Exhibit 2.1
EXECUTION COPY
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CONTRIBUTION AGREEMENT
by and among
ONEOK, INC.
NORTHERN BORDER PARTNERS, L.P.
and
NORTHERN BORDER INTERMEDIATE LIMITED PARTNERSHIP
February 14, 2006
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TABLE OF CONTENTS
SECTION 1. CONTRIBUTION................................................... 1
1.1 Contribution to Northern Border................................ 1
1.2 Issuance of the Units.......................................... 2
1.3 The Closing.................................................... 2
1.4 GP Contribution and Dropdown To NBILP.......................... 3
1.5 Working Capital Adjustment..................................... 3
SECTION 2. REPRESENTATIONS AND WARRANTIES OF ONEOK........................ 5
2.1 Organization and Authority of ONEOK............................ 5
2.2 Organization, Authority and Qualification of the Entities...... 6
2.3 Capital of Companies; Beneficial Ownership..................... 6
2.4 Subsidiaries................................................... 7
2.5 Financial Statements........................................... 7
2.6 Taxes.......................................................... 8
2.7 Absence of Certain Changes..................................... 9
2.8 Ordinary Course................................................ 10
2.9 Intellectual Property.......................................... 10
2.10 Contracts...................................................... 11
2.11 Compliance..................................................... 12
2.12 Litigation..................................................... 12
2.13 Insurance...................................................... 12
2.14 Related Transactions........................................... 13
2.15 Employee Benefit Matters....................................... 13
2.16 Environmental Matters.......................................... 14
2.17 Securities Act................................................. 14
2.18 Regulatory Matters............................................. 15
2.19 Operating Assets............................................... 15
2.20 Brokers' Fees.................................................. 16
2.21 Books and Records.............................................. 16
2.22 Indebtedness................................................... 16
2.23 Disclaimer..................................................... 16
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE NBP PARTNERSHIPS......... 17
3.1 Organization and Authority of the NBP Partnerships............. 17
3.2 Capitalization................................................. 18
3.3 Litigation..................................................... 19
3.4 Compliance..................................................... 19
3.5 Employee Matters............................................... 19
3.6 Environmental Matters.......................................... 20
3.7 Absence of Certain Changes..................................... 21
3.8 Securities Act................................................. 21
3.9 SEC Filings.................................................... 21
3.10 Brokers' Fees.................................................. 22
3.11 Opinion of Financial Adviser................................... 22
3.12 Registration Rights............................................ 22
3.13 Disclaimer..................................................... 22
SECTION 4. COVENANTS OF ONEOK............................................. 23
4.1 Conduct of the Entities........................................ 23
4.2 Cash Management................................................ 25
SECTION 5. COVENANTS OF THE NBP PARTNERSHIPS.............................. 25
5.1 Books and Records.............................................. 25
5.2 Approval of Issuance of Common Units Upon Conversion Units..... 26
SECTION 6. COVENANTS OF ONEOK AND THE NBP PARTNERSHIPS.................... 26
6.1 Access to Information.......................................... 26
6.2 Commercially Reasonable Efforts................................ 27
6.3 Regulatory and Other Authorizations; Notices and Consents...... 27
6.4 Public Announcements........................................... 28
6.5 Notices of Certain Events...................................... 29
6.6 Entity Guarantees.............................................. 29
6.7 Intercompany Accounts.......................................... 29
6.8 Shared Contracts and Drop-Down Contracts....................... 29
6.9 ONEOK Marks.................................................... 30
6.10 Indebtedness for Borrowed Money................................ 31
6.11 Conversion Transactions........................................ 31
6.12 Interim Financial Statements................................... 31
6.13 Cooperation Regarding Audits................................... 31
6.14 Insurance Matters.............................................. 32
SECTION 7. CONDITIONS TO CLOSING.......................................... 32
7.1 Conditions to the Obligations of ONEOK......................... 32
7.2 Conditions to the Obligations of the NBP Partnerships.......... 34
SECTION 8. TERMINATION OF AGREEMENT; RIGHTS TO PROCEED.................... 36
8.1 Termination.................................................... 36
8.2 Effect of Termination.......................................... 37
SECTION 9. INDEMNIFICATION................................................ 37
9.1 Survival of Representations and Warranties, Etc................ 37
9.2 Indemnification................................................ 37
9.3 Threshold; Cap................................................. 38
9.4 Exclusive Remedy; Sole Recourse................................ 40
9.5 No Contribution................................................ 40
9.6 Setoff......................................................... 40
9.7 Third Party Claims............................................. 40
SECTION 10. TAX MATTERS.................................................... 41
10.1 Retention of Records........................................... 41
10.2 Cooperation.................................................... 41
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10.3 Transfer Taxes................................................. 42
10.4 Tax Returns.................................................... 42
10.5 Allocation of Taxes............................................ 43
10.6 Tax Indemnity.................................................. 45
10.7 Contests....................................................... 46
10.8 Amended Tax Returns............................................ 47
10.9 Miscellaneous.................................................. 47
10.10 Allocation of Value among the Contributed Entities; Book Ups... 47
SECTION 11. MISCELLANEOUS.................................................. 48
11.1 Fees and Expenses................................................. 48
11.2 Governing Law..................................................... 48
11.3 Notices........................................................... 48
11.4 Entire Agreement.................................................. 50
11.5 Assignability; Binding Effect..................................... 50
11.6 Captions and Gender............................................... 50
11.7 Execution in Counterparts......................................... 50
11.8 Amendments........................................................ 50
11.9 Publicity and Disclosures......................................... 50
11.10 Severability...................................................... 51
11.11 Waiver of Jury Trial.............................................. 51
11.12 Arbitration....................................................... 51
11.13 Time of the Essence............................................... 51
11.14 Remedies Cumulative; Specific Performance......................... 51
11.15 Further Assurances................................................ 52
11.16 Third Party Beneficiaries......................................... 52
11.17 Audit Committee Authority......................................... 52
11.18 Certain Definitions............................................... 52
11.19 Other Defined Terms............................................... 60
Exhibit A - Companies/Company Subsidiaries
Exhibit B - Form of Amendment
Exhibit C - ONEOK Guaranty Agreement
Exhibit D - Target Working Capital
Exhibit E - Services Agreement
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CONTRIBUTION AGREEMENT
This CONTRIBUTION AGREEMENT (this "Agreement") is entered into as of
February 14, 2006 by and among ONEOK, Inc., an Oklahoma corporation ("ONEOK"),
Northern Border Partners, L.P., a Delaware limited partnership ("Northern
Border"), and Northern Border Intermediate Limited Partnership ("NBILP", and
together with Northern Border, the "NBP Partnerships ") (each a "Party" and
together, the "Parties"). Capitalized terms used but not defined shall have the
meaning given in Section 11.18.
WITNESSETH
WHEREAS, ONEOK owns all of the issued and outstanding Equity Interests (the
"Shares") of each of the Persons listed on Exhibit A hereto under the heading
"Companies" (the "Companies", and each, individually, a "Company");
WHEREAS, the Companies and their Subsidiaries, all of which are listed on
Exhibit A under the heading "Company Subsidiaries", own and operate natural gas
gathering, processing, fractionating, transportation, storage, pipelines and
natural gas liquids assets located in Kansas, Oklahoma and Texas (the
"Business"); and
WHEREAS, ONEOK wishes to contribute the Shares to the NBP Partnerships and
the NBP Partnerships wish to accept the contribution of the Shares, upon the
terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and mutual agreements and
covenants herein contained, and intending to be legally bound hereby, the
Parties hereto hereby agree as follows:
SECTION 1. CONTRIBUTION
1.1 CONTRIBUTION TO NORTHERN BORDER. Immediately before Closing, ONEOK
shall deliver or cause to be delivered to Northern Plains Natural Gas Company,
LLC ("Northern Plains") and Pan Border Gas Company, LLC ("Pan Border", and
collectively, the "Contributing NBP General Partners"), good and sufficient
instruments of transfer transferring the NBP GP Shares and the NBILP GP Shares
to the Contributing NBP General Partners. At the Closing, ONEOK and the
Contributing NBP General Partners shall deliver or cause to be delivered to
Northern Border good and sufficient instruments of transfer transferring the NBP
Shares and the NBP GP Shares, respectively, to Northern Border. Such instruments
of transfer shall effectively vest in Northern Border good and marketable title
to the NBP Shares and the NBP GP Shares free and clear of all Liens other than
transfer restrictions imposed by applicable securities laws. The contribution of
the NBP GP Shares by the Contributing NBP General Partners will be made in order
to comply with the NBP General Partners' obligations to maintain general partner
capital accounts in accordance with Section 4.2 of the Northern Border
Partnership Agreement and NBP acknowledges that the contribution of the NBP GP
Shares by the Contributing NBP general Partners is sufficient to maintain the
aggregate general partner capital accounts in NBP required by Section 4.2 of the
Northern Border Partnership Agreement.
1.2 ISSUANCE OF THE UNITS. As consideration for the NBP Shares,
Northern Border will, at Closing, issue to ONEOK 36,494,126 units representing
limited partnership interests in Northern Border with the rights and preferences
contained in the form of amendment (the "Amendment") to the Amended and Restated
Agreement of Limited Partnership of Northern Border, dated as of October 1, 1993
(the "Northern Border Partnership Agreement"), attached hereto as Exhibit B (the
"Units"), which Units shall be convertible, as set forth in the Amendment, into
common units representing limited partnership interests in Northern Border
("Common Units;" and the Common Units into which the Units are convertible, the
"Conversion Units").
1.3 THE CLOSING.
(a) Subject to the provisions of Section 8, the closing of the
transactions contemplated by this Agreement (the "Closing") shall take place at
the offices of ▇▇▇▇▇ & ▇▇▇▇▇▇▇, ▇▇▇ ▇. ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇ ▇▇▇▇▇, commencing
at 10:00 a.m. local time on the first business day of the calendar month
immediately following the satisfaction or waiver of all conditions to the
obligations of the Parties to consummate the transactions contemplated hereby
(other than conditions with respect to actions the Parties shall take at the
Closing itself, including without limitation, conditions in Section 7.1(h) and
7.2(h) herein) or such other date as Northern Border and ONEOK may mutually
determine (the "Closing Date").
(b) At the Closing, ONEOK will deliver the following documents
and deliverables to Northern Border:
(i) Good and sufficient instruments of transfer transferring
all of the Shares to Northern Border free and clear of all Liens other than
transfer restrictions imposed by applicable securities laws;
(ii) An executed copy of a Services Agreement substantially
in the form attached hereto as Exhibit E (the "Services Agreement");
(iii) A certificate certifying that the transactions
contemplated hereby are exempt from withholding under Code Section 1445 executed
in accordance with the requirements of the Treasury regulations promulgated
thereunder;
(iv) Resignations of the officers, directors and managers
identified prior to Closing by Northern Border;
(v) An executed copy of a Guaranty substantially in the form
attached hereto as Exhibit C (the "ONEOK Guaranty Agreement");
(vi) An executed copy of a Payment, Performance, Indemnity
and Support Agreement substantially in the form attached hereto as Schedule
1.3(b)(vi);
(vii) A written opinion from legal counsel to ONEOK
addressed to Northern Border substantially in the form attached hereto as
Schedule 1.3(b)(vii); and
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(viii) Such other certificates, instruments of conveyance,
and documents as may be reasonably requested by Northern Border prior to the
Closing Date to carry out the intent and purposes of this Agreement.
(c) At the Closing, Northern Border will deliver the following
documents and deliverables to ONEOK:
(i) Certificates (or appropriate evidence of a book entry
transfer to the account designated by ONEOK) representing the Units;
(ii) An executed copy of the Services Agreement;
(iii) An Agreement and Guaranty with respect to each of the
equipment leases relating to ONEOK Bushton Processing, Inc., in a form
reasonably acceptable to ONEOK and Northern Border, and such other agreements,
certificates and assurances necessary in connection with the transfer of ONEOK
Bushton Processing, Inc. to Northern Border;
(iv) An executed copy of a Payment, Performance, Indemnity
and Support Agreement substantially in the form attached hereto as Schedule
1.3(b)(vi);
(v) A written opinion from legal counsel to Northern Border
addressed to ONEOK substantially in the form attached hereto as Schedule
1.3(c)(v); and
(vi) Such other certificates, instruments, and documents as
may be reasonably requested by ONEOK prior to the Closing Date to carry out the
intent and purposes of this Agreement.
1.4 GP CONTRIBUTION AND DROPDOWN TO NBILP. At the Closing and
immediately following the contribution set forth in Section 1.1, (i) Northern
Border shall deliver to NBILP good and sufficient instruments of transfer
transferring the NBP Shares and the NBP GP Shares to NBILP, and (ii) ONEOK shall
cause the Contributing NBP General Partners to deliver to NBILP good and
sufficient instruments of transfer transferring the NBILP GP Shares to NBILP.
Such instruments of transfer shall effectively vest in NBILP good and marketable
title to the Shares free and clear of all Liens other than transfer restrictions
imposed by applicable securities laws. The contribution of the NBILP GP Shares
by the Contributing NBP General Partners will be made in order to comply with
the NBP General Partners' obligations to maintain general partner capital
accounts in accordance with Section 4.2 of the Amended and Restated Agreement of
Limited Partnership of NBILP, dated as of October 1, 1993 (the "NBILP
Partnership Agreement") and NBILP acknowledges that the contribution of the
NBILP GP Shares by the Contributing NBP General Partners is sufficient to
maintain the aggregate general partner capital accounts in NBILP required by
Section 4.2 of the NBILP Partnership Agreement.
1.5 WORKING CAPITAL ADJUSTMENT.
(a) As soon as practicable, but in no event later than 60 days
following the Closing, ONEOK shall prepare and deliver to Northern Border a
calculation (the "Closing Working Capital Statement") of the Net Working Capital
of the Entities, on a consolidated basis,
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as of the close of business on the last day of the month immediately preceding
the Closing Date (the "Closing Working Capital"). The Closing Working Capital
Statement shall be prepared in accordance with the principles set forth in the
definition of Net Working Capital.
(b) ONEOK shall deliver a copy of the Closing Working Capital
Statement to Northern Border promptly after it has been prepared. After receipt
of the Closing Working Capital Statement, Northern Border shall have 30 days to
review the Closing Working Capital Statement, together with the work papers used
in the preparation thereof. ONEOK shall (i) provide Northern Border and its
Representatives reasonable access during normal business hours to all relevant
personnel, work papers, trial balances and other financial information to the
extent necessary or useful to complete their review of the Closing Working
Capital Statement, and (ii) cooperate with Northern Border's and its
Representatives' reasonable requests with respect to the review of the Closing
Working Capital Statement, including by providing on a timely basis all
information necessary or useful in reviewing the Closing Working Capital
Statement. Unless Northern Border delivers written notice to ONEOK on or prior
to the 30th day after Northern Border's receipt of the Closing Working Capital
Statement specifying in reasonable detail the amount, nature and basis of all
disputed items, Northern Border shall be deemed to have accepted and agreed to
the calculation of the Closing Working Capital. If Northern Border (or one of
its Representatives) notifies ONEOK of an objection to the calculation of the
Closing Working Capital, ONEOK and Northern Border shall, within 20 days (or
such longer period as the Parties may agree in writing) following such notice
(the "Resolution Period"), attempt to resolve their differences and any
resolution by them as to any disputed amounts shall be final, binding and
conclusive (other than as a result of manifest error or fraud).
(c) If, at the conclusion of the Resolution Period, there are any
amounts remaining in dispute, then such amounts remaining in dispute shall be
submitted to a nationally recognized public accounting firm agreed by Northern
Border and ONEOK (the "Neutral Auditors"). Northern Border and ONEOK shall
execute, if requested by the Neutral Auditors, a reasonable engagement letter,
including customary indemnities. The Neutral Auditors shall act as an arbitrator
to determine, based solely on the provisions of this Section 1.5(c) and the
presentations by ONEOK and Northern Border, and not by independent review, only
those issues still in dispute. The Neutral Auditors' determination shall be made
within 30 days of the dispute being submitted for their determination, shall be
set forth in a written statement delivered to ONEOK and Northern Border and
shall be final, non-appealable and binding on the Parties hereto, absent
manifest error or fraud. A judgment of a court of competent jurisdiction may be
entered upon the Neutral Auditors' determination. The Neutral Auditors shall
have exclusive jurisdiction over, and resort to the Neutral Auditors as provided
in this Section 1.5(c) shall be the only recourse and remedy of the Parties
against one another with respect to, any disputes arising out of or relating to
the adjustments pursuant to this Section 1.5(c). The fees, costs and expenses of
the Neutral Auditors shall be borne by Northern Border, on the one hand, and by
ONEOK, on the other, based upon the percentage which the portion of the
contested amount not awarded to each Party bears to the amount actually
contested by such Party. For example, if Northern Border claims that the Closing
Working Capital is $1,000 less than the amount determined by ONEOK, and ONEOK
contests only $500 of the amount claimed by Northern Border, and if the Neutral
Auditors ultimately resolve the dispute by awarding Northern Border $300 of the
$500 contested, then the costs and expenses of the Neutral Auditors will be
allocated 60% (i.e., 300 / 500) to ONEOK and 40% (i.e., 200 / 500) to Northern
Border. The term "Final Closing
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Working Capital" shall mean the definitive Closing Working Capital agreed to (or
deemed to be agreed to) by Northern Border and ONEOK in accordance with Section
1.5(b) hereof or resulting from the determinations made by the Neutral Auditors
in accordance with this Section 1.5(c) (in addition to those items theretofore
agreed to by ONEOK and Northern Border).
(d) In the event the Final Closing Working Capital
(i) exceeds the Target Working Capital, Northern Border
shall pay the excess in cash to ONEOK; or
(ii) is less than the Target Working Capital, ONEOK shall
pay the difference in cash to Northern Border (the payments contemplated by this
Section 1.5(d) are referred to as the "Net Working Capital Adjustment").
All payments made pursuant to this Section 1.5 shall be made by wire
transfer of immediately available funds within five (5) days of the
determination of the Final Closing Working Capital to an account designated in
writing by the applicable Party.
SECTION 2. REPRESENTATIONS AND WARRANTIES OF ONEOK
Except as set forth in the disclosure schedules delivered by ONEOK (the
"ONEOK Disclosure Schedules") to Northern Border on the date hereof (it being
agreed that any matter disclosed in a particular Schedule of the Disclosure
Schedules delivered by ONEOK shall be deemed to have been disclosed with respect
to any other Sections of this Agreement to the extent that the relevance of such
matter to such other Section is readily apparent from the information
disclosed), ONEOK represents and warrants to Northern Border that the statements
contained in this Section 2 are true, correct and complete as of the date of
this Agreement and will be true, correct and complete as of the Closing, except
in each case to the extent that such statements are expressly made only as of a
specified date, in which case ONEOK represents and warrants that such statements
are true, correct and complete as of such specified date.
2.1 ORGANIZATION AND AUTHORITY OF ONEOK.
(a) ONEOK is a corporation duly incorporated, validly existing
and in good standing under the laws of Oklahoma.
(b) ONEOK has all requisite right, authority and power to enter
into this Agreement and each Related Agreement to be executed and delivered by
ONEOK and to carry out the transactions contemplated hereby and thereby.
(c) The execution, delivery and performance by ONEOK of this
Agreement and each Related Agreement have been duly authorized by all necessary
action of ONEOK and no other action on the part of ONEOK is required in
connection therewith.
(d) This Agreement and each Related Agreement to be executed and
delivered by ONEOK constitutes, or when executed and delivered will constitute,
valid and binding obligations of ONEOK enforceable in accordance with their
respective terms, except as such
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enforceability may be limited by bankruptcy, insolvency or other similar laws
from time to time in effect which affect the enforcement of creditors' rights
generally.
(e) The execution, delivery and performance by ONEOK of this
Agreement and each Related Agreement to be executed and delivered by ONEOK, with
or without the giving of notice or the passage of time, or both:
(i) do not and will not conflict with or violate any
provision of the organizational documents of ONEOK or any Entity;
(ii) do not and will not conflict with or violate any Legal
Requirements applicable to ONEOK or any of the Entities, or, except as set forth
in Schedule 2.1(e)(ii) and any filings required to be made under the HSR Act,
require ONEOK or any Entity to obtain any approval, consent or waiver of, or
make any filing with, any Governmental Authority that has not been obtained or
made;
(iii) do not and will not require the consent, approval or
waiver of any Person (other than any Governmental Authority), except as set
forth in Schedule 2.1(e)(iii), or except for any such consents, approvals or
waivers as have been obtained or the failure of which to be obtained would not,
individually or in the aggregate, have a Material Adverse Effect; and
(iv) does not and will not breach any Material Contract or
result in or permit the termination of any such Material Contract.
2.2 ORGANIZATION, AUTHORITY AND QUALIFICATION OF THE ENTITIES. Each
Company and each Subsidiary thereof (each, a "Company Subsidiary" and, together
with the Companies, each an "Entity" and, collectively, the "Entities") is duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, as set forth on Exhibit A, and has all
necessary power and authority to own, operate or lease the properties and assets
now owned, operated or leased by it and to carry on its business as it is
currently conducted. Each Entity is duly licensed or qualified to do business
and is in good standing (to the extent applicable) in each jurisdiction in which
the properties owned or leased by it or the operation of its business makes such
licensing or qualification necessary, except where the failure to be so
qualified or licensed would not, individually or in the aggregate, have a
Material Adverse Effect. All material actions taken by the Entities have been
duly authorized, and no Entity has taken any action that in any material respect
conflicts with, constitutes a material default under or results in a material
violation of the organizational documents of such Entities. True and correct
copies of the organizational documents of each Entity, each as in effect on the
date hereof, have previously been made available to Northern Border.
2.3 CAPITAL OF COMPANIES; BENEFICIAL OWNERSHIP.
(a) All of the issued and outstanding shares of capital stock of
each of the Companies that is a corporation are validly issued, fully paid and
nonassessable and are owned beneficially and of record, directly or indirectly,
by ONEOK, and all of the limited liability company interests in each of the
Companies that is a limited liability company are validly issued, fully paid and
nonassessable and are owned beneficially and of record, directly or indirectly,
by ONEOK, in each case free and clear of all Liens.
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(b) There are no outstanding options, warrants, rights,
commitments, preemptive rights or agreements of any kind for the issuance or
sale of, or outstanding securities convertible into, any additional shares of
capital stock of any class or limited liability company interests, as the case
may be, of any Company which would entitle the holders thereof to an interest in
or rights in respect of that Company, and there are no agreements of any kind
that may obligate ONEOK or any of its Affiliates (including the Companies) to
sell, issue, purchase, redeem or otherwise transfer any Shares to any Person.
There are no voting agreements, proxies or other similar agreements or
understandings with respect to the Shares.
2.4 SUBSIDIARIES.
(a) Exhibit A lists, for each Company Subsidiary, its name, type
of entity, jurisdiction of its incorporation, formation or organization and the
percentage Equity Interest owned by a Company. Except as set forth in Schedule
2.4(a), the Companies own, directly or indirectly, all of the issued and
outstanding Equity Interests of each Company Subsidiary, free and clear of all
Liens other than transfer restrictions imposed by applicable securities laws,
and the owner beneficially and of record of each Company Subsidiary is either a
Company or a Company Subsidiary, as applicable, and all Equity Interests of each
Company Subsidiary are validly issued, fully paid and nonassessable. There are
no options, warrants, convertible securities or other rights, agreements,
arrangements or commitments of any character relating to the Equity Interests of
the Company Subsidiaries or that may obligate the Company Subsidiaries to issue
or sell any Equity Interests of any Company Subsidiary, and there are no
agreements of any kind that may obligate any Company to sell, issue, purchase,
redeem or otherwise transfer any Equity Interests in any Company Subsidiary to
any Person. There are no voting agreements, proxies or other similar agreements
or understandings with respect to the Equity Interests of the Company
Subsidiaries.
(b) Other than the Company Subsidiaries, no Entity owns any
Equity Interest in any Person except as set forth in Schedule 2.4(b). The
Entities own, directly or indirectly, 50% of the outstanding Equity Interests in
Fox Plant, L.L.C. and 10.1765% of the Equity Interests in Venice Energy Services
Company, L.L.C., in each case free and clear of all Liens, other than transfer
restrictions imposed by applicable securities laws.
2.5 FINANCIAL STATEMENTS.
(a) ONEOK has delivered to Northern Border true, correct and
complete copies of a consolidated unaudited balance sheet of the Entities (the
"Balance Sheet") as of December 31, 2005 (the "Balance Sheet Date") and an
unaudited statement of income of the Acquired Entities for the 12 months then
ended (together, the "Financial Statements") copies of which are attached hereto
as Schedule 2.5(a). The long-term Indebtedness listed in the Financial
Statements under the caption "Long-term Debt, excluding current maturities" is
all owed to ONEOK or its Affiliates.
(b) Except (i) to the extent set forth in or reserved against in
the Balance Sheet or as identified in Schedule 2.5(b) hereto, (ii) for current
liabilities (determined in accordance with GAAP) incurred in the ordinary course
of business consistent with past practices since the Balance Sheet Date, and
(iii) for immaterial Liabilities, none of the Entities has any Liabilities of
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the type that would be required to be disclosed on a balance sheet of that
Entity (or the notes thereto) prepared in accordance with GAAP.
(c) The Financial Statements have been prepared in accordance
with GAAP (except as disclosed herein) during the periods covered thereby, are
complete and correct in all material respects, and present fairly in all
material respects the financial condition of the applicable Entities at the
dates of said statements and the results of their operations for the periods
covered thereby, except for normal year or period end adjustments and the
absence of footnotes.
2.6 TAXES.
(a) The Entities have (giving effect to extensions) (x) duly and
timely filed (or there has been filed on their behalf) with the appropriate
Governmental Authority all income and other material Tax Returns required to be
filed by them, and all such Tax Returns are true, correct and complete in all
material respects and (y) timely paid or accrued on the their books, or there
has been paid on their behalf, all material Taxes due and payable.
(b) The Entities have complied in all material respects with all
applicable Tax Laws relating to the payment and withholding of Taxes.
(c) There are no Liens that arose in connection with Taxes upon
the assets or properties of the Entities except for Liens described in clause
(a) of the definition of "Permitted Liens".
(d) The Entities have not requested (nor has any request been
made by any Person on behalf of any of the Entities) in writing any extension of
time within which to file any Tax Return in respect of any taxable year which
has not since been filed, and no outstanding written waivers or comparable
written consents regarding the application of the statute of limitations with
respect to any Taxes or Tax Returns has been given by or on behalf of the
Entities.
(e) To the Knowledge of ONEOK, no U.S. federal, state, local or
foreign audits, reviews or other administrative proceedings or court proceedings
("Audits") are ongoing or have been initiated with regard to any Taxes or Tax
Returns of the Entities, and the Entities have not received any written notice
of any such Audits.
(f) None of the Entities has agreed or is required to make any
adjustment by reason of a change in accounting method that would affect any
taxable year ending after the Closing Date, and no Tax Authority has proposed
any such adjustment or change in accounting method that would affect any taxable
year ending after the Closing Date. None of the Entities have an application
pending with any Tax Authority requesting permission for any change in
accounting method that relates to their business or operations and that would
affect any taxable year ending after the Closing Date.
(g) Each of the Entities is classified as a partnership or a
disregarded entity for U.S. federal income tax purposes, except for those
Entities listed in Schedule 2.6.
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(h) No written claim has been made, and to the Knowledge of ONEOK
there has been no oral or threatened claim, by any Tax Authority in a
jurisdiction where an Entity does not file a Tax Return that it is or may be
subject to Tax in that jurisdiction.
(i) None of the Entities is a party to any Tax allocation or
sharing agreement or has any liability for the Taxes of another Person under
Treasury Regulations Section 1.1502-6 or similar law, as a transferee,
successor, by contract or otherwise.
(j) ONEOK is a United States person within the meaning of the
Code.
(k) The unpaid Taxes of the Companies (A) did not, as of the
Balance Sheet Date, exceed the reserves established on the Financial Statements,
and (B) do not exceed the reserve as adjusted for the passage of time through
the Closing Date in accordance with past custom and practice of the Entities in
filing their Tax Returns.
(l) None of the assets or properties of the Entities (A) secures
any debt the interest on which is tax-exempt under Code Section 103(a), (B) is
"tax-exempt use property" within the meaning of Code Section 168(h), (C) is "tax
exempt bond financed property" within the meaning of Code Section 168(g)(5), (D)
is "limited use property" within the meaning of Revenue Procedure 76-30 or (E)
will be treated as owned by another Person pursuant to the provisions of Code
Section 168(f)(8).
(m) The transactions contemplated herein are not subject to tax
withholding pursuant to the provisions of Section 3406 or Subchapter A of
Chapter 3 of the Code or any other Legal Requirement.
2.7 ABSENCE OF CERTAIN CHANGES. As of the date hereof, except as
identified on Schedule 2.7, since the Balance Sheet Date there has not been:
(a) any change in the financial condition, properties, assets,
Liabilities, business or operations of the Entities that has had or would
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect;
(b) any contingent Liability incurred by any of the Entities as
guarantor or otherwise with respect to the obligations of others (other than any
other Entity) in excess of $500,000, or any cancellation of any material debt or
claim owing to any Entity, or waiver of any right that has had or would
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect;
(c) other than Permitted Liens, any Lien placed on any of the
material properties of the Entities, that remain in existence on the date hereof
and that will remain in existence on the Closing Date;
(d) any material obligation or Liability of any nature incurred
by any of the Entities, whether accrued, absolute, contingent or otherwise,
asserted or unasserted, known or unknown, other than obligations and Liabilities
incurred in the ordinary course of business consistent with past practice and in
accordance with the terms of this Agreement;
9
(e) any purchase, sale or other disposition, or any agreement or
other arrangement for the purchase, sale or other disposition, of any of the
material properties or assets of any Entity other than in the ordinary course of
business consistent with past practice and in accordance with the terms of this
Agreement;
(f) any material change in accounting principles, methods or
practices used by any Entity;
(g) any loss, damage, destruction or other casualty to any
Entity's property, plants, equipment or inventories (whether or not covered by
insurance) that has had or would reasonably be expected to have, individually or
in the aggregate, a Material Adverse Effect;
(h) any material change in the compensation levels of any
Entity's senior executives, any material changes in the manner in which other
employees are generally compensated or any provision of additional or
supplemental benefits for its employees generally, except, in each case, normal
periodic increases or promotions effected in the ordinary course of business
consistent with past practice;
(i) any material commitment, guarantee, contractual obligation,
capital expenditure or transaction entered into by any Entity, other than in the
ordinary course of business consistent with past practice, or any borrowing or
other incurrence, assumption or guarantee of Indebtedness by any Entity other
than short term Indebtedness owed to ONEOK or its Affiliates; or
(j) any agreement or understanding whether in writing or
otherwise, for any Entity to take any of the actions specified in paragraphs (a)
through (i) above.
