Exhibit 10.4

 

EXECUTION COPY

 

Limited Liability Company Membership Interest

 

Purchase Agreement

 

by and between

 

KOCH HYDROCARBON MANAGEMENT COMPANY, LLC

 

and

 

ONEOK, INC.

 

for the purchase and sale of

 

a 100% Membership Interest in

 

KOCH VESCO HOLDINGS, LLC

 

Date: May 9, 2005

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TABLE OF CONTENTS

 

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1.

   Definitions    1      1.1    Definitions    1      1.2    Construction    5  
   1.3    Seller Knowledge Qualifiers    5

2.

   Purchase and Sale of the Vesco Holdings Membership Interest    5      2.1   
Purchase and Sale of the Vesco Holdings Membership Interest    5      2.2   
Purchase Price    5      2.3    Closing Date Statement    6

3.

   Closing and Termination.    6      3.1    Closing    6      3.2   
Termination of Agreement    6      3.3    Effect of Termination    6

4.

   Representations and Warranties of Seller    7      4.1    Organization and
Good Standing    7      4.2    Authority    7      4.3    Enforceable    7     
4.4    No Conflict    7      4.5    Consents and Approvals    8      4.6   
Ownership    8      4.7    Financial Statements    8      4.8    Brokers or
Finders    9      4.9    Proceedings    9      4.10    Contracts    9      4.11
   No Undisclosed Liabilities    9      4.12    Compliance with Laws; Permits   
9      4.13    No Other Business    9      4.14    Employees    9

5.

   Representations and Warranties of Purchaser    10      5.1    Organization
and Good Standing    10

 

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TABLE OF CONTENTS

(continued)

 

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     5.2    Authority    10      5.3    Enforceable    10      5.4    No
Conflict    10      5.5    Consents and Approvals    10      5.6    Brokers or
Finders    10      5.7    Proceedings    11      5.8    Securities Matters    11
     5.9    Financing    11

6.

   Covenants    11      6.1    Access to Information    11      6.2    Further
Assurances    12      6.3    Supplementation and Amendment of Schedules    12  
   6.4    Antitrust Approvals    12      6.5    Use of Name    14      6.6   
Preservation of Records    14      6.7    Publicity    15      6.8    Tax
Matters    15      6.9    Insurance    16      6.10    Confidentiality    17

7.

   Indemnification    17      7.1    Survival of Representations and Warranties
and Covenants    17      7.2    Indemnification by Seller    17      7.3   
Indemnification by Purchaser    18      7.4    Indemnification Procedures    18
     7.5    Limitations on Indemnification    19      7.6    Tax Treatment of
Indemnity Payments    21      7.7    No Consequential Damages    21      7.8   
Exclusive Remedy    22      7.9    No Transfer of Seller’s Indemnities    22

 

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TABLE OF CONTENTS

(continued)

 

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8.

   Conditions to Closing    22      8.1    Conditions Precedent to Obligations
of Seller    22      8.2    Conditions Precedent to Obligations of Purchaser   
23      8.3    Frustration of Closing Conditions    24

9.

   Miscellaneous    25      9.1    Payment of Transfer Taxes    25      9.2   
Expenses    25      9.3    Submission to Jurisdiction; Consent to Service of
Process    25      9.4    Entire Agreement; Amendments and Waivers    25     
9.5    Governing Law    26      9.6    Notices    26      9.7    Severability   
27      9.8    Binding Effect; Assignment    27      9.9    Non-Recourse    28  
   9.10    Counterparts    28      9.11    Time is of the Essence    28     
9.12    Specific Performance    28

 

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Exhibits

 

Exhibit A    Form of § 1445 Certificate Exhibit B    Form of Assignment and
Assumption Agreement Schedules      Schedule 4.4    No Conflict Schedule 4.9   
Proceedings Schedule 4.10    Contracts

 

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Limited Liability Company Membership

Interest Purchase Agreement

 

This Limited Liability Company Membership Interest Purchase Agreement (this
“Agreement”), dated as of May 9, 2005, is made by and between Koch Hydrocarbon
Management Company, LLC, a Delaware limited liability company (“Seller”), and
ONEOK, Inc., an Oklahoma corporation (“Purchaser”). Each of Purchaser and Seller
is sometimes individually referred to herein as “Party,” and collectively as the
“Parties.”

 

R E C I T A L S

 

A. Seller owns 100% of the membership interests (the “Vesco Holdings Membership
Interest”) of Koch Vesco Holdings, LLC, a Delaware limited liability company
(“Vesco Holdings”).

 

B. Vesco Holdings owns a membership interest in Venice Energy Services Company,
L.L.C. (“VESCO”), a Delaware limited liability company, which membership
interest represents 10.1765% of the outstanding membership interests of VESCO
(the “VESCO Membership Interest”).

 

C. Purchaser desires to purchase and acquire from Seller and Seller desires to
sell, transfer, assign and convey the Vesco Holdings Membership Interest to
Purchaser, subject to the terms and conditions set forth in this Agreement.

 

NOW, THEREFORE, the Parties, in consideration of their mutual promises and
covenants set forth herein, and for other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, and subject to the terms
and conditions of this Agreement, agree as follows:

 

1. Definitions.

 

1.1 Definitions. Capitalized terms used in this Agreement shall have the
following meanings:

 

“Accounting Referee” has the meaning given to it in Section 6.8.

 

“Act” has the meaning given to it in Section 5.8.

 

“Adjusted Purchase Price” has the meaning given it in Section 2.2.

 

“Affiliate” means, with respect to any Person, any other Person that, directly
or indirectly through one or more intermediaries, controls, or is controlled by,
or is under common control with, such Person and the term “control” (including
the terms “controlled by” and “under common control with”) means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of

 

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such Person, whether through the ownership of voting stock, ownership interest
or securities, by contract or otherwise.

 

“Agreement” has the meaning given it in the Preamble.

 

“Antitrust Division” has the meaning given it in Section 6.4(a).

 

“Antitrust Laws” has the meaning given it in Section 4.4.

 

“Business Day” means any day of the year on which national banking institutions
in New York, New York are open to the public for conducting business and are not
required or authorized to close.

 

“Closing” has the meaning given it in Section 3.1.

 

“Closing Date” has the meaning given it in Section 3.1.

 

“Closing Date Statement” has the meaning given it in Section 2.3.

 

“Confidentiality Agreement” has the meaning given it in Section 6.10.

 

“Contracts” has the meaning given it in Section 4.10.

 

“Contributions” has the meaning given it in Section 2.2.

 

“Distributions” has the meaning given it in Section 2.2.

 

“Encumbrance” means any lien (possessory or otherwise, and including inchoate
liens), judgment liens, community property interest, equitable interest, burden,
charge, security interest, hypothecation, mortgage, deed of trust, uniform
commercial code or similar filing, adverse claim of title, pledge, encumbrance,
conditional sales or title retention contract, option (including purchase
options), right of first refusal, restriction of any kind or nature whatsoever
in favor of any Person, or claim or right of any Person of any kind or nature
whatsoever (whether legal or contractual).

 

“Financial Statements” has the meaning given it in Section 4.7.

 

“FTC” has the meaning given it in Section 6.4(a).

 

“Governmental Body” means any government or governmental or regulatory body
thereof, or political subdivision thereof, whether federal, state, local or
foreign, or any agency, instrumentality or authority thereof, or any court or
arbitrator (public or private).

 

“HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, and the rules and regulations promulgated thereunder.

 

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“Indebtedness” of any Person means, without duplication, (i) the principal of
and premium (if any) in respect of (A) indebtedness of such Person for money
borrowed and (B) indebtedness evidenced by notes, debentures, bonds or other
similar instruments for the payment of which such Person is responsible or
liable; (ii) all obligations of such Person issued or assumed as the deferred
purchase price of property, all conditional sale obligations of such Person and
all obligations of such Person under any title retention agreement (but
excluding trade accounts payable and other accrued current liabilities arising
in the ordinary course of business of such Person); (iii) all obligations of
such Person under leases required to be capitalized in accordance with generally
accepted accounting principles in the United States on the date hereof; (iv) all
obligations of such Person for the reimbursement of any obligor on any letter of
credit, banker’s acceptance or similar credit transaction; (v) all obligations
of the type referred to in clauses (i) through (iv) of other Persons for the
payment of which such Person is responsible or liable as obligor, guarantor,
surety or otherwise, including guarantees of such obligations; and (vi) all
obligations of the type referred to in clauses (i) through (v) of other Persons
secured by any Encumbrance on any property or asset of such Person (whether or
not such obligation is assumed by such Person).

 

“Indemnification Claim” has the meaning given it in Section 7.4(a).

 

“Koch Marks” has the meaning given it in Section 6.5.

 

“Law” means any foreign, federal, state, local law, statute, code, ordinance,
rule or regulation.

 

“Legal Proceeding” means any judicial, administrative or arbitral actions, suits
or proceedings (public or private) by or before a Governmental Body.

 

“Liability” means any Indebtedness, debt, liability or obligation (whether
direct or indirect, absolute or contingent, accrued or unaccrued, liquidated or
unliquidated, or due or to become due) and including all costs and expenses
relating thereto.

 

“Losses” means all losses, Liabilities, obligations, damages, notices, actions,
suits, proceedings, claims, demands, assessments, judgments, costs, penalties
and expenses, including attorneys’ and other professionals’ fees and
disbursements.

