EXHIBIT (10)(f)
ONEOK, Inc. STOCK COMPENSATION PLAN
FOR NON-EMPLOYEE DIRECTORS
STOCK OPTION AGREEMENT
THIS AGREEMENT, made in Tulsa, Oklahoma, as of the 25th day of January,
---- -------
2001, between ONEOK, Inc., (hereinafter referred to as "Corporation"), and
__________________ (hereinafter referred to as "Optionee"), a Non-Employee
Director of the Corporation.
WHEREAS, the Corporation desires to provide the Optionee with an added
incentive to continue to contribute to the growth and profitability of the
Corporation, to continue to perform services of major importance to the
Corporation, and to encourage the Optionee to own shares of stock of the
Corporation; and
WHEREAS, the stock option granted hereunder is granted pursuant to the
terms of the Corporation's Stock Compensation Plan for Non-Employee Directors
initially adopted January 18, 2001 (hereinafter referred to as the Plan); and
WHEREAS, this option is intended to be a "non-qualified" stock option;
NOW, THEREFORE, in consideration of the mutual agreements stated
hereinafter, the Corporation and the Optionee agree that:
1. Stock Option. The Optionee is hereby granted, and the Optionee
------------
accepts, an Option to purchase 5,000 shares of the Corporation's Common Stock
after January 25, 2002, and prior to January 25, 2011, at a purchase price of
$44.625 per share (the Fair Market Value as defined in Section 2(i) of the Plan)
of each share at January 25, 2001, all subject to the terms, provisions, and
conditions of this Agreement (including, without limitation, the provisions on
the period of exercise in paragraph 5, below) and of the Plan, which are
incorporated herein by reference. Should there be any inconsistency between the
provisions of this Agreement and the Plan, the provisions of the Plan shall
control. This option may be exercised in the manner and to the extent provided
in this Agreement and the Plan as to all or any part of the shares of stock
subject to the option from time to time during the option period stated above,
and exercise of the option as to part of such shares shall not exhaust or
terminate the option. The option shall be exercised as to not less than fifty
(50) shares at any one time. Payment of the option price shall be made
concurrently with the exercise of the option, as provided in the Plan and this
Agreement.
2. Plan. This option is being made pursuant to the Plan initially adopted
----
by the Board of Directors of the Corporation on January 18, 2001, which provides
that the aggregate number of shares of Common Stock of the Corporation which may
be issued or transferred pursuant to stock options or other incentives under the
Plan, as amended, is three hundred and fifty thousand (350,000) shares, and
which Plan specifies the authority of the Corporation, its Board of Directors,
and a committee of the Board of Directors (the "Committee") to select Non-
Employee Directors to be granted options and other stock incentives. The
Executive Compensation
Page 1 of 7
Committee of the Board of Directors has been selected by the Board of Directors
as the Committee authorized to administer the Plan with respect to this option.
3. Optionee's Agreement Concerning Service as a Director. In
-----------------------------------------------------
consideration of the Corporation's granting of this option as incentive
compensation to Optionee, the Optionee agrees to continue to contribute and
perform service as a Director of the Corporation at the direction, will and
pleasure of the Corporation and the Board of Directors. Provided, however,
neither the foregoing agreement of the Optionee in this paragraph 3, nor any
other provision in this Agreement shall confer on the Optionee any right to
continue in service as a Director of the Corporation, or interfere in any way
with the right of the Corporation to terminate the Optionee's service as a
Director at any time.
4. Registration of Stock; Optionee's Representation With Respect To
----------------------------------------------------------------
Purchase for Investment. It is intended by the Corporation that the Plan and
-----------------------
the shares of Common Stock covered by this option are to be registered under the
Securities Act of 1933, as amended, prior to the date the option first becomes
exercisable; provided, that in the event such registration is for any reason not
made effective for such shares, the Optionee agrees, for the Optionee, for the
Optionee's heirs and legal representatives by inheritance or bequest, and for
any permissible transferee of Optionee, that all shares purchased hereunder will
be acquired for investment and not with a view to, or for sale or tender in
connection with the distribution of any part thereof, including any transfer or
distribution of such shares by the Optionee in exercising any part of this
option or as otherwise allowed by the Plan.
