-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, DpY/DtKt9YF1fDG39c54x9qzNsVEgPTe1RvzsQWcHsnuGiGxny6d3Ye4DBtEkZut TAfuVUbFDqG3lJtIGkTylQ== 0000909281-01-500006.txt : 20010330 0000909281-01-500006.hdr.sgml : 20010330 ACCESSION NUMBER: 0000909281-01-500006 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 8 CONFORMED PERIOD OF REPORT: 20001231 FILED AS OF DATE: 20010329 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NORTHERN BORDER PARTNERS LP CENTRAL INDEX KEY: 0000909281 STANDARD INDUSTRIAL CLASSIFICATION: NATURAL GAS TRANSMISSION [4922] IRS NUMBER: 931120873 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: SEC FILE NUMBER: 001-12202 FILM NUMBER: 1583839 BUSINESS ADDRESS: STREET 1: 1400 SMITH ST STREET 2: C/O ENRON BLDG CITY: HOUSTON STATE: TX ZIP: 77002 BUSINESS PHONE: 7138536161 MAIL ADDRESS: STREET 1: 1400 SMITH ST STREET 2: ENRON BUILDING RM 4524 CITY: HOUSTON STATE: TX ZIP: 77002 10-K 1 nbp10-ka.txt FORM 10-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 _______________________ F O R M 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2000 Commission file number: 1-12202 NORTHERN BORDER PARTNERS, L.P. (Exact name of registrant as specified in its charter) DELAWARE 93-1120873 (State or other jurisdiction (I.R.S. Employer of incorporation or organization) Identification No.) 1400 Smith Street, Houston, Texas 77002-7369 (Address of principal executive offices)(zip code) Registrant's telephone number, including area code: 713-853-6161 ___________________ Securities registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which registered Common Units New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No _ Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. X Aggregate market value of the Common Units held by non- affiliates of the registrant, based on closing prices in the daily composite list for transactions on the New York Stock Exchange on March 2, 2001, was approximately $995,168,848. NORTHERN BORDER PARTNERS, L.P. TABLE OF CONTENTS Page No. Part I Item 1. Business 1 Item 2. Properties 13 Item 3. Legal Proceedings 14 Item 4. Submission of Matters to a Vote of Security Holders 14 Part II Item 5. Market for Registrant's Common Units and Related Security Holder Matters 15 Item 6. Selected Financial Data 16 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 17 Item 7a. Quantitative and Qualitative Disclosures About Market Risk 24 Item 8. Financial Statements and Supplementary Data 24 Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure 24 Part III Item 10. Partnership Management 25 Item 11. Executive Compensation 28 Item 12. Security Ownership of Certain Beneficial Owners and Management 33 Item 13. Certain Relationships and Related Transactions 33 Part IV Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K. 36 PART I Item 1. Business General We are a publicly traded limited partnership and a leading transporter of natural gas imported from Canada to the United States. We, through our subsidiary limited partnership, Northern Border Intermediate Limited Partnership, collectively referred to herein as "Partnership", own a 70% general partner interest in Northern Border Pipeline Company, a Texas general partnership. In addition, Crestone Energy Ventures, L.L.C. and Black Mesa Pipeline Company are wholly-owned subsidiaries of the Partnership. Our general partners and the general partners of the intermediate limited partnership are Northern Plains Natural Gas Company and Pan Border Gas Company, both subsidiaries of Enron Corp., and Northwest Border Pipeline Company, a subsidiary of The Williams Companies, Inc. Our general partners hold an aggregate 2% general partner interest in the Partnership. The general partners or their affiliates also own common units representing an aggregate 13.5% limited partner interest. The combined general and limited partner interests in the Partnership held by Enron and Williams are 11.7% and 3.8%, respectively (See Item 13. "Certain Relationships and Related Transactions"). The Partnership is managed by or under the direction of the Partnership Policy Committee consisting of three members, each of whom has been appointed by one of the general partners (See Item 10. "Partnership Management"). Northern Border Pipeline owns an interstate pipeline system that transports natural gas from the Montana- Saskatchewan border to natural gas markets in the midwestern United States. This pipeline system connects with multiple pipelines that provide shippers with access to the various natural gas markets served by those pipelines. In the year ended December 31, 2000, we estimate that Northern Border Pipeline transported approximately 22% of the total amount of natural gas imported from Canada to the United States. Over the same period, approximately 90% of the natural gas transported was produced in the western Canadian sedimentary basin located in the provinces of Alberta, British Columbia and Saskatchewan. Northern Border Pipeline transports gas for shippers under a tariff regulated by the Federal Energy Regulatory Commission ("FERC"). The tariff specifies the calculation of amounts to be paid by shippers and the general terms and conditions of transportation service on the pipeline system. Northern Border Pipeline's revenues are derived from agreements for the receipt and delivery of gas at points along the pipeline system as specified in each shipper's individual transportation contract. Northern Border Pipeline does not own the gas that it transports, and therefore it does not assume the related natural gas commodity risk. Our interest in Northern Border Pipeline represents the largest proportion of our assets, earnings and cash flows. The remaining 30% general partner interest in Northern Border Pipeline is owned by TC PipeLines Intermediate Limited Partnership, a subsidiary limited partnership of TC PipeLines, LP, a publicly traded partnership. The general partner of TC PipeLines and its subsidiary limited partnership is TC PipeLines GP, Inc., which is a subsidiary of TransCanada PipeLines Limited. Management of Northern Border Pipeline is overseen by the Northern Border Management Committee, which is comprised of three representatives from the Partnership (one designated by each general partner) and one representative from TC PipeLines. Voting power on the management committee is presently allocated among Northern Border Partners' three representatives in proportion to their general partner interests in Northern Border Partners. As a result, the 70% voting power of our three representatives on the management committee is allocated as follows: 35% to the representative designated by Northern Plains, 22.75% to the representative designated by Pan Border and 12.25% to the representative designated by Northwest Border. Therefore, Enron controls 57.75% of the voting power of the management committee and has the right to select two of the members of the management committee. For a discussion of specific relationships with affiliates, refer to Item 13. "Certain Relationships and Related Transactions." The pipeline system is operated by Northern Plains pursuant to an operating agreement. Northern Plains employs approximately 200 individuals located at the operating headquarters in Omaha, Nebraska, and at various locations along the pipeline route. Northern Plains' employees are not represented by any labor union and are not covered by any collective bargaining agreements. In September 2000, we purchased interests in gas gathering businesses in the Powder River and Wind River Basins in Wyoming for approximately $209 million from Enron North America. The transaction included the purchase of Enron Midstream Services, L.L.C., now known as Crestone Gathering Services, L.L.C., and ownership interests in Bighorn Gas Gathering, L.L.C. ("Bighorn"), Fort Union Gas Gathering, L.L.C. ("Fort Union") and Lost Creek Gathering, L.L.C. ("Lost Creek"). The transaction added to our previous ownership in Bighorn. Through our wholly owned subsidiary, Crestone Energy Ventures, we own 100% of Crestone Gathering Services, a 49% interest in Bighorn, a 33% interest in Fort Union and a 35% interest in Lost Creek, which collectively own over 300 miles of gas gathering facilities in Wyoming. Crestone Gathering Services provides gas gathering services to third parties. The gathering facilities interconnect to the interstate gas pipeline grid serving gas markets in the Rocky Mountains, the Midwest and California. The Bighorn and Fort Union systems gather coal seam methane gas produced in the Powder River basin in northeastern Wyoming. Under various agreements, the majority of which are long-term, producers have dedicated their reserves to Bighorn, giving Bighorn the right to gather coal seam methane gas produced in areas of Wyoming covering 800,000 acres. Bighorn's system is capable of gathering more that 250 million cubic feet per day of coal bed methane gas for delivery to the Fort Union gathering system. The Fort Union gathering system is capable of delivering more than 450 million cubic feet per day of coal seam methane gas into the interstate pipeline grid. Fort Union has announced a planned expansion to increase capacity to 634 million cubic feet per day that is expected to be in service in October 2001. The Lost Creek system gathers natural gas produced from conventional gas wells in the Wind River basin in central Wyoming and consists of 106 miles of gathering header. The system is capable of delivering more than 275 million cubic feet per day of gas into the interstate pipeline grid. CMS Field Services, Inc. holds the remaining ownership interest in Bighorn and is the project manager and operator. The Bighorn system is managed through a management committee consisting of representatives of the owners. CMS Field Services, CIG Resources Company, Western Gas Resources and Barrett Resources hold the remaining interest in Fort Union. CMS Field Services is the managing member, Western Gas Resources is the field operator and CIG is the administrative manager. Burlington Resources Trading, Inc. holds the remaining interest in Lost Creek and is the managing member. A subsidiary of Crestone Energy Ventures is the commercial and administrative manager. The system is operated by Elkhorn Field Services Company. NBP Services Corporation, an Enron subsidiary, provides administrative services for us and operating services for Crestone Energy Ventures. NBP Services Corporation has 22 employees and utilizes employees of its affiliates to provide these services. We also own Black Mesa Pipeline Company. Black Mesa owns a 273-mile, 18-inch diameter coal slurry pipeline which originates at a coal mine in Kayenta, Arizona. The coal slurry pipeline transports crushed coal suspended in water. It traverses westward through northern Arizona to the 1,500 megawatt Mohave Power Station located in Laughlin, Nevada. The coal slurry pipeline is the sole source of fuel for the Mohave Power Station, which consumes an average of 4.8 million tons of coal annually. The capacity of the pipeline is fully contracted to the coal supplier for the Mohave Power Station through the year 2005. The pipeline is operated by Black Mesa Pipeline Operations, LLC, a wholly-owned subsidiary of the Partnership. Approximately 58 people are employed in the operations of Black Mesa, of which 26 are represented by a labor union, the United Mine Workers. Pending Acquisitions In March 2001, we signed a definitive agreement for the acquisition of Midwestern Gas Transmission from El Paso Corporation for approximately $100 million. The Midwestern system is a 350-mile interstate natural gas pipeline extending from Portland, Tennessee to Joliet, Illinois. Midwestern connects to Northern Border Pipeline and other major interstate pipeline systems including Alliance Pipeline, Tennessee Gas Pipeline, Trunkline and Texas Gas Transmission to provide bi-directional service to markets in Kentucky, Indiana, southern Illinois and the Joliet/Chicago market hub. The acquisition is expected to close in the second quarter of this year, subject to the receipt of all necessary approvals. In March 2001, we signed a definitive agreement to purchase Bear Paw Energy, L.L.C. The purchase price is approximately $366 million to be paid with 5.7 million of our common units and $183 million in cash, of which $98.2 million will be used to retire debt of Bear Paw Energy with the remainder payable to the sellers. An additional $6 million will be payable in February 2002, if certain performance criteria are met. The purchase is targeted for completion by the end of the first quarter of this year. Bear Paw Energy has extensive gathering and processing operations in the Powder River Basin in Wyoming and the Williston Basin in Montana, North Dakota and Saskatchewan. Bear Paw Energy has approximately 226,000 leasehold production acres under dedication and 600 miles of high and low pressure gathering pipelines in the Powder River Basin. In the Williston Basin, Bear Paw Energy has over 2,800 miles of gathering pipelines and four processing plants with 90 million cubic feet per day of capacity. In February 2001, we signed a purchase and sale agreement to purchase the Mazeppa Plant, Gladys Plant and a minority interest in the Gregg Lake/Obed Pipeline, all of which are located in Alberta, Canada, from Dynegy Canada, Inc. The purchase price, which is subject to adjustment, is approximately $46 million. The Mazeppa Plant is a sour gas processing plant with 87 million cubic feet per day of combined capacity and associated gathering pipelines. The Gladys Plant is a sour gas processing plant with 7 million cubic feet per day of capacity. The Gregg Lake/Obed Pipeline is comprised of 85 miles of gathering lines with a capacity of 150 million cubic feet per day. We are targeting to close on this transaction by the end of March 2001. The Northern Border Pipeline System Northern Border Pipeline owns a 1,214-mile United States interstate pipeline system that transports natural gas from the Montana-Saskatchewan border near Port of Morgan, Montana, to interconnecting pipelines in the upper Midwest of the United States. Construction of the pipeline was initially completed in 1982. The pipeline system was expanded and/or extended in 1991, 1992 and 1998. The pipeline system has pipeline access to natural gas reserves in the western Canadian sedimentary basin in the provinces of Alberta, British Columbia and Saskatchewan in Canada, as well as the Williston Basin in the United States. The pipeline system also has access to synthetic gas produced at the Dakota Gasification plant in North Dakota. For the year ended December 31, 2000, of the natural gas transported on the system, approximately 90% was produced in Canada, approximately 5% was produced by the Dakota Gasification plant, and approximately 5% was produced in the Williston Basin. The pipeline system consists of 822 miles of 42-inch diameter pipe designed to transport 2,373 million cubic feet per day ("mmcfd") from the Canadian border to Ventura, Iowa; 30-inch diameter pipe and 36-inch diameter pipe, each approximately 147 miles in length, designed to transport 1,300 mmcfd in total from Ventura, Iowa to Harper, Iowa; and 226 miles of 36-inch diameter pipe and 19 miles of 30-inch diameter pipe designed to transport 645 mmcfd from Harper, Iowa to a terminus near Manhattan, Illinois (Chicago area). Along the pipeline there are 15 compressor stations with total rated horsepower of 476,500 and measurement facilities to support the receipt and delivery of gas at various points. Other facilities include four field offices and a microwave communication system with 51 tower sites. At its northern end, the pipeline system is connected to TransCanada's majority-owned Foothills Pipe Lines (Sask.) Ltd. system in Canada, which is connected to TransCanada's Alberta system and the pipeline system owned by Transgas Limited in Saskatchewan. The Alberta system gathers and transports approximately 18% of the total North American natural gas production and approximately 74% of the natural gas produced in the western Canadian sedimentary basin. The pipeline system also connects with facilities of Williston Basin Interstate Pipeline at Glen Ullin and Buford, North Dakota, facilities of Amerada Hess Corporation at Watford City, North Dakota and facilities of Dakota Gasification Company at Hebron, North Dakota in the northern portion of the pipeline system. Interconnects The pipeline system connects with multiple pipelines that provide its shippers with access to the various natural gas markets served by those pipelines. The pipeline system interconnects with pipeline facilities of: * Northern Natural Gas Company, an Enron subsidiary, at Ventura, Iowa as well as multiple smaller interconnections in South Dakota, Minnesota and Iowa; * Natural Gas Pipeline Company of America at Harper, Iowa; * MidAmerican Energy Company at Iowa City and Davenport, Iowa and Cordova, Illinois; * Alliant Power Company at Prophetstown, Illinois; * Northern Illinois Gas Company at Troy Grove and Minooka, Illinois; * Midwestern Gas Transmission Company near Channahon, Illinois; * ANR Pipeline Company near Manhattan, Illinois; and * The Peoples Gas Light and Coke Company near Manhattan, Illinois at the terminus of the pipeline system. The Ventura, Iowa interconnect with Northern Natural Gas Company functions as a large market center, where natural gas transported on the pipeline system is sold, traded and received for transport to significant consuming markets in the Midwest and to interconnecting pipeline facilities destined for other markets. Shippers The pipeline system serves more than 50 firm transportation shippers with diverse operating and financial profiles. Based upon shippers' contractual obligations, as of December 31, 2000, 92% of the firm capacity is contracted by producers and marketers. The remaining firm capacity is contracted to local distribution companies (5%), interstate pipelines (2%) and end-users (1%). As of December 31, 2000, the termination dates of these contracts ranged from October 31, 2001 to December 21, 2013 and the weighted average contract life, based upon annual contractual obligations, was approximately six years with just under 99% of capacity contracted through mid-September 2003. Based on their proportionate shares of capacity, as of December 31, 2000, the five largest shippers are: Pan- Alberta Gas (U.S.) Inc. (25.5%), TransCanada Energy Marketing USA, Inc. (11.4%), PanCanadian Energy Services Inc (7.3%), Enron North America Corp. (6.3%) and Engage Energy US, LP. (5.4%). The 20 largest shippers, in total, are responsible for approximately 93% of total revenues. As of December 31, 2000, the largest shipper, Pan- Alberta, holds firm capacity of 690 mmcfd under three contracts with terms to October 31, 2003. An affiliate of Enron provides guaranties for 300 mmcfd of Pan-Alberta's contractual obligations through October 31, 2001. In addition, Pan-Alberta's remaining capacity is supported by various credit support arrangements, including, among others, a letter of credit, a guaranty from an interstate pipeline company through October 31, 2001 for 132 mmcfd, an escrow account and an upstream capacity transfer agreement. Mirant Americas Energy Marketing, LP, formerly Southern Company Energy Marketing L.P., manages the assets of Pan- Alberta Gas, Ltd., which include Pan-Alberta's contracts with Northern Border Pipeline. Some of the shippers are affiliated with the general partners of Northern Border Pipeline. TransCanada Energy Marketing USA, Inc., a subsidiary of TransCanada, holds firm contracts representing 11.4% of capacity. Enron North America Corp., a subsidiary of Enron, holds firm contracts representing 6.3% of capacity. Transcontinental Gas Pipe Line Corporation, a subsidiary of Williams, holds a contract representing 0.8% of capacity. See Item 13. "Certain Relationships and Related Transactions." Demand For Transportation Capacity Northern Border Pipeline's long-term financial condition is dependent on the continued availability of economic western Canadian natural gas for import into the United States. Natural gas reserves may require significant capital expenditures by others for exploration and development drilling and the installation of production, gathering, storage, transportation and other facilities that permit natural gas to be produced and delivered to pipelines that interconnect with the pipeline system. Low prices for natural gas, regulatory limitations or the lack of available capital for these projects could adversely affect the development of additional reserves and production, gathering, storage and pipeline transmission of western Canadian natural gas supplies. Additional pipeline export capacity also could accelerate depletion of these reserves. Northern Border Pipeline's business depends in part on the level of demand for western Canadian natural gas in the markets the pipeline system serves. The volumes of natural gas delivered to these markets from other sources affect the demand for both western Canadian natural gas and use of the pipeline system. Demand for western Canadian natural gas to serve other markets also influences the ability and willingness of shippers to use the pipeline system to meet demand in the markets that the pipeline serves. A variety of factors could affect the demand for natural gas in the markets that the pipeline system serves. These factors include: * economic conditions; * fuel conservation measures; * alternative energy requirements and prices; * climatic conditions; * government regulation; and * technological advances in fuel economy and energy generation devices. We cannot predict whether these or other factors will have an adverse effect on demand for use of the pipeline system or how significant that adverse effect could be. Future Demand and Competition On March 16, 2000, the FERC issued an order granting Northern Border Pipeline's application for a certificate to construct and operate its proposed Project 2000 facilities. Project 2000 will expand and extend the pipeline system into Indiana. Project 2000 will afford shippers on the extended pipeline system access to industrial gas consumers in northern Indiana through an interconnect with Northern Indiana Public Service Company, a major midwest local distribution company, at the terminus near North Hayden, Indiana. The capital expenditures for Project 2000 are estimated to be approximately $94 million with a planned in-service of November 2001. Proposed facilities include approximately 34.4 miles of 30-inch pipeline, new equipment and modifications at three compressor stations resulting in a net increase of 22,500 compressor horsepower and one meter station. As a result of the Project 2000 expansion, the pipeline system will have the ability to transport 1,484 mmcfd from Ventura to Harper, Iowa, 844 mmcfd from Harper to Manhattan, Illinois, and 544 mmcfd on the new extension from Manhattan to North Hayden, Indiana. Five shippers have contracted for all the additional capacity under long-term transportation agreements. The Project 2000 shippers are: Bethlehem Steel Corporation, El Paso Energy Marketing Company, Northern Indiana Public Service Company, Peoples Energy Services Corporation and The Peoples Gas Light and Coke Company. Northern Border Pipeline competes with other pipeline companies that transport natural gas from the western Canadian sedimentary basin or that transport natural gas to markets in the midwestern United States. The competitors for the supply of natural gas include six pipelines and the Canadian domestic users in the western Canadian sedimentary basin region. Northern Border Pipeline's competitive position is affected by the availability of Canadian natural gas for export, the prices of natural gas in alternative markets, the cost of producing natural gas in Canada, and demand for natural gas in the United States. Alliance Pipeline, which commenced transporting natural gas from the western Canadian sedimentary basin to the midwestern United States in December 2000, delivers its volumes into the Chicago market and other interstate pipelines. Alliance Pipeline transports gas containing high-energy liquid hydrocarbons. Additional facilities to extract the natural gas liquids were constructed near Alliance Pipeline's terminus in Chicago to permit Alliance to transport natural gas with the liquids-rich element. As a consequence of Alliance Pipeline, there has been an increase in natural gas moving from the western Canadian sedimentary basin to Chicago. Vector Pipeline L.P. interconnects with Alliance and transports gas eastward to a terminus in eastern Canada. There are several additional projects proposed to transport natural gas from the Chicago area that would provide access to additional markets for the shippers. The proposed projects currently being pursued by third parties are targeting markets in northern Illinois, Wisconsin and the northeast United States. These proposed projects are in various stages of regulatory approval. Williams has a minority interest (14.6%) in Alliance Pipeline. TransCanada and other unaffiliated companies own and operate pipeline systems that transport natural gas from the same natural gas reserves in western Canada that supply Northern Border Pipeline's customers. Natural gas is also produced in the United States and transported by competing pipeline systems to the same markets as those served by the pipeline system. Crestone Energy Ventures competes with other natural gas gathering and pipelines companies to carry natural gas from the production area of the Powder River and Wind River Basins of Wyoming to the major interstate transmission pipelines in the Rocky Mountain Region. Crestone Energy Ventures' competitive position is affected by the pace of gas drilling, gas production rates, gas reserves, and the demand for natural gas in the Rocky Mountains, Midwest, and California markets served by the interstate pipeline gas grid. The pace of drilling may be impacted by the ability of gas producers to obtain the necessary drilling and production permits in an economic manner. In providing gas gathering services, Crestone Energy Ventures may require acreage dedication and/or volume commitments from gas producers. Development of future gas gathering systems will be staged to reflect the growth in number of wells and field production. FERC Regulation General Northern Border Pipeline is subject to extensive regulation by the FERC as a "natural gas company" under the Natural Gas Act. Under the Natural Gas Act and the Natural Gas Policy Act, the FERC has jurisdiction with respect to virtually all aspects of the business, including: * transportation of natural gas; * rates and charges; * construction of new facilities; * extension or abandonment of service and facilities; * accounts and records; * depreciation and amortization policies; * the acquisition and disposition of facilities; and * the initiation and discontinuation of services. Where required, Northern Border Pipeline holds certificates of public convenience and necessity issued by the FERC covering the facilities, activities and services. Under Section 8 of the Natural Gas Act, the FERC has the power to prescribe the accounting treatment for items for regulatory purposes. Northern Border Pipeline's books and records are periodically audited under Section 8. The FERC regulates the rates and charges for transportation in interstate commerce. Natural gas companies may not charge rates exceeding rates judged just and reasonable by the FERC. In addition, the FERC prohibits natural gas companies from unduly preferring or unreasonably discriminating against any person with respect to pipeline rates or terms and conditions of service. Some types of rates may be discounted without further FERC authorization. Northern Border Rate Case Proceeding In May 1999, Northern Border Pipeline filed a rate case wherein it proposed, among other things, to increase the allowed equity rate of return to 15.25%. The total annual cost of service increase due to the proposed changes was approximately $30 million. A number of the shippers and competing pipelines filed interventions and protests. In June 1999, the FERC issued an order in which the proposed changes were suspended until December 1, 1999, after which they were implemented with subsequent billings subject to refund. The order set for hearing not only the proposed changes but also several issues raised by intervenors including the appropriateness of the cost of service form of tariff and the depreciation schedule. Upon a request for clarification, the FERC issued an order in August 1999 that provided that the manner in which the costs of the recently completed expansion and extension project ("The Chicago Project") could be recovered from shippers may be examined in this proceeding and that, while Northern Border Pipeline had not proposed to change the depreciation rates approved in the last rate case, it had the burden of proving that the depreciation rates are just and reasonable. On September 26, 2000, Northern Border Pipeline filed a stipulation and agreement in its 1999 rate case proceeding that documented a settlement. On December 13, 2000, the FERC issued its order approving the terms of the settlement. One of the important elements of the settlement is the conversion of Northern Border Pipeline's form of tariff from cost of service to stated rates based on a straight-fixed variable rate design. Under the former cost of service tariff, the firm transportation shippers contracted to pay for a proportionate share of the pipeline system's cost of service. During any given month, each of these shippers paid a uniform mileage-based charge for the amount of capacity contracted, and calculated under a cost of service tariff. The shippers were obligated to pay their proportionate share of the cost of service regardless of the amount of natural gas they actually transported. Under the cost of service form of tariff, Northern Border Pipeline could not charge or collect more than the cost of service. Under Northern Border Pipeline's new form of tariff, shippers pay Northern Border Pipeline on the basis of stated transportation rates. Under the terms of the settlement, and in accordance with straight-fixed variable rate design principles, approximately 98% of the agreed upon revenue level is attributed to demand charges. The firm shippers are obligated to pay a monthly demand charge, regardless of the amount of natural gas they actually transport, for the term of their contracts. The remaining 2% of the agreed upon revenue level is attributed to the commodity charge based on the volumes of gas actually transported. From December 1, 1999, through and including December 31, 2000, the rates were based upon an annual revenue level of $307 million. For periods after December 31, 2000, the rates are based upon an