 

“Material Adverse Effect” means a material adverse effect on the business,
assets, properties, results of operations or financial condition of VESCO, other
than an effect resulting from an Excluded Matter. “Excluded Matter” means any
one or more of the following: (i) the effect of any change in the United States
or foreign economies or securities or financial markets in general; (ii) the
effect of any change that generally affects any industry in which VESCO
operates; (iii) the effects of any change arising in connection with any natural
disasters, hostilities, acts of war, sabotage or terrorism or military actions
or any escalation or material worsening of any such hostilities, acts of war,
sabotage or terrorism or military actions existing or underway as of the date
hereof;

 

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(iv) the effect of any action taken by Purchaser or its Affiliates with respect
to the transactions contemplated hereby or with respect to VESCO; (v) any matter
of which Purchaser is aware on the date hereof; (vi) the effect of any changes
in applicable Laws or accounting rules; (vii) the failure of VESCO to meet any
of its internal projections; (viii) any effect resulting from the public
announcement of this Agreement, compliance with the terms of this Agreement or
the consummation of the transactions contemplated by this Agreement; (ix) the
loss of any employee of VESCO; or (x) matters that will be reflected in the
determination of the Adjusted Purchase Price as of the Closing Date.

 

“Nominal Purchase Price” has the meaning given it in Section 2.2.

 

“Organizational Document” means (a) the articles of organization and the
operating agreement of a limited liability company; (b) any charter or similar
document adopted or filed in connection with the creation, formation, or
organization of a Person; and (c) any amendment to any of the foregoing.

 

“Party” and “Parties” have the meanings given them in the Preamble to this
Agreement.

 

“Person” means any individual, corporation, partnership, firm, joint venture,
association, joint enterprise, joint-stock company, trust, unincorporated
organization, Governmental Body or other entity.

 

“Prime Rate” means the prime lending rate as reported in the Wall Street Journal
(under the heading “Money Rates”) on the Closing Date.

 

“Purchaser” has the meaning given it in the Preamble to this Agreement.

 

“Purchaser Indemnified Parties” has the meaning given it in Section 7.2(a).

 

“Seller” has the meaning given it in the Preamble to this Agreement.

 

“Seller Indemnified Parties” has the meaning given it in Section 7.3(a).

 

“Valuation Statement” has the meaning given to it in Section 6.8.

 

“VESCO” has the meaning given it in the Recitals.

 

“VESCO Articles of Organization” means VESCO’s certificate of formation, filed
at the Secretary of State of the State of Delaware on August 26, 1997.

 

“Vesco Holdings” has the meaning given it in the Recitals.

 

“Vesco Holdings Articles of Organization” means Vesco Holdings’ certificate of
formation, filed at the Secretary of State of the State of Delaware on February
23, 2005.

 

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“Vesco Holdings LLC Agreement” means that certain Limited Liability Company
Agreement, dated February 23, 2005, by Seller as the sole member of Vesco
Holdings.

 

“Vesco Holdings Membership Interest” has the meaning given it in the Recitals.

 

“VESCO LLC Agreement” means that certain Second Amended and Restated Limited
Liability Company Agreement, dated April 1, 1998, as amended on October 1, 2004,
by and among Seller (successor in interest to Koch Energy Services Company),
Dynegy Midstream Services, Limited Partnership, Chevron U.S.A. Inc., Venice
Gathering Company and Enterprise Gas Processing, LLC (successor in interest to
Tejas Natural Gas Liquids, LLC).

 

“VESCO Membership Interest” has the meaning given it in the Recitals.

 

1.2 Construction. Unless the context shall require otherwise: (i) words
importing the singular number or plural number shall include the plural number
and singular number respectively; (ii) words importing the masculine gender
shall include the feminine and neuter genders and vice versa; (iii) reference to
“include”, “includes”, and “including” shall be deemed to be followed by the
phrase “without limitation”; (iv) reference in this Agreement to “herein”,
“hereby”, or “hereunder”, or any similar formulation, shall be deemed to refer
to this Agreement as a whole, including the Exhibit(s) and Schedules referenced
herein and which are attached hereto and incorporated herein by reference; (v)
if a term is defined in this Agreement, a derivative of that term shall have a
corresponding meaning; and (vi) all references to “Section” or “Sections” refer
to the corresponding Section or Sections of this Agreement.

 

1.3 Seller Knowledge Qualifiers. References to “Seller’s knowledge” or “to the
knowledge of Seller” and similar terms shall refer to the actual knowledge of
the following individuals: David Overstreet and Kurt Burmeister.

 

2. Purchase and Sale of the Vesco Holdings Membership Interest.

 

2.1 Purchase and Sale of the Vesco Holdings Membership Interest. Upon the terms
and subject to the conditions of this Agreement, at the Closing, Seller shall
sell, assign, transfer, convey and deliver to Purchaser, and Purchaser will
purchase and accept from Seller, the Vesco Holdings Membership Interest.

 

2.2 Purchase Price. In consideration of the sale, assignment, transfer,
conveyance and delivery of the Vesco Holdings Membership Interest, Purchaser
shall pay to Seller the sum of SIXTY MILLION UNITED STATES DOLLARS ($60,000,000)
(the “Nominal Purchase Price”), minus the amount of any distributions received
by Vesco Holdings from VESCO pursuant to the VESCO LLC Agreement (the
“Distributions”) from the date hereof until the Closing Date, plus the amount of
any capital contributions made by Vesco Holdings to VESCO pursuant to the VESCO
LLC Agreement (the “Contributions”) from the date hereof until the Closing Date
(the “Adjusted Purchase

 

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Price”) which shall be paid by wire transfer of immediately available United
States funds (not ACH) into an account designated by Seller.

 

2.3 Closing Date Statement. At least two (2) Business Days before Closing,
Seller shall deliver to Purchaser a closing statement (the “Closing Date
Statement”) that shall show the Distributions and the Contributions made from
the date hereof until the Closing Date (which shall be conclusive for all
purposes to adjust the Nominal Purchase Price at Closing, absent manifest
error), and shall designate to Purchaser an account into which the Adjusted
Purchase Price shall be deposited.

 

3. Closing and Termination.

 

3.1 Closing. The closing of the transaction (the “Closing”) shall take place at
the offices of Seller, 4111 East 37th Street North, Wichita, Kansas 67220, at
10:00 a.m. (Central time) no later than the second Business Day after all of the
conditions to Closing set forth in Sections 8.1 and 8.2 have been satisfied or
waived (other than conditions that by their nature are to be satisfied at the
Closing, but subject to the satisfaction or waiver of such conditions) or
another time mutually agreed by the Parties. The date on which the Closing
occurs is referred to in this Agreement as the “Closing Date.” The Closing shall
be deemed to be effective at 11:59 p.m. Central Time on the day before the
Closing Date.

 

3.2 Termination of Agreement. This Agreement may be terminated before the
Closing as follows:

 

(a) At the election of Seller or Purchaser on or after the first annual
anniversary of the date hereof, if the Closing shall not have occurred by the
close of business on such date, provided that the terminating party is not in
material default of any of its obligations hereunder, and provided further that
such date may be extended by Seller for up to two consecutive periods of up to
180 days each if only the conditions to Closing set forth in Sections 8.1(d) and
8.2(d) remain unsatisfied or unwaived at the first annual anniversary of the
date hereof;

 

(b) by mutual written consent of Purchaser and Seller; or

 

(c) by Purchaser or Seller if there shall be in effect a final nonappealable
order or judgment of a Governmental Body of competent jurisdiction permanently
restraining, enjoining or otherwise prohibiting the consummation of the
transactions contemplated hereby; it being agreed that the Parties shall
promptly appeal any adverse determination that is not nonappealable (and pursue
such appeal with reasonable diligence).

 

3.3 Effect of Termination. In the event that this Agreement is validly
terminated in accordance with Section 3.2, written notice thereof shall
forthwith be given to the other Party, and this Agreement shall terminate. Each
of the Parties shall be relieved of their duties and obligations arising under
this Agreement after the date of such

 

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termination and such termination shall be without Liability to Purchaser or
Seller; provided, that no such termination shall relieve any party hereto from
Liability for any breach of this Agreement and, provided, further, that the
obligations of the parties set forth in Section 9.2 hereof shall survive any
such termination and shall be enforceable hereunder.

 

4. Representations and Warranties of Seller. Seller represents and warrants to
Purchaser as follows:

 

4.1 Organization and Good Standing. Seller is a limited liability company duly
organized and validly existing and in good standing under the laws of Delaware.
Vesco Holdings is a limited liability company, duly organized and validly
existing under the laws of Delaware. Seller has provided to Purchaser complete
and correct copies of the Vesco Holdings Articles of Organization and the VESCO
Articles of Organization, the Vesco Holdings LLC Agreement and the VESCO LLC
Agreement, in each case, as amended to, and in effect on, the date hereof.

 

4.2 Authority. Seller has the limited liability company power and authority to
execute and deliver this Agreement and each agreement and instrument to be
delivered by Seller pursuant hereto, and to carry out its obligations hereunder
and thereunder. The execution, delivery and performance of this Agreement and
each agreement and instrument to be delivered pursuant hereto by Seller, and the
consummation of the transactions provided for hereby have been duly authorized
and approved by all requisite limited liability company action of Seller and no
other act or proceeding on the part of Seller or its members is necessary to
authorize the execution, delivery or performance of this Agreement.