5. Period of Exercise and Vesting of Option. This option may be exercised
----------------------------------------
at any time on and after January 25, 2002, and prior to January 25, 2011;
provided, that this option may also be exercised at the times and under the
conditions specified in paragraphs 8 and 9, below.
Notwithstanding the foregoing, in the event of the Optionee's death, this
-------------------------------------------------------------------------
option shall be one hundred percent (100%) exercisable and fully vested
------
irrespective of the period of time that has then elapsed since the date this
option is granted, provided, however, this paragraph does not extend the period
of exercise of this option beyond the expiration of the term thereof stated in
paragraph 1, above.
6. Method of Exercise and Payment. This option shall be exercised by
------------------------------
written notice delivered to the Corporate Secretary of the Corporation on and in
the form authorized by the Corporation, accompanied by payment of the option
price for the number of shares specified and paid for in such exercise. The
Corporation shall then make delivery of such shares, provided that if any law or
regulation requires the Corporation, as it determines, to take any action with
respect to the shares specified in such notice before the issuance thereof, then
the date of delivery of such shares shall be extended for the period necessary
to take such action. The Optionee agrees to pay to the Corporation any
applicable federal, state, or local income, employment, social security,
medicare, or other withholding tax obligation arising in connection with this
option, or the Optionee's exercise thereof; and the Corporation shall have the
right, without the Optionee's prior approval or direction, to satisfy such
withholding tax by withholding all or any part of the shares of Common Stock
that would otherwise be transferred and delivered to the Optionee, with
Page 2 of 7
any shares so withheld to be valued at the Fair Market Value (as defined in
Section 2(i) of the Plan) on the date of such withholding. The Optionee, with
the consent of the Corporation, may satisfy such withholding tax by delivery and
transfer to the Corporation of shares of Common Stock of the Corporation
previously owned by the Optionee for at least six months, with any shares so
delivered and transferred to be valued at the Fair Market Value on the date of
such delivery. The purchase price of shares subject to this option shall be paid
in cash, or by bank-certified, cashiers, or personal check subject to
collection; or, in the alternative, the Optionee (or other person authorized to
exercise this option), may (i) pay the purchase price of such shares by
delivering to the Corporation a properly executed exercise notice together with
a copy of irrevocable instructions to a stockbroker to sell immediately some or
all of the shares acquired by the exercise of the option and deliver promptly to
the Corporation an amount of sale proceeds sufficient to pay the purchase price,
or (ii) pay the purchase price in shares of Common Stock of the Corporation
transferred and surrendered by the Optionee to the Corporation, or (iii) any
combination of the foregoing means of payment; provided, that the making of any
payment by the Optionee other than by cash or check shall be subject to any
conditions, rules, regulations, and procedures which the Corporation may adopt
or prescribe, which shall be effective as to the exercise of this option to the
extent provided therein, without regard to the form of payment otherwise allowed
or authorized with respect to any other option or participant under the Plan.
Any payment other than by cash or check shall be made only at the time and in
the manner which the Corporation determines is necessary to comply with any
applicable provisions of SEC Rule 16b-3 (as defined in Section 2(r) of the
Plan).
7. Restored Options. The Optionee shall be granted an Option (a Restored
----------------
Option) if and when (i) the Optionee exercises all or part of this option by
--------
surrendering shares of Common Stock of the Corporation already owned by the
Optionee in full or partial payment of the option price under this option,
and/or (ii) shares of Common Stock are surrendered or withheld to satisfy
withholding tax obligations incident to the exercise of this option; provided,
that no Restored Option shall be granted hereunder unless the Optionee is in the
service of the Corporation as a Director thereof at the time of any such
exercise of this option and surrender or withholding of shares of Common Stock.
