Exhibit 10.6

 

AMENDMENT NO. 1 TO

LIMITED LIABILITY COMPANY

MEMBERSHIP INTEREST PURCHASE AGREEMENT

by and between

ONEOK ENERGY RESOURCES COMPANY

and

TXOK ACQUISITION, INC.

 

This Amendment No. 1 to Limited Liability Company Membership Interest Purchase
Agreement (the “Amendment”) is entered into as of September 27, 2005, between
TXOK Acquisition, Inc., a Delaware corporation (the “Purchaser”), and ONEOK
Energy Resources Company, a Delaware corporation (the “Seller”). Capitalized
terms used herein but not defined shall have the meaning set forth in the
Purchase Agreement (as defined below).

 

RECITALS

 

WHEREAS, Seller and Purchaser entered into that certain Limited Liability
Company Membership Interest Purchase Agreement, dated as of September 19, 2005
(the “Purchase Agreement” and, as amended by this Amendment, the “Agreement”),
relating to the sale of all of the outstanding membership interests (the
“Membership Interests”) in ONEOK Energy Resources Holdings, L.L.C., a Delaware
limited liability company; and

 

WHEREAS, the parties desire to amend the Purchase Agreement on the terms and
conditions set forth herein;

 

NOW, THEREFORE, in consideration of the premises and mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Parties agree as follows:

 

1. Definitions. The definition of “Estimated Purchase Price” in Section 1.1 of
the Purchase Agreement shall be deleted in its entirety and replaced with the
following:

 

“Estimated Purchase Price” means Seller’s good faith estimate of the Purchase
Price as set forth in a statement delivered by Seller to Purchaser at least one
Business Day before the Closing.”

 

2. Purchase Price and Adjustments. Section 2.2(a) of the Purchase Agreement
shall be deleted in its entirety and replaced with the following:

 

“(a) The aggregate consideration payable by Purchaser to Seller for the
Membership Interests (the “Purchase Price”) shall consist of $387,730,870.00
(the “Base Purchase Price”) plus or minus, as the case may be, the difference
between the Net Working Capital as of the Effective Date and the Net Working
Capital as of the Balance Sheet Date. For the avoidance of doubt, if Net Working
Capital as of the Effective Date is greater than the Net Working Capital as of
the Balance Sheet Date, then the difference shall be added to the Base Purchase
Price. If Net Working Capital as of the Balance Sheet Date is greater than the
Net Working Capital as of the Effective Date, then the difference shall be
subtracted from the Base Purchase Price.

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In addition, the Base Purchase Price shall be subject to adjustment as provided
in Sections 2.2(b), 2.2(c), 2.2(d), 2.2(e), 3.4, 6.15 and 9.2.”

 

3. Closing. Section 2.3 of the Purchase Agreement shall be deleted in its
entirety and replaced with the following:

 

“Section 2.3 Closing. The closing of the transactions contemplated by this
Agreement (the “Closing”) will take place at 10:00 a.m., at the offices of
Gable & Gotwals, 100 West 5th Street, Tulsa, Oklahoma on September 27, 2005,
subject to the satisfaction or waiver of each condition set forth in Section 7.1
or Section 7.2, or such other date as Purchaser and Seller may mutually
determine. The date on which the Closing occurs is hereinafter referred to as
the “Closing Date”.”

 

4. Notice of Title Defects. Section 3.4(a) of the Purchase Agreement shall be
deleted in its entirety and replaced with the following:

 

“(a) To assert a claim arising out of a breach of Section 3.1, Purchaser must
deliver a written claim notice to Seller promptly after becoming aware of a
Title Defect but in any event on or before 2:00 p.m. central time on
September 26, 2005 (the “Title Claim Date”), except as otherwise provided under
Section 3.5. Such notice shall be in writing and shall include (i) a specific
description of the alleged Title Defects, (ii) the Wells or Units affected,
(iii) the Allocated Values (as described below) of the Wells or Units subject to
the alleged Title Defects, (iv) supporting documents reasonably necessary for
Seller (as well as any title attorney or examiner hired by Seller) to verify the
existence of the alleged Title Defects and (v) the amount by which Purchaser
reasonably believes the Allocated Values of those Wells or Units are reduced by
the alleged Title Defects and the computations and information upon which
Purchaser’s belief is based. The alleged Title Defects delivered to Seller on or
before the Title Claim Date are attached hereto as Schedule 3.4. Purchaser shall
be deemed to have waived all breaches of Section 3.1 for which Seller has not
been given proper written notice as described above on or before the Title Claim
Date. The term “Allocated Value” for any assets of the Companies equals the
portion of the Purchase Price allocated to such asset as described on Exhibit B.
Seller, to the extent it desires to assert a Title Benefit, must deliver to
Purchaser, on or before the Title Claim Date, a similar written notice as to
each Title Benefit asserted.”