 

4.3 Enforceable. This Agreement constitutes a legal, valid, and binding
obligation of Seller, enforceable against Seller in accordance with its terms,
except as such enforcement may be limited by (i) bankruptcy or other Laws of
such general application affecting creditors’ rights generally and (ii) general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law).

 

4.4 No Conflict. Except as set forth on Schedule 4.4 and except for compliance
with the applicable requirements of the HSR Act, the Sherman Act, as amended,
the Clayton Act, as amended, the Federal Trade Commission Act, as amended, and
any other United States federal or state or foreign statutes, rules,
regulations, orders, decrees, administrative or judicial doctrines or other Laws
that are designed to prohibit, restrict or regulate actions having the purpose
or effect of monopolization or restraint of trade (collectively, the “Antitrust
Laws”), the execution and delivery of this Agreement by Seller and the
consummation by Seller of the transactions contemplated hereby do not and will
not: (i) violate any provision of any Organizational Document of Seller or Vesco
Holdings; (ii) violate, conflict with, or constitute a default or a breach under
or result in the acceleration of any obligation with respect to any material
loan agreement,

 

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indenture, lease, or mortgage of Seller or Vesco Holdings, or to the knowledge
of Seller, VESCO, or any provision or restriction of any material lien, lease
agreement, sales agreement, contract, or instrument to which Seller or Vesco
Holdings, or to the knowledge of Seller, VESCO, is a party or by which it is
bound; or (iii) to the knowledge of Seller, violate any order, judgment, award,
decree, Law, rule, ordinance, or regulation to which any assets of Seller, Vesco
Holdings or VESCO is subject or by which Seller, Vesco Holdings or VESCO is
bound.

 

4.5 Consents and Approvals. Except as may be required under the Antitrust Laws
or the VESCO LLC Agreement, no notice to, declaration, filing or registration
with, or authorization, consent or approval of, or permit from (other than those
already made or obtained) any Person is required to be made or obtained by
Seller in connection with the execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby by
Seller.

 

4.6 Ownership. Vesco Holdings is, and will be immediately before the Closing,
the owner of all of the VESCO Membership Interest, free and clear of any
Encumbrance, including any restriction on use, voting, transfer, receipt of
income or exercise of any other attribute of ownership, subject to the VESCO
Articles of Organization and the terms and conditions of the VESCO LLC Agreement
and any transfer restrictions imposed by securities Laws. The VESCO Membership
Interest constitutes all of the membership interest of VESCO currently owned by
Vesco Holdings, and the VESCO Membership Interest constitutes 10.1765% of the
outstanding membership interests of VESCO. Seller is, and will be immediately
before the Closing, the owner of all of the Vesco Holdings Membership Interest,
free and clear of any Encumbrance, including any restriction on use, voting,
transfer, receipt of income or exercise of any other attribute of ownership,
subject to the Vesco Holdings Articles of Organization and the terms and
conditions of the Vesco Holdings LLC Agreement and any transfer restrictions
imposed by securities Laws. The Vesco Holdings Membership Interest constitutes
all of the membership interest of Vesco Holdings currently owned by Seller, and
the Vesco Holdings Membership Interest constitutes all of the outstanding
membership interests of Vesco Holdings. Seller has full power and authority to
sell, assign, transfer, convey and deliver the Vesco Holdings Membership
Interest and when the same are delivered to Purchaser, Purchaser will acquire
good title thereto, free and clear of all Encumbrances, subject to the Vesco
Holdings Articles of Organization and the terms and conditions of the Vesco
Holdings LLC Agreement and any transfer restrictions imposed by securities Laws.

 

4.7 Financial Statements. Seller has delivered to Purchaser copies of (i) the
audited balance sheets of VESCO as of December 31, 2001 and 2002, together with
the related audited statements of income of VESCO for the years ended December
31, 2001 and 2002 and (ii) the unaudited balance sheet of VESCO as of December
31, 2003 and 2004 and the related statement of income of VESCO for the twelve
month periods then ended (such audited and unaudited statements, including the
related notes and schedules

 

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thereto, are referred to herein as the “Financial Statements”). Each of the
Financial Statements are true and complete copies of the financial statements as
provided to Seller by VESCO.

 

4.8 Brokers or Finders. Neither Seller nor Vesco Holdings has incurred any
Liability, contingent or otherwise, for brokers’ or finders’ fees in connection
with the transactions contemplated by this Agreement for which Purchaser shall
have any responsibility or Liability.

 

4.9 Proceedings. No Legal Proceeding is pending or threatened in writing against
Seller or Vesco Holdings seeking to restrain or prohibit this Agreement or the
transactions contemplated hereby, or to obtain damages, a discovery order or
other relief in connection with this Agreement or the transactions contemplated
hereby. To Seller’s knowledge, and except as set forth on Schedule 4.9, there
are no Legal Proceedings pending against VESCO, which, if adversely determined,
would reasonably be expected to have a Material Adverse Effect.

 

4.10 Contracts. Schedule 4.10 sets forth all of the contracts to which Vesco
Holdings is a party or by which it is bound, other than contracts that have been
terminated or will expire by their terms before or upon the Closing or contracts
with Affiliates of Seller that will be terminated before or upon Closing (the
“Contracts”). To the knowledge of Seller, Vesco Holdings has not received any
written notice of any material default or event that with notice or lapse of
time, or both, would constitute a material default by Vesco Holdings under any
Contracts.

 

4.11 No Undisclosed Liabilities. Except for Liabilities arising under the
Contracts, Vesco Holdings has no material Liabilities.

 

4.12 Compliance with Laws; Permits. Vesco Holdings is in compliance in all
material respects with all Laws of any Governmental Body applicable to its
business or operations. Vesco Holdings has not received any written notice of or
been charged with the violation of any Laws.

 

4.13 No Other Business. Vesco Holdings conducts no business and owns no assets,
including any securities, other than the VESCO Membership Interest.

 

4.14 Employees. There are not now, nor have there ever been, any employees of
Vesco Holdings.

 

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5. Representations and Warranties of Purchaser. Purchaser represents and
warrants to Seller as follows:

 

5.1 Organization and Good Standing. Purchaser is a corporation, duly organized,
validly existing, and in good standing under the laws of the State of Oklahoma.

 

5.2 Authority. Purchaser has full corporate power and authority to execute and
deliver this Agreement and each agreement and instrument to be delivered by
Purchaser pursuant hereto, and to carry out its obligations hereunder and
thereunder. The execution, delivery and performance of this Agreement and each
agreement and instrument to be delivered pursuant hereto by Purchaser, and the
consummation of the transactions provided for hereby have been duly authorized
and approved by all requisite corporate action of Purchaser and no other
corporate act or proceeding on the part of Purchaser or its shareholders is
necessary to authorize the execution, delivery or performance of this Agreement.

 

5.3 Enforceable. This Agreement constitutes a legal, valid, and binding
obligation of Purchaser, enforceable against Purchaser in accordance with its
terms, except as such enforceability may be limited by (i) bankruptcy or other
Laws of such general application affecting creditors’ rights generally and (ii)
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).

 

5.4 No Conflict. The execution and delivery of this Agreement by Purchaser and
consummation by Purchaser of the transactions contemplated hereby do not and
will not: (i) violate any provision of the certificate of incorporation or
bylaws of Purchaser; (ii) violate, conflict with, or constitute a default or a
breach under or result in the acceleration of any obligation with respect to any
loan agreement, indenture, lease, or mortgage of Purchaser or any provision or
restriction of any lien, lease agreement, sales agreement, contract, or
instrument to which Purchaser is a party or by which it is bound; or (iii) to
the knowledge of Purchaser, violate any order, judgment, award, decree, Law,
rule, ordinance, or regulation to which any assets of Purchaser is subject or by
which Purchaser is bound.

 

5.5 Consents and Approvals. No notice to, declaration, filing or registration
with, or authorization, consent or approval of, or permit from (other than those
already made or obtained) any Person is required to be made or obtained by
Purchaser in connection with the execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby by
Purchaser.

 

5.6 Brokers or Finders. Purchaser has not incurred any Liability, contingent or
otherwise, for brokers’ or finders’ fees in connection with the transactions
contemplated by this Agreement for which Seller shall have any responsibility or
Liability.

 

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5.7 Proceedings. No Legal Proceeding is pending or threatened in writing against
Purchaser seeking to restrain or prohibit this Agreement or the transactions
contemplated hereby, or to obtain damages, a discovery order or other relief in
connection with this Agreement or the transactions contemplated hereby.

 

5.8 Securities Matters. Purchaser is an “accredited investor” as defined in Rule
501 under the Securities Act of 1933, as amended (the “Act”), and is acquiring
the Vesco Holdings Membership Interest solely for its own account and not with a
view to any distribution or disposition thereof. Purchaser understands that (a)
the Vesco Holdings Membership Interest has not been registered under the Act or
registered or qualified under any applicable state securities Laws in reliance
upon specific exemptions therefrom, and (b) the Vesco Holdings Membership
Interest may not be transferred or sold except in a transaction registered or
exempt from registration under the Act, and registered or qualified or exempt
from registration or qualification under any applicable state securities Laws.

