EXHIBIT 99.1
TERMINATION AGREEMENT
THIS AGREEMENT, dated this 5th day of January, 2005, between ONEOK, Inc.,
an Oklahoma corporation, or any division or subsidiary thereof, having its
principal office in Tulsa, Oklahoma (the "Corporation"), and ___________(the
"Executive").
W I T N E S S E T H:
WHEREAS, the Executive, as an employee of the Corporation, has rendered
valuable service to the Corporation, and the Corporation wishes to retain the
Executive's services, assuring both itself and the Executive of the continuity
of management in the event of any actual or threatened Change in Control of the
Corporation; and
NOW, THEREFORE, it is hereby agreed by and between the parties as follows:
1. Term of Agreement. This Agreement shall commence as of January 5, 2005
and shall continue in effect until January 1, 2007 (the "Term"); provided,
however, that on January 1, 2007 and on each January 1 thereafter, the Term
shall automatically be extended and renewed for one (1) year unless either the
Executive or the Corporation shall have given written notice to the other of its
election not to renew this Agreement at least ninety (90) days prior thereto
that the Term shall not be so extended; provided, further, however, that
following the occurrence of a Change in Control, the Term shall not expire
before the expiration of three (3) years after such occurrence.
2. Termination Payments. In the event of a Termination (as hereinafter
defined) during the Term and within three (3) years after a Change in Control,
the Executive shall:
a. Be paid a lump sum termination payment by the Corporation in an amount
equivalent to [TWO (2)] [THREE (3)] times the Executive's Annual Compensation,
and
b. Be paid a lump sum payment by the Corporation equal to the Executive's
short-term incentive compensation "target percentage" under the Corporation's
incentive compensation plan times the Annual Base Salary, prorated for the
length of employment during the current performance period, and
c. Be paid by, or receive from the Corporation the employee benefits
(including, but not limited to, car allowances and coverage under any medical or
insurance arrangements or programs) to which the Executive would have been
entitled under all employee welfare plans, programs, or arrangements maintained
by the Corporation if the Executive had remained in the employ of the
Corporation for the [TWO (2)] [THREE (3)]-year period following Termination.
Such employee benefits shall be provided under plans sponsored by the
Corporation on the Occurrence Date or the Termination Date, whichever produces
the higher benefits, but if such benefits are not available under Corporation
sponsored plans in effect during each of the [TWO (2)] [THREE (3)] years, the
Corporation shall provide such benefits to the Executive under plans
covering the Executive individually, or otherwise provide or pay such benefits
to the Executive.
d. The lump sum payments described above shall be calculated and paid not
later than thirty (30) calendar days after the Termination Date. Any payment not
made within the thirty (30) days shall thereafter bear interest at two percent
(2%) over the "prime rate" as published in The Wall Street Journal from time to
time, which is the base rate on corporate loans posted by at least seventy-five
percent (75%) of the nation's thirty (30) largest banks.
3. Non-Disclosure. The Executive agrees that the Executive shall not,
during the [TWO (2)] [THREE (3)] years after the date of any such Termination,
directly or indirectly, divulge, disclose, or communicate to any other person
any trade secrets that the Corporation may use in its business operations.
4. Definitions. For purposes of this Agreement, the following terms shall
have the meaning specified.