For purposes of this Section 2.7, materiality, as to any matter, shall be
determined with respect to all the Entities, taken as a whole.
2.8 ORDINARY COURSE. Since the Balance Sheet Date, the Entities have
conducted their respective businesses in the ordinary course of business
consistent with past practices.
2.9 INTELLECTUAL PROPERTY. Each Entity owns or has the right to use
all Intellectual Property Assets necessary for or used in the conduct of its
business as currently conducted ("Entity Intellectual Property Assets"), and all
such Entity Intellectual Property Assets owned by any Entity are free and clear
of all Liens (other than Permitted Liens). Neither the execution or delivery of
this Agreement, nor the consummation of the transactions contemplated hereby
will, with or without notice or lapse of time, result in, or give any other
Person the right or option to cause or declare, a breach or termination of, or
cancellation or reduction in rights of any Entity under any Contract providing
for the license of any Entity Intellectual Property Assets to such Entity,
except for any such terminations, cancellations or reductions that, individually
or in the aggregate, would not have a Material Adverse Effect. No Entity is
infringing or otherwise violating in any material respect the Intellectual
Property Assets of any other Person.
10
2.10 CONTRACTS.
(a) As of the date hereof, Schedule 2.10(a) contains a true and
complete listing of the following Contracts to which any Entity is a party
(collectively, the "Material Contracts"):
(i) except for any intercompany Indebtedness that will be
cancelled prior to Closing, each Contract for Indebtedness or the borrowing of
money, or securing Indebtedness or the borrowing of money, by any Entity
involving an obligation in excess of $500,000;
(ii) each natural gas transportation, storage, gathering or
processing Contract that individually involves revenues of the Entities in
excess of $500,000 for the year to date period ended on the Balance Sheet Date;
(iii) each executory Contract for the purchase of any fixed
asset or service for a price in excess of $500,000, whether or not such purchase
is in the ordinary course of business;
(iv) each Contract involving a remaining commitment by the
Entities to pay capital expenditures in excess of $500,000;
(v) each Contract for lease of personal property or real
property involving aggregate payments in excess of $500,000 in any calendar
year;
(vi) each employment Contract and each Contract providing
retention, severance or project bonus payments, in each case that have not been
paid in full as of the date of this Agreement;
(vii) each Contract with any union, trade organization or
bargaining unit representative;
(viii) each material acquisition, divestiture or merger
agreement;
(ix) each joint venture or partnership agreement;
(x) except for Contracts otherwise described in this Section
2.10, each Contract between ONEOK or any of its Affiliates (other than the
Entities) or any officer, director or manager of any Entity, on the one hand,
and any Entity on the other hand, involving payments by or to Entities in excess
of $500,000 in any calendar year;
(xi) each Contract that provides for a limit on the ability
of an Entity or its Affiliates to compete in any line of business or with any
Person or in any geographic area during any period of time after the Closing;
(xii) each Shared Contract involving payments by or to
Entities in excess of $500,000 in any calendar year;
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(xiii) each Drop-Down Contract involving payments by or to
Entities in excess of $500,000 in any calendar year; and
(xiv) each Contract not otherwise listed above involving
aggregate payments (contingent or otherwise), by or to the Entities in excess of
$500,000 in any future calendar year that cannot be terminated by the Entities
upon 60 days or less notice without penalty.
(b) True and complete copies of all Material Contracts have been
made available to Northern Border.
(c) Except as would not, individually or in the aggregate, have a
Material Adverse Effect, (i) each Material Contract is in full force and effect
and represents the legal, valid and binding obligation of the Entity that is a
party thereto and, to the Knowledge of ONEOK, represents the legal, valid and
binding obligation of the other parties thereto, and (ii) the Entities are not
and, to the Knowledge of ONEOK, no other party is in material breach of any
Material Contract, and neither ONEOK nor any Entity has received any written or,
to the Knowledge of ONEOK, oral notice of termination or breach of any Material
Contract. For purposes of this Section 2.10(c) only, "Material Contracts" shall
also include all Contracts of the types described in Section 2.10(a) above
entered into by any Entity between the date hereof through and including the
Closing Date.
2.11 COMPLIANCE. Each Entity is, and at all times since January 1,
2001 has been, in material compliance with all applicable Legal Requirements,
except for such instances of non-compliance that, individually or in the
aggregate would not have a Material Adverse Effect. Since January 1, 2001, none
of ONEOK or any Entity has received any written notice from any Governmental
Authority regarding any actual or possible material violation of or material
failure by any Entity to comply with any Legal Requirement that has resulted, or
would reasonably be expected to result, in any material fine, penalty or
Liability. Each Entity holds all Permits necessary for it to own and operate its
assets and for the conduct of the Business as now being conducted, other than
any Permits, the failure of which to hold would not, individually or in the
aggregate, have a Material Adverse Effect and there is no suspension or
cancellation of any such Permits pending or, to the Knowledge of ONEOK,
threatened.
2.12 LITIGATION. Except as disclosed in Schedule 2.12, there are no
Legal Proceedings pending or, to the Knowledge of ONEOK, threatened (a) that (i)
seeks more than $1,000,000 in damages for which any Entity could be liable, (ii)
seeks injunctive relief against any Entity, its assets or its activities or
(iii) is, or seeks to be certified as, a class or similar representative action
and involves any Entity or the material assets of any Entity, or (b) that
challenges or otherwise seeks to prevent, enjoin, alter or delay the
consummation of the transactions contemplated hereby. No Entity (nor any of the
material assets of any Entity) is subject to any outstanding Governmental Order.
2.13 INSURANCE. Schedule 2.13 identifies all insurance policies
maintained by, at the expense of or for the benefit of any Entity and identifies
any material unresolved claims made thereunder. ONEOK has previously made
available to Northern Border accurate and complete copies of the insurance
policies identified on Schedule 2.13. Each of such insurance
12
policies is in full force and effect, and the Entities have paid all premiums
due thereunder. Since January 1, 2005, no Entity has received any written notice
or other communication regarding any actual or possible (a) cancellation or
invalidation of any insurance policy, (b) refusal of any coverage or rejection
of any material claim under any insurance policy, or (c) material adjustment in
the amount of the premiums payable with respect to any insurance policy.
2.14 RELATED TRANSACTIONS. Except as set forth on Schedule 2.14, and
other than through ownership of the Shares, no Related Party (a) has any direct
or indirect ownership interest in any material asset used in or otherwise
relating to the Business; (b) is indebted to any Entity in an amount exceeding
$500,000; (c) has any direct or indirect financial interest in any Material
Contract; and (d) has any claim against any Entity in excess of $500,000 (other
than rights to receive compensation for services performed as an employee of the
Entity or its Subsidiaries). Each of the following shall be deemed to be a
"Related Party": (i) ONEOK and its Affiliates (other than the Entities); (ii)
each individual who is an officer or director of ONEOK, its Affiliates or any
Entity; (iii) each member of the immediate family of each of the individuals
referred to in clause "(ii)" above; and (iv) any trust or other entity (other
than ONEOK or any Entity, Northern Border and any Subsidiary of Northern Border)
in which any one of the individuals referred to in clauses "(ii)" and "(iii)"
above holds (or in which more than one of such individuals collectively hold),
beneficially or otherwise, a controlling voting, proprietary or equity interest.
2.15 EMPLOYEE BENEFIT MATTERS. Except as set forth on Schedule 2.15:
(a) All of the employees engaged in running and operating the
Business are employees of ONEOK or its Affiliates (other than the Entities).
None of the Entities have any employees or any Liabilities under any current or
former Employee Benefit Plan.
(b) No Entity has any Liabilities in respect of Employee Benefit
Plans or employment matters relating to current or former employees of such
Entity or any current or former ERISA Affiliate of such Entity.
(c) Neither ONEOK or any of its Affiliates (including the
Entities) is a party to, or bound by, any collective bargaining agreement,
Contract or other understanding with a labor union with respect to any employees
who perform services in connection with the businesses of the Entities, and, to
the Knowledge of ONEOK, there are not any union organizing efforts underway with
respect to any such employees. There are no unfair labor practice or labor
arbitration proceedings pending or, to the Knowledge of ONEOK, threatened
against any Entity.
(d) Each Entity is in compliance, in all material respects, with
all applicable Legal Requirements respecting employment, employment practices,
labor, terms and conditions of employment and wages and hours, and no Entity has
or would reasonably be expected to have any Liability arising out of any failure
of ONEOK or its Affiliates (other than the Entities) to comply with any such
Legal Requirements.
(e) None of the Entities is obligated to make any payments, or is
party to any agreement that could obligate it to make any payments, that would
not be deductible under Code
13
section 162(m) or 280G of the Code, or would be considered a payment under a
nonqualified deferred compensation plan, as contemplated in Code section 409A.
2.16 ENVIRONMENTAL MATTERS. Notwithstanding any other provision in
this Agreement, this Section 2.16 contains the exclusive representations of
ONEOK concerning Environmental Matters. Except as set forth on Schedule 2.16:
(a) Each Entity is, and at all times since January 1, 2001 has
been, in material compliance with all applicable Environmental Laws;
(b) There have been no releases of Hazardous Materials from, at,
on or under any property now owned or leased (or formerly owned or leased) by
any Entity which are required by applicable Environmental Laws to be remediated
(or would, upon discovery, be required to be remediated) by any Entity, except
for any releases that have been fully remediated or that would not, individually
or in the aggregate, have a Material Adverse Effect;
(c) Neither ONEOK nor any Entity has received any written request
for information or written notification that it is a potentially responsible
party under CERCLA or any similar state Legal Requirement with respect to any
on-site or off-site location for which liability is currently being asserted
against them with respect to the activities or operations of the Entities and no
Entity has sent or contributed waste to any facility that is subject to a
potential claim under CERCLA or any similar state Legal Requirement;
(d) There are no material writs, injunctions, decrees, notices of
violation, Governmental Orders or judgments outstanding, or any Legal
Proceedings pending or, to ONEOK's Knowledge, threatened, involving any Entity
relating to (i) its compliance with any Environmental Law or (ii) the release,
discharge, spill, treatment, storage or disposal of Hazardous Materials into the
environment at any location that could reasonably be expected to result in any
Entity incurring any material Liability under Environmental Law;
(e) Each Entity has obtained, currently maintains and is in
material compliance with all Environmental Permits, and all such Environmental
Permits are in effect and no Legal Proceeding is pending with respect to any
such Environmental Permit;
(f) Except as otherwise disclosed in the Balance Sheet, no
material expenditures, capital improvements or changes in operation are, or, to
the Knowledge of ONEOK, will be, necessary to achieve or maintain compliance
with any Environmental Permit or Environmental Law, or will be necessary as a
condition or result of the renewal, amendment or necessary modification of any
Environmental Permit; and
(g) ONEOK has provided or made available to Northern Border all
information relevant to the environmental compliance and condition of the
Entities and all of their respective Business Facilities, and the estimated or
reasonably anticipated remediation costs related thereto.
2.17 SECURITIES ACT. ONEOK is acquiring the Units solely for the
purpose of investment and not with a view to, or for offer or sale in connection
with, any distribution thereof in violation of the Securities Act or state
securities laws. ONEOK acknowledges that the Units
14
are not registered under the Securities Act or any applicable state securities
law, and that such Units may not be transferred or sold except pursuant to the
registration provisions of the Securities Act or pursuant to an applicable
exemption therefrom and pursuant to state securities laws and regulations as
applicable. ONEOK acknowledges that each certificate representing the Units
shall bear a legend in substantially the following form:
THE UNITS REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS
("ACTS"). THE UNITS HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD
OR OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
FOR THE UNITS UNDER THE ACTS OR AN OPINION OF COUNSEL SATISFACTORY TO THE
PARTNERSHIP THAT SUCH REGISTRATION IS NOT REQUIRED.
2.18 REGULATORY MATTERS. No Entity is a "public utility company,"
"holding company" or "subsidiary" or "affiliate" of a holding company as such
terms are defined in the Public Utility Holding Company Act of 1935 (the "1935
Act"). Each Entity that is a "Natural Gas Company" as that term is defined in
Section 2 of the Natural Gas Act ("NGA") is in compliance, in all material
respects, with all provisions of the NGA and all rules and regulations
promulgated by FERC pursuant thereto. Each such Natural Gas Company is in
compliance, in all material respects, with all orders issued by FERC that
pertain to material terms and conditions and material rates charged for
services. No approval of (a) the SEC under the 1935 Act or (b) FERC under the
NGA or the Federal Power Act is required in connection with the execution of
this Agreement by ONEOK or the transactions contemplated hereby with respect to
ONEOK or the Entities. The Form No. 2 Annual Reports filed by each Natural Gas
Company with FERC for the years ended December 31, 2004 and December 31, 2003
were true, correct and complete, in all material respects, as of the dates
thereof and since December 31, 2004 no Natural Gas Company has become subject to
any proceeding under Section 5 of the NGA or any general rate case proceeding
commenced under Section 4 of the NGA by reason of a filing made with the FERC
after December 31, 2004. Except as set forth on Schedule 2.18, no approvals of
state Governmental Authorities are required in connection with the execution of
this Agreement by ONEOK or the transactions contemplated hereby with respect to
ONEOK or the Entities.
2.19 OPERATING ASSETS.
(a) Except as identified to the contrary in Schedule 2.19(a), (i)
except for the Drop-Down Contracts and the Shared Contracts and except as would
not reasonably be expected to have a Material Adverse Effect, the Entities own
or have the right to use the pipelines, storage facilities, gas processing
facilities, fractionators, plants, equipment and related facilities and assets
("Operating Assets") necessary to enable them to conduct their business in the
manner currently being conducted and the Entities own or have the right to use
the Operating Assets that are reflected as being owned or leased by such
Entities on the Financial Statements; (ii) the Operating Assets are free and
clear of Liens other than Permitted Liens; (iii) each Entity has good and
indefeasible title to the real property it owns in fee, free and clear of all
Liens other than Permitted Liens; and (iv) each Entity has title to its
rights-of-way and easements (A) free and clear of all Liens and claims of those
claiming by, through or under ONEOK or its Affiliates
15
(other than the Entities), other than Permitted Liens; and (B) sufficient to
allow such Entity to conduct its business in substantially the same manner as
such business is currently being conducted.
(b) Except as identified to the contrary in Schedule 2.19(b), the
Operating Assets are in good operating condition and repair, ordinary wear and
tear excepted, are free of material defects and are suitable for the use for
which such assets are currently used.
2.20 BROKERS' FEES. Except for UBS Investment Bank (the fees of which
shall be paid solely by ONEOK), no broker, finder, investment banker or other
Person is entitled to any brokerage fee, finders' fee or other commission in
connection with the transactions contemplated by this Agreement based upon
arrangements made by ONEOK or any of its Affiliates.
2.21 BOOKS AND RECORDS. The respective books of account, minute books,
stock or other equity record books and other records of each Entity, all of
which have been made available to Northern Border, are complete and correct.
2.22 INDEBTEDNESS. No Entity has any Indebtedness to any Person other
than Indebtedness owed to the other Entities or to ONEOK or its other
Affiliates.
2.23 DISCLAIMER.
(a) Except as and to the extent expressly set forth in Section 2,
(i) ONEOK makes no representations or warranties, express or implied, and (ii)
ONEOK expressly disclaims all Liability and responsibility for any
representation, warranty, statement or information made or communicated (orally
or in writing) to Northern Border or any of its Subsidiaries, employees, agents,
consultants or representatives (including, without limitation, any opinion,
information, projection or advice that may have been provided to Northern Border
by any officer, director, employee, agent, consultant, representative or advisor
of ONEOK or any of its Affiliates).
(b) WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, EXCEPT AS
EXPRESSLY REPRESENTED OTHERWISE IN SECTION 2, ONEOK EXPRESSLY DISCLAIMS ANY
REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, ORAL OR WRITTEN, AS TO (I) TITLE
TO ANY OF THE PROPERTIES OR OTHER ASSETS OF ANY OF THE ENTITIES, (II) THE
CONTENTS, CHARACTER OR NATURE OF ANY DESCRIPTIVE MEMORANDUM OR REPORT RELATING
TO THE PROPERTIES OR OTHER ASSETS OF ANY OF THE ENTITIES, (III) ANY ESTIMATES OF
THE VALUE OF THE ASSETS OR FUTURE REVENUES GENERATED BY THE PROPERTIES OR OTHER
ASSETS OF ANY OF THE ENTITIES, (IV) THE MAINTENANCE, REPAIR, CONDITION, QUALITY,
SUITABILITY, DESIGN OR MARKETABILITY OF THE PROPERTIES OR OTHER ASSETS OF ANY OF
THE ENTITIES, OR (V) ANY OTHER MATERIALS OR INFORMATION THAT MAY HAVE BEEN MADE
AVAILABLE OR COMMUNICATED TO NORTHERN BORDER OR ITS AFFILIATES, OR ITS OR THEIR
EMPLOYEES, AGENTS, CONSULTANTS, REPRESENTATIVES OR ADVISORS IN CONNECTION WITH
THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR ANY DISCUSSION OR
PRESENTATION RELATING THERETO, AND FURTHER DISCLAIMS ANY REPRESENTATION OR
16
WARRANTY, EXPRESS OR IMPLIED, OF MERCHANTABILITY, FITNESS FOR A PARTICULAR
PURPOSE OR CONFORMITY TO MODELS OR SAMPLES OF MATERIALS OF ANY EQUIPMENT, IT
BEING EXPRESSLY UNDERSTOOD AND AGREED BY THE PARTIES HERETO THAT, EXCEPT AS
EXPRESSLY REPRESENTED OTHERWISE IN SECTION 2, NORTHERN BORDER SHALL BE DEEMED TO
BE OBTAINING PIPELINES, STORAGE FACILITIES, PLANTS, EQUIPMENT AND RELATED
FACILITIES AND OTHER ASSETS IN ITS PRESENT STATUS, CONDITION AND STATE OF
REPAIR, "AS IS" AND "WHERE IS" WITH ALL FAULTS AND THAT NORTHERN BORDER HAS MADE
OR CAUSED TO BE MADE SUCH INSPECTIONS AS IT DEEMS APPROPRIATE.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE NBP PARTNERSHIPS
Except as set forth in the disclosure schedules (the "NBP Partnerships
Disclosure Schedules") delivered by the NBP Partnerships to ONEOK on the date
hereof (it being agreed that any matter disclosed in a particular Schedule of
the NBP Partnerships Disclosure Schedules shall be deemed to have been disclosed
with respect to any other Sections of this Agreement to the extent that the
relevance of such matter to such other Section is readily apparent from the
information disclosed), the NBP Partnerships represent and warrant to ONEOK that
the statements contained in this Section 3 are true, correct and complete as of
the date of this Agreement and will be true, correct and complete as of the
Closing, except in each case to the extent that such statements are expressly
made only as of a specified date, in which case the NBP Partnerships represent
and warrant that such statements are true, correct and complete as of such
specified date.
3.1 ORGANIZATION AND AUTHORITY OF THE NBP PARTNERSHIPS.
(a) The NBP Partnerships are limited partnerships duly organized,
validly existing and in good standing under the laws of Delaware.
(b) The NBP Partnerships have all requisite right, authority and
power to enter into this Agreement and each Related Agreement to be executed and
delivered by Northern Border and to carry out the transactions contemplated
hereby.
(c) The Partnership Policy Committee and the Audit Committee of
Northern Border have each approved the execution, delivery and performance of
this Agreement and each of the other Northern Border Transaction Agreements, and
the Audit Committee has determined that the Northern Border Transaction is fair
and reasonable to Northern Border. Except as contemplated by this Agreement, the
execution, delivery and performance by the NBP Partnerships of this Agreement
and each of the other Northern Border Transaction Agreements have been duly
authorized by all necessary action of the NBP Partnerships and no other action
on the part of the NBP Partnerships is required in connection therewith.
(d) This Agreement and each Related Agreement (including, without
limitation, the Amendment) executed and delivered by the NBP Partnerships
constitutes, or when executed and delivered will constitute, valid and binding
obligations of the NBP Partnerships
17
enforceable in accordance with their respective terms, except as such
enforceability may be limited by bankruptcy, insolvency or other similar laws
from time to time in effect which affect the enforcement of creditors' rights
generally.
(e) The execution, delivery and performance by the NBP
Partnerships of this Agreement and each Related Agreement (including, without
limitation, the Amendment) executed and delivered by the NBP Partnerships, with
or without the giving of notice or the passage of time, or both, and the
issuance of the Units or the Conversion Units, as applicable:
(i) do not and will not conflict with or violate any
provision of the organizational documents of the NBP Partnerships;
(ii) do not and will not conflict with or violate any Legal
Requirements applicable to the NBP Partnerships or, except as set forth in
Schedule 3.1(e)(ii) and any filings required to be made under the HSR Act,
require the NBP Partnerships to obtain any approval, consent or waiver of, or
make any filing with, any Governmental Authority that has not been obtained or
made, except for such violations or failures to obtain such approval, consent or
waiver would not, individually or in the aggregate, have a material adverse
effect on the ability of the NBP Partnerships to perform its obligations
hereunder and consummate the transactions contemplated hereby on the Closing
Date;
(iii) except as set forth on Schedule 3.1(e)(iii), do not
and will not require the consent, approval or waiver of any Person (other than
any Governmental Authority), except for the approval of the issuance of the
Conversion Units by the holders of the Common Units and except for any such
consents, approvals or waivers as have been obtained or the failure of which to
be obtained would not, individually or in the aggregate, have a material adverse
effect on the ability of the NBP Partnerships to perform their obligations
hereunder and consummate the transactions contemplated hereby on the Closing
Date;
(iv) does not and will not breach any contract material to
the business or operations of the NBP Partnerships or result in or permit the
termination of any such contract; and
(v) except for issuance of the Conversion Units, do not
require the consent or approval of the holders of Common Units.
(f) The Northern Border Partnership Agreement and the NBILP
Partnership Agreement are in full force and effect and are binding on all the
partners thereto. After the Closing, the Amendment will be effective to amend
the Northern Border Partnership Agreement in accordance with the provisions and
terms of the Amendment.
3.2 CAPITALIZATION.
(a) As of the date hereof, Northern Border has 46,397,214 Common
Units issued and outstanding and the partnership interests in Northern Border
are as described in the Northern Border Partnership Agreement. Except as set
forth on Schedule 3.2(a), there are no options, warrants, convertible securities
or other rights, agreements, arrangements or commitments of any character
relating to the partnership interests of Northern Border or obliging
18
Northern Border to issue or sell any partnership interests of Northern Border.
NBILP has a 1.0101% general partner interest issued and outstanding. All of the
limited partner interests in NBILP are held by Northern Border. Except as set
forth on Schedule 3.2(a), there are no options, warrants, convertible securities
or other rights, agreements, arrangements or commitments of any character
relating to the partnership interests in NBILP or obligating NBILP to issue or
sell any partnership interests of NBILP.
(b) All of the Units and Conversion Units issuable to ONEOK
pursuant to this Agreement, when issued, will at time of such issuance or
conversion, as applicable, be duly authorized, validly issued, fully paid, and
nonassessable and free of preemptive rights, with no personal liability
attaching to ownership thereof, except as such non-assessability and absence of
personal liability may be affected by section 18-607 of the Delaware Revised
Limited Partnership Act. At the Closing, Northern Border will deliver to ONEOK
good and valid title to the Units, and, upon conversion, to the Conversion
Units, in each case, free and clear of any Liens, other than those imposed by
section 18-607 of the Delaware Revised Limited Partnership Act, applicable
securities laws or the Northern Border Partnership Agreement.
3.3 LITIGATION. Except as disclosed in Schedule 3.3, there are no
Legal Proceedings pending or, to the Knowledge of the NBP Partnerships,
threatened (a) that (i) seeks more than $1,000,000 in damages for which the NBP
Partnerships or any of their Subsidiaries could be liable, (ii) seeks injunctive
relief against the NBP Partnerships or any of their Subsidiaries or any of their
respective assets or activities or (iii) is, or seeks to be certified as, a
class or similar representative action involving the NBP Partnerships or any of
their Subsidiaries or any of their respective assets, or (b) that challenges or
otherwise seeks to prevent, enjoin, alter or delay the consummation of the
transactions contemplated hereby. Neither of the NBP Partnerships nor any of
their Subsidiaries (nor any of their material assets) is subject to any
outstanding Governmental Order.
3.4 COMPLIANCE. Except as set forth on Schedule 3.4, the NBP
Partnerships and their Subsidiaries are, and at all times since January 1, 2001
have been, in material compliance with all applicable Legal Requirements, except
for such instances of non-compliance that, individually or in the aggregate
would not have a Northern Border Material Adverse Effect. Except as set forth on
Schedule 3.4, since January 1, 2001, neither of the NBP Partnerships nor any of
their Subsidiaries have received any written notice from any Governmental
Authority regarding any actual or possible material violation of or material
failure to comply with any Legal Requirement that has resulted, or would
reasonably be expected to result, in any material fine, penalty or Liability.
Except as set forth on Schedule 3.4, the NBP Partnerships and their Subsidiaries
hold all Permits necessary for the conduct of their business as now being
conducted, other than any Permits the failure of which to hold would not,
individually or in the aggregate, have a Northern Border Material Adverse
Effect, and there is no suspension or cancellation of any such Permits pending
or, to the Knowledge of the NBP Partnerships, threatened.
3.5 EMPLOYEE MATTERS. Except for the Black Mesa Companies:
(a) Neither of the NBP Partnerships nor any of their Subsidiaries
has at any time maintained, sponsored or been obligated to contribute to any
Employee Benefit Plan.
19
(b) There are no liabilities owed by the NBP Partnerships or any
of their Subsidiaries in respect of current or former employees or employment
related matters, other than to employees or former employees of ONEOK or its
Affiliates who provide services primarily to one or more of the Entities.
(c) Neither of the NBP Partnerships nor any of their Subsidiaries
is a party to, or bound by, any collective bargaining agreement, Contract or
other understanding with a labor union. There are no unfair labor practice or
labor arbitration proceedings pending or, to the Knowledge of the NBP
Partnerships, threatened in writing against the NBP Partnerships or any of their
Subsidiaries.
3.6 ENVIRONMENTAL MATTERS. Notwithstanding any other provision in this
Agreement, this Section 3.6 contains the exclusive representations of the NBP
Partnerships concerning Environmental Matters. Except as set forth on Schedule
3.6:
(a) The NBP Partnerships and their Subsidiaries are, and at all
times since January 1, 2005 have been, in material compliance, with all
applicable Environmental Laws;
(b) There have been no releases of Hazardous Materials at, on or
under any property now owned or leased (or formerly owned or leased) by the NBP
Partnerships or any of their Subsidiaries which are required by applicable
Environmental Laws to be remediated by the NBP Partnerships or any of their
Subsidiaries, except for any releases that have been fully remediated or that
would not, individually or in the aggregate, have a Northern Border Material
Adverse Effect;
(c) Neither of the NBP Partnerships nor any of their Subsidiaries
has received any written request for information or written notification that it
is a potentially responsible party under CERCLA or any similar state Legal
Requirement with respect to any on-site or off-site location for which liability
is currently being asserted against them with respect to the activities or
operations of the NBP Partnerships and their Subsidiaries and neither of the NBP
Partnerships nor any of their Subsidiaries has sent or contributed waste to any
facility that is subject to a potential claim under CERCLA or any similar state
Legal Requirement;
(d) There are no material writs, injunctions, decrees, notices of
violation, Governmental Orders or judgments outstanding, or any Legal
Proceedings pending or, to the Knowledge of the NBP Partnerships, threatened,
involving the NBP Partnerships or any of their Subsidiaries relating to (i) its
compliance with any Environmental Law or (ii) the release, discharge, spill,
treatment, storage or disposal of Hazardous Materials into the environment at
any location that could reasonably be expected to result in the NBP Partnerships
or any of their Subsidiaries incurring any material Liability under
Environmental Law;
(e) The NBP Partnerships and each of their Subsidiaries has
obtained, currently maintains and is in material compliance with all
Environmental Permits, and all such Environmental Permits are in effect and no
Legal Proceeding is pending with respect to any such Environmental Permit; and
(f) Except to the extent set forth in or reserved against in the
consolidated financial statements of Northern Border contained in the Northern
Border SEC Documents, no
20
material expenditures, capital improvements or changes in operation are, or, to
the Knowledge of the NBP Partnerships, will be, necessary to achieve or maintain
compliance with any Environmental Permit or Environmental Law, or will be
necessary as a condition or result of the renewal, amendment or necessary
modification of any Environmental Permit.
3.7 ABSENCE OF CERTAIN CHANGES. As of the date hereof, since September
30, 2005 (a) there has not been any Northern Border Material Adverse Effect and
(b) the business of Northern Border and its consolidated Subsidiaries has been
conducted in all material respects only in the ordinary course consistent with
past practice.
3.8 SECURITIES ACT. The NBP Partnerships are acquiring the Shares
solely for the purpose of investment and not with a view to, or for offer or
sale in connection with, any distribution thereof in violation of the Securities
Act or state securities laws. The NBP Partnerships acknowledge that the Shares
are not registered under the Securities Act or any applicable state securities
law, and that such Shares may not be transferred or sold except pursuant to the
registration provisions of the Securities Act or pursuant to an applicable
exemption therefrom and pursuant to state securities laws and regulations as
applicable.
3.9 SEC FILINGS.
(a) The NBP Partnerships have made available to ONEOK true and
complete copies of all SEC Documents filed by Northern Border with the SEC since
January 1, 2004 (the "Northern Border SEC Documents"), which are all of the
documents (other than preliminary material) that Northern Border was required to
file with the SEC since such date. As of their respective dates, the Northern
Border SEC Documents complied in all material respects with the applicable
requirements of the Securities Act or the Exchange Act, as the case may be, and
the rules and regulations promulgated thereunder. None of the Northern Border
SEC Documents, including, without limitation, any exhibits, financial statements
or schedules included therein, at the time filed contained any untrue statement
of material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The financial
statements (including the related notes and schedules) of Northern Border
included in the Northern Border SEC Documents comply as to form in all material
respects with the published rules and regulations of the SEC with respect
thereto, were prepared in accordance with GAAP applied on a consistent basis
during the periods involved (except as may be indicated in the notes thereto or,
in the case of the unaudited statements, as permitted by the rules of the SEC)
and fairly present in accordance with the applicable requirements of GAAP
(subject, in the case of the unaudited statements, to normal, recurring
adjustments, none of which will be material), the consolidated financial
position of Northern Border and its consolidated Subsidiaries as of their
respective dates and the consolidated results of operations and the consolidated
cash flows of Northern Border and its consolidated Subsidiaries for the periods
presented therein.