 

5.9 Financing. Purchaser (i) has, and at the Closing will have, sufficient
internal funds (without giving effect to any unfunded financing regardless of
whether any such financing is committed) available to pay the Adjusted Purchase
Price and any expenses incurred by Purchaser in connection with the transactions
contemplated by this Agreement, (ii) has, and at the Closing will have, the
resources and capabilities (financial or otherwise) to perform its obligations
hereunder, and (iii) has not incurred any Liability of any kind, which would
impair or adversely affect such resources and capabilities.

 

6. Covenants.

 

6.1 Access to Information. Before Closing, Seller shall permit, and shall use
its commercially reasonable efforts to cause Vesco Holdings and VESCO to permit,
Purchaser and its representatives (including its legal advisors and accountants)
to have reasonable access, during normal business hours and upon reasonable
advance notice, to the properties, books, records and personnel of VESCO;
provided, that in no event shall Seller, Vesco Holdings or VESCO be obligated to
provide (i) access or information in violation of applicable Law or VESCO’s LLC
Agreement, (ii) bids, letters of intent, expressions of interest, or other
proposals received from others in connection with the transactions contemplated
by this Agreement or otherwise and information and analyses relating to such
communications, (iii) any information, the disclosure of which would jeopardize
any privilege available to Seller, Vesco Holdings, VESCO or any of their
respective Affiliates relating to such information or would cause Seller, Vesco
Holdings, VESCO or any of their respective Affiliates to breach a
confidentiality obligation by which it is bound or (iv) any of Seller’s or Vesco
Holding’s internal valuations of the industry of VESCO, Vesco Holdings, VESCO or
the VESCO Membership Interest. Purchaser’s access to the properties, books,
records and personnel of VESCO shall be subject to applicable third party
manager/operator approvals. In connection with such access, Purchaser’s
representatives shall cooperate with Seller’s, Vesco Holding’s and

 

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VESCO’s representatives and shall use their commercially reasonable efforts to
minimize any disruption of the business of Seller, Vesco Holdings, VESCO and the
manager/operator of the assets of VESCO, as the case may be. Purchaser agrees to
abide by any safety rules or rules of conduct reasonably imposed by Seller,
Vesco Holdings, VESCO or the manager/operator of the assets of VESCO, as the
case may be, with respect to Purchaser’s access and any information furnished to
Purchaser or its representatives pursuant to this Section 6.1. Purchaser shall
indemnify, defend and hold harmless Seller, Vesco Holdings and VESCO and their
respective officers, directors, employees and agents from and against any and
all Losses asserted against or suffered by them relating to, resulting from, or
arising out of, examinations or inspections made by Purchaser or its
representatives pursuant to this Section 6.1, except to the extent such Losses
relate to, result from or arise out of, the gross negligence or willful
misconduct of Seller. Notwithstanding anything to the contrary contained herein,
before Closing, without the prior written consent of Seller, which may be
withheld for any reason, (i) Purchaser shall not contact any suppliers to, or
customers of, VESCO or its Affiliates and (ii) Purchaser shall have no right to
perform invasive or subsurface investigations of the properties or facilities of
VESCO.

 

6.2 Further Assurances. Upon the terms and subject to the conditions contained
herein, the Parties agree: (a) to use all commercially reasonable efforts to
take, or cause to be taken, all actions and to do, or cause to be done, all
things necessary, proper or advisable to consummate and make effective the
transactions contemplated by this Agreement, (b) to execute any documents,
instruments or conveyances of any kind which may be reasonably necessary or
advisable to carry out any of the transactions contemplated hereunder or
thereunder, and (c) to reasonably cooperate with each other in connection with
the foregoing.

 

6.3 Supplementation and Amendment of Schedules. From time to time before the
Closing, Seller shall have the right to supplement or amend the Schedules with
respect to any matter hereafter arising or discovered after the delivery of the
Schedules pursuant to this Agreement. No such supplement or amendment shall have
any effect on the satisfaction of the condition to closing set forth in Section
8.2(a); provided, however, if the Closing shall occur, then Purchaser shall be
deemed to have waived any right or claim pursuant to the terms of this Agreement
or otherwise, including pursuant to Article 7 hereof, with respect to any and
all matters disclosed pursuant to any such supplement or amendment at or before
the Closing.

 

6.4 Antitrust Approvals.

 

(a) Each of Purchaser and Seller shall, and Seller shall cause Vesco Holdings
to, (i) make or cause to be made all filings required of each of them or any of
their respective Affiliates under the Antitrust Laws with respect to the
transactions contemplated hereby as promptly as practicable and, in any event,
within fifteen (15) Business Days after the date of this Agreement, (ii) comply
at the earliest practicable date

 

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with any request under the HSR Act or other Antitrust Laws for additional
information, documents, or other materials received by each of them or any of
their respective subsidiaries from the Federal Trade Commission (the “FTC”), the
Antitrust Division of the U.S. Department of Justice (the “Antitrust Division”)
or any other Governmental Body in respect of such filings or such transactions,
and (iii) cooperate with each other in connection with any such filing
(including, to the extent permitted by applicable Law, responding to any
reasonable requests for copies of all such documents to the non-filing parties
before filing and considering all reasonable additions, deletions or changes
suggested in connection therewith) and in connection with resolving any
investigation or other inquiry of any of the FTC, the Antitrust Division or
other Governmental Body under any Antitrust Laws with respect to any such filing
or any such transaction. Each such party shall use its best efforts to furnish
to each other all information required for any application or other filing to be
made pursuant to any applicable Law in connection with the transactions
contemplated by this Agreement. Any party may, as it deems advisable and
necessary, reasonably designate any competitively sensitive material provided to
the other parties under this Section 6.4 as “outside counsel only.” Such
materials and the information contained therein shall be given only to the
outside legal counsel of the recipient, and the recipient shall cause such
outside counsel not to disclose such materials or information to any employees,
officers, directors or other representatives of the recipient or their
Affiliates, unless express written permission is obtained in advance from the
source of the materials. Each such party shall promptly inform the other party
hereto of any oral communication with, and provide copies of written
communications with, any Governmental Body regarding any such filings or any
such transaction. No party hereto shall independently participate in any formal
meeting with any Governmental Body in respect of any such filings,
investigation, or other inquiry without giving the other party hereto prior
notice of the meeting and, to the extent permitted by such Governmental Body,
the opportunity to attend and/or participate. Subject to applicable Law, the
parties hereto will consult and cooperate with one another in connection with
any analyses, appearances, presentations, memoranda, briefs, arguments, opinions
and proposals made or submitted by or on behalf of any party hereto relating to
proceedings under the HSR Act or other Antitrust Laws. Purchaser shall pay all
filing fees in connection with all filings under the Antitrust Laws.

 

(b) Each of Purchaser and Seller shall, and Seller shall cause Vesco Holdings
to, use its best efforts to resolve such objections, if any, as may be asserted
by any Governmental Body with respect to the transactions contemplated by this
Agreement under the Antitrust Laws. In connection therewith, if any Legal
Proceeding is instituted (or threatened to be instituted) challenging any
transaction contemplated by this Agreement as in violation of any Antitrust Law,
each of Purchaser and Seller shall, and Seller shall cause Vesco Holdings to,
cooperate and use its best efforts to contest and resist any such Legal
Proceeding, and to have vacated, lifted, reversed, or overturned any decree,
judgment, injunction or other order whether temporary, preliminary or permanent,
that is in effect and that prohibits, prevents, limits or restricts consummation
of the transactions contemplated by this Agreement, including by pursuing all
available avenues

 

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of administrative and judicial appeal and all available legislative action,
unless, by mutual agreement, Purchaser and Seller decide that litigation is not
in their respective best interests. Each of Purchaser and Seller shall, and
Seller shall cause Vesco Holdings to, use its best efforts to take such action
as may be required to cause the expiration of the notice periods under the HSR
Act or other Antitrust Laws with respect to such transactions as promptly as
possible after the execution of this Agreement. In connection with and without
limiting the foregoing, Purchaser agrees to take promptly any and all steps
necessary to avoid or eliminate each and every impediment under any Antitrust
Laws that may be asserted by any Federal, state and local and non-United States
antitrust or competition authority, so as to enable the parties to close the
transactions contemplated by this Agreement as expeditiously as possible,
including committing to or effecting, by consent decree, hold separate orders,
trust or otherwise, the sale or disposition of such of its assets or businesses
(including any acquired pursuant to this Agreement) as are required to be
divested in order to avoid the entry of, or to effect the dissolution of, any
decree, order, judgment, injunction, temporary restraining order or other order
in any suit or preceding, that would otherwise have the effect of preventing,
delaying or limiting the consummation of the transactions contemplated by this
Agreement.

 

6.5 Use of Name. Purchaser agrees that (i) neither Purchaser nor any of its
Affiliates has any right, title or interest in or to the name “Koch” or any
service marks, trademarks, trade names, identifying symbols, logos, emblems,
signs or insignia related thereto or containing or comprising the foregoing,
including any derivations, modifications or alterations thereof, and any word,
name or mark confusingly similar thereto (collectively, the “Koch Marks”), (ii)
neither Purchaser nor any of its Affiliates shall have any right to use the Koch
Marks after the Closing Date and (iii) Purchaser shall immediately after the
Closing change the name of Vesco Holdings to any name other than the Koch Marks
and Purchaser shall, and Purchaser shall cause its Affiliates to, otherwise
cease to hold itself out as having any affiliation with Seller or any of its
Affiliates. In furtherance thereof, as promptly as practicable but in no event
later than one hundred twenty (120) days following the Closing Date, Purchaser
shall remove, strike over or otherwise obliterate all Koch Marks from all
materials including any vehicles, business cards, schedules, stationery,
packaging materials, displays, signs, promotional materials, manuals, forms,
computer software and other materials.