annual revenue level of $305 million. On a per unit of transportation basis, the rates under the new tariff are approximately equal to the cost of service on a per unit basis charged prior to December 1, 1999. The settlement also provides that neither Northern Border Pipeline nor its existing shippers can seek rate changes until November 1, 2005, at which time Northern Border Pipeline must file a new rate case. Prior to the new rate case, Northern Border Pipeline will not be permitted to increase rates if its costs increase, nor will it be required to reduce rates based on cost savings. Northern Border Pipeline's earnings and cash flow will depend on its future costs, contracted capacity, the volumes of gas transported and its ability to recontract capacity at acceptable rates. Under Northern Border Pipeline's previous cost of service form of tariff, the amount of revenue that it collected from customers generally declined as the rate base was recovered. Under its new tariff, Northern Border Pipeline is entitled to collect revenue based on stated rates established in its 1999 rate case until its next rate case, which will be filed November 1, 2005. It will, however, continue to depreciate its rate base at an annual depreciation rate on transmission plant in service of 2.25% and its rate base in 2005 will be a factor in determining what it can charge when it files a new rate case at that time. In order to avoid a decline in revenue it can collect from its customers, Northern Border Pipeline must maintain or increase its rate base by acquiring or constructing assets that replace or add to existing pipeline facilities or by adding new facilities and maintain its level of contracted capacity at the stated rates. It was agreed in the settlement of the 1999 rate case, that there would be no project cost containment mechanism adjustment for The Chicago Project and that all costs as of November 30, 1999 incurred in the construction and commissioning of the Chicago Project were included in rate base. The project cost containment mechanism was created in the settlement of the 1995 rate case. The purpose of the project cost containment mechanism was to limit Northern Border Pipeline's ability to include cost overruns for The Chicago Project in rate base and to provide incentives for cost underruns. The settlement of Northern Border Pipeline's 1995 rate case provided that for at least seven years from the date The Chicago Project was completed, Northern Border Pipeline could continue to calculate the allowance for income taxes in the manner it had historically used. In addition, a settlement adjustment mechanism of $31 million was implemented, which effectively reduces the return on rate base. These provisions of the 1995 rate case were maintained in the settlement of Northern Border's 1999 rate case. Northern Border Pipeline also provides interruptible transportation service. Interruptible transportation service is transportation in circumstances when surplus capacity is available after satisfying firm service requests. The maximum rate that may be charged to interruptible shippers is calculated as the sum of the firm transportation Rate Schedule T-1 maximum reservation charge and commodity rate. Under the previous cost of service form of tariff, all interruptible transportation service revenue generated was credited to the benefit of the firm shippers. Under the new tariff, Northern Border Pipeline shares net interruptible transportation service revenue and any new services revenue on an equal basis with its firm shippers through October 31, 2003. In addition, Northern Border Pipeline is permitted to retain revenue from interruptible transportation service to offset any decontracted firm capacity. After October 31, 2003, all revenues from interruptible transportation service and other new services will no longer be subject to sharing and thus will be retained by Northern Border Pipeline. In addition, the settlement of the 1999 rate case also provided for an equal sharing with its firm shippers of revenue generated from a certain telecommunications contract for the term of that contract. Northern Border Pipeline intends to develop new services and seek the FERC's authorization to implement such services. While the receipt of those approvals and the future impact of the revenue sharing provisions of the settlement on Northern Border Pipeline's earnings cannot be determined at this time, revenues from these sources are expected to be minimal through at least October 31, 2003. Open access regulation Beginning on April 8, 1992, the FERC issued a series of orders, known as Order 636, which required pipeline companies to unbundle their services and offer sales, transportation, storage, gathering and other services separately, to provide all transportation services on a basis that is equal in quality for all shippers and to implement a program to allow firm holders of pipeline capacity to resell or release their capacity to other shippers. Capacity release provisions were adopted that allowed shippers to release all or part of their capacity either permanently or temporarily. Shippers on the pipeline system have temporarily released capacity as well as permanently released capacity to other shippers who have agreed to comply with the underlying contractual and regulatory obligations associated with that capacity. Beginning in 1996, the FERC issued a series of orders, referred to together as Order 587, amending its open access regulations to standardize business practices and procedures governing transactions between interstate natural gas pipelines, their customers, and others doing business with the pipelines. The intent of Order 587 was to assist shippers that deal with more than one pipeline by establishing standardized business practices and procedures. These business standards, developed by the Gas Industry Standards Board, govern important business practices including shipper supplied service nominations, allocation of available capacity, accounting and invoicing of transportation service, standardized internet business transactions and capacity release. Northern Border Pipeline has implemented the necessary changes to its tariff and internal systems. In 1998, the FERC initiated a number of proceedings to further amend its open access regulations. In the resulting order, Order 637 issued February 9, 2000, the FERC revised the short-term transportation regulations by 1) waiving the maximum rate ceiling in its capacity release regulations until September 30, 2002 for short-term releases of capacity of less than one year; 2) permitting value-oriented peak/off- peak rates to better allocate revenue responsibility between short-term and long-term markets; 3) permitting term- differentiated rates to better allocate risks between shippers and the pipelines; 4) revising the regulations related to scheduling procedures, capacity segmentation, imbalance management and penalties; 5) retaining the right of first refusal and the five-year matching cap but limiting the right to customers with maximum rate contracts for 12 or more consecutive months of service; and 6) adopting new reporting requirements to take effect September 1, 2000 that include reporting daily transactional data on all firm and interruptible contracts, daily reporting of scheduled quantities at points or segments, and the posting of corporate and pipeline organizational charts, names and functions. As required by Order No. 637, Northern Border Pipeline filed pro forma tariff sheets in compliance to address the issues identified in 4) above. This filing is pending at the FERC. All other related compliance filings and reporting requirements have been completed and implemented. We do not believe that these regulatory initiatives will have a material adverse impact to Northern Border Pipeline's operations. Environmental and Safety Matters Our operations are subject to federal, state and local laws and regulations relating to safety and the protection of the environment which include the Resource Conservation and Recovery Act, the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, Clean Air Act, as amended, the Clean Water Act, as amended, the Natural Gas Pipeline Safety Act of 1969, as amended, and the Pipeline Safety Act of 1992. Black Mesa Pipeline Company, our subsidiary, has received a Findings of Violation by the United States Environmental Protection Agency ("EPA"), citing violations of the Clean Water Act and Notice of Violation from the Arizona Department of Environmental Quality citing violations of state laws due to discharges of coal slurry on Black Mesa's pipeline from December 1997 through July 1999. Black Mesa Pipeline has paid an amount of $128,000 in penalties for all alleged violations into an escrow account and has executed a Consent Decree which sets forth this payment as well as certain preventative measures, reporting requirements and associated penalties for failure to comply. Upon execution by the EPA and the Arizona Department of Environmental Quality, this Consent Decree will be filed in the United States District Court, District of Arizona for public notice, comment and final approval. Although we believe that our operations and facilities are in general compliance in all material respects with applicable environmental and safety regulations, risks of substantial costs and liabilities are inherent in pipeline operations, and we cannot provide any assurances that we will not incur such costs and liabilities. Moreover, it is possible that other developments, such as increasingly strict environmental and safety laws, regulations and enforcement policies thereunder, and claims for damages to property or persons resulting from the Partnership's operations, could result in substantial costs and liabilities to the Partnership. If we are unable to recover such resulting costs, earnings and cash distributions could be adversely affected. Item 2. Properties Northern Border Pipeline holds the right, title and interest in its pipeline system. With respect to real property, the pipeline system falls into two basic categories: (a) parcels which Northern Border Pipeline owns in fee, such as certain of the compressor stations, meter stations, pipeline field office sites, and microwave tower sites; and (b) parcels where the interest of Northern Border Pipeline derives from leases, easements, rights-of-way, permits or licenses from landowners or governmental authorities permitting the use of such land for the construction and operation of the pipeline system. The right to construct and operate the pipeline across certain property was obtained by Northern Border Pipeline through exercise of the power of eminent domain. Northern Border Pipeline continues to have the power of eminent domain in each of the states in which it operates the pipeline system, although it may not have the power of eminent domain with respect to Native American tribal lands. Approximately 90 miles of the pipeline is located on fee, allotted and tribal lands within the exterior boundaries of the Fort Peck Indian Reservation in Montana. Tribal lands are lands owned in trust by the United States for the Fort Peck Tribes and allotted lands are lands owned in trust by the United States for an individual Indian or Indians. Northern Border Pipeline does have the right of eminent domain with respect to allotted lands. In 1980, Northern Border Pipeline entered into a pipeline right-of-way lease with the Fort Peck Tribal Executive Board, for and on behalf of the Assiniboine and Sioux Tribes of the Fort Peck Indian Reservation. This pipeline right-of-way lease, which was approved by the Department of the Interior in 1981, granted to Northern Border Pipeline the right and privilege to construct and operate its pipeline on certain tribal lands. This lease expires in 2011. In conjunction with obtaining a pipeline right-of-way lease across tribal lands located within the exterior boundaries of the Fort Peck Indian Reservation, Northern Border Pipeline also obtained a right-of-way across allotted lands located within the reservation boundaries. This right- of-way on allotted lands is either a perpetual easement or for a term of years. Most of the allotted lands are subject to a perpetual easement either granted, by the Bureau of Indian Affairs ("BIA") for and on behalf of individual Indian owners or obtained through condemnation. Several tracts are subject to a right-of-way grant that has a term of 15 years. Crestone Gathering Services holds the right, title and interest in its gathering system which consists of low pressure gas gathering lines and compression and measurement facilities. Crestone Gathering Services' system is utilized for the gathering and compression of coal bed methane gas from low pressure at the wellhead to high pressure gathering lines of which 30 miles is steel pipe and 99 miles is polyethylene pipe. Along these gathering lines, Crestone Gathering Services has installed 42 gas compression facilities with a total rated horsepower of 36,000 and measurement facilities to support the receipt and delivery of gas at various points. The real property rights for Crestone Gathering Service's system are derived through leases, easements, rights-of-way and permits. Item 3. Legal Proceedings We are not currently parties to any legal proceedings that, individually or in the aggregate, would reasonably be expected to have a material adverse impact on our results of operations or financial position. Also, see Item 1. "Business - Environmental and Safety Matters." Item 4. Submission of Matters to a Vote of Security Holders There were no matters submitted to a vote of security holders during 2000. PART II Item 5. Market for the Registrant's Common Units and Related Security Holder Matters The following table sets forth, for the periods indicated, the high and low sale prices per common unit, as reported on the New York Stock Exchange Composite Tape, and the amount of cash distributions per common unit declared for each quarter:
Price Range Cash High Low Distributions 2000 First Quarter.................. $29.25 $23.00 $0.65 Second Quarter................. 28.125 23.75 $0.65 Third Quarter.................. 31.875 27.25 $0.70 Fourth Quarter................. 33.625 27.75 $0.70 1999 First Quarter.................. $35.50 $30.375 $0.61 Second Quarter................. 33.5625 30.1875 0.61 Third Quarter.................. 31.875 28.00 0.61 Fourth Quarter................. 29.50 21.625 0.65
As of March 1, 2001, there were approximately 1,480 record holders of common units and approximately 39,700 beneficial owners of the common units, including common units held in street name. We currently have 31,503,563 common units outstanding, representing a 98% limited partner interest. The common units are the only outstanding limited partner interests. Thus, our equity consists of general partner interests representing in the aggregate a 2% interest and common units representing in the aggregate a 98% limited partner interest. The general partners are entitled to 2% of all cash distributions, and the holders of common units are entitled to the remaining 98% of all cash distributions, except that the general partners are entitled to incentive distributions if the amount distributed with respect to any quarter exceeds $0.605 per common unit ($2.42 annualized). Under the incentive distribution provisions, the general partners are entitled to 15% of amounts distributed in excess of $0.605 per common unit, 25% of amounts distributed in excess of $0.715 per common unit ($2.86 annualized) and 50% of amounts distributed in excess of $0.935 per common unit ($3.74 annualized). The amounts that trigger incentive distributions at various levels are subject to adjustment in certain events, as described in the Partnership Agreement. On January 18, 2001, we declared a distribution of $0.70 per unit ($2.80 per unit on an annualized basis), payable February 14, 2001 to the general partners and unitholders of record at January 31, 2001. Item 6. Selected Financial Data (in thousands, except per unit, other financial data and operating data)
Year Ended December 31, 2000 1999 1998 1997 1996 INCOME DATA: Operating revenues, net $ 339,732 $ 318,963 $ 217,592 $ 198,574 $ 201,943 Operations and maintenance 62,097 53,451 44,770 37,418 28,366 Depreciation and amortization 60,699 54,842 43,885 40,332 46,979 Taxes other than income 28,634 30,952 22,012 22,836 24,390 Regulatory credit -- -- (8,878) -- -- Operating income 188,302 179,718 115,803 97,988 102,208 Interest expense, net 81,495 67,709 30,922 30,860 32,670 Other income 8,032 4,562 13,208 8,149 2,900 Minority interests in net income 38,119 35,568 30,069 22,253 22,153 Net income to partners $ 76,720 $ 81,003 $ 68,020 $ 53,024 $ 50,285 Net income per unit $ 2.50 $ 2.70 $ 2.27 $ 1.97 $ 1.88 Number of units used in computation 29,665 29,347 29,345 26,392 26,200 CASH FLOW DATA: Net cash provided by operating activities $ 169,615 $ 173,368 $ 103,849 $ 119,621 $ 137,534 Capital expenditures 19,721 102,270 652,194 152,658 18,597 Distribution per unit 2.65 2.44 2.30 2.20 2.20 BALANCE SHEET DATA (AT END OF PERIOD): Property, plant and equipment, net $1,732,076 $1,745,356 $1,730,476 $1,118,364 $ 937,859 Total assets 2,082,720 1,863,437 1,825,766 1,266,917 1,016,484 Long-term debt, including current maturities 1,171,962 1,031,986 976,832 481,355 377,500 Minority interests in partners' capital 248,098 250,450 253,031 174,424 158,089 Partners' capital 572,274 515,269 507,426 500,728 410,586 OTHER FINANCIAL DATA: Ratio of earnings to fixed charges (1) 2.4 2.7 3.0 3.2 3.2 OPERATING DATA: Northern Border Pipeline: Million cubic feet of gas delivered 852,674 834,833 608,187 621,262 630,148 Average daily throughput (MMcfd) 2,400 2,353 1,706 1,735 1,755 Transportation units (million dekatherm miles per day): Firm service 2,276 2,289 1,417 1,393 1,392 Interruptible 19 6 28 47 56 (1) "Earnings" means the sum of pre-tax income from continuing operations and fixed charges. "Fixed charges" means the sum of (a) interest expensed and capitalized; (b) amortized premiums, discounts and capitalized expenses related to indebtedness; and (c) an estimate of interest within rental expenses.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations Year Ended December 31, 2000 Compared With the Year Ended December 31, 1999 Operating revenues, net increased $20.8 million (7%) for the year ended December 31, 2000, as compared to the same period in 1999. Operating revenues attributable to Northern Border Pipeline were $311.0 million for the year ended December 31, 2000, as compared to $298.3 million for the same period in 1999, an increase of $12.7 million (4%). Northern Border Pipeline's operating revenues for 2000 reflect the significant terms of the rate case settlement discussed in Item 1. "Business - Northern Border Rate Case Proceeding". Operating revenues for 1999 were determined under Northern Border Pipeline's cost of service tariff. Operating revenues from Crestone Energy Ventures were $7.5 million for 2000, which represented three months of activity. Crestone Energy Venture's operating results occurred in the fourth quarter of 2000 after the acquisition of gas gathering businesses in late September 2000 (see Item 1. "Business - General"). Operations and maintenance expense increased $8.6 million (16%) for the year ended December 31, 2000, from the same period in 1999, due primarily to $5.1 million of expense from Crestone Energy Ventures. Operations and maintenance expense attributable to Northern Border Pipeline increased $2.8 million (7%) for the year ended December 31, 2000, from the same period in 1999, due primarily to increased employee payroll and benefit expenses and costs to operate two electric-powered compressor units. Depreciation and amortization expense increased $5.9 million (11%) for the year ended December 31, 2000, as compared to the same period in 1999. Depreciation and amortization expense attributable to Northern Border Pipeline increased $5.4 million (10%) for the year ended December 31, 2000, as compared to the same period in 1999, due primarily to an increase in the depreciation rate applied to transmission plant. As a result of the rate case settlement, Northern Border Pipeline used a depreciation rate for transmission plant of 2.25% for 2000. Northern Border Pipeline had used a depreciation rate of 2.0% for 1999. Taxes other than income decreased $2.3 million (7%) for the year ended December 31, 2000, as compared to the same period in 1999, due primarily to adjustments to Northern Border Pipeline's previous estimates of ad valorem taxes. Interest expense, net increased $13.8 million (20%) for the year ended December 31, 2000, as compared to the same period in 1999. Interest expense for the Partnership increased approximately $9.2 million (167%) for the year ended December 31, 2000, as compared to the same period in 1999, due to additional borrowings and an increase in interest rates. The additional borrowings were made primarily for the acquisition of gas gathering businesses in the Powder River and Wind River basins in Wyoming in December 1999, June 2000 and September 2000. Interest expense attributable to Northern Border Pipeline increased $4.9 million (8%) for the year ended December 31, 2000, as compared to the same period in 1999, due primarily to an increase in average interest rates between 1999 and 2000. The impact of the increase in interest rates was partially offset by a decrease in average debt outstanding. Other income increased $3.5 million (76%) for the year ended December 31, 2000, as compared to the same period in 1999. Other income attributable to Northern Border Pipeline increased $6.7 million (491%) for the year ended December 31, 2000, as compared to the same period in 1999, due primarily to a reduction in reserves previously established for regulatory issues as a result of the settlement of Northern Border Pipeline's rate case. The 1999 results included $3.0 million of other non-recurring income for the Partnership. Minority interests in net income increased $2.6 million (7%) for the year ended December 31, 2000, as compared to the same period in 1999, due to increased net income for Northern Border Pipeline. Year Ended December 31, 1999 Compared With the Year Ended December 31, 1998 Operating revenues, net increased $101.4 million (47%) for the year ended December 31, 1999, as compared to the same period in 1998, due primarily to additional revenue from Northern Border Pipeline's operation of The Chicago Project facilities. Additional receipt capacity of 700 mmcfd, a 42% increase, and new firm transportation agreements with 27 shippers resulted from The Chicago Project. Northern Border Pipeline's cost of service tariff provided an opportunity to recover operations and maintenance costs of the pipeline, taxes other than income taxes, interest, depreciation and amortization, an allowance for income taxes and a regulated return on equity. Northern Border Pipeline was generally allowed an opportunity to collect from its shippers a return on unrecovered rate base as well as recover that rate base through depreciation and amortization. The Chicago Project increased Northern Border Pipeline's rate base, which increased return for the year ended December 31, 1999. Also reflected in the increase in 1999 revenues are recoveries of increased pipeline operating expenses due to the new facilities. Operations and maintenance expense increased $8.7 million (19%) for the year ended December 31, 1999, from the same period in 1998, due primarily to operations and maintenance expenses for The Chicago Project facilities and increased employee payroll and benefit expenses. Depreciation and amortization expense increased $11.0 million (25%) for the year ended December 31, 1999, as compared to the same period in 1998, due primarily to The Chicago Project facilities placed into service. The impact of the additional facilities on depreciation and amortization expense was partially offset by a decrease in the depreciation rate applied to transmission plant from 2.5% to 2.0%. Northern Border Pipeline agreed to reduce the depreciation rate at the time The Chicago Project was placed into service as part of a previous rate case settlement. Taxes other than income increased $8.9 million (41%) for the year ended December 31, 1999, as compared to the same period in 1998, due primarily to ad valorem taxes attributable to the facilities placed into service for The Chicago Project. For the year ended December 31, 1998, Northern Border Pipeline recorded a regulatory credit of $8.9 million. During the construction of The Chicago Project, Northern Border Pipeline placed new facilities into service in advance of the December 1998 project in-service date to maintain gas flow at firm contracted capacity while existing facilities were being modified. The regulatory credit deferred the cost of service of these new facilities, which Northern Border Pipeline began to recover from its shippers commencing with the in-service date of The Chicago Project. Interest expense, net increased $36.8 million (119%) for the year ended December 31, 1999, as compared to the same period in 1998, due to an increase in interest expense of $17.9 million and a decrease in interest expense capitalized of $18.9 million. Interest expense increased due primarily to an increase in average debt outstanding, reflecting amounts borrowed to finance a portion of the capital expenditures for The Chicago Project. The impact of the increased borrowings on interest expense was partially offset by a decrease in average interest rates between 1998 and 1999. The decrease in interest expense capitalized is due to the completion of construction of The Chicago Project in December 1998. Other income decreased $8.6 million (65%) for the year ended December 31, 1999, as compared to the same period in 1998, primarily due to a decrease in the allowance for equity funds used during construction. The decrease in the allowance for equity funds used during construction is due to the completion of construction of The Chicago Project in December 1998. Minority interests in net income increased $5.5 million (18%) for the year ended December 31, 1999, as compared to the same period in 1998, due to increased net income for Northern Border Pipeline. Liquidity and Capital Resources General In August 1999, Northern Border Pipeline completed a private offering of $200 million of 7.75% Senior Notes due 2009, which notes were subsequently exchanged in a registered offering for notes with substantially identical terms ("Pipeline Senior Notes"). The indenture under which the Pipeline Senior Notes were issued does not limit the amount of unsecured debt Northern Border Pipeline may incur, but does contain material financial covenants, including restrictions on incurrence of secured indebtedness. The proceeds from the Pipeline Senior Notes were used to reduce indebtedness under a June 1997 credit agreement. In June 1997, Northern Border Pipeline entered into a credit agreement ("Pipeline Credit Agreement") with certain financial institutions to borrow up to an aggregate principal amount of $750 million. The Pipeline Credit Agreement is comprised of a $200 million five-year revolving credit facility to be used for the retirement of Northern Border Pipeline's prior credit facilities and for general business purposes, and a $550 million three-year revolving credit facility to be used for the construction of The Chicago Project. Effective March 1999, in accordance with the provisions of the Pipeline Credit Agreement, Northern Border Pipeline converted the three-year revolving credit facility to a term loan maturing in 2002. At December 31, 2000, $424 million was outstanding under the term loan and $45 million was outstanding under the five-year revolving credit facility. At December 31, 2000, Northern Border Pipeline also had outstanding $184 million of senior notes issued in a $250 million private placement under a July 1992 note purchase agreement. The note purchase agreement provides for four series of notes, Series A through D, maturing between August 2000 and August 2003. The Series A Notes with a principal amount of $66 million were repaid in August 2000. The Series B Notes with a principal amount of $41 million mature in August 2001. Northern Border Pipeline anticipates borrowing on the Pipeline Credit Agreement to repay the Series B Notes. In June 2000, the Partnership completed a private offering of $150 million of 8 7/8% Senior Notes due 2010 ("Partnership Senior Notes"). In September 2000, the Partnership completed an additional private offering of $100 million of Partnership Senior Notes. The Partnership Senior Notes were subsequently exchanged in a registered offering for notes with substantially identical terms. The indenture under which the Partnership Senior Notes were issued does not limit the amount of unsecured debt the Partnership may incur, but does contain material financial covenants, including restrictions on incurrence of secured indebtedness. The proceeds from the Partnership Senior Notes were used in acquisitions made by the Partnership in June 2000 and September 2000 (see Cash Flows from Investing Activities). In June 2000, the Partnership entered into two credit agreements with certain financial institutions, a $75 million 364- day credit agreement and a $75 million three-year revolving credit agreement (collectively, "2000 Partnership Credit Agreements"). At December 31, 2000, $26.3 million was outstanding under the 2000 Partnership Credit Agreements. In November 2000, the Partnership sold, through an underwritten public offering, 2,156,250 common units. In conjunction with the issuance of the additional common units, the Partnership's general partners made capital contributions to the Partnership to maintain a 2% general partner interest in accordance with the partnership agreements. The net proceeds of the public offering and the general partners' capital contribution totaled approximately $60.7 million and were primarily used to repay amounts borrowed under the 2000 Partnership Credit Agreements. In March 2001, the Partnership completed a private offering of $225 million of 7.10% Senior Notes due 2011 ("2001 Partnership Senior Notes"). The Partnership will register an exchange offer with the Securities and Exchange Commission to exchange the 2001 Partnership Senior Notes for notes with substantially identical terms. The indenture under which the 2001 Partnership Senior Notes were issued does not limit the amount of unsecured debt the Partnership may incur, but does contain material financial covenants, including restrictions on incurrence of secured indebtedness. The proceeds from the 2001 Partnership Senior Notes are to be used to fund a portion of the acquisition of Bear Paw Energy (see Item 1. Business - Pending Acquisitions) and for capital