(b) Except (i) to the extent set forth in or reserved against in
the consolidated financial statements of Northern Border contained in the
Northern Border SEC Documents, (ii) for current liabilities (determined in
accordance with GAAP) incurred in the ordinary course of business consistent
with past practices since the date of the most recent consolidated financial
statements of Northern Border contained in the Northern Border SEC Documents and
(iii) except
21
for immaterial Liabilities, Northern Border has no Liabilities of the type that
would be required to be disclosed on a balance sheet of Northern Border (or the
notes thereto) prepared in accordance with GAAP.
3.10 BROKERS' FEES. Except for the fees payable to the financial
advisor referenced in Section 3.11 herein (the fees of which shall be paid
solely by Northern Border), no broker, finder, investment banker or other Person
is entitled to any brokerage fee, finders' fee or other commission in connection
with the transactions contemplated by this Agreement based upon arrangements
made by Northern Border or any of its Affiliates.
3.11 OPINION OF FINANCIAL ADVISER. ▇▇▇▇▇▇ Brothers Inc. has provided
the Audit Committee of Northern Border (with a copy to the Partnership Policy
Committee of Northern Border) with its opinion that, as of the date hereof and
based upon and subject to the matters set forth therein, the net consideration
involved in the Northern Border Transaction is fair to Northern Border from a
financial point of view.
3.12 REGISTRATION RIGHTS. The Units and the Conversion Units, when
issued, will be Partnership Securities (as such term is used in the Northern
Border Partnership Agreement) and ONEOK will be entitled to exercise all of the
registration rights provided for in Section 6.14 of the Northern Border
Partnership Agreement with respect to the Units and the Conversion Units.
3.13 DISCLAIMER.
(a) Except as and to the extent expressly set forth in Section 3,
(i) the NBP Partnerships make no representations or warranties, express or
implied, and (ii) the NBP Partnerships expressly disclaim all Liability and
responsibility for any representation, warranty, statement or information made
or communicated (orally or in writing) to ONEOK or any of its Affiliates,
employees, agents, consultants or representatives (including, without
limitation, any opinion, information, projection or advice that may have been
provided to ONEOK by any officer, director, employee, agent, consultant,
representative or advisor of the NBP Partnerships or any of their Subsidiaries).
(b) WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, EXCEPT AS
EXPRESSLY REPRESENTED OTHERWISE IN SECTION 3, THE NBP PARTNERSHIPS EXPRESSLY
DISCLAIM ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, ORAL OR WRITTEN, AS
TO (I) TITLE TO ANY OF THE PROPERTIES OR OTHER ASSETS OF THE NBP PARTNERSHIPS OR
ANY OF THEIR SUBSIDIARIES, (II) THE CONTENTS, CHARACTER OR NATURE OF ANY
DESCRIPTIVE MEMORANDUM OR REPORT RELATING TO THE PROPERTIES OR OTHER ASSETS OF
THE NBP PARTNERSHIPS OR ANY OF THEIR SUBSIDIARIES, (III) ANY ESTIMATES OF THE
VALUE OF THE ASSETS OR FUTURE REVENUES GENERATED BY THE PROPERTIES OR OTHER
ASSETS OF THE NBP PARTNERSHIPS OR ANY OF THEIR SUBSIDIARIES, (IV) THE
MAINTENANCE, REPAIR, CONDITION, QUALITY, SUITABILITY, DESIGN OR MARKETABILITY OF
THE PROPERTIES OR OTHER ASSETS OF THE NBP PARTNERSHIPS OR ANY OF THEIR
SUBSIDIARIES, OR (V) ANY OTHER MATERIALS OR INFORMATION THAT MAY HAVE BEEN MADE
22
AVAILABLE OR COMMUNICATED TO ONEOK OR ITS AFFILIATES, OR ITS OR THEIR EMPLOYEES,
AGENTS, CONSULTANTS, REPRESENTATIVES OR ADVISORS IN CONNECTION WITH THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR ANY DISCUSSION OR PRESENTATION
RELATING THERETO, AND FURTHER DISCLAIMS ANY REPRESENTATION OR WARRANTY, EXPRESS
OR IMPLIED, OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR CONFORMITY
TO MODELS OR SAMPLES OF MATERIALS OF ANY EQUIPMENT.
SECTION 4. COVENANTS OF ONEOK
4.1 CONDUCT OF THE ENTITIES. Except as set forth on Schedule 4.1,
during the period from the date of this Agreement until the Closing (the
"Pre-Closing Period"), ONEOK agrees that, except as otherwise contemplated by
this Agreement, the ONEOK Disclosure Schedules, or as Northern Border shall
otherwise consent in writing (such consent not to be unreasonably withheld,
delayed or conditioned):
(a) Ordinary Course. ONEOK shall cause the Entities to, (i)
conduct their Business in the ordinary course consistent with past practice and
(ii) use commercially reasonable efforts to (A) preserve intact their current
business organization, (B) preserve the relationships of the Entities with
customers, suppliers, landlords, creditors, employees and other Persons having
business dealings with the Entities, (C) preserve and maintain in force all of
the insurance policies of the Entities and each of the Permits of the Entities,
(D) maintain and repair all property material to the operation of the Business
in a manner consistent with past practice, (E) make the capital expenditures
identified in the budget previously provided to Northern Border and (F) make
payments to all employees, vendors and other trade creditors in a timely manner
consistent with past practice.
(b) Governing Documents. ONEOK shall cause each Entity not to
amend or waive any rights under the organizational documents of such Entity,
other than amendments or waivers necessary to execute, deliver and perform the
transactions contemplated by this Agreement including, without limitation,
pursuant to Section 6.12.
(c) Issuance of Securities. ONEOK shall cause each Entity not to
issue, transfer, sell or dispose of, or authorize or agree to the issuance,
transfer, sale or disposition of (whether through the issuance or granting of
options, rights, warrants, or otherwise), any Equity Interests of any Entity or
any options, rights, warrants or other securities convertible into or
exchangeable or exercisable for any Equity Interests of any Entity or amend any
of the terms of any securities or agreements relating to such Equity Interests
outstanding on the date hereof.
(d) Reclassifications. ONEOK shall cause each Entity not to
split, combine or reclassify any Equity Interests of any Entity, or redeem,
purchase or otherwise acquire or offer to acquire any such Equity Interests of
any Entity.
(e) No Acquisitions. ONEOK shall cause each Entity not to form
any Subsidiary or acquire or agree to acquire, by merging or consolidating with,
or by purchasing an equity interest in or any of the assets of, any Person;
provided, however, that, subject to Section
23
4.1(h), the foregoing shall not restrict ONEOK or any Entity from purchasing
assets in the ordinary course of operating the Entities.
(f) No Dispositions. ONEOK shall cause each Entity not to
transfer, sell, lease, license, encumber or otherwise dispose of or agree to
transfer, sell, lease, license, encumber or otherwise dispose of, any of their
respective assets other than (i) in the ordinary course of business consistent
with past practice, (ii) pursuant to existing contractual obligations, (iii) the
imposition of Permitted Liens and (iv) the transfer of assets among the
Entities.
(g) Material Contracts. ONEOK shall cause each Entity not to
enter into, or permit any of the material assets owned or used by Entity to
become bound by or modify, amend or prematurely terminate, or waive any material
right or remedy under:
(i) any Contract containing covenants limiting the freedom
of any of the Entities, Northern Border or any of its Subsidiaries or their
assignees or successors to compete in any line of business or with any Person or
in any geographic area during any period of time following the Closing;
(ii) any Contract for the borrowing of money or related to
Indebtedness of any Entity in excess of $500,000;
(iii) any Contract with any officer, employee, director of
any Entity or ONEOK or any of their respective Affiliates;
(iv) any Contract with any union, trade organization or
bargaining unit representative; or
(v) any acquisition, divestiture, merger, joint venture or
partnership agreement that is material to the Business.
(h) Capital Expenditures. ONEOK shall cause each Entity not to
make, authorize or enter into commitments to make capital expenditures in an
amount that, when added to all other capital expenditures made during the
Pre-Closing Period on behalf of any Entity, exceeds $500,000, other than any
capital expenditures contemplated by the budget previously provided to Northern
Border.
(i) Indebtedness. ONEOK shall cause each Entity not to (i) lend
money to any Person (except that any Entity may make routine advances to
employees in the ordinary course of business) or (ii) incur, assume, guarantee
or otherwise become liable in respect of any Indebtedness.
(j) Accounting. ONEOK shall cause each Entity not to change any
of its methods of accounting or accounting practices in any material respect
except as may be required by any Legal Requirement or GAAP.
(k) Tax Elections. ONEOK shall cause each Entity not to make any
Tax election, other than (A) any Tax election made consistent with prior
practice of the Entity, (B) a Tax election that would not adversely affect
Northern Border or any Entity for any taxable
24
period or portion thereof beginning after the Closing Date or (C) a Tax election
to effect a Conversion Transaction as contemplated by Section 6.11.
(l) Proceedings. ONEOK shall cause each Entity not to settle any
material Legal Proceeding if, as a result of the settlement, the Entity would be
liable after the Closing for settlement payments in excess of $5,000,000 or
subject to any injunctive or similar equitable relief or otherwise be subject to
any ongoing obligations following the payment of any settlement amounts.
(m) Regulatory Actions. ONEOK shall cause each Entity not to,
other than routine compliance filings, make any filings or submit any documents
or information to FERC or any other Governmental Authority, other than routine
compliance filings, without prior consultation with Northern Border.
(n) Agreements to Take Action. ONEOK shall cause each Entity not
to agree or commit to take any of the actions described in clauses "(b)" through
"(m)" above.
4.2 CASH MANAGEMENT. Nothing contained in this Agreement shall prevent
or limit the ability of any Entity to distribute, dividend or otherwise transfer
any cash to ONEOK, any other Entity or any other Affiliate of ONEOK during the
Pre-Closing Period.
SECTION 5. COVENANTS OF THE NBP PARTNERSHIPS
5.1 BOOKS AND RECORDS.
(a) No later than ten (10) days after Closing, ONEOK will make
available to the NBP Partnerships or their designee, at ONEOK's sole cost and
expense, originals of all files, records, information and data (in all formats)
owned by or primarily relating to the Entities that are in the possession or
control of ONEOK or its Affiliates (together with all ONEOK's and its
Affiliate's contractual rights to request other such files, records, information
and data from any third party).
(b) For a period of five (5) years from the Closing Date:
(i) The NBP Partnerships shall not dispose of or destroy any
of the material books and records relating to the Business for periods prior to
the Closing (the "Books and Records") without first offering to turn over
possession thereof to ONEOK by written notice from the NBP Partnerships to ONEOK
at least 60 days prior to the proposed date of such disposition or destruction.
Within 30 days after receipt of such notice from the NBP Partnerships, ONEOK may
notify the NBP Partnerships that it wishes to receive such Books and Records,
and the NBP Partnerships shall deliver such Books and Records (to the extent
such Books and Records are not subject to an attorney-client or similar
privilege or other confidentiality obligation) to a designated Representative of
ONEOK upon receipt by the NBP Partnerships of a written agreement in form and
substance reasonably satisfactory to the NBP Partnerships in which ONEOK agrees
to maintain the confidentiality of such Books and Records. If ONEOK does not
notify the NBP Partnerships within 30 days of receipt of such notice, the NBP
Partnerships may dispose of or destroy the Books and Records.
25
(ii) The NBP Partnerships shall, on reasonable notice and at
reasonable times at Northern Border's principal place of business or at any
location where any Books and Records are stored, allow ONEOK and its agents
reasonable access to all Books and Records that are not subject to
attorney-client or similar privilege or other confidentiality obligation, to the
extent such access is requested for any legitimate purpose related to ONEOK's
prior ownership of the Entities and provided that the NBP Partnerships have
received a written agreement in form and substance reasonably satisfactory to
the NBP Partnerships in which ONEOK agrees to maintain the confidentiality of
such Books and Records. ONEOK shall have the right, at its own expense, to make
copies of any such Books and Records; provided, however, that any such access or
copying shall be had or done in such a manner so as not to unduly interfere with
the normal conduct of the Business.
(iii) The NBP Partnerships shall make available to ONEOK
upon reasonable notice to ONEOK and at reasonable times and upon written request
the personnel of the NBP Partnerships to assist ONEOK in locating and obtaining
any Books and Records.
5.2 APPROVAL OF ISSUANCE OF COMMON UNITS UPON CONVERSION UNITS.
Northern Border shall, as soon as reasonably practicable following the Closing
(but in any event prior to the one year anniversary of the Closing Date), (i)
take action to call and hold a meeting of holders of the Common Units for the
purposes of approving the issuance of the Conversion Units to ONEOK upon the
conversion of the Units by ONEOK and approving the amendment to the Northern
Border Partnership Agreement in the manner contemplated by the Parties in the
Amendment, (ii) actively solicit proxies in favor of the proposals described in
subsection 5.2(i) above, and (iii) take such other actions as may be reasonably
necessary and appropriate in order to obtain all requisite approvals for the
resolutions described above in this Section 5.2.
SECTION 6. COVENANTS OF ONEOK AND THE NBP PARTNERSHIPS
The parties hereto agree that:
6.1 ACCESS TO INFORMATION. During the Pre-Closing Period
(a) ONEOK will, and will cause each Entity to, (i) give the NBP
Partnerships and their Representatives reasonable access during normal business
hours and on reasonable notice to the officers, personnel, properties, Tax
Returns, books, records and work papers of and relating to any Entity, (ii)
furnish to the NBP Partnerships and their Representatives such financial and
operating data and copies of such Tax Returns, books, records, work papers and
other documents and information with respect to any Entity, as such Persons may
reasonably request, and (iii) instruct their respective Representatives to
cooperate with the NBP Partnerships in their investigation of the Entities. The
Parties agree that any information provided, or caused to be provided, by the
Entities pursuant to this Section 6.1(a) shall be kept confidential and not
disclosed to any third party, except to the extent required by any Legal
Requirement. ONEOK shall cooperate to ensure that the provision of access
hereunder to the NBP Partnerships and their authorized Representatives shall
comply in all respects with the Federal Energy Regulatory Commission's ("FERC")
Standards of Conduct for Transmission Providers set forth in 18 C.F.R. Part 37,
et al.
26
(b) The NBP Partnerships will (i) give ONEOK and its
Representatives reasonable access during normal business hours and on reasonable
notice to the officers, personnel, properties, Tax Returns, books, records and
work papers of and relating to the NBP Partnerships and their Subsidiaries, (ii)
furnish to ONEOK and its Representatives such financial and operating data and
copies of such Tax Returns, books, records, work papers and other documents and
information with respect to Northern Border and its Subsidiaries, as such
Persons may reasonably request, and (iii) instruct its Representatives to
cooperate with ONEOK in its investigation of the NBP Partnerships and their
Subsidiaries. The Parties agree that any information provided, or caused to be
provided, by the NBP Partnerships and their Subsidiaries pursuant to this
Section 6.1(b) shall be kept confidential and not disclosed to any third party,
except to the extent required by any Legal Requirement. The NBP Partnerships
shall cooperate to ensure that the provision of access hereunder to ONEOK and
its authorized Representatives shall comply in all respects with the FERC
Standards of Conduct for Transmission Providers set forth in 18 C.F.R. Part 37,
et al.
6.2 COMMERCIALLY REASONABLE EFFORTS. Subject to the terms and
conditions of this Agreement and applicable Legal Requirements, each of the
Parties hereto shall act in good faith and use its 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 hereby as soon as practicable, including such
actions or things as the other Parties may reasonably request in order to cause
any of the conditions to such other Party's or Parties' obligation to consummate
the transactions contemplated by this Agreement to be fully satisfied.
6.3 REGULATORY AND OTHER AUTHORIZATIONS; NOTICES AND CONSENTS.
(a) Each of the Parties shall use commercially reasonable efforts
to obtain promptly all authorizations, consents, orders and approvals of all
Governmental Authorities (including by making, or causing to be made, all
appropriate filings of notifications or reports) necessary for its execution and
delivery of, and the performance of its obligations pursuant to, and the
consummation of the transactions contemplated by, this Agreement (such
authorizations, consents, orders and approvals, "Governmental Approvals"). ONEOK
and the NBP Partnerships shall, and ONEOK shall cause the Entities to, cooperate
in promptly seeking to obtain the Governmental Approvals.
(b) Neither ONEOK nor the NBP Partnerships shall intentionally
take any action that would be reasonably expected to delay, impair or impede the
receipt of any Governmental Approvals. ONEOK and the NBP Partnerships agree to
make, or to cause to be made, all appropriate filings of notifications and
reports required to obtain the Governmental Approvals promptly after the date of
this Agreement and to supply promptly any additional information and documentary
material that may be requested by Governmental Authorities responsible therefor.
As defined further below, the parties shall cooperate in making any such
filings. ONEOK and the NBP Partnerships agree to use their commercially
reasonable efforts to avoid or eliminate each and every impediment under any
Legal Requirement that may be asserted by any Governmental Authority in
connection with the Governmental Approvals so as to enable the Parties to
expeditiously close the transactions contemplated by this Agreement. ONEOK and
the NBP Partnerships agree to use commercially reasonable efforts to vacate or
lift
27
any order relating to the Governmental Approvals that would have the effect of
making any of the transactions contemplated by this Agreement illegal or
otherwise prohibiting their consummation. Notwithstanding any other terms or
provisions of this Agreement, in no event shall the NBP Partnerships or their
Subsidiaries be deemed to have any obligation to dispose of any assets or
properties (including any assets or properties of the Entities) or to enter into
any agreement with any Person in order to obtain early termination or expiration
of the waiting period under the HSR Act or to obtain any other Governmental
Approvals.
(c) Each Party shall promptly notify the other parties of any
communication it or any of its Affiliates receives from any Governmental
Authority relating to the matters that are the subject of this Agreement,
including any filing, investigation or inquiry, and, subject to applicable Law,
permit the other Parties to review in advance any proposed communication by such
Party to, or filing by such party with, any Governmental Authority. No Party
shall agree to participate in any meeting with any Governmental Authority in
respect of any filings, investigation or other inquiry unless it consults with
the other Parties in advance and, to the extent permitted by such Governmental
Authority, affords the other Parties the reasonable opportunity to attend and
participate. Each Party will coordinate and cooperate fully with the other
Parties in exchanging such information and providing such assistance as such
other Parties may reasonably request in connection with the foregoing and in
seeking early termination of any applicable waiting periods under the HSR Act or
in connection with any other Governmental Approvals. Each Party will provide the
other Parties with copies of all correspondence, filings or communications
between such Party or any of its Representatives, on the one hand, and any
Governmental Authority, on the other hand, with respect to this Agreement and
the transactions contemplated by this Agreement, including with respect to the
Party hereto making a filing, providing copies of all such documents to the
non-filing Parties and their Representatives prior to filing (except that no
Party hereto shall be under an obligation of any kind to provide the other
Parties with documents, material or other information relating to such Party's
valuation of the Business).
(d) The NBP Partnerships and ONEOK shall (and shall each cause
their respective Affiliates to) use commercially reasonable efforts to obtain
all consents, authorizations, waivers and approvals of third parties that any of
the Parties or their respective Affiliates (including the Entities) are required
to obtain in order to consummate the transactions contemplated hereby.
(e) Northern Border shall use commercially reasonable efforts to
list the Common Units to be issued to ONEOK pursuant to this Agreement on the
New York Stock Exchange, prior to the Closing Date or immediately upon
conversion of the Units into Conversion Units, subject to official notice of
issuance.
(f) The Parties agree to cooperate and assist in the filing of
proxy solicitation materials relating to matters contemplated hereby requiring a
vote of the holders of the outstanding Common Units of Northern Border, as
promptly as practicable after the date hereof.
6.4 PUBLIC ANNOUNCEMENTS. During the Pre-Closing Period, the Parties
shall consult with each other before issuing any press release or making any
public statement with respect to the transactions contemplated hereby and,
except as may be required by applicable
28
Legal Requirements or stock exchange rules and regulations, shall not issue any
such press release or make any such public statement unless the text of such
statement shall first have been agreed to by the parties.
6.5 NOTICES OF CERTAIN EVENTS. Each Party hereto shall promptly notify
the other Parties hereto (i) following the receipt of any notice of any Legal
Proceeding commenced or, to the Knowledge of ONEOK, or the Knowledge of the NBP
Partnerships, as applicable, threatened against it that relates to or seeks to
prohibit the consummation of the transactions contemplated hereby, (ii) upon its
discovery that any of its representations or warranties in this Agreement
contain any inaccuracies or that such Party has breached or otherwise failed to
perform its obligations, covenants and agreements contained herein or (iii) upon
its discovery of any development that is reasonably likely to result in a
failure of a condition to the Closing.
6.6 ENTITY GUARANTEES.
(a) The NBP Partnerships and ONEOK shall use commercially
reasonable efforts to obtain from the respective beneficiary, in form and
substance reasonably satisfactory to ONEOK, on or before the Closing, valid and
binding written releases of ONEOK and its Affiliates (other than the Entities),
as applicable, from any liability or obligation, whether arising before, on or
after the Closing Date, under any Entity Guarantees in effect as of the Closing.
If any Entity Guarantee has not been released as of the Closing Date, then the
NBP Partnerships shall continue to use commercially reasonable efforts after the
Closing to cause each such unreleased Entity Guarantee to be released promptly.
Schedule 6.6 to the ONEOK Disclosure Schedules contains a true, correct and
complete list of all of the Entity Guarantees.
(b) Notwithstanding anything to the contrary herein, the Parties
acknowledge and agree that at any time on or after the Closing Date, any of
ONEOK and its Affiliates may, in its sole discretion, take any action to
terminate, obtain release of or otherwise limit its liability under any and all
outstanding Entity Guarantees.
(c) The NBP Partnerships shall indemnify and hold harmless ONEOK
and its Affiliates from and after the Closing Date for any and all Damages
arising out of or relating to any Entity Guarantees.
6.7 INTERCOMPANY ACCOUNTS. Except for amounts related to normal
operational sales and cost of sales and fuel, prior to Closing ONEOK will settle
all Intercompany Accounts and intercompany arrangements between any Entity, on
the one hand, and ONEOK and its Affiliates (other than an Entity), on the other
hand, and the Entities will not have any Liability whatsoever with respect to
such settled intercompany arrangements and Intercompany Accounts. ONEOK shall be
solely liable for any contractual or other Liabilities, express or implied,
arising out of the termination, cancellation and elimination of any of the
foregoing.
6.8 SHARED CONTRACTS AND DROP-DOWN CONTRACTS.
(a) Schedule 6.8(a) contains a true and complete listing of all
Shared Contracts and Drop-Down Contracts. Commencing on the date hereof, (i)
Northern Border and ONEOK shall use commercially reasonable efforts to cause the
Shared Contracts to be replaced with separate Contracts that provide that each
Entity receive only such rights and obligations
29
under a replacement Contract substantially and materially similar to those
contract rights and obligations utilized by it in the conduct of its business
immediately prior to the date hereof and (ii) Northern Border and ONEOK shall
use commercially reasonable efforts to cause the Drop-Down Contracts to be
assigned to one or more Entities, as applicable, or, if any such Drop-Down
Contracts are not assignable or if ONEOK is not able to obtain any consent
required to so assign such Drop-Down Contracts, use commercially reasonable
efforts to cause such Drop-Down Contracts to be replaced with separate Contracts
that provide that the Entity receives the rights and obligations under a
replacement Contract as are substantially and materially similar to those
contract rights and obligations of ONEOK under such Drop-Down Contracts
immediately prior to the date hereof. The administrative costs and expenses
arising from the separation, replacement or assignment of a Shared Contract or
Drop-Down Contract (excluding any costs incurred under the payment terms under
any such Contract or any replacement Contract) shall be borne by ONEOK.
(b) If the Parties are not able to effect the separation and
replacement of a Shared Contract or to effect the assignment or replacement of a
Drop-Down Contract prior to the Closing, then, from the Closing until such
Contract is separated and replaced (in the case of a Shared Contract), assigned
or replaced (in the case of a Drop-Down Contract) or expires by its terms, to
the extent permissible under any Legal Requirement and under the terms of such
Contract, ONEOK shall, and Northern Border shall cause each Entity to, (i)
assume and perform the liabilities and obligations under such Contract relating
to its respective business (and shall promptly reimburse the other Party for any
expenses relating thereto incurred by the other Party or its Affiliates), (ii)
hold in trust for the benefit of the other Party, and shall promptly forward to
the other Party, any monies or other benefits received pursuant to such Shared
Contract relating to the business of the other Party (or its Affiliates) and
(iii) endeavor to institute alternative arrangements intended to put the Parties
in substantially the same economic position as if such Contract were separated
and replaced (in the case of a Shared Contract) or assigned or replaced (in the
case of a Drop-Down Contract).
6.9 ONEOK MARKS. Northern Border shall obtain no right, title,
interest, license or any other right whatsoever to use the word "ONEOK" or any
Trademarks containing or comprising the foregoing, or any Trademark confusingly
similar thereto or dilutive thereof (collectively, the "ONEOK Marks").
Notwithstanding the preceding sentence, effective upon the Closing Date, ONEOK,
on behalf of itself and its Affiliates hereby grants to the Entities and
Northern Border a nonexclusive, nontransferable, royalty-free license, without
right to sublicense, to use, solely in the Entities' businesses as they are
presently conducted, any and all of the ONEOK Marks solely to the extent
appearing on existing advertising materials and property of the Companies (such
as signage, vehicles, and equipment) for a period of 6 months from the Closing
Date ("License Period"); provided, however, that with respect to pipeline and
gas storage signage the License Period shall be deemed to be a period of 12
months from the Closing Date. Northern Border and the Entities may use such
existing inventory, advertising materials and property during the License
Period, but shall not create new inventory, advertising materials or property
using the ONEOK Marks. Northern Border and the Entities shall promptly replace
or remove all ONEOK Marks on inventory, advertising materials and other assets,
provided that all such use shall cease no later than the end of the License
Period. As promptly as practicable and no later than 60 days after the Closing
Date, Northern Border shall change the name of any Entity that contains a
reference to "ONEOK", to a name that does not contain such
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reference. The Parties agree, because damages would be an inadequate remedy,
that a Party seeking to enforce this Section 6.9 shall be entitled to seek
specific performance and injunctive relief as remedies for any breach thereof in
addition to other remedies available at law or in equity.
6.10 INDEBTEDNESS FOR BORROWED MONEY. Immediately prior to the
Closing, (i) ONEOK shall repay or otherwise settle any Indebtedness due to the
Entities from ONEOK or its Affiliates (other than the Entities) and (ii) ONEOK
shall cause the repayment or settlement of any Indebtedness due from the
Entities to ONEOK or its Affiliates (other than the Entities), in each case,
including interest and other amounts accrued thereon or due in respect thereof,
other than any Indebtedness fully reflected in the Closing Working Capital.
6.11 CONVERSION TRANSACTIONS. ONEOK shall, prior to the Closing Date,
subject to having obtained any and all necessary approvals and consents from
Governmental Authorities, (a) cause each of the Converting Companies to convert
from corporations into an Eligible Person under the laws of the jurisdiction in
which each is organized on the date of this Agreement (the "Conversion
Transactions") (and use its best efforts, after consulting with Northern Border,
to form such Eligible Person as instructed by Northern Border) and (b) cause
each of the Companies and Company Subsidiaries that is not on the date hereof
treated as a partnership or an entity disregarded from its owner for United
States federal income tax purposes to be so treated on or before the Closing
Date and (c) cause each such Company and Company Subsidiary described in
subsections 6.11(a) or (b) above to be continuously treated as a partnership or
a disregarded entity from its owner for United States federal income tax
purposes from the date it becomes so treated through the Closing Date.
6.12 INTERIM FINANCIAL STATEMENTS. From time to time after the date
hereof, ONEOK will deliver to Northern Border copies of the monthly and
quarterly financial statements (which shall include a balance sheet and a
statement of income) for the Entities for all periods after the Balance Sheet
Date through and including the Closing Date (collectively, the "Interim
Financial Statements"). The Interim Financial Statements will be prepared on the
same basis as the Financial Statements and will present fairly in all material
respects the financial position, results of operations and cash flows of the
Entities as of such dates and for the periods then ended (subject to normal
year-end audit adjustments consistent with prior periods).
6.13 COOPERATION REGARDING AUDITS. ONEOK acknowledges and understands
that Northern Border may be required to obtain certain information relating to
the Entities including, but not limited to, audited or unaudited financial
statements of the Entities, and disclose such information in registration
statements and other documents filed with the Securities and Exchange Commission
under the federal securities laws or in disclosure documents given to investors
in certain securities offerings, including in connection with the third-party
financing required to satisfy Northern Border's obligations under Section 1.2 of
the Northern Border Purchase Agreement. At Northern Border's cost, ONEOK agrees
to use commercially reasonable efforts to cooperate, and shall cause its
Affiliates, accountants, counsel and other agents and representatives to
cooperate, with Northern Border in connection therewith with respect to the
Entities for periods prior to the Closing, including the execution and delivery
of any customary audit representation letters, consents or comfort letters and
representation letters
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for such periods presented to ONEOK by Northern Border and its auditors for
execution in connection therewith.
6.14 INSURANCE MATTERS. The Parties acknowledge that the facilities
owned by Venice Energy Services Co., L.L.C. ("▇▇▇▇▇") were damaged by Hurricane
▇▇▇▇▇▇▇ in 2005 and that ONEOK ▇▇▇▇▇ Holdings, L.L.C. ("▇▇▇▇▇ Holdings"), a
wholly-owned subsidiary of ONEOK, holds 10.1765% of the outstanding equity
interests in ▇▇▇▇▇. The Parties further acknowledge that ▇▇▇▇▇ Holdings has
contributed approximately $2,500,000 to ▇▇▇▇▇ as the pro rata amount that
▇▇▇▇▇'▇ partnership committee required the partners in ▇▇▇▇▇ to contribute for
the repair costs for such facilities. In addition to such prior contribution,
ONEOK shall pay or reimburse Northern Border for its pro rata share of any
additional amounts the ▇▇▇▇▇ partnership committee requires the partners in
▇▇▇▇▇ to contribute to ▇▇▇▇▇ with respect to such hurricane damage occurring in
2005. As a result, the Parties acknowledge and agree that ONEOK shall receive
and retain all proceeds of any casualty loss insurance that may relate to such
facilities for the period prior to the Closing. With respect to any "business
interruption" or similar insurance coverage that may relate to the interest of
ONEOK or its Affiliates in ▇▇▇▇▇, ONEOK or its Affiliates (other than the
Entities) shall retain or be paid that portion of any such insurance proceeds
that may be paid covering the period prior to Closing, and the Entities shall
retain or be paid that portion of any such insurance proceeds covering the
period on or after Closing. To the extent either Party receives any insurance
proceeds that are payable to the other Party as set forth in this Section 6.14,
then such proceeds shall be promptly paid to such other Party.
SECTION 7. CONDITIONS TO CLOSING
7.1 CONDITIONS TO THE OBLIGATIONS OF ONEOK. The obligation of ONEOK to
consummate this Agreement and the transactions contemplated hereby is subject to
the fulfillment, prior to or at the Closing, of the following conditions
precedent unless waived by ONEOK in its sole discretion:
(a) Accuracy of Representations and Warranties.