 

6.6 Preservation of Records. Purchaser shall cause Vesco Holdings to preserve
and keep the records relating to VESCO and Vesco Holdings for a period of seven
(7) years from the Closing Date, or, if longer, as required by Law. Purchaser
shall cause Vesco Holdings to make such records and personnel available as may
be reasonably required by Seller in connection with, among other things, any
insurance claims or indemnification claims by, Legal Proceedings or tax audits
against or governmental investigations of Seller or any of its Affiliates or in
order to enable Seller to comply with its obligations under this Agreement and
each other agreement, document or instrument contemplated hereby or thereby. In
the event Purchaser wishes to destroy such records after that time, Purchaser
shall cause Vesco Holdings first to give ninety

 

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(90) days prior written notice to Seller, and Seller shall have the right at its
option and expense, upon prior written notice given to Purchaser within that
ninety (90) day period, to take possession of the records within one hundred and
eighty (180) days after the date of such notice.

 

6.7 Publicity.

 

(a) Neither Purchaser nor Seller shall, and Seller shall cause Vesco Holdings
not to, issue any press release or public announcement concerning this Agreement
or the transactions contemplated hereby without obtaining the prior written
approval of the other party hereto, which approval will not be unreasonably
withheld, conditioned or delayed, unless, in the reasonable judgment of Seller
or Purchaser, disclosure is otherwise required by applicable Law, provided that,
to the extent required by applicable Law, the party intending to make such
release shall use its commercially reasonable efforts consistent with applicable
Law to consult with the other party with respect to the text thereof.

 

(b) Each of Purchaser and Seller agree that the terms of this Agreement shall
not be disclosed or otherwise made available to the public and that copies of
this Agreement shall not be publicly filed or otherwise made available to the
public, except where such disclosure, availability or filing is required by
applicable Law and only to the extent required by such Law. In the event that
such disclosure, availability or filing is required by applicable Law, each of
Purchaser and Seller, as applicable, agrees to use its commercially reasonable
efforts to obtain “confidential treatment” of this Agreement with the U.S.
Securities and Exchange Commission (or the equivalent treatment by any other
Governmental Body) and to redact such terms of this Agreement as the other party
may request.

 

6.8 Tax Matters.

 

(a) Tax Allocation. If VESCO shall have an election in effect under Section 754
of the Code for the taxable year of VESCO that includes the Closing Date, then
as promptly as practicable, but in no event later than sixty (60) days after the
Closing Date, Purchaser shall prepare and deliver to Seller a statement (the
“Valuation Statement”) valuing the assets of VESCO for purposes of (i) Treasury
Regulation Section 1.743-1(d)(2) in determining Purchaser’s adjustment to the
federal income tax basis of the assets of VESCO and for purposes of performing
Purchaser’s obligations pursuant to section 3 of Exhibit F to the VESCO LLC
Agreement, and (ii) Treasury Regulation Section 1.751-1(a)(2) in determining the
character of Seller’s gain or loss, as the case may be, for federal income tax
purposes in respect of the transactions contemplated by this Agreement. Seller
shall have fifteen (15) days to review the Valuation Statement and shall notify
Purchaser of any disputes with the valuation as set forth in the Valuation
Statement. Seller and Purchaser shall negotiate in good faith to resolve any
such dispute before the date that is sixty (60) days before the due date of the
tax returns that reflect the valuation. If Seller and Purchaser cannot resolve
the disputed

 

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valuation before such date, then Seller and Purchaser shall refer the dispute to
PricewaterhouseCoopers LLP (the “Accounting Referee”) to review and to determine
the proper valuation (it being understood that in making such determination, the
Accounting Referee shall be functioning as an expert and not as an arbitrator).
The Accounting Referee shall deliver to Seller and Purchaser, as promptly as
practicable (but in any case no later than thirty (30) days from the date of
engagement of the Accounting Referee), a determination of the valuation. This
determination will be binding on the Parties and all tax returns filed by
Purchaser, Seller and each of their Affiliates shall be prepared consistently
with such valuation. The cost of such review and report shall be borne by
Purchaser. Seller and Purchaser shall use commercially reasonable efforts to
ensure that the Valuation Statement is not disputed by VESCO.

 

(b) Tax Elections. Purchaser shall not make an election under Treasury
Regulation Section 301.7701-3 (or any similar election under state or local Law)
to treat Vesco Holdings as a corporation for tax purposes for any period before
the Closing.

 

(c) Interim Closing of VESCO Books. Seller and Purchaser shall cooperate to
request the Management Committee of VESCO to perform an interim closing of the
books of VESCO as of the Closing Date pursuant to Treasury Regulation Section
1.706-1(c)(2)(ii).

 

6.9 Insurance.

 

(a) Purchaser shall not, and shall cause Vesco Holdings not to, assert any
right, claim or interest to or under any insurance policies or rights to
proceeds thereof in effect on or before the Closing Date relating to Vesco
Holdings, VESCO or Seller. In furtherance thereof, Purchaser, on behalf of
itself and Vesco Holdings, hereby waives any and all rights to or under any such
insurance policies.

 

(b) Notwithstanding the foregoing Section 6.9(a), if between the date of this
Agreement and the Closing, (i) any Loss or damage to the improvements or other
tangible personal property of VESCO or Vesco Holdings shall occur from fire,
casualty or any other occurrence, (ii) Seller does not at its discretion replace
or restore such property before the Closing Date and (iii) the Closing occurs,
then all insurance proceeds received by Seller or Vesco Holdings as a result of
the event causing such loss or damage (net of any retrospective premium, payback
or similar obligations in applicable insurance policies) will be delivered by
Seller to Purchaser. For the avoidance of doubt, Seller shall not otherwise have
any obligation to replace or restore any such property if such insurance
proceeds are assigned to Purchaser. Seller shall have the sole right and
authority to provide notices and claims to the applicable insurance carrier and
otherwise to communicate and negotiate with such carrier, but shall use its
commercially reasonable efforts to obtain any such proceeds payable to Seller.
Notwithstanding the foregoing, the benefit of any insurance proceeds in relation
to “business interruption” damages based upon lost profits or business
opportunities in respect of the period before the Closing

 

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Date, and insurance proceeds in relation to such Loss or damage to the extent
attributable to any such property replaced or restored before the Closing Date
or otherwise used for such purposes, will inure to the benefit of and be payable
to Seller, and Purchaser will not be entitled to receive or retain such
proceeds.

 

6.10 Confidentiality. Purchaser acknowledges that the information provided to it
in connection with this Agreement and the transactions contemplated hereby is
subject to the terms of the confidentiality agreement between Purchaser and
Seller dated April 27, 2005 (the “Confidentiality Agreement”), the terms of
which are incorporated herein by reference. Effective upon, and only upon, the
Closing Date, the Confidentiality Agreement shall terminate.

 

7. Indemnification.

 

7.1 Survival of Representations and Warranties and Covenants. All of the
representations and warranties made by each Party in this Agreement shall
survive the consummation of the transactions contemplated herein and shall
continue in full force and effect after the Closing for a period of nine (9)
months; provided, however, that the representations and warranties made by
Seller in Sections 4.6 and 4.8 shall survive Closing until the fifth annual
anniversary of the Closing Date. All of the covenants made by each Party in this
Agreement shall survive the consummation of the transactions contemplated herein
and shall continue in full force and effect after the Closing indefinitely until
all obligations with respect to any such covenants are fulfilled in their
entirety.

 

7.2 Indemnification by Seller.

 

(a) Subject to Sections 6.3, 7.1 and 7.5 hereof, Seller hereby agrees to
indemnify and hold Purchaser and its directors, officers, employees, Affiliates,
stockholders, agents, attorneys, representatives and permitted assigns
(collectively, the “Purchaser Indemnified Parties”) harmless from and against
any Losses incurred by any of the Purchaser Indemnified Parties based upon or
arising directly from any breach of the representations, warranties, covenants
or agreements made by Seller in this Agreement.

 

(b) Purchaser acknowledges and agrees that Seller shall not have any Liability
under any provision of this Agreement for any Loss to the extent that such Loss
relates to action taken by Purchaser or any other Person (other than Seller in
breach of this Agreement) after the Closing Date. Purchaser shall take and shall
cause its Affiliates to take all reasonable steps to mitigate any Loss upon
becoming aware of any event that would reasonably be expected to, or does, give
rise thereto, including incurring costs only to the minimum extent necessary to
remedy the breach that gives rise to the Loss.

 

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7.3 Indemnification by Purchaser.

 

(a) Subject to Sections 7.1 and 7.5, Purchaser hereby agrees to indemnify and
hold Seller and its directors, officers, employees, Affiliates, stockholders,
agents, attorneys, representatives and permitted assigns (collectively, the
“Seller Indemnified Parties”) harmless from and against any Losses incurred by
any of the Seller Indemnified Parties based upon or arising directly from (i)
any breach of the representations, warranties, covenants or agreements made by
Purchaser in this Agreement or (ii) except as otherwise provided in Section
7.2(a), all Liabilities of any of VESCO or Vesco Holdings arising on, before or
after the Closing Date.