Any such Restored Option shall be subject to the availability of shares of
Common Stock under the Plan at the time of such exercise of this option. A
Restored Option shall cover a number of shares of Common Stock not greater than
the number of shares of Common Stock surrendered in payment of the option price
under this option and/or used to satisfy any tax obligation incident to the
exercise of this option. Each Restored Option shall have an option price equal
to the Fair Market Value (as defined in Section 2(i) of the Plan) of the Common
Stock on the date of grant of the Restored Option and shall expire on the stated
expiration date of this option. The date of grant of a Restored Option shall be
the date on which such Restored Option is granted as a result of an exercise of
this Option. A Restored Option shall be exercisable at any time and from time
to time after the expiration of a period of six (6) months following the date of
grant of the Restored Option. Except as otherwise stated above in this
paragraph 7 with respect to a Restored Option's exercise price and period of
exercise, any Restored Option granted hereunder shall be evidenced by a written
instrument which shall contain substantially the same terms and conditions as
are contained in this Agreement, with such modifications as are necessary to
reflect the nature of the option as a Restored Option granted under the Plan and
this Agreement; and approval of this Agreement by
Page 3 of 7
the Committee shall be deemed to be approval of all of the foregoing described
terms and provisions of any Restored Option granted hereunder. The grant of each
Restored Option shall be subject to such rules and procedures as the Committee,
in its sole discretion, may prescribe.
8. Transferability of Option and Termination of Service
----------------------------------------------------
(a) Except as provided in subparagraph (b) of this paragraph 8, below, this
option shall not be transferable by the Optionee otherwise than by will or the
laws of descent and distribution which apply to the Optionee's estate, and this
option shall be exercisable, during the Optionee's lifetime, only by the
Optionee.
(b) Notwithstanding the foregoing, the Optionee may transfer any part or
all of this option to members of the Optionee's immediate family, or to one or
more trusts for the benefit of such immediate family members, or partnerships in
which such immediate family members are the only partners if the Optionee does
not receive any consideration for the transfer. In the event of any such
transfer, this option shall continue to be subject to the same terms and
conditions otherwise applicable hereunder and under the Plan immediately prior
to its transfer, except that this option shall not be further transferable by
the transferee inter vivos, except for transfer back to the original Optionee.
----- -----
For any such transfer to be effective, the Optionee must provide prior written
notice thereof to the Committee, unless otherwise authorized and approved by the
Committee, in its sole discretion; and the Optionee shall furnish to the
Committee such information as it may request with respect to the transferee and
the terms and conditions of any such transfer. For purposes of any transfer of
this option under this subparagraph (b), "immediate family" shall mean the
Optionee's spouse, children and grandchildren, and the transferee shall
sometimes be referred to herein as a "permissible transferee."
(c) Notwithstanding anything to the contrary expressed or implied herein
(including without limitation, the provisions of paragraph 5 on the exercise and
vesting of this option), except for the provisions of subparagraph 9(f), the
unexercised portion of this option (whether or not it is vested) shall become
invalid and wholly terminated and forfeited upon (i) the Optionee's resignation
from service as a Director of the Corporation or (ii) upon the removal by the
Corporation of the Optionee from service as a Director of the Corporation.
(d) Subject to the provisions of subparagraph 9(f), in the event of the
Optionee's retirement from service as a Director of the Corporation in
----------
accordance with the Corporation's By-laws, the Optionee, or a permissible
transferee, may exercise this option to the extent it is vested at the time of
such retirement under paragraph 5, above, at any time within twelve (12) months
after such retirement. Subject to the provisions of subparagraph 9(f), to the
extent this option is not vested at such retirement under paragraph 5 above, it
shall terminate and be forfeited upon such retirement.