(i) All representations and warranties made by the NBP
Partnerships (other than those set forth in Section 3.9 (SEC Filings)) herein
and in any Related Agreement shall be true and correct when made and on and as
of the Closing, except for representations and warranties that are made as of a
specific date or time, which shall be true and correct only as of such specific
date or time, except for such failures of such representations and warranties to
be true and correct (without giving effect to any limitation or qualification as
to Northern Border Material Adverse Effect or "materiality" (including the word
"material") set forth therein) as would not, individually or in the aggregate,
have a material adverse effect on the ability of the NBP Partnerships to perform
their obligations hereunder and consummate the transactions contemplated hereby
on the Closing Date;
(ii) The representations and warranties made by Northern
Border in Section 3.9 (SEC Filings) shall be true and correct in all material
respects when made and on and as of the Closing, with the same force and effect
as if made on and as of the Closing, except for
32
representations and warranties that are made as of a specific date or time,
which shall be true and correct in all material respects only as of such
specific date or time.
(b) Compliance with Covenants. The NBP Partnerships shall have
performed in all material respects all obligations and agreements, and complied
in all material respects with all covenants, contained in this Agreement and any
Related Agreements to be performed or complied with by it prior to or on the
Closing.
(c) No Material Change. Since the date hereof, there shall not
have occurred any event, development or circumstance that, individually or in
the aggregate, has had or would reasonably be expected to have a Northern Border
Material Adverse Effect.
(d) Certificate from Officers. The NBP Partnerships shall have
delivered to ONEOK a certificate of Northern Border's Chief Financial and
Accounting Officer dated as of the Closing to the effect that the statements set
forth in paragraphs (a), (b) and (c) above in this Section 7.1 are true and
correct.
(e) No Injunction. At the time of Closing there shall be no
effective injunction, writ or preliminary restraining order or any Governmental
Order of any nature issued by a Governmental Authority of competent jurisdiction
to the effect that the transactions contemplated by this Agreement may not be
consummated as herein provided, and no proceeding or lawsuit shall have been
commenced by any Governmental Authority or other Person for the purpose of
obtaining any such injunction, writ or preliminary restraining order.
(f) ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇. All required filings under the HSR Act
shall have been completed and all applicable time limitations under such Act
shall have expired without a request for further information by the relevant
Governmental Authorities under such Act, or in the event of such a request for
further information, the expiration of all applicable time limitations under the
Act shall have occurred without the objection of such federal authorities.
(g) Governmental Approvals. The consent of (i) Kansas Corporation
Commission for transfer of Certificates of Convenience and Necessity and
transfer of tariffs related to Mid-Continent Marketing Center ("KCC Consent")
and (ii) Oklahoma Corporation Commission for the sale of ONEOK Gas
Transportation, L.L.C. ("OCC Consent"), shall have been obtained.
(h) Other Transactions. The transactions contemplated by the
Purchase and Sale Agreement by and between ONEOK, Northern Border and NBILP,
dated concurrently with this Agreement (the "Northern Border Purchase
Agreement"), the Purchase and Sale Agreement between TransCan Northwest Border
Ltd and Northern Plains Natural Gas Company, LLC (the "GP Purchase Agreement")
and the Partnership Interest Purchase and Sale Agreement by and between NBILP
and TC PipeLines Intermediate Limited Partnership, dated February __, 2006 (the
"TransCanada Agreement" and, together with the Northern Border Purchase
Agreement and the GP Purchase Agreement, the "Other Transaction Agreements"),
shall have been consummated on the Closing Date (the transactions contemplated
by the GP Purchase Agreement shall be consummated immediately prior to the
Closing and ONEOK or its Affiliates shall, immediately following such
consummation, own 100% of the general partnership interests
33
in Northern Border, the transactions contemplated by the Northern Border
Purchase Agreement shall be consummated simultaneously with the Closing and the
transactions contemplated by the TransCanada Agreement shall be consummated
immediately following the Closing).
(i) Amendment to Credit Facility. An amendment to each of (A) the
Credit Agreement dated as of September 17, 2004 by and among ONEOK, Bank of
America, N.A., and the financial institutions therein named as Lenders, as
amended, and (B) the Credit Agreement dated June 27, 2005 among ONEOK, Inc., as
Borrower, Citibank, N.A., as Administrative Agent, and the Lenders party
thereto, as amended, shall have been executed and delivered by the parties
thereto in form and substance reasonably satisfactory to ONEOK that permits
ONEOK to enter into and perform its obligations under this Agreement.
(j) Delivery of Deliverables. Each of the deliveries set forth in
Section 1.3(c) shall have been made.
(k) Bushton Consents. Written consents and agreements from the
trustees, owner participants, noteholders and other parties as may reasonably be
necessary in connection with the transfer of ONEOK Bushton Processing, Inc.
("OBPI") to Northern Border, and in connection with the conversion of OBPI to a
limited liability company, shall have been obtained.
7.2 CONDITIONS TO THE OBLIGATIONS OF THE NBP PARTNERSHIPS. The
obligation of the NBP Partnerships to consummate this Agreement and the
transactions contemplated hereby is subject to the fulfillment, prior to or at
the Closing, of the following conditions precedent unless waived by the NBP
Partnerships in writing in their sole discretion:
(a) Accuracy of Representations and Warranties. All
representations and warranties made by ONEOK herein and in any Related Agreement
shall be true and correct when made and on and as of the Closing, except for
representations and warranties that are made as of a specific date or time,
which shall be true and correct only as of such specific date or time except for
such failures of such representations and warranties to be true and correct
(without giving effect to any limitation or qualification as to "materiality"
(including the word "material") or "Material Adverse Effect" set forth therein)
as would not, individually or in the aggregate, have a Material Adverse Effect.
(b) Compliance with Covenants. ONEOK shall have performed in all
material respects all obligations and agreements, and complied in all material
respects with all covenants, contained in this Agreement and any Related
Agreements to be performed or complied with by it prior to or on the Closing.
(c) No Material Change. Since the date hereof, there shall not
have occurred any event, development or circumstance with respect to ONEOK or
the Entities that, individually or in the aggregate, has had or would reasonably
be expected to have a Material Adverse Effect or a material adverse effect on
the ability of ONEOK to perform its obligations hereunder and consummate the
transactions contemplated hereby on the Closing Date.
(d) Certificate from Officers. ONEOK shall have delivered to
Northern Border a certificate of ONEOK's Chief Financial Officer dated as of the
Closing to the effect that
34
the statements set forth in paragraphs (a), (b) and (c) above in this Section
7.2 are true and correct.
(e) No Injunction. At the time of Closing there shall be no
effective injunction, writ or preliminary restraining order or any Governmental
Order of any nature issued by a Governmental Authority of competent jurisdiction
to the effect that the transactions contemplated by this Agreement may not be
consummated as herein provided, and no proceeding or lawsuit shall have been
commenced by any Governmental Authority or other Person for the purpose of
obtaining any such injunction, writ or preliminary restraining order.
(f) ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇. All required filings under the HSR Act
shall have been completed and all applicable time limitations under such Act
shall have expired without a request for further information by the relevant
Governmental Authorities under such Act, or in the event of such a request for
further information, the expiration of all applicable time limitations under the
Act shall have occurred without the objection of such federal authorities.
(g) Governmental Approvals. The KCC Consent and the OCC Consent
shall have been obtained.
(h) Other Transactions. The transactions contemplated by the
Other Transaction Agreements shall have been consummated on the Closing Date
(the transactions contemplated by the GP Purchase Agreement shall be consummated
immediately prior to the Closing and ONEOK or its Affiliates shall, immediately
following such consummation, own 100% of the general partner interests in
Northern Border, the transactions contemplated by the Northern Border Purchase
Agreement shall be consummated simultaneously with the Closing and the
transactions contemplated by the TransCanada Agreement shall be consummated
immediately following the Closing).
(i) Conversion Transactions. The Conversion Transactions shall
have been completed in form and substance satisfactory to Northern Border.
(j) Amendment of Certain Debt Agreements. Amendments to (i) that
certain Revolving Credit Agreement, dated as of May 16, 2005, by and among
Northern Border, the lenders named therein and Citibank, N.A., and (ii) that
certain Revolving Credit Agreement, dated as of May 16, 2005, by and among
Northern Border Pipeline Company, the lenders named therein, and Citibank N.A.,
(the "Northern Border Credit Agreements") as are reasonably necessary to permit
Northern Border to enter into and consummate the transactions contemplated by
the Northern Border Transaction Agreements without violating the terms of, or
causing a default under, either such credit agreement (the "Northern Border
Credit Agreement Amendments"), shall have been executed and delivered by the
parties thereto.
(k) Delivery of Deliverables. Each of the deliveries set forth in
Section 1.3(b) shall have been made.
(l) Waiver Under Viking Indenture. A waiver by the holders of a
majority of the principal amount of the notes outstanding under the Amended and
Restated Indenture Agreement dated as of November 30, 2004 (the "Viking
Indenture") between Viking Gas Transmission Company and ▇▇▇▇▇ Fargo Bank,
National Association, as Trustee as are
35
reasonably necessary to permit Northern Border to enter into and consummate the
transactions contemplated by the Northern Border Transaction Agreements without
violation of the terms thereof or causing default thereunder shall have been
obtained.
(m) Bushton Consents. Written consents and agreements from the
trustees, owner participants, noteholders and other parties as may reasonably be
necessary in connection with the transfer of OBPI to Northern Border, and in
connection with the conversion of OBPI to a limited liability company, shall
have been obtained.
SECTION 8. TERMINATION OF AGREEMENT; RIGHTS TO PROCEED
8.1 TERMINATION.
(a) This Agreement may be terminated on or prior to the Closing
Date only as follows:
(i) by mutual written consent of the Parties to this
Agreement;
(ii) at the election of any Party, if the Closing shall not
have occurred on or prior to June 30, 2006; provided that no Party shall be
entitled to terminate this Agreement pursuant to this Section 8.1(a)(ii) if such
Party's failure to fulfill any obligation under this Agreement has been the
primary cause of the failure of the Closing to occur on or before such date; and
provided further that upon the occurrence of a request for additional
information being received from a Governmental Authority pursuant to the HSR Act
such date shall be extended to September 30, 2006;
(iii) by any Party, if a Governmental Authority shall have
issued an order, decree or ruling permanently restraining, enjoining or
otherwise prohibiting the transactions contemplated by this Agreement, and such
order, decree or ruling shall have become final and nonappealable, provided that
the terminating Party has satisfied its obligations under Section 6 in response
to actions or requests of such Governmental Authority;
(iv) by ONEOK, if ONEOK is not in material breach of its
obligations under this Agreement and there has been a breach of any
representation, warranty, covenant, or agreement of the NBP Partnerships
contained in this Agreement such that any of the conditions set forth in Section
7.1 would not be satisfied at or prior to the Closing, and, if such breach is of
a character that it is capable of being cured, such breach has not been cured by
the NBP Partnerships within 15 days after written notice thereof from ONEOK; or
(v) by the NBP Partnerships, if the NBP Partnerships are not
in material breach of their obligations under this Agreement and there has been
a breach of any representation, warranty, covenant, or agreement of ONEOK
contained in this Agreement such that any of the conditions set forth in Section
7.2 would not be satisfied at or prior to the Closing, and, if such breach is of
a character that it is capable of being cured, such breach has not been cured by
ONEOK within 15 days after written notice thereof from the NBP Partnerships.
(b) The termination of this Agreement shall be effectuated by the
delivery of a written notice of such termination from the party terminating this
Agreement to the other party.
36
8.2 EFFECT OF TERMINATION. All obligations of the parties hereunder
shall cease upon any termination pursuant to Section 8.1; provided, however,
that (i) the provisions of this Section 8, Section 6.1 (solely with respect to
confidentiality obligations) and Section 11 hereof shall survive any termination
of this Agreement, and (ii) nothing herein shall relieve any party from any
Liability for any intentional breach (including any "efficient breach") of this
Agreement or a failure to comply with any of its covenants, conditions or
agreements contained herein.
SECTION 9. INDEMNIFICATION
9.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES, ETC. The
representations and warranties of ONEOK and the NBP Partnerships contained in
this Agreement shall survive the Closing and expire on the second anniversary of
the Closing Date; provided, however, that (i) the representations and warranties
of ONEOK in Sections 2.1 (Organization and Authority of ONEOK), 2.2
(Organization, Authority and Qualification of the Entities), 2.3 (Capital of
Companies; Beneficial Ownership) and 2.4 (Subsidiaries) shall survive
indefinitely, (ii) the representations and warranties of ONEOK in Section 2.16
(Environmental Matters) shall survive the Closing and expire on the fourth
anniversary of the Closing Date, (iii) the representations and warranties of
ONEOK in Section 2.6 (Taxes) shall survive the Closing and expire on the 60th
day following the expiration of the applicable statute of limitations relating
thereto and (iv) the representations and warranties of the NBP Partnerships in
Sections 3.1 (Organization and Authority of the NBP Partnerships) and 3.2
(Capitalization) shall survive indefinitely. No Northern Border Indemnitee shall
be entitled to indemnification for a breach of a representation or warranty
under this Section 9 unless it shall have given ONEOK written notice that it
seeks indemnification (which notice may be, in the case of third-party Claims,
notice under Section 9.7) on or before the expiration of such representation or
warranty. No ONEOK Indemnitee shall be entitled to indemnification for a breach
of a representation or warranty under this Section 9 unless it shall have given
the NBP Partnerships written notice that it seeks indemnification (which notice
may be, in the case of third-party Claims, notice under Section 9.7) on or
before the expiration of such representation or warranty. Each notice delivered
under the preceding two sentences shall include a good faith estimate of the
amount claimed and a detailed description of the circumstances surrounding the
Damages in respect of which indemnification is claimed. The terms of this
Agreement that by their nature are intended to survive the Closing shall survive
the Closing indefinitely (or for their respective terms, if any).
9.2 INDEMNIFICATION.
(a) From and after the Closing, ONEOK shall hold harmless and
indemnify the Northern Border Indemnitees from and against, and shall compensate
and reimburse each of the Northern Border Indemnitees for, (i) any Damages which
are directly or indirectly suffered or incurred by any of the Northern Border
Indemnitees or to which any of the Northern Border Indemnitees may otherwise
become subject (regardless of whether or not such Damages relate to any
third-party Claim) as a result of, caused by or arising out of (including any
allegations by a third party): (A) other than in connection with Section 2.16 of
this Agreement (which is covered under Section 9.2(a)(ii) below), any inaccuracy
in or breach of any representation or warranty of ONEOK set forth in this
Agreement (without giving effect to any limitation or qualification as to
"materiality" (including the word "material" or "Material Adverse Effect")
contained or
37
incorporated directly or indirectly in such representation or warranty); (B) any
breach of any covenant or obligation of ONEOK under this Agreement; (C) the
litigation matters commonly known as "Woody's/Decor" and "▇▇▇▇▇", each of which
is described in greater detail on Schedule 9.2(a) hereto; or (ii) any Damages
with respect to any inaccuracy in or breach of any representation or warranty of
ONEOK set forth in Section 2.16 of this Agreement (without giving effect to any
limitation or qualification as to "materiality" (including the word "material"
or "Material Adverse Effect") or the "Knowledge of ONEOK" contained or
incorporated directly or indirectly in such representation or warranty), in each
case in this subsection (ii) except for Damages that arise out of matters
discovered by or on behalf of the NBP Partnerships or their Subsidiaries as a
result of a Phase II, Phase III or similar environmental subsurface
investigation undertaken voluntarily after Closing by or on behalf of the NBP
Partnerships or any of their Subsidiaries, including the Entities, and except
for remediation costs and expenses for matters that are not required to be
remediated under applicable law.
(b) From and after the Closing, the NBP Partnerships shall hold
harmless and indemnify the ONEOK Indemnitees from and against, and shall
compensate and reimburse each of the ONEOK Indemnitees for, any Damages which
are directly or indirectly suffered or incurred by any of the ONEOK Indemnitees
or to which any of the ONEOK Indemnitees may otherwise become subject
(regardless of whether or not such Damages relate to any third-party Claim) as a
result of, caused by or arising out of: (i) any inaccuracy in or breach of any
representation or warranty of the NBP Partnerships set forth in this Agreement
(without giving effect to any limitation or qualification as to "materiality"
(including the word "material" or "Northern Border Material Adverse Effect")
contained or incorporated directly or indirectly in such representation or
warranty); or (ii) any breach of any covenant or obligation of Northern Border
under this Agreement; provided, however, that no ONEOK Indemnitee shall have any
claim or recourse against the NBP Partnerships, and the NBP Partnerships shall
have no obligation to indemnify any ONEOK Indemnitee under the terms of this
Agreement, with respect to any breach by the NBP Partnerships of any
representation or warranty of the NBP Partnerships set forth in this Agreement
if to the Knowledge of ONEOK, the NBP Partnerships are in breach of any
representation or warranty on the date hereof. For purposes of this Section
9.2(b) only, the term "Knowledge of ONEOK" shall include the actual knowledge of
▇▇▇▇▇ ▇▇▇▇.
(c) To the extent that ONEOK or its Affiliates (other than the
Entities) has the right to seek indemnification from third parties for the
benefit of the Entities or their assets, and the Entities are not entitled to
seek such indemnification on their own accord, ONEOK, upon Northern Border's
written request, shall assign such indemnification rights to Northern Border or,
if such rights cannot be assigned, assert (at Northern Border's cost) a claim
relating to such matter against such third party on behalf of the applicable
Entities, and provide to Northern Border all benefits of such indemnification
as, when and if provided by such third party. Notwithstanding the foregoing,
neither ONEOK nor its Affiliates shall be obligated to make any additional
payments or to take any action that would cause them to incur or be subject to
any additional liabilities or costs with respect to any actions taken under this
Section 9.2(c).
9.3 THRESHOLD; CAP.
38
(a) ONEOK shall not be required to make any indemnification
payment in respect of any claim or series of substantially related claims made
pursuant to Section 9.2(a)(i)(A) or (B) or Section 9.2(a)(ii) of this Agreement,
or pursuant to Section 9.2(a)(i)(A) or (B) or Section 9.2(a)(ii) of the Northern
Border Purchase Agreement, unless the amount of any Damages that have been
directly or indirectly suffered or incurred by any one or more of the Northern
Border Indemnitees or to which any one or more of the Northern Border
Indemnitees has or have otherwise become subject with respect to such claim (or
such substantially related claims) exceeds $100,000 (the "Minimum Claim
Amount"). In addition, ONEOK shall not be required to make any indemnification
payment pursuant to Section 9.2(a)(i)(A) or (B) or Section 9.2(a)(ii) of this
Agreement, or pursuant to Section 9.2(a)(i)(A) or (B) or Section 9.2(a)(ii) of
the Northern Border Purchase Agreement, until such time as the total amount of
all individual claims exceeding the Minimum Claim Amount (such total amount, the
"Aggregate Northern Border Damages") exceeds $45,000,000 in the aggregate (the
"Indemnity Threshold"). If the total amount of such Aggregate Northern Border
Damages exceeds the Indemnity Threshold, then, subject to Section 9.3(b), the
Northern Border Indemnitees shall be entitled to be indemnified against and
compensated and reimbursed for all Aggregate Northern Border Damages in excess
of the Indemnity Threshold. The NBP Partnerships shall not be required to make
any indemnification payment in respect of any claim (or series of substantially
related claims) made pursuant to Section 9.2(b) of this Agreement or pursuant to
Section 9.2(b) of the Northern Border Purchase Agreement unless the amount of
any Damages that have been directly or indirectly suffered or incurred by any
one or more of the ONEOK Indemnitees or to which any one or more of the ONEOK
Indemnitees has or have otherwise become subject with respect to such claim (or
such substantially related claims) exceeds the Minimum Claim Amount. In
addition, the NBP Partnerships shall not be required to make any indemnification
payment pursuant to Section 9.2(b) of this Agreement or pursuant to Section
9.2(b) of the Northern Border Purchase Agreement until such time as the total
amount of all individual claims exceeding the Minimum Claim Amount (such total
amount, the "Aggregate ONEOK Damages") exceeds the Indemnity Threshold. If the
total amount of such Aggregate ONEOK Damages exceeds the Indemnity Threshold,
then, subject to Section 9.3(b), the Northern Border Indemnitees shall be
entitled to be indemnified against and compensated and reimbursed for all
Aggregate ONEOK Damages in excess of the Indemnity Threshold.
(b) The maximum liability of ONEOK under Section 9.2(a)(i)(A) or
(B) and Section 9.2(a)(ii) of this Agreement and under Section 9.2(a)(i)(A) or
(B) or Section 9.2(a)(ii) of the Northern Border Purchase Agreement, taken in
the aggregate, shall be $360,000,000 (the "ONEOK Indemnity Cap"). The maximum
liability of the NBP Partnerships under Section 9.2(b) of this Agreement and
under Section 9.2(b) of the Northern Border Purchase Agreement, taken in the
aggregate, shall be $198,000,000 (the "Northern Border Indemnity Cap").
(c) The limitations set forth in Section 9.3(a) and Section
9.3(b) shall not apply to any of the matters described in Sections 1.5 (Working
Capital Adjustment), 2.1 (Organization and Authority of ONEOK), 2.2
(Organization, Authority and Qualification of the Entities), 2.3 (Capital of
Companies; Beneficial Ownership), 2.4 (Subsidiaries), 3.1 (Organization and
Authority of Northern Border) and 3.2 (Capitalization).
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9.4 EXCLUSIVE REMEDY; SOLE RECOURSE. With the exception of claims
based upon fraud or intentional misrepresentation, from and after the Closing,
the indemnification provisions set forth in this Section 9 and the Tax
indemnification provisions set forth in Section 10.6 shall be the sole and
exclusive remedy of both the Northern Border Indemnitees and the ONEOK
Indemnitees for Damages under this Agreement (it being understood that nothing
in this Section 9.4 or elsewhere in this Agreement shall affect the Parties'
rights to specific performance or other equitable remedies with respect to the
covenants referred to in this Agreement to be performed after the Closing).
9.5 NO CONTRIBUTION. ONEOK shall not have and shall not exercise or
assert (or attempt to exercise or assert), any right of contribution, right of
indemnity or other right or remedy against any Entity in connection with any
indemnification obligation or any other Liability to which it may become subject
under or in connection with this Agreement.
9.6 SETOFF. Notwithstanding anything herein to the contrary, Damages
shall be calculated net of any insurance or indemnification proceeds and Tax
Benefits actually received by an Indemnitee or its Affiliates in connection with
the facts giving rise to the right of indemnification (net of any fees, costs or
expenses incurred in enforcing such Indemnitee's rights to recover such
insurance proceeds).
9.7 THIRD PARTY CLAIMS.
(a) Upon receipt by any Person seeking to be indemnified pursuant
to Section 9.2 (the "Indemnitee") of notice of any third-party claim, (each a
"Claim") against it which has or is expected to give rise to a claim for
Damages, the Indemnitee shall give prompt written notice thereof to the Person
from which it seeks to be indemnified (the "Indemnitor"), indicating the nature
of such Claim and the basis therefor; provided, however, that any delay or
failure by the Indemnitee to give notice to the Indemnitor shall relieve the
Indemnitor of its obligations hereunder only to the extent, if at all, that it
is materially prejudiced by reason of such delay or failure.
(b) The Indemnitor shall have 30 days (or such shorter period as
may be required by applicable Legal Requirements) after receipt of the
Indemnitee's notice to elect, at its option, to assume the defense of, at its
own expense and by its own counsel, any such Claim. If the Indemnitor desires to
undertake to defend any such Claim, it shall promptly notify the Indemnitee of
its intention to do so. Notwithstanding an election by the Indemnitor to assume
the defense of such Claim, (i) the Indemnitee shall have the right to employ
separate counsel and to participate in the defense of such Claim, and the
Indemnitor shall bear the reasonable fees, costs and expenses of such separate
counsel if (A) the Indemnitee shall have determined in good faith that an actual
or potential conflict of interest makes representation by the same counsel or
the counsel selected by the Indemnitor inappropriate, (B) the Indemnitee shall
have determined in good faith that the Damages in respect of such Claim may
exceed the remaining balance of the applicable Indemnity Cap, or (C) the
Indemnitor shall have authorized the Indemnitee to employ separate counsel at
the Indemnitor's expense, and (ii) the Indemnitee shall have the right at any
time after the Indemnitor assumes the defense of such Claim to assume the
defense of such Claim if (y) the Indemnitor subsequently determines that it does
not believe the Claim is one for which the Indemnitee is entitled to
indemnification, compensation or reimbursement under this
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Section 9.7 and requests that the Indemnitee assume the defense of such Claim
(in which case the Indemnitee may, but shall not be obligated to, retain the
legal counsel previously retained by the Indemnitor to assist in the defense of
such Claim) or (z) any Damages in respect of such Claim are reasonably likely to
exceed the remaining balance of the applicable Indemnity Cap available to such
Indemnitee (in which case the Indemnitor shall bear the reasonable fees, costs
and expenses of Indemnitee's counsel, subject to the applicable Indemnity Cap,
as applicable). The Indemnitee and Indemnitor and their counsel shall cooperate
fully in the compromise or defense of any Claim subject to this Section 9.7 and
keep one another informed of all developments relating to any such Claims, and
provide copies of all relevant correspondence and documentation relating
thereto. If an Indemnitor receiving a notice of Claim does not elect to defend
such Claim within the time period referred to above, the Indemnitee shall have
the right, in addition to any other right or remedy it may have hereunder, at
the Indemnitor's expense, subject to the Indemnity Cap, as applicable, to defend
such Claim. The Indemnitee's defense of, or participation in the defense of, any
such Claim shall not in any way diminish or lessen the obligations of the
Indemnitor under this Section 9.7. In no event may an Indemnitor or an
Indemnitee settle or compromise any Claim without the consent of the other
(which consent will not be unreasonably withheld, conditioned or delayed);
provided, however, that an Indemnitor may settle or compromise a claim without
the consent of the Indemnitee so long as (i) the relief consists solely of money
damages in an amount greater than the Indemnity Threshold and less than the
remaining balance of the applicable Indemnity Cap with respect to the Indemnitor
and includes a provision whereby the plaintiff or claimant in the matter
releases the Indemnitor and the Indemnitee from all liability with respect
thereto, and (ii) such Indemnitor acknowledges the Indemnitee is entitled to
indemnification, compensation and reimbursement under this Section 9.7). If
remediation is required in connection with any Claims for which the Northern
Border Indemnitees are entitled to indemnification under Section 9.2(a)(ii)
above, ONEOK shall have the right to conduct, control and direct such
remediation; provided, however, that any remediation activities undertaken by
ONEOK shall be conducted (i) in compliance with all applicable Legal
Requirements and any health and safety plan or other reasonable plans or
guidelines imposed by the NBP Partnerships on Persons entering its properties,
and (ii) in a manner that minimizes any short or long-term interference with the
operations of the NBP Partnerships. ONEOK shall consult with the NBP
Partnerships in its determination of the appropriate remediation standard to
which remediation will be performed, and any institutional controls that ONEOK
intends to employ to meet such remediation standard.
SECTION 10. TAX MATTERS
10.1 RETENTION OF RECORDS. Each of Northern Border and ONEOK shall
retain, and Northern Border shall cause each of the Entities to retain, all Tax
Records in its possession for all open Tax Periods ending on or before or
including the Closing Date, until 6 months following the expiration of the
statute of limitations (and any extensions thereof) of the respective Tax
Periods. "Tax Records" means any Tax Return, Tax Return workpapers,
documentation relating to any Audit, and any other books of account or records
(whether on paper, computer disk or any other medium) required or advisable to
be maintained under the applicable Tax law or under any record retention
agreement with any Tax Authority.
10.2 COOPERATION. Northern Border and ONEOK covenant and agree that
subsequent to the Closing, upon reasonable notice and during normal business
hours, they and
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their Affiliates will (i) give the other Party and its Representatives
information, books and records (or copies thereof) relevant to the Entities, to
the extent necessary to enable the other Party to prepare its Tax Returns (and
any Tax Returns for which it has preparation or filing responsibility hereunder)
or determine the amount of any refund, credit or other amount the amount of
which the requesting Party may be entitled to receive pursuant to this
Agreement, and (ii) provide the other Party and its Representatives with such
information, books and records (or copies thereof) as may reasonably be
requested in connection with any Tax Return, inquiry, election, Audit or other
examination by any Tax Authority, or judicial or administrative proceedings
relating to liability for Taxes. ONEOK and Northern Border also shall make
available to each other, as reasonably requested, and at the expense of the
requesting Party, knowledgeable employees or advisors of the Party or its
Affiliates of which the request is made and personnel responsible for preparing
and maintaining information, books, records and documents in connection with Tax
filings, Audits, disputes or litigation. Notwithstanding the foregoing or any
other provision in this Agreement, neither Northern Border nor the Entities (or
any Affiliates of either) shall have the right to receive or obtain any
information relating to Taxes of ONEOK, any of its Affiliates, or any of its
predecessors other than information relating solely to or otherwise affecting
the calculation of Taxes of or attributable to the Entities or any of their
subsidiaries. Northern Border and ONEOK each agree, upon request, to use their
reasonable efforts to obtain any certificate or other document from any Tax
Authority or any other Person as may be necessary to mitigate, reduce or
eliminate any Tax that could be imposed with respect to the transactions
contemplated by this Agreement.
10.3 TRANSFER TAXES. All transfer, documentary, recording, notarial,
sales, use, registration, stamp and other similar taxes, fees and expenses
(including, but not limited to, all applicable stock transfer, real estate
transfer or gains Taxes and including any penalties, interest and additions to
such tax) incurred in connection with this Agreement and the transactions
contemplated hereby shall be borne by ONEOK. Northern Border and ONEOK shall
cooperate in timely making and filing all Tax Returns as may be required to
comply with the provisions of laws relating to such Transfer Taxes.
10.4 TAX RETURNS.
(a) ONEOK shall prepare (or cause to be prepared) and timely file
all Tax Returns required to be filed with any Tax Authority with respect to the
Entities for all Tax Periods ending on or before the Closing Date and shall pay
all Taxes (in excess of any applicable accruals therefor included within the
calculation of Final Closing Working Capital) due with respect to such Tax
Returns. Northern Border shall timely pay all Taxes due with respect to such Tax
Returns to the extent of any applicable accruals included within the calculation
of Final Closing Working Capital. ONEOK shall provide Northern Border with
drafts of such Tax Returns at least 10 days prior to the due date for filing
such Tax Returns (taking into account extensions) for Northern Border's review
and comment; provided that in the case of a Tax Return which is a Consolidated
Return, ONEOK shall only be required to provide the portions of such
Consolidated Return relating solely to the income, gain, loss and deduction of
the Entities. The final form of any such Tax Return required to be provided to
Northern Border (and the portion of any such Consolidated Return relating solely
to the Entities), pursuant to the preceding sentence, shall be subject to
Northern Border's prior written consent, which shall not be unreasonably
withheld; provided that Northern Border shall not withhold consent to the filing
of any such Tax
42
Return if such Tax Return (or in the case of a Consolidated Return the portion
thereof relating to the Entities) is prepared in a manner consistent with
Section 10.4(c) of this Agreement and the treatment of any items that are not
covered by past practice would not have an adverse effect on the Taxes of the
Entities for any period beginning on or after the Closing Date or the portion of
any Straddle Period (as defined below) that is Northern Border's responsibility.