investments and general corporate purposes. In March 2001, the Partnership entered into a $200 million three-year revolving credit agreement with certain financial institutions ("2001 Partnership Credit Agreement"). The 2001 Partnership Credit Agreement is to be used for capital expenditures, working capital and general business purposes. The 2001 Partnership Credit Agreement replaced the 2000 Partnership Credit Agreements discussed previously. Short-term liquidity needs will be met by internal sources and through the lines of credit discussed above. Long-term capital needs may be met through the ability to issue long-term indebtedness as well as additional limited partner interests of the Partnership. Cash Flows From Operating Activities Cash flows provided by operating activities decreased $3.8 million to $169.6 million for the year ended December 31, 2000, as compared to the same period in 1999, primarily due to reduced earnings from higher interest costs. During 2000, we realized net cash inflows of approximately $2.4 million related to Northern Border Pipeline's rate case, which included $25.1 million of amounts collected subject to refund less estimated refunds issued in late December 2000 totaling approximately $22.7 million. Cash flows provided by operating activities increased $69.5 million to $173.4 million for the year ended December 31, 1999, as compared to the same period in 1998, primarily attributed to The Chicago Project facilities placed into service in late December 1998. Cash Flows From Investing Activities Business acquisitions for the year ended December 31, 2000 include gas gathering businesses in the Powder River and Wind River basins in Wyoming for approximately $229.5 million. For the comparable period in 1999, the Partnership acquired a 39% common member interest in Bighorn for $31.9 million. See Item 1. "Business - General" for a discussion of the acquisitions. The investments in unconsolidated affiliates of $8.8 million for the year ended December 31, 2000 primarily reflects capital contributions of $11.8 million to Bighorn, net of a $3.5 million payment received from Enron North America. As part of the terms of the purchase agreement, Enron North America agreed to fund approximately $3.5 million of an equity investment in Lost Creek. Crestone Energy Ventures expects to make the investment in Lost Creek during 2001. Capital expenditures of $19.7 million for the year ended December 31, 2000 included $7.4 million for Northern Border Pipeline's Project 2000 (see Item 1. "Business - Future Demand and Competition") and $3.8 million for gas gathering facilities for Crestone Energy Ventures. For the same period in 1999, capital expenditures were $102.3 million and included $85.5 million for The Chicago Project and $2.5 million for Project 2000. The remaining capital expenditures for 2000 and 1999 are primarily related to renewals and replacements of existing facilities. Total capital expenditures and investments in unconsolidated affiliates for 2001 are estimated to be $198 million. Capital expenditures for Northern Border Pipeline are estimated to be $97 million, including approximately $81 million for Project 2000 and approximately $16 million primarily for renewals and replacements of existing facilities. Northern Border Pipeline currently anticipates funding its 2001 capital expenditures primarily by using internal sources and borrowing on the Pipeline Credit Agreement. Capital expenditures for Crestone Energy Ventures are estimated to be $79 million and investments in unconsolidated affiliates are estimated to be $22 million for 2001. The Partnership anticipates financing Crestone Energy Venture's capital requirements primarily by borrowing on the Partnership Credit Agreements or other debt facilities. If the acquisitions discussed in Item 1. "Business - Pending Acquisitions" are completed, capital expenditures of $30 to $35 million, in addition to those discussed above, are expected in 2001. Cash Flows From Financing Activities Cash flows provided by financing activities were $100.8 million for the year ended December 31, 2000 compared to cash flows used of $57.3 million for the same period in 1999. Cash distributions to the unitholders and the general partners increased $7.3 million to $80.4 million reflecting an increase in the distribution from $2.44 per unit for 1999 to $2.65 per unit for 2000. The proceeds from the private offering of the Partnership Senior Notes, including premiums but net of associated debt discounts and issuance costs, totaled approximately $252.0 million. The proceeds were used to repay the Partnership's existing indebtedness of $119.5 million and to partially fund the acquisition of gas gathering businesses discussed previously. The funding for the remainder of the acquisition of gas gathering businesses came from borrowings under the Partnership Credit Agreements of $97.5 million. Financing activities for 2000 reflect $60.7 million in net proceeds from the issuance of 2,156,250 common units and a related capital contribution by the Partnership's general partners in November 2000. In December 2000, the Partnership received approximately $15.0 million from the termination of interest rate swap agreements. Repayments on the 2000 Partnership Credit Agreements of approximately $71.2 million were primarily made using the proceeds from the issuance of common units and the termination of the interest rate swap agreements. For the year ended December 31, 2000, advances under the Pipeline Credit Agreement, which were primarily used to repay $66 million of Series A Notes, were $75 million as compared to advances of $90 million for the same period in 1999, which were primarily used to finance a portion of the capital expenditures for The Chicago Project. Financing activities for the year ended December 31, 1999 included $197.4 million from the issuance of the Pipeline Senior Notes, net of associated debt discounts and issuance costs, and $12.9 million from the termination of Northern Border Pipeline's interest rate forward agreements. Payments on the Pipeline Credit Agreement were $45 million for the year ended December 31, 2000, as compared to $263 million for the same period 1999. At December 31, 2000, we reflected a cash overdraft of approximately $22.4 million primarily due to Northern Border Pipeline's refund checks outstanding. The goal of our cash management program is to maximize the amount of our cash and cash equivalents balance in highly liquid, interest- bearing investments. Those investments are converted to cash when needed to replenish our bank accounts for check clearing requirements. Cash flows used in financing activities were $57.3 million for the year ended December 31, 1999, as compared to cash flows provided by financing activities of $482.6 million for the year ended December 31, 1998. Cash distributions to the unitholders and the general partners increased $4.3 million reflecting an increase in the quarterly distribution from $2.30 per unit for 1998 to $2.44 per unit for 1999. Distributions paid to minority interest holders were $38.1 million for the year ended December 31, 1999, as compared to net cash contributions received from minority interest holders of $48.5 million for the year ended December 31, 1998, which included amounts needed to finance a portion of the capital expenditures for The Chicago Project. Financing activities for the year ended December 31, 1998 reflect $7.6 million in net proceeds from the issuance of 225,000 common units and related capital contributions by the Partnership's general partners in January 1998. Advances under the Pipeline Credit Agreement, which were primarily used to finance a portion of the capital expenditures for The Chicago Project, were $90.0 million for the year ended December 31, 1999. Advances under a Partnership credit agreement, which were used for the acquisition of Bighorn, were $24.5 million for the year ended December 31, 1999. For the same period in 1998, advances under the Pipeline Credit Agreement and a Partnership credit agreement totaled $498.0 million. During the year ended December 31, 1999, $263.0 million was repaid on the Pipeline Credit Agreement. New Accounting Pronouncements In June 1998, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative Instruments and Hedging Activities." In June 1999, the FASB issued SFAS No. 137, which deferred the effective date of SFAS No. 133 to fiscal years beginning after June 15, 2000. In June 2000, the FASB issued SFAS No. 138, which amended certain guidance within SFAS No. 133. See Note 11 to the Consolidated Financial Statements. Information Regarding Forward Looking Statements Statements in this Annual Report that are not historical information are forward looking statements. Such forward looking statements include: * the discussions under "Business - Future Demand and Competition" and elsewhere regarding Northern Border Pipeline's efforts to pursue opportunities to further increase the capacity of its pipeline system; * the discussion under "Business - Northern Border Rate Case Proceeding" regarding Northern Border Pipeline's rate case settlement; * the discussions under "Business - Pending Acquisitions"; and * the discussion in "Management's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources." Although we believe that our expectations regarding future events are based on reasonable assumptions within the bounds of our knowledge of our business, we can give no assurance that our goals will be achieved or that our expectations regarding future developments will be realized. Important factors that could cause actual results to differ materially from those in the forward looking statements include: * future demand for natural gas; * availability of economic western Canadian natural gas; * industry conditions; * natural gas, political and regulatory developments that impact FERC proceedings; * Northern Border Pipeline's success in sustaining its positions in such proceedings, or the success of intervenors in opposing Northern Border Pipeline's positions; * Northern Border Pipeline's ability to replace its rate base as it is depreciated and amortized; * competitive developments by Canadian and U.S. natural gas transmission companies; * political and regulatory developments in the U.S. and Canada; * our ability to successfully negotiate final definitive purchase agreements and to receive necessary approvals; and * conditions of the capital markets and equity markets. Item 7a. Quantitative and Qualitative Disclosures About Market Risk Our interest rate exposure results from variable rate borrowings from commercial banks. To mitigate potential fluctuations in interest rates, we attempt to maintain a significant portion of our consolidated debt portfolio in fixed rate debt. We also use interest rate swap agreements to increase the portion of fixed rate debt. As of December 31, 2000, approximately 60% of our debt portfolio, after considering the effect of interest rate swap agreements, is in fixed rate debt. If average interest rates change by one percentage compared to rates in effect as of December 31, 2000, consolidated annual interest expense would change by approximately $4.6 million. This amount has been determined by considering the impact of the hypothetical interest rates on our variable rate borrowings outstanding as of December 31, 2000. Item 8. Financial Statements and Supplementary Data The information required hereunder is included in this report as set forth in the "Index to Financial Statements" on page F-1. Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure None. Item 10. Partnership Management We are managed by or under the direction of the Partnership Policy Committee consisting of three members, each of which has been appointed by one of the general partners. The members appointed by Northern Plains, Pan Border and Northwest Border have 50%, 32.5% and 17.5%, respectively of the voting power. The Partnership Policy Committee has appointed three individuals who are neither officers nor employees of any general partner or any affiliate of a general partner, to serve as a committee of the Partnership (the "Audit Committee") with authority and responsibility for selecting our independent public accountants, reviewing our annual audit and resolving accounting policy questions. The Audit Committee also has the authority to review, at the request of a general partner, specific matters as to which a general partner believes there may be a conflict of interest in order to determine if the resolution of such conflict proposed by the Partnership Policy Committee is fair and reasonable to us. As is commonly the case with publicly-traded partnerships, we do not directly employ any of the persons responsible for managing or operating the Partnership or for providing it with services relating to its day-to-day business affairs. We have entered into an Administrative Services Agreement with NBP Services Corporation, a wholly-owned subsidiary of Enron, pursuant to which NBP Services provides tax, accounting, legal, cash management, investor relations, operating and other services for the Partnership. NBP Services has 22 employees and uses the employees of Enron or its affiliates who have duties and responsibilities other than those relating to the Administrative Services Agreement. Upon completion of the acquisition of the interests in Bear Paw, NBP Services will increase its employees by approximately 100. In consideration for its services under the Administrative Services Agreement, NBP Services is reimbursed for its direct and indirect costs and expenses, including an allocated portion of employee time and Enron's overhead costs. Set forth below is certain information concerning the members of the Partnership Policy Committee, our representatives on the Northern Border Management Committee and the persons designated by the Partnership Policy Committee as our executive officers and as Audit Committee members. All members of the Partnership Policy Committee and our representatives on the Northern Border Management Committee serve at the discretion of the general partner that appointed them. The persons designated as executive officers serve in that capacity at the discretion of the Partnership Policy Committee. Effective October 1, 2000, William R. Cordes replaced Larry L. DeRoin as our Chief Executive Officer and Chairman of the Partnership Policy Committee and of the Northern Border Management Committee. The members of the Partnership Policy Committee receive no management fee or other remuneration for serving on this Committee. The Audit Committee members are elected, and may be removed, by the Partnership Policy Committee. Each Audit Committee member receives an annual fee of $20,000 and is paid $1,500 for each meeting attended. Effective February 2001, a third Audit Committee member was elected. Name Age Positions Executive Officers: William R. Cordes 52 Chief Executive Officer Jerry L. Peters 43 Chief Financial and Accounting Officer Members of Partnership Policy Committee and Partnership's representatives on Northern Border Management Committee: William R. Cordes 52 Chairman Stanley C. Horton 51 Member Cuba Wadlington, Jr. 57 Member Members of Audit Committee: Daniel P. Whitty 69 Chairman Daniel Dienstbier 60 Member Gerald B. Smith 50 Member William R. Cordes was named Chief Executive Officer of the Partnership and Chairman of the Partnership Policy Committee in October 2000. Mr. Cordes is the President of Northern Plains, an Enron subsidiary, having been appointed to that position on October 1, 2000, and is a director of Northern Plains. Mr. Cordes was named Chairman of the Northern Border Management Committee October 1, 2000. He started his career with another Enron company, Northern Natural, in 1970 and has worked in several management positions at Northern Natural. In June of 1993, he was named President of Northern Natural and added the position of President of Transwestern Pipeline in May of 1996. Stanley C. Horton was appointed to the Partnership Policy Committee and to the Northern Border Management Committee in December 1998. Mr. Horton is the Chairman and Chief Executive Officer of Enron Transportation Services Company, formerly the Enron Gas Pipeline Group, and has held that position since January 1997. From February 1996 to January 1997, he was Co- Chairman and Chief Executive Officer of Enron Operations Corp. From June 1993 to February 1996, he was President and Chief Operating Officer of Enron Operations Corp. He is a Director, Chairman of the Board and Chief Executive Officer of EOTT Energy Corp., the general partner of EOTT Energy Partners, L.P. Cuba Wadlington, Jr. was named to the Partnership Policy Committee and to the Northern Border Management Committee on December 1, 1999. On January 4, 2000, Mr. Wadlington was named President and Chief Executive Officer of Williams Gas Pipeline. Previously, he had served as Executive Vice President and Chief Operating Officer of Williams Gas Pipeline since July 1999. Mr. Wadlington joined Transco in 1995 when Williams acquired Transco Energy Company. From 1995 to 1999, he served as senior vice president and general manager of Williams Gas Pipeline-Transco. From 1988 to 1995, he served as senior vice president and general manager of Williams Western Pipeline Company, executive vice president of Kern River Gas Transmission Company, and director of Northwest Pipeline Corporation and Williams Western Pipeline, all affiliates or subsidiaries of Williams. Mr. Wadlington serves on the Board of Directors of Williams Communication Group Inc., and Sterling Bancshares Inc. Jerry L. Peters was named Chief Financial and Accounting Officer in July 1994. Mr. Peters has held several management positions with Northern Plains since 1985 and was elected Treasurer for Northern Plains in October 1998, Vice President of Finance for Northern Plains in July 1994, and director of Northern Plains in August 1994. Mr. Peters was also named Vice President, Finance of Enron Transportation Services Company in February 2001. Prior to joining Northern Plains in 1985, Mr. Peters was employed as a Certified Public Accountant by KPMG Peat Marwick, LLP. Daniel P. Whitty was appointed to the Audit Committee in December 1993. Mr. Whitty is an independent financial consultant. He is a director of Enron Funding Corp., Enron Equity Corp. and of EOTT Energy Corp., all subsidiaries of Enron, and the latter of which is the general partner of EOTT Energy Partners, L.P. He has served as a member of the Board of Directors of Methodist Retirement Communities Inc., and a Trustee of the Methodist Retirement Trust. Mr. Whitty was a partner at Arthur Andersen & Co. until his retirement on January 31, 1988. Gerald B. Smith was appointed to the Audit Committee in April 1994. He is Chairman and Chief Executive Officer and co- founder of Smith, Graham & Company Investment Advisors, a fixed income investment management firm, which was founded in 1990. He has served as a director of that company since December 1998 and is a member of the Audit Committee and Executive Committee of the board. He is also a director of Pennzoil-Quaker States, Charles Schwab Family of Funds, Cooper Industries, and Rorento N.V.(Netherlands). From 1988 to 1990, he served as Senior Vice President and Director of Fixed Income and Chairman of the Executive Committee of Underwood Neuhaus & Co. Daniel Dienstbier was appointed to the Audit Committee effective February 1, 2001. Mr. Dienstbier is currently a member of the Board of Directors of Dynegy Corporation and has served on that board since 1995. At the time of his retirement in 1994, he was the President and Chief Operating Officer of American Oil & Gas Company. He serves on arbitration panels involving energy contract disputes. From 1965 through mid-1988, Mr. Dienstbier held various positions with Northern Natural Gas Company. From 1985 to 1988, he was the President of Enron's Gas Pipeline Group, which included Enron's interest in Northern Border Pipeline. Item 11. Executive Compensation The following table summarizes certain information regarding compensation paid or accrued during each of Northern Plains' last three fiscal years to the executive officers of the Partnership (the "Named Officers") for services performed in their capacities as executive officers of Northern Plains: Summary Compensation Table All Other
Annual Compensation Long-Term Compensation Compensation Securities Restricted Underlying Other Annual Stock Awards Options/SARs LTIP Payouts Name & Position Year Salary(1) Bonus(2) Compensation(3) ($)(4) (#) ($)(5) ($)(6) Larry L. DeRoin 2000 $209,167 $ -- $16,844 $164,754 11,335 $403,125 $513,534 Chief Executive 1999 $266,367 $225,000 $ 7,773 $ -- -- $ -- $ 10,413 Officer 1998 $256,067 $250,000 $ 7,200 $125,024 19,020 $ -- $ 6,380 William R. Cordes 2000 $311,000 $250,000 $15,000 $205,984 17,405 $131,250 $ 13,110 Chief Executive Officer Jerry L. Peters 2000 $145,293 $110,000 $ 3,708 $112,385 15,040 $ -- $ 10,091 Chief Financial and 1999 $132,933 $100,000 $ 3,983 $ -- 9,070 $ -- $ 5,260 Accounting Officer 1998 $123,225 $110,000 $ 1,214 $ 60,030 20,000 $ -- $ 1,956 (1) Mr. DeRoin retired effective September 30, 2000. Mr. Cordes was appointed President of Northern Plains and Chief Executive Officer of the Partnership on October 1, 2000. (2) Employees may elect to receive Northern Border phantom units, Enron Corp. phantom stock, and/or Enron Corp. stock options in lieu of all or a portion of an annual bonus payment. Mr. Peters elected to receive Northern Border phantom units in lieu of a portion of the cash bonus payment under the Northern Border Phantom Unit Plan. He received 1,532 units in 1999 and 1,450 units in 2000. In each case, units will be released to him five years following the grant date. (3) Other Annual Compensation includes cash perquisite allowances, service awards, and vacation payouts. Also, Enron maintains three deferral plans for key employees under which payment of base salary, annual bonus, and long-term incentive awards may be deferred to a later specified date. Under the 1985 Deferral Plan, interest is credited on amounts deferred based on 150% of Moody's seasoned corporate bond yield index with a minimum rate of 12%, which for 1998, 1999 and 2000 was the minimum rate of 12%. No interest has been reported as Other Annual Compensation under the 1985 Deferral Plan for participating Named Officers because the crediting rates during 1998, 1999, and 2000, did not exceed 120% of the long-term Applicable Federal Rate of 14.38% in effect at the time the 1985 Deferral Plan was implemented. Beginning January 1, 1996, the 1994 Deferral Plan credits interest based on fund elections chosen by participants. Since earnings on deferred compensation invested in third-party investment vehicles, comparable to mutual funds, need not be reported, no interest has been reported as Other Annual Compensation under the 1994 Deferral Plan during 1998, 1999 and 2000. (4) The aggregate total of shares in unreleased Enron restricted stock holdings and their values as of December 31, 2000, for each of the Named Officers is: Mr. Cordes, 7,737 shares valued at $643,138, and Mr. Peters, 2,755 shares valued at $229,009. Dividend equivalents for all restricted stock awards accrue from date of grant and are paid upon vesting. (5) Reflects cash payments under the Enron Corp. Performance Unit Plan for the 1996-1999 period. Payments made under the Performance Unit Plan are based on Enron's total shareholder return relative to its peers. Enron's performance over the 1996- 1999 performance period rendered a value of $1.50 based on a ranking of second as compared to 11 industry peers. Mr. DeRoin's payment includes amounts relating to 1997-2000 and 1998-2001 performance periods ($187,250 and $103,125 respectively) which were paid early due to his retirement. (6) The amounts shown include the value of Enron Common Stock allocated to employees' special subaccounts under Enron's Employee Stock Ownership Plan, matching contributions to employees' Enron Corp. Savings Plan, and imputed income on life insurance benefits. Mr. DeRoin received a $500,000 payment following his retirement. Such payment was in lieu of any severance pay or severance benefits that otherwise would be payable under Enron's Severance Pay Plan. In addition, Mr. DeRoin has entered into an agreement under which he has agreed to provide consulting services to Northern Plains and its businesses until September 30, 2002 for which he receives a payment of $20,833 per month.
Stock Option Grants During 2000 The following table sets forth information with respect to grants of stock options pursuant to Enron's stock plans to the Named Officers reflected in the Summary Compensation Table. No stock appreciation rights were granted during 2000.
Potential Realizable Value at Individual Grants Assumed Annual Rates of Stock Number of % of Total Price Appreciation for Option Term (1) Securities Options/SARs Underlying Granted to Exercise or Options/SARs Employees in Base Price Expiration Name Granted(#) Fiscal Year ($/Sh) Date 0%(2) 5% 10% Larry L. DeRoin 11,285 (3) 0.03% $55.5000 01/18/2007 $ -- $254,974 $594,198 50 (4) 0.00% $55.5000 01/18/2007 $ -- $ 1,130 $ 2,633 William R. Cordes 14,105 (3) 0.04% $55.5000 01/18/2007 $ -- $318,689 $742,682 50 (4) 0.00% $55.5000 01/18/2007 $ -- $ 1,130 $ 2,633 3,250 (6) 0.01% $83.1250 12/29/2007 $ -- $ 73,431 $171,125 Jerry L. Peters 7,695 (3) 0.02% $55.5000 01/18/2007 $ -- $173,861 $405,171 50 (4) 0.00% $55.5000 01/18/2007 $ -- $ 1,130 $ 2,633 5,770 (5) 0.01% $65.0000 01/24/2007 $ -- $152,683 $355,816 1,525 (6) 0.00% $83.1250 12/29/2007 $ -- $ 34,456 $ 80,297 (1) The dollar amounts under these columns represent the potential realizable value of each grant of options assuming that the market price on Enron Common Stock appreciates in value from the date of grant at the 5% and 10% annual rates prescribed by the SEC and therefore are not intended to forecast possible future appreciation, if any, of the price of Enron Common Stock. (2) An appreciation in stock price, which will benefit all shareholders, is required for optionees to receive any gain. A stock price appreciation of 0% would render the option without value to the optionees. (3) Represents stock options awarded under the Enron Corp. Long-Term Incentive Program. Awards vest 25% on the grant date and 25% on each anniversary thereafter. (4) A grant of 50 stock options was provided to each eligible Enron employee in recognition of Enron stock reaching a fair market value of $50 after the August, 1999, 2-for-1 stock split. (5) Mr. Peters elected to receive stock options in lieu of a portion of his 1999 annual cash bonus payment in the form of stock options which were granted in January, 2000 and were 100% vested on date of grant. (6) All eligible employees received an option grant under the EnronOptions Program. The EnronOptions Program provides a grant of options equal to 5% of base annual salary for each year of participation in the program, not to exceed five years of participation. Stock options vest 20% each year beginning June 30, 2001.
Aggregated Stock Option/SAR Exercises During 2000 and Stock Option/SAR Values as of December 31, 2000 The following table sets forth information with respect to the Named Officers concerning the exercise of Enron SARs and options during the last fiscal year and unexercised Enron options and SARs held as of the end of the fiscal year:
Number of Securities Underlying Unexercised Value of Unexercised Shares Options/SARs at In-the-Money Options/SARs Acquired on Value December 31, 2000 December 31, 2000 (1) Name Exercise (#) Realized Exercisable Unexercisable Exercisable Unexercisable Larry L. DeRoin 102,990 $5,458,031 50,875 -- $ 2,630,794 $ -- William R. Cordes 47,130 $2,922,001 213,788 41,327 $13,454,935 $1,945,463 Jerry L. Peters 9,090 $ 432,676 54,084 9,891 $ 2,915,839 $ 393,525 (1) The dollar value in this column for Enron Corp. stock options was calculated by determining the difference between the fair market value underlying the options as of December 31, 2000 ($83.1250) and the grant price.
Retirement and Supplemental Benefit Plans Enron maintains the Enron Corp. Cash Balance Plan (the "Cash Balance Plan") which is a noncontributory defined benefit pension plan to provide retirement income for employees of Enron and its subsidiaries. Through December 31, 1994, participants in the Cash Balance Plan with five years or more of service were entitled to retirement benefits in the form of an annuity based on a formula that uses a percentage of final average pay and years of service. In 1995, Enron's Board of Directors adopted an amendment to and restatement of the Cash Balance Plan changing the plan's name from the Enron Corp. Retirement Plan to the Enron Corp. Cash Balance Plan. In connection with a change to the retirement benefit formula, all employees became fully vested in retirement benefits earned through December 31, 1994. The formula in place prior to January 1, 1995 was suspended and replaced with a benefit accrual in the form of a cash balance of 5% of annual base pay beginning January 1, 1996. Under the Cash Balance Plan, each employee's accrued benefit will be credited with interest based on ten-year Treasury Bond yields. Enron also maintains a noncontributory employee stock ownership plan ("ESOP") which covers all eligible employees. Allocations to individual employees' retirement accounts within the ESOP offset a portion of benefits earned under the Cash Balance Plan prior to December 31, 1994. December 31, 1993 was the final date on which ESOP allocations were made to employees' retirement accounts. In addition, Enron has a Supplemental Retirement Plan that is designed to assure payments to certain employees of that retirement income that would be provided under the Cash Balance Plan except for the dollar limitation on accrued benefits imposed by the Internal Revenue Code of 1986, as amended, and a Pension Program for Deferral Plan Participants that provides supplemental retirement benefits equal to any reduction in benefits due to deferral of salary into Enron's Deferral Plan. The following table sets forth the estimated annual benefits payable under normal retirement at age 65, assuming current remuneration levels without any salary or bonus projections and participation until normal retirement at age 65, with respect to the Named Officers under the provisions of the foregoing retirement plans.
Estimated Current Credited Current Estimated Credited Years of Compensation Annual Benefit Years of Service Covered Payable Upon Service at Age 65 By Plans Retirement Mr. Cordes 30.4 43.1 $311,000 $142,234 Mr. Peters 15.9 37.8 $145,293 $ 78,957 ________ NOTE: The estimated annual benefits payable are based on the straight life annuity form without adjustment for any offset applicable to a participant's retirement subaccount in Enron's ESOP.