(e) Subject to the provisions of subparagraph 9(f), in the event of the
Optionee's death while still serving as a Director of the Corporation, the
legatees, or personal representatives or heirs, or permissible transferee of the
Optionee, as the case may be, may exercise this option,
Page 4 of 7
which shall be fully vested at the time of the Optionee's death under paragraph
5, above, at any time within twelve (12) months after the date of the Optionee's
death.
(f) Notwithstanding the foregoing, the period of time in which the
Optionee, or the legatees, or personal representatives or heirs, or permissible
transferee of an Optionee may exercise this option in the event of the
Optionee's retirement from service as a Director of the Corporation, or death
under the foregoing provisions of this paragraph 8, shall in no event extend
beyond the expiration of the term of this option as stated in paragraph 1,
above.
(g) The Corporation may, in its sole discretion, allow this option to be
exercised by a legal representative of the Optionee standing in a fiduciary
--
relationship to the Optionee by reason of the Optionee being incapacitated or
incompetent under applicable state law.
9. Adjustment Provisions. It is understood that, prior to the expiration
---------------------
of this option or prior to the full exercise of this option, certain changes in
capitalization of the Corporation may occur. It is, therefore, understood and
agreed with respect to changes in capitalization that:
(a) If a stock dividend is declared on the Common Stock of the Corporation,
there shall be added to the shares of stock under the unexercised portion of
this option the number of shares which would have been issuable to the Optionee
-----
had the Optionee been the holder of record of the number of shares then under
option, but not theretofore purchased and issued hereunder, and the option price
per share shall be adjusted accordingly. Provided, however, that in making such
adjustments, no fractional shares, or scrip certificates in lieu thereof, shall
be issuable by the Corporation, and the Optionee shall be entitled to receive
only the number of full shares to which the Optionee may be entitled by reason
of such adjustment at the adjusted option price per share.
(b) In the event of an increase in the outstanding shares of Common Stock
of the Corporation, effectuated for the purpose of acquiring properties or
securities of another corporation or business enterprise, there shall be no
increase in the number of shares which are the subject matter of this option as
a result of such acquisition.
(c) In the event of an increase or decrease in the number of outstanding
shares of Common Stock of the Corporation through recapitalization,
reclassification, stock split-ups, consolidation of shares, changes in par value
and the like, an appropriate adjustment shall be made in the number of shares
and option price per share provided for under Section 1 of this Agreement,
either by increasing the number of shares and decreasing the option price per
share or by decreasing the number of shares and increasing the option price per
share, as may be required to enable the Optionee to acquire the same
proportionate stockholdings at the same aggregate purchase price. Provided,
however, that in making such adjustments, no fractional shares, or scrip
certificates in lieu thereof, shall be issuable by the Corporation, and the
Optionee shall be entitled to receive only the number of full shares to which
the Optionee may be entitled by reason of such adjustment at the adjusted option
price per share.
(d) The Corporation agrees that if during the term of this Agreement and
prior to the exercise of this option as to all shares subject hereto, the
Corporation (i) shall offer for sale to
Page 5 of 7
holders of its Common Stock shares of Common Stock or of other classes of stock
or other securities of the Corporation (except under a dividend reinvestment
plan or similar plan), or (ii) in connection with any transaction shall acquire
or shall cause to be issued rights to acquire shares of stock or other
securities of another corporation to or for the benefit of the holders of Common
Stock of the Corporation, the Corporation will give written notice to the
Optionee of the rights which are thus to be acquired or issued to or for the
benefit of the holders of Common Stock of the Corporation in sufficient time to
permit the Optionee to exercise this option, to the extent this option is then
exercisable, if the Optionee should elect to do so, and to permit the Optionee
to participate in such rights as a holder of such Common Stock of the
Corporation.