In the case of any Tax Return required to be filed by ONEOK pursuant to this
Section 10.4(a) after the Closing Date, Northern Border shall arrange for the
signing of such Tax Returns or shall provide ONEOK with such powers or attorney
or other authorization, in each case as may be necessary to effect such filings
in accordance with applicable Tax Law.
(b) Northern Border shall prepare (or cause to be prepared) and
timely file all Tax Returns for all Tax Periods ending after the Closing Date,
including all Tax Returns for periods which include but do not end on the
Closing Date ("Straddle Periods") (the "Northern Border Returns"). If ONEOK is
responsible under Section 10.5 of this Agreement for any Taxes due with respect
to a Northern Border Return, Northern Border shall provide ONEOK with a
substantially final draft of each such Tax Return at least 10 days prior to the
due date for filing such Tax Returns (taking into account extensions) for
ONEOK's review and comment and the final form for any such Northern Border
Returns shall be subject to ONEOK's prior written consent, which shall not be
unreasonably withheld; provided however, that ONEOK shall not withhold consent
if such Tax Return is prepared in a manner consistent with Section 10.4(c) of
this Agreement and the treatment of any items that are not covered by past
practice would not have a material adverse effect on the Tax liabilities of
ONEOK or the Entities for any Pre-Closing Period. Northern Border shall timely
pay all Taxes due with respect to such Returns and ONEOK shall promptly
reimburse Northern Border for any such Taxes which are its responsibility
pursuant to Section 10.5 of this Agreement.
(c) Except as otherwise agreed by the parties, any Tax Return
that includes any of the Entities' assets or activities for any Pre-Closing
Period shall be prepared in accordance with ONEOK's past Tax accounting
practices used with respect to the Tax Returns in question (unless the party
responsible for preparing the Tax Return determines that the past practices are
no longer permissible under the Code or other applicable Tax law), and to the
extent any items are not covered by past practices (or in the event such past
practices are no longer permissible under the Code or other applicable Tax law),
in accordance with reasonable Tax accounting practices selected by the party
responsible for preparing the Tax Return. In the case of any Tax Return for an
Entity for any Straddle Period, any income, gain, loss and deduction shall be
allocated based on a closing of the books method or such other method as may be
agreed upon in writing by the parties.
(d) As part of the Services Agreement between ONEOK and Northern
Border, ONEOK shall provide certain Tax Return filing assistance and other Tax
assistance relating to the Taxes of the Entities in respect of periods ending
after the Closing Date.
10.5 ALLOCATION OF TAXES.
(a) Allocation of Straddle Period Taxes. Northern Border and
ONEOK shall, to the extent permitted by applicable Tax Law and except as
otherwise provided herein, elect with the relevant Tax Authority to close the
Tax Period of the Entities as of and including the
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Closing Date. Subject to the preceding sentence, in the case of Taxes
attributable to the Entities that are payable with respect to any Straddle
Period the portion of any such Taxes that are allocable to the portion of the
Straddle Period ending on the Closing Date shall: (1) in the case of Taxes that
are either (A) based upon or related to income or receipts or (B) imposed in
connection with any sale, transfer or assignment of property (real or personal,
tangible or intangible) be deemed equal to the amount that would be payable if
the Tax year ended on and included the Closing Date and (2) in the case of Taxes
(other than those described in clause (i)) imposed on a period basis with
respect to the business or assets of the Entities or otherwise measured by the
level of any item, be deemed to be the amount of such Taxes for the entire
Straddle Period (or, in the case of such Taxes determined on an arrears basis,
the amount of such Taxes for the immediately preceding Tax Period) multiplied by
a fraction the numerator of which is the number of calendar days in the portion
of the Straddle Period ending on and including the Closing Date and the
denominator of which is the number of calendar days in the entire Straddle
Period (the "Part-Year Fraction"). For purposes of clause (1) of the preceding
sentence, any exemption, deduction, credit or other item that is calculated on
an annual basis shall be allocated to the portion of the Straddle Period ending
on the Closing Date on a pro rata basis determined by multiplying the total
amount of such item allocated to the Straddle Period times the Part-Year
Fraction. In the case of any Tax based upon or measured by capital (including
net worth or long-term debt) or intangibles, any amount thereof required to be
allocated under this Section 10.5(a) shall be computed by reference to the level
of such items on the Closing Date. ONEOK shall be responsible for and shall pay
any Taxes (in excess of any applicable accruals therefor included within the
calculation of Final Closing Working Capital) allocable to the portion of the
Straddle Period ending on the Closing Date and Northern Border shall be
responsible for and shall pay any Taxes allocable to the portion of the Straddle
Period after the Closing Date.
(b) Post-Closing Tax Periods. From and after the Closing Date,
for the portion of any Straddle Period that begins on the day after the Closing
Date and any other Tax Period beginning after the Closing Date, without
duplication of any amount otherwise payable by Northern Border pursuant to this
Agreement, Northern Border shall be responsible and pay, or cause the Entities
to pay, to the appropriate Tax Authority any other Taxes due with respect to the
Entities for any such period.
(c) Ad Valorem Taxes. Notwithstanding the foregoing, all ad
valorem taxes (other than production, severance and similar Taxes measured by
the quantity of or the value of production) related to the 2006 ad valorem tax
year shall be pro-rated based on the number of days during the 2006 ad valorem
tax year falling before and falling on or after the Closing Date. ONEOK will pay
to Northern Border at Closing an amount equal to the portion of the 2006 ad
valorem taxes allocated to it pursuant to this paragraph (to the extent such
allocated amounts exceed any applicable accruals therefor included within the
calculation of Final Closing Working Capital). ONEOK shall not be liable for any
ad valorem taxes for the period following the Closing. Northern Border assumes
full responsibility for filing all ad valorem renditions and tax returns in all
applicable tax jurisdictions due after the Closing Date. ONEOK will, upon
request from Northern Border, provide reasonably requested historical
documentation of prior year filings related to ad valorem taxes to help
facilitate Northern Border's correct filing of ad valorem renditions and tax
returns. ONEOK assumes full responsibility for filing all ad valorem taxes
through the Closing Date.
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10.6 TAX INDEMNITY.
(a) ONEOK's Indemnity for Taxes for Pre-Closing Date Periods.
Notwithstanding any of the provisions of Section 9, from and after the Closing
Date, without duplication of any amount otherwise payable by ONEOK pursuant to
this Agreement, ONEOK shall indemnify Northern Border and its respective
Affiliates against:
(i) all Taxes (in excess of any applicable accruals therefor
included within the calculation of Final Closing Working Capital) imposed or
payable by the Entities with respect to Tax Periods ending on or before the
Closing Date and the portion of any Straddle Periods ending on the Closing Date
(each such period a "Pre-Closing Taxable Period");
(ii) all Taxes that are imposed or payable by the Entities
that are attributable to (A) any termination of the Entities under Code Section
708 caused by the transactions contemplated herein, or (B) ONEOK or any member
of an Affiliated, consolidated, combined or unitary Tax group of which the
Entities are or were members prior to the Closing Date (other than any Taxes of
the Entities) that is imposed under Treasury Regulation Section 1.1502-6 (or any
similar provision of state, local or foreign law) by reason of such Entities
being included in any such Affiliated, consolidated, combined or unitary Tax
group; and
(iii) any payments (in excess of any applicable accruals
therefor included within the calculation of Final Closing Working Capital) owed
by the Entities to any third party (other than a Governmental Authority) under a
tax sharing or other contractual agreement with respect to Taxes of the Entity
accruing on or before the Closing Date.
(b) Northern Border Indemnity for Taxes for Post-Closing Tax
Periods. Notwithstanding any of the provisions of Section 9, from and after the
Closing Date, without duplication of any amount otherwise payable by Northern
Border pursuant to this Agreement, Northern Border shall indemnify ONEOK and its
respective Affiliates against all Taxes imposed on or payable by Northern Border
or the Entities relating to any Tax Period or portion thereof that begins after
the Closing Date, including the portion of the Straddle Period beginning
immediately after the Closing Date and including any Taxes accruing after the
Closing Date.
(c) Payments. Payment by the indemnitor of any amount due under
this Section 10.6 shall be made within 10 days following written notice by the
indemnitee that payment of such amounts to the appropriate Tax Authority is due,
such written notice to reasonably demonstrate that the indemnitee is entitled to
such payment under the terms of this Agreement.
(d) Tax Refunds. If Northern Border or any of its Affiliates
(including, for this purpose, the Entities after the Closing Date) receives a
refund of Taxes of the Entities with respect to a Pre-Closing Taxable Period
(including any interest thereon), or in lieu thereof a credit against Taxes,
Northern Border shall pay (or cause the Entities to pay) to ONEOK the amount of
such Tax refund or credit (net of any costs or expenses incurred by Northern
Border or the Entities in obtaining the Tax refund or credit). Such payment
shall be made promptly following the receipt of such Tax refund or credit by
Northern Border or any of its Affiliates. In addition, if the payments made (or
deemed made) by or on behalf of the Entities with respect to
45
the Pre-Closing Taxable Period portion of the Straddle Period exceed the Taxes
due with respect to such portion of the Straddle Period, Northern Border shall
cause the Entities to pay to ONEOK such excess within 10 days following the
filing of the relevant Tax Return with respect to such Straddle Period. ONEOK
shall have the sole right, at its expense, to pursue any Tax refunds with
respect to Tax periods ending on or before the Closing Date.
10.7 CONTESTS.
(a) Notices. After the Closing Date, Northern Border and ONEOK
each shall notify the other in writing within 5 business days of receipt of any
notice of the commencement of any Tax audit or administrative or judicial
proceeding relating to the Taxes of any of the Entities ("Tax Controversy") in
respect to Pre-Closing Taxable Periods or the Straddle Periods, the outcome of
which may affect the Tax liabilities or indemnification obligations under this
Agreement of the other party ("Tax Indemnitor"). Such notice shall include
copies of any notice or other document received from any Tax Authority in
respect of such audit or other proceeding. If either Northern Border or ONEOK
fail to give the other party prompt notice as required under this Agreement,
then (i) if the failure of a party to give such notice precludes the Tax
Indemnitor from contesting an asserted Tax liability in any administrative or
judicial forums, then the Tax Indemnitor shall not have any obligation to
indemnify under this Agreement for any loss or damage arising out of such
asserted Tax liability, and (ii) if the Tax Indemnitor is not so precluded from
contesting an asserted Tax liability, but such failure to give prompt notice
results in a detriment to the Tax Indemnitor, then any amount which the Tax
Indemnitor is otherwise required to pay pursuant to this Agreement with respect
to such liability shall be reduced by the amount of such detriment.
(b) Control of Contests. ONEOK shall control the defense and
settlement of any Tax Controversy involving any asserted liability for Taxes
imposed with respect to the Entities relating to Tax Periods that end on or
before the Closing Date for which ONEOK is responsible pursuant to this Section
10. Northern Border shall control the defense and settlement of any Tax
Controversy involving any asserted liability for Taxes imposed with respect to
the Entities relating to Tax Periods that end after the Closing Date.
(c) Procedures. If the resolution of any Tax Controversy would be
grounds for indemnification under this Agreement (including, for this purpose,
as a result of altering the Tax Period in which items of income, gain, loss,
deduction or credit are reported) by the party not in control of the conduct of
such Tax Controversy (the "Non-Controlling Party") or otherwise adversely affect
the Tax liability of the Non-Controlling Party, (i) the party in control of such
Tax Controversy (the "Controlling Party") shall keep the Non-Controlling Party
fully informed of any proceedings, events, and developments relating to or in
connection with such Tax Controversy; (ii) the Non-Controlling Party shall be
entitled to receive copies of all correspondence and documents relating to such
Tax Controversy; (iii) the Controlling Party shall consult with the
Non-Controlling Party and shall not enter into any settlement with respect to
any such Tax Controversy without the Non-Controlling Party's prior written
consent, such consent not to be unreasonably withheld, conditioned or delayed;
and (iv) at its own cost and expense, the Non-Controlling Party shall have the
right to participate (but not control) the defense of such Tax Controversy;
provided however, that clauses (i) through (iv) shall apply only in respect of
46
the portion of such Tax Controversy, correspondence and documents that relate
solely to the Entities.
10.8 AMENDED TAX RETURNS. ONEOK shall not, without the prior written
consent of Northern Border (which consent shall not be unreasonably withheld,
conditioned or delayed), file any amended Tax Return or claim for Tax refund
filed or required to be filed hereunder to be filed by ONEOK to the extent such
filing, if accepted, could be reasonably expected to have an adverse effect on
the Tax liability of Northern Border, its Affiliates or any Entity or any of the
Entities for any Tax Period after the Closing; provided that no such consent
shall be required for any amended return or claim for Tax refund resulting from
an audit adjustment.
10.9 MISCELLANEOUS.
(a) Character of Payments. Any payment made by ONEOK, Northern
Border, or any of their respective Subsidiaries (including the Entities) under
this Section 10 shall constitute an adjustment to the consideration contributed
for the Units for all tax purposes.
(b) Interest on Payments. To the extent any payment obligation
under this Section 10 or Article 9 is not made on a timely basis (as determined
by the relevant provision of this Section 10 or the relevant provision of
Article 9), the amount due and payable shall bear interest at a floating annual
rate equal to the annual prime lending rate of The Chase Manhattan Bank in
effect, from time to time, from the last date such payment would be timely under
the relevant provision of this Section 10 or Article 9, as applicable, to the
date of the payment of such amount.
(c) Survival of Tax Claims. Notwithstanding any other provision
of this Agreement to the contrary, any obligations of the parties pursuant to
this Section 10 shall be unconditional and absolute and shall survive until the
expiration of 6 months after the applicable statute of limitations (taking into
account any applicable extensions or tollings thereof) relating to the Taxes at
issue.
(d) Treatment of Contribution. The Parties intend that the
contribution of the Shares and the receipt of the Units pursuant to this
Agreement shall be tax free transactions governed by Section 721 of the Code.
Each party agrees that it shall not take any position that is inconsistent with
the foregoing in any filing made by such party with the IRS or any other taxing
authority.
10.10 ALLOCATION OF VALUE AMONG THE CONTRIBUTED ENTITIES; BOOK UPS.
(a) Within one hundred twenty (120) days following the Closing
Date, ONEOK will prepare, or cause to be prepared, and delivered to Northern
Border a statement of the fair market value of the interests in each of the
Entities acquired pursuant to this Agreement, with the aggregate of the Entity
fair market values equaling the fair market value of the consideration provided
in Section 1.2 of this Agreement. In addition, in the case of any Entities which
are taxable as disregarded entities federal income tax, the statement shall also
include a statement of the fair market value of the assets of each of such
Entities (such statement, together with the Entity fair market schedule, the
"FMV Schedules"). The FMV Schedules as so prepared by ONEOK shall be deemed
accepted by Northern Border, unless Northern Border shall send
47
ONEOK a written objection thereto within thirty (30) days following the Northern
Border's receipt thereof. In the event that Northern Border delivers a timely
written objection as aforesaid and Northern Border and ONEOK are unable to
resolve such objection within twenty (20) business days after Northern Border is
notified of ONEOK's objection, the matters in dispute shall be submitted for
final and binding determination to the Neutral Auditors. The FMV Schedules as
proposed by ONEOK, shall be adjusted to reflect the resolution of any timely
objections made thereto by Northern Border in accordance with this Section 10.9
and the determinations of the Neutral Auditors, which determinations will be
binding absent manifest error or fraud. Northern Border and ONEOK shall each pay
their own expenses of preparing and analyzing the schedules and resolving
objections thereto; provided that the cost of any appraisals required to prepare
the FMV Schedule shall be borne 50 percent by Northern Border and 50 percent by
ONEOK. The fees and expenses of the Neutral Auditors used to resolve objections
to the schedules will be borne equally by Northern Border and ONEOK.
(b) ONEOK and Northern Border shall use the FMV Schedules as
determined under this Section 10.9 to calculate built in gain or loss with
respect to interests in the contributed Entities for purposes of Section 704(c)
of the Code and the Treasury Regulations thereunder. Each party agrees that it
shall not take any position that varies from or is inconsistent with such
valuation in any filing made by such party with the IRS or any other taxing
authority, except to the extent an adjustment is required by the IRS or any
other taxing authority.
(c) In connection with the contribution hereunder and the
contribution of the Shares by Northern Border to NBILP, Northern Border and
NBILP shall adjust the carrying value of their assets to their respective fair
market values in accordance with the provisions of Treasury Regulation
1.704-1(b)(2)(iv)(f). Such adjustments shall be supported by one or more
appraisals reasonably satisfactory to ONEOK, a copy of which appraisals shall be
provided to ONEOK. In the event of any dispute with respect to the values as so
determined the matters in dispute shall be submitted for final and binding
determination to the Neutral Auditors. Northern Border, NBILP and ONEOK shall
each pay their own expenses of preparing and analyzing the schedules and
resolving objections thereto; provided that the cost of the appraisals shall be
borne solely by Northern Border and NBILP. The fees and expenses of the Neutral
Auditors used to resolve objections to the schedules will be borne equally by
Northern Border and ONEOK.
SECTION 11. MISCELLANEOUS
11.1 FEES AND EXPENSES. Each of the parties will bear its own expenses
in connection with the negotiation and the consummation of the transactions
contemplated by this Agreement.
11.2 GOVERNING LAW. This Agreement shall be construed under and
governed by the internal laws of the State of Delaware without regard to its
conflict of laws provisions.
11.3 NOTICES. All notices and other communications between the Parties
shall be in writing and shall be deemed to have been duly given (i) when
delivered in person or by overnight delivery service, (ii) 3 days after posting
in the United States mail having been sent registered or certified mail return
receipt requested, or (iii) upon receipt when delivered by
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facsimile transmission, in each case, to the addresses set forth below (or to
such other address or addresses as the Parties may designate from time to time
in writing):
TO ONEOK:
ONEOK, Inc.
▇▇▇ ▇. ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: President
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to (which shall not constitute notice):
ONEOK, Inc.
▇▇▇ ▇. ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: General Counsel
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
and to:
▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇ ▇. ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. Lake
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
TO THE NORTHERN BORDER PARTNERSHIPS:
Northern Border Partners, L.P.
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Chief Executive Officer
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to (which shall not constitute notice):
Northern Border Partners, L.P.
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ Place
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇ Liddell & ▇▇▇▇ LLP
600 ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
and with a copy to (prior to the Closing):
▇▇▇▇▇ ▇▇▇▇▇ L.L.P.
▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: R. ▇▇▇▇ ▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Any notice given hereunder may be given on behalf of any party by his
counsel or other authorized representatives.
11.4 ENTIRE AGREEMENT. This Agreement together with the Related
Agreements, including the Schedules and Exhibits referred to herein and therein
and the other writings specifically identified herein and therein (including the
Confidentiality Agreement) or contemplated hereby, is complete, reflects the
entire agreement of the Parties with respect to its subject matter, and
supersedes all previous written or oral negotiations, commitments and writings.
No promises, representations, understandings, warranties and agreements have
been made by any of the Parties hereto except as referred to herein or therein
or in such Schedules and Exhibits or in such other writings and all inducements
to the making of this Agreement relied upon by any of the Parties hereto have
been expressed herein or in such Schedules or Exhibits or in such other
writings.
11.5 ASSIGNABILITY; BINDING EFFECT. This Agreement may not be assigned
by any Party without the prior written consent of the other parties to this
Agreement. This Agreement shall be binding upon and enforceable by, and shall
inure to the benefit of, the Parties hereto and their respective successors and
permitted assigns.
11.6 CAPTIONS AND GENDER. The captions in this Agreement are for
convenience only and shall not affect the construction or interpretation of any
term or provision hereof. The use in this Agreement of the masculine pronoun in
reference to a Party hereto shall be deemed to include the feminine or neuter,
as the context may require.
11.7 EXECUTION IN COUNTERPARTS. For the convenience of the Parties and
to facilitate execution, this Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same document.
11.8 AMENDMENTS. This Agreement may not be amended or modified, nor
may compliance with any condition or covenant set forth herein be waived, except
by a writing duly and validly executed by Northern Border, NBILP and ONEOK, or
in the case of a waiver, the Party waiving compliance.
11.9 PUBLICITY AND DISCLOSURES. No press releases or public
disclosure, either written or oral, of the transactions contemplated by this
Agreement shall be made by a Party to this Agreement without the written consent
of ONEOK, Northern Border and NBILP.
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11.10 SEVERABILITY. The Parties agree that, in the event that any
provision of this Agreement or the application of any such provision to any
Party is held by a court of competent jurisdiction to be contrary to law, the
provision in question shall be construed so as to be lawful and the remaining
provisions of this Agreement shall remain in full force and effect.
11.11 WAIVER OF JURY TRIAL. Each of the parties hereto hereby waives
to the fullest extent permitted by applicable law any right it may have to a
trial by jury with respect to any Legal Proceeding directly or indirectly
arising out of, under or in connection with this Agreement or the transactions
contemplated by this Agreement.
11.12 ARBITRATION. All disputes arising out of or in connection with
this Agreement and the transactions contemplated hereby and thereby, which
cannot be resolved through the procedures described herein or therein shall be
finally resolved solely and exclusively by means of arbitration under the
then-current rules for non-administered arbitration of the International
Institute for Conflict Prevention and Resolution ("CPR Rules") to be conducted
in English in the City of Tulsa. The arbitration shall be conducted by a panel
of three (3) arbitrators appointed by agreement of the Parties, or failing such
agreement, under the CPR Rules, provided that any arbitrator selected shall be a
retired federal judge of a court within the jurisdiction of the United States.
The arbitration will proceed in accordance with the CPR Rules. The decision of
the arbitrators shall be final, conclusive, and binding upon the Parties, and a
judgment upon the award may be obtained and entered in any federal or state
court of competent jurisdiction. The Parties agree that any arbitration shall be
kept confidential and any element of such arbitration (including but not limited
to any pleadings, briefs or other documents submitted or exchanged, any
testimony or other oral submissions, and any awards) shall not be disclosed
beyond the arbitral tribunal, the Parties, their counsel and any persons
necessary to conduct the arbitration, except as may be required in recognition
and enforcement proceedings, if any, or in order to satisfy disclosure
obligations imposed by any applicable law. The Parties agree to cooperate in
providing each other with all discovery, including but not limited to the
exchange of documents and depositions of Parties and non-Parties, reasonably
related to the issues in the arbitration. If the Parties are unable to agree on
any matter relating to such discovery, any such difference shall be determined
by the arbitrators. The award of the arbitrators shall be final and binding upon
the Parties, and shall not be subject to any appeal or review. The Parties agree
that such award may be recognized and enforced in any court of competent
jurisdiction. The Parties also agree to submit to the non-exclusive personal
jurisdiction of the federal and state courts sitting in Oklahoma, for the
limited purpose of enforcing this arbitration agreement (including, where
appropriate, issuing injunctive relief) or any award resulting from arbitration
pursuant to this Section 11.12. The Parties agree that except in the case of
fraud the arbitration proceeding described in this Section 11.12 is the sole and
exclusive manner in which the Parties may resolve disputes arising out of or in
connection with this Agreement. The arbitrators have the discretion to grant the
prevailing Party in any arbitration attorneys' fees and costs and make the
non-prevailing Party responsible for all expenses of the arbitration.
11.13 TIME OF THE ESSENCE. Time is of the essence with respect to the
performance of the obligations set forth in this Agreement.
11.14 REMEDIES CUMULATIVE; SPECIFIC PERFORMANCE. The rights and
remedies of the Parties hereto shall be cumulative and not alternative. The
Parties hereto agree that, in the
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event of any breach or threatened breach by any party to this
Agreement of any covenant, obligation or other provision set forth in this
Agreement for the benefit of any other Party to this Agreement, such other Party
shall be entitled (in addition to any other remedy that may be available to it
and without the requirement of the posting of a bond) to (a) a decree or order
of specific performance or mandamus to enforce the observance and performance of
such covenant, obligation or other provision and (b) an injunction restraining
such breach or threatened breach.
11.15 FURTHER ASSURANCES. From and after the date of this Agreement,
upon the request of any Party, the other Parties shall execute and deliver such
instruments, documents or other writings as may be reasonably necessary to carry
out and effectuate fully the intent and purposes of this Agreement.
11.16 THIRD PARTY BENEFICIARIES. Nothing herein expressed or implied
is intended to or shall be construed to confer upon or give any Person, other
than the Parties hereto and their respective successors, permitted assigns and
Affiliates (including, without limitation, the Northern Border Indemnitees and
the ONEOK Indemnitees), any rights or remedies under or by reason of this
Agreement.
11.17 AUDIT COMMITTEE AUTHORITY. At or prior to the Closing, (a) any
action, notice, consent, approval or waiver that is required to be taken or
given or may be taken or given by Northern Border pursuant to Section 1.5
(Working Capital Adjustment), Section 4.1 (Conduct of the Entities), Section 6.4
(Public Announcements), Section 7.2 (Conditions to the Obligations of the NBP
Partnerships), and Section 8.1 (Termination), and (b) any amendment of this
Agreement or of any other Northern Border Transaction Agreement shall be made,
taken or given by Northern Border, as the case may be, only with the
concurrence, or at the direction, of the Audit Committee of Northern Border.
11.18 CERTAIN DEFINITIONS. For purposes of this Agreement, the term:
"Acquired Entities" means, collectively, the Entities and the
"Entities" as defined in the Northern Border Purchase Agreement.
"Affiliates" means, with respect to the Person to which it refers, a
Person that directly or indirectly through one or more intermediaries, controls
or is controlled by, or is under common control with, such subject Person.
Notwithstanding the other provisions of this definition and except as otherwise
expressly provided in this Agreement, ONEOK's Affiliates shall be deemed to
exclude Northern Border and its Subsidiaries and Northern Border's Affiliates
shall be deemed to exclude ONEOK and its Subsidiaries (including the Entities).
"Black Mesa Companies" means Black Mesa Pipeline Operations, L.L.C.,
Black Mesa Holdings, Inc. and Black Mesa Pipeline, Inc.
"Business Facility" includes any pipeline or pipeline easement or
right-of-way, compressor station, hub, delivery point, receipt point,
interconnection, gas storage facility, gas processing facility, fractionator,
storage field, well or other real or personal property that any Entity or any of
its respective organizational predecessors currently owns, leases, manages or
operates in any manner or formerly owned, leased, managed or operated in any
manner, including, without limitation, the Operating Assets.
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"CERCLA" shall have the meaning ascribed to it in the definition of
Environmental Laws.
"Code" means the Internal Revenue Code of 1986, as amended.
"Contract" means any written or oral note, instrument, bond, mortgage,
indenture, lease, sublease, contract, subcontract, warranty, agreement,
obligation, understanding, commitment or legally binding commitment or
undertaking of any nature.
"Consolidated Return" means a consolidated United States Income Tax
Return (within the meaning of Section 1501 of the Code and the Treasury
Regulations promulgated pursuant to Section 1502 of the Code) and any other
combined, joint, consolidated or unitary Tax Return required to be filed with
any Tax Authority that includes both (i) any Entity and (ii) ONEOK or any
subsidiary of ONEOK that is not an Entity.
"Contribution Companies" means each of the Companies, other than the
Intermediate Contribution Companies.
"Converting Companies" means each of ONEOK Bushton Processing, Inc.,
ONEOK ▇▇▇▇▇ Storage Company, OkTex Pipeline Company, ONEOK Field Services
Company and Mid Continent Market Center, Inc.
"Copyrights" shall have the meaning ascribed to it in the definition
of Intellectual Property Assets.
"Damages" means any loss, damage, injury, decline in value, lost
opportunity, liability (INCLUDING STRICT LIABILITY), claim, demand, settlement,
judgment, award, fine, penalty, Tax, fee (including reasonable attorneys' fees),
charge, cost or expense of any nature (including costs and expenses of
litigation, administrative proceedings and investigations), whether arising in
tort, contract or otherwise, but excluding any punitive damages except to the
extent such punitive damages are awarded against any Indemnitees in a
third-party Claim; provided, however, notwithstanding any other provision of
this Agreement to the contrary, to avoid double counting as to any matter,
"Damages" shall not include any Liability to the extent that such Liability (or
a reserve therefor (to the extent of such reserve)) is fully reflected as a
current liability in the calculation of Final Closing Working Capital.
"Drop-Down Contracts" means all Contracts (other than Shared
Contracts, intercompany loan or credit agreements that shall be terminated prior
to or at the Closing, confidentiality agreements, benefit plans and employment
or secondment agreements), to which an Entity is not a party and to which ONEOK
or any Affiliate of ONEOK (other than an Entity) is a party and which solely
benefits one or more of the Entities.
"Eligible Person" means a Person treated as a "domestic eligible
entity" under section 301.7701-3(a) of the Treasury regulations promulgated
under the Code.
"Employee Benefit Plan" means (i) each "employee benefit plan," as
such term is defined in Section 3(3) of ERISA, including any multiemployer plan
(as defined in Section 3(40) of ERISA), (ii) each plan that would be an employee
benefit plan if it was subject to ERISA, such
53
as plans for directors, (iii) each stock bonus, stock ownership, stock option,
stock purchase, stock appreciation rights, phantom stock or other stock plan
(whether qualified or nonqualified), and (iv) each bonus, deferred compensation
or incentive compensation plan; provided, however, that such term shall not
include (a) routine employment policies and procedures developed and applied in
the ordinary course of business and consistent with past practice, including
wage, vacation, holiday, and sick or other leave policies, (b) workers
compensation insurance, and (c) directors and officers liability insurance.
"Environmental Laws" means, without limitation, the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980 ("CERCLA"), 42
U.S.C. Sections 9601 et seq., the Emergency Planning and Community Right-to-Know
Act of 1986, 42 U.S.C. Sections 11001 et seq., the Resource Conservation and
Recovery Act, 42 U.S.C. Sections 6901 et seq., the Toxic Substances Control Act,
15 U.S.C. Sections 2601 et seq., the Clean Air Act, 42 U.S.C. Sections 7401 et
seq., and the Clean Water Act (Federal Water Pollution Control Act), 33 U.S.C.
Sections 1251 et seq., the Occupational Safety and Health Act, 29 U.S.C.
