and all conditions herein contained to be fulfilled or complied with
by the Company at or prior to the Closing Date and, with respect to
the Option Units, at or prior to the Option Closing Date, shall have
been duly performed, fulfilled or complied with.
22
(e) The Representatives will have received opinions, each dated the
Closing Date and, with respect to the Option Units, the Option Closing
Date, and satisfactory in form and substance to counsel to the
Underwriters, from (i) Gable & Gotwals, counsel to the Company, to the
effect set forth in Exhibit B, (ii) Andersen, Byrd, Richeson, Flaherty
and Henrichs, special Kansas counsel to the Company, and (iii) Patman
& Osborn, special Texas counsel to the Company.
(f) The Representatives will have received an opinion, dated the
Closing Date and the Option Closing Date, from Jones Day, counsel to
the Underwriters, with respect to the Registration Statement, the
Prospectus and this Agreement, which opinion shall be satisfactory in
all respects to the Representatives.
(g) On the date of the Prospectus, the Accountant shall have
furnished to the Representatives a letter, dated the date of its
delivery, addressed to the Representatives and in form and substance
satisfactory to the Representatives, containing statements and
information of the type ordinary include in accountant's "comfort
letters" to underwriters, delivered according to Statement of
Accounting Standards No. 72 (or any successor bulletin), with respect
to the audited and unaudited financial statements and certain
financial and other statistical and numerical information contained or
incorporated by reference in the Registration Statement and the
Prospectus. At the Closing Date and, as to the Option Units, the
Option Closing Date, the Accountant shall have furnished to the
Representatives a letter, dated the date of its delivery, which shall
confirm, on the basis of a review in accordance with the procedures
set forth in the letter from the Accountant, that nothing has come to
their attention during the period from the date of the letter referred
to in the prior sentence to a date (specified in the letter) not more
than three days prior to the Closing Date and the Option Closing Date
that would require any change in their letter dated the date of the
Prospectus, if it were required to be dated and delivered at the
Closing Date and the Option Closing Date.
(h) At the Closing Date and, as to the Option Units, the Option
Closing Date, there shall be furnished to each Underwriter an accurate
certificate, dated the date of its delivery, signed by each of the
Chief Executive Officer, President or a Vice President and the Chief
Financial Officer of the Company, in form and substance satisfactory
to the Underwriters, to the effect that:
(i) each signer of such certificate has reviewed the
Registration Statement and the Prospectus (including any
documents filed under the Exchange Act and deemed to be
incorporated by reference into the Prospectus) and (A) as of the
date of such certificate, such documents are true and correct in
all material respects and do not omit to state a material fact
required to be stated therein or necessary in order to make the
statements therein not untrue or misleading and (B) since the
Effective Date, no event has occurred as a result of which it is
necessary to amend or supplement the Prospectus in order to make
the statements therein not untrue or misleading in any material
respect and there has been no
23
document required to be filed under the Exchange Act and the
Exchange Act Rules and Regulations that upon such filing would
be deemed to be incorporated by reference into the Prospectus
that has not been so filed;
(ii) each of the representations and warranties of the Company
contained in this Agreement were, when originally made, and are,
at the time such certificate is delivered, true and correct in
all material respects; and
(iii) each of the covenants required herein to be performed by
the Company on or prior to the delivery of such certificate has
been duly, timely and fully performed and each condition herein
required to be complied with by the Company on or prior to the
date of such certificate has been duly, timely and fully
complied with.
(i) On or prior to the Closing Date, the Representatives will have
received executed Lock-Up Letter Agreements, in the form of Exhibit C
hereto, from the Company's directors and executive officers.
(j) The Units will be qualified for sale in such states as the
Underwriters may reasonably request, each such qualification shall be
in effect and not subject to any stop order or other proceeding on the
Closing Date or the Option Closing Date.
(k) Subsequent to the execution and delivery of this Agreement and
prior to the Closing Date or the Option Closing Date, as the case may
be, there shall not have been any downgrading, nor any notice given of
any intended or potential downgrading or of a possible change that
does not indicate the direction of the possible change, in the rating
accorded any of the Company's securities by any "nationally recognized
statistical rating organization," as such term is defined for purposes
of Rule 436(g)(2) under the Act.
(l) The Corporate Units shall have been approved for listing on the
New York Stock Exchange, subject only to official notice of issuance.
(m) The Company shall have furnished to the Representatives such
certificates, in addition to those specifically mentioned herein, as
the Representatives may have reasonably requested as to the accuracy
and completeness at the Closing Date and the Option Closing Date of
any statement in the Registration Statement or the Prospectus or any
documents filed under the Exchange Act and deemed to be incorporated
by reference into the Prospectus, as to the accuracy at the Closing
Date and the Option Closing Date of the representations and warranties
of the Company herein, as to the performance by the Company of its
obligations hereunder, or as to the fulfillment of the conditions
concurrent and precedent to the obligations hereunder of each
Underwriter.
(n) At the Closing Date, (i) the Units shall be rated at least Baa2
and A- by Moody's Investors Service, Inc. ("Moody's"), and Standard &
Poor's Ratings
24
Group, a division of The McGraw-Hill Companies, Inc. ("S&P"),
respectively, and the Company shall have delivered to the Underwriters
a letter from each such rating agency, or other evidence satisfactory
to the Underwriters, confirming that the Units have such ratings, and
(ii) neither Moody's nor S&P shall have, since the date of this
Agreement, downgraded or publicly announced that it has under
surveillance or review, with possible negative implications, its
ratings of the Units or any securities of the Company which are of the
same class as the Units, or of the financial condition of the Company.
If any condition specified in this Section 5 is not satisfied when
and as required to be satisfied, this Agreement may be terminated by the
Representatives by notice to the Company at any time on or prior to the Closing
Date and, with respect to the Option Units, at any time prior to the Option
Closing Date, which termination shall be without liability on the part of any
party to any other party, except that Section 4, Section 6, Section 8 and
Section 11 shall at all times be effective and shall survive such termination.
6. Reimbursement of Underwriters' Expenses. If this Agreement is
terminated by the Representatives pursuant to Section 5, Section 7, Section
9 or Section 10, or if the sale to the Underwriters of the Initial Units on
the Closing Date is not consummated because of any refusal, inability or
failure on the part of the Company to perform any agreement herein or to
comply with any provision hereof, the Company agrees to reimburse the
Representatives and the other Underwriters (or such Underwriters as have
terminated this Agreement with respect to themselves), severally, upon
demand for all out-of-pocket expenses that shall have been reasonably
incurred by the Representatives and the Underwriters in connection with the
proposed purchase and the offering and sale of the Corporate Units,
including but not limited to fees and disbursements of counsel, printing
expenses, travel expenses, postage, facsimile and telephone charges.