 

5. Representations and Warranties of Seller. The following Section 5.7 is added
to the Purchase Agreement:

 

“Section 5.7 Allocation. Purchaser allocated the values in this transaction (in
the aggregate for the transactions described in this Agreement and in the Stock
Purchase Agreement between ONEOK, Inc. and Purchaser dated of even date
herewith) as follows:

 

Exploration and Production Assets:

   $ 498,626,955.08  

Unproductive Real Property:

   $ 150,412,423.86  

Gathering System:

   $ 18,841,499.00 ”

 

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6. Employment Offers. Section 6.9(c) of the Purchase Agreement shall be deleted
in its entirety and replaced with the following:

 

“(c) Each offer of employment by Purchaser or its Affiliates to a Company
Employee or to an Additional Available Employee shall be made in writing on or
before October 7, 2005 and shall be consistent with the provisions of this
Section 6.9 and shall remain open until October 14, 2005. As soon as practicable
after Closing, but no later than October 14, 2005, Purchaser shall notify Seller
as to each Company Employee and each Additional Available Employee who has
accepted employment with the Purchaser or its Affiliates, and each Company
Employee and each Additional Available Employee who has rejected or not
responded to an offer of such employment. Purchaser shall indemnify and hold
harmless Seller and its Affiliates with respect to all Losses relating to or
arising out of the employee selection and employment offer process described in
the preceding provisions of this Section 6.9 (including any claim of
discrimination or other illegality in such selection and offer process). The
transfer of employment of each Transferred Employee shall be effective, in each
case, as of October 15, 2005, except that if a Transferred Employee accepts
employment after such date, then the transfer of employment shall be effective
as of the day after the date the first payroll payment is due from Purchaser to
such employee; provided, however, that in all cases all direct or indirect costs
and expenses for compensation, benefits, taxes and all Losses (including any
Losses associated with any health or welfare plan benefits) and all other direct
or indirect costs relating to or arising out of the employment of each such
Transferred Employee shall be allocated as of the Effective Date. For the
avoidance of doubt, the agreement and intention of the parties is that Seller
and its Affiliates shall pay (or reimburse Purchaser and its Affiliates for) all
direct and indirect costs, expenses, taxes and Losses relating to or arising out
of the employment of each Transferred Employee prior to the Effective Date, and
Purchaser and its Affiliates shall pay (or reimburse Seller and its Affiliates
for) all direct and indirect costs, expenses, taxes and Losses relating to or
arising out of the employment of each Transferred Employee from and after the
Effective Date.”

 

7. Terms of Employment. Section 6.9(d) of the Purchase Agreement shall be
deleted in its entirety and replaced with the following:

 

“(d) The terms of employment (including all benefits) of the Transferred
Employees by the Purchaser or its Affiliates shall be substantially similar or
superior to those terms of employment and benefits provided by Purchaser and its
Affiliates to their employees in similar positions and with similar
responsibilities as of the Closing Date. For a period of not less than one
(1) year following the Effective Date, Purchaser or its Affiliates shall pay
each Transferred Employee a base salary or wage not less than that paid by
Seller or its Affiliates immediately prior to the Closing Date, and Purchaser or
its Affiliates shall provide to each Transferred Employee an opportunity to earn
bonuses on the same basis as similarly situated employees of Purchaser and its
Affiliates.”

 

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8. Severance. The following Section 6.9(m) is added to the Purchase Agreement:

 

“(m) If, within one (1) year after the Effective Date, Purchaser employs any
Company Employee or any Additional Available Employee to whom Seller or its
Affiliates made any severance payments, then Purchaser shall reimburse Seller or
its Affiliates for the full amount of such severance payments.”

 

9. Transition Services. Section 6.16 of the Purchase Agreement shall be deleted
in its entirety and replaced with the following:

 