Mr. DeRoin participates in the Executive Supplemental Survivor Benefit Plan. In the event of death after retirement, the Plan provides an annual benefit to the participant's beneficiary equal to 50 percent of the participant's annual base salary at retirement, paid for 10 years. The Plan also provides that in the event of death before retirement, the participant's beneficiary receives an annual benefit equal to 30% of the participant's annual base salary at death, paid for the life of the participant's spouse (but for no more than 20 years in some cases). Severance Plans Enron's Severance Pay Plan, as amended, provides for the payment of benefits to employees who are terminated for failing to meet performance objectives or standards or who are terminated due to reorganization or economic factors. The amount of benefits payable for performance related terminations is based on length of service and may not exceed six weeks' pay. For those terminated as the result of reorganization or economic circumstances, the benefit is based on length of service and amount of pay up to a maximum payment of 26 weeks of base pay. If the employee signs a Waiver and Release of Claims Agreement, the severance pay benefits are doubled. Under no circumstances will the total severance pay benefit exceed 52 weeks of pay. Under the Enron Corp. Change of Control Severance Plan, in the event of an unapproved change of control of Enron, any employee who is involuntarily terminated within two years following the change of control will be eligible for severance benefits equal to two weeks of base pay multiplied by the number of full or partial years of service, plus one month of base pay for each $10,000 (or portion of $10,000) included in the employee's annual base pay, plus one month of base pay for each five percent of annual incentive award opportunity under any approved plan. The maximum an employee can receive is 2.99 times the employee's average W-2 earnings over the past five years. Item 12. Security Ownership of Certain Beneficial Owners and Management The following table sets forth the beneficial ownership of the voting securities of the Partnership as of February 15, 2001 by our executive officers, members of the Partnership Policy Committee and the Audit Committee who own units and by certain beneficial owners. Other than as set forth below, no person is known by the general partners to own beneficially more than 5% of the voting securities. Amount and Nature of Beneficial Ownership Common Units Number Percent of Units1/ of Class Jerry L. Peters 1,000 * 1111 South 103rd Street Omaha, NE 68124-1000 Stanley C. Horton 1400 Smith Street Houston, TX 77002-7369 10,000 * The Williams Companies, Inc.2/ 1,123,500 3.6 One Williams Center Tulsa, OK 74101-3288 Enron Corp.2/ 1400 Smith Street Houston, TX 77002 3,215,452 10.2 Duke Energy Corp.2/ 422 So. Church St. Charlotte, NC 88242-0001 2,086,500 6.6 ______________ * Less than 1%. 1/ All units involve sole voting and investment power. 2/ Indirect ownership through their subsidiaries. Item 13. Certain Relationships and Related Transactions We have extensive ongoing relationships with the general partners. Such relationships include the following: (i) Northern Plains provides, in its capacity as the operator of the Northern Border pipeline system, certain tax, accounting and other information to the Partnership, (ii) NBP Services, an affiliate of Enron, assists the Partnership in connection with the operation and management of the Partnership and operating services for Crestone Energy Ventures pursuant to the terms of an Administrative Services Agreement between the Partnership and NBP Services, (iii) NBP Energy Pipelines, L.L.C. (now known as Crestone Energy Ventures, L.L.C) purchased from Enron North America Corp., an affiliate of Enron, interests in gas gathering businesses in the Powder River and Wind River Basins in Wyoming for approximately $209 million, and (iv) Crestone Energy Ventures provides to Enron North America Corp., under a Master Services Agreement effective September 21, 2000, gas and administrative services for fixed and variable fees. The amount of fixed fees for 2000 was $45,000 per day and for 2001 is $21,600 per day. In addition, Northern Border Pipeline has extensive ongoing relationships with the general partners and certain of their affiliates and with affiliates of TC PipeLines. For example, Northern Plains has acted (since 1980), and will continue to act, as the operator of the pipeline system pursuant to the terms of an operating agreement between Northern Plains and Northern Border Pipeline. In addition, as of February 1, 2001: * Enron North America Corp., an affiliate of Enron, is one of Northern Border Pipeline's firm shippers, and is obligated to pay for 6.3% of the capacity. It also has contracted with Crestone Energy Venture and Crestone Gas Services for certain gas and administrative services for which it pays both a fixed and variable fee. * TransCanada Energy Marketing USA, Inc., an affiliate of TransCanada PipeLines Limited, is one of Northern Border Pipeline's firm shippers and is currently obligated to pay for 11.4% of the capacity; * Transcontinental Gas Pipe Line Corporation, an affiliate of Williams, is one of Northern Border Pipeline's firm shippers and is currently obligated to pay for 0.8% of the capacity; and * Northern Natural Gas Company, an affiliate of Enron, provides a financial guaranty for a portion of the transportation capacity held by Pan-Alberta Gas, which currently represents 10.5% of the capacity. The Partnership Policy Committee, whose members are designated by our three general partners, establishes the business policies of the Partnership. We have three representatives on the Northern Border Management Committee, each of whom votes a portion of the Partnership's 70% interest on the Northern Border Management Committee. These representatives are also designated by our general partners. Our interests could conflict with the interests of our general partners or their affiliates, and in such case the members of the Partnership Policy Committee will generally have a fiduciary duty to resolve such conflicts in a manner that is in our best interest. Northern Border Pipeline's interests could conflict with the our interest or the interest of TC PipeLines and their affiliates, and in such case our representatives on the Northern Border Management Committee will generally have a fiduciary duty to resolve such conflicts in a manner that is in the best interest of Northern Border Pipeline. Our fiduciary duty as a general partner of Northern Border Pipeline may restrict the Partnership from taking actions that might be in our best interest but in conflict with the fiduciary duty that our representatives or we owe to TC PipeLines. Unless otherwise provided for in a partnership agreement, the laws of Delaware and Texas generally require a general partner of a partnership to adhere to fiduciary duty standards under which it owes its partners the highest duties of good faith, fairness and loyalty. Similar rules apply to persons serving on the Partnership Policy Committee or the Northern Border Management Committee. Because of the competing interests identified above, our Partnership Agreement and the partnership agreement for Northern Border Pipeline contain provisions that modify certain of these fiduciary duties. For example: * The Partnership Agreement states that the general partners, their affiliates and their officers and directors will not be liable for damages to the Partnership, its limited partners or their assignees for errors of judgment or for any acts or omissions if the general partners and such other persons acted in good faith. * The Partnership Agreement allows the general partners and the Partnership Policy Committee to take into account the interests of parties in addition to our interest in resolving conflicts of interest. * The Partnership Agreement provides that the general partners will not be in breach of their obligations under the Partnership Agreement or their duties to us or our unitholders if the resolution of a conflict is fair and reasonable to us. The latitude given in the Partnership Agreement in connection with resolving conflicts of interest may significantly limit the ability of a unitholder to challenge what might otherwise be a breach of fiduciary duty. * The Partnership Agreement provides that a purchaser of Common Units is deemed to have consented to certain conflicts of interest and actions of the general partners and their affiliates that might otherwise be prohibited and to have agreed that such conflicts of interest and actions do not constitute a breach by the general partners of any duty stated or implied by law or equity. * Our Audit Committee will, at the request of a general partner or a member of the Partnership Policy Committee, review conflicts of interest that may arise between a general partner and its affiliates (or the member of the Partnership Policy Committee designated by it), on the one hand, and the unitholders or us, on the other. Any resolution of a conflict approved by the Audit Committee is conclusively deemed fair and reasonable to us. * We entered into an amendment to the partnership agreement for Northern Border Pipeline that relieves us and TC PipeLines, their affiliates and their transferees from any duty to offer business opportunities to Northern Border Pipeline, with certain exceptions. We are required to indemnify the members of the Partnership Policy Committee and general partners, their affiliates and their respective officers, directors, employees, agents and trustees to the fullest extent permitted by law against liabilities, costs and expenses incurred by any such person who acted in good faith and in a manner reasonably believed to be in, or (in the case of a person other than one of the general partners) not opposed to, the Partnership's best interests and with respect to any criminal proceedings, had no reasonable cause to believe the conduct was unlawful. PART IV Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K (a)(1) and (2) Financial Statements and Financial Statement Schedules See "Index to Financial Statements" set forth on page F-1. (a)(3) Exhibits * 3.1 Form of Amended and Restated Agreement of Limited Partnership of Northern Border Partners, L.P. (Exhibit 3.1 No. 2 to the Partnership's Form S-1 Registration Statement, Registration No. 33-66158 ("Form S-1")). * 3.2 Form of Amended and Restated Agreement of Limited Partnership For Northern Border Intermediate Limited Partnership (Exhibit 10.1 to Form S-1). * 4.1 Indenture, dated as of June 2, 2000, between the registrants and Bank One Trust Company, N.A. (Exhibit 4.1 to the Partnership's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2000 ("June 2000 10-Q")). * 4.2 First Supplemental Indenture, dated as of September 14, 2000, between the registrants and Bank One Trust Company, N.A.(Exhibit 4.2 to Form S-4 Registration Statement, Registration No. 333-46212 ("NBP Form S-4")). 4.3 Indenture, dated as of March 21, 2001, between Northern Border Partners, L.P. and Northern Border Intermediate Limited Partnership and Bank One Trust Company, N.A., Trustee. 4.4 Registration Rights Agreement dated March 21, 2001 by and among Northern Border Partners, L.P., Northern Border Intermediate Limited Partnership, Banc of America Securities LLC, SunTrust Equitable Securities Corporation, Banc One Capital Markets, Inc. and BMO Nesbitt Burns Corp. * 4.5 Indenture, dated as of August 17, 1999, between Northern Border Pipeline Company and Bank One Trust Company, NA, successor to The First National Bank of Chicago, as trustee. (Exhibit No. 4.1 to Northern Border Pipeline Company's Form S-4 Registration Statement, Registration No. 333-88577 ("NB Form S-4"). *10.1 Northern Border Pipeline Company General Partnership Agreement between Northern Plains Natural Gas Company, Northwest Border Pipeline Company, Pan Border Gas Company, TransCanada Border Pipeline Ltd. and TransCan Northern Ltd., effective March 9, 1978, as amended (Exhibit 10.2 to Form S-1). *10.2 Operating Agreement between Northern Border Pipeline Company and Northern Plains Natural Gas Company, dated February 28, 1980 (Exhibit 10.3 to Form S-1). *10.3 Administrative Services Agreement between NBP Services Corporation, Northern Border Partners, L.P. and Northern Border Intermediate Limited Partnership (Exhibit 10.4 to Form S-1). *10.4 Note Purchase Agreement between Northern Border Pipeline Company and the parties listed therein, dated July 15, 1992 (Exhibit 10.6 to Form S-1). *10.4.1 Supplemental Agreement to the Note Purchase Agreement dated as of June 1, 1995 (Exhibit 10.6.1 to the Partnership's Annual Report on Form 10-K for the year ended December 31, 1995 ("1995 10-K")). *10.5 Guaranty made by Panhandle Eastern Pipeline Company, dated October 31, 1992 (Exhibit 10.9 to Form S-1). *10.6 Northern Border Pipeline Company U.S. Shippers Service Agreement between Northern Border Pipeline Company and Enron Gas Marketing, Inc., dated June 22, 1990 (Exhibit 10.10 to Form S-1). *10.6.1 Amended Exhibit A to Northern Border Pipeline Company U.S. Shippers Service Agreement between Northern Border Pipeline Company and Enron Gas Marketing, Inc. (Exhibit 10.10.1 to the Partnership's Annual Report on Form 10-K for the year ended December 31, 1993 ("1993 10-K")). *10.6.2 Amended Exhibit A to Northern Border Pipeline U.S. Shippers Service Agreement between Northern Border Pipeline Company and Enron Gas Marketing, Inc., effective November 1, 1994 (Exhibit 10.10.2 to the Partnership's Annual Report on Form 10-K for the year ended December 31, 1994). *10.6.3 Amended Exhibit A's to Northern Border Pipeline Company U.S. Shipper Service Agreement effective, August 1, 1995 and November 1, 1995 (Exhibit 10.10.3 to 1995 10-K). *10.6.4 Amended Exhibit A to Northern Border Pipeline Company U.S. Shipper Service Agreement effective April l, 1998 (Exhibit 10.10.4 to the Partnership's Annual Report on Form 10-K for the year ended December 31, 1997 ("1997 10-K")). *10.7 Guaranty made by Northern Natural Gas Company, dated October 7, 1993 (Exhibit 10.11.1 to 1993 10-K). *10.8 Guaranty made by Northern Natural Gas Company, dated October 7, 1993 (Exhibit 10.11.2 to 1993 10-K). *10.9 Northern Border Pipeline Company U.S. Shippers Service Agreement between Northern Border Pipeline Company and Western Gas Marketing Limited, as agent for TransCanada PipeLines Limited, dated December 15, 1980 (Exhibit 10.13 to Form S-1). *10.9.1 Amendment to Northern Border Pipeline Company Service Agreement extending the term effective November 1, 1995 (Exhibit 10.13.1 to 1995 10-K). *10.10 Form of Seventh Supplement Amending Northern Border Pipeline Company General Partnership Agreement (Exhibit 10.15 to Form S-1). *10.11 Northern Border Pipeline Company U.S. Shippers Service Agreement between Northern Border Pipeline Company and Transcontinental Gas Pipe Line Corporation, dated July 14, 1983, with Amended Exhibit A effective February 11, 1994 (Exhibit 10.17 to 1995 10-K). *10.12 Form of Credit Agreement among Northern Border Pipeline Company, The First National Bank of Chicago, as Administrative Agent, The First National Bank of Chicago, Royal Bank of Canada, and Bank of America National Trust and Savings Association, as Syndication Agents, First Chicago Capital Markets, Inc., Royal Bank of Canada, and BancAmerica Securities, Inc, as Joint Arrangers and Lenders (as defined therein) dated as of June 16, 1997 (Exhibit 10(c) to Amendment No. 1 to Form S-3, Registration Statement No. 333-40601 ("Form S-3")). *10.13 Northern Border Pipeline Company U.S. Shippers Service Agreement between Northern Border Pipeline Company and Enron Capital & Trade Resources Corp. dated October 15, 1997 (Exhibit 10.21 to 1997 10-K). *10.14 Northern Border Pipeline Company U.S. Shippers Service Agreement between Northern Border Pipeline Company and Enron Capital & Trade Resources Corp. dated October 15, 1997 (Exhibit 10.22 to 1997 10-K). *10.15 Northern Border Pipeline Company U.S. Shippers Service Agreement between Northern Border Pipeline Company and Enron Capital & Trade Resources Corp. dated August 5, 1997 with Amendment dated September 25, 1997 (Exhibit 10.25 to 1997 10-K). *10.16 Northern Border Pipeline Company U.S. Shippers Service Agreement between Northern Border Pipeline Company and Enron Capital & Trade Resources Corp. dated August 5, 1997 (Exhibit 10.26 to 1997 10-K). *10.17 Northern Border Pipeline Company U.S. Shippers Service Agreement between Northern Border Pipeline Company and TransCanada Gas Services Inc., as agent for TransCanada PipeLines Limited dated August 5, 1997 (Exhibit 10.27 to 1997 10-K). *10.18 Project Management Agreement by and between Northern Plains Natural Gas Company and Enron Engineering & Construction Company, dated March 1, 1996 (Exhibit No. 10.39 to NB Form S-4). *10.19 Eighth Supplement Amending Northern Border Pipeline Company General Partnership Agreement (Exhibit 10.15 to NB Form S-4). 10.20 Revolving Credit Agreement, dated as of March 21, 2001, between Northern Border Partners, L.P., SunTrust Bank, Administrative Agent, Bank of Montreal and Bank of America, N.A., Co-Syndication Agents and Bank One, NA, Documentation Agent and Lenders (as defined therein). *10.21 Northern Border Pipeline Company U.S. Shippers Service Agreement between Northern Border Pipeline Company and Pan- Alberta Gas (US) Inc., dated October 1, 1993, with Amended Exhibit A effective June 22, 1998 (Exhibit 10.36 to Northern Border Pipeline Company Annual Report on Form 10-K for the year ended December 31, 1999 ("NB Pipeline 1999 10-K")). *10.22 Northern Pipeline Company U.S. Shippers Service Agreement between Northern Border Pipeline Company and Pan-Alberta Gas (US) Inc.,(successor to Natgas U.S. Inc.) dated October 6, 1989, with Amended Exhibit A effective April 2, 1999 (Exhibit 10.37 to NB Pipeline 1999 10-K). *10.23 Northern Border Pipeline Company U.S. Shippers Service Agreement between Northern Border Pipeline Company and Pan- Alberta Gas (U.S.) Inc., dated October l, 1992, with Amended Exhibit A effective June 22, 1998 (Exhibit 10.38 to NB Pipeline 1999 10-K). 10.24 Purchase and Sale Agreement, dated as of September 21, 2000 by and between Enron North America Corp. and NBP Energy Pipeline, L.L.C.(now known as Crestone Energy Ventures, L.L.C.). 10.25 Master Services Agreement, dated as of September 21, 2000 between NBP Energy Pipelines, L.L.C.,(now known as Crestone Energy Ventures, L.L.C.) and Enron North America Corp. 10.26 Acquisition Agreement, dated as of March 14, 2001, among Northern Border Partners, L.P., Northern Border Intermediate Limited Partnership, Bear Paw Investments, LLC, Bear Paw Energy, LLC and Sellers (defined therein). 21 The subsidiaries of Northern Border Partners, L.P. are Northern Border Intermediate Limited Partnership; Northern Border Pipeline Company; and Crestone Energy Ventures, L.L.C. 23.01 Consent of Arthur Andersen LLP. *99.1 Northern Border Phantom Unit Plan (Exhibit 99.1 to Amendment No. 1 to Form S-8, Registration No. 333-66949). *Indicates exhibits incorporated by reference as indicated; all other exhibits are filed herewith. (b)Reports The Partnership filed a Current Report on Form 8-K, dated November 2, 2000, reporting the public offering of up to 2,156,250 common units representing limited partner interests and including exhibits. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on this 29th day of March, 2001. NORTHERN BORDER PARTNERS, L.P. (A Delaware Limited Partnership) By: WILLIAM R. CORDES William R. Cordes Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons in the capacities and on the dates indicated. Signature Title Date WILLIAM R. CORDES Chief Executive Officer and March 29, 2001 William R. Cordes Chairman of the Partnership Policy Committee (Principal Executive Officer) STANLEY C. HORTON Member of Partnership Policy March 29, 2001 Stanley C. Horton Committee CUBA WADLINGTON, JR. Member of Partnership Policy March 29, 2001 Cuba Wadlington, Jr. Committee JERRY L. PETERS Chief Financial and March 29, 2001 Jerry L. Peters Accounting Officer NORTHERN BORDER PARTNERS, L.P. AND SUBSIDIARIES INDEX TO FINANCIAL STATEMENTS Page No. Consolidated Financial Statements Report of Independent Public Accountants F-2 Consolidated Balance Sheet - December 31, 2000 and 1999 F-3 Consolidated Statement of Income - Years Ended F-4 December 31, 2000, 1999 and 1998 Consolidated Statement of Cash Flows - Years Ended F-5 December 31, 2000, 1999 and 1998 Consolidated Statement of Changes in Partners' Capital - Years Ended December 31, 2000, 1999 and 1998 F-6 Notes to Consolidated Financial Statements F-7 through F-26 Financial Statements Schedule Report of Independent Public Accountants on Schedule S-1 Schedule II - Valuation and Qualifying Accounts S-2 Report of Independent Public Accountants To Northern Border Partners, L.P.: We have audited the accompanying consolidated balance sheet of Northern Border Partners, L.P. (a Delaware limited partnership) and Subsidiaries as of December 31, 2000 and 1999, and the related consolidated statements of income, cash flows and changes in partners' capital for each of the three years in the period ended December 31, 2000. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Northern Border Partners, L.P. and Subsidiaries as of December 31, 2000 and 1999, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2000, in conformity with accounting principles generally accepted in the United States. ARTHUR ANDERSEN LLP Omaha, Nebraska, January 22, 2001 NORTHERN BORDER PARTNERS, L.P. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET (In Thousands)
December 31, ASSETS 2000 1999 CURRENT ASSETS Cash and cash equivalents $ 35,363 $ 22,927 Accounts receivable 31,538 24,946 Related party receivables 9,079 5,292 Materials and supplies, at cost 5,736 4,410 Under recovered cost of service -- 3,068 Total current assets 81,716 60,643 TRANSMISSION PLANT Property, plant and equipment 2,454,918 2,410,133 Less: Accumulated provision for depreciation and amortization 722,842 664,777 Property, plant and equipment, net 1,732,076 1,745,356 INVESTMENTS AND OTHER ASSETS Investments in unconsolidated affiliates 221,625 31,895 Goodwill 28,405 9,076 Other 18,898 16,467 Total investments and other assets 268,928 57,438 Total assets $2,082,720 $1,863,437 LIABILITIES AND PARTNERS' CAPITAL CURRENT LIABILITIES Current maturities of long-term debt $ 44,464 $ 183,617 Accounts payable 35,413 8,279 Accrued taxes other than income 28,493 26,608 Accrued interest 15,635 17,608 Accumulated provision for rate refunds 4,726 2,317 Total current liabilities 128,731 238,429 LONG-TERM DEBT, net of current maturities 1,127,498 848,369 MINORITY INTERESTS IN PARTNERS' CAPITAL 248,098 250,450 RESERVES AND DEFERRED CREDITS 6,119 10,920 COMMITMENTS AND CONTINGENCIES (NOTE 9) PARTNERS' CAPITAL General Partners 11,445 10,305 Common Units 560,829 504,964 Total partners' capital 572,274 515,269 Total liabilities and partners' capital $2,082,720 $1,863,437 The accompanying notes are an integral part of these consolidated financial statements.
NORTHERN BORDER PARTNERS, L.P. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF INCOME (In Thousands, Except Per Unit Amounts)
Year Ended December 31, 2000 1999 1998 OPERATING REVENUES Operating revenues $363,688 $321,280 $217,592 Provision for rate refunds (23,956) (2,317) -- Operating revenues, net 339,732 318,963 217,592 OPERATING EXPENSES Operations and maintenance 62,097 53,451 44,770 Depreciation and amortization 60,699 54,842 43,885 Taxes other than income 28,634 30,952 22,012 Regulatory credit -- -- (8,878) Operating expenses 151,430 139,245 101,789 OPERATING INCOME 188,302 179,718 115,803 INTEREST EXPENSE Interest expense 81,881 67,807 49,923 Interest expense capitalized (386) (98) (19,001) Interest expense, net 81,495 67,709 30,922 OTHER INCOME Allowance for equity funds used during construction 305 101 10,237 Equity earnings (losses) of unconsolidated affiliates (647) -- -- Other income, net 8,374 4,461 2,971 Other income 8,032 4,562 13,208 MINORITY INTERESTS IN NET INCOME 38,119 35,568 30,069 NET INCOME TO PARTNERS $ 76,720 $ 81,003 $ 68,020 NET INCOME PER UNIT $ 2.50 $ 2.70 $ 2.27 NUMBER OF UNITS USED IN COMPUTATION 29,665 29,347 29,345 The accompanying notes are an integral part of these consolidated financial statements.
NORTHERN BORDER PARTNERS, L.P. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS (In Thousands)
Year Ended December 31, 2000 1999 1998 CASH FLOWS FROM OPERATING ACTIVITIES: Net income to partners $ 76,720 $ 81,003 $ 68,020 Adjustments to reconcile net income to partners to net cash provided by operating activities: Depreciation and amortization 61,054 54,895 43,899 Minority interests in net income 38,119 35,568 30,069 Provision for rate refunds 25,082 2,317 -- Rate refunds paid (22,673) -- -- Allowance for equity funds used during construction (305) (101) (10,237) Reserves and deferred credits (4,801) 1,077 (24) Regulatory credit -- -- (9,105) Changes in components of working capital (2,279) (1,482) (19,243) Other (1,302) 91 470 Total adjustments 92,895 92,365 35,829 Net cash provided by operating activities 169,615 173,368 103,849 CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures for property, plant and equipment, net (19,721) (102,270) (652,194) Acquisition of businesses (229,505) (31,895) -- Investments in unconsolidated affiliates (8,766) -- -- Net cash used in investing activities (257,992) (134,165) (652,194) CASH FLOWS FROM FINANCING ACTIVITIES: Cash distributions General and limited partners (80,411) (73,160) (68,876) Minority Interests (40,471) (38,149) (18,362) Contributions received from Minority Interests -- -- 66,900 Issuance of partnership interests, net 60,696 -- 7,554 Issuance of long-term debt, net 431,148 313,526 498,000 Retirement of long-term debt (304,817) (270,805) (2,523) Increase in cash overdraft 22,437 -- -- Proceeds received upon termination of derivatives 15,005 12,896 -- Long-term debt financing costs (2,774) (1,626) (63) Net cash provided by (used in) financing activities 100,813 (57,318) 482,630 NET CHANGE IN CASH AND CASH EQUIVALENTS 12,436 (18,115) (65,715) Cash and cash equivalents-beginning of year 22,927 41,042 106,757 Cash and cash equivalents-end of year $ 35,363 $ 22,927 $ 41,042 Changes in components of working capital: Accounts receivable $ (8,502) $ (8,691) $ (1,628) Materials and supplies (1,313) (221) 269 Accounts payable 4,755 (3,897) (11,830) Accrued taxes other than income 1,686 6,468 (368) Accrued interest (1,973) 5,146 1,696 Over/under recovered cost of service 3,068 (287) (7,382) Total $ (2,279) $ (1,482) $ (19,243) The accompanying notes are an integral part of these consolidated financial statements.
NORTHERN BORDER PARTNERS, L.P. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' CAPITAL (In Thousands)
Total General Common Subordinated Partners' Partners Units Units Capital Partners' Capital at December 31, 1997 $10,015 $394,587 $ 96,126 $500,728 Net income to partners 1,359 52,077 14,584 68,020 Issuance of partnership interests, net 151 7,457 (54) 7,554 Distributions paid (1,377) (52,733) (14,766) (68,876) Partners' Capital at December 31, 1998 10,148 401,388 95,890 507,426 Subordinated Units converted to Common Units -- 95,890 (95,890) -- Net income to partners 1,710 79,293 -- 81,003 Distributions paid (1,553) (71,607) -- (73,160) Partners' Capital at December 31, 1999 10,305 504,964 -- 515,269 Net income to partners 2,566 74,154 -- 76,720 Issuance of partnership interests, net 1,214 59,482 -- 60,696 Distributions paid (2,640) (77,771) -- (80,411) Partners' Capital at December 31, 2000 $11,445 $560,829 $ -- $572,274 The accompanying notes are an integral part of these consolidated financial statements.