7. Effectiveness of this Agreement.
(a) This Agreement shall not become effective until the later of (i)
the execution of this Agreement by the parties hereto and (ii) if
required, notification by the Commission to the Company and the
Representatives of the effectiveness of the Registration Statement
under the Securities Act.
(b) Prior to such effectiveness, this Agreement may be terminated by
any party by notice to each of the other parties hereto, and any such
termination shall be without liability on the part of (i) the Company
to any Underwriter, except that the Company shall be obligated to
reimburse the expenses of the Representatives and the Underwriters
pursuant to Sections 4 and 6 hereof, (ii) any Underwriter to the
Company or (iii) any party hereto to any other party, except that the
provisions of Section 8 shall at all times be effective and shall
survive such termination.
25
8. Indemnification.
(a) The Company will indemnify and hold harmless each Underwriter,
the directors, officers, employees and agents of each Underwriter and
each person, if any, who controls each Underwriter within the meaning
of Section 15 of the Act or Section 20 of the Exchange Act from and
against any and all losses, claims, liabilities, expenses and damages
(including, but not limited to, any and all investigative, legal and
other expenses reasonably incurred in connection with, and any and all
amounts paid in settlement of, any action, suit or proceeding between
any of the indemnified parties and any indemnifying parties or between
any indemnified party and any third party, or otherwise, or any claim
asserted), as and when incurred, to which any Underwriter, or any such
person, may become subject under the Act, the Exchange Act or other
federal or state statutory law or regulation, at common law or
otherwise, insofar as such losses, claims, liabilities, expenses or
damages arise out of or are based on (i) any untrue statement or
alleged untrue statement of a material fact contained in any
preliminary prospectus, the Registration Statement or the Prospectus
or any amendment or supplement to the Registration Statement or the
Prospectus or in any documents filed under the Exchange Act and deemed
to be incorporated by reference into the Prospectus, or in any
application or other document executed by or on behalf of the Company
or based on written information furnished by or on behalf of the
Company filed in any jurisdiction in order to qualify the Units under
the securities laws thereof or filed with the Commission, (ii) the
omission or alleged omission to state in such document a material fact
required to be stated in it or necessary to make the statements in it
not misleading or (iii) any act or failure to act or any alleged act
or failure to act by any Underwriter in connection with, or relating
in any manner to, the Units or the offering contemplated hereby, and
which is included as part of or referred to in any loss, claim,
liability, expense or damage arising out of or based upon matters
covered by clause (i) or (ii) above (provided that the Company shall
not be liable under this clause (iii) to the extent it is finally
judicially determined by a court of competent jurisdiction that such
loss, claim, liability, expense or damage resulted directly from any
such acts or failures to act undertaken or omitted to be taken by such
Underwriter through its gross negligence or willful misconduct);
provided that the Company will not be liable to the extent that such
loss, claim, liability, expense or damage arises from the sale of the
Units in the public offering to any person by an Underwriter and is
based on an untrue statement or omission or alleged untrue statement
or omission made in reliance on and in conformity with information
relating to either Underwriter furnished in writing to the Company by
such Underwriter expressly for inclusion in the Registration
Statement, any preliminary prospectus or the Prospectus. This
indemnity agreement will be in addition to any liability that the
Company might otherwise have.
(b) Each Underwriter agrees, severally and not jointly, to indemnify
and hold harmless the Company, each person, if any, who controls the
Company within the meaning of Section 15 of the Act or Section 20 of
the Exchange Act, each director of the Company and each officer of the
Company who signs the Registration
26
Statement to the same extent as the foregoing indemnity from the
Company to each Underwriter, but only insofar as losses, claims,
liabilities, expenses or damages arise out of or are based on any
untrue statement or omission or alleged untrue statement or omission
made in reliance on and in conformity with written information
relating to such Underwriter furnished in writing to the Company by
the Representatives expressly for use in the Registration Statement or
the Prospectus. This indemnity agreement will be in addition to any
liability that each Underwriter may otherwise have; provided, however,
that in no case will any Underwriter be liable or responsible for any
amount in excess of the underwriting discounts and commissions
received by such Underwriter.
(c) Any party that proposes to assert the right to be indemnified
under this Section 8 will, promptly after receipt of notice of
commencement of any action against such party in respect of which a
claim is to be made against an indemnifying party or parties under
this Section 8, notify each such indemnifying party of the
commencement of such action, enclosing a copy of all papers served,
but the omission so to notify such indemnifying party will not relieve
it from any liability that it may have to any indemnified party under
the foregoing provisions of this Section 8 unless, and only to the
extent that, such omission results in the forfeiture of substantive
rights or defenses by the indemnifying party. If any such action is
brought against any indemnified party and it notifies the indemnifying
party of its commencement, the indemnifying party will be entitled to
participate in and, to the extent that it elects by delivering written
notice to the indemnified party promptly after receiving notice of the
commencement of the action from the indemnified party to assume the
defense of the action, with counsel satisfactory to the indemnified
party, and after notice from the indemnifying party to the indemnified
party of its election to assume the defense, the indemnifying party
will not be liable to the indemnified party for any legal or other
expenses except as provided below and except for the reasonable costs
of investigation subsequently incurred by the indemnified party in
connection with the defense. The indemnified party will have the right
to employ its own counsel in any such action, but the fees, expenses
and other charges of such counsel will be at the expense of such
indemnified party unless (i) the employment of counsel by the
indemnified party has been authorized in writing by the indemnifying
party, (ii) the indemnified party has reasonably concluded (based on
advice of counsel) that there may be legal defenses available to it or
other indemnified parties that are different from or in addition to
those available to the indemnifying party, (iii) a conflict or
potential conflict exists (based on advice of counsel to the
indemnified party) between the indemnified party and the indemnifying
party (in which case the indemnifying party will not have the right to
direct the defense of such action on behalf of the indemnified party)
or (iv) the indemnifying party has not in fact employed counsel to
assume the defense of such action within a reasonable time after
receiving notice of the commencement of the action, in each of which
cases the reasonable fees, disbursements and other charges of counsel
will be at the expense of the indemnifying party or parties. It is
understood that the indemnifying party shall not, in connection with
any proceeding or related proceedings in the same jurisdiction, be
liable for the reasonable fees,
27
disbursements and other charges of more than one separate firm
admitted to practice in such jurisdiction at any one time for all such
indemnified party or parties. All such fees, disbursements and other
charges will be reimbursed by the indemnifying party promptly as they
are incurred. An indemnifying party will not be liable for any
settlement of any action or claim effected without its written consent
(which consent will not be unreasonably withheld). No indemnifying
party shall, without the prior written consent of each indemnified
party, settle or compromise or consent to the entry of any judgment in
any pending or threatened claim, action or proceeding relating to the
matters contemplated by this Section 8 (whether or not any indemnified
party is a party thereto), unless such settlement, compromise or
consent includes an unconditional release of each indemnified party
from all liability arising or that may arise out of such claim, action
or proceeding. Notwithstanding any other provision of this Section
8(c), if at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for fees and
expenses of counsel, such indemnifying party agrees that it shall be
liable for any settlement effected without its written consent if (1)
such settlement is entered into more than 45 days after receipt by
such indemnifying party of the aforesaid request, (2) such
indemnifying party shall have received notice of the terms of such
settlement at least 30 days prior to such settlement being entered
into and (3) such indemnifying party shall not have reimbursed such
indemnified party in accordance with such request prior to the date of
such settlement.