 

(b) Seller shall take and cause its Affiliates to take all reasonable steps to
mitigate any Loss upon becoming aware of any event that would reasonably be
expected to, or does, give rise thereto, including incurring costs only to the
minimum extent necessary to remedy the breach that gives rise to the Loss.

 

7.4 Indemnification Procedures.

 

(a) In the event that any Legal Proceedings shall be instituted, or that any
claim shall be asserted, by any Person in respect of which payment may be sought
under Sections 7.2 or 7.3 hereof ( an “Indemnification Claim”), the indemnified
party shall promptly cause written notice in reasonable detail of the assertion
of any Indemnification Claim of which it has knowledge that is covered by this
indemnity to be forwarded to the indemnifying party. The indemnifying party
shall have the right, at its sole option and expense, to be represented by
counsel of its choice, which must be reasonably satisfactory to the indemnified
party, and to defend against, negotiate, settle or otherwise deal with any
Indemnification Claim that relates to any Losses indemnified against hereunder.
If the indemnifying party elects to defend against, negotiate, settle or
otherwise deal with any Indemnification Claim that relates to any Losses
indemnified against hereunder, it shall within ninety (90) days notify the
indemnified party of its intent to do so. If the indemnifying party elects not
to defend against, negotiate, settle or otherwise deal with any Indemnification
Claim that relates to any Losses indemnified against hereunder, the indemnified
party may defend against, negotiate, settle or otherwise deal with such
Indemnification Claim. If the indemnifying party shall assume the defense of any
Indemnification Claim, the indemnified party may participate, at its own
expense, in the defense of such Indemnification Claim; provided, however, that
such indemnified party shall be entitled to participate in any such defense with
separate counsel at the expense of the indemnifying party if, (i) so requested
by the indemnifying party to participate or (ii) in the reasonable opinion of
counsel to the indemnified party, a conflict or potential conflict exists
between the indemnified party and the indemnifying party that would make such
separate representation advisable; and provided, further, that the indemnifying
party shall not be required to pay for more than one such counsel for all
indemnified parties in connection with any Indemnification Claim. The parties
hereto agree to cooperate fully with each other in connection with the defense,
negotiation or

 

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settlement of any such Indemnification Claim. Notwithstanding anything in this
Section 7.4 to the contrary, neither the indemnifying party nor the indemnified
party shall, without the written consent of the other party, settle or
compromise any Indemnification Claim or permit a default or consent to entry of
any judgment unless the claimant and such party provide to such other party an
unqualified release from all Liability in respect of the Indemnification Claim.
Notwithstanding the foregoing, if a settlement offer solely for money damages is
made by the applicable third party claimant, and the indemnifying party notifies
the indemnified party in writing of the indemnifying party’s willingness to
accept the settlement offer and, subject to the applicable limitations of
Section 7.5, pay the amount called for by such offer, and the indemnified party
declines to accept such offer, the indemnified party may continue to contest
such Indemnification Claim, free of any participation by the indemnifying party,
and the amount of any ultimate Liability with respect to such Indemnification
Claim that the indemnifying party has an obligation to pay hereunder, subject to
the applicable limitations of Section 7.5, shall be limited to the lesser of (A)
the amount of the settlement offer that the indemnified party declined to accept
plus the Losses of the indemnified party relating to such Indemnification Claim
through the date of its rejection of the settlement offer or (B) the aggregate
Losses of the Indemnified Party with respect to such Indemnification Claim. If
the indemnifying party makes any payment on any Indemnification Claim, the
indemnifying party shall be subrogated, to the extent of such payment, to all
rights and remedies of the indemnified party to any insurance benefits or other
claims of the indemnified party with respect to such Indemnification Claim.

 

(b) After any final decision, judgment or award shall have been rendered by a
Governmental Body of competent jurisdiction and the expiration of the time in
which to appeal therefrom, or a settlement shall have been consummated, or the
indemnified party and the indemnifying party shall have arrived at a mutually
binding agreement with respect to an Indemnification Claim hereunder, the
indemnified party shall forward to the indemnifying party notice of any sums due
and owing by the indemnifying party pursuant to this Agreement with respect to
such matter.

 

7.5 Limitations on Indemnification.

 

(a) A Purchaser Indemnified Party may assert an Indemnification Claim pursuant
to Section 7.2(a) with respect to representations and warranties of the Seller
only to the extent the Purchaser Indemnified Party gives notice of the
Indemnification Claim pursuant to Section 7.4(a) before the expiration of the
applicable time period set forth in Section 7.1 for such representation and
warranty. Any Indemnification Claim not made in accordance with Section 7.4(a)
by the Purchaser Indemnified Parties on or before the applicable date set forth
in Section 7.1, and Seller’s indemnification obligations with respect thereto,
will be irrevocably and unconditionally released and waived by the Purchaser
Indemnified Parties.

 

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(b) Notwithstanding the provisions of this Article 7, Seller shall not have any
indemnification obligations for Losses under Section 7.2, (i) for any individual
item where the Loss relating thereto is less than $100,000 and (ii) in respect
of each individual item where the Loss relating thereto is equal to or greater
than $100,000, unless the aggregate amount of all such Losses exceeds three (3%)
percent of the Nominal Purchase Price, and then only to the extent of such
excess. In no event shall the aggregate amount of Losses to be paid by Seller
under Section 7.2 exceed ten (10%) percent of the Nominal Purchase Price.
Notwithstanding the foregoing, in no event shall the aggregate indemnification
to be paid by Seller under Section 7.2 with respect to a breach by Seller of the
representations and warranties contained in any of Sections 4.6, 4.10, 4.11,
4.12, 4.13 and 4.14 exceed the Purchase Price.

 

(c) No representation or warranty of Seller contained herein shall be deemed
untrue or incorrect, and Seller shall not be deemed to have breached a
representation or warranty, as a consequence of the existence of any fact,
circumstance or event of which (i) is disclosed in response to another
representation or warranty contained in this Agreement or (ii) Purchaser is
aware as of the Closing Date.

 

(d) No Purchaser Indemnified Party shall have any right to indemnification under
this Article 7 in respect of any matter that is taken into account in the
calculation of any adjustment to the Adjusted Purchase Price pursuant to this
Agreement.

 

(e) The amount of any Losses for which indemnification is provided under this
Article 7 shall be net of any amounts actually recovered or recoverable by the
indemnified party under insurance policies or otherwise, and net of any tax
benefit realized by Purchaser, with respect to such Losses.

 

(f) For purposes of calculating the amount of any Losses for which
indemnification for any breach of any representation or warranty is provided
under this Article 7 (but not for purposes of determining whether any particular
representation or warranty contained herein has been breached), any materiality
or Material Adverse Effect qualifications in the applicable representations or
warranties shall be ignored.

 

(g) Notwithstanding anything contained in this Agreement to the contrary,
Purchaser, on behalf of itself and each of the other Purchaser Indemnified
Parties, acknowledges and agrees that, except for the representations and
warranties contained in Article 4 (as modified by the Schedules hereto), neither
Seller nor any other Person is making any express or implied representation or
warranty with respect to Seller, Vesco Holdings, VESCO, their respective
Affiliates or the transactions contemplated by this Agreement, and Seller
disclaims any representations or warranties, whether made by Seller, Vesco
Holdings, VESCO or any of their respective Affiliates, officers, directors,
employees, agents or representatives. Any claims a Purchaser Indemnified Party
may have for breach of representation or warranty shall be based solely on the
representations and warranties of Seller set forth in Article 4 (as modified by
the Schedules hereto as

 

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supplemented or amended). In furtherance of the foregoing, except for the
representations and warranties contained in Article 4 (as modified by the
Schedules hereto), Purchaser, on behalf of itself and each of the other
Purchaser Indemnified Parties, acknowledges and agrees that none of VESCO, Vesco
Holdings, Seller, any of their respective Affiliates or any other Person will
have or be subject to any Liability to Purchaser or any other Person for, and
Seller hereby disclaims all Liability and responsibility for, any
representation, warranty, projection, forecast, statement, or information made,
communicated, or furnished (orally or in writing) to Purchaser or its Affiliates
or representatives, including any confidential memoranda distributed on behalf
of Vesco Holdings relating to VESCO or Vesco Holdings or other publications or
data room information provided to Purchaser or its Affiliates or
representatives, or any other document or information in any form provided to
Purchaser or its Affiliates or representatives in connection with the sale of
the Vesco Holdings Membership Interest and the transactions contemplated hereby
(including any opinion, information, projection, or advice that may have been or
may be provided to Purchaser or its Affiliates or representatives by any
director, officer, employee, agent, consultant, or representative of VESCO,
Vesco Holdings or Seller or any of their respective Affiliates) or for
Purchaser’s use of any such information.

 

(h) Purchaser, on behalf of itself and each of the other Purchaser Indemnified
Parties, acknowledges that it has conducted to its satisfaction, its own
independent investigation of the condition, operations and business of VESCO and
Vesco Holdings and, in making its determination to proceed with the transactions
contemplated by this Agreement, each of the Purchaser Indemnified Parties has
relied on the results of Purchaser’s independent investigation. The disclosure
of any matter or item in any schedule hereto shall not be deemed to constitute
an acknowledgment that any such matter is required to be disclosed.