NORTHERN BORDER PARTNERS, L. P. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. ORGANIZATION AND MANAGEMENT Northern Border Partners, L.P., a Delaware limited partnership, through a subsidiary limited partnership, Northern Border Intermediate Limited Partnership, a Delaware limited partnership, collectively referred to herein as the Partnership, owns a 70% general partner interest in Northern Border Pipeline Company (Northern Border Pipeline). The remaining 30% general partner interest in Northern Border Pipeline is owned by TC PipeLines Intermediate Limited Partnership (TC PipeLines). Black Mesa Holdings, Inc. (Black Mesa) and Crestone Energy Ventures, L.L.C. (Crestone Energy Ventures)(formerly NBP Energy Pipelines, L.L.C.) are wholly-owned subsidiaries of the Partnership. Northern Plains Natural Gas Company (Northern Plains), a wholly- owned subsidiary of Enron Corp. (Enron), Pan Border Gas Company (Pan Border), a wholly-owned subsidiary of Northern Plains, and Northwest Border Pipeline Company (Northwest Border), a wholly-owned subsidiary of The Williams Companies, Inc. serve as the General Partners of the Partnership and collectively own a 2% general partner interest in the Partnership. In December 1998, Northern Plains acquired Pan Border from a subsidiary of Duke Energy Corporation. At the closing of the acquisition, Pan Border's sole asset consisted of its general partner interest in the Partnership. The General Partners or their affiliates also own common units representing, in the aggregate, an effective 13.5% limited partner interest in the Partnership at December 31, 2000 (see Note 8). The Partnership is managed by or is under the direction of a committee (Partnership Policy Committee) consisting of one person appointed by each General Partner. The members appointed by Northern Plains, Pan Border and Northwest Border have 50%, 32.5% and 17.5%, respectively, of the voting interest on the Partnership Policy Committee. The Partnership has entered into an administrative services agreement with NBP Services Corporation (NBP Services), a wholly-owned subsidiary of Enron, pursuant to which NBP Services provides certain administrative, operating and management services for the Partnership and is reimbursed for its direct and indirect costs and expenses. Northern Border Pipeline is a general partnership, formed in 1978, pursuant to the Texas Uniform Partnership Act. Northern Border Pipeline owns a 1,214-mile natural gas transmission pipeline system extending from the United States-Canadian border near Port of Morgan, Montana, to a terminus near Manhattan, Illinois. Northern Border Pipeline is managed by a Management Committee that includes three representatives from the Partnership (one representative appointed by each of the General Partners of the Partnership) and one representative from TC PipeLines. The Partnership's representatives selected by Northern Plains, Pan Border and Northwest Border have 35%, 22.75% and 12.25%, respectively, of the voting interest on the Northern Border Pipeline Management Committee. The representative designated by TC PipeLines votes the remaining 30% interest. The day-to-day management of Northern Border Pipeline's affairs is the responsibility of Northern Plains (the Operator), as defined by the operating agreement between Northern Border Pipeline and Northern Plains. Northern Border Pipeline is charged for the salaries, benefits and expenses of the Operator. For the years ended December 31, 2000, 1999 and 1998, Northern Border Pipeline reimbursed the Operator approximately $31.7 million, $29.7 million and $30.0 million, respectively. Additionally, Northern Border Pipeline utilizes Enron affiliates for management on pipeline expansion and extension projects. The Northern Border Pipeline partnership agreement provides that distributions to Northern Border Pipeline's partners are to be made on a pro rata basis according to each partner's capital account balance. The Northern Border Pipeline Management Committee determines the amount and timing of such distributions. Any changes to, or suspension of, the cash distribution policy of Northern Border Pipeline requires the unanimous approval of the Northern Border Pipeline Management Committee. Crestone Energy Ventures owns a 49% common membership interest and a 100% class A share interest in Bighorn Gas Gathering, L.L.C. (Bighorn); a 33% interest in Fort Union Gas Gathering, L.L.C. (Fort Union); and a 35% interest in Lost Creek Gathering, L.L.C. (Lost Creek). Crestone Gathering Services, L.L.C. (Crestone Gathering Services) is a wholly-owned subsidiary of Crestone Energy Ventures. Crestone Energy Ventures acquired its interests in Fort Union, Lost Creek, Crestone Gathering Services and a portion of Bighorn in September 2000 (see Note 3). Collectively, Crestone Gathering Services, Bighorn, Fort Union and Lost Creek own over 300 miles of gas gathering facilities in Wyoming. The gathering facilities interconnect to the interstate gas pipeline grid serving gas markets in the Rocky Mountains, the Midwest and California. NBP Services provides certain administrative and management services for Crestone Energy Ventures. Black Mesa, through a wholly-owned subsidiary, owns a 273-mile, 18- inch diameter coal slurry pipeline that originates at a coal mine in Kayenta, Arizona and ends at the 1,500 megawatt Mohave Power Station located in Laughlin, Nevada. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (A) Principles of Consolidation and Use of Estimates The consolidated financial statements include the assets, liabilities and results of operations of the Partnership and its majority-owned subsidiaries. The Partnership operates through a subsidiary limited partnership of which the Partnership is the sole limited partner and the General Partners are the sole general partners. The 30% ownership of Northern Border Pipeline by TC PipeLines is accounted for as a minority interest. All significant intercompany items have been eliminated in consolidation. The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. (B) Government Regulation Northern Border Pipeline is subject to regulation by the Federal Energy Regulatory Commission (FERC). Northern Border Pipeline's accounting policies conform to Statement of Financial Accounting Standards (SFAS) No. 71, "Accounting for the Effects of Certain Types of Regulation." Accordingly, certain assets that result from the regulated ratemaking process are recorded that would not be recorded under generally accepted accounting principles for nonregulated entities. At December 31, 2000 and 1999, Northern Border Pipeline has reflected regulatory assets of approximately $12.4 million and $12.1 million, respectively, in Other Assets on the consolidated balance sheet. Northern Border Pipeline is recovering the regulatory assets from its shippers over varying time periods, which range from four to 43 years. (C) Revenue Recognition Northern Border Pipeline transports gas for shippers under a tariff regulated by the FERC. The tariff specifies the calculation of amounts to be paid by shippers and the general terms and conditions of transportation service on the pipeline system. Northern Border Pipeline's revenues are derived from agreements for the receipt and delivery of gas at points along the pipeline system as specified in each shipper's individual transportation contract. Northern Border Pipeline does not own the gas that it transports, and therefore it does not assume the related natural gas commodity risk. See Notes 4 and 5 for a further discussion of Northern Border Pipeline's tariff and transportation agreements. (D) Cash and Cash Equivalents Cash equivalents consist of highly liquid investments with original maturities of three months or less. The carrying amount of cash and cash equivalents approximates fair value because of the short maturity of these investments. (E) Income Taxes Income taxes are the responsibility of the partners and are not reflected in these financial statements. However, the Northern Border Pipeline tariff establishes the method of accounting for and calculating income taxes and requires Northern Border Pipeline to reflect in its financial records the income taxes which would have been paid or accrued if Northern Border Pipeline were organized during the period as a corporation. As a result, for purposes of determining transportation rates in calculating the return allowed by the FERC, partners' capital and rate base are reduced by the amount equivalent to the net accumulated deferred income taxes. Such amounts were approximately $326 million and $316 million at December 31, 2000 and 1999, respectively, and are primarily related to accelerated depreciation and other plant-related differences. (F) Property, Plant and Equipment and Related Depreciation and Amortization Property, plant and equipment is stated at original cost. The original cost of utility property retired is charged to accumulated depreciation and amortization, net of salvage and cost of removal. No retirement gain or loss is included in income except in the case of extraordinary retirements or sales. Maintenance and repairs are charged to operations in the period incurred. The provision for depreciation and amortization of the transmission line is an integral part of Northern Border Pipeline's FERC tariff. The effective depreciation rates applied to Northern Border Pipeline's transmission plant in 2000, 1999 and 1998 were 2.25%, 2.0% and 2.5%, respectively. Based upon the rate case settlement discussed in Note 4, Northern Border Pipeline will continue to use a 2.25% depreciation rate. The effective depreciation rate applied to Crestone Energy Venture's gathering facilities was 3.33%. Composite rates are applied to all other functional groups of property having similar economic characteristics. (G) Allowance for Funds Used During Construction The allowance for funds used during construction (AFUDC) represents the estimated costs, during the period of construction, of funds used for construction purposes. For regulated activities, Northern Border Pipeline is permitted to earn a return on and recover AFUDC through its inclusion in rate base and the provision for depreciation. (H) Investments in Unconsolidated Affiliates The investments in unconsolidated affiliates are accounted for by the equity method. The excess of the Partnership's investments in unconsolidated affiliates over the underlying equity in the fair value of the net assets acquired is being amortized on a straight-line basis over 30 years. During 2000, the Partnership recorded amortization expense of $2.2 million related to its investments in unconsolidated affiliates, which is reflected as a component of equity earnings (losses) of unconsolidated affiliates in the Partnership's consolidated statement of income. See Note 7 for details on the Partnership's investments in unconsolidated affiliates and related equity earnings (losses). (I) Goodwill Goodwill consists of the excess of cost over fair value of the net assets acquired in business acquisitions and is being amortized using a straight-line method over 30 years. During 2000, 1999 and 1998, the Partnership recorded amortization expense of $0.5 million, $0.3 million and $0.3 million, respectively. This amortization expense is reflected as a component of depreciation and amortization in the Partnership's consolidated statement of income. (J) Risk Management Financial instruments are used in the management of the Partnership's interest rate exposure. A control environment has been established which includes policies and procedures for risk assessment and the approval, reporting and monitoring of financial instrument activities. As a result, Northern Border Pipeline has entered into various interest rate swap agreements with major financial institutions which hedge interest rate risk by effectively converting certain of its floating rate debt to fixed rate debt. Northern Border Pipeline does not use these instruments for trading purposes. The cost or benefit of the interest rate swap agreements is recognized currently as a component of interest expense. (K) Reclassifications Certain reclassifications have been made to the consolidated financial statements for prior years to conform with the current year presentation. 3. BUSINESS ACQUISITIONS In December 1999, Crestone Energy Ventures purchased a 39% common membership interest in Bighorn for approximately $31.9 million and in June 2000, Crestone Energy Ventures purchased 80% of class A shares in Bighorn for approximately $20.8 million. In September 2000, Crestone Energy Ventures purchased interests in gas gathering businesses in the Powder River and Wind River basins in Wyoming from Enron North America Corp. (ENA), a subsidiary of Enron, for approximately $208.7 million. The acquisition included the purchase of a 100% interest in Enron Midstream Services, L.L.C., now known as Crestone Gathering Services, a 33% interest in Fort Union and a 35% interest in Lost Creek. The purchase of Crestone Gathering Services increased Crestone Energy Venture's ownership in Bighorn to a 49% common membership interest and a 100% interest in the class A shares. The Partnership has accounted for these acquisitions using the purchase method of accounting. The purchase price has been allocated based upon the estimated fair value of the assets and liabilities acquired as of the acquisition date. The excess of the purchase price over the fair value of the Crestone Gathering Services net assets acquired is reflected as goodwill on the consolidated balance sheet. The investments in Bighorn, Fort Union and Lost Creek are being reflected in investments in unconsolidated affiliates on the consolidated balance sheet. See Note 7 for additional discussion of the Partnership's investments in unconsolidated affiliates. The following is a summary of the effects of the acquisitions made in 2000 and 1999 on the Partnership's consolidated financial position (amounts in thousands):
2000 1999 Current assets $ 1,949 $ -- Property, plant and equipment 29,789 -- Investments in unconsolidated affiliates 179,079 31,895 Goodwill 18,887 -- Current liabilities (199) -- $229,505 $31,895
If the acquisitions made in 2000 had occurred at the beginning of 2000, the Partnership's 2000 consolidated operating revenues would have been $343 million, net income to partners would have been $65 million and net income per unit would have been $2.00. These unaudited pro forma results are for illustrative purposes only and are not necessarily indicative of the operating results that would have occurred had the business acquisitions been consummated at that date, nor are they necessarily indicative of future operating results. Bighorn's ownership structure consists of common membership interests, which represents approximately 93.8% of its capitalization, and non-voting class A and class B shares, each of which represents approximately 3.1% of the total capitalization. Both of the non-voting classes of shares are subject to certain distribution preferences as well as limitations based on the cumulative number of wells connected to the Bighorn system at the end of each calendar year. These shares will receive an income allocation equal to the cash distributions received and are not entitled to any other allocations of income or distributions of cash. During 1999 and 2000, no income allocation or cash distribution was made to the non-voting shares. Ownership of these shares does not affect the amount of capital contributions that are required to be made to the operations of Bighorn by the owners of the common membership interests. 4. RATES AND REGULATORY ISSUES Rate Case Northern Border Pipeline's revenue is derived from agreements with various shippers for the transportation of natural gas. It transports gas under a FERC regulated tariff. Northern Border Pipeline had used a cost of service form of tariff since its inception but agreed to convert to a stated rate form of tariff as part of the settlement of its current rate case discussed below. Under the cost of service tariff, Northern Border Pipeline was provided an opportunity to recover all of the operations and maintenance costs of the pipeline, taxes other than income taxes, interest, depreciation and amortization, an allowance for income taxes and a regulated return on equity. Northern Border Pipeline was generally allowed to collect from its shippers a return on regulated rate base as well as recover that rate base through depreciation and amortization. Billings for the firm transportation agreements were based on contracted volumes to determine the allocable share of the cost of service and were not dependent upon the percentage of available capacity actually used. Under the cost of service tariff, Northern Border Pipeline billed on an estimated basis for a six-month cycle. Any net excess or deficiency resulting from the comparison of the actual cost of service determined for the period in accordance with the FERC tariff to the estimated billing was accumulated, including carrying charges thereon, and was either billed to or credited back to the shippers. Revenues reflected actual cost of service. An amount equal to differences between billing estimates and the actual cost of service, including carrying charges, was reflected in current assets or current liabilities. Northern Border Pipeline filed a rate proceeding with the FERC in May 1999 for, among other things, a redetermination of its allowed equity rate of return. The total annual cost of service increase due to Northern Border Pipeline's proposed changes was approximately $30 million. In June 1999, the FERC issued an order in which the proposed changes were suspended until December 1, 1999, after which the proposed changes were implemented with subsequent billings subject to refund. In September 2000, Northern Border Pipeline filed a stipulation and agreement with the FERC that documented the proposed settlement of its pending rate case. The settlement was approved by the FERC in December 2000. Under the approved settlement, effective December 1, 1999, shippers will pay stated transportation rates based on a straight fixed variable rate design. Under the straight fixed variable rate design, approximately 98% of the agreed upon revenue level is attributed to demand charges, based upon contracted firm capacity, and the remaining 2% is attributed to commodity charges, based on the volumes of gas actually transported on the system. From December 1, 1999, through and including December 31, 2000, the rates were based upon an annual revenue level of $307 million. For periods after December 31, 2000, the rates are based upon an annual revenue level of $305 million. The settlement further provides for the incorporation into Northern Border Pipeline's rate base all of the construction costs of The Chicago Project, which was Northern Border Pipeline's expansion and extension of its pipeline from near Harper, Iowa to a point near Manhattan, Illinois. Northern Border Pipeline had placed into service the facilities for The Chicago Project in December 1998. Under the settlement, both Northern Border Pipeline and its existing shippers will not be able to seek rate changes until November 1, 2005, at which time Northern Border Pipeline must file a new rate case. After the FERC approved the rate case settlement and prior to the end of 2000, Northern Border Pipeline made estimated refund payments to its shippers totaling approximately $22.7 million, primarily related to the period from December 1999 to November 2000. At December 31, 2000, Northern Border Pipeline had estimated its remaining refund obligation through the end of 2000 to be approximately $4.7 million, which is expected to be paid in the first quarter of 2001. Northern Border Pipeline's operating revenues for 2000 reflect the significant terms of the approved settlement. Certificate application In October 1998, Northern Border Pipeline filed a certificate application with the FERC to seek approval to expand and extend its pipeline system into Indiana (Project 2000). When completed, Project 2000 will afford shippers on the expanded and extended pipeline system access to industrial gas consumers in northern Indiana. The certificate application was subsequently amended by Northern Border Pipeline in March and December 1999. On March 16, 2000, the FERC issued an order granting Northern Border Pipeline's application for a certificate to construct and operate the proposed facilities. The FERC approved Northern Border Pipeline's request for rolled-in rate treatment based upon the proposed project costs. The project has a targeted in-service date of November 2001. The capital expenditures for the project are estimated to be approximately $94 million, of which $10.8 million had been incurred through December 31, 2000. 5. TRANSPORTATION AGREEMENTS Northern Border Pipeline's operating revenues are collected pursuant to the FERC tariff through firm transportation service agreements (firm service agreements). The firm service agreements extend for various terms with termination dates that range from October 2001 to December 2013. Northern Border Pipeline also has interruptible service agreements with numerous other shippers as a result of its self-implementing blanket transportation authority. Under the approved settlement of Northern Border Pipeline's rate case discussed in Note 4, in certain situations, Northern Border Pipeline will reduce the billings for the firm service agreements by one half of the revenues received from the interruptible service agreements through October 31, 2003. After October 31, 2003, all revenues from interruptible transportation service will be retained by Northern Border Pipeline. Northern Border Pipeline's largest shipper, Pan-Alberta Gas (U.S.) Inc. (PAGUS), is presently obligated for approximately 25.5% of the contracted firm capacity through three firm service agreements which expire in October 2003. Financial guarantees exist through October 2001 for approximately 16.3% of the contracted firm capacity of PAGUS, including 10.5% guaranteed by Northern Natural Gas Company, a wholly-owned subsidiary of Enron. The remaining obligation of PAGUS is supported by various credit support arrangements, including among others, a letter of credit, an escrow account and an upstream capacity transfer agreement. Operating revenues from the PAGUS firm service agreements and interruptible service agreements for the years ended December 31, 2000, 1999 and 1998 were $65.0 million, $76.6 million and $87.3 million, respectively. TransCanada Energy Marketing USA, Inc. (TransCanada Energy), an affiliate of TC PipeLines, has firm service agreements representing approximately 11.4% of contracted capacity. The firm service agreements for TransCanada Energy extend for various terms with termination dates that range from October 2003 to December 2008. Other shippers affiliated with the partners of Northern Border Pipeline have firm service agreements representing approximately 7.1% of contracted capacity. These firm service agreements extend for various terms with termination dates that range from January 2002 to May 2009. Operating revenues from the affiliated firm service agreements and interruptible service agreements for the years ended December 31, 2000, 1999, and 1998 were $58.5 million, $52.5 million and $22.4 million, respectively. Crestone Energy Ventures and Crestone Gathering Services (collectively Crestone) provide gas gathering and administrative services to third parties, ENA, and the Partnership's unconsolidated affiliates. Crestone's total revenues from affiliates for the year ended December 31, 2000, were $7.3 million. Black Mesa's operating revenue is derived from a pipeline transportation agreement (Pipeline Agreement) with the coal supplier for the Mohave Power Station that expires in December 2005. The pipeline is the sole source of fuel for the Mohave plant. Under the terms of the Pipeline Agreement, Black Mesa receives a monthly demand payment, a per ton commodity payment and a reimbursement for certain other expenses. 6. CREDIT FACILITIES AND LONG-TERM DEBT Detailed information on long-term debt is as follows:
December 31, (In thousands) 2000 1999 Northern Border Pipeline 1992 Pipeline Senior Notes - average 8.49% and 8.43% at December 31, 2000 and 1999, respectively, due from 2000 to 2003 $ 184,000 $ 250,000 Pipeline Credit Agreement Term loan, due 2002 424,000 439,000 Five-year revolving credit facility 45,000 -- 1999 Pipeline Senior Notes - 7.75%, due 2009 200,000 200,000 Northern Border Partners, L.P. Partnership Senior Notes - 8 7/8%, due 2010 250,000 -- Partnership Credit Agreements - Three-year revolving credit facility 26,300 -- Credit agreements - average 6.78%, due 2000 -- 114,500 Black Mesa 10.7% Note agreement, due quarterly to 2004 13,910 17,027 Unamortized proceeds from termination of derivatives 26,046 12,397 Unamortized debt premium (discount) 2,706 (938) Total 1,171,962 1,031,986 Less: Current maturities of long-term debt 44,464 183,617 Long-term debt $1,127,498 $ 848,369
In June 2000, the Partnership completed a private offering of $150 million of 8 7/8% Senior Notes due 2010 (Partnership Senior Notes). The proceeds from the private offering, net of debt discounts and issuance costs, were primarily used to reduce existing indebtedness under a November 1997 credit agreement and to acquire the class A shares in Bighorn (see Note 3). In September 2000, the Partnership completed a private offering of an additional $100 million of Partnership Senior Notes. The proceeds from this offering, along with the proceeds from the credit agreements described below, were used for the acquisition of the interests in gas gathering businesses from ENA (see Note 3). The Partnership Senior Notes were subsequently exchanged in a registered offering for notes with substantially identical terms. The Partnership entered into 10-year interest rate swap agreements with an aggregate notional principal amount of $150 million in June 2000. The interest rate swap agreements were terminated in December 2000 and resulted in proceeds to the Partnership of approximately $15.0 million. The proceeds are being amortized against interest expense over the 10-year life of the terminated interest rate swap agreements. In June 2000, the Partnership entered into two credit agreements with certain financial institutions, a $75 million 364-day credit agreement and a $75 million three-year revolving credit agreement (collectively, Partnership Credit Agreements). The Partnership Credit Agreements are to be used for capital expenditures, working capital and general business purposes. The Partnership Credit Agreements permit the Partnership to choose among various interest rate options, to specify the portion of the borrowings to be covered by specific interest rate options and to specify the interest rate period. The Partnership is required to pay a fee on the principal commitment amount of $150 million. At December 31, 2000, the average effective interest rate on the Partnership Credit Agreements was 8.92% In August 1999, Northern Border Pipeline completed a private offering of $200 million of 7.75% Senior Notes due 2009, which notes were subsequently exchanged in a registered offering for notes with substantially identical terms (1999 Pipeline Senior Notes). Also in August 1999, Northern Border Pipeline received approximately $12.9 million from the termination of interest rate forward agreements, which is being amortized against interest expense over the life of the 1999 Pipeline Senior Notes. The interest rate forward agreements, which had an aggregate notional amount of $150 million, had been executed in September 1998 to hedge the interest rate on a planned issuance of fixed rate debt in 1999. The proceeds from the private offering, net of debt discounts and issuance costs, and the termination of the interest rate forward agreements were used to reduce existing indebtedness under a June 1997 credit agreement. In June 1997, Northern Border Pipeline entered into a credit agreement (Pipeline Credit Agreement) with certain financial institutions to borrow up to an aggregate principal amount of $750 million. The Pipeline Credit Agreement is comprised of a $200 million five-year revolving credit facility to be used for the retirement of a previously existing bank loan agreement and for general business purposes, and a $550 million three-year revolving credit facility to be used for the construction of The Chicago Project. Effective March 1999, in accordance with the provisions of the Pipeline Credit Agreement, Northern Border Pipeline converted the three-year revolving credit facility to a term loan maturing in June 2002. The Pipeline Credit Agreement permits Northern Border Pipeline to choose among various interest rate options, to specify the portion of the borrowings to be covered by specific interest rate options and to specify the interest rate period, subject to certain parameters. Northern Border Pipeline is required to pay a facility fee on the remaining aggregate principal commitment amount of $624 million. At December 31, 2000 and 1999, Northern Border Pipeline had an outstanding interest rate swap agreement with a notional amount of $40 million, which will terminate in November 2001. Under the agreement, Northern Border Pipeline makes payments to counterparties at fixed rates and in return receives payments at variable rates based on the London Interbank Offered Rate. At December 31, 2000 and 1999, Northern Border Pipeline was in a payable position relative to its counterparties. The average effective interest rate of Northern Border Pipeline's variable rate debt, taking into consideration the interest rate swap agreement, was 7.06% and 6.73% at December 31, 2000 and 1999, respectively. Interest paid, net of amounts capitalized, during the years ended December 31, 2000, 1999 and 1998 was $84.2 million, $62.5 million and $28.7 million, respectively. Aggregate repayments of long-term debt required for the next five years are as follows: $44 million, $551 million, $96 million, and $2 million for 2001, 2002, 2003, and 2004, respectively. There are no scheduled debt maturities for 2005. Certain of Northern Border Pipeline's long-term debt and credit arrangements contain requirements as to the maintenance of minimum partners' capital and debt to capitalization ratios which restrict the incurrence of other indebtedness by Northern Border Pipeline and also place certain restrictions on distributions to the partners of Northern Border Pipeline. Under the most restrictive of the covenants, as of December 31, 2000 and 1999, respectively, $136 million and $132 million of partners' capital of Northern Border Pipeline could be distributed. The indenture under which the Partnership Senior Notes were issued does not limit the amount of indebtedness or other obligations that the Partnership may incur, but does contain material financial covenants, including restrictions on the incurrence of secured indebtedness. The Partnership Credit Agreements, as amended, require the maintenance of a ratio of debt to total capital, excluding the nonrecourse debt of subsidiaries, of no more than 45% currently and gradually decreasing to 35% by September 30, 2001. The following estimated fair values of financial instruments represent the amount at which each instrument could be exchanged in a current transaction between willing parties. Based on quoted market prices for similar issues with similar terms and remaining maturities, the estimated fair value of the 1992 Pipeline Senior Notes was approximately $191 million and $273 million at December 31, 2000 and 1999, respectively. The estimated fair value of the 1999 Pipeline Senior Notes was approximately $213 million and $201 million at December 31, 2000 and 1999, respectively. The estimated fair value of the Partnership Senior Notes was approximately $271 million at December 31, 2000. The estimated fair value of the Black Mesa note agreement was approximately $15 million and $18 million at December 31, 2000 and 1999, respectively. At December 31, 2000 and 1999, the estimated fair value which would be payable to terminate the interest rate swap agreement, taking into account current interest rates, was approximately $1 million. The Partnership presently intends to maintain the current schedule of maturities for the 1992 Pipeline Senior Notes, 1999 Pipeline Senior Notes, Partnership Senior Notes, the Black Mesa note agreement and the interest rate swap agreement that will result in no gains or losses on their respective repayment. The fair value of the Pipeline Credit Agreement and Partnership Credit Agreements approximates the carrying value since the interest rates are periodically adjusted to reflect current market conditions. 7. UNCONSOLIDATED AFFILIATES The Partnership's investments in unconsolidated affiliates which are accounted for by the equity method is as follows:
Net Ownership December 31, (In thousands) Interest 2000 1999 Bighorn (a) $ 83,562 $31,895 Fort Union 33% 69,872 -- Lost Creek 35% 68,191 -- $221,625(b) $31,895 (a) As discussed in Note 3, the Partnership's common membership interest in Bighorn increased from 39% at December 31, 1999 to 49% at December 31, 2000. The Partnership also held 100% of the non-voting class A shares of Bighorn at December 31, 2000. (b) At December 31, 2000 and 1999, the unamortized excess of the Partnership's investments in unconsolidated affiliates was $189.5 million and $20.0 million, respectively.
The Partnership's equity earnings (losses) of unconsolidated affiliates is as follows:
(In thousands) 2000(a) Bighorn $(1,394) Fort Union 285 Lost Creek 462 $ (647) (a) Initial investments in unconsolidated affiliates began in late December 1999.
Summarized combined financial information of the Partnership's unconsolidated affiliates is presented below:
December 31, (In thousands) 2000 1999(b) Balance sheet Current assets (a) $ 15,202 $ 1,770 Property, plant and equipment, net 160,558 32,619 Other noncurrent assets 1,329 -- Current liabilities 4,509 1,912 Long-term debt 99,364 -- Other noncurrent liabilities 4,008 -- Owners' equity 69,208 32,477 (a) Includes $434 thousand receivable from the Partnership at December 31, 2000. (b) Includes only balances from Bighorn.
(In thousands) 2000 (a) Income statement Operating revenues $8,598 Operating expenses 3,871 Net income 4,116 Distributions paid to the Partnership $ 933 (a) Includes entire year results for Bighorn, which was acquired in late December 1999, and results for Fort Union and Lost Creek after they were acquired in September 2000.