Sections. 651 et seq., and all rules and regulations promulgated pursuant to any
of the above statutes, and any federal, state, local, municipal, foreign or
other law, statute, constitution, common law, resolution, ordinance, code,
edict, decree, order, rule, regulation, permit condition, ruling or requirement
issued, enacted, adopted, promulgated, implemented or otherwise put into effect
by or under the authority of any Governmental Authority, in each case relating
to Environmental Matters.
"Environmental Matters" means any matters arising out of or relating
to health and safety, or pollution or protection of the environment or
workplace, including, without limitation, the ambient and indoor air, surface
and ground waters, land and soils, buildings, and indoor workplaces, and any of
the foregoing relating to the use, generation, transport, treatment, storage, or
disposal of any Hazardous Materials.
"Environmental Permit" means all Permits required to comply with any
applicable Environmental Law.
"Entity Guarantees" means all guaranties, letters of credit, bonds,
sureties and other credit support or assurances provided by ONEOK or its
Affiliates (other than the Entities) in support of any obligations of the
Entities.
"Equity Interests" means the capital stock, limited liability company
membership interest, partnership interest or similar ownership interests of any
Person.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" means, with respect to any Person, any other Person
that is a member of a group described in Section 414(b), (c), (m) or (o) of the
Code or Section 4001(b)(1) of ERISA that includes the first Person, or that is a
member of the same "controlled group" as the first Person pursuant to Section
4001(a)(14) of ERISA.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.
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"GAAP" means United States generally accepted accounting principles
and practices as in effect from time to time and applied consistently throughout
the periods involved.
"Governmental Authority" means any foreign or domestic federal, state,
local, municipal, or other government or governmental authority of any nature
(including any governmental agency, branch, department, official, or entity and
any court or other tribunal); or any body exercising, or entitled to exercise,
any administrative, executive, judicial, legislative, police, or regulatory or
power of any nature, in each case having jurisdiction over ONEOK, the Entities,
the Business or Northern Border.
"Governmental Order" means any order, ruling, writ, judgment,
injunction, decree, stipulation, determination or award entered by or with any
Governmental Authority.
"Hazardous Material" means any substance, material or waste that is
regulated by any Environmental Law as hazardous, toxic, a pollutant,
contaminant, solid waste or words of similar import, including, without
limitation, petroleum, petroleum derivatives and by-products, asbestos, urea
formaldehyde and polychlorinated biphenyls.
"HSR Act" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of
1976, as amended, and the rules and regulations promulgated thereunder.
"Indebtedness" means all outstanding obligations for borrowed money,
including (i) indebtedness evidenced by notes, bonds, debentures or other
instruments (and including all outstanding principal, prepayment premiums, if
any, and accrued interest, fees and expenses related thereto), (ii) any
outstanding obligations under capital leases and purchase money obligations,
(iii) any amounts owed with respect to drawn letters of credit and (iv) any
outstanding guarantees of obligations of the type described in clauses (i)
through (iii) above (and, for the avoidance of doubt, excludes accounts
payable).
"Indemnity Cap" means the ONEOK Indemnity Cap or the Northern Border
Indemnity Cap, as applicable.
"Intellectual Property Assets" means: (A) patents, patent
applications, inventions, discoveries, and invention disclosures (whether or not
patented) (collectively, "Patents"); (B) trade names, trade dress, logos,
slogans, internet domain names, registered and unregistered trademarks and
service marks and related registrations, applications for registration and
renewals therefor (collectively, "Trademarks"); (C) copyrights in both published
and unpublished works and all copyright registrations, applications and renewals
therefor, and all derivatives, translations, adaptations and combinations of the
above (collectively, "Copyrights"); (D) know-how, trade secrets, confidential or
proprietary information, data, processes and strategies, (collectively, "Trade
Secrets"); (E) other intellectual property rights and/or proprietary rights
relating to any of the foregoing; (F) Software; and (G) goodwill, licenses,
permits, consents, approvals, and claims of infringement against third parties.
"Intercompany Accounts" shall mean all balances related to
receivables, payables or other accounts between ONEOK and its Subsidiaries
(other than the Entities) on the one hand, and the Entities, on the other hand
(but excluding all Indebtedness).
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"IRS" means the Internal Revenue Service.
"Intermediate Contribution Companies" means each of ONEOK ▇▇▇▇▇
Storage Company, OkTex Pipeline Company and ONEOK Gas Gathering, L.L.C.
"Knowledge of the NBP Partnerships" or similar words or phrases means
the actual knowledge of ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇▇▇.
"Knowledge of ONEOK" or similar words or phrases means the actual
knowledge of ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇.
"Legal Proceeding" means any action, suit, litigation, arbitration,
proceeding (including any civil, criminal, administrative, investigate or
appellate proceeding), hearing, inquiry, audit, examination or investigation
commenced, brought, conducted or heard by or before, or otherwise involving, any
court or Governmental Authority or any arbitrator or arbitration panel.
"Legal Requirement" means any federal, state, local, municipal,
foreign or other law, statute, constitution, principle of common law,
resolution, ordinance, code, edict, decree, rule, regulation, ruling, order,
judgment or requirement issued, enacted, adopted, promulgated, implemented or
otherwise put into effect by or under the authority of any Governmental
Authority, including, without limitation, Tax Laws.
"Liabilities" means any and all debts, liabilities and obligations,
whether accrued or fixed, absolute or contingent, matured or unmatured or
determined or determinable, including, without limitation, those arising under
any Legal Requirement and those arising under any contract, agreement,
arrangement, commitment or undertaking.
"Lien" means any claim, restriction on voting, transfer or pledge,
hypothecation, option, right of first refusal, easement, preemptive right,
community property interest, mortgage, lien (including, without limitation,
environmental and tax liens), charge, encumbrance, security interest or other
restriction of any kind, whether imposed by Legal Requirement, agreement,
understanding or otherwise.
"Material Adverse Effect" means with respect to the Entities any
event, change or effect that individually or in the aggregate has or would
reasonably be expected to have a material adverse effect upon the condition
(financial or otherwise), business, assets, liabilities, or results of
operations of the Entities, taken as a whole; excluding any adverse change,
event or effect arising from: (i) conditions generally affecting the United
States economy or generally affecting one or more industries in which the
Entities operate; (ii) national or international political conditions, including
terrorism or the engagement by the United States in hostilities or acts of war;
(iii) financial, banking or securities markets (including any disruption thereof
and any decline in the price of any security or any market index); (iv) changes
in GAAP which are not specific to the Entities; (v) changes in any laws, rules,
regulations, orders, or other binding directives issued by any Governmental
Authority generally affecting one or more industries in which the Entities
operate; (vi) the public announcement, pendency or completion of the
transactions contemplated by this Agreement; or (vii) seasonal reductions in
revenues and/or
56
earnings of the entities in the ordinary course of business. References in this
Agreement to dollar amount thresholds shall not be deemed to be a measure of a
Material Adverse Effect or materiality.
"NBILP GP Shares" means all of the outstanding Equity Interests in the
Intermediate Contribution Companies.
"NBP General Partners" means Northern Plains, Pan Border and Northwest
Border.
"NBP GP Shares" means an undivided 1% interest in the Shares of the
Contribution Companies.
"NBP Shares" means an undivided 99% interest in the Shares of the
Contribution Companies.
"Net Working Capital" means, at any date, the difference between the
consolidated current assets of the Entities and the consolidated current
liabilities of the Entities, in each case determined in accordance with GAAP
applied consistently in the manner applied in the Financial Statements, except
as otherwise provided in the calculation of Target Working Capital as set forth
in Exhibit D, and except as otherwise provided in Schedule 1.5, (but for the
purposes of preparing the Closing Working Capital Statement only, without regard
to any income Tax assets or liabilities).
"Northern Border Indemnitees" means the NBP Partnerships and their
respective Affiliates (including, without limitation, the Entities) and their
respective Representatives.
"Northern Border Material Adverse Effect" means with respect to the
NBP Partnerships any event, change or effect that individually or in the
aggregate has or would reasonably be expected to have a material adverse effect
upon the condition (financial or otherwise), business, assets, liabilities, or
results of operations of the NBP Partnerships, taken as a whole; excluding any
adverse change, event or effect arising from: (i) conditions generally affecting
the United States economy or generally affecting one or more industries in which
the NBP Partnerships operate; (ii) national or international political
conditions, including terrorism or the engagement by the United States in
hostilities or acts of war; (iii) financial, banking or securities markets
(including any disruption thereof and any decline in the price of any security
or any market index); (iv) changes in GAAP which are not specific to Northern
Border; (v) changes in any laws, rules, regulations, orders, or other binding
directives issued by any Governmental Authority generally affecting one or more
industries in which the NBP Partnerships operate; (vi) the public announcement,
pendency or completion of the transactions contemplated by this Agreement or
(vii) seasonal reductions in revenues and/or earnings of Northern Border in the
ordinary course of business. References in this Agreement to dollar amount
thresholds shall not be deemed to be a measure of a Northern Border Material
Adverse Effect or materiality.
"Northern Border Transaction" means the transactions provided for
under the terms of the Northern Border Transaction Agreements when viewed on a
collective basis.
"Northern Border Transaction Agreements" means this Agreement, the
Northern Border Purchase Agreement, the TransCanada Agreement, the Amendment and
each agreement,
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instrument, certificate or similar document executed and delivered by Northern
Border pursuant to the terms of this Agreement, the Northern Border Purchase
Agreement, the TransCanada Agreement and the Amendment.
"Northwest Border" means Northwest Border Pipeline Company.
"ONEOK Indemnitees" means ONEOK, ONEOK's Affiliates and their
respective Representatives.
"Patents" shall have the meaning ascribed to it in the definition of
Intellectual Property Assets.
"Permit" means any license, franchise, permit, consent, permission,
concession, order, approval, authorization, qualification or registration from,
of or with a Governmental Authority.
"Permitted Liens" means such of the following as to which no
enforcement, collection, execution, levy or foreclosure Legal Proceeding shall
have been commenced: (a) Liens for Taxes, assessments and governmental charges
or levies arising in the ordinary course of business and not yet delinquent or
Liens that are solely financial in nature and are accounted for as current
liabilities in the determination of the Net Working Capital Adjustment; (b)
Liens imposed by any applicable Legal Requirement, such as materialmen's,
mechanics', carriers', workmen's and repairmen's liens and other similar liens
arising in the ordinary course of business securing obligations or which are
being contested in good faith by appropriate proceedings and for which
appropriate reserves have been established to the extent they exceed $500,000;
(c) pledges or deposits to secure obligations under workers' compensation laws
or similar legislation or to secure public or statutory obligations; (d)
deposits to secure the performance of bids, trade contracts (other than for
borrowed money), leases, statutory obligations, surety and appeal bonds,
performance bonds and other obligations of a like nature incurred in the
ordinary course of business consistent with past practice; (e) all matters of
record, including, without limitation, survey exceptions, reciprocal easement
agreements and other encumbrances on title to real property, and all special
exceptions included in title insurance policies or title opinions issued to any
Entity, in each case that could not result in future denial of possession and do
not unreasonably interfere with the use of the properties in the Business; (f)
all applicable zoning, entitlement, conservation restrictions and other land use
and environmental regulations that do not unreasonably interfere with the use of
the properties in the Business; (g) all exceptions, restrictions, easements,
charges, rights-of-way and other Liens set forth in any Permits or other state,
local or municipal franchise applicable to any Entity or any of their respective
properties that do not unreasonably interfere with the use of the properties in
the Business; (h) any encumbrances, restrictions, defects in title or other
similar Liens that could not result in future denial of possession and do not
unreasonably interfere with the use of the properties in the Business; (i) the
rights of licensors and licensees under licenses executed in the ordinary course
of business that do not unreasonably interfere with the use of the properties in
the Business; and (j) Liens created by Northern Border or its successors and
assigns.
"Person" means any individual, partnership, corporation, limited
liability company, trust, other entity or Governmental Authority.
58
"Related Agreements" means any agreement, instrument, certificate or
similar document executed and delivered pursuant to this Agreement (including,
without limitation, the Other Transaction Agreements and the Amendment).
"Representative" means with respect to a Person, such Person's
officers, directors, managers, partners, employees, agents, attorneys,
accountants, advisors and representatives. With respect to Northern Border,
"Representative" shall include the Chairman of its Audit Committee.
"Securities Act" means the Securities and Exchange Act of 1933, as
amended, and the rules and regulations promulgated thereunder.
"SEC" means the Securities and Exchange Commission.
"SEC Documents" means all reports, schedules, forms, statements and
other documents (including exhibits and all other information incorporated
therein) filed by the applicable Party with the SEC under the Securities Act or
the Exchange Act.
"Shared Contract" means any Contract (other than Drop-Down Contracts,
Intercompany Accounts, confidentiality agreements, Employee Benefit Plans, and
employment or secondment agreements), to which an Entity is not a party and to
which ONEOK or any Affiliate of ONEOK (other than an Entity) is a party and
which directly benefits both (i) an Entity, and (ii) ONEOK or any Affiliate of
ONEOK (other than an Entity).
"Software" means any and all of the following, other than "shrink
wrap" licenses, that are primarily used by any of the Entities: (i) computer
programs, including any and all software implementations of algorithms, models
and methodologies, whether in source code or object code, (ii) databases and
compilations, including any and all data and collections of data, whether
machine readable or otherwise, (iii) descriptions, flow-charts and other work
product used to design, plan, organize and develop any of the foregoing,
screens, user interfaces, report formats, firmware, development tools,
templates, menus, buttons and icons and (iv) documentation, including user
manuals and other training documentation, related to any of the foregoing.
"Subsidiary" means with respect to any Person, the corporations,
partnerships, limited liability companies, joint ventures, associations and
other entities controlled by such Person directly or indirectly through one or
more intermediaries.
"Target Working Capital" means the amount shown as the Target Working
Capital on Exhibit D.
"Tax" or "Taxes" means all taxes, charges, levies, fees, or other
assessments imposed by any federal, state, local or foreign Tax Authority,
including, but not limited to, any income, gross income, gross receipts,
profits, capital stock, franchise, business, withholding payroll, social
security, workers' compensation, unemployment, disability, property, ad valorem,
stamp, excise, occupation, service, sales, use, license, lease, transfer,
import, export, value added, goods and services, alternative minimum, estimated
or other similar tax (including any fee, assessment, or other charge in the
nature of or in lieu of any tax), and any interest, penalties, additions to tax,
or additional amounts in respect of the foregoing.
59
"Tax Authority" means, with respect to any Tax, the Governmental
Authority that imposes such Tax and the agency (if any) charged with the
collection or administration of such Tax for such entity.
"Tax Benefits" means any refund of Taxes, reduction in liability for
Taxes, or credit against Taxes.
"Tax Law" means the law (including any applicable regulations or any
administrative pronouncement) of any Governmental Authority relating to any Tax.
"Tax Period" means, with respect to any Tax, the period for which the
Tax is reported as provided under the applicable Tax Law.
"Tax Return" means any report of Taxes due, any claims for refund of
Taxes paid, any information return with respect to Taxes or any other similar
report, statement, declaration, or document required to be filed under
applicable Tax Law, including any attachments, exhibits or other materials
submitted with any of the foregoing and including any amendments or supplements
to any of the foregoing.
"Trademarks" shall have the meaning ascribed to it in the definition
of Intellectual Property Assets.
"Trade Secrets" shall have the meaning ascribed to it in the
definition of Intellectual Property Assets.
"Transfer Taxes" means all sales, use, transfer, stock transfer, real
property transfer, documentary, gains, stamp recording and similar Taxes and
fees (including any penalties, interest or additions) incurred in connection
with the transactions contemplated by this Agreement.
11.19 OTHER DEFINED TERMS. For the purpose of this Agreement, the
following terms shall have the meanings given in the indicated Sections of this
Agreement:
INDEX
TERM SECTION
---- -------
1935 Act........................................................... 2.18
Aggregate Northern Border Damages.................................. 9.3(a)
Aggregate ONEOK Damages............................................ 9.3(a)
Agreement.......................................................... Preamble
Amendment.......................................................... 1.2
Audits............................................................. 2.6(e)
Balance Sheet...................................................... 2.5(a)
Balance Sheet Date................................................. 2.5(a)
Books and Records.................................................. 5.2(b)(i)
Business........................................................... Recitals
Claim.............................................................. 9.7(a)
Closing............................................................ 1.3(a)
60
Closing Date....................................................... 1.3(a)
Closing Working Capital............................................ 1.5(a)
Closing Working Capital Statement.................................. 1.5(a)
Common Units....................................................... 1.2
Companies.......................................................... Recitals
Company............................................................ Recitals
Company Subsidiary................................................. 2.2
Contributing NBP General Partners.................................. 1.1
Controlling Party.................................................. 10.7(c)
Conversion Transactions............................................ 6.11
Conversion Units................................................... 1.2
CPR Rules.......................................................... 11.12
Entities........................................................... 2.2
Entity............................................................. 2.2
Entity Intellectual Property Assets................................ 2.9
FERC............................................................... 6.1(a)
Final Closing Working Capital...................................... 1.5(c)
Financial Statements............................................... 2.5(a)
FMV Schedules...................................................... 10.10(a)
Governmental Approvals............................................. 6.3(a)
GP Purchase Agreement.............................................. 7.1(h)
Indemnitee......................................................... 9.7(a)
Indemnitor......................................................... 9.7(a)
Indemnity Threshold................................................ 9.3(a)
Interim Financial Statements....................................... 6.12
KCC Consent........................................................ 7.1(g)
License Period..................................................... 6.9
Material Contracts................................................. 2.10(a)
Minimum Claim Amount............................................... 9.3(a)
NBILP.............................................................. Preamble
NBILP Partnership Agreement........................................ 1.4
NBP Partnerships................................................... Preamble
NBP Partnerships Disclosure Schedules.............................. 3
Net Working Capital Adjustment..................................... 1.5(d)(ii)
Neutral Auditors................................................... 1.5(c)
NGA................................................................ 2.18
Non-Controlling Party.............................................. 10.7(c)
Northern Border.................................................... Preamble
Northern Border Credit Agreement Amendments........................ 7.2(j)
Northern Border Credit Agreements.................................. 7.2(j)
Northern Border Indemnity Cap...................................... 9.3(b)
Northern Border Partnership Agreement.............................. 1.2
Northern Border Purchase Agreement................................. 7.1(h)
Northern Border Returns............................................ 10.4(b)
Northern Border SEC Documents...................................... 3.9(a)
Northern Plains.................................................... 1.1
61
OBPI............................................................... 7.1(k)
OCC Consent........................................................ 7.1(g)
ONEOK.............................................................. Preamble
ONEOK Disclosure Schedules......................................... 2
ONEOK Guaranty Agreement........................................... 1.3(b)(ii)
ONEOK Indemnity Cap................................................ 9.3(b)
ONEOK Marks........................................................ 6.9
Operating Assets................................................... 2.19(a)
Other Transaction Agreements....................................... 7.1(h)
Pan Border......................................................... 1.1
Parties............................................................ Preamble
Party.............................................................. Preamble
Part-Year Fraction................................................. 10.5(a)
Pre-Closing Period................................................. 4.1
Pre-Closing Taxable Period......................................... 10.6(a)
Related Party...................................................... 2.14
Resolution Period.................................................. 1.5(b)
Services Agreement................................................. 1.3(b)(ii)
Shares............................................................. Recitals
Straddle Periods................................................... 10.4(b)
Tax Controversy.................................................... 10.7(a)
Tax Indemnitor..................................................... 10.7(a)
Tax Records........................................................ 10.1
TransCanada Agreement.............................................. 7.1(h)
Units.............................................................. 1.2
Viking Indenture................................................... 7.2(l)
62
IN WITNESS WHEREOF the parties hereto have caused this Agreement to be
executed as of the date set forth above by their duly authorized
representatives.
ONEOK, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
----------------------------------
Title: Chairman of the Board, President
---------------------------------
and Chief Executive Officer
---------------------------------
NORTHERN BORDER PARTNERS, L.P.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------
Title: Chief Executive Officer
---------------------------------
NORTHERN BORDER INTERMEDIATE
LIMITED PARTNERSHIP
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------
Title: Chief Executive Officer
---------------------------------
63
Exhibit B
---------
AMENDMENT NO. 1 TO AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP OF
NORTHERN BORDER PARTNERS, L.P.
This Amendment No. 1 to Amended and Restated Agreement of Limited
Partnership of Northern Border Partners, L.P. (this "Amendment"), dated as of
February [ ], 2006, is entered into and effectuated by Northern Plains Natural
Gas Company, LLC, a Delaware limited liability company ("Northern Plains"),
Northwest Border Pipeline Company, a Delaware corporation ("Northwest Border"),
and Pan Border Gas Company, LLC, a Delaware limited liability company ("Pan
Border" and, together with Northern Plains and Northwest Border, the "General
Partners"), as the General Partners, pursuant to authority granted in Section
4.2 and Section 15.1 of the Amended and Restated Agreement of Limited
Partnership of Northern Border Partners, L.P., dated as of October 1, 1993 (the
"Partnership Agreement"). Capitalized terms used but not defined herein are used
as defined in the Partnership Agreement.
RECITALS:
WHEREAS, Section 4.2(a) of the Partnership Agreement provides that the
Partnership Policy Committee, without the approval of any Limited Partners, may
issue additional Partnership Securities, or classes or series thereof, for any
Partnership purpose, at any time or from time to time, and may issue such
Partnership Securities for such consideration and on such terms and conditions
as shall be established by the Partnership Policy Committee in its sole
discretion;
WHEREAS, Section 4.2(b) of the Partnership Agreement provides that the
Partnership Securities authorized to be issued by the Partnership pursuant to
Section 4.2(a) may be issued in one more classes, or one or more series of any
such classes, with such designations, preferences and relative, participating,
optional or other special rights, powers and duties (which may be senior to
existing classes and series of Partnership Securities (except as provided in
Section 4.2(c)) as shall be fixed by the Partnership Policy Committee;
WHEREAS, Section 15.1(f) of the Partnership Agreement provides that the
Partnership Policy Committee, without the approval of any Limited Partner or
Assignee (subject to the terms of Section 4.2 of the Partnership Agreement), may
amend any provision of the Partnership Agreement necessary or appropriate in
connection with the authorization for issuance of any class or series of
Partnership Securities pursuant to Section 4.2 of the Partnership Agreement;
WHEREAS, the Partnership has entered into a definitive agreement, dated as
of February 14, 2006, between the Partnership and ONEOK, Inc., an Oklahoma
corporation ("ONEOK") (the "Contribution Agreement");
WHEREAS, as part consideration for the contribution of the Shares to the
Partnership, the Contribution Agreement obligates the Partnership to issue
limited partner interests to be designated as Class B Units having the terms set
forth in this Agreement;
WHEREAS, the Partnership Policy Committee, in consultation with the Audit
Committee, has determined that the issuance of the Class B Units provided for in
this Amendment is permitted by Section 4.2 of the Partnership Agreement; and
1
WHEREAS, Section 15.1(d)(i) of the Partnership Agreement provides that the
Partnership Policy Committee, without the approval of any Limited Partner or
Assignee, may amend any provision of the Partnership Agreement to reflect a
change that the Partnership Policy Committee determines, in its sole discretion,
does not adversely affect the Limited Partners in any material respect;
NOW, THEREFORE, it is hereby agreed as follows:
A. Amendment. The Partnership Agreement is hereby amended as follows:
1) Section 1.1 is hereby amended to add the following definitions:
"Class B Subordination Period" means the period
commencing upon issuance of the Class B Units and ending on
the earlier of (a) the Conversion Approval Date or (b) the
Conversion Approval Termination Date.
"Class B Unit" means a Unit representing a fractional
part of the Partnership Interests of all Limited Partners
and Assignees and having the rights and obligations
specified with respect to Class B Units in this Agreement.
Except as otherwise provided in this Agreement, the term
"Class B Unit" does not refer to a Common Unit prior to the
conversion of the Class B Unit into a Common Unit pursuant
to the terms hereof.
"Class B Unit Arrearage" means, with respect to any
Class B Unit, and as to any calendar quarter within the
Class B Subordination Period, the excess, if any, of (a) the
Minimum Quarterly Distribution with respect to such Class B
Unit (including any applicable increased amounts
distributable with respect to the Minimum Quarterly
Distribution following the Class B Distribution Increase
Date, the Section 4.11(b) Distribution Increase Date or the
GP Removal Date) over (b) the sum of all Available Cash
distributed with respect to such Class B Unit in respect of
such quarter pursuant to Section 4.10(b)(ii)(A) (and Section
4.10(b)(ii)(A)(1) following the Class B Distribution
Increase Date and/or GP Removal Date, as applicable).
"Cumulative Class B Unit Arrearage" means, with respect
to any Class B Unit, and as of the end of any calendar
quarter (or on the expiration of the Class B Subordination
Period), the excess, if any, of (a) the sum resulting from
adding together the Class B Unit Arrearage as to such Class
B Unit for each of the quarters within the Class B
Subordination Period over (b) the sum resulting from adding
together (i) any distributions theretofore made pursuant to
Section 4.10(b)(ii)(B) (and Section 4.10(b)(ii)(A)(2)
following the Class B Distribution Increase Date and/or GP
2
Removal Date, as applicable) with respect to such Class B
Unit (including any distributions to be made in respect of
the last of such quarters) and (ii) any Cumulative Common
Unit Arrearage then existing upon conversion of a Class B
Unit into a Common Unit pursuant to the terms hereof or the
occurrence of a Termination Capital Transaction.
2) Section 1.1 is hereby amended to:
a) add the following sentence to the end of the definition of
"Common Unit":
"Except as otherwise provided in this Agreement, the
term "Common Unit" does not refer to a Class B Unit prior to
the conversion of the Class B Unit into a Common Unit
pursuant to the terms hereof."
b) add the phrase "or within the Class B Subordination Period"
after the phrase "and as to any calendar quarter within the
Subordination Period" in the definition of "Common Unit
Arrearage."
c) add the phrase "or within the Class B Subordination Period"
after the phrase "for each of the quarters within the
Subordination Period ending on or before the last day of
such quarter" in clause (a) of the definition of "Cumulative
Common Unit Arrearage."
d) add the following proviso to the end of the definition of
"Outstanding":
"; provided, further, that, except as provided in
Sections 4.11(a), 4.11(b), 4.12(a) and 4.12(b), none of the
Class B Units shall be deemed to be Outstanding for purposes
of determining if any Class B Units are entitled to
distributions of Available Cash unless such Class B Units
shall have been reflected on the Partnership's books and
records as outstanding during such calendar quarter and on
the Record Date for the determination of any distribution of
Available Cash;"
e) add the phrase "or if not offered to the public, the price
per Unit at which such class or series of Unit was initially
issued, in each case" after the phrase "for sale by the
Underwriters in respect of such offering," in the definition
of "Unrecovered Initial Unit Price."
3) Article IV is hereby amended to add new Sections 4.10 - 4.13
creating a new class of Units as follows:
SECTION 4.10 ESTABLISHMENT OF CLASS B UNITS.
3
a) General. The Partnership Policy Committee hereby designates
and creates a class of Units to be designed as "Class B
Units" and consisting of a total of 36,494,126 Class B
Units, and fixes the designations, preferences and relative,
participating, optional or other special rights, power and
duties of holders of the Class B Units as set forth in this
Section 4.10.
b) Rights Associated with Class B Units. During the period
commencing upon issuance of the Class B Units and ending
upon the conversion of the Class B Units as set forth in
Section 4.10(f) hereof, unless amended pursuant to Section
4.11 or Section 4.12 hereof:
i) subject to the provisions of Section 5.1(d)(iii)(A),
and unless clauses (ii), (iii), or (iv) below require a
different allocation pursuant to Section 5.1(c)(i) or
otherwise, all items of Partnership income, gain, loss,
deduction and credit shall be allocated to the Class B
Units to the same extent as such items would be so
allocated if such Class B Units were Common Units that
were then Outstanding;
ii) Notwithstanding anything to the contrary in Section
5.4, with respect to distributions made in accordance
with Section 5.4 for calendar quarters ending on or
prior to the expiration of the Class B Subordination
Period, the Class B Units shall be deemed Units, but
not Common Units, for such purposes and, in addition,
the holders of Class B Units shall have the right to
share in Partnership quarterly cash distributions in
accordance with Section 5.4 hereof (such distribution
to be prorated for the quarter in which the Class B
Units are issued), provided that following any
distribution pursuant to Section 5.4(c) and prior to
any distribution pursuant to Section 5.4(d), Available
Cash shall be distributed as follows:
(A) 99% to the holders of Class B Units and 1% to
the General Partners, in accordance with
their relative General Partner Percentage
Interests, until there has been distributed
in respect of each Class B Unit Outstanding
as of the last day of such quarter an amount
equal to the Minimum Quarterly Distribution;
and
(B) then, 99% to the holders of Class B Units and
1% to the General Partners, in accordance
with their relative General Partner
Percentage Interests, until there has been
distributed in respect of each Class B
4
Unit Outstanding as of the last day of such
quarter an amount equal to the Cumulative
Class B Unit Arrearage, if any, existing with
respect to such quarter.
iii) The holders of Class B Units shall have the right to
share in Partnership quarterly cash distributions for
quarters ending after the expiration of the Class B
Subordination Period in accordance with Section 5.4
hereof as if such holders of Class B Units held Common
Units and, in addition, notwithstanding anything to the
contrary set forth in Section 5.4, if a Cumulative
Class B Unit Arrearage exists on the date of the
expiration of the Class B Subordination Period, prior
to any distribution pursuant to Section 5.4(d),
irrespective of whether any such Class B Units are then
Outstanding, Available Cash shall be distributed in
accordance with Section 4.10(b)(ii)(B) hereof to each
holder of record of the applicable Class B Units as of
the expiration of the Class B Subordination Period.