"Change in Control"
a. means the occurrence of any of the following during the term of this
Agreement:
(1) An acquisition (other than directly from the Corporation) of any
voting securities of the Corporation (the "Voting Securities") by any
"Person" (as the term person is used for purposes of Section 13(d) or
14(d) of the Exchange Act), immediately after which such Person has
"Beneficial Ownership" (within the meaning of Rule 13d-3 promulgated under
the Exchange Act) of twenty percent (20%) or more of the then outstanding
Shares or the combined voting power of the Corporation's then outstanding
Voting Securities; provided, however, in determining whether a Change in
Control has occurred pursuant to this Section 4(a), Shares or Voting
Securities which are acquired in a "Non-Control Acquisition" (as
hereinafter defined) shall not constitute an acquisition which would cause
a Change in Control. A "Non-Control Acquisition" shall mean an acquisition
by (i) an employee benefit plan (or a trust forming a part thereof)
maintained by (A) the Corporation or (B) any corporation or other Person
of which a majority of its voting power or its voting equity securities or
equity interest is owned or controlled, directly or indirectly, by the
Corporation (for purposes of this definition, a "Related Entity"), (ii)
the Corporation or any Related Entity, or (iii) any Person in connection
with a "Non-Control Transaction" (as hereinafter defined);
(2) The individuals who, as of JANUARY 1, 2005, are members of the
Board of Directors (the "Incumbent Board"), cease for any reason to
constitute at least a majority of the members of the Board of Directors;
or, following a Merger which results in a Parent Corporation, the board of
directors of the ultimate Parent Corporation; provided, however, that if
the election, or nomination for election by the Corporation's common
stockholders, of any new director was approved by a vote of at least
two-thirds of the Incumbent Board, such new director shall, for purposes
of this Agreement, be considered as a member of the Incumbent Board;
provided further, however, that no individual shall be considered a member
of the Incumbent Board if such individual initially assumed office as a
result of either an actual or threatened "Election Contest" (as described
in Rule
- 2 -
14a-11 promulgated under the Exchange Act) or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other than
the Board of Directors (a "Proxy Contest"), including by reason of any
agreement intended to avoid or settle any Election Contest or Proxy
Contest; or
(3) The consummation of:
(i) A merger, consolidation or reorganization with or into the
Corporation or in which securities of the Corporation are issued (a
"Merger"), unless such Merger is a "Non-Control Transaction." A
"Non-Control Transaction" shall mean a Merger where:
(A) the stockholders of the Corporation, immediately before
such Merger, own directly or indirectly immediately following
such Merger at least fifty percent (50%) of the combined voting
power of the outstanding voting securities of (x) the corporation
resulting from such Merger (the "Surviving Corporation") if fifty
percent (50%) or more of the combined voting power of the then
outstanding voting securities of the Surviving Corporation is not
Beneficially Owned, directly or indirectly by another Person (a
"Parent Corporation"), or (y) if there is one or more Parent
Corporations, the ultimate Parent Corporation;
(B) the individuals who were members of the Incumbent Board
immediately prior to the execution of the agreement providing for
such Merger constitute at least a majority of the members of the
board of directors of (x) the Surviving Corporation, if there is
no Parent Corporation, or (y) if there is one or more Parent
Corporations, the ultimate Parent Corporation; and
(C) no Person other than (1) the Corporation, (2) any Related
Entity, (3) any employee benefit plan (or any trust forming a
part thereof) that, immediately prior to such Merger was
maintained by the Corporation or any Related Entity, or (4) any
Person who, immediately prior to such Merger had Beneficial
Ownership of thirty percent (30%) or more of the then outstanding
Voting Securities or Shares, has Beneficial Ownership of thirty
percent (30%) or more of the combined voting power of the
outstanding voting securities or common stock of (x) the
Surviving Corporation if there is no Parent Corporation, or (y)
if there is one or more Parent Corporations, the ultimate Parent
Corporation.
(ii) A complete liquidation or dissolution of the Corporation; or
(iii) The sale or other disposition of all or substantially all
of the assets of the Corporation to any Person (other than a
transfer to a Related Entity or under conditions that would
constitute a Non-Control Transaction with the disposition of assets
being regarded as a Merger for this purpose or the distribution to
the Corporation's stockholders of the stock of a Related Entity or
any other assets).
- 3 -
b. Notwithstanding the foregoing, Change in Control shall not be deemed to
occur,
(1) solely because any Person (the "Subject Person") acquired
Beneficial Ownership of more than the permitted amount of the then
outstanding Shares or Voting Securities if:
(i) such acquisition occurs as a result of the acquisition of Shares
or Voting Securities by the Corporation which, by reducing the number
of Shares or Voting Securities then outstanding, increases the
proportional number of shares Beneficially Owned by the Subject Person,
provided that if a Change in Control would occur (but for the operation
of this subparagraph) as a result of the acquisition of Shares or
Voting Securities by the Corporation, and after such share acquisition
by the Corporation, the Subject Person becomes the Beneficial Owner of
any additional Shares or Voting Securities which increases the
percentage of the then outstanding Shares or Voting Securities
Beneficially Owned by the Subject Person, then a Change in Control
shall occur, or
(ii) (A) within five business days after a Change in Control would
have occurred (but for the operation of this subparagraph), or if the
Subject Person acquired Beneficial Ownership of twenty percent (20%) or
more of the then outstanding Shares or the combined voting power of the
Corporation's then outstanding Voting Securities inadvertently, then
after the Subject Person discovers or is notified by the Corporation
that such acquisition would have triggered a Change in Control (but for
the operation of this subparagraph), the Subject Person notifies the
Board of Directors that it did so inadvertently, and (B) within two
business days after such notification, the Subject Person divests
itself of a sufficient number of Shares or Voting Securities so that
the Subject Person is the Beneficial Owner of less than twenty percent
(20%) of the then outstanding Shares or the combined voting power of
the Corporation's then outstanding Voting Securities.