8. PARTNERS' CAPITAL At December 31, 2000, partners' capital consisted of 31,503,563 common units representing an effective 98% limited partner interest in the Partnership (including 13.5% held collectively by the General Partners or their affiliates) and a 2% general partner interest. At December 31, 1999, partners' capital consisted of 29,347,313 common units representing an effective 98% limited partner interest in the Partnership (including 14.5% held collectively by the General Partners or their affiliates) and a 2% general partner interest. Effective January 19, 1999, the Partnership converted its 6,420,000 outstanding subordinated units into an equal number of common units since the Partnership Policy Committee determined the subordination period ended as a result of satisfying the criteria set forth in the partnership agreement. In November 2000, the Partnership sold, through an underwritten public offering, 2,156,250 common units. In conjunction with the issuance of the additional common units, the Partnership's general partners made capital contributions to the Partnership to maintain a 2% general partner interest in accordance with the partnership agreements. The net proceeds of the public offering and the general partners' capital contribution totaled approximately $60.7 million and were primarily used to repay amounts borrowed under the Partnership Credit Agreements. In January 1998, the Partnership sold, through an underwritten public offering, 225,000 common units. The units sold in 1998 resulted from the underwriters exercise of an over-allotment option to purchase a limited number of additional common units after an offering of common units in December 1997. The net proceeds, of the public offering and the associated general partners' capital contributions, was approximately $7.6 million. The Partnership will make distributions to its partners with respect to each calendar quarter in an amount equal to 100% of its Available Cash. "Available Cash" generally consists of all of the cash receipts of the Partnership adjusted for its cash disbursements and net changes to cash reserves. Available Cash will generally be distributed 98% to the Unitholders and 2% to the General Partners. Partnership income is allocated to the General Partners and the limited partners in accordance with their respective partnership percentages, after giving effect to any priority income allocations for incentive distributions that are allocated 100% to the General Partners. As an incentive, the General Partners' percentage interest in quarterly distributions is increased after certain specified target levels are met (see Note 10). At the time the quarterly distributions exceed $0.605 per unit, the General Partners receive 15% of the excess. As the quarterly distributions are increased above $0.715 per unit, the General Partners receive increasing percentages in excess of the targets reaching a maximum of 50% of the excess of the highest target level. 9. COMMITMENTS AND CONTINGENCIES Firm Transportation Obligations and Other Commitments Crestone Energy Ventures has firm transportation agreements with Fort Union and Lost Creek. Under these agreements, Crestone Energy Ventures must make specified minimum payments each month. At December 31, 2000, the estimated aggregate amounts of such required future payments were $8.2 million annually for 2001 through 2005 and $35.7 million for later years. At December 31, 2000, the Partnership is a guarantor on a construction loan outstanding of an unconsolidated affiliate of approximately $23.1 million. The Partnership has also guaranteed the performance of an unconsolidated affiliate in connection with a credit agreement that expires in September 2009. At December 31, 2000, the guarantee was $2.9 million. Capital expenditure and investment program Total capital expenditures for 2001 are estimated to be $176 million. This includes approximately $81 million for Northern Border Pipeline's Project 2000 (see Note 4), $79 million for Crestone Energy Ventures gathering facilities and approximately $16 million for renewals and replacements of the existing facilities. Crestone Energy Ventures also estimates that it will be required to make additional investments in its unconsolidated affiliates of approximately $22 million in 2001 to support their capital expenditure projects. Funds required to meet the capital requirements for 2001 are anticipated to be provided primarily from debt borrowings and internal sources. Environmental Matters The Partnership is not aware of any material contingent liabilities with respect to compliance with applicable environmental laws and regulations. Other Various legal actions that have arisen in the ordinary course of business are pending. The Partnership believes that the resolution of these issues will not have a material adverse impact on the Partnership's results of operations or financial position. 10. NET INCOME PER UNIT Net income per unit is computed by dividing net income, after deduction of the General Partners' allocation, by the weighted average number of units outstanding. The General Partners' allocation is equal to an amount based upon their combined 2% general partner interest, adjusted to reflect an amount equal to incentive distributions. Net income per unit was determined as follows:
(In thousands, except Year ended December 31, per unit amounts) 2000 1999 1998 Net income to partners $76,720 $81,003 $68,020 Net income allocated to General Partners (1,534) (1,620) (1,359) Adjustment to reflect incentive distributions (1,032) (90) -- (2,566) (1,710) (1,359) Net income allocable to units $74,154 $79,293 $66,661 Weighted average units outstanding 29,665 29,347 29,345 Net income per unit $ 2.50 $ 2.70 $ 2.27
11. ACCOUNTING PRONOUNCEMENTS In 1998, the Financial Accounting Standards Board (FASB) issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities." SFAS No. 133 establishes accounting and reporting standards requiring that every derivative instrument (including certain derivative instruments embedded in other contracts) be recorded on the balance sheet as either an asset or liability measured at its fair value. The statement requires that changes in the derivative's fair value be recognized currently in earnings unless specific hedge accounting criteria are met. Special accounting for qualifying hedges allows a derivative's gains and losses to offset related results on the hedged item in the income statement, and requires that a company formally document, designate and assess the effectiveness of transactions that receive hedge accounting. In June 1999, the FASB issued SFAS No. 137, which deferred the effective date of SFAS No. 133 to fiscal years beginning after June 15, 2000. In June 2000, the FASB issued SFAS No. 138, which amended certain guidance within SFAS No. 133. The Partnership and its subsidiaries will adopt SFAS No. 133 beginning January 1, 2001. The adoption of SFAS No. 133, as amended, will not have a material impact on the Partnership's financial position or results of operations. 12. GEOGRAPHIC AND BUSINESS SEGMENT INFORMATION The Partnership's business is divided into operating segments, defined as components of the enterprise about which financial information is available and evaluated regularly by the Partnership's executive management and the Partnership Policy Committee in deciding how to allocate resources to an individual segment and in assessing performance of the segment. The Partnership's reportable segments are strategic business units that offer different services. They are managed separately because each business requires different marketing strategies. The accounting policies of the segments are the same as those described in the summary of significant accounting policies in Note 2. The Partnership evaluates performance based on EBITDA (net income before minority interests; interest expense; and depreciation and amortization, including goodwill amortization, which is netted against equity earnings of unconsolidated affiliates) and operating income. Interest expense on the Partnership's debt is not allocated to the segments. Therefore, management believes that EBITDA is the dominant measurement of segment performance.
Gas Interstate Coal Gathering (In thousands) Pipeline Slurry (a) Other(b) Total 2000 Revenues from external customers $ 311,022 $ 21,170 $ 7,540 $ -- $ 339,732 Depreciation and amortization 57,328 2,977 394 -- 60,699 Operating income (loss) 184,167 4,355 2,019 (2,239) 188,302 Interest expense, net 65,161 1,677 -- 14,657 81,495 Equity earnings (losses) of unconsolidated affiliates -- -- (647) -- (647) Other income, net 8,058 32 -- 589 8,679 EBITDA 249,553 7,364 4,007 (1,650) 259,274 Capital expenditures 15,523 386 3,812 -- 19,721 Identifiable assets 1,768,505 29,605 58,230 4,755 1,861,095 Investments in unconsolidated affiliates -- -- 221,625 -- 221,625 Total assets $1,768,505 $ 29,605 $279,855 $ 4,755 $2,082,720 1999 Revenues from external customers $ 298,347 $ 20,616 $ -- $ -- $ 318,963 Depreciation and amortization 51,908 2,934 -- -- 54,842 Operating income (loss) 177,411 3,670 -- (1,363) 179,718 Interest expense, net 60,214 1,997 -- 5,498 67,709 Other income, net 1,363 (39) -- 3,238 4,562 EBITDA 230,682 6,565 -- 1,875 239,122 Capital expenditures 101,678 592 -- -- 102,270 Identifiable assets 1,796,691 32,075 -- 2,776 1,831,542 Investments in unconsolidated affiliates -- -- 31,895 -- 31,895 Total assets $1,796,691 $ 32,075 $ 31,895 $ 2,776 $1,863,437 1998 Revenues from external customers $ 196,600 $ 20,992 $ -- $ -- $ 217,592 Depreciation and amortization 40,989 2,896 -- -- 43,885 Operating income (loss) 113,661 3,631 -- (1,489) 115,803 Interest expense, net 25,541 2,281 -- 3,100 30,922 Other income, net 12,111 640 -- 457 13,208 EBITDA 166,761 7,167 -- (1,032) 172,896 Capital expenditures 651,169 1,025 -- -- 652,194 Identifiable assets 1,790,889 34,421 -- 456 1,825,766 Total assets $1,790,889 $ 34,421 $ -- $ 456 $1,825,766 (a) Gas gathering operating results commence from the date of acquisition in September 2000 (see Note 4) except for equity earnings of Bighorn, which commenced in January 2000. (b) Includes other items not allocable to segments.
13. QUARTERLY FINANCIAL DATA (Unaudited)
(In thousands, except Operating Operating Net Income Net Income per unit amounts) Revenues, net Income to Partners per Unit 2000 First Quarter $81,517 $45,171 $17,966 $0.59 Second Quarter 82,536 44,747 18,042 0.60 Third Quarter 83,550 48,216 20,338 0.66 Fourth Quarter 92,129 50,168 20,374 0.65 1999 First Quarter $78,895 $44,961 $21,631 $0.72 Second Quarter 78,012 44,255 20,561 0.69 Third Quarter 79,046 44,728 19,357 0.65 Fourth Quarter 83,010 45,774 19,454 0.65
14. SUBSEQUENT EVENTS On January 18, 2001, the Partnership declared a cash distribution of $0.70 per unit ($2.80 per unit on an annualized basis) for the quarter ended December 31, 2000. The distribution is payable February 14, 2001, to unitholders of record at January 31, 2001. Report of Independent Public Accountants on Schedule To Northern Border Partners, L.P.: We have audited in accordance with auditing standards generally accepted in the United States, the consolidated financial statements of Northern Border Partners, L.P. and Subsidiaries included in this Form 10-K and have issued our report thereon dated January 22, 2001. Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The schedule of Northern Border Partners, L.P. and Subsidiaries listed in Item 14 of Part IV of this Form 10-K is the responsibility of the Company's management and is presented for purposes of complying with the Securities and Exchange Commission's rules and is not part of the basic financial statements. This schedule has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, fairly states in all material respects the financial data required to be set forth therein in relation to the basic financial statements taken as a whole. ARTHUR ANDERSEN LLP Omaha, Nebraska, January 22, 2001 SCHEDULE II NORTHERN BORDER PARTNERS, L.P. AND SUBSIDIARIES SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998 (In Thousands)
Column A Column B Column C Column D Column E Additions Deductions Balance at Charged to Charged For Purpose For Beginning Costs and to Other Which Reserves Balance at Description of Year Expenses Accounts Were Created End of Year Reserve for regulatory issues 2000 $7,376 $1,800 $-- $7,376 $1,800 1999 $6,726 $ 650 $-- $ -- $7,376 1998 $6,726 $ -- $-- $ -- $6,726
UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 _______________________ EXHIBITS TO F O R M 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2000 Commission file number: 1-12202 NORTHERN BORDER PARTNERS, L.P. (Exact name of registrant as specified in its charter) DELAWARE 93-1120873 (State or other jurisdiction (I.R.S. Employer of incorporation Identification No.) or organization) 1400 Smith Street, Houston, Texas 77002-7369 (Address of principal executive offices)(zip code) Registrant's telephone number, including area code: 713-853-6161 ___________________ EXHIBIT INDEX * 3.1 Form of Amended and Restated Agreement of Limited Partnership of Northern Border Partners, L.P. (Exhibit 3.1 No. 2 to the Partnership's Form S-1 Registration Statement, Registration No. 33-66158 ("Form S-1")). * 3.2 Form of Amended and Restated Agreement of Limited Partnership For Northern Border Intermediate Limited Partnership (Exhibit 10.1 to Form S-1). * 4.1 Indenture, dated as of June 2, 2000, between the registrants and Bank One Trust Company, N.A. (Exhibit 4.1 to the Partnership's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2000 ("June 2000 10-Q")). * 4.2 First Supplemental Indenture, dated as of September 14, 2000, between the registrants and Bank One Trust Company, N.A.(Exhibit 4.2 to Form S-4 Registration Statement, Registration No. 333-46212 ("NBP Form S-4")). 4.3 Indenture, dated as of March 21, 2001, between Northern Border Partners, L.P. and Northern Border Intermediate Limited Partnership and Bank One Trust Company, N.A., Trustee. 4.4 Registration Rights Agreement dated March 21, 2001 by and among Northern Border Partners, L.P., Northern Border Intermediate Limited Partnership, Banc of America Securities LLC, SunTrust Equitable Securities Corporation, Banc One Capital Markets, Inc. and BMO Nesbitt Burns Corp. * 4.5 Indenture, dated as of August 17, 1999, between Northern Border Pipeline Company and Bank One Trust Company, NA, successor to The First National Bank of Chicago, as trustee. (Exhibit No. 4.1 to Northern Border Pipeline Company's Form S-4 Registration Statement, Registration No. 333-88577 ("NB Form S-4"). *10.1 Northern Border Pipeline Company General Partnership Agreement between Northern Plains Natural Gas Company, Northwest Border Pipeline Company, Pan Border Gas Company, TransCanada Border Pipeline Ltd. and TransCan Northern Ltd., effective March 9, 1978, as amended (Exhibit 10.2 to Form S-1). *10.2 Operating Agreement between Northern Border Pipeline Company and Northern Plains Natural Gas Company, dated February 28, 1980 (Exhibit 10.3 to Form S-1). *10.3 Administrative Services Agreement between NBP Services Corporation, Northern Border Partners, L.P. and Northern Border Intermediate Limited Partnership (Exhibit 10.4 to Form S-1). *10.4 Note Purchase Agreement between Northern Border Pipeline Company and the parties listed therein, dated July 15, 1992 (Exhibit 10.6 to Form S-1). *10.4.1 Supplemental Agreement to the Note Purchase Agreement dated as of June 1, 1995 (Exhibit 10.6.1 to the Partnership's Annual Report on Form 10-K for the year ended December 31, 1995 ("1995 10-K")). *10.5 Guaranty made by Panhandle Eastern Pipeline Company, dated October 31, 1992 (Exhibit 10.9 to Form S-1). *10.6 Northern Border Pipeline Company U.S. Shippers Service Agreement between Northern Border Pipeline Company and Enron Gas Marketing, Inc., dated June 22, 1990 (Exhibit 10.10 to Form S-1). *10.6.1 Amended Exhibit A to Northern Border Pipeline Company U.S. Shippers Service Agreement between Northern Border Pipeline Company and Enron Gas Marketing, Inc. (Exhibit 10.10.1 to the Partnership's Annual Report on Form 10-K for the year ended December 31, 1993 ("1993 10-K")). *10.6.2 Amended Exhibit A to Northern Border Pipeline U.S. Shippers Service Agreement between Northern Border Pipeline Company and Enron Gas Marketing, Inc., effective November 1, 1994 (Exhibit 10.10.2 to the Partnership's Annual Report on Form 10-K for the year ended December 31, 1994). *10.6.3 Amended Exhibit A's to Northern Border Pipeline Company U.S. Shipper Service Agreement effective, August 1, 1995 and November 1, 1995 (Exhibit 10.10.3 to 1995 10-K). *10.6.4 Amended Exhibit A to Northern Border Pipeline Company U.S. Shipper Service Agreement effective April l, 1998 (Exhibit 10.10.4 to the Partnership's Annual Report on Form 10-K for the year ended December 31, 1997 ("1997 10-K")). *10.7 Guaranty made by Northern Natural Gas Company, dated October 7, 1993 (Exhibit 10.11.1 to 1993 10-K). *10.8 Guaranty made by Northern Natural Gas Company, dated October 7, 1993 (Exhibit 10.11.2 to 1993 10-K). *10.9 Northern Border Pipeline Company U.S. Shippers Service Agreement between Northern Border Pipeline Company and Western Gas Marketing Limited, as agent for TransCanada PipeLines Limited, dated December 15, 1980 (Exhibit 10.13 to Form S-1). *10.9.1 Amendment to Northern Border Pipeline Company Service Agreement extending the term effective November 1, 1995 (Exhibit 10.13.1 to 1995 10-K). *10.10 Form of Seventh Supplement Amending Northern Border Pipeline Company General Partnership Agreement (Exhibit 10.15 to Form S-1). *10.11 Northern Border Pipeline Company U.S. Shippers Service Agreement between Northern Border Pipeline Company and Transcontinental Gas Pipe Line Corporation, dated July 14, 1983, with Amended Exhibit A effective February 11, 1994 (Exhibit 10.17 to 1995 10-K). *10.12 Form of Credit Agreement among Northern Border Pipeline Company, The First National Bank of Chicago, as Administrative Agent, The First National Bank of Chicago, Royal Bank of Canada, and Bank of America National Trust and Savings Association, as Syndication Agents, First Chicago Capital Markets, Inc., Royal Bank of Canada, and BancAmerica Securities, Inc, as Joint Arrangers and Lenders (as defined therein) dated as of June 16, 1997 (Exhibit 10(c) to Amendment No. 1 to Form S-3, Registration Statement No. 333-40601 ("Form S-3")). *10.13 Northern Border Pipeline Company U.S. Shippers Service Agreement between Northern Border Pipeline Company and Enron Capital & Trade Resources Corp. dated October 15, 1997 (Exhibit 10.21 to 1997 10-K). *10.14 Northern Border Pipeline Company U.S. Shippers Service Agreement between Northern Border Pipeline Company and Enron Capital & Trade Resources Corp. dated October 15, 1997 (Exhibit 10.22 to 1997 10-K). *10.15 Northern Border Pipeline Company U.S. Shippers Service Agreement between Northern Border Pipeline Company and Enron Capital & Trade Resources Corp. dated August 5, 1997 with Amendment dated September 25, 1997 (Exhibit 10.25 to 1997 10-K). *10.16 Northern Border Pipeline Company U.S. Shippers Service Agreement between Northern Border Pipeline Company and Enron Capital & Trade Resources Corp. dated August 5, 1997 (Exhibit 10.26 to 1997 10-K). *10.17 Northern Border Pipeline Company U.S. Shippers Service Agreement between Northern Border Pipeline Company and TransCanada Gas Services Inc., as agent for TransCanada PipeLines Limited dated August 5, 1997 (Exhibit 10.27 to 1997 10-K). *10.18 Project Management Agreement by and between Northern Plains Natural Gas Company and Enron Engineering & Construction Company, dated March 1, 1996 (Exhibit No. 10.39 to NB Form S-4). *10.19 Eighth Supplement Amending Northern Border Pipeline Company General Partnership Agreement (Exhibit 10.15 to NB Form S-4). 10.20 Revolving Credit Agreement, dated as of March 21, 2001, between Northern Border Partners, L.P., SunTrust Bank, Administrative Agent, Bank of Montreal and Bank of America, N.A., Co-Syndication Agents and Bank One, NA, Documentation Agent and Lenders (as defined therein). *10.21 Northern Border Pipeline Company U.S. Shippers Service Agreement between Northern Border Pipeline Company and Pan-Alberta Gas (US) Inc., dated October 1, 1993, with Amended Exhibit A effective June 22, 1998 (Exhibit 10.36 to Northern Border Pipeline Company Annual Report on Form 10-K for the year ended December 31, 1999 ("NB Pipeline 1999 10-K")). *10.22 Northern Pipeline Company U.S. Shippers Service Agreement between Northern Border Pipeline Company and Pan-Alberta Gas (US) Inc.,(successor to Natgas U.S. Inc.) dated October 6, 1989, with Amended Exhibit A effective April 2, 1999 (Exhibit 10.37 to NB Pipeline 1999 10-K). *10.23 Northern Border Pipeline Company U.S. Shippers Service Agreement between Northern Border Pipeline Company and Pan-Alberta Gas (U.S.) Inc., dated October l, 1992, with Amended Exhibit A effective June 22, 1998 (Exhibit 10.38 to NB Pipeline 1999 10-K). 10.24 Purchase and Sale Agreement, dated as of September 21, 2000 by and between Enron North America Corp. and NBP Energy Pipeline, L.L.C.(now known as Crestone Energy Ventures, L.L.C.). 10.25 Master Services Agreement, dated as of September 21, 2000 between NBP Energy Pipelines, L.L.C.,(now known as Crestone Energy Ventures, L.L.C.) and Enron North America Corp. 10.26 Acquisition Agreement, dated as of March 14, 2001, among Northern Border Partners, L.P., Northern Border Intermediate Limited Partnership, Bear Paw Investments, LLC, Bear Paw Energy, LLC and Sellers (defined therein). 21 The subsidiaries of Northern Border Partners, L.P. are Northern Border Intermediate Limited Partnership; Northern Border Pipeline Company; and Crestone Energy Ventures, L.L.C. 23.01 Consent of Arthur Andersen LLP. *99.1 Northern Border Phantom Unit Plan (Exhibit 99.1 to Amendment No. 1 to Form S-8, Registration No. 333- 66949). *Indicates exhibits incorporated by reference as indicated; all other exhibits are filed herewith. EX-4 2 exh43.txt INSTRUMENTS DEFINING THE RIGHTS OF SECURITY HOLDER EXHIBIT 4.3 ---------------------------------------------------------------------- NORTHERN BORDER PARTNERS, L.P. ISSUER NORTHERN BORDER INTERMEDIATE LIMITED PARTNERSHIP GUARANTOR 7.10% SENIOR NOTES DUE 2011 7.10% SENIOR NOTES DUE 2011, SERIES A INDENTURE DATED AS OF MARCH 21, 2001 BANK ONE TRUST COMPANY, N.A. TRUSTEE ---------------------------------------------------------------------- CROSS-REFERENCE TABLE 1
TRUST INDENTURE ACT SECTION INDENTURE SECTION - ---------------- ----------------- 310(a)(1)..............................................................7.09 (a)(2)..............................................................7.09 (a)(3)..............................................................N.A. (a)(4)..............................................................N.A. (a)(5).......................................................7.08;..7.09 (b).....................................................7.08; 7.09; 7.10 (c).................................................................N.A. 311(a).................................................................7.13 (b).................................................................7.13 (c).................................................................N.A. 312(a).................................................................2.05 (b)................................................................10.03 (c)................................................................10.03 313(a).................................................................7.15 (b)(2)..............................................................7.15 (c)..........................................................7.15, 10.02 (d).................................................................7.15 314(a).................................................................4.03 (a)(4).......................................................4.04; 10.04 (c)(1)..............................................................N.A. (c)(2)..............................................................N.A. (c)(3)..............................................................N.A. (e)................................................................10.05 (f).................................................................N.A. 315(a).................................................................7.01 (b).................................................................7.02 (c).................................................................7.01 (d).................................................................7.01 (e).................................................................6.14 316(a)(last sentence)..................................................2.09 (a)(1)(A)...........................................................6.12 (a)(1)(B)...........................................................6.13 (a)(2)..............................................................N.A. (b).................................................................6.08 (c)..........................................................2.12; 10.14 317(a)(1)..............................................................6.04 (a)(2)..............................................................6.04 (b).................................................................2.04 318(a)................................................................10.01 (b)................................................................10.01 (c)................................................................10.01 N.A. means not applicable.