 

7.6 Tax Treatment of Indemnity Payments. Seller and Purchaser agree to treat any
indemnity payment made pursuant to this Article 7 as an adjustment to the
Adjusted Purchase Price for federal, state, local and foreign income tax
purposes.

 

7.7 NO CONSEQUENTIAL DAMAGES. NOTWITHSTANDING ANYTHING TO THE CONTRARY ELSEWHERE
IN THIS AGREEMENT OR PROVIDED FOR UNDER ANY APPLICABLE LAW, NO PARTY SHALL, IN
ANY EVENT, BE LIABLE TO ANY OTHER PERSON, EITHER IN CONTRACT OR IN TORT, FOR ANY
CONSEQUENTIAL, INCIDENTAL, INDIRECT, SPECIAL OR PUNITIVE DAMAGES OF SUCH OTHER
PERSON, INCLUDING LOSS OF FUTURE REVENUE, INCOME OR PROFITS, DIMINUTION OF VALUE
OR LOSS OF BUSINESS REPUTATION OR OPPORTUNITY RELATING TO THE BREACH OR ALLEGED
BREACH HEREOF, WHETHER OR NOT THE POSSIBILITY OF SUCH DAMAGES HAS BEEN DISCLOSED
TO THE OTHER PARTY IN ADVANCE OR COULD HAVE BEEN REASONABLY FORESEEN BY SUCH
OTHER PARTY (PROVIDED THAT SUCH LIMITATION SHALL NOT LIMIT SELLER’S RIGHT TO
RECOVER CONTRACT DAMAGES IN CONNECTION WITH PURCHASER’S FAILURE TO CONSUMMATE
THE CLOSING IN VIOLATION OF THIS AGREEMENT). THE EXCLUSION OF CONSEQUENTIAL,

 

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INCIDENTAL, INDIRECT, SPECIAL OR PUNITIVE DAMAGES AS SET FORTH IN THE PRECEDING
SENTENCE SHALL NOT APPLY TO ANY SUCH DAMAGES SOUGHT BY THIRD PARTIES AGAINST A
PURCHASER INDEMNIFIED PARTY OR A SELLER INDEMNIFIED PARTY, AS THE CASE MAY BE,
IN CONNECTION WITH LOSSES THAT MAY BE INDEMNIFIED PURSUANT TO THIS ARTICLE 7.

 

7.8 EXCLUSIVE REMEDY. SELLER, ON BEHALF OF ITSELF AND EACH OF THE OTHER SELLER
INDEMNIFIED PARTIES, AND PURCHASER, ON BEHALF OF ITSELF AND EACH OF THE OTHER
PURCHASER INDEMNIFIED PARTIES, ACKNOWLEDGE AND AGREE THAT, SUBJECT TO SECTION
9.12, THE SOLE AND EXCLUSIVE REMEDY FOR ANY BREACH OR INACCURACY, OR ALLEGED
BREACH OR INACCURACY, OF ANY REPRESENTATION OR WARRANTY IN THIS AGREEMENT OR ANY
COVENANT OR AGREEMENT UNDER THIS AGREEMENT, SHALL BE INDEMNIFICATION IN
ACCORDANCE WITH THIS ARTICLE 7. IN FURTHERANCE OF THE FOREGOING, SELLER, ON
BEHALF OF ITSELF AND EACH OF THE OTHER SELLER INDEMNIFIED PARTIES, AND
PURCHASER, ON BEHALF OF ITSELF AND EACH OF THE OTHER PURCHASER INDEMNIFIED
PARTIES, HEREBY WAIVE, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY
AND ALL OTHER RIGHTS, CLAIMS AND CAUSES OF ACTION (INCLUDING RIGHTS OF
CONTRIBUTIONS, IF ANY) THAT MAY BE BASED UPON, ARISE OUT OF OR RELATE TO THIS
AGREEMENT, OR THE NEGOTIATION, EXECUTION OR PERFORMANCE OF THIS AGREEMENT
(INCLUDING ANY TORT OR BREACH OF CONTRACT CLAIM OR CAUSE OF ACTION BASED UPON,
ARISING OUT OF OR RELATED TO ANY REPRESENTATION OR WARRANTY MADE IN OR IN
CONNECTION WITH THIS AGREEMENT OR AS AN INDUCEMENT TO ENTER INTO THIS
AGREEMENT), KNOWN OR UNKNOWN, FORESEEN OR UNFORESEEN, WHICH EXIST OR MAY ARISE
IN THE FUTURE, THAT IT MAY HAVE AGAINST THE SELLER INDEMNIFIED PARTIES OR THE
PURCHASER INDEMNIFIED PARTIES, AS THE CASE MAY BE, ARISING UNDER OR BASED UPON
ANY FEDERAL, STATE OR LOCAL LAW (INCLUDING ANY SUCH LAW RELATING TO
ENVIRONMENTAL MATTERS OR ARISING UNDER OR BASED UPON ANY SECURITIES LAW, COMMON
LAW OR OTHERWISE).

 

7.9 No Transfer of Seller’s Indemnities. If Purchaser sells, assigns or
otherwise transfers, by operation of law or otherwise, any or all of the VESCO
Membership Interest to any Person, other than an Affiliate of Purchaser, then
Seller’s indemnities pursuant to Section 7.2 relating to such transferred VESCO
Membership Interest, or portion thereof, shall automatically and immediately
extinguish.

 

8. Conditions to Closing.

 

8.1 Conditions Precedent to Obligations of Seller. The obligations of Seller to
consummate the transactions contemplated by this Agreement are subject to the
fulfillment, before or on the Closing Date, of each of the following conditions
(any or all of which may be waived by Seller in whole or in part to the extent
permitted by applicable Law; provided, however, that Seller agrees that it shall
not waive the condition set forth in Section 8.1(f) before the six month
anniversary of the date hereof):

 

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(a) Purchaser shall be deemed to remake the representations and warranties of
Purchaser set forth in this Agreement and such representations and warranties
qualified as to materiality shall be true and correct, and those not so
qualified shall be true and correct in all material respects, at and as of the
Closing Date as though made on the Closing Date, except to the extent such
representations and warranties relate to an earlier date (in which case such
representations and warranties qualified as to materiality shall be true and
correct, and those not so qualified shall be true and correct in all material
respects, on and as of such earlier date);

 

(b) Purchaser shall have performed and complied in all material respects with
all obligations and covenants required by this Agreement to be performed or
complied with by Purchaser on or before the Closing Date;

 

(c) there shall not be in effect any order, ruling or judgment by a Governmental
Body of competent jurisdiction restraining, enjoining or otherwise prohibiting
the consummation of the transactions contemplated hereby;

 

(d) the waiting period applicable to the transactions contemplated by this
Agreement under the Antitrust Laws shall have expired or early termination shall
have been granted;

 

(e) Seller shall have received the Adjusted Purchase Price pursuant to Section
2.2;

 

(f) the transactions contemplated by (i) that certain Asset Purchase Agreement
dated as of the date hereof by and between Koch Pipeline Company, L.P. and
Purchaser and (ii) that certain Limited Liability Company Membership Interest
and Stock Purchase Agreement dated as of the date hereof by and between Koch
Hydrocarbon Management Company, LLC and Purchaser shall each be consummated
simultaneously with the Closing and the transactions contemplated herein;

 

(g) there shall not have occurred any event subsequent to the date of this
Agreement and on or before the Closing Date that has caused a Material Adverse
Effect; and

 

(h) Purchaser shall have delivered to Seller Purchaser’s duly executed signature
page to an Assignment and Assumption Agreement, signed by an authorized officer
of Purchaser assuming the Vesco Holdings Membership Interest.

 

8.2 Conditions Precedent to Obligations of Purchaser. The obligation of
Purchaser to consummate the transactions contemplated by this Agreement is
subject to the fulfillment, on or before the Closing Date, of each of the
following conditions (any or all of which may be waived by Purchaser in whole or
in part to the extent permitted by applicable Law):

 

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(a) Subject to supplementation pursuant to Section 6.3, Seller shall be deemed
to remake the representations and warranties of Seller set forth in this
Agreement and such representations and warranties qualified as to materiality
shall be true and correct, and those not so qualified shall be true and correct
in all material respects, at and as of the Closing Date as though made on the
Closing Date, except to the extent such representations and warranties relate to
an earlier date (in which case such representations and warranties qualified as
to materiality shall be true and correct, and those not so qualified shall be
true and correct in all material respects, on and as of such earlier date);
provided however, that in the event of a breach of a representation or warranty,
the condition set forth in this Section 8.2(a) shall be deemed satisfied unless
the effect of all such breaches of representations and warranties taken together
result in a Material Adverse Effect;

 

(b) Seller shall have performed and complied in all material respects with all
obligations and agreements required by this Agreement to be performed or
complied with by them on or before the Closing Date;

 

(c) there shall not be in effect any order, ruling or judgment by a Governmental
Body of competent jurisdiction restraining, enjoining or otherwise prohibiting
the consummation of the transactions contemplated hereby;

 

(d) the waiting period applicable to the transactions contemplated by this
Agreement under the Antitrust Laws shall have expired or early termination shall
have been granted;

 

(e) there shall not have occurred any event subsequent to the date of this
Agreement and on or before the Closing Date that has caused a Material Adverse
Effect; and

 

(f) Seller shall have delivered, or caused to be delivered, to Purchaser a duly
executed and acknowledged affidavit of the appropriate Affiliate of Seller,
substantially in the form attached hereto as Exhibit A, stating that such
Affiliate of Seller is not a “foreign person” as defined in Section 1445 of the
Code; and

 

(g) Seller shall have delivered to Purchaser Seller’s duly executed signature
page to an Assignment and Assumption Agreement, substantially in the form
attached hereto as Exhibit B, signed by an authorized officer of Seller
assigning the Vesco Holdings Membership Interest to Purchaser.