(d) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in the
foregoing paragraphs of this Section 8 is applicable in accordance
with its terms but for any reason is held to be unavailable from the
Company or the Underwriters, the Company and the Underwriters shall
contribute to the total losses, claims, liabilities, expenses and
damages (including any investigative, legal and other expenses
reasonably incurred in connection with, and any amount paid in
settlement of, any action, suit or proceeding or any claim asserted,
but after deducting any contribution received by the Company from
persons other than the Underwriters, such as persons who control the
Company within the meaning of the Act, officers of the Company who
signed the Registration Statement and directors of the Company, who
also may be liable for contribution) to which the Company and the
Underwriters may be subject in such proportion as shall be appropriate
to reflect the relative benefits received by the Company on the one
hand and the Underwriters on the other. The relative benefits received
by the Company on the one hand and the Underwriters on the other shall
be deemed to be in the same proportion as the total net proceeds from
the offering (before deducting expenses) received by the Company bear
to the total underwriting discounts and commissions received by the
Underwriters, in each case as set forth in the table on the cover page
of the Prospectus. If, but only if, the allocation provided by the
foregoing sentence is not permitted by applicable law, the allocation
of contribution shall be made in such proportion as is appropriate to
reflect not only the relative benefits referred to in the foregoing
sentence but also the relative fault of the Company, on the one hand,
and the Underwriters, on the other, with respect to the statements or
omissions that
28
resulted in such loss, claim, liability, expense or damage, or action
in respect thereof, as well as any other relevant equitable
considerations with respect to such offering. Such relative fault
shall be determined by reference to whether the untrue or alleged
untrue statement of a material fact or the omission or alleged
omission to state a material fact related to information supplied by
the Company or the Underwriters, the intent of the parties and their
relative knowledge, access to information and opportunity to correct
or prevent such statement or omission. The Company and the
Underwriters agree that it would not be just and equitable if
contributions pursuant to this Section 8(d) were to be determined by
pro rata allocation or by any other method of allocation which does
not take into account the equitable considerations referred to herein.
The amount paid or payable by an indemnified party as a result of the
loss, claim, liability, expense or damage, or action in respect
thereof, referred to above in this Section 8(d) shall be deemed to
include, for purpose of this Section 8(d), any legal or other expenses
reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding
the provisions of this Section 8(d), no Underwriter shall be required
to contribute any amount in excess of the underwriting discounts and
commissions received by it and no person found guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act)
will be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. The Underwriters' obligations to
contribute as provided in this Section 8(d) are several to their
respective underwriting obligations and not joint. For purposes of
this Section 8(d), any person who controls a party to this Agreement
within the meaning of the Act will have the same rights to
contribution as that party, and each officer of the Company who signed
the Registration Statement will have the same rights to contribution
as the Company, subject in each case to the provisions hereof. Any
party entitled to contribution, promptly after receipt of notice of
commencement of any action against such party in respect of which a
claim for contribution may be made under this Section 8(d), will
notify any such party or parties from whom contribution may be sought,
but the omission so to notify will not relieve the party or parties
from whom contribution may be sought from any other obligation it or
they may have under this Section 8(d). Except for a settlement entered
into pursuant to the last sentence of Section 8(c) hereof, no party
will be liable for contribution with respect to any action or claim
settled without its written consent (which consent will not be
unreasonably withheld).
(e) The indemnity and contribution agreements contained in this
Section 8 and the representations and warranties of the Company
contained in this Agreement shall remain operative and in full force
and effect regardless of (i) any investigation made by or on behalf of
the Underwriters, (ii) acceptance of the Units and payment therefor or
(iii) any termination of this Agreement.
9. Termination. The obligations of the Underwriters under this Agreement
may be terminated at any time on or prior to the Closing Date (or, with
respect to the Option Units, on or prior to the Option Closing Date), by
notice to the Company from the Representatives if, prior to delivery and
payment for the Units (or the Option Units, as
29
the case may be), in the sole judgment of the Representatives, (a) there
has been, since the respective dates as of which information is given in
the Registration Statement and the Prospectus, any material adverse change
or any development involving a prospective change, which has had or is
reasonably likely to have a Material Adverse Effect; (b) trading in any of
the equity securities of the Company shall have been suspended by the
Commission, the NASD or the New York Stock Exchange; (c) trading in
securities generally on the New York Stock Exchange or the Nasdaq National
Market shall have been suspended or limited or minimum or maximum prices
shall have been generally established on such exchange or automated
quotation system, or additional material governmental restrictions, not in
force on the date of this Agreement, shall have been imposed upon trading
in securities generally by the New York Stock Exchange or The Nasdaq Stock
Market or by order of the Commission or the NASD or any court or other
governmental authority; (d) a general banking moratorium shall have been
declared by federal or New York or Oklahoma State authorities; (e) there
shall have occurred any outbreak or escalation of national or international
hostilities or any crisis or calamity, or any change in the United States
or international financial or securities markets, or any substantial change
or development involving a prospective substantial change in national or
international political, financial or economic conditions, as in the
judgment of the Representatives is material and adverse and makes it
impractical or inadvisable to market the Units in the manner and on the
terms described in the Prospectus or to enforce contracts for the sale of
securities; (f) any downgrading, or placement on any watch list for
possible downgrading, in the rating of the Company's debt securities by any
"nationally recognized statistical rating organization" (as defined for
purposes of Rule 436(g) under the Exchange Act); (g) the taking of any
action by any governmental body or agency in respect of its monetary or
fiscal affairs that in the judgment of the Representatives has a material
adverse effect on the securities markets in the United States; or (h) the
Company shall have sustained a loss by strike, fire, flood, earthquake,
accident or other calamity of such character as in the judgment of the
Representatives may interfere materially with the business and operations
of the Company regardless of whether of not such loss shall have been
insured. Any termination pursuant to this Section 9 shall be without
liability on the part of (i) the Company to any Underwriter, except that
the Company shall be obligated to reimburse the expenses of the
Representatives and the Underwriters pursuant to Section 4 and 6 hereof,
(ii) any Underwriter to the Company or (iii) of any party hereto to any
other party except that the provisions of Section 8 shall at all times be
effective and shall survive such termination.