“Section 6.16 Transition Services. Seller and Purchaser hereby agree to
negotiate in good faith to enter into a transition services agreement as
mutually agreed upon by the parties hereto before the Closing, provided however,
that nothing in this Section 6.16 shall create a condition to Closing, and the
failure of Seller and Purchaser to mutually agree upon a transition services
agreement shall not affect the parties obligations to close the transaction
contemplated by this Agreement. Purchaser understands and agrees that Seller’s
obligation to provide transition services under the transition services
agreement shall be limited to the provision of: (i) reasonable office space,
(ii) reasonably necessary IT services, and (iii) to the extent permitted by any
third party licensor of Seller, access to Seller’s accounting, land, production
reporting and measurement systems. Seller shall charge Purchaser for such
transition services at Seller’s cost, and Purchaser shall pay Seller for all
such charges. Purchaser and/or each Company, as applicable, each agree to
provide to Seller transition services and access to records of the Companies as
is reasonably necessary to allow Seller to perform all customary accounting and
financial reporting activities related to Seller’s ownership, control and/or
operation of the Companies, including monthly, quarterly and year-end financial
and tax reporting. Purchaser shall charge Seller for such transition services at
Purchaser’s cost, and Seller shall pay Purchaser for all such charges. Neither
Party shall be obligated to acquire new, additional or different personnel,
equipment or resources, or to acquire or establish any separate hardware or
software platforms to perform such transition services. The Parties may use
Affiliates, contractors, subcontractors, vendors or other third parties to
provide some or all of the transition services. Unless otherwise specifically
provided in a mutually agreed upon transition services agreement, the transition
services will be available only for a period of 180 days after the Effective
Date. Purchaser understands and agrees that Seller shall have no obligation to
provide transition services to Purchaser to the extent the Company Employees or
the Additional Available Employees that typically provide such services are no
longer available to Seller.”

 

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10. Distribution. The following Section 9.7 is added to the Purchase Agreement:

 

“Section 9.7 Distribution. Immediately prior to the Closing, the Companies shall
transfer the assets described on Exhibit “D” to ONEOK, Inc., an Oklahoma
corporation (the “Distribution”). The Distribution is considered an integral
part of this Agreement pursuant to which, among other things, the Seller will
transfer the Membership Interests to the Purchaser for the Purchase Price and
elect to treat such transfer as a sale of assets by each Company under
Section 338(h)(10) of the Code. Each Company does not intend to make the
Distribution without the transfer of the Membership Interests by the Seller to
Purchaser. Accordingly, it is intended that the Distribution be considered a
distribution pursuant to a plan of complete liquidation of each Company
qualifying for treatment under Section 332 of the Code as contemplated in Treas.
Reg. sections 1.338(h)(10)-1(d)(4)(i) and 1.338(h)(10)-1(e).”

 

11. Indemnification by Seller. The following Section 10.2(d) is added to the
Purchase Agreement:

 

“(d) To the extent that (i) Seller has the right to seek indemnification from
Wagner & Brown, Ltd., a Texas limited partnership (“Wagner & Brown”) or any of
its Affiliates with respect to the following litigation matters: (i) White Oak
Independent School District, Plaintiff v. ONEOK Texas Energy Resources, L.P.,
Defendant, filed in the United States District Court for the Eastern District of
Texas, Case No. 2-05CV-107, (ii) James Sydney Person, Plaintiff v.ONEOK Texas
Energy Resources, L.P. and Wagner & Brown L.P., Defendants, filed in the
District Court of Gregg County, Texas, Case No. 2005-863-CCL2 (Companion case to
White Oak above), and (ii) Seller has the right to provide the benefits of such
indemnification to Purchaser, and (iii) the Purchaser Indemnified Parties are
not otherwise entitled to indemnification from Seller under this Article X, then
Seller, upon Purchaser’s written request, shall assert a claim relating to such
matter against Wagner & Brown and Seller shall provide to Purchaser all benefits
of such indemnification as, when and if provided by Wagner & Brown.
Notwithstanding the foregoing, Seller shall not be obligated to make any
additional payments or to take any action that would cause it to incur or be
subject to any additional liabilities or costs with respect to any actions taken
under this Section 10.2(d). Notwithstanding the foregoing, nothing in this
Section 10.2(d) shall be construed to create any express or implied
representation or warranty that Seller is entitled to any indemnification from
Wagner & Brown.”

 

12. Ratification. Except as expressly amended herein, all terms and provisions
of the Purchase Agreement shall remain in full force and effect, and are hereby
ratified, approved and confirmed in every respect.

 

(REMAINDER OF PAGE INTENTIONALLY LEFT BLANK –

SIGNATURE PAGE FOLLOWS)

 

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IN WITNESS WHEREOF, the Parties hereto have executed this Amendment as of the
date first written above.

 

ONEOK ENERGY RESOURCES COMPANY

By:

  /s/

Name:

   

Title:

   

 

“SELLER”

TXOK ACQUISITION, INC.

By:

  /s/

Name:

   

Title:

   

“PURCHASER”

 

ONEOK, Inc. hereby executes this Amendment as guarantor of the post-closing
payment and performance obligations of Seller under the Agreement for the
purpose of acknowledging the amendments made herein to the Purchase Agreement
solely in its capacity as such guarantor.

 

ONEOK, INC.

By:

  /s/

Name:

   

Title:

   

“SELLER”

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Schedule 3.4

 

(Notice of Alleged Title Defects)