(2) if (i) the Shareholder Group (as defined in the Shareholder
Agreement) acquires Beneficial Ownership of fifteen percent (15%) or more
of the Corporation's Voting Securities pursuant to the terms of the
Shareholder Agreement, by and between WAI, Inc. (now known as ONEOK, Inc.)
and Western Resources, Inc. dated as of November 26, 1997 (the
"Shareholder Agreement"), until the earlier of (a) the termination of the
Shareholder Agreement or (b) the successful consummation of a Buyout
Tender Offer as defined in Section 3.6(b) of the Shareholder Agreement,
but upon either of such events, the acquisition or existence of such
percentage of Beneficial Ownership by Western Resources, Inc. or any of
its affiliates shall constitute a Change in Control or (ii) the equity
securities of the Corporation owned by the Shareholder Group are in any
manner restructured with the approval of a majority of the members of the
Incumbent Board (excluding Shareholder Nominees, as defined in the
Shareholder Agreement).
c. Notwithstanding anything in this Agreement to the contrary, if the
Executive's employment is terminated by the Corporation without Just Cause prior
to the date of a Change in
- 4 -
Control but the Executive reasonably demonstrates that the termination (i) was
at the request of a third party who has indicated an intention or taken steps
reasonably calculated to effect a Change in Control or (ii) otherwise arose in
connection with, or in anticipation of, a Change in Control which has been
threatened or proposed, such termination shall be deemed to have occurred after
a Change in Control for purposes of this Agreement provided a Change in Control
shall actually have occurred.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
The "Occurrence Date" means the date on which a Change in Control of the
Corporation occurs.
"Shares" means the common stock, par value $.01 per share, of the
Corporation and any other securities into which such shares are changed or for
which such shares are exchanged.
"Termination" means termination of the Executive's employment with the
Corporation, within three (3) years after the Occurrence Date and prior to such
Executive's Normal Retirement Date,
(i) By the Corporation for any reason other than death or Permanent and
Total Disability of the Executive, or for "Just Cause". The following
circumstances shall constitute "Just Cause":
The Executive's conviction in a court of law of a felony, or any crime
or offense in a court of law of a felony, or any crime or offense
involving misuse or misappropriation of money or property, the
Executive's violation of any covenant, agreement or obligation not to
disclose confidential information regarding the business of the
Corporation (or a division or subsidiary); any violation by the
Executive of any covenant not to compete with the Corporation (or a
division or subsidiary); any act of dishonesty by the Executive which
adversely affects the business of the Corporation (or a division or
subsidiary); any willful or intentional act of the Executive which
adversely affects the business of, or reflects unfavorably on the
reputation of the Corporation (or a division or subsidiary); the
Executive's use of alcohol or drugs which interferes with the
Executive's performance of duties as an employee of the Corporation (or
a division or subsidiary); or the Executive's failure or refusal to
perform the specific directives of the Corporation's Board of
Directors, or its officers which directives are consistent with the
scope and nature of the Executive's duties and responsibilities with
the existence and occurrence of all of such causes to be determined by
the Corporation, in its sole discretion; provided, that nothing
contained in the foregoing provisions of this paragraph shall be deemed
to interfere in any way with the right of the Corporation (or a
division or subsidiary), which is hereby acknowledged, to terminate the
Executive's employment at any time without cause.
(ii) By the Executive with the consent of the Board of Directors, or
for "Good
- 5 -
Reason." The following circumstances shall constitute "Good Reason":
A demotion, loss of title or significant authority or responsibility
of the Executive with respect to the Executive's employment with the
Corporation from those in effect on the Occurrence Date, a reduction
in salary of the Executive from that received from the Corporation
immediately prior to the Occurrence Date, a reduction in short-term
and/or long-term incentive targets from those applicable to the
Executive immediately prior to the Occurrence Date, the relocation
of the Corporation's principal executive offices to a location
outside the metropolitan area of Tulsa, Oklahoma, or the
Corporation's requiring a Relocation of principal place of
employment of the Executive, or the failure of a successor
corporation to explicitly assume this Agreement; provided, however,
the Executive may consent in writing to any such demotion, loss,
reduction, relocation or successor's failure to assume. The effect
of any written consent of the Executive under this Section 4(e)(ii)
shall be strictly limited to the terms specified in such written
consent. The Executive shall give notice of any Termination of the
Executive's employment for Good Reason due to any of the events
described above by delivery of written notice thereof to the
Corporation within one hundred twenty (120) days after the first
occurrence of the event giving rise to such Good Reason.