10. Default of One or More of the Several Underwriters.
(a) If, on the Closing Date or the Option Closing Date, as the case
may be, any one or more of the several Underwriters shall fail or
refuse to purchase Corporate Units that it or they have agreed to
purchase hereunder on such date, and the aggregate number of Corporate
Units that such defaulting Underwriter or Underwriters agreed but
failed or refused to purchase does not exceed 10% of the aggregate
number of the Corporate Units to be purchased on such date, the other
Underwriters shall be obligated, severally, in the proportions that
the number of Initial Units set forth opposite their respective names
on Schedule I hereto bears to the aggregate number of Initial Units
set forth opposite the names of all such
30
non-defaulting Underwriters, or in such other proportions as may be
specified by the Representatives with the consent of the
non-defaulting Underwriters, to purchase the Units that such
defaulting Underwriter or Underwriters agreed but failed or refused to
purchase on such date. If, on the Closing Date or the Option Closing
Date, as the case may be, any one or more of the Underwriters shall
fail or refuse to purchase Corporate Units and the aggregate number of
Corporate Units with respect to which such default occurs exceeds 10%
of the aggregate number of Corporate Units to be purchased on such
date, and arrangements satisfactory to the Representatives and the
Company for the purchase of such Corporate Units are not made within
48 hours after such default, this Agreement shall terminate without
liability on the part of any non-defaulting Underwriters or the
Company for the purchase or sale of any Units under this Agreement. In
any such case, either the Representatives or the Company shall have
the right to postpone the Closing Date or the Option Closing Date, as
the case may be, but in no event for a period longer than seven days,
in order that the required changes, if any, to the Registration
Statement and the Prospectus or in any other documents or arrangements
may be effected.
(b) As used in this Section 10, the term "Underwriter" shall be
deemed to include any person substituted for a defaulting Underwriter
under this Section 10. Any action taken pursuant to this Section 10
shall not relieve any defaulting Underwriter from liability in respect
of any default of such Underwriter under this Agreement.
11. Miscellaneous.
(a) Notice given pursuant to any of the provisions of this Agreement
shall be in writing and, unless otherwise specified, shall be mailed,
hand delivered or telecopied and confirmed (i) if to the Company, at
the office of the Company, 100 West Fifth Street, Tulsa, Oklahoma
74103, Facsimile: 918-588-7971, Attention: Chief Financial Officer, or
(ii) if to the Underwriters, at the offices of (A) UBS Warburg LLC,
299 Park Avenue, New York, New York 10171, Facsimile: 212-821-4042,
Attention: General Counsel, (B) Banc of America Securities LLC, 9 West
57th Street, New York, New York 10019, Facsimile: 212-847-5124,
Attention: Eric Hambleton, and (C) J.P. Morgan Securities Inc., 277
Park Avenue, New York, New York 10172, Facsimile: 212-622-6037,
Attention: Paul A. O'Hern. Any such notice shall be effective only
upon receipt. Any notice under Section 9 may be made by telecopy or
telephone, but if so made shall be subsequently confirmed in writing.
(b) This Agreement has been and is made solely for the benefit of
the several Underwriters and the Company and of the controlling
persons, directors and officers referred to in Section 8, and their
respective successors and assigns, and no other person shall acquire
or have any right under or by virtue of this Agreement. The term
"successors and assigns" as used in this Agreement shall not include a
purchaser, as such purchaser, of Units from the Underwriters.
31
(c) All representations, warranties and agreements of the Company
contained herein or in certificates or other instruments delivered
pursuant hereto, shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of the
Underwriters or any of its controlling persons and shall survive
delivery of and payment for the Units hereunder.
(d) Any action required or permitted to be taken by the
Representatives under this Agreement shall be taken by them jointly.
(e) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK.
(f) Except as set forth below, no claim may be commenced, prosecuted
or continued in any court other than the courts of the State of New
York located in the City and County of New York or in the United
States District Court for the Southern District of New York, which
courts shall have jurisdiction of such courts and personal service
with respect thereto. The Company hereby consents to personal
jurisdiction, service and venue in any court in which any claim
arising out of or in any way relating to this Agreement is brought by
any third party against any indemnified party. Each of the
Representatives and the Company (on its behalf and, to the extent
permitted by applicable law, on behalf of all indemnified parties and
its and their stockholders and affiliates) waives all right to trial
by jury in any action, proceeding or counterclaim (whether based upon
contract, tort or otherwise) in any way arising out of or relating to
this Agreement. The Company agrees that a final judgment in any such
action, proceeding or counterclaim brought in any such court shall be
conclusive and binding upon the Company and may be enforced in any
other courts in the jurisdiction of which the Company is or may be
subject, by suit upon such judgment.
(g) This Agreement may be signed in two or more counterparts with
the same effect as if the signatures thereto and hereto were upon the
same instrument.
(h) In case any provision in this Agreement shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired
thereby.
(i) The Company and the Underwriters each hereby irrevocably waive
any right they may have to a trial by jury in respect of any claim
based upon or arising out of this Agreement or the transactions
contemplated hereby.
(j) This Agreement may not be amended or otherwise modified or any
provision hereof waived except by an instrument in writing signed by
the Representatives and the Company.
[The remainder of this page is intentionally left blank.]
32
Please confirm that the foregoing correctly sets forth the agreement
between the Company and the several Underwriters.
Very truly yours,
ONEOK, INC.
By: /s/ Jim Kneale
-----------------------------------
Name: Jim Kneale
---------------------------------
Title: Senior Vice President, Treasurer
--------------------------------
and Chief Financial Officer
--------------------------------
Confirmed as of the date first
above mentioned:
UBS WARBURG LLC
Acting on behalf of itself and as the Representative
of the other several Underwriters
By: /s/ By: /s/
----------------------------- -----------------------------
Name: Name:
--------------------------- ---------------------------
Title: Title:
-------------------------- --------------------------
BANC OF AMERICA SECURITIES LLC
Acting on behalf of itself and as the Representative
of the other several Underwriters
By: /s/
-----------------------------
Name:
---------------------------
Title:
--------------------------
J.P. MORGAN SECURITIES INC.