- ----------------------------- This Cross-Reference Table is not part of this Indenture. TABLE OF CONTENTS ARTICLE I DEFINITIONS AND INCORPORATION BY REFERENCE..........................1 SECTION 1.01 Definitions..........................................1 SECTION 1.02 Incorporation by Reference of Trust Indenture Act...12 SECTION 1.03 Rules of Construction...............................13 ARTICLE II THE NOTES.........................................................13 SECTION 2.01 Form and Dating.....................................13 SECTION 2.02 Execution, Re-Opening and Authentication............14 SECTION 2.03 Registrar and Paying Agent..........................14 SECTION 2.04 Paying Agent to Hold Money in Trust.................15 SECTION 2.05 Holder Lists........................................15 SECTION 2.06 Transfer and Exchange...............................15 SECTION 2.07 Replacement Notes...................................27 SECTION 2.08 Outstanding Notes...................................28 SECTION 2.09 Treasury Notes......................................28 SECTION 2.10 Temporary Notes.....................................28 SECTION 2.11 Cancellation........................................29 SECTION 2.12 Defaulted Interest..................................29 SECTION 2.13 CUSIP Numbers.......................................29 ARTICLE III REDEMPTION AND PREPAYMENT........................................29 SECTION 3.01 Notices to Trustee..................................29 SECTION 3.02 Selection of Notes to be Redeemed...................30 SECTION 3.03 Notice of Redemption................................30 SECTION 3.04 Effect of Notice of Redemption......................31 SECTION 3.05 Deposit of Redemption Price.........................31 SECTION 3.06 Notes Redeemed in Part..............................31 SECTION 3.07 Mandatory Redemption................................32 ARTICLE IV COVENANTS.........................................................32 SECTION 4.01 Payment of Notes....................................32 SECTION 4.02 Maintenance of Office or Agency.....................32 SECTION 4.03 Reports.............................................33 SECTION 4.04 Statement by Officers as to Default.................33 SECTION 4.05 Existence...........................................34 SECTION 4.06 Limitations on Liens................................34 SECTION 4.07 Restriction of Sale-Leaseback Transactions..........34 SECTION 4.08 Waiver of Certain Covenants.........................34 SECTION 4.09 Payments for Consent................................35 SECTION 4.10 Money for Note Payments to Be Held in Trust.........35 SECTION 4.11 Repurchase Upon a Rating Decline....................36 ARTICLE V SUCCESSORS.........................................................38 SECTION 5.01 Partnership and Guarantor May Consolidate, Etc., Only on Certain Terms...............................38
i SECTION 5.02 Successor Substituted................................38 ARTICLE VI DEFAULTS AND REMEDIES..............................................39 SECTION 6.01 Events of Default....................................39 SECTION 6.02 Acceleration of Maturity; Rescission and Annulment...40 SECTION 6.03 Collection of Indebtedness and Suits for Enforcement by Trustee...............................41 SECTION 6.04 Trustee May File Proofs of Claim.....................41 SECTION 6.05 Trustee May Enforce Claims Without Possession of Notes.............................................42 SECTION 6.06 Application of Money Collected.......................42 SECTION 6.07 Limitation on Suits..................................42 SECTION 6.08 Unconditional Right of Holders to Receive Principal, Premium, Liquidated Damages and Interest..43 SECTION 6.09 Restoration of Rights and Remedies...................43 SECTION 6.10 Rights and Remedies Cumulative.......................43 SECTION 6.11 Delay or Omission Not Waiver.........................44 SECTION 6.12 Control by Holders...................................44 SECTION 6.13 Waiver of Past Defaults..............................44 SECTION 6.14 Undertaking for Costs................................44 SECTION 6.15 Waiver of Usury, Stay or Extension Laws..............45 ARTICLE VII TRUSTEE...........................................................45 SECTION 7.01 Certain Duties and Responsibilities..................45 SECTION 7.02 Notice of Defaults...................................46 SECTION 7.03 Certain Rights of Trustee............................46 SECTION 7.04 Not Responsible for Recitals or Issuance of Notes....48 SECTION 7.05 May Hold Notes.......................................48 SECTION 7.06 Money Held in Trust..................................48 SECTION 7.07 Compensation and Reimbursement.......................48 SECTION 7.08 Disqualification; Conflicting Interests..............49 SECTION 7.09 Corporate Trustee Required; Eligibility..............49 SECTION 7.10 Resignation and Removal; Appointment of Successor....49 SECTION 7.11 Acceptance of Appointment by Successor...............51 SECTION 7.12 Merger, Conversion, Consolidation or Succession to Business..........................................51 SECTION 7.13 Preferential Collection of Claims Against Partnership..........................................51 SECTION 7.14 Appointment of Authenticating Agent..................52 SECTION 7.15 Reports by Trustee to Holders of the Notes...........53 ARTICLE VIII LEGAL DEFEASANCE AND COVENANT DEFEASANCE.........................53 SECTION 8.01 Option to Effect Legal Defeasance or Covenant Defeasance...........................................53 SECTION 8.02 Legal Defeasance and Discharge.......................54 SECTION 8.03 Covenant Defeasance..................................54 SECTION 8.04 Conditions to Legal or Covenant Defeasance...........55 SECTION 8.05 Deposited Money and Government Securities to be Held in Trust; Other Miscellaneous Provisions........56 SECTION 8.06 Repayment to Partnership.............................57 SECTION 8.07 Reinstatement........................................57
ii ARTICLE IX AMENDMENT, SUPPLEMENT AND WAIVER...................................57 SECTION 9.01 Without Consent of Holders of Notes..................57 SECTION 9.02 With Consent of Holders of Notes.....................58 SECTION 9.03 Compliance with Trust Indenture Act..................59 SECTION 9.04 Revocation and Effect of Consents....................60 SECTION 9.05 Notation on or Exchange of Notes.....................60 SECTION 9.06 Trustee to Sign Amendments, Etc......................60 ARTICLE X MISCELLANEOUS.......................................................60 SECTION 10.01 Trust Indenture Act Controls........................60 SECTION 10.02 Notices.............................................60 SECTION 10.03 Communication by Holders of Notes with Other Holders of Notes....................................61 SECTION 10.04 Certificate and Opinion as to Conditions Precedent..62 SECTION 10.05 Statements Required in Certificate or Opinion.......62 SECTION 10.06 Rules by Trustee and Agents.........................62 SECTION 10.07 Non-Recourse to the General Partners; No Personal Liability of Directors, Officers, Employees or Partners............................................62 SECTION 10.08 Governing Law.......................................63 SECTION 10.09 No Adverse Interpretation of Other Agreements.......63 SECTION 10.10 Successors..........................................63 SECTION 10.11 Severability........................................63 SECTION 10.12 Counterpart Originals...............................63 SECTION 10.13 Table of Contents, Headings, Etc....................63 SECTION 10.14 Acts of Holders; Record Dates.......................63 ARTICLE XI MEETINGS OF HOLDERS OF NOTES.......................................65 SECTION 11.01 Purposes for Which Meetings May Be Called...........65 SECTION 11.02 Call, Notice and Place of Meetings..................65 SECTION 11.03 Persons Entitled to Vote at Meetings................65 SECTION 11.04 Quorum; Action......................................65 SECTION 11.05 Determination of Voting Rights; Conduct and Adjournment of Meetings.............................66 SECTION 11.06 Counting Votes and Recording Action of Meetings.....67 ARTICLE XII GUARANTEE OF NOTES................................................67 SECTION 12.01 Unconditional Guarantee.............................67 SECTION 12.02 Limitation of Guarantor's Liability.................69 SECTION 12.03 Execution and Delivery of Guarantee.................69 SECTION 12.04 Addition of Guarantors..............................70 SECTION 12.05 Release of Guarantee................................70 Exhibits Exhibit A Form of Note...............................................A-1 Exhibit B Form of Certificate of Transfer............................B-1 Exhibit C Form of Certificate of Exchange............................C-1 Exhibit D Registration Rights Agreement..............................D-1
iii INDENTURE dated as of March 21, 2001 among Northern Border Partners, L.P., a Delaware limited partnership (the "Partnership"), Northern Border Intermediate Limited Partnership, a Delaware limited partnership (the "Guarantor") and Bank One Trust Company, N.A., as trustee (the "Trustee"). R E C I T A L S: - - - - - - - - The Partnership, the Guarantor and the Trustee agree as follows for the benefit of each other and for the equal and ratable benefit of the Holders of the 7.10% Senior Notes due 2011 (the "Initial Notes") and the 7.10% Senior Notes due 2011, Series A, issued in the Exchange Offer (the "Exchange Notes" and, together with the Initial Notes, the "Notes"): ARTICLE I DEFINITIONS AND INCORPORATION BY REFERENCE SECTION 1.01 Definitions. "Acquired Debt" means, with respect to any specified Person, (i) Indebtedness of any other Person existing at the time such other Person is merged with or into or became a Subsidiary of such specified Person, including, without limitation, Indebtedness incurred in connection with, or in contemplation of, such other Person merging with or into or becoming a Subsidiary of such specified Person and (ii) Indebtedness secured by a Lien encumbering any asset acquired by such specified Person. "Affiliate" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, "control" when used with respect to any specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise, and the terms "controlling" and "controlled" have meanings correlative to the foregoing. "Agent" means any Registrar, Paying Agent or co-registrar. "Applicable Procedures" means, with respect to any transfer or exchange of or for beneficial interests in any Global Note, the rules and procedures of the Depositary that apply to such transfer or exchange. "Attributable Indebtedness" means with respect to a Sale-Leaseback Transaction, as of the time of determination, the lesser of (i) the fair market value of such assets (as determined in good faith by the Partnership Policy Committee); (ii) the present value of the total Net Amount of Rent required to be paid under the lease involved in such Sale-Leaseback Transaction during the remaining term thereof (including any renewal term exercisable at the lessee's option or period for which the lease has been extended), discounted at the rate of interest set forth or implicit in the terms of such lease or, if not practicable to determine such rate, the weighted average interest rate per annum borne by the Notes, compounded semiannually; and (iii) if the obligation with respect to the Sale-Leaseback Transaction constitutes an obligation that is required to be classified and accounted for as a Capital Lease Obligation for financial reporting purposes in accordance with GAAP, the amount equal to the capitalized amount of such obligation required to be paid by the lessee as determined in accordance with GAAP and included in the financial statements of the lessee. "Authenticating Agent" means any person authorized by the Trustee pursuant to Section 7.14 hereof to authenticate the Notes. "Authorized Newspaper" means a newspaper, in the English language or in an official language of the country of publication, customarily published on each Business Day, whether or not published on Saturdays, Sundays or holidays, and of general circulation in the place in connection with which the term is used or in the financial community of such place. Where successive publications are required to be made in Authorized Newspapers, the successive publications may be made in the same or different newspapers in the same city meeting the foregoing requirements and in each case on any day that is a Business Day in the place of publication. "Bankruptcy Code" means Title 11, U.S. Code, as amended, or any similar federal or state law for the relief of debtors. "Business Day" means any day other than a Legal Holiday. "Capital Lease Obligation" means, at the time any determination thereof is to be made, the amount of the liability in respect of a capital lease that would at such time be required to be capitalized on a balance sheet in accordance with GAAP. "Capital Interests" means any and all shares, interests, participations, rights or other equivalents (however designated) of capital stock, including, without limitation, with respect to partnerships, partnership interests (whether general or limited), with respect to limited liability companies, member interests and any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, such partnership. "Corporate Trust Office of the Trustee" shall be at the address of the Trustee specified in Section 11.02 hereof or such other address as to which the Trustee may give notice to the Partnership. "Consolidated Net Tangible Assets" means, at any date of determination, the aggregate amount of total assets included in the most recent quarterly or annual balance sheet of the Partnership and its consolidated Subsidiaries prepared in accordance with GAAP less applicable reserves reflected in such balance sheet, after deducting the following amounts: (i) all current liabilities reflected in such balance sheet; and (ii) all goodwill, trade names, trademarks, patents, unamortized debt discount and expenses and other like intangibles reflected in such balance sheet. "Currency Hedging Obligations" means, with respect to any Person, the net payment Obligations of such Person under agreements or arrangements designed to protect such Person 2 against fluctuations in the currency exchange rates incurred or entered into in the ordinary course of its business and not for speculative purposes. "Custodian" means any receiver, trustee, assignee, liquidator, sequester or similar official under the Bankruptcy Code. "Debt" means any obligation incurred, created or assumed by any Person for the repayment of money borrowed, any purchase money obligation incurred, created or assumed by such Person and any guarantee of any of the foregoing. "Default" means any event that is or, with the passage of time or the giving of notice (or both), would be an Event of Default. "Definitive Note" means a certificated Note registered in the name of the Holder thereof and issued in accordance with Section 2.06 hereof, substantially in the form of Exhibit A hereto except that such Note shall not bear the Global Note Legend and shall not have the "Schedule of Exchanges of Interests in the Global Note" attached thereto. "Depositary" means, with respect to the Notes issuable or issued in whole or in part in global form, the Person specified in Section 2.03 hereof as the Depositary with respect to the Notes, and any and all successors thereto appointed as depositary hereunder and having become such pursuant to the applicable provision of this Indenture. "Exchange Act" means the Securities Exchange Act of 1934, as amended. "Exchange Notes" means notes registered under the Securities Act that are issued under Section 2.06(f) hereof in exchange for the Notes pursuant to the Exchange Offer. "Exchange Offer" has the meaning set forth in the Registration Rights Agreement. "Exchange Offer Registration Statement" has the meaning set forth in the Registration Rights Agreement. "Exempted Indebtedness" means Indebtedness of which the Partnership or any of its Subsidiaries is an obligor or guarantor, or that has been assumed by the Partnership or any of its Subsidiaries, which Indebtedness is secured by a Lien (other than a Permitted Lien), or any Attributable Indebtedness of the Partnership or any of its Subsidiaries, provided that the sum of the aggregate principal amount of all such Indebtedness then outstanding (other than the Notes) so secured by a Lien (other than a Permitted Lien) and the amount of all the outstanding Attributable Indebtedness, in each case not otherwise permitted by Section 4.06 or 4.07, does not at the time such Indebtedness or Attributable Indebtedness is incurred exceed 10% of the Consolidated Net Tangible Assets of the Partnership and its Subsidiaries. "Fair Market Value" means, with respect to consideration received or to be received pursuant to any transaction by any Person, the fair market value of such consideration as determined in good faith by the Partnership Policy Committee. 3 "Financial Hedging Obligations" means, with respect to any Person, the net payment Obligations of such Person under (i) interest rate swap agreements, interest rate cap agreements and interest rate collar agreements and (ii) other agreements or arrangements designed to protect such Person against fluctuations in interest rates or currency exchange rates incurred or entered into in the ordinary course of its business and not for speculative purposes. "Funded Debt" means all Debt maturing one year or more from the date of the incurrence, creation, assumption, or guarantee thereof, all Debt directly or indirectly renewable or extendable, at the option of the debtor, by its terms or by the terms of any instrument or agreement relating thereto, to a date one year or more from the date of the incurrence, creation, assumption, or guarantee thereof, and all Debt under a revolving credit or similar agreement obligating the lender or lenders to extend credit over a period of one year or more. "GAAP" means generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants, the statements and pronouncements of the Financial Accounting Standards Board and such other statements by such other entities as have been approved by a significant segment of the accounting profession, which are applicable at the date of determination. "General Partners" means Northern Plains Natural Gas Company, a Delaware corporation, Pan Border Gas Company, a Delaware corporation, and Northwest Border Pipeline Company, a Delaware corporation. "Global Note Legend" means the legend set forth in Section 2.06(g)(ii) hereof, which is required to be placed on all Global Notes issued under this Indenture. "Global Notes" means a permanent global Note substantially in the form of Exhibit A attached hereto that bears the Global Note Legend and that has the "Schedule of Exchanges of Interests in the Global Note" attached thereto, and that is deposited with or on behalf of and registered in the name of the Depositary, or its nominee. "Government Contract Lien" means any Lien in favor of the United States of America or any State thereof, territory or possession thereof (or the District of Columbia), or any department, agency, instrumentality or political subdivision thereof (or the District of Columbia) to secure partial, progress, advance or other payments pursuant to any contract or statute or to secure any Indebtedness incurred for the purpose of financing all or any part of the purchase price or the cost of constructing, developing or improving the property subject to such Liens. "Government Securities" means direct obligations of, or obligations guaranteed by, the United States of America for the payment of which guarantees or obligations the full faith and credit of the United States is pledged. "guarantee" means a guarantee (other than by endorsement of negotiable instruments for collection in the ordinary course of business), direct or indirect, in any manner (including, without limitation, letters of credit and reimbursement agreements in respect thereof or pledging assets to secure), of all or any part of any Indebtedness. 4 "Guarantor" means Northern Border Intermediate Limited Partnership and (i) each Subsidiary of the Partnership that becomes a guarantor of the Notes pursuant to Section 12.04, (ii) each Subsidiary of the Partnership that executes a supplemental indenture in which such Subsidiary agrees to be bound by Article XII and (iii) any Subsidiary of the Partnership that is a successor corporation of Northern Border Intermediate Limited Partnership or any Subsidiary of the Partnership referred to in clauses (i) and (ii). The term "Guarantor" shall not include any Subsidiary of the Partnership referred to in clauses (i) through (iii) that shall have been released from its obligations under Article XII pursuant to Section 12.05. "Hedging Obligations" means, with respect to any Person, collectively, the Currency Hedging Obligations of such Person and the Financial Hedging Obligations of such Person. "Holder" means a Person in whose name a Note is registered. "Holding Subsidiary" means a Guarantor and any Subsidiary of the Partnership which succeeds such Guarantor and which owns or controls, directly or indirectly, Capital Interests of any one or more other Subsidiaries of the Partnership. "Indebtedness" means, with respect to any Person, at any date, any of the following, without duplication: (i) any liability of such Person (A) for borrowed money (whether or not the recourse of the lender is to the whole of the assets of such Person or only to a portion thereof), (B) evidenced by a note, bond, debenture or similar instrument, or (C) for the payment of money relating to a Capital Lease Obligation or other obligation (whether issued or assumed) relating to the deferred purchase price of property; (ii) all conditional sale obligations and all obligations under any title retention agreement (even if the rights and remedies of the seller under such agreement in the event of default are limited to repossession or sale of such property); (iii) all obligations for the reimbursement of any obligor on any letter of credit, banker's acceptance or similar credit translation, other than as entered into in the ordinary course of business; (iv) all indebtedness of others secured by (or for which the holder of such indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien on any asset or property (including, without limitation, leasehold interests and any other tangible or intangible property) of such Person, whether or not such indebtedness is assumed by such Person or is not otherwise such Person's legal liability in full (except obligations of others secured by Liens, neither assumed nor guaranteed by such Person nor on which it customarily pays interest, existing upon real estate or rights in or relating to real estate acquired by such Person for substation, metering station, gathering line, transmission line, transportation line, distribution line or right of way purposes, and any Liens reserved in leases for rent and for compliance with the terms of the leases in the case of leasehold estates, to the extent that any such Lien referred to in this clause (iv) does not materially impair the use of the property), the amount of such indebtedness for the purposes of this definition shall be limited to the lesser of the amount of such indebtedness secured by such Lien or the fair market value of the assets or the property securing such lien, (v) all indebtedness of others (including all interest and dividends on any Indebtedness or preferred securities of any other Person) the payment of which is guaranteed, directly or indirectly, by such Person or that is otherwise its legal liability or which such Person has agreed to purchase or repurchase or in respect of which such Person has agreed contingently to supply or advance funds; and (vi) to the extent not otherwise included in this definition, obligations in respect of Hedging Obligations. Indebtedness shall not include (a) accounts payable arising in the ordinary course of business and 5 (b) any obligations in respect of prepayments for natural gas or oil production or natural gas or oil imbalances. "Indenture" means this Indenture, as amended or supplemented from time to time. "Indirect Participant" means a Person who holds a beneficial interest in a Global Note through a Participant. "Initial Purchasers" means Banc of America Securities LLC, Banc One Capital Markets, Inc., BMO Nesbitt Burns Corp. and SunTrust Equitable Securities Corporation. "Institutional Accredited Investor" means an institution that is an "accredited investor" as defined in Rule 501(a)(1), (2), (3) or (7) of the Securities Act. "Initial Notes" has the meaning set forth in the preamble to this Indenture. "Interest Payment Date" means March 15 and September 15. "Investment Grade" means BBB- or above, in the case of S&P (or its equivalent under any successor Rating Categories of S&P), Baa3 or above, in the case of Moody's (or its equivalent under any successor Rating Categories of Moody's), and the equivalent in respect of the Rating Categories of any Rating Agencies substituted for S&P or Moody's. "Issue Date" means the date on which the Notes are first authenticated and delivered under the Indenture. "Legal Holiday" means a Saturday, a Sunday or a day on which banking institutions in the City of New York or at a place of payment are authorized by law, regulation or executive order to remain closed. If a payment date is a Legal Holiday at a place of payment, payment may be made at that place on the next succeeding day that is not a Legal Holiday, and no interest shall accrue for the intervening period. "Letter of Transmittal" means the letter of transmittal to be prepared by the Partnership and sent to all Holders of the Notes for use by such Holders in connection with the Exchange Offer. "Lien" means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law (including, without limitation, any conditional sale or other title retention agreement, any lease in the nature thereof, any option or other agreement to sell or give a security interest in any asset and any filing of or agreement to give any financing statement under the Uniform Commercial Code (or equivalent statutes) of any jurisdiction). "Liquidated Damages" means all additional interest then owing pursuant to Section 5 of the Registration Rights Agreement. "Moody's" means Moody's Investors Service, Inc. and its successors. 6 "Net Amount of Rent" as to any lease for any period means the aggregate amount of rent payable by the lessee with respect to such period after excluding amounts, whether or not designated as rent or additional rent, required to be paid on account of or contingent upon maintenance and repairs, insurance, taxes, assessments, water rates and similar charges. In the case of any lease that is terminable by the lessee upon the payment of a penalty, such net amount shall be the lesser of (i) the net amount determined assuming termination of the lease on the first date such lease may be terminated (in which case such net amount shall also include the amount of such penalty, but no rent shall be considered as payable under such lease subsequent to the first date upon which it may be so terminated) and (ii) such net amount assuming no such termination. "Note Custodian" means the Trustee, as custodian with respect to the Notes in global form, or any successor entity thereto. "Notes" has the meaning assigned to it in the preamble to this Indenture. "Obligations" means any principal, premium (if any), Liquidated Damages (if any), interest (including, without limitation, interest accruing on or after the filing of any petition in bankruptcy or for reorganization relating to the Partnership or its Subsidiaries whether or not a claim for post-filing interest is allowed in such proceeding), penalties, fees, charges, expenses, indemnifications, reimbursement obligations, damages (including Liquidated Damages, if any,), guarantees and other liabilities or amounts payable under the documentation governing any Indebtedness or in respect thereof. "Offering" means the offering of the Initial Notes by the Partnership. "Offering Memorandum" means the Offering Memorandum of the Partnership, dated March 14, 2001 with respect to the Offering. "Officer" means, with respect to any Person, the Chairman of the Board, the Chief Executive Officer, the President, the Chief Operating Officer, the Chief Financial and Accounting Officer, the Treasurer, any Assistant Treasurer, the Controller, the Secretary or any Vice-President of such Person; provided, however, that an Officer with respect to a partnership shall mean an Officer of its general partner or general partners or, as applicable in the case of the Partnership, a member of its Partnership Policy Committee or equivalent governing body. "Officers' Certificate" means a certificate signed on behalf of the Partnership by two Officers of the Partnership, one of whom must be the principal executive officer, the principal financial officer, the treasurer or the principal accounting officer of the Partnership, that meets the requirements of Section 10.05 hereof. "Opinion of Counsel" means an opinion from legal counsel who is reasonably acceptable to the Trustee, that meets the requirements of Section 10.05 hereof. The counsel may be an employee of or counsel to the Partnership or the Guarantor. "Participant" means, with respect to DTC, a Person who has an account with DTC. 7 "Partnership" means the Person named as the "Partnership" in the first paragraph of this instrument until a successor Person shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "Partnership" shall mean such successor Person. "Partnership Policy Committee" means the committee that oversees management of the Partnership. "Partnership Request" or "Partnership Order" means a written request or order signed in the name of the Partnership by a member of the Partnership Policy Committee or the chief executive officer or the chief financial and accounting officer of the Partnership, and delivered to the Trustee, or if the Partnership shall change its form of entity to other than a limited partnership, by Persons or officers, members, agents and the like positions comparable to those of the foregoing nature, as applicable. "Paying Agent" means any Person authorized by the Partnership to pay the principal of or any premium, interest or Liquidated Damages on the Notes on behalf of the Partnership and shall have the meaning assigned to such term in Section 2.03 hereof. "Permitted Liens" means, with respect to any Person: (i) with respect to the Notes issued under this Indenture, Liens existing on or provided for under the terms of agreements existing on the date the Notes are issued; (ii) Liens on property, shares of stock, Indebtedness or other assets of any Person (which is not a Subsidiary) existing at the time such Person is merged into or consolidated with or into the Partnership or any of its Subsidiaries; provided that such Liens are not incurred in anticipation of such Person becoming a Subsidiary; or Liens existing at the time of a sale, lease or other disposition of properties of a Person as an entirety or substantially as an entirety to the Partnership or any of its Subsidiaries; (iii) Liens on property, shares of stock, Indebtedness or other assets existing at the time of acquisition thereof by the Partnership or any of its Subsidiaries, or Liens to secure all or part of the purchase price thereof; (iv) Liens on property, shares of stock, indebtedness for borrowed money, or other assets to secure any Indebtedness incurred prior to, at the time of or within 24 months after, the latest of the acquisition thereof and, in the case of property, the completion of construction, the completion of development or improvements or the commencement of commercial operation of such property for the purpose of financing all or part of the purchase price thereof, such construction or the making of such developments or improvements; (v) Liens securing Indebtedness owed to the Partnership or any of its Subsidiaries; (vi) Liens on property to secure all or part of the cost of acquiring, constructing, altering, improving, developing or repairing any property or asset, or 8 improvements used in connection with that property or Liens incurred by the Partnership or any of its Subsidiaries to provide funds for any such activities; (vii) Government Contract Liens; (viii) Liens on any property to secure bonds for the construction, installation or financing of pollution control or abatement facilities or other forms of industrial revenue bond financing, or indebtedness issued or guaranteed by the United States, any state or any department, agency or instrumentality thereof; (ix) Liens contemplated by Section 7.07 hereof; (x) Liens deemed to exist by reason of negative pledges in respect of Indebtedness; and (xi) Liens to secure any refinancing, refunding, extension, renewal or replacement (or successive refinancings, refundings, extensions, renewals or replacements), as a whole or in part, of any Indebtedness secured by any Lien referred to in clauses (i) through (x) above; provided, however, that such Lien(s) shall not extend to any property of the Partnership or any of its Subsidiaries, as the case may be, other than the property specified in clauses (i) through (x) above to which the Lien securing such refinanced, refunded, extended, renewed or replaced Indebtedness applied and improvements thereto or proceeds therefrom. "Person" means any individual, corporation, partnership, joint venture, association, joint stock company, trust, limited liability company, unincorporated organization, government or any agency or political subdivision thereof or any other entity. "Place of Payment", when used with respect to the Notes, means, unless otherwise specifically provided in notice given pursuant to Section 4.02 hereof, the office or agency of the Partnership in the City of New York and such other place or places where, the principal of and any premium, if any, interest and Liquidated Damages, if any, on the Notes are payable. "Private Placement Legend" means the legend set forth in Section 2.06(g)(i) hereof to be placed on all Notes issued under this Indenture except where otherwise permitted by the provisions of this Indenture. "Proceeding" means any voluntary or involuntary insolvency, bankruptcy, receivership, custodianship, liquidation, dissolution, reorganization, assignment for the benefit of creditors, appointment of a custodian, receiver, trustee or other officer with similar powers or any other proceeding for the liquidation, dissolution or other winding up of a Person (including, without limitation, any such proceeding under Bankruptcy Code). "Property" means any right or interest of the Partnership or any of its Subsidiaries in and to property of any kind whatsoever, whether real, personal or mixed and whether tangible or intangible. 