"Termination Date" means the date of the Executive's Termination.
"Annual Compensation" means the greater of (A) the sum of (i) the Annual
Base Salary last preceding the Occurrence Date, plus (ii) the Executive's bonus
for the year last preceding the Occurrence Date, or (B)(i) the Annual Base
Salary last preceding the Occurrence Date, plus (ii) the Executive's target
bonus for the current performance period.
"Code" means the Internal Revenue Code of 1986, as amended.
"Annual Base Salary" means the annual base salary of the Executive as set
and approved annually by the Corporation.
"Normal Retirement Date" means the Normal Retirement Date of the Executive
under the Retirement Plan for Employees of ONEOK, Inc. and Subsidiaries.
"Permanent and Total Disability" means a condition of disability of the
Executive that comes within the meaning of such term under Section 22(e) of the
Code.
"Relocation" means the Corporation requiring the Executive to move and
relocate to a new principal place of the Executive's employment by the
Corporation, which is more than thirty-five (35) miles further from the
Executive's principal place of residence than the Executive's principal place of
employment was prior to such change.
5. Section 280G Limitation on Payments.
- 6 -
a. The Corporation shall make the payment and provide the payments and
benefits under Section 2 of this Agreement; provided, however, that if all or
any portion of the payments and benefits provided under Section 2 of this
Agreement, either alone or together with other payments and benefits which the
Executive receives or is then entitled to receive from the Corporation, would
constitute a "parachute payment" within the meaning of Section 280G of the Code,
the Corporation shall reduce such payments and benefits provided to the
Executive under Section 2 of this Agreement to the extent necessary so that no
portion thereof shall be subject to the excise tax imposed by Section 4999 of
the Code; but only if, by reason of such reduction, the net after-tax benefit to
the Executive shall exceed the net after-tax benefit if such reduction were not
made. "Net after-tax benefit" for these purposes shall mean the sum of (i) the
total amount payable to the Executive under Section 2 of this Agreement, plus
(ii) all other payments and benefits which the Executive receives or is then
entitled to receive from the Corporation that would constitute a "parachute
payment" within the meaning of Section 280G of the Code, less (iii) the amount
of federal income taxes payable with respect to the foregoing calculated at the
maximum marginal income tax rate for each year in which the foregoing shall be
paid to the Executive (based upon the rate in effect for such year as set forth
in the Code at the time of the payment under Section 2), less (iv) the amount of
excise taxes imposed with respect to the payments and benefits described in (i)
and (ii) above by Section 4999 of the Code. The amount of any reduction made
under this Section 5(a) in the payment to which the Executive is entitled under
Section 2 of this Agreement is hereinafter referred to as the "Relinquished
Amount."
b. If the Executive's payment under Section 2 of this Agreement is reduced
under Section 5(a) and, notwithstanding such reduction, the Executive
subsequently pays or becomes obligated to pay any excise tax under Section 4999
of the Code on any portion of any payment or benefit the Executive receives
(whether pursuant to this Agreement or otherwise) in connection with the event
giving rise to the Executive's right to receive payments and benefits under
Section 2 of this Agreement, the Corporation shall pay to the Executive an
amount equal to the Relinquished Amount, together with interest thereon at the
rate set forth in Section 2(g) of this Agreement from the date of the payment to
the Executive pursuant to Section 2 of this Agreement to and including the date
of payment of the Relinquished Amount, and an amount ("Special Reimbursement")
which, after payment by the Executive of any federal, state and local taxes,
including any further excise tax under Section 4999 of the Code resulting from
all payments and benefits received (whether pursuant to this Agreement or
otherwise, and including the Relinquished Amount and this Special
Reimbursement), equals the total excise tax paid or payable.
c. The determination of whether the payments shall be reduced as provided
in this Section 5 and the amount of such reduction shall be made at the
Corporation's expense by an accounting firm retained by the Corporation at the
time the calculation is to be performed, or one selected by the Corporation from
among the five largest accounting firms in the United States (the "Accounting
Firm"). The Accounting Firm shall provide its determination (the
"Determination"), together with detailed supporting calculations and
documentation to the Corporation and the Executive within ten (10) days of the
Termination Date. If the Accounting Firm determines that no excise tax is
payable by the Executive with respect to the payments, it shall furnish the
Executive with an opinion reasonably acceptable to the Executive that no excise
tax will be imposed with respect to any such payments and, absent manifest
error, such
- 7 -
Determination shall be binding, final and conclusive upon the Corporation and
the Executive. If the Accounting Firm determines that an excise tax would be
payable, the Executive shall have the right to accept the Determination of the
Accounting Firm as to the extent of the reduction, if any, pursuant to this
Section 5, or to have such Determination reviewed by an accounting firm selected
by the Executive, at the expense of the Corporation, in which case the
determination of such second accounting firm shall be binding, final and
conclusive upon the Corporation and Executive.