Acting on behalf of itself and as the Representative
of the other several Underwriters
By: /s/
-----------------------------
Name:
---------------------------
Title:
--------------------------
S-1
SCHEDULE I
Number of
Initial Units
Underwriter to be Purchased
- ----------- ---------------
UBS Warburg LLC............................................ 4,060,001
Banc of America Securities LLC............................. 4,060,001
J.P. Morgan Securities Inc................................. 4,060,000
ABN AMRO Incorporated...................................... 606,666
A.G. Edwards & Sons, Inc................................... 606,666
SunTrust Capital Markets, Inc.............................. 606,666
---------------
TOTAL............................................. 14,000,000
===============
SCHEDULE II
SUBSIDIARIES OF THE COMPANY
State of Company's
Incorporation Ownership
Subsidiary or Organization Percentage
- ---------- --------------- ----------
Mid Continent Market Center, Inc. Kansas 100.0%
Market Center Gathering, Inc. Kansas 100.0%
ONEOK Sayre Storage Company Delaware 100.0%
OkTex Pipeline Company Delaware 100.0%
ONEOK Gas Transportation, L.L.C. Oklahoma 100.0%
ONEOK Gas Storage Holdings, Inc. Delaware 100.0%
ONEOK Texas Gas Storage, L.P. Texas 100.0%
ONEOK WesTex Transmission, L.P. Delaware 100.0%
ONEOK Gas Storage, L.L.C. Oklahoma 100.0%
ONEOK Palo Duro Pipeline Company, Inc. Delaware 100.0%
ONEOK Resources Company Delaware 100.0%
ONEOK Services Company Oklahoma 100.0%
ONEOK Technology Company Delaware 100.0%
ONEOK Energy Marketing and Trading Company, II Delaware 100.0%
Kansas Gas Marketing Company Kansas 100.0%
ONEOK Energy Marketing and Trading Company, L.P. Texas 100.0%
ONEOK Energy Marketing Holdings, Inc. Oklahoma 100.0%
ONEOK Energy Marketing Company Oklahoma 100.0%
ONEOK Leasing Company Delaware 100.0%
ONEOK Parking Company Delaware 100.0%
ONEOK Field Services Company Oklahoma 100.0%
ONEOK Bushton Processing, Inc. Delaware 100.0%
Blue Moon Holdings, L.L.C. Delaware 50.0%
ONEOK Field Services Holdings, Inc. Oklahoma 100.0%
ONEOK Texas Field Services, L.P. Texas 100.0%
ONEOK Field Services Transmission, L.L.C. Oklahoma 100.0%
ONEOK Gas Processing, L.L.C. Oklahoma 100.0%
ONEOK International, Inc. Delaware 100.0%
ALPHA Transmission Company Oklahoma 100.0%
Oklahoma Natural Energy Services Company Oklahoma 100.0%
ONEOK Gas Gathering, L.L.C. Oklahoma 100.0%
Potato Hills Gas Gathering System (general partnership) Oklahoma 50.0%
ONEOK Kansas Company Kansas 100.0%
Oasis Acquisition Corporation California 100.0%
Kansas Gas Service Company Kansas 100.0%
Sycamore Gas System (general partnership) Oklahoma 48.4%
Fox Plant, L.L.C. Delaware 50.0%
State of Company's
Incorporation Ownership
Subsidiary or Organization Percentage
- ---------- --------------- ----------
ONEOK Midstream Gas Supply, L.L.C. Oklahoma 100.0%
ONEOK NGL Marketing, L.P. Texas 100.0%
Kansas Gas Supply Corporation Delaware 100.0%
ONEOK WesTex Gas Pipeline, Inc. Oklahoma 100.0%
ONEOK Texas Resources, Inc. Delaware 100.0%
ONEOK Beta Company Delaware 100.0%
Subsidiaries Acquired from Southern Union
- -----------------------------------------
Mercado Gas Services, Inc. Delaware 100.0%
Norteno Pipeline Company Delaware 100.0%
ONEOK Transmission Company Delaware 100.0%
ONEOK International Investments, Inc. Delaware 100.0%
ONEOK Energy International, Inc. Delaware 100.0%
SUPro Energy Company Delaware 100.0%
Energia Estrella de Sur, S.A. de C.V. Mexico 100.0%
Compania Nacional de Gas S.A. de C.V. Mexico 43.29%
Construcciones, Instalaciones y Asesorias, S.A. de C.V. Mexico 43.29%
Gas Servicios Del Norte de Mexico S. De R.L. De C.V. Mexico 43.29%
Materiales y Aparatus, S.A. de C.V. Mexico 48.0%
Salart, S.A. de C.V. Mexico 42.02%
Servicios Corporativos Phenix, S.C. Mexico 43.29%
In addition to the interests of the Company in the Subsidiaries set forth above,
the Company also directly or indirectly holds various interests in oil and gas
wells and related projects and holds various undivided interests in gasoline
plants and other facilities relating to the oil and gas business and holds
minority interests in various other entities and ventures.
EXHIBIT A
ONEOK, INC.
PRICE DETERMINATION AGREEMENT
January 23, 2003
UBS WARBURG LLC
BANC OF AMERICA SECURITIES LLC
J.P. MORGAN SECURITIES INC.
as Representatives of the Several
Underwriters Named in Schedule I to the
Underwriting Agreement Referred to Below
c/o UBS WARBURG LLC
299 Park Avenue
New York, New York 10171
c/o BANC OF AMERICA SECURITIES LLC
9 West 57th Street
New York, New York 10019
c/o J.P. MORGAN SECURITIES INC.
277 Park Avenue
New York, New York 10172
Ladies and Gentlemen:
Reference is made to the Underwriting Agreement, dated January 23, 2003
(the "Underwriting Agreement"), among ONEOK, Inc., an Oklahoma corporation (the
"Company"), and the several Underwriters named in Schedule I thereto
(collectively, the "Underwriters"), for whom you are acting as representatives
(collectively, the "Representatives"). The Underwriting Agreement provides for
the purchase by the Underwriters from the Company, subject to the terms and
conditions set forth therein, of the Company's 8.50% Equity Units, initially
consisting of 14,000,000 aggregate units ("Corporate Units"), with a stated
amount per Corporate Unit of $25.00. This Agreement is the Price Determination
Agreement referred to in the Underwriting Agreement.
Pursuant to Section 1 of the Underwriting Agreement, the undersigned agrees
with the Representatives as follows:
I. The initial public offering price per unit for the Corporate Units
shall be $25.00.