 

8.3 Frustration of Closing Conditions. Neither Purchaser nor Seller may rely on
the failure of any condition set forth in Sections 8.1 or 8.2 as the case may be
if such failure was caused by such Party’s failure to comply with any provision
of this Agreement.

 

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9. Miscellaneous.

 

9.1 Payment of Transfer Taxes. All sales, use, transfer, intangible,
recordation, documentary stamp or similar taxes or charges, of any nature
whatsoever, applicable to, or resulting from, the transactions contemplated by
this Agreement shall be borne by Purchaser. At Closing, Purchaser shall remit
such taxes resulting from the transactions contemplated by this Agreement to
Seller or otherwise provide for the payment of such taxes in a manner
satisfactory to Seller. In the event Seller receives written notice assessing
taxes from any tax authority after the Closing Date with respect to such taxes,
Purchaser shall within ten (10) days of receiving written notice from Seller of
such taxes, remit such amounts to Seller.

 

9.2 Expenses. Except as otherwise provided in this Agreement, each of Seller and
Purchaser shall bear its own expenses incurred in connection with the
negotiation and execution of this Agreement and each other agreement, document
and instrument contemplated by this Agreement and the consummation of the
transactions contemplated hereby and thereby.

 

9.3 Submission to Jurisdiction; Consent to Service of Process.

 

(a) Seller, on behalf of itself and each of the other Seller Indemnified
Parties, and Purchaser, on behalf of itself and each of the other Purchaser
Indemnified Parties, hereby irrevocably submit to the exclusive personal
jurisdiction of the Delaware Court of Chancery over any dispute arising out of
or relating to this Agreement or any of the transactions contemplated hereby and
each Party hereby irrevocably agrees that all claims in respect of such dispute
or any suit, action proceeding related thereto may be heard and determined in
such court. Seller, on behalf of itself and each of the other Seller Indemnified
Parties, and Purchaser, on behalf of itself and each of the other Purchaser
Indemnified Parties, hereby irrevocably waive, to the fullest extent permitted
by applicable Law, any objection that they may now or hereafter have to the
laying of venue of any such dispute brought in such court or any defense of
inconvenient forum for the maintenance of such dispute. Each of Seller, on
behalf of itself and each of the other Seller Indemnified Parties, and
Purchaser, on behalf of itself and each of the other Purchaser Indemnified
Parties, agrees that a judgment in any such dispute may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by Law.

 

(b) Each of Seller, on behalf of itself and each of the other Seller Indemnified
Parties, and Purchaser, on behalf of itself and each of the other Purchaser
Indemnified Parties, hereby consents to process being served by any Party to
this Agreement in any suit, action or proceeding by delivery of a copy thereof
in accordance with the provisions of Section 9.6.

 

9.4 Entire Agreement; Amendments and Waivers. This Agreement (including the
schedules and exhibits hereto) and the Confidentiality Agreement represent the
entire

 

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understanding and agreement between the Parties with respect to the subject
matter hereof. This Agreement can be amended, supplemented or changed, and any
provision hereof can be waived, only by written instrument making specific
reference to this Agreement signed by the Party against whom enforcement of any
such amendment, supplement, modification or waiver is sought. No action taken
pursuant to this Agreement, including any investigation by or on behalf of any
Party, shall be deemed to constitute a waiver by the Party taking such action of
compliance with any representation, warranty, covenant or agreement contained
herein. The waiver by any Party of a breach of any provision of this Agreement
shall not operate or be construed as a further or continuing waiver of such
breach or as a waiver of any other or subsequent breach. No failure on the part
of any Party to exercise, and no delay in exercising, any right, power or remedy
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of such right, power or remedy by such Party preclude any other or
further exercise thereof or the exercise of any other right, power or remedy.

 

9.5 Governing Law. The provisions of this Agreement, all of the documents
delivered pursuant hereto, their execution, performance or nonperformance,
interpretation, construction and all matters based upon, arising out of or
related to this Agreement or the negotiation, execution or performance of this
Agreement (whether in tort or contract) shall be governed by the Laws, both
procedural and substantive, of the State of Delaware without regard to its
conflict of laws provisions that if applied might require the application of the
Laws of another jurisdiction.

 

9.6 Notices. All notices and other communications under this Agreement shall be
in writing and shall be deemed given (a) when delivered personally by hand (with
written confirmation of receipt), (b) when sent by facsimile (with written
confirmation of transmission) or (c) one (1) business day following the day sent
by overnight courier (with written confirmation of receipt), in each case at the
following addresses and facsimile numbers (or to such other address or facsimile
number as a Party may have specified by notice given to the other Party pursuant
to this provision):

 

If to Seller, to:

 

Koch Hydrocarbon Management Company, LLC

Attn: President

4111 E. 37th St. North

Wichita, Kansas 67220

Fax: (316) 828-7972

 

With a copy to:

 

Koch Hydrocarbon Management Company, LLC

Attn: General Counsel

4111 E. 37th St. North

Wichita, Kansas 67220

Fax: (316) 828-3133

 

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and

 

Weil, Gotshal & Manges LLP

Attn: Glenn D. West, Esq.

200 Crescent Court, Suite 300

Dallas, Texas 75201

Fax: (214) 746-7777

 

If to Purchaser, to:

 

ONEOK, Inc.

Attn: David Kyle

100 West Fifth Street

Tulsa, Oklahoma 74103

Fax: (918) 588-7961

 

With a copy to:

 

ONEOK, Inc.

Attn: General Counsel

100 West Fifth Street

Tulsa, Oklahoma 74103

Fax: (918) 588-7971

 

9.7 Severability. If any term or other provision of this Agreement is invalid,
illegal, or incapable of being enforced by any Law or public policy, all other
terms or provisions of this Agreement shall nevertheless remain in full force
and effect so long as the legal substance of the transactions contemplated
hereby is not affected in any manner materially adverse to any Party. Upon such
determination that any term or other provision is invalid, illegal, or incapable
of being enforced, the Parties shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the Parties as closely as
possible in an acceptable manner in order that the transactions contemplated
hereby are consummated as originally contemplated to the greatest extent
possible.

 

9.8 Binding Effect; Assignment. This Agreement shall be binding upon and inure
to the benefit of the Parties and their respective successors and permitted
assigns. Nothing in this Agreement shall create or be deemed to create any third
party beneficiary rights in any person or entity not a party to this Agreement.
No assignment of this Agreement or of any rights or obligations hereunder may be
made by either Seller or Purchaser, directly or indirectly (by operation of law
or otherwise), without the prior written consent of the other Party (other than
an assignment to an Affiliate) and any attempted assignment without the required
consents shall be void. No assignment of any

 

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obligations hereunder shall relieve the assignor of its obligations hereunder,
and any such assignor shall remain jointly and severally liable for its
obligations and the obligations of its permitted assignee. Upon any such
permitted assignment, the references in this Agreement to Purchaser shall also
apply to any such assignee unless the context otherwise requires.

 

9.9 Non-Recourse. This Agreement may only be enforced against, and any claims or
causes of action that may be based upon, arise out of or relate to this
Agreement, or the negotiation, execution or performance of this Agreement may
only be made against, the entities that are expressly identified as Parties. No
past, present or future director, officer, employee, incorporator, member,
partner, stockholder, Affiliate, agent, attorney or representative of Seller or
any of their respective Affiliates shall have any Liability for any obligations
or liabilities of Seller under this Agreement of or for any claim based on, in
respect of, or by reason of, the transactions contemplated hereby and thereby.

 

9.10 Counterparts. This Agreement may be executed in one or more counterparts,
each of which will be deemed to be an original copy of this Agreement and all of
which, when taken together, will be deemed to constitute one and the same
agreement. Once signed, any reproduction of this Agreement made by reliable
means (e.g., photocopy, facsimile) is considered an original.

 

9.11 Time is of the Essence. With regard to the dates and time periods set forth
or referred to in this Agreement, TIME IS OF THE ESSENCE.

 

9.12 Specific Performance. Without limiting any other rights or remedies of the
Parties, to the extent all of the conditions to Closing set forth in Article 8
have either been satisfied or waived and a Party fails to consummate the
Closing, the other Party shall have the right to seek a decree of specific
performance to cause the breaching party to so consummate the Closing.

 

[The Remainder of This Page is Intentionally Left Blank.]

 

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IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by
their respective officers thereunto duly authorized, as of the date first
written above.

 

Seller:   Purchaser:

Koch Hydrocarbon Management

Company, LLC

  ONEOK, Inc. By:  

/s/ Ronald D. Vaupel

--------------------------------------------------------------------------------

  By:  

/s/ David Kyle

--------------------------------------------------------------------------------

Name:   Ronald D. Vaupel   Name:   David Kyle Title:   Chief Executive Officer  
Title:  

Chairman, President and

Chief Executive Officer

 

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