This distribution shall not be deemed a distribution on
a Common Unit, but the satisfaction of prior
entitlements of the holders of Class B Units as of the
expiration of the Class B Subordination Period. For the
taxable year in which such distribution is made, if not
previously allocated, each Person receiving such cash
distribution shall be allocated items of gross income
in an amount equal to such distribution as provided in
Section 5.1(d)(iii)(A).
iv) Notwithstanding anything to the contrary in Section
5.1(c)(i), during the Class B Subordination Period the
Class B Units shall be treated as Common Units then
Outstanding for purposes of Section 5.1(c)(i), and, in
addition, following any allocation made pursuant to
Section 5.1(c)(i)(B) and before an allocation is made
pursuant to Section 5.1(c)(i)(C), any remaining Net
Termination Gain shall be allocated 99% to the holders
of the Class B Units and 1% to the General Partners, in
accordance with their relative General Partner
Percentage Interests, until each such holder of a Class
B Unit has been allocated Net Termination Gain equal to
any then existing Cumulative Class B Unit Arrearage
with respect to such Class B Unit.
c) Voting Rights. Unless amended pursuant to Section 4.11 or
Section 4.12 hereof, (i) during the Class B Subordination
Period, the Class B Units are non-voting (and solely for all
purposes of calculating votes and determining the presence
of a quorum under this Agreement, none of the Class B Units
shall be deemed Outstanding), except that the Class B Units
shall be entitled to vote
5
as a separate class on any matter that adversely affects the
rights or preferences of the Class B Units in relation to
other classes of Partnership Interests or as required by
law. The approval of a majority of the Class B Units shall
be required to approve any matter for which the holders of
the Class B Units are entitled to vote as a separate class,
and (ii) upon expiration of the Class B Subordination
Period, the Class B Units will have such voting rights
pursuant to the Partnership Agreement as such Class B Units
would have if they were Common Units that were then
Outstanding except that, with respect to the Conversion
Approval or Amendment Approval, none of the Class B Units
shall be deemed Outstanding as of the record date for such
vote or be entitled to vote. Each Class B Unit will be
entitled to the number of votes equal to the number of
Common Units into which a Class B Unit is convertible at the
time of the record date for the vote or written consent on
the matter.
d) Certificates. The Class B Units will be evidenced by
certificates in such form as the Partnership Policy
Committee may approve and, subject to the satisfaction of
any applicable legal and regulatory requirements, may be
assigned or transferred in a manner identical to the
assignment and transfer of other Units. The Certificates
will include the restrictive legend set forth in Section
2.17 of the Contribution Agreement.
e) Registrar and Transfer Agent. Northern Plains will act as
registrar and transfer agent of the Class B Units.
f) Conversion. Except as provided in this Section 4.10(f), the
Class B Units are not convertible into Common Units.
i) Optional Conversion. The Partnership shall, as promptly
as practicable following the issuance of any Class B
Units, take such actions as may be necessary or
appropriate to submit to a vote or consent of its
securityholders the approval of a change in the terms
of the Class B Units to provide that each Class B Unit
shall be convertible from time to time, at the option
of the holders thereof, into one Common Unit (subject
to appropriate adjustment in the event of any split-up,
combination or similar event affecting the Common Units
that occurs prior to the conversion of the Class B
Units), effective upon approval of the issuance of
additional Common Units in accordance with the
following sentence (the "Conversion Approval"). The
vote or consent required for such approval will be the
requisite vote required under the rules or staff
interpretations of the National Securities Exchange on
which the Common Units are listed or admitted for
trading for the listing or addition to
6
trading of the Common Units that would be issued upon
such conversion, excluding those Units held by ONEOK
and its affiliates. Upon receipt of the required vote
or consent (the date of such approval, the "Conversion
Approval Date"), the terms of the Class B Units will be
changed, automatically and without further action, so
that each Class B Unit may be converted, at the option
of the holder thereof, into one Common Unit (subject to
appropriate adjustment in the event of any split-up,
combination or similar event affecting the Common Units
that occurs prior to the conversion of the Class B
Units).
ii) Automatic Conversion. The Partnership shall, as
promptly as practicable following the issuance of any
Class B Units, take such actions as may be necessary or
appropriate to submit to a vote or consent of holders
of at least 66 2/3% of the Outstanding Units (excluding
those Units held by ONEOK and its Affiliates) and
otherwise as required by Section 15.2 of the
Partnership Agreement, the amendments to the
Partnership Agreement described on Annex A (the
approval of such amendment, the "Amendment Approval,"
and the date of obtaining the Amendment Approval, the
"Amendment Approval Date"). Subject to Section 4.12,
each Class B Unit shall automatically convert into one
Common Unit (subject to appropriate adjustment in the
event of any split-up, combination or similar event
affecting the Common Units that occurs prior to the
conversion of the Class B Units) upon receipt of:
(A) Conversion Approval as set forth above in
paragraph (i); and
(B) Amendment Approval as set forth above in this
paragraph (ii);
and immediately thereafter, none of the Class B Units shall
be outstanding.
iii) Quarterly Cash Distributions. Each Common Unit into
which a Class B Unit has been converted as provided in
this Section 4.10(f) shall have the right to share in
any Partnership quarterly cash distributions made in
respect of a Common Unit in accordance with Section 5.4
hereof (including, without limitation and not
withstanding anything to the contrary contained in the
Partnership Agreement, the right to any distributions
of amounts in
7
respect of Cumulative Common Unit Arrearages in respect
of a Common Unit).
SECTION 4.11 AMENDMENT OF TERMS OF CLASS B UNITS IF
SECURITYHOLDER APPROVAL IS NOT OBTAINED.
a) If:
i) the Conversion Approval has not been obtained by the
date that is 12 months following the Closing (as
defined under the Contribution Agreement); and
ii) the Amendment Approval has not been obtained by the
date that is 12 months following the Closing;
then, unless the provisions of Section 4.12 shall already be
in effect, effective as of the next succeeding day (the
"Class B Distribution Increase Date") until amended by the
provisions of Section 4.12, Sections 4.10(b) and 4.10(c)
hereof will be deemed to be amended in their entirety,
automatically and without further action, as follows:
"b) Rights Associated with Class B Units. Prior to the
conversion of all of the Class B Units pursuant to Section
4.10(f) above:
i) subject to the provisions of Section 5.1(d)(iii)(A) and
paragraphs (ii) and (iii) below, all items of
Partnership income, gain, loss, deduction and credit
shall be allocated to the Class B Units to the same
extent such items would be allocated if such Class B
Units were Common Units then Outstanding, and the
allocations to Class B Units shall have the same order
of priority relative to allocations on the Common
Units;
ii) (A) notwithstanding anything to the contrary in Section
5.4, the Class B Units shall be deemed Units, but not
Common Units, for purposes of Section 5.4 and the Class
B Units shall have the right to share in Partnership
quarterly cash distributions in accordance with Section
5.4 hereof based on 115% of the amount of any
Partnership distribution that would be made to each
Common Unit so that the amount of any Partnership
distribution to each Class B Unit will equal 115% of
the amount of such distribution to each Common Unit
(such additional 15% pro rated for the quarter in which
the Class B Distribution Increase Date occurs),
provided, however, that following any distribution
pursuant to Section 5.4(c) and prior to any
distribution pursuant to Section 5.4(d), Available Cash
shall be distributed as follows:
8
(1) 99% to the holders of Class B Units and 1% to
the General Partners, in accordance with their
relative General Partner Percentage Interests,
until there has been distributed in respect of
each Class B Unit Outstanding as of the last day
of such quarter an amount equal to 115% of the
Minimum Quarterly Distribution; and
(2) then, 99% to the holders of Class B Units and
1% to the General Partners, in accordance with
their relative General Partner Percentage
Interests, until there has been distributed in
respect of each Class B Unit Outstanding as of the
last day of such quarter an amount equal to the
Cumulative Class B Unit Arrearage, if any,
existing with respect to such quarter.
(B) notwithstanding anything to the contrary contained
in Section 5.4, if a Cumulative Class B Unit Arrearage
exists on the date of the expiration of the Class B
Subordination Period, prior to any distribution
pursuant to Section 5.4(d), irrespective of whether any
such Class B Units are then Outstanding, Available Cash
shall be distributed 99% to the holders of record of
the applicable Class B Units as of the expiration of
the Class B Subordination Period and 1% to the General
Partners, in accordance with their relative General
Partner Percentage Interests, until there has been
distributed in respect of each Class B Unit an amount
equal to the Cumulative Class B Unit Arrearage, if any,
existing with respect to such quarter. This
distribution shall not be deemed a distribution on a
Common Unit, but the satisfaction of prior entitlements
of the holders of Class B Units as of the expiration of
the Class B Subordination Period. For the taxable year
in which such distribution is made, if not previously
allocated, each Person receiving such cash distribution
shall be allocated items of gross income in an amount
equal to such distribution as provided in Section
5.1(d)(iii)(A); and
iii) the Class B Units shall have rights upon dissolution
and liquidation of the Partnership, including the right
to share in any liquidating distributions, that are
based on 115% of the liquidating distributions that
would be made to the Common Units so that the amount of
any liquidating distribution to each Class B Unit will
equal 115% of the amount of such distribution to each
Common Unit, and, in addition, following any allocation
made pursuant to Section 5.1(c)(i)(B) and before an
allocation is made pursuant to Section 5.1(c)(i)(C),
any remaining Net Termination Gain shall be allocated
99% to
9
the holders of the Class B Units and 1% to the General
Partners, in accordance with their relative General
Partner Percentage Interests, until each such holder of
a Class B Unit has been allocated Net Termination Gain
equal to any then existing Cumulative Class B Unit
Arrearage with respect to such Class B Unit, and
accordingly, notwithstanding anything to the contrary
in this Agreement, prior to any distribution under
Section 14.3, the Capital Account of each Partner shall
be adjusted to give effect to the foregoing liquidation
rights.
c) Voting Rights. The Class B Units will have such voting
rights pursuant to the Partnership Agreement as such Class B
Units would have if they were Common Units that were then
Outstanding except that, with respect to the Conversion
Approval or Amendment Approval, none of the Class B Units
shall be deemed Outstanding as of the record date for such
vote or be entitled to vote. Each Class B Unit will be
entitled to the number of votes equal to the number of
Common Units into which a Class B Unit is convertible at the
time of the record date for the vote or written consent on
the matter."
(b If:
i) the Conversion Approval has been obtained by the
date that is 12 months following the Closing (as
defined under the Contribution Agreement); and
ii) the Amendment Approval has not been obtained by
the date that is 12 months following the Closing;
then, unless the provisions of Section 4.12 shall
already be in effect, effective as of the next
succeeding day (the "Section 4.11(b) Distribution
Increase Date") until amended by the provisions of
Section 4.12, Sections 4.10(b) and 4.10(c) hereof will
be deemed to be amended in their entirety,
automatically and without further action, as follows:
"b) Rights Associated with Class B Units. Prior to the
conversion of all of the Class B Units pursuant to Section
4.10(f) above:
i) subject to the provisions of Section
5.1(d)(iii)(A) and paragraphs (ii) and (iii)
below, all items of Partnership income, gain,
loss, deduction and credit shall be allocated to
the Class B Units to the same extent such items
would be allocated if such Class B Units were
Common Units then Outstanding, and the allocations
to Class B Units shall have the same order of
priority relative to allocations on the Common
Units;
10
ii) (A) the Class B Units shall have the right to
share in Partnership quarterly cash distributions
based on 115% of the amount of any Partnership
distribution that would be made to each Common
Unit so that the amount of any Partnership
distribution to each Class B Unit will equal 115%
of the amount of such distribution to each Common
Unit (such additional 15% pro rated for the
quarter in which the Class B Distribution Increase
Date occurs), and the right of holders of Class B
Units to receive distributions shall have the same
order of priority relative to distributions on the
Common Units; and
(B) notwithstanding anything to the contrary
contained in Section 5.4, if a Cumulative Class B
Unit Arrearage existed on the date of the
expiration of the Class B Subordination Period,
prior to any distribution pursuant to Section
5.4(d), irrespective of whether any such Class B
Units are then Outstanding, Available Cash shall
be distributed 99% to the holders of record of the
applicable Class B Units as of the expiration of
the Class B Subordination Period and 1% to the
General Partners, in accordance with their
relative General Partner Percentage Interests,
until there has been distributed in respect of
each Class B Unit an amount equal to the
Cumulative Class B Unit Arrearage, if any,
existing with respect to such quarter. This
distribution shall not be deemed a distribution on
a Common Unit, but the satisfaction of prior
entitlements of the holders of Class B Units as of
the expiration of the Class B Subordination
Period. For the taxable year in which such
distribution is made, if not previously allocated,
each Person receiving such cash distribution shall
be allocated items of gross income in an amount
equal to such distribution as provided in Section
5.1(d)(iii)(A); and
iii) the Class B Units shall have rights upon
dissolution and liquidation of the Partnership,
including the right to share in any liquidating
distributions, that are based on 115% of the
liquidating distributions that would be made to
the Common Units so that the amount of any
liquidating distribution to each Class B Unit will
equal 115% of the amount of such distribution to
each Common Unit, and, in addition, following any
allocation made pursuant to Section 5.1(c)(i)(B)
and before an allocation is made pursuant to
Section 5.1(c)(i)(C), any remaining Net
Termination Gain shall be allocated 99% to the
holders of the Class B Units and 1% to the General
Partners, in accordance with their relative
General Partner Percentage Interests, until each
such holder of a Class B Unit
11
has been allocated Net Termination Gain equal
to any then existing Cumulative Class B Unit
Arrearage with respect to such Class B Unit, and
accordingly, notwithstanding anything to the
contrary in this Agreement, prior to any
distribution under Section 14.3, the Capital
Account of each Partner shall be adjusted to give
effect to the foregoing liquidation rights.
c) Voting Rights. The Class B Units will have such voting
rights pursuant to the Partnership Agreement as such
Class B Units would have if they were Common Units that
were then Outstanding except that, with respect to the
Conversion Approval or Amendment Approval, none of the
Class B Units shall be deemed Outstanding as of the
record date for such vote or be entitled to vote. Each
Class B Unit will be entitled to the number of votes
equal to the number of Common Units into which a Class
B Unit is convertible."
c) If a Class B Distribution Increase Date or Section 4.11(b)
Distribution Increase Date has occurred and the
Partnership's securityholders thereafter either (1) obtain
the Conversion Approval and the Amendment Approval, or (2)
any of the Class B Units are converted into Common Units
pursuant to Section 4.10(f)(i), then, unless the provisions
of Section 4.12 shall already be in effect, (i) with respect
to the matters described in sub-clause (1) above, as of the
later of the Conversion Approval Date and the Amendment
Approval Date, all Class B Units shall automatically, and
without further action of the holder(s) thereof, be
converted into Common Units in accordance with Section
4.10(f)(ii), and (ii) with respect to matters described in
sub-clauses (1) and (2) above for the quarter in which such
conversion occurs, concurrently with the distribution made
in accordance with Article V of the Partnership Agreement of
Available Cash, with respect to the quarter in which the
conversion of the Class B Units is effected, a distribution
shall be paid to each holder of record of the applicable
Class B Units as of the effective date of such conversion,
with the amount of such distribution for each such Class B
Unit to be equal to the product of (a) 15% of the amount to
be distributed in respect of such quarter to each Common
Unit times (it being agreed that each such Common Unit
issued upon conversion shall be entitled to the full
distribution payable to the holder of a Common Unit) and (b)
a fraction, of which (A) the numerator is the number of days
in such quarter up to but excluding the date of such
conversion, and (B) the denominator is the total number of
days in such quarter (the foregoing amount being referred to
as an "Excess Payment"). For the taxable year in which an
Excess Payment is made, each holder of a Class B Unit shall
be allocated items of gross income with respect to such
taxable year in an amount equal to the Excess Payment
distributed to it as provided in Section 5.1(d)(iii)(A).
SECTION 4.12 AMENDMENT OF TERMS OF CLASS B UNITS UPON REMOVAL OF THE
GENERAL PARTNER.
12
a) If prior to the conversion of all Class B Units, a resolution of the
Limited Partners holding the requisite majority of Outstanding Units is
passed approving the removal of any Affiliate of ONEOK as the general
partner of the Partnership (a "GP Removal Event") and the Conversion
Approval has not been obtained, then notwithstanding Section 4.11,
automatically and without further action and, effective as of the next
succeeding day (the "GP Removal Date"), Section 4.10(f)(ii) shall be deemed
to be deleted in its entirety, automatically and without further action,
and Sections 4.10(b) and 4.10(c) hereof will be deemed to be amended in
their entirety, automatically and without further action, as follows:
"b) Rights Associated with Class B Units. Prior to the
conversion of the Class B Units as set forth in Section
4.10(f) hereof:
i) subject to the provisions of Section 5.1(d)(iii)(A) and
paragraphs (ii) and (iii) below, all of items
Partnership income, gain, loss, deduction and credit
shall be allocated to the Class B Units to the same
extent as such items would be allocated if such Class B
Units were Common Units then Outstanding, and the
allocations to Class B Units shall have the same order
of priority relative to allocations on the Common
Units; and
ii) (A) notwithstanding anything to the contrary in Section
5.4, the Class B Units shall be deemed Units, but not
Common Units, for purposes of Section 5.4 and the Class
B Units shall have the right to share in Partnership
quarterly cash distributions in accordance with Section
5.4 hereof based on 125% of the amount of any
Partnership distribution that would be made to each
Common Unit so that the amount of any Partnership
distribution to each Class B Unit will equal 125% of
the amount of such distribution to each Common Unit
(such additional 25% pro rated for the quarter in which
the GP Removal Date occurs), provided, however, that
following any distribution pursuant to Section 5.4(c)
and prior to any distribution pursuant to Section
5.4(d), Available Cash shall be distributed as follows:
(1) 99% to the holders of Class B Units and 1% to
the General Partners, in accordance with
their relative General Partner Percentage
Interests, until there has been distributed
in respect of each Class B Unit Outstanding
as of the last day of such quarter an amount
equal to 125% of the Minimum Quarterly
Distribution; and
(2) then, 99% to the holders of Class B Units and
1% to the General Partners, in accordance
with their relative General Partner
Percentage Interests, until there has been
13
distributed in respect of each Class B Unit
Outstanding as of the last day of such
quarter an amount equal to the Cumulative
Class B Unit Arrearage, if any, existing with
respect to such quarter.
(B) notwithstanding anything to the contrary in
Section 5.4, if a Cumulative Class B Unit
Arrearage exists on the date of the expiration of
the Class B Subordination Period, prior to any
distribution pursuant to Section 5.4(d),
irrespective of whether any such Class B Units are
then Outstanding, Available Cash shall be
distributed 99% to the holders of record of the
applicable Class B Units as of the expiration of
the Class B Subordination Period and 1% to the
General Partners, in accordance with their
relative General Partner Percentage Interests,
until there has been distributed in respect of
each Class B Unit an amount equal to the
Cumulative Class B Unit Arrearage, if any,
existing with respect to such quarter. This
distribution shall not be deemed a distribution on
a Common Unit, but the satisfaction of prior
entitlements of the holders of Class B Units as of
the expiration of the Class B Subordination
Period. For the taxable year in which such
distribution is made, if not previously allocated,
each Person receiving such cash distribution shall
be allocated items of gross income in an amount
equal to such distribution as provided in Section
5.1(d)(iii)(A); and
iii) the Class B Units shall have rights upon dissolution
and liquidation of the Partnership, including the right
to share in any liquidating distributions, that are
based on 125% of the liquidating distributions that
would be made to the Common Units so that the amount of
any liquidating distribution to each Class B Unit will
equal 125% of the amount of such distribution to each
Common Unit, and, in addition, following any allocation
made pursuant to Section 5.1(c)(i)(B) and before an
allocation is made pursuant to Section 5.1(c)(i)(C),
any remaining Net Termination Gain shall be allocated
99% to the holders of the Class B Units and 1% to the
General Partners, in accordance with their relative
General Partner Percentage Interests, until each such
holder of a Class B Unit has been allocated Net
Termination Gain equal to any then existing Cumulative
Class B Unit Arrearage with respect to such Class B
Unit, and accordingly, notwithstanding anything to the
contrary in this Agreement, prior to any distribution
under Section 14.3, the Capital Account of each Partner
shall be adjusted to give effect to the foregoing
liquidation rights.
14
c) Voting Rights. The Class B Units will have such voting
rights pursuant to the Partnership Agreement as such Class B
Units would have if they were Common Units that were then
Outstanding except that, (i) for the purposes of the
definition of "Outstanding" such Class B Units shall be
deemed to be "Units," but not "Common Units," for all
purposes thereof and (ii) with respect to the Conversion
Approval (if not already obtained), none of the Class B
Units shall be deemed Outstanding as of the record date for
such vote or be entitled to vote . Each Class B Unit will be
entitled to one vote on each matter with respect to which
such Class B Unit is entitled to be voted."
b) If, the Conversion Approval has been obtained and a GP Removal
Event occurs, then notwithstanding Section 4.11, automatically and
without further action and, effective as of the GP Removal Date,
Section 4.10(f)(ii) shall be deemed to be deleted in its entirety,
automatically and without further action, and Sections 4.10(b) and
4.10(c) hereof will be deemed to be amended in their entirety,
automatically and without further action, as follows:
"b) Rights Associated with Class B Units. Prior to the
conversion of the Class B Units as set forth in Section
4.10(f) hereof:
i) subject to the provisions of Section
5.1(d)(iii)(A) and paragraphs (ii) and (iii)
below, all of items Partnership income, gain,
loss, deduction and credit shall be allocated to
the Class B Units to the same extent as such items
would be allocated if such Class B Units were
Common Units then Outstanding, and the allocations
to Class B Units shall have the same order of
priority relative to allocations on the Common
Units; and
ii) (A) the Class B Units shall have the right to
share in Partnership quarterly cash distributions
based on 125% of the amount of any Partnership
distribution that would be made to each Common
Unit so that the amount of any Partnership
distribution to each Class B Unit will equal 125%
of the amount of such distribution to each Common
Unit (such additional 25% pro rated for the
quarter in which the GP Removal Date occurs), and
the right of holders of Class B Units to receive
distributions shall have the same order of
priority relative to distributions on the Common
Units; and,
(B) notwithstanding anything to the contrary in
Section 5.4, if a Cumulative Class B Unit
Arrearage existed on the date of the expiration of
the Class B Subordination Period, prior to any
distribution pursuant to Section 5.4(d),
irrespective of whether any such Class B Units are
then Outstanding, Available Cash shall be
distributed 99% to the
15
holders of record of the applicable Class B Units
as of the expiration of the Class B Subordination
Period and 1% to the General Partners, in
accordance with their relative General Partner
Percentage Interests, until there has been
distributed in respect of each Class B Unit an
amount equal to the Cumulative Class B Unit
Arrearage, if any, existing with respect to such
quarter. This distribution shall not be deemed a
distribution on a Common Unit, but the
satisfaction of prior entitlements of the holders
of Class B Units as of the expiration of the Class
B Subordination Period. For the taxable year in
which such distribution is made, if not previously
allocated, each Person receiving such cash
distribution shall be allocated items of gross
income in an amount equal to such distribution as
provided in Section 5.1(d)(iii)(A); and
iii) the Class B Units shall have rights upon
dissolution and liquidation of the Partnership,
including the right to share in any liquidating
distributions, that are based on 125% of the
liquidating distributions that would be made to
the Common Units so that the amount of any
liquidating distribution to each Class B Unit will
equal 125% of the amount of such distribution to
each Common Unit, and, in addition, following any
allocation made pursuant to Section 5.1(c)(i)(B)
and before an allocation is made pursuant to
Section 5.1(c)(i)(C), any remaining Net
Termination Gain shall be allocated 99% to the
holders of the Class B Units and 1% to the General
Partners, in accordance with their relative
General Partner Percentage Interests, until each
such holder of a Class B Unit has been allocated
Net Termination Gain equal to any then existing
Cumulative Class B Unit Arrearage with respect to
such Class B Unit, and accordingly,
notwithstanding anything to the contrary in this
Agreement, prior to any distribution under Section
14.3, the Capital Account of each Partner shall be
adjusted to give effect to the foregoing
liquidation rights.
c) Voting Rights. The Class B Units will have such voting
rights pursuant to the Partnership Agreement as such Class B
Units would have if they were Common Units that were then
Outstanding except that, for the purposes of the definition
of "Outstanding" such Class B Units shall be deemed to be
"Units", but not "Common Units" for all purposes thereof.
Each Class B Unit will be entitled to one vote on each
matter with respect to which such Class B Unit is entitled
to be voted."
c) If a GP Removal Event has occurred and any of the Class B
Units are converted into Common Units pursuant to Section
4.10(f)(i), then, for the quarter in which such conversion
occurs, concurrently with the distribution made in
16
accordance with Article V of the Partnership Agreement of
Available Cash, with respect to the quarter in which the
conversion of the Class B Units is effected, a distribution shall
be paid to each holder of record of the applicable Class B Units
as of the effective date of such conversion, with the amount of
such distribution for each such Class B Unit to be equal to the
product of (a) 25% of the amount to be distributed in respect of
such quarter to each Common Unit times (it being agreed that each
such Common Unit issued upon conversion shall be entitled to the
full dividend payable to the holder of a Common Unit) (b) a
fraction, of which (i) the numerator is the number of days in
such quarter up to but excluding the date of such conversion, and
(ii) the denominator is the total number of days in such quarter
(the foregoing amount being referred to as an "Excess Payment").
For the taxable year in which an Excess Payment is made, each
holder of a Class B Unit shall be allocated items of gross income
with respect to such taxable year in an amount equal to the
Excess Payment distributed to it as provided in Section
5.1(d)(iii)(A).
SECTION 4.13 CHANGE OF NEW YORK STOCK EXCHANGE RULES OR
INTERPRETATIONS. If at any time (i) the rules of the National
Securities Exchange on which the Common Units are listed or
admitted to trading or the staff interpretations of such rules
are changed, or (ii) facts and circumstances arise so that the
Conversion Approval is no longer required as a condition to the
listing of the Common Units that would be issued upon any
conversion of any Class B Units into Common Units as provided in
Section 4.10(f)(i) hereof as determined by the Partnership Policy
Committee (the date that the Partnership Policy Committee makes
such determination, the "Conversion Approval Termination Date")
and the Amendment Approval has been obtained, then, unless the
provisions of Section 4.12 shall already be in effect, the terms
of such Class B Units will be changed so that each such Class B
Unit is converted (without further action or any vote of any
securityholders of the Partnership) into one Common Unit (subject
to appropriate adjustment in the event of any split-up,
combination or similar event affecting the Common Units).
B. Agreement in Effect. Except as hereby amended, the Partnership
Agreement shall remain in full force and effect.
C. Applicable Law. This Amendment shall be construed in accordance
with and governed by the laws of the State of Delaware.
D. Invalidity of Provisions. If any provision of this Amendment is or
becomes invalid, illegal or unenforceable in any respect, the validity, legality
and enforceability of the remaining provisions contained herein shall not be
effected thereby.
E. Counterparts. This Amendment may be executed in counterparts, all
of which together shall constitute an agreement binding on all parties thereto,
notwithstanding that all such parties are not signatories to the original or the
same counterpart.
17
General Partners:
Northern Plains Natural Gas Company, LLC
----------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Northwest Border Pipeline Company
----------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Pan Border Gas Company, LLC
----------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Limited Partners:
All Limited Partners now and hereafter
admitted as limited partner of the
Partnership, pursuant to Powers of
Attorney now and hereafter executed in
favor of, and granted and delivered to,
the Members of the Partnership Policy
Committee.
----------------------------------------
Chairman of the Partnership Policy
Committee, as attorney-in-fact for all
Limited Partners pursuant to the Powers
of Attorney granted in Section 1.4
18
ANNEX A
1. THE FOLLOWING DEFINITIONS SHALL BE DELETED IN THEIR ENTIRETY FROM ARTICLE
II:
"GROSS GENERAL PARTNER PERCENTAGE INTEREST"; AND
"HYPOTHETICAL EQUITY VALUE".
2. SECTION 13.2 SHALL BE AMENDED TO READ IN ITS ENTIRETY AS FOLLOWS:
"Section 13.2 Removal of the General Partner.
The General Partner may be removed if such removal is approved by the
Unitholders holding at least 66 2/3% of the Outstanding Units (including
for purposes of such determination Units held by the General Partner and
its Affiliates) voting as a single class. Any such action by such holders
for removal of the General Partner must also provide for the election of a
successor General Partner by the Unitholders holding a majority of the
outstanding Common Units voting as a class (including for purposes of such
determination Units held by the General Partner and its Affiliates). Such
removal shall be effective immediately following the admission of a
successor General Partner. The removal of the General Partner shall also
automatically constitute the removal of the General Partner as general
partner or managing member, to the extent applicable, of the Intermediate
Partnership and any other Group Members of which the General Partner is a
general partner or managing member. If a Person is elected as a successor
General Partner in accordance with the terms of this Section 13.2, such
Person shall, upon admission pursuant to Article XII, automatically become
a successor general partner or managing member, to the extent applicable,
of the Intermediate Partnership and any other Group Members of which the
General Partner is a general partner of a managing member. The right of the
holders of Outstanding Units to remove the General Partner shall not exist
or be exercised unless the Partnership has received an opinion opining as
to the matters covered by a Withdrawal Opinion of Counsel. Any successor
General Partner elected in accordance with the terms of this Section 13.2
shall be subject to the provisions of Section 12.3."
3. THE SECOND PARAGRAPH OF SECTION 13.3(A) SHALL BE AMENDED TO READ IN ITS
ENTIRETY AS FOLLOWS:
"For purposes of this Section 13.3(a), the fair market value of the
Departing Partner's Combined Interest shall be determined by agreement
between the Departing Partner and its successor or, failing agreement
within 30 days after the effective date of such Departing Partner's
departure, by an independent investment banking firm or other independent
expert selected by the Departing Partner and its successor, which, in turn,
may rely on other experts, and the determination of which shall be
conclusive as to such matter. If such parties cannot agree upon one
independent investment banking firm or other independent expert within 45
days after the effective date of such departure, then the Departing Partner
shall designate an independent investment banking firm or other independent
expert, the Departing Partner's successor shall designate an independent
investment
banking firm or other independent expert, which third independent
investment banking firm or other independent expert shall determine the
fair market value of the Combined Interest of the Departing Partner. In
making its determination, such third independent investment banking firm or
other independent expert may consider the then current trading price of
Units on any National Securities Exchange on which Units are then listed or
admitted to trading, the value of the Partnership's assets, the rights and
obligations of the Departing Partner and other factors it may deem
relevant."
4. SECTION 13.3(B) SHALL BE AMENDED TO READ IN ITS ENTIRETY AS FOLLOWS:
(b) If the Combined Interest of a Departing Partner is not acquired by one
or more of the remaining General Partners pursuant to Section 11.7(b)
or by a successor in the manner set forth in Section 13.3(a), the
Departing Partner shall become a Limited Partner and the Combined
Interest shall be converted into Common Units based on the fair market
value of such Combined Interest as calculated pursuant to Section
13.3(a) and the Current Market Price of the Common Units as of the
effective date of the departure of such Departing Partner. Any
successor General Partner shall indemnify the Departing Partner as to
all debts and liabilities of the Partnership arising on or after the
date on which the Departing Partner becomes a Limited Partner. For
purposes of this Agreement, conversion of a General Partner's
Partnership Interest as a general partner in the Partnership to Common
Units will be characterized as if such General Partner contributed its
Partnership Interest to the Partnership in exchange for the
newly-issued Common ▇▇▇▇▇.
-▇▇-
▇▇▇▇▇▇▇ ▇
_________
SERVICES AGREEMENT
This Services Agreement ("Agreement") is made and entered into as of the
[__]th day of [________], 2006 (the "Effective Date") by and among ONEOK, Inc.,
an Oklahoma corporation ("ONEOK"), Northern Plains Natural Gas Company, LLC, a
Delaware limited liability company ("Northern Plains"), NBP Services, LLC, a
Delaware limited liability company ("NBP Services"), Northern Border Partners,
L.P., a Delaware limited partnership (the "MLP"), and Northern Border
Intermediate Limited Partnership (the "ILP"), a Delaware limited partnership.