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II. The purchase price per unit for the Corporate Units to be paid by the
several Underwriters shall be $24.25 representing an amount equal to the initial
public offering price set forth above, less $0.75 per unit.
The Company represents and warrants to the Underwriters that the
representations and warranties of the Company set forth in Section 3 of the
Underwriting Agreement are accurate as though expressly made at and as of the
date hereof.
As contemplated by the Underwriting Agreement, attached as Schedule I is a
completed list of the several Underwriters, which shall be a part of this
Agreement and the Underwriting Agreement.
This Agreement shall be governed by the law of the State of New York.
[The remainder of this page is intentionally left blank.]
A-2
If the foregoing is in accordance with your understanding of the agreement
among the Underwriters and the Company, please sign and return to the Company a
counterpart hereof, whereupon this instrument along with all counterparts and
together with the Underwriting Agreement shall be a binding agreement among the
Underwriters and the Company in accordance with its terms and the terms of the
Underwriting Agreement.
Very truly yours,
ONEOK, INC.
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
Confirmed as of the date first
above mentioned:
UBS WARBURG LLC
Acting on behalf of itself and as the Representative
of the other several Underwriters
By: By:
----------------------------- -----------------------------
Name: Name:
--------------------------- ---------------------------
Title: Title:
-------------------------- --------------------------
BANC OF AMERICA SECURITIES LLC
Acting on behalf of itself and as the Representative
of the other several Underwriters
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
J.P. MORGAN SECURITIES INC.
Acting on behalf of itself and as the Representative
of the other several Underwriters
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
A-3
EXHIBIT B
Form of Opinion Of
Counsel to the Company
1. The Company and each of its significant subsidiaries (as defined in
Rule 1-02(w) of Regulation S-X of the Rules and Regulations) is a corporation,
limited liability company, general partnership or limited partnership duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization and has full power and
authority to conduct all the activities conducted by it, to own or lease all the
assets owned or leased by it and to conduct its business as described in the
Registration Statement and the Prospectus, except in each case as would not,
individually or in the aggregate, result in a Material Adverse Effect. The
Company is the direct or indirect sole record owner and, to such counsel's
knowledge, the sole beneficial owner of all of the capital stock, capital
interests or partnership interests of each of its Subsidiaries, except as
otherwise set forth on Schedule II to the Underwriting Agreement, dated as of
January 23, 2003 (together with the Price Determination Agreement included
therein as Exhibit A, the "Agreement").
2. All of the shares of Common Stock issuable pursuant to the Purchase
Contracts have been duly authorized and reserved for issuance and, when issued,
delivered and paid for in accordance with the provisions of the Purchase
Contract Agreement, the Purchase Contracts and the Pledge Agreement, will be
validly issued, fully paid and nonassessable; the issuance of such Common Stock
and the Units will not be subject to (a) any preemptive right arising under the
certificate of incorporation, by-laws or other organizational document of the
Company or such significant subsidiary or the laws of the State of Oklahoma, (b)
co-sale right, (c) right of first refusal or (d) other similar right. Except as
described in the Registration Statement or the Prospectus or in the documents
incorporated therein by reference or in any employee or director compensation
arrangements pursuant to a plan in effect on the date of this opinion, to such
counsel's knowledge, there is no commitment or arrangement to issue, and there
are no outstanding options, warrants or other rights calling for the issuance
of, any share of capital stock of the Company or any Subsidiary to any person or
any security or other instrument that by its terms is convertible into,
exercisable for or exchangeable for capital stock of the Company.
3. The Units, including the Senior Notes, have been duly authorized,
executed and delivered by the Company; the Units, when issued against payment
therefor as contemplated by the Underwriting Agreement, will be entitled to the
benefits of the Purchase Contract Agreement; the Senior Notes, when issued
against payment therefor as contemplated by the Agreement, will be entitled to
the benefits of the Indenture; and the Units and the Senior Notes (when so
issued) are legal, valid and binding obligations of the Company, enforceable
against the Company in accordance with their respective terms, subject to the
effect of bankruptcy, insolvency, reorganization, receivership, moratorium and
other laws affecting the rights and remedies of creditors generally and general
equitable principles and subject to any principles of public policy limiting the
rights to enforce any indemnification provisions contained therein.
4. No consent, approval, authorization or order of, or any filing or
declaration with, any court or governmental agency or body is required in
connection with (a) the authorization,
B-1
issuance, transfer, sale or delivery of the Units by the Company, (b) the
execution, delivery and performance of the Agreement, by the Company or (c) the
taking by the Company of any action contemplated thereby except such as (1) have
been obtained under the Act and the Rules and Regulations and (2) may be
required under state securities or "Blue Sky" laws or by the by-laws and rules
of the NASD in connection with the purchase and distribution by the Underwriters
of the Units to be sold by the Company.
5. The authorized, issued and outstanding capital stock of the Company
is as set forth in the Registration Statement and the Prospectus. The form of
certificate used to evidence the Common Stock and filed as an Exhibit to the
Registration Statement is in due and proper form and complies with all
applicable statutory requirements.
6. All issued and outstanding shares of capital stock or other equity
interests of each significant subsidiary (as defined in Rule 1-02(w) of
Regulation S-X of the Rules and Regulations) of the Company have been duly
authorized and validly issued and, to such counsel's knowledge, have not been
issued in violation of or subject to (a) any preemptive right arising under the
certificate of incorporation, by-laws or other organizational document of the
Company or such significant subsidiary or the laws of the State of Oklahoma or
any such significant subsidiary's jurisdiction of incorporation or organization,
(b) co-sale right, (c) right of first refusal or (d) other similar right. To
such counsel's knowledge, all of the shares of capital stock or other equity
interests in the Subsidiaries reflected as owned by the Company on Schedule II
to the Agreement are owned by the Company free and clear of any security
interests, liens, encumbrances and claims whatsoever.
7. The Registration Statement, the Prospectus (including any documents
incorporated by reference into the Prospectus, at the time they were filed), the
Indenture and the Purchase Contract Agreement comply or complied in all material
respects as to form with the requirements of the Act, the Rules and Regulations,
the Exchange Act, the Exchange Act Rules and Regulations, the Trust Indenture
Act and the Trust Indenture Act Rules and Regulations (except that such counsel
need not express an opinion as to financial statements, schedules and other
financial data contained in the Registration Statement or the Prospectus or
incorporated by reference therein).