(e) Subject to the provisions of subparagraph (f), below, in the event the
Corporation proposes to merge or consolidate with another corporation, or to
sell or dispose of all or substantially all of its assets and business, or to
dissolve, the Corporation will give written notice thereof to the Optionee in
sufficient time to permit the Optionee to exercise this option to the extent it
is then exercisable (but without any acceleration or other modification of the
terms thereof except as otherwise required and provided by the terms of the Plan
---------
and this option), if the Optionee should elect to do so, and participate in such
transaction as a shareholder of the Corporation. Provided, however, in
connection with any merger or consolidation, or other transaction under which
the Corporation or its holders of shares of Common Stock will acquire stock or
other securities of the continuing, resulting, or another corporation, in
exchange for their shares of Common Stock of the Corporation, provision shall be
made for this option to become an option covering shares of the continuing,
resulting, or other corporation in the same proportion, at an equivalent price,
and subject to the same conditions, and for the issuance upon exercise by the
Optionee of the Optionee's pro rata number of shares or other securities on the
basis of the number of shares of Common Stock of the Corporation as to which the
option hereby granted remains at the time unexercised at the same aggregate
purchase price provided for in this Agreement, with the price per unit to be
adjusted upward or downward according to the increase or decrease of the number
of units involved. Provided, however, that no fractional shares shall be
reserved for issuance or be issuable to the Optionee and the Optionee shall be
entitled to receive only the number of full shares to which the Optionee may be
entitled by reason of the foregoing at the adjusted option price per share.
(f) Notwithstanding any provision to the contrary stated herein, including
subparagraphs 8(c), (d), and (e), at the time of a Change in Control with
---
respect to the Corporation, this option, to the extent it has not been
previously forfeited, shall pursuant to the provisions of Section 7 of the Plan,
(i) become fully vested and exercisable at that time to the extent not fully
vested and exercisable, and (ii) shall remain fully vested and exercisable until
it expires or terminates pursuant to its terms and conditions. The provisions
of this subparagraph (f) shall be applied in addition to, and shall not reduce,
modify, or change any other obligation or right of the Optionee otherwise
provided for in paragraph 3, above, concerning the Optionee's continued service
as a Director of the Corporation or the termination thereof. This option is
subject to the provisions of Section 7(e) of the Plan authorizing the
Corporation, or a committee of its Board of Directors, to provide in advance or
at the time of a Change in Control for cash to be paid in settlement of this
option, all subject to such terms and conditions as the Corporation or such
committee, in its sole discretion, may determine and impose. For purposes of
this subparagraph (f), the term "Change in Control" shall have the same meaning
as provided in the definition thereof stated in Section
Page 6 of 7
2(c) of the Plan, including any amendments thereof which may be made from time
to time in the future pursuant to the provisions of the Plan, with any amended
definition of such term to apply to all events thereafter coming within the
amended meaning.
10. Stock Reserved. The Corporation shall at all times during the term of
--------------
this Agreement reserve and keep available such number of shares of its Common
Stock held as treasury shares of the Corporation as will be sufficient to
satisfy the requirements of this Agreement, and shall pay all taxes imposed
upon the Corporation upon the exercise of this option and all other fees and
expenses necessarily incurred by the Corporation in connection therewith.
11. Rights of Shareholder. The Optionee shall have no rights as a
---------------------
shareholder in respect of shares as to which this option shall not have been
exercised and payment made as provided in the Plan, and the Optionee shall not
be considered or treated as a record owner of shares with respect to which this
option is exercised until the date that the stock certificate or certificates
are actually issued and such issuance reflected on the stock records of the
Corporation.
12. Successors and Assigns. This Agreement shall inure to the benefit of
----------------------
and be binding upon the heirs, legatees, legal representatives, successors, and
assigns of the parties hereto.
IN WITNESS WHEREOF, the Corporation has caused this Agreement to be duly
executed by its officers thereunto duly authorized, and the Optionee has signed
the same, in duplicate originals, as of the day and year first above written.
ONEOK, Inc.
Corporation
By: ----------------------------------------
Xxxxx X. Xxxx
Chairman of the Board, President and
Chief Executive Officer
---------------------------------------------
Optionee
Page 7 of 7