Each party is referred to herein individually as a "Party," and collectively as
the "Parties." Capitalized terms used herein and not otherwise defined shall
have the meanings given to them in Section 10.1.
WITNESSETH:
WHEREAS, the MLP and ILP previously contracted for NBP Services to provide
certain services to the MLP and the ILP in connection with the day-to-day
business and affairs of the MLP and ILP pursuant to the Administrative Services
Agreement;
WHEREAS, the Parties desire for the Administrative Services Agreement to be
terminated, superseded and replaced by this Agreement and to have the services
previously provided under that Administrative Services Agreement be provided
under this Agreement;
WHEREAS, Northern Plains, pursuant to certain Operating Agreements, is the
operator of certain interstate natural gas pipelines in which the MLP and the
ILP have an ownership interest;
WHEREAS, the Operating Agreements each provide that Northern Plains may
delegate or cause one or more of its affiliates to fulfill its obligations under
the Operating Agreements;
WHEREAS, certain affiliates of ONEOK own all of the outstanding general
partner interests of each of the MLP and ILP and own a substantial percentage of
the outstanding equity interests in the MLP;
WHEREAS, the Parties have determined that the operations of ONEOK and its
affiliates and the Northern Border Companies can operate more efficiently and
cost effectively if certain common services are combined and shared;
WHEREAS, certain ONEOK Affiliates and Northern Border Companies are
regulated by various governmental entities that require a fair and reasonable
method of allocation for costs incurred for such common services; and
WHEREAS, ONEOK (an affiliate of NBP Services and Northern Plains) desires
to provide or cause the provision of certain services to the Northern Border
Companies, and the Northern Border Companies desire to receive these services,
in accordance with the terms and conditions of this Agreement.
NOW THEREFORE, in consideration of the premises and the agreements
contained herein, and for other good and valuable consideration, the receipt and
sufficiency of which are
hereby acknowledged, and intending to be legally bound hereby, the Parties
hereby agree as follows:
ARTICLE I
SERVICES TO BE PROVIDED
1.1 Services. On the terms and conditions set forth in this Agreement,
ONEOK will provide or cause to be provided to the Northern Border Companies at
least the type and amount of services that it provides or causes to be provided
to ONEOK Affiliates, including but not limited to, executive officers, legal
services, human resources and employee benefits, information technology,
insurance and risk management, purchasing, inventory control, gas supply
services, marketing, pipeline control, right of way management, general
operations and maintenance, measurement, engineering, accounting, contract
administration, SEC reporting, day-to-day supervisory and administrative
services, planning support, budgeting support, technical, treasury services, tax
and internal audit services, external audit services and other services required
to be provided pursuant to the partnership agreements of the MLP and ILP, as
amended from time to time, and various other services routinely and customarily
provided to the ONEOK Affiliates (the "Services"). Each Northern Border Company
or permitted successor or assign that receives Services shall be referred to as
a "Purchaser" and collectively as the "Purchasers". ONEOK and the ONEOK
Affiliates that provide Services under this Agreement, including Northern Plains
and NBP Services, shall be collectively referred to as the "Provider."
1.2 Operating Agreement Services. The Parties acknowledge and agree that
Northern Plains will continue to perform its obligations under each of the
Operating Agreements. To the extent Northern Plains requests Services from ONEOK
under this Agreement in order to perform those obligations, ONEOK shall provide
such Services, and Northern Plains shall pay for such Services, under the terms
and conditions set forth in this Agreement. To the extent Northern Plains
receives Services under this Agreement, it will be deemed a "Purchaser" with
respect to such Services.
1.3 Additional Services. Any additional services requested by any Purchaser
will be provided on the basis agreed upon by the Parties in writing. Unless the
context otherwise requires, the term "Services" in this Agreement shall include
any such additional services agreed upon in writing by the Parties.
1.4 Costs. The costs for the Services provided under this Agreement will be
allocated and billed monthly to the Purchasers in a manner consistent with the
method of allocation of such costs among other ONEOK Affiliates and consistent
with applicable law, including the requirements of the Federal Energy Regulatory
Commission ("FERC"). Direct costs will be allocated to the Purchasers having
activities that give rise to such costs to the extent that such direct basis can
reasonably be determined and allocated. The remaining unallocated direct costs
and all indirect costs will then be allocated on the basis of a three-factor
formula (the "Distrigas Method"), consistent with methods approved by the FERC.
The Distrigas Method provides for the allocation of common costs based on the
average of the percentage of "gross plant and investment", "operating income"
and "labor expense," as such terms are defined in FERC regulations of each
company involved in the calculation. The Provider will determine an average of
those three factors for each Purchaser and for ONEOK and each ONEOK Affiliate
2
that is involved in the calculation. That average will be the allocation ratio
for each such entity (the "Distrigas Allocation Ratio"). The Distrigas
Allocation Ratio for each such entity will then be applied to the total amount
of common costs to determine the amount of common costs that will be allocated
to each such entity. The Distrigas Allocation Ratio will be recalculated
annually, or as required due to acquisitions, divestitures or other similar
types of transactions or regulatory requirements. For the avoidance of doubt,
the costs allocated through the Distrigas Method are based on actual costs
recognized under U.S. generally accepted accounting principles and do not
include a ▇▇▇▇-up or other element of profit. The Provider is not entitled to
and will not receive any other fee or other compensation for the performance of
the Services other than as set forth in this Section 1.4.
ARTICLE II
SERVICE STANDARD
2.1 Standard of Care; Limited Warranty.
(a) The Provider represents that it will discharge its duties
hereunder in good faith and with reasonable diligence and on a basis
consistent with the standards of service provided to ONEOK Affiliates.
EXCEPT AS SET FORTH IN THE IMMEDIATELY PRECEDING SENTENCE, THE PROVIDER
MAKES NO (AND HEREBY DISCLAIMS AND NEGATES ANY AND ALL) WARRANTIES OR
REPRESENTATIONS WHATSOEVER, EXPRESS OR IMPLIED, WITH RESPECT TO THE
SERVICES. IN NO EVENT SHALL THE PROVIDER BE LIABLE TO THE NORTHERN BORDER
COMPANIES OR ANY OTHER PERSON FOR ANY INCIDENTAL, CONSEQUENTIAL, OR SPECIAL
DAMAGES RESULTING FROM ANY ERROR IN THE PERFORMANCE OF THE SERVICES,
REGARDLESS OF WHETHER THE PROVIDER OR OTHERS MAY BE WHOLLY, CONCURRENTLY,
PARTIALLY, OR SOLELY NEGLIGENT OR OTHERWISE AT FAULT; PROVIDED HOWEVER,
THAT THE PROVIDER SHALL BE LIABLE FOR ANY DAMAGES ARISING OUT OF ITS GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT. THE PRECEDING IS THE ONLY WARRANTY
CONCERNING THE SERVICES AND ANY RESULTS, WORK PRODUCT OR PRODUCTS RELATED
THERETO, AND IS MADE EXPRESSLY IN LIEU OF ALL OTHER WARRANTIES AND
REPRESENTATIONS EXPRESSED OR IMPLIED, INCLUDING, WITHOUT LIMITATION, THE
WARRANTIES OF FITNESS FOR A PARTICULAR PURPOSE, MERCHANTABILITY OR
NONINFRINGEMENT. THE PARTIES UNDERSTAND, ACKNOWLEDGE AND AGREE THAT THE
LEVEL OF COMPENSATION THE PARTIES HAVE AGREED TO ACCEPT IS PREDICATED ON
THIS LIMITATION OF LIABILITY AND DISCLAIMER OF WARRANTIES.
(b) The Parties shall agree and communicate regarding (i) any changes
to the Services or (ii) service level expectations related to the Services.
The Provider shall not make any changes to the Services or the manner in
which they are provided without advance notice to the Purchaser.
2.2 Consequences of Breach or Non-Performance. The Purchasers shall
promptly notify the Provider of any failure by the Provider to perform one or
more of the Services in
3
accordance with the terms of this Agreement. In the event that the Provider does
not cure such non-performance within thirty (30) business days of the receipt of
such notice, the Purchasers may terminate such Service(s) by delivering notice
to the Provider.
2.3 Relationship of Parties. The Parties hereby acknowledge and agree that,
in providing the Services and otherwise in connection with this Agreement, the
Provider is an independent contractor and is not, and shall not be deemed to be,
an agent, employee or legal representative of the Purchasers or otherwise as
having power or authority to bind the Purchasers, unless specifically delegated
to do so in order to facilitate the Services.
ARTICLE III
TERM AND TERMINATION
3.1 Term. This Agreement shall become effective as of the Effective Date
and shall remain in effect until terminated as herein provided or until Services
are no longer being provided (the "Term").
3.2 Termination of this Agreement. Except as set forth in Section 2.2 of
this Agreement, a Party may not terminate this Agreement during the Term except
under the following circumstances:
(a) The Parties may terminate this Agreement by the execution of a
written agreement signed by authorized representatives of all Parties, in
which event the termination shall be effective on the date specified in
such agreement.
(b) If a transaction is consummated which would cause the Provider or
its Affiliates (other than the Northern Border Companies and their
subsidiaries) to cease to be a general partner of the MLP or the ILP, then
ONEOK or the MLP, as the case may be, shall have the right to terminate
this Agreement upon the execution and delivery of a mutually agreeable
transition services agreement between the Parties.
3.3 Termination of the Administrative Services Agreement. Effective as of
the execution and delivery of this Agreement, the Administrative Services
Agreement is hereby terminated, superseded and replaced by this Agreement;
provided, however, that all amounts due or to become due under that
Administrative Services Agreement shall be paid in full and the Administrative
Services Agreement shall continue in effect with respect thereto until all such
amounts are paid in full.
ARTICLE IV
BILLING AND PAYMENT
4.1 Invoices. The Provider will send one monthly invoice to the ILP
covering all of the Services provided under this Agreement. The monthly invoice
will be sent following completion of the Provider's normal monthly financial
reporting process, including completion of the Distrigas Method calculation. The
ILP shall pay each invoice by wire transfer or other means of immediate payment
within fifteen (15) days of the invoice date without setoff or deduction of any
kind, except as provided in Section 4.2. Any late payment by the ILP shall incur
a late fee of ten percent (10%) per annum, calculated from the due date until
the date of
4
payment. In the event that any invoice is based on estimated costs, the Provider
shall make adjustments by increasing or decreasing the costs in the invoice
subsequent to the determination of the actual costs.
4.2 Disputed Amounts. In the event that a dispute arises as to the amount
of any statement or invoice or any portions thereof submitted pursuant to this
Article IV, the Parties will resolve the dispute in accordance with this Section
4.2 and Section 4.3 below. Pending resolution of the dispute, the ILP may
withhold payment of the amounts on an invoice or statement to the extent such
amounts are disputed in good faith, but shall pay all charges on such invoice or
statement that are not so disputed. If the ILP disputes any amount on an invoice
or statement it shall promptly notify the Provider in writing of such disputed
amounts and the reasons each such charge is disputed. The Provider shall provide
the ILP with sufficient records relating to the disputed charge to enable the
Parties to resolve the dispute. In the event the determination is made that the
ILP should have paid the disputed amount, the ILP shall pay the disputed amount,
with interest on the disputed amount at a rate of ten percent (10%) per annum,
calculated from and after the original due date of such invoice until the date
of payment. If the ILP paid the disputed amount, but such disputed amount is
ultimately determined not to have been payable, then the Provider shall refund
to the ILP the disputed amount, with interest on the disputed amount at a rate
of ten percent (10%) per annum, calculated from and after the date the Provider
received the payment to the date of the refund. Payment by the ILP of a disputed
amount shall not be deemed a waiver of the right of the ILP to recoup any
contested portion of any ▇▇▇▇ or statement.
4.3 Dispute Resolution. In the event of a dispute under this Agreement, the
Parties shall, during the fifteen (15) days after notice of such a dispute, use
their commercially reasonable efforts to reach agreement on the disputed items
or amounts. If the Parties are unable to reach agreement within such period,
they shall promptly thereafter cause a nationally recognized accounting firm
agreeable to the Parties (the "Accounting Referee") to review this Agreement and
the disputed items or amounts. The Accounting Referee shall deliver to the
Parties as promptly as practicable (but in any event no later than thirty (30)
days from the date of engagement of the Accounting Referee), a report setting
forth the Accounting Referee's determination of the appropriate resolution of
the dispute. Such determination shall be final and binding upon the Parties. The
cost of such review and report shall be borne equally by each Party involved in
the dispute.
4.4 Audit. The Northern Border Companies and their designated
representatives, after fifteen (15) days notice in writing to the Provider,
shall have the right during normal business hours to audit, at their own
expense, all books and records of the Provider related to the Services. Such
audits shall not be commenced more often than twice each calendar year. The
Northern Border Companies shall have two (2) years after the close of a calendar
year in which to make an audit of the Provider's records for such calendar year.
Absent fraud or intentional concealment or misrepresentation by the Provider or
its employees, the Provider shall neither be required nor permitted to adjust
any item unless a claim therefore is presented or adjustment is initiated within
two (2) years after the close of the calendar year in which the statement
therefore is rendered, and in the absence of such timely claims or adjustments,
the bills and statements rendered shall be conclusively established as correct.
The Provider shall use reasonable
5
commercial efforts to obtain similar audit rights from contractors, consultants
and suppliers engaged to perform any of the Services on behalf of the Provider.
ARTICLE V
LIMITATION OF LIABILITY AND INDEMNITIES
5.1 Purchaser's Limitation of Liability. Each of the Northern Border
Companies agrees, with respect to the Services provided to such entity
hereunder, to indemnify, defend and hold harmless the Provider and its
Affiliates (provided that Northern Plains shall not be entitled to indemnity for
any costs, expenses or liabilities incurred by it as a general partner of the
MLP or the ILP), and their respective employees, officers, directors,
representatives and agents harmless from and against all claims, losses, costs,
damages and expenses (including, without limitation, attorneys' fees and
expenses), penalties and liabilities (collectively, "Liabilities") arising out
of the acts (or failure to act) by any such persons or entities in connection
with the performance by such persons or entities of such Services, REGARDLESS OF
WHETHER THE PROVIDER, OR SUCH OTHER PERSONS OR ENTITIES MAY BE WHOLLY,
CONCURRENTLY, PARTIALLY OR SOLELY NEGLIGENT OR OTHERWISE AT FAULT IN CONNECTION
THEREWITH; PROVIDED, HOWEVER, THAT NEITHER THE PROVIDER NOR ANY OF SUCH OTHER
PERSONS AND ENTITIES SHALL BE INDEMNIFIED FOR THE GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT OF THE PROVIDER OR SUCH OTHER PERSONS OR ENTITIES.
5.2 Provider's Indemnification. The Provider shall indemnify, defend and
hold the Northern Border Companies and their general partners and their
respective employees, directors, policy committee members, officers,
representatives and agents harmless from and against all Liabilities arising out
of the performance of this Agreement and resulting from the gross negligence or
willful misconduct of the Provider or its Affiliates.
5.3 Defense of Claims. It is understood and agreed that in the event that
any Party is made a defendant in any suit, action or proceeding for which it is
entitled to be indemnified pursuant to this Agreement, and the applicable
indemnifying party fails or refuses to timely assume the defense thereof, after
having been notified by the indemnified party to do so, that the indemnified
party may compromise and settle or defend any such claim, and the applicable
indemnifying party shall be bound and obligated to reimburse said indemnified
party for the amount expended by the indemnified party in settling and
compromising any such claim, or for the amount expended by the indemnified party
in paying any judgment rendered therein, together with all reasonable attorneys'
fees and costs incurred by the indemnified party for defense or settlement of
such claim. Any judgment rendered against the indemnified party or amount
expended by the indemnified party in compromising or settling such claim,
together with all reasonable attorneys' fees and costs, shall be conclusive as
determining the amount for which the applicable indemnifying party is liable to
reimburse the indemnified party hereunder.
ARTICLE VI
CONFIDENTIALITY AND OWNERSHIP OF RECORDS
6.1 Confidentiality. The Parties acknowledge that in the course of this
Agreement they may have access to and be in possession of Confidential
Information (as described
6
immediately below) of the other Party. Each Party shall protect the other
Parties' Confidential Information in the same manner as it protects its own
confidential information of like kind, which in no event shall be less than
reasonable care. Each Party's access to the Confidential Information of the
other Parties shall be restricted to those of such Party's personnel who have a
need to know in order to perform under this Agreement. The provisions of this
Section shall survive any termination or expiration of this Agreement and shall
not be limited by any limitation of liability contained herein. The term
"Confidential Information" shall mean information regarded by that Party as
proprietary or confidential, including, but not limited to, information relating
to its business affairs, financial information and prospects; future projects or
purchases; proprietary products, materials or methodologies; data; customer
lists; system or network configurations; passwords and access rights; and any
other information marked as confidential or, in the case of information verbally
disclosed, verbally designated as confidential.
6.2 Ownership of Records. The Northern Border Companies shall own the data,
records, information, etc. provided, generated, or otherwise related to the
Services and the business of the Northern Border Companies ("Northern Border
Company Records"), regardless of who prepares or generates such Northern Border
Company Records. The Provider shall maintain on behalf of the Northern Border
Companies all Northern Border Company Records and shall not destroy or delete
any Northern Border Company Records without the prior written consent of the
Northern Border Companies. Additionally, should this Agreement be terminated,
then the Provider shall deliver or cause to be delivered all Northern Border
Company Records to the Northern Border Companies; provided, however, that ONEOK
shall be entitled to retain copies of any such Records.
ARTICLE VII
FORCE MAJEURE
7.1 Force Majeure. Subject to the standards set forth in Article II, if, by
reason of force majeure (as defined in Section 7.2 below), a Party is rendered
unable, wholly or in part, to carry out its obligations under this Agreement,
and if the non-performing Party declaring force majeure gives notice and
reasonable particulars of such force majeure to the Party to whom the
performance is due within a reasonable time after the occurrence of the cause
relied on, upon giving such notice, so far as and to the extent that it is
affected by such force majeure, the non-performing Party declaring force majeure
shall not be liable solely on account of such inability to perform during the
continuance of any inability so caused; provided, however, the non-performing
Party shall use commercially reasonable efforts to recommence performance of the
affected Services as promptly as possible; provided, further, however, that an
event of force majeure shall not excuse payment for Services provided hereunder.
7.2 Definition of Force Majeure. The term "force majeure" as employed in
this Agreement shall mean acts of God; strikes, lockouts or industrial disputes
or disturbances; civil disturbances; arrests and restraints from rulers of
people; interruptions by government, administrative agency or court orders,
other than as a result of a failure to comply with laws; present and future
valid orders, decisions or rulings of any governmental or administrative entity
having proper jurisdiction; acts of a public enemy; wars; acts of terrorism;
riots; blockades; insurrections; inability to secure materials by reason of
allocations promulgated by authorized governmental agencies; epidemics;
landslides; lightning; earthquakes; fire; storm; floods;
7
washouts; whether of the kind herein enumerated or otherwise, not reasonably
within the control of the Party claiming force majeure and not caused, in whole
or in part, by the acts or omissions of the Party so affected by force majeure.
ARTICLE VIII
NOTICES AND REPORTS
8.1 Notices. All notices and other communications under this Agreement
shall be in writing and shall be deemed duly given (i) when delivered personally
or by prepaid overnight courier, with a record of receipt, (ii) the fourth day
after mailing, if mailed by certified mail, return receipt requested, or (iii)
the day of transmission, if sent by facsimile or telecopy during regular
business hours, or the day after transmission if sent after regular business
hours (with a copy promptly sent by prepaid overnight courier with record of
receipt or by certified mail, return receipt requested), to the Parties at the
following addresses or telecopy numbers (or to such other address or telecopy
number as a Party may have specified by notice given to the other Party pursuant
to this provision):
If to the Provider(s), to:
ONEOK, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: General Counsel
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to Northern Border Companies:
Northern Border Partners, L.P.
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: General Counsel
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
ARTICLE IX
MISCELLANEOUS
9.1 Applicable Law. THIS AGREEMENT, THE RIGHTS AND OBLIGATIONS OF THE
PARTIES UNDER THIS AGREEMENT, AND ANY CLAIM OR CONTROVERSY DIRECTLY OR
INDIRECTLY BASED UPON OR ARISING OUT OF THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT (WHETHER BASED ON CONTRACT, TORT, OR ANY OTHER
THEORY), INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, SHALL
IN ALL RESPECTS BE GOVERNED BY AND INTERPRETED, CONSTRUED, AND DETERMINED IN
ACCORDANCE WITH, THE APPLICABLE PROVISIONS OF THE BANKRUPTCY CODE AND THE
INTERNAL LAWS OF THE STATE OF OKLAHOMA (WITHOUT REGARD TO ANY CONFLICTS OF LAW
PROVISION THAT WOULD REQUIRE THE APPLICATION OF THE LAW OF ANY OTHER
JURISDICTION).
8
9.2 Waiver. The performance of or compliance with a Party's obligation
hereunder may be waived, but only in writing signed by an authorized
representative of the other relevant Party. No waiver or failure of enforcement
by any Party of any default by any other Party in the performance of any
provision, condition or requirement herein shall be deemed to be a waiver of, or
in any manner a release of the defaulting Party from, performance of any other
provision, condition or requirement herein, nor deemed to be a waiver of, or in
any manner a release of the defaulting Party from, future performance of the
same provision, condition or requirement; nor shall any delay or omission of any
non-defaulting Party to exercise any right hereunder in any manner impair the
exercise of any such right or any like right accruing to it thereafter.
9.3 Modification. This Agreement may not be modified, varied or amended
except by an instrument in writing signed by the Parties.
9.4 Headings. The headings to each of the various Articles and Sections in
this Agreement are included for convenience and reference only and shall have no
effect on, or be deemed as part of the text of, this Agreement.
9.5 Third Parties. Except as provided in Article V hereof, this Agreement
is not intended to confer upon any Person not a Party hereto any rights or
remedies hereunder, and no Person other than the Parties hereto is entitled to
rely on or enforce any representation, warranty or covenant contained herein.
9.6 Survival; Limitations Period. Notwithstanding any other provisions in
this Agreement, all indemnities, limitations of liability, and payment
obligations set forth in this Agreement, and the provisions set forth in Section
4.2 and Articles V, VI, VII, VIII, IX, X and XI, shall survive the termination
of this Agreement or the expiration of the Term, in whole or in part. NO PARTY
MAY ASSERT ANY CAUSE OF ACTION AGAINST ANY OTHER PARTY ARISING UNDER OR IN
CONNECTION WITH THIS AGREEMENT MORE THAN ONE (1) YEAR AFTER TERMINATION OF THIS
AGREEMENT.
9.7 Binding Effect Assignment.
(a) Subject to Section 9.7(b) below, no Party hereto may assign this
Agreement, in whole or in part, except with the prior written approval of
each other Party. This Agreement shall inure to the benefit of, and shall
be binding upon, the Parties and their respective permitted successors and
assigns.
(b) The Provider may assign the performance by it of any Service to an
Affiliate (other than the Northern Border Companies and their subsidiaries)
or any subsidiary or any successor in interest to any such Affiliate or
subsidiary. In addition, the Provider may subcontract or outsource the
performance of any Service to a third party.
9.8 Entire Agreement. This Agreement, including any exhibits, attachments
and schedules hereto, constitutes the entire agreement between the Parties
concerning the subject matter hereof, and supersedes any prior understandings or
written or oral agreements relative to such subject matter. However, this
Agreement in no way changes or amends the terms of the Operating Agreements or
the Administrative Services Agreement or the obligations of NBP
9
Services and Northern Plains to any of the Northern Border Companies under any
of those agreements.
9.9 Waiver of Jury Trial. THE PARTIES HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY
RIGHT THAT THEY MAY HAVE TO TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION, OR IN
ANY LEGAL PROCEEDING, DIRECTLY OR INDIRECTLY BASED UPON OR ARISING OUT OF THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT (WHETHER BASED ON
CONTRACT, TORT, OR ANY OTHER THEORY). EACH PARTY (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT, OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTIES WOULD NOT, IN THE EVENT OF LITIGATION,
SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER
PARTIES HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS,
THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
9.10 No Strict Construction. The Parties to this Agreement have
participated jointly in the negotiation and drafting of this Agreement. In the
event an ambiguity or question of intent or interpretation arises with respect
to this Agreement, this Agreement shall be construed as if drafted jointly by
the Parties, and no presumption or burden of proof shall arise favoring or
disfavoring a Party by virtue of the authorship of any of the provisions of this
Agreement.
9.11 Severability. If any provision of this Agreement is invalid or
unenforceable, the balance of this Agreement shall remain in effect.
9.12 Counterparts. This Agreement may be executed in any number of
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
9.13 Acknowledgement of Applicability of Section 365(n) of the Bankruptcy
Code. The Parties hereby acknowledge that this Agreement is an executory
contract granting rights in intellectual property to the Northern Border
Companies as described in the U. S. Bankruptcy Code, Title 11 Section
365(n)(1)(B), and, as such, the Northern Border Companies may retain their
rights under this Agreement in the event that the Provider or its Affiliates or
its trustee, as applicable, rejects such executory contract or this Agreement
pursuant to, and in accordance with, Section 365(n) of Title 11. Furthermore,
the Parties acknowledge and agree that the execution of this Agreement shall not
impair any of the Provider's rights under title 11 of the United States Code.
ARTICLE X
INTERPRETATION; DEFINITIONS
10.1 Definitions. Capitalized terms used herein and not otherwise defined
shall have the following meanings:
10
"Administrative Services Agreement" means the agreement between NBP
Services, LLC, Northern Border Partners, L.P. and Northern Border Intermediate
Limited Partnership effective as of October 1, 1993, as amended.
"Affiliate" means any person or entity that is Controlled By a person. For
purposes of this Agreement, a Provider shall not constitute an Affiliate of any
Purchaser.
"Control" or "Controlled By" means possession, directly or indirectly, of
power to direct or cause the direction of management or policies (whether
through ownership of securities or partnership or other ownership interests, by
written contract or otherwise).
"Northern Border Companies" (each, individually, a Northern Border Company)
means (i) the MLP, (ii) the ILP, (iii) any direct or indirect subsidiary of the
MLP, and (iv) any other entity that directly, or through one or more
intermediaries, is controlled by the MLP, and (v) any entity in which the MLP or
ILP has a direct or indirect ownership interest and NBP Services or Northern
Plains is contractually obligated to provide administrative and/or operational
services.
"ONEOK Affiliates" means any direct or indirect subsidiary of ONEOK or any
entity controlled by ONEOK, but shall exclude any of the Northern Border
Companies.
"Operating Agreements" include (i) the Northern Border Pipeline Project
Operating Agreement between Northern Plains Natural Gas Company and Northern
Border Pipeline Company dated February 28, 1980; (ii) the Midwestern Gas
Transmission Company Operating Agreement between Northern Plains Natural Gas
Company and Midwestern Gas Transmission Company dated May 1, 2001; (iii) the
Viking Gas Transmission Company Operating Agreement between Northern Plains
Natural Gas Company and Viking Gas Transmission Company dated January 17, 2003,
and (iv) the Operating Agreement between Northern Plains Natural Gas Company and
Guardian Pipeline, L.L.C. dated April 5, 2004. Additionally, this definition
shall include any other operating agreement subsequently entered into by
Northern Plains for the purpose of providing similar services to other natural
gas transmission companies or similar services to other entities in the energy
industry.
10.2 Construction and Interpretation. All references herein to agreements
and other contractual instruments shall be deemed to include all exhibits,
attachments and appendices attached thereto and all amendments and other
modifications to such agreements and instruments. Words used herein in the
singular, where the context so permits, shall also apply to words when used in
the plural and visa versa. The term "including" when used in this Agreement will
be by way of example and not considered in any way to be a limitation, and means
"including, without limitation".
ARTICLE XI
LICENSE GRANT
11.1 License. Subject to the terms and conditions of this Agreement, and
subject to the right of ONEOK and the ONEOK Affiliates to do so, ONEOK and the
ONEOK Affiliates (collectively, for purposes of this Article XI, "Licensor")
hereby grant and agree to grant to each Northern Border Company (each, for
purposes of this Article XI, a "Licensee"), under all of Licensor's intellectual
property rights in and to the software programs, object code and source
11
code, and documentation related to the Services and licensed patents related
thereto ("Licensed Programs"), a fully paid-up, irrevocable and perpetual
(during the term of this Agreement), worldwide, non-exclusive, transferable,
sublicensable, assignable license to: (i) copy, modify and use the Licensed
Programs and documentation; (ii) use, make, have made, distribute, and sell any
and all products and services of Licensee, its Affiliates, and its sublicensees
(if any) and (iii) engage in the business as conducted by Licensee, its
Affiliates, and sublicensees (if any). The foregoing license shall include the
right for any third party service company or independent contractor retained by
any Licensee or an Affiliate of any Licensee ("Contractor") to install, copy,
modify and/or use the Licensed Programs on behalf of such Licensee and its
Affiliates. The grant of the foregoing licenses with respect to any particular
Licensed Program and related documentation or patents shall be limited to those
Licensed Programs utilized by the Provider to provide the Services to the
Purchasers and shall not include any Licensed Programs subject to agreements
that would be breached by the grant in this paragraph.
11.2 Existing Rights. Except as expressly provided herein, Licensor shall
retain all of its right, title and interest, including, without limitation, all
intellectual property rights, in and to the Licensed Programs, including any and
all copies in whatever form. Licensee acknowledges that all materials provided
by Licensor to Licensee under this provision, including, but not limited to the
Licensed Programs, class libraries, scripts, algorithms, designs, flow-charts,
procedures, processes, systems, methodologies, and information shall remain the
sole and exclusive property of Licensor.
11.3 Hardware and Software Platform. Licensee acknowledges that Licensee's
operation of the Licensed Programs may require, among other things, Licensee's
obtaining rights to use third party hardware and licensed copies of third party
software, and Licensee shall be responsible for obtaining such rights to use
third party hardware and software. Licensor assumes no responsibility or
liability under this license grant or otherwise for obtaining or providing any
such third party hardware or software or for providing any labor support.
Licensor shall provide reasonable assistance in converting Licensee's data files
for use with the Licensed Programs.
(Signature Page Follows)
12
IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed
by their respective officers thereunto duly authorized, all as of the date first
above written.
ONEOK, Inc.,
an Oklahoma corporation
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
NORTHERN PLAINS NATURAL GAS
COMPANY, LLC,
a Delaware limited liability company
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
NBP SERVICES, LLC,
a Delaware limited liability company
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
NORTHERN BORDER PARTNERS, L.P.
a Delaware limited partnership
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
NORTHERN BORDER INTERMEDIATE
LIMITED PARTNERSHIP,
a Delaware limited partnership
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------