8. The information in the Registration Statement and the Prospectus
under the captions "Transactions with Westar," "Description of the Equity
Units," "Description of the Purchase Contracts," "Certain Provisions of the
Purchase Contract Agreement and the Pledge Agreement," "Description of the
Senior Notes" and "Description of Capital Stock," insofar as such statements
purport to summarize the legal matters or documents referred to therein, present
fair summaries of such legal matters and documents.
9. To such counsel's knowledge, (a) any instrument, document, lease,
license, contract or other agreement (collectively, "Documents") required to be
described or referred to in the Registration Statement or the Prospectus has
been properly described or referred to therein, and (b) any Document required to
be filed as an exhibit to the Registration Statement has been filed as an
exhibit thereto or has been incorporated as an exhibit by reference in the
Registration Statement; and, to such counsel's knowledge, no default exists in
the due performance or
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observance of any obligation, agreement, covenant or condition contained in any
Document filed or required to be filed as an exhibit to the Registration
Statement.
10. To such counsel's knowledge, no person or entity has the right to
require the registration under the Act of shares of Common Stock or other
securities of the Company by reason of the filing or effectiveness of the
Registration Statement.
11. To such counsel's knowledge, the Company is not in violation of,
or in default with respect to, any law, rule, regulation, order, judgment or
decree, except as may be described in the Registration Statement and the
Prospectus (including the documents incorporated by reference therein) or such
as in the aggregate do not now have and would not reasonably be expected to have
a Material Adverse Effect.
12. All descriptions in the Prospectus of statutes, regulations or
legal or governmental proceedings are accurate and fairly present the
information required to be shown in all material respects.
13. The Company has full corporate power and authority to: (a) enter
into the Agreement, the Transaction Agreement, the Purchase Contract Agreement,
the Purchase Contracts, the Pledge Agreement, the Remarketing Agreement and the
Indenture, (b) issue the Units and the Common Stock issuable pursuant to the
Purchase Contracts and to incur the indebtedness evidenced by the Senior Notes
and (c) make the Contract Adjustment Payments. The Agreement, the Transaction
Agreement, the Purchase Contract Agreement, the Purchase Contracts, the Pledge
Agreement, the Remarketing Agreement and the Indenture have been duly
authorized, executed and delivered by the Company, are legal, valid and binding
obligations of the Company, enforceable against the Company in accordance with
their respective terms, subject to the effect of bankruptcy, insolvency,
reorganization, receivership, moratorium and other laws affecting the rights and
remedies of creditors generally and general equitable principles and subject to
any principles of public policy limiting the rights to enforce any
indemnification provisions contained therein.
14. The execution and delivery by the Company of, and the performance
by the Company of its agreements in, the Agreement, the Transaction Agreement,
the Purchase Contract Agreement, the Purchase Contracts, the Pledge Agreement,
the Remarketing Agreement and the Indenture do not and will not (a) violate the
certificate of incorporation or by-laws of the Company, (b) breach or result in
a default under, cause the time for performance of any obligation to be
accelerated under, or result in the creation or imposition of any lien, charge
or encumbrance upon any of the assets of the Company or any of its Subsidiaries
pursuant to the terms of, any indenture, mortgage, deed of trust, loan
agreement, bond, debenture, note agreement, capital lease or other evidence of
indebtedness of which such counsel has knowledge, (c) breach or result in a
default under, cause the time for performance of any obligation to be
accelerated under, or result in the creation or imposition of any lien, charge
or encumbrance upon any of the assets of the Company or any of its assets
pursuant to the terms of, any (i) voting trust arrangement or any contract or
other agreement to which the Company is a party that restricts the ability of
the Company to issue securities of which such counsel has knowledge or (ii)
Document filed as an exhibit to, or incorporated as an exhibit by reference in,
the
B-3
Registration Statement, (d) breach or otherwise violate any existing obligation
of the Company under any court or administrative order, judgment or decree of
which such counsel has knowledge or (e) violate applicable provisions of any
statute or regulation in the State of Oklahoma or of the United States; except
with respect to items (b), (c) and (d) above, such conflicts, agreements,
breaches, violations or defaults as would not have a Material Adverse Effect.
15. Delivery of certificates for the Units will transfer valid and
marketable title thereto to each Underwriter that has purchased such Units in
good faith and without notice of any adverse claim with respect thereto.
16. The Company is not an "investment company" or an "affiliated
person" of, or "promoter" or "principal underwriter" for, an "investment
company," as such terms are defined in the Investment Company Act of 1940, as
amended.
17. The Indenture has been duly qualified under the Trust Indenture Act.
18. The Corporate Units have been duly authorized for listing on the
New York Stock Exchange upon official notice of issuance.
Such counsel hereby confirms to the Underwriters that such counsel has been
orally advised by the Commission that the Registration Statement has become
effective under the Act and that, to such counsel's knowledge, no order
suspending the effectiveness of the Registration Statement has been issued and
no proceeding for that purpose has been instituted or is threatened, pending or
contemplated.
Such counsel hereby further confirms to the Underwriters that, to such
counsel's knowledge, there are no actions, suits, proceedings or investigations
pending or overtly threatened in writing against the Company or any of its
Subsidiaries, or any of their respective officers or directors in their
capacities as such, before or by any court, governmental agency or arbitrator
that (i) seek to challenge the legality or enforceability of the Agreement or
the Units, (ii) except as set forth in the Registration Statement or Prospectus
or any documents incorporated by reference therein, seek to challenge the
legality or enforceability of any of the Documents filed, or required to be
filed, as exhibits to the Registration Statement, (iii) except as set forth in
the Registration Statement or Prospectus or any documents incorporated by
reference therein seek damages or other remedies with respect to any of the
Documents filed, or required to be filed, as exhibits to the Registration
Statement, except as would not have a Material Adverse Effect, (iv) except as
set forth in or contemplated by the Registration Statement or the Prospectus or
any of the documents incorporated by reference into the Registration Statement
or the Prospectus, seek money damages in excess of 10% of the current assets of
the Company and its subsidiaries on a consolidated basis or seek to impose
criminal penalties upon the Company, any of its Subsidiaries or any of their
respective officers or directors in their capacities as such and of which such
counsel has knowledge, other than ordinary routine litigation incidental to the
Company's business, or (v) except as set forth in or contemplated by the
Registration Statement or the Prospectus or any of the documents incorporated by
reference into the Registration Statement or the Prospectus, seek to enjoin any
of the business activities of the Company or any
B-4
of its Subsidiaries or the transactions described in the Prospectus and of which
such counsel has knowledge.