6. Fees and Expenses. The Corporation shall reimburse the Executive on a
current basis, for all legal fees, arbitration fees and related expenses
incurred by the Executive in connection with this Agreement following a Change
in Control, including, without limitation, (a) all such fees and expenses, if
any, incurred in contesting any termination of employment or incurred by the
Executive in seeking advice with respect to the matters set forth in Section 2
hereof, or (b) Executive seeking to enforce any benefit provided by this
Agreement, in each case, regardless of whether or not the claim is upheld by a
court of competent jurisdiction; provided, however, Executive shall be required
to repay any such amounts to the extent that the arbitrator under Section 14
issues a final and non-appealable order determining that the Executive's
position was frivolous. The Corporation shall reimburse the Executive for all
reasonable attorneys' and accountants' fees incurred in connection with
determining whether a reduction under Section 5(a) is appropriate.
7. Consideration. As consideration for the benefits to be provided by the
Corporation under this Agreement, prior to the occurrence of a Change in Control
the Executive agrees to deliver to the Corporation thirty (30) calendar days'
prior written notice of any voluntary termination by the Executive of the
Executive's employment with the Corporation.
8. Notices. Any notices, requests, demands, and other communications
provided for by this Agreement shall be sufficient if in writing and if sent by
registered or certified mail to the Executive at the last address the Executive
has filed in writing with the Corporation or, in the case of the Corporation, at
its principal executive offices.
9. Governing Law. The provisions of this Agreement shall be construed in
accordance with the laws of the State of Oklahoma.
10. Amendment. This Agreement may be amended or canceled only by mutual
agreement of the parties in writing and so long as the Executive lives, no
person, other than the parties hereto, shall have any rights under or interest
in this Agreement or the subject matter hereof.
11. Succession. This Agreement shall be binding upon and shall inure to
the benefit of the parties hereto and their respective heirs, legal
representatives, successors and assigns. The Corporation shall have the right to
assign this Agreement to a parent, affiliate or subsidiary corporation or to any
corporation with which it may merge or consolidate.
12. Severability. In the event that all or any part of any provision of
this Agreement shall be determined to be invalid or unenforceable for any
reason, the remaining provisions of
- 8 -
this Agreement or such provision shall be unaffected thereby and shall remain in
full force and effect. If any provision of this Agreement or portion thereof is
so broad as to be unenforceable it shall be interpreted to be only so broad as
is enforceable. Nothing in this Agreement is intended to or shall be construed
to violate any Federal or State law or regulation.
13. Related Agreements. This Agreement shall supersede and terminate all
prior individual agreements between the Corporation and the Executive relating
to the matters contained herein; provided, however that any severance
agreements, plans and policies that currently affect the Executive as provided
for in the Purchase Agreement and Closing Documents between ONEOK, Inc. and CCE
Holdings, LLC, (the "CCE Severance Benefits") shall continue to be applicable.
However, any benefit that becomes payable under the CCE Severance Benefits shall
offset benefits that may become payable under this Agreement so that severance
benefits are not duplicated. The Executive shall not be entitled to participate
in ONEOK, Inc.'s Severance Pay Policy.
14. Arbitration.
a. Any dispute, controversy or claim arising out of or relating to this
Agreement, or the breach, termination or validity thereof, shall be settled by
binding arbitration in accordance with the CPR NON-ADMINISTERED ARBITRATION
RULES in effect on the date of this Agreement, by a sole arbitrator.
b. The arbitration shall be governed by the United States Arbitration Act,
9 U.S.C. Section 1-16, and judgment upon the award rendered by the Arbitrator
may be entered by any court having jurisdiction thereof.
c. The place of arbitration shall be Tulsa, Oklahoma.
d. The statute of limitations of the State of Oklahoma applicable to the
commencement of a lawsuit shall apply to the commencement of an arbitration
hereunder.
- 9 -
IN WITNESS WHEREOF, the Executive has hereunto set the Executive's hand and,
pursuant to the authorization from its Board of Directors, the Corporation has
caused this Agreement to be executed in its name on its behalf, all as of the
day and year first above written.
___________________________________
"Executive"
ONEOK, Inc.
By_________________________________
Xxxxx Xxxx, Chairman,
Chief Executive Officer and
President
"Corporation"
- 10 -