Such counsel has participated in the preparation of the Registration
Statement and the Prospectus. From time to time in connection therewith such
counsel has had discussions with (i) officers and representatives of the
Company, (ii) representatives of KPMG LLP, the independent accountants who
examined certain of the financial statements of the Company and its consolidated
subsidiaries included or incorporated by reference in the Registration Statement
and the Prospectus, and (iii) the Underwriters' representatives and counsel
concerning the information contained in or incorporated by reference in the
Registration Statement and the Prospectus. Such counsel has not independently
verified and is not passing upon, and does not assume any responsibility for,
the accuracy, completeness or fairness of the information contained in or
incorporated by reference in the Registration Statement and the Prospectus
except to the extent set forth in paragraphs 5 and 8 above. Based solely upon
the participation and discussions described above, however, no facts have come
to such counsel's attention that cause such counsel to believe that the
Registration Statement and the Prospectus, when read collectively (except for
the following as to which such counsel is not called upon to express a view: (a)
financial statements, schedules and other financial data contained in the
Registration Statement or the Prospectus (or incorporated by reference therein)
and (b) the information referred to under the caption "Experts" as having been
included or incorporated by reference into the Registration Statement and the
Prospectus on the authority of KPMG LLP as experts), as of the date thereof or
as of the date hereof, contained or contains any untrue statement of a material
fact or omitted or omits to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances in which they were made, not misleading.
In rendering the foregoing opinion, counsel may rely, to the extent they
deem such reliance proper, on the opinions of other counsel to the Company as to
matters governed by the laws of jurisdictions other than the United States and
the State of Oklahoma, and as to matters of fact, upon certificates of officers
of the Company and of government officials; provided that such counsel shall
state that in such counsel's opinion that such counsel and the Underwriters are
justified in relying on such opinions of other counsel. Copies of all such
opinions and certificates shall be furnished to counsel to the Underwriters on
the Closing Date. For purposes of the foregoing opinion, such counsel has not
examined the Units, except a specimen thereof, and has relied upon a certificate
of the trustee under the Indenture as to the authentication of the Senior Notes
and a certificate of the Purchase Contract Agent under the Purchase Contract
Agreement as to the authentication of the Units. For purposes of paragraph 4 and
14(e) above, such counsel has reviewed only those statutes, rules and
regulations, including regulatory rules and regulations, that in such counsel's
experience are applicable to transactions of the type contemplated by the
Agreement or the Indenture or for the offering, issuance, sale or delivery of
the Units. For purposes of the foregoing opinion, the term "knowledge" shall
mean the conscious awareness of information by any Primary Lawyer, without
undertaking any investigation. The term "Primary Lawyer" shall mean each lawyer
in such counsel's Firm who gave substantive attention to representations of the
Company in connection with the transaction described in the Prospectus.
B-5
Capitalized terms used in such opinion but not defined shall have the
meanings assigned to them in the Agreement, except the term "Subsidiaries" shall
not include any subsidiaries listed on Schedule II to the Agreement as being
organized under the laws of Mexico ("Excluded Subsidiaries") and counsel shall
not be required to express any opinions regarding any Excluded Subsidiaries.
B-6
EXHIBIT C
LOCK-UP LETTER AGREEMENT
January 13, 2003
UBS WARBURG LLC
BANC OF AMERICA SECURITIES LLC
J.P. MORGAN SECURITIES INC.
as Representatives of the Several
Underwriters of the Proposed Public
Offering Referred to Below
c/o UBS WARBURG LLC
299 Park Avenue
New York, New York 10171
c/o BANC OF AMERICA SECURITIES LLC
600 Montgomery Street - Equity Capital Markets
San Francisco, California 94111
c/o J.P. MORGAN SECURITIES INC.
277 Park Avenue
New York, New York 10172
Ladies and Gentlemen:
The undersigned is an owner of record or beneficially of certain securities
of ONEOK, Inc, an Oklahoma corporation (the "Company"). The Company proposes to
carry out a public offering (the "Offering") of Equity Units of the Company,
which will have a stated amount of $25 and will consist of a purchase contract
issued by the Company and, initially, $25 principal amount of the Company's
senior notes (the "Equity Units"), for which you will act as the representatives
of the underwriters. The undersigned recognizes that the Offering will be of
benefit to the undersigned and will benefit the Company. The undersigned
acknowledges that you and the other underwriters are relying on the
representations and agreements of the undersigned contained in this letter in
carrying out the Offering and in entering into underwriting arrangements with
the Company with respect to the Offering.
In consideration of the foregoing, the undersigned hereby agrees that the
undersigned will not, (and will cause any spouse or immediate family member of
the spouse or the undersigned living in the undersigned's household not to),
without the prior written consent of UBS Warburg LLC, Banc of America Securities
LLC and J.P. Morgan Securities Inc. (which consent may be withheld in their sole
discretion), directly or indirectly, sell, offer, contract or grant any option
to sell (including, without limitation, any short sale), pledge, transfer,
establish an open "put equivalent position" within the meaning of Rule 16a-1(h)
under the Securities Exchange Act of 1934 or otherwise dispose of any Equity
Units, purchase contracts or shares of the Company's
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common stock, $0.01 par value per share (including the associated preferred
stock purchase rights, the "Common Stock"), options or warrants to acquire
Equity Units, purchase contracts or shares of Common Stock, or securities
exchangeable or exercisable for or convertible into Equity Units, purchase
contracts or shares of Common Stock, currently or hereafter owned either of
record or beneficially (as defined in Rule 13d-3 under the Securities Exchange
Act of 1934) by the undersigned (or such spouse or family member), or publicly
announce an intention to do any of the foregoing, for a period commencing on the
date hereof and continuing through the close of trading on the date 90 days
after the date of the final prospectus supplement relating to the Offering. The
undersigned also agrees and consents to the entry of stop transfer instructions
with the Company's transfer agent or registrar, as applicable, against the
transfer of Equity Units, purchase contracts or shares of Common Stock or
securities convertible into or exchangeable or exercisable for Equity Units,
purchase contracts or shares of Common Stock held by the undersigned except in
compliance with the foregoing restrictions.
With respect to the Offering only, the undersigned waives any registration
rights relating to registration under the Securities Act of 1933 of any Equity
Units, purchase contracts or shares of Common Stock owned either of record or
beneficially by the undersigned, including any rights to receive notice of the
Offering.
This agreement is irrevocable and will be binding on the undersigned and
the respective successors, heirs, personal representatives, and assigns of the
undersigned.
- --------------------------------------------
Printed Name of Holder
By:
----------------------------------------
Signature
- --------------------------------------------
Printed Name of Person Signing
(and indicate capacity of person signing if
signing as custodian, trustee, or on behalf
of an entity)
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