9 "Purchase Agreement" means the Purchase Agreement, dated as of March 14, 2001 among the Partnership, Northern Border Intermediate Limited Partnership, and the Initial Purchasers (as defined therein.) "QIB" means a "qualified institutional buyer" as defined in Rule 144A of the rules and regulations promulgated by the SEC under the Securities Act. "Rating Agencies" means (a) S&P and Moody's or (b) if S&P or Moody's or both of them are not making ratings of the Notes publicly available, a nationally recognized U.S. rating agency or agencies, as the case may be, selected by the Partnership, which will be substituted for S&P or Moody's or both, as the case may be. "Rating Categories" means: (a) with respect to S&P, any of the following categories (any of which may include a "+" or "-")" AAA, AA, A, BBB, BB, B, CCC, CC, C and D (or equivalent successor categories); (b) with respect to Moody's, any of the following categories (any of which may include a "1," "2" or "3"): Aaa, Aa, A, Baa, Ba, B, Caa, Ca, C and D (or equivalent successor categories); and (c) the equivalent of any such categories of S&P or Moody's used by another Rating Agency, if applicable. "Rating Decline" means the assignment by any Rating Agency of a rating to the Notes that is below Investment Grade. "Redemption Date" means the date on which the Notes are to be redeemed pursuant to Article III hereof. "Registration Rights Agreement" means the Registration Rights Agreement, dated as of March 21, 2001, by and among the Partnership and the other parties named on the signature pages thereof, a copy of which is attached hereto as Exhibit D, as such agreement may be amended, modified or supplemented from time to time. "Responsible Officer," when used with respect to the Trustee, means any officer, including, without limitation, any vice president, assistant vice president, assistant treasurer or secretary within the Corporate Trust Administration of the Trustee (or any successor group of the Trustee) or any other officer of the Trustee customarily performing functions similar to those performed by any of the above designated officers and also means, with respect to a particular corporate trust matter, any other officer or employee to whom such matter is referred because of his knowledge of and familiarity with the particular subject. "Restricted Definitive Note" means a Definitive Note bearing the Private Placement Legend. 10 "Restricted Global Note" means the Global Note substantially in the form of Exhibit A hereto bearing the Global Note Legend and the Private Placement Legend and deposited with and registered in the name of the Depositary or its nominee. "Rule 144" means Rule 144 of the rules and regulations promulgated under the Securities Act. "Rule 144A" means Rule 144A of the rules and regulations promulgated under the Securities Act. "Rule 903" or "Rule 904" means Rule 903 or Rule 904 of the rules and regulations promulgated under the Securities Act. "S&P" means Standard & Poor's Ratings Services, a division of The McGraw-Hill Companies, Inc., and its successors. "Sale-Leaseback Transaction" means any arrangement with any Person pursuant to which the Partnership or any of its Subsidiaries leases any Property that has been or is to be sold or transferred by the Partnership or its Subsidiaries to such Person, other than (i) any such transaction involving a lease for a term of not more than two years, (ii) any such transaction between the Partnership and any of its Subsidiaries or between any Subsidiaries of the Partnership, and (iii) any such transaction executed by the time of, or within 12 months after the latest of, the acquisition, the completion of construction, development or improvement, or the commencement of commercial operation of the Partnership's assets subject to such leasing transaction. "SEC" means the Securities and Exchange Commission. "Securities Act" means the Securities Act of 1933, as amended. "Shelf Registration Statement" has the meaning set forth in the Registration Rights Agreement. "Significant Subsidiary" means any Subsidiary that would be a "significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated pursuant to the Securities Act, as such Regulation is in effect on the date of this Indenture. "Stated Maturity" means, with respect to any installment of interest or principal on any series of Indebtedness, the date on which such payment of interest or principal was scheduled to be paid in the original documentation governing such Indebtedness, and shall not include any contingent obligations to repay, redeem or repurchase any such interest or principal prior to the date originally scheduled for the payment thereof. "Subordinated Indebtedness" means any Indebtedness of the Partnership which is subordinated in right of payment to the Notes. "Subsidiary" of any Person means (i) any Person of which at the time of such determination more than 50% of the total voting power of Capital Interests entitled (without 11 regard to the occurrence of any contingency to vote in the election of directors, managers or trustees thereof (or other Persons constituting an equivalent governing body) is owned or controlled, directly or indirectly, by such Person or one or more of the Subsidiaries of such Person (or a combination thereof), (ii) in the case of a partnership, any Person of which at the time of such determination more than 50% of the partners' Capital Interests (considering all partners' Capital Interests as a single class) is owned or controlled, directly or indirectly, by such Person or one or more Subsidiaries of such Person, or (iii) any other Person in which such Person or one or more of the Subsidiaries of that Person (or a combination thereof) has the power to control by contract or otherwise the board of directors, managers or trustees thereof or equivalent governing body or otherwise controls such entity. Unless otherwise provided, references in this Indenture to a Subsidiary are to a Subsidiary of the Partnership. "TIA" or "Trust Indenture Act" means the Trust Indenture Act of 1939 as in effect on the date on which this Indenture is qualified under the TIA. "Trustee" means the party named as such above until a successor replaces it in accordance with the applicable provisions of this Indenture and thereafter means the successor serving hereunder. "Unrestricted Definitive Note" means one or more Definitive Notes that do not bear and are not required to bear the Private Placement Legend. "Unrestricted Global Note" means a Global Note representing a series of Notes that do not and are not required to bear the Private Placement Legend. Other Definitions
Defined in Term Section ---- ---------- "Covenant Defeasance"............................ 8.03 "DTC"............................................ 2.03 "Event of Default"............................... 6.01 "Legal Defeasance"............................... 8.02 "Registrar"...................................... 2.03
SECTION 1.02 Incorporation by Reference of Trust Indenture Act. Whenever this Indenture refers to a provision of the TIA, the provision is incorporated by reference in and made a part of this Indenture. The following TIA terms used in this Indenture have the following meanings: "indenture securities" means the Notes; "indenture security holder" means a Holder of a Note; 12 "indenture to be qualified" means this Indenture; "indenture trustee" or "institutional trustee" means the Trustee; and "obligor" on the Notes means the Partnership and any successor obligor upon the Notes. All other terms used in this Indenture that are defined by the TIA, defined by TIA reference to another statute or defined by SEC rule under the TIA have the meanings so assigned to them. SECTION 1.03 Rules of Construction. Unless the context otherwise requires: (1) a term has the meaning assigned to it; (2) an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP; (3) "or" is not exclusive; (4) words in the singular include the plural, and in the plural include the singular; provisions apply to successive events and transactions; and (5) references to sections of or rules under the Securities Act shall be deemed to include substitute, replacement of successor sections or rules adopted by the SEC from time to time. ARTICLE II THE NOTES SECTION 2.01 Form and Dating. The Notes and the Trustee's certificate of authentication shall be substantially in the form of Exhibit A hereto. The Notes may have notations, legends or endorsements required by law, stock exchange rule or usage. Each Note shall be dated the date of its authentication. The Notes shall be in denominations of $1,000 and integral multiples thereof. The terms and provisions contained in the Notes shall constitute, and are hereby expressly made, a part of this Indenture and the Partnership and the Trustee, by their execution and delivery of this Indenture, expressly agree to such terms and provisions and to be bound thereby. However, to the extent any provision of any Note conflicts with the express provisions of this Indenture, the provisions of this Indenture shall govern and be controlling. Notes issued in global form shall be substantially in the form of Exhibit A attached hereto (including the Global Note Legend and the "Schedule of Exchanges of Interests in the Global Note" attached thereto). Notes issued in definitive form shall be substantially in the form of Exhibit A attached hereto 13 (but without the Global Note Legend and without the "Schedule of Exchanges of Interests in the Global Note" attached thereto). Each Global Note shall represent such of the outstanding Notes as shall be specified therein and each shall provide that it shall represent the aggregate principal amount of outstanding Notes from time to time endorsed thereon and that the aggregate principal amount of outstanding Notes represented thereby may from time to time be reduced or increased, as appropriate, to reflect exchanges and redemptions. Any endorsement of a Global Note to reflect the amount of any increase or decrease in the aggregate principal amount of outstanding Notes represented thereby shall be made by the Trustee, the Depositary or the Note Custodian, at the direction of the Trustee, in accordance with instructions given by the Holder thereof as required by Section 2.06 hereof. SECTION 2.02 Execution, Re-Opening and Authentication. One Officer shall sign the Notes for the Partnership by manual or facsimile signature. If an Officer whose signature is on a Note no longer holds that office at the time a Note is authenticated, the Note shall nevertheless be valid. A Note shall not be valid until authenticated by the manual signature of the Trustee. The signature shall be conclusive evidence that the Note has been authenticated under this Indenture. The Trustee shall, upon a written order of the Partnership signed by one Officer, authenticate Initial Notes for original issue on the Issue Date up to $225,000,000.00 aggregate principal amount of the Notes. The Initial Notes offered and sold pursuant to Rule 144A shall be issued in the form of a single Restricted Global Note, and the Initial Notes offered and sold to Institutional Accredited Investors shall be issued in the form of a separate Restricted Global Note. Each series of Notes may be re-opened for issuances of additional Notes without the consent of Holders, provided that no additional Notes may be issued if an Event of Default has occurred and is continuing with respect to the Notes. The Trustee may appoint an Authenticating Agent acceptable to the Partnership to authenticate Notes. An Authenticating Agent may authenticate Notes whenever the Trustee may do so. Each reference in this Indenture to authentication by the Trustee includes authentication by such agent. An Authenticating Agent has the same rights as an Agent to deal with (i) Holders or (ii) an Affiliate of the Partnership. SECTION 2.03 Registrar and Paying Agent. The Partnership shall maintain an office or agency within the City and State of New York where Notes may be presented for registration of transfer or for exchange ("Registrar") and an office or agency where Notes may be presented for payment ("Paying Agent"). The Registrar shall keep a register of the Notes and of their transfer and exchange. The Partnership may appoint one or more co-registrars and one or more additional paying agents. The term "Registrar" includes any co-registrar and the term "Paying Agent" includes any additional paying agent. The Partnership may change any Paying Agent or Registrar without notice to any Holder. The Partnership shall promptly notify the Trustee in writing of the name and address of any Agent not a party to this Indenture. If the Partnership fails to appoint or maintain another 14 entity as Registrar or Paying Agent, the Trustee shall act as such. The Partnership or any of its Subsidiaries may act as Paying Agent or Registrar. The Partnership initially appoints The Depository Trust Company ("DTC") to act as Depositary with respect to the Global Notes. The Partnership initially appoints the Trustee to act as the Registrar and Paying Agent and to act as Note Custodian with respect to the Global Notes. SECTION 2.04 Paying Agent to Hold Money in Trust. The Partnership shall require each Paying Agent other than the Trustee to agree in writing that the Paying Agent will hold in trust for the benefit of Holders or the Trustee all money held by the Paying Agent for the payment of principal of, premium, if any, or Liquidated Damages, if any, or interest on the Notes, and will notify the Trustee of any default by the Partnership in making any such payment. While any such default continues, the Trustee may require a Paying Agent to pay all money held by it to the Trustee. The Partnership at any time may require a Paying Agent to pay all money held by it to the Trustee. Upon payment over to the Trustee, the Paying Agent (if other than the Partnership or a Subsidiary) shall have no further liability for the money. If the Partnership or an Affiliate of the Partnership acts as Paying Agent, it shall segregate and hold in a separate trust fund for the benefit of the Holders all money held by it as Paying Agent. Upon any bankruptcy or reorganization proceedings relating to the Partnership, the Trustee shall serve as Paying Agent for the Notes. SECTION 2.05 Holder Lists. The Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of all Holders and shall otherwise comply with TIA ss. 312(a). If the Trustee is not the Registrar, the Partnership shall provide to a Responsible Officer of the Trustee at least seven Business Days before each Interest Payment Date and at such other times as the Trustee may request in writing, a list in such form and as of such date as the Trustee may reasonably require of the names and addresses of the Holders of Notes and the Partnership shall otherwise comply with TIA ss. 312(a). SECTION 2.06 Transfer and Exchange. (a) Transfer and Exchange of Global Notes. A Global Note may not be transferred as a whole except by the Depositary to a nominee of the Depositary, by a nominee of the Depositary to the Depositary or to another nominee of the Depositary, or by the Depositary or any such nominee to a successor Depositary or a nominee of such successor Depositary. All Global Notes will be exchanged by the Partnership for Definitive Notes if (i) the Partnership delivers to the Trustee notice from the Depositary that it is unwilling or unable to continue to act as Depositary for the Global Notes or that it is no longer a clearing agency registered under the Exchange Act and, in either case, a successor Depositary is not appointed by the Partnership within 90 days after the date of such notice from the Depositary or (ii) the Partnership in its sole discretion notifies the Trustee in writing that it elects to cause issuance of the Notes in certificated form. If an Event of Default occurs and is continuing, the Partnership shall, at the request of the Holder thereof, exchange all or part of a Global Note for one or more Definitive Notes in denominations of $1000 or multiples thereof. Upon the occurrence of either of the 15 preceding events described in clause (i) or (ii) of the immediately preceding sentence, Definitive Notes shall be issued in such names as the Depositary shall instruct the Trustee. Global Notes also may be exchanged or replaced, in whole or in part, as provided in Section 2.07 hereof. Every Note authenticated and delivered in exchange for, or in lieu of, a Global Note or any portion thereof, pursuant to this Section 2.06(a) or Section 2.07 hereof, shall be authenticated and delivered in the form of, and shall be, a Global Note. A Global Note may not be exchanged for another Note other than as provided in this Section 2.06(a), however, beneficial interests in a Global Note may be transferred and exchanged as provided in Section 2.06(b), (c) or (f) hereof. Notwithstanding anything in this Section 2.06 to the contrary, no Notes shall be transferred or exchanged for a period of 15 days prior to a selection of Notes to be redeemed pursuant to Article III. (b) Transfer and Exchange of Beneficial Interests in the Global Notes. The transfer and exchange of beneficial interests in the Global Notes shall be effected through the Depositary, in accordance with the provisions of this Indenture and the Applicable Procedures. Beneficial interests in the Restricted Global Notes shall be subject to restrictions on transfer comparable to those set forth herein to the extent required by the Securities Act. Transfers of beneficial interests in the Global Notes also shall require compliance with the following subparagraphs as applicable: (i) Transfer of Beneficial Interests in an Unrestricted Global Note. Beneficial interests in any Unrestricted Global Note may be transferred only to Persons who take delivery thereof in the form of a beneficial interest in an Unrestricted Global Note. No written orders or instructions shall be required to be delivered to the Registrar to effect the transfers described in this Section 2.06(b)(i). (ii) Transfers and Exchanges of Beneficial Interests in Global Notes. In connection with all transfers and exchanges of beneficial interests (other than a transfer of a beneficial interest in a Global Note to a Person who takes delivery thereof in the form of a beneficial interest in the same Global Note), the transferor of such beneficial interest must deliver to the Registrar (A) (1) a written order from a Participant or an Indirect Participant given to the Depositary in accordance with the Applicable Procedures directing the Depositary to credit or cause to be credited a beneficial interest in another Global Note in an amount equal to the beneficial interest to be transferred or exchanged and (2) instructions given in accordance with the Applicable Procedures containing information regarding the Participant account to be credited with such increase or (B) (1) a written order from a Participant or an Indirect Participant given to the Depositary in accordance with the Applicable Procedures directing the Depositary to cause to be issued a Definitive Note in an amount equal to the beneficial interest to be transferred or exchanged and (2) instructions given by the Depositary to the Registrar containing information regarding the Person in whose name such Definitive Note shall be registered to effect the transfer or exchange referred to in (1) above. Upon an Exchange Offer by the Partnership in accordance with Section 2.06(f) hereof, the requirements of this Section 2.06(b)(ii) shall be deemed to have been satisfied upon receipt by the Registrar of the instructions contained in the Letter of Transmittal delivered by the Holder of such beneficial interests in the Restricted Global Notes. Upon satisfaction of all of the requirements for transfer or exchange of beneficial interests in Global Notes 16 contained in this Indenture, the Notes and otherwise applicable under the Securities Act, the Trustee shall adjust the principal amount of the relevant Global Note(s) pursuant to Section 2.06(h) hereof. (iii) Transfer of Beneficial Interests in a Restricted Global Note. A beneficial interest in any Restricted Global Note may be transferred to a Person who takes delivery thereof in the form of a beneficial interest in the same or different Restricted Global Note if the transfer complies with the requirements of clause (ii) above, if applicable, and the transferor delivers to the Registrar a certificate in the form of Exhibit B hereto. (iv) Transfer and Exchange of Beneficial Interests in a Restricted Global Note for Beneficial Interests in an Unrestricted Global Note. A beneficial interest in any Restricted Global Note may be exchanged by any holder thereof for a beneficial interest in an Unrestricted Global Note or transferred to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Note if the exchange or transfer complies with the requirements of clause (ii) above and: (A) such exchange or transfer is effected pursuant to the Exchange Offer in accordance with the Registration Rights Agreement; (B) any such transfer is effected pursuant to the Shelf Registration Statement in accordance with the Registration Rights Agreement; (C) [intentionally omitted]; or (D) the Registrar receives the following: (1) if the holder of such beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a beneficial interest in an Unrestricted Global Note, a certificate from such holder in the form of Exhibit C hereto, including the certifications in Item (1) thereof; (2) if the holder of such beneficial interest in a Restricted Global Note proposes to transfer such beneficial interest to a Person who shall take delivery thereof in the form of a beneficial interest in an Unrestricted Global Note, a certificate from such holder in the form of Exhibit B hereto, including the certifications in Item (4) thereof; and (3) in each such case set forth in this subparagraph (D), an Opinion of Counsel in form reasonably ` acceptable to the Registrar to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are not required in order to maintain compliance with the Securities Act. If any such transfer is effected pursuant to subparagraph (B) or (D) above at a time when an Unrestricted Global Note has not yet been issued, the Partnership shall issue and, upon receipt of an authentication order in accordance with Section 2.02 hereof, the Trustee shall authenticate 17 one or more Unrestricted Global Notes in an aggregate principal amount equal to the principal amount of beneficial interests transferred pursuant to subparagraph (B) or (D) above. Beneficial interests in an Unrestricted Global Note cannot be exchanged for, or transferred to Persons who take delivery thereof in the form of, a beneficial interest in a Restricted Global Note. (c) Transfer or Exchange of Beneficial Interests for Definitive Notes. (i) If any holder of a beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a Restricted Definitive Note or to transfer such beneficial interest to a Person who takes delivery thereof in the form of a Restricted Definitive Note, then, upon receipt by the Registrar of the following documentation: (A) if the holder of such beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a Definitive Note, a certificate from such holder in the form of Exhibit C hereto, including the certifications in Item (5) thereof; (B) if such beneficial interest is being transferred to a QIB in accordance with Rule 144A under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in Item (1) thereof; (C) if such beneficial interest is being transferred pursuant to Rule 904 or Rule 904 under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in Item (2) thereof; (D) if such beneficial interest is being transferred pursuant to an exemption from the registration requirements of the Securities Act in accordance with Rule 144 under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in Item (3)(a) thereof; (E) if such beneficial interest is being transferred pursuant to any other exemption (including a beneficial interest being transferred to an Institutional Accredited Investor) from the registration requirements of the Securities Act, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications, certificates and Opinion of Counsel required by Item (3)(d) thereof, if applicable; (F) if such beneficial interest is being transferred to the Partnership or any of its Subsidiaries, a certificate to the effect set forth in Exhibit B hereto, including the certifications in Item (3)(b) thereof; or (G) if such beneficial interest is being transferred pursuant to an effective registration statement under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in Item (3)(c) thereof, 18 the Trustee, upon notice of receipt of such documentation by the Registrar, shall cause the aggregate principal amount of the applicable Global Note to be reduced accordingly pursuant to Section 2.06(h) hereof, and the Partnership shall execute and the Trustee shall authenticate and make available for delivery to the Person designated in the instructions a Definitive Note in the appropriate principal amount. Any Definitive Note issued in exchange for a beneficial interest in a Restricted Global Note pursuant to this Section 2.06(c) shall be registered in such name or names and in such authorized denomination or denominations as the holder of such beneficial interest shall instruct the Registrar through instructions from the Depositary and the Participant or Indirect Participant. The Trustee shall make available for delivery such Definitive Notes to the Persons in whose names such Notes are so registered. Any Definitive Note issued in exchange for a beneficial interest in a Restricted Global Note pursuant to this Section 2.06(c)(i) shall bear the Private Placement Legend and shall be subject to all restrictions on transfer contained therein. (ii) Notwithstanding Section 2.06(c)(i) hereof, a holder of a beneficial interest in a Restricted Global Note may exchange such beneficial interest for an Unrestricted Definitive Note or may transfer such beneficial interest to a Person who takes delivery thereof in the form of an Unrestricted Definitive Note only if: (A) such exchange or transfer is effected pursuant to the Exchange Offer in accordance with the Registration Rights Agreement; (B) any such transfer is effected pursuant to the Shelf Registration Statement in accordance with the Registration Rights Agreement; (C) [intentionally omitted]; or (D) the Registrar receives the following: (1) if the holder of such beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a Definitive Note that does not bear the Private Placement Legend, a certificate from such holder in the form of Exhibit C hereto, including the certifications in Item (2) thereof; (2) if the holder of such beneficial interest in a Restricted Global Note proposes to transfer such beneficial interest to a Person who shall take delivery thereof in the form of a Definitive Note that does not bear the Private Placement Legend, a certificate from such holder in the form of Exhibit B hereto, including the certifications in Item (4) thereof; and (3) in each such case set forth in this subparagraph (D), an Opinion of Counsel in form reasonably acceptable to the Partnership, to the effect that such exchange or transfer is in compliance with the Securities Act, that the restrictions on transfer contained herein and in the Private Placement Legend are not required in order to maintain compliance with the Securities Act, and such beneficial interest in a Restricted Global Note is being exchanged or transferred in 19 compliance with any applicable blue sky securities laws of any State of the United States. (iii) If any holder of a beneficial interest in an Unrestricted Global Note proposes to exchange such beneficial interest for a Definitive Note or to transfer such beneficial interest to a Person who takes delivery thereof in the form of a Definitive Note, then, upon satisfaction of the conditions set forth in Section 2.06(b)(ii) hereof, the Trustee shall cause the aggregate principal amount of the applicable Global Note to be reduced accordingly pursuant to Section 2.06(h) hereof, and the Partnership shall execute and the Trustee shall authenticate and make available for delivery to the Person designated in the instructions a Definitive Note in the appropriate principal amount. Any Definitive Note issued in exchange for a beneficial interest pursuant to this Section 2.06(c)(iii) shall be registered in such name or names and in such authorized denomination or denominations as the holder of such beneficial interest shall instruct the Registrar through instructions from the Depositary and the Participant or Indirect Participant. The Trustee shall make available for delivery such Definitive Notes to the Persons in whose names such Notes are so registered. Any Definitive Note issued in exchange for a beneficial interest pursuant to this Section 2.06(c)(iii) shall not bear the Private Placement Legend. A beneficial interest in an Unrestricted Global Note cannot be exchanged for a Definitive Note bearing the Private Placement Legend or transferred to a Person who takes delivery thereof in the form of a Definitive Note bearing the Private Placement Legend. (d) Transfer and Exchange of Definitive Notes for Beneficial Interests. (i) If any Holder of a Restricted Definitive Note proposes to exchange such Note for a beneficial interest in a Restricted Global Note or to transfer such Definitive Notes to a Person who takes delivery thereof in the form of a beneficial interest in a Restricted Global Note, then, upon receipt by the Registrar of the following documentation: (A) if the Holder of such Restricted Definitive Note proposes to exchange such Note for a beneficial interest in a Restricted Global Note, a certificate from such Holder in the form of Exhibit C hereto, including the certifications in Item (6) thereof; (B) if such Definitive Note is being transferred to a QIB in accordance with Rule 144A under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in Item (1) thereof; (C) if such Definitive Note is being transferred pursuant to Rule 903 or Rule 904 under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in Item(2) thereof; (D) if such Definitive Note is being transferred pursuant to an exemption from the registration requirements of the Securities Act in accordance with Rule 144 under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in Item (3)(a) thereof; 20 (E) if such Definitive Note is being transferred to an Institutional Accredited Investor or in reliance on any other exemption from the registration requirements of the Securities Act, in either case, other than those listed in subparagraphs (B), (C) and (D) above, a certificate in the form of Exhibit B hereto, including certifications, certificates, and any Opinion of Counsel required by Item (3)(d) thereof, if applicable; (F) if such Definitive Note is being transferred to the Partnership or any of its Subsidiaries, a certificate to the effect set forth in Exhibit B hereto, including the certifications in Item (3)(b) thereof; or (G) if such Definitive Note is being transferred pursuant to an effective registration statement under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in Item (3)(c) thereof, the Trustee, upon notice of receipt of such documentation by the Registrar, shall cancel the Definitive Note, and increase or cause to be increased the aggregate principal amount of the appropriate Restricted Global Note. (ii) A Holder of a Restricted Definitive Note may exchange such Note for a beneficial interest in an Unrestricted Global Note or transfer such Restricted Definitive Note to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Note only if: (A) such exchange or transfer is effected pursuant to the Exchange Offer in accordance with the Registration Rights Agreement; (B) any such transfer is effected pursuant to the Shelf Registration Statement in accordance with the Registration Rights Agreement; (C) [intentionally omitted]; or (D) the Registrar receives the following: (1) if the Holder of such Restricted Definitive Note proposes to exchange such Note for a beneficial interest in an Unrestricted Global Note, a certificate from such Holder in form of Exhibit C hereto, including the certifications in Item (3) thereof; (2) if the Holder of such Definitive Note proposes to transfer such Note to a Person who shall take delivery thereof in the form of a beneficial interest in an Unrestricted Global Note, a certificate from such Holder in the form of Exhibit B hereto, including the certifications in Item (4) thereof; and (3) in each such case set forth in this subparagraph (D), an Opinion of Counsel in form reasonably acceptable to the Partnership to the effect that such exchange or transfer is in compliance with the Securities Act, that 22 the restrictions on transfer contained herein and in the Private Placement Legend are not required in order to maintain compliance with the Securities Act, and such Definitive Note is being exchanged or transferred in compliance with any applicable blue sky securities laws of any State of the United States. Upon satisfaction of the conditions of any of the subparagraphs in this Section 2.06(d)(ii), the Trustee shall cancel the Definitive Note and increase or cause to be increased the aggregate principal amount of one of the Unrestricted Global Notes. (iii) A Holder of an Unrestricted Definitive Note may exchange such Note for a beneficial interest in an Unrestricted Global Note or transfer such Definitive Note to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Note at any time. Upon receipt of a request for such an exchange or transfer, the Trustee shall cancel the applicable Unrestricted Definitive Note and increase or cause to be increased the aggregate principal amount of one of the Unrestricted Global Notes. (iv) If any such exchange or transfer from a Definitive Note to a beneficial interest is effected pursuant to subparagraphs (ii)(B), (ii)(D) or (iii) of this Section 2.06(d) at a time when an Unrestricted Global Note has not yet been issued, the Partnership shall issue and, upon receipt of an authentication order in accordance with Section 2.02 hereof, the Trustee shall authenticate one or more Unrestricted Global Notes in an aggregate principal amount equal to the principal amount of beneficial interests transferred pursuant to subparagraphs (ii)(B), (ii)(D) or (iii) of this Section 2.06(d). (e) Transfer and Exchange of Definitive Notes for Definitive Notes. Upon request by a Holder of Definitive Notes and such Holder's compliance with the provisions of this Section 2.06(e), the Registrar shall register the transfer or exchange of Definitive Notes. Prior to such registration of transfer or exchange, the requesting Holder shall present or surrender to the Registrar the Definitive Notes duly endorsed or accompanied by a written instruction of transfer in form satisfactory to the Registrar duly executed by such Holder or by his attorney, duly authorized in writing. In addition, the requesting Holder shall provide any additional certifications, documents and information, as applicable, pursuant to the provisions of this Section 2.06(e). (i) Restricted Definitive Notes may be transferred to and registered in the name of Persons who take delivery thereof if the Registrar receives the following: (A) if the transfer will be made pursuant to Rule 144A under the Securities Act, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in Item (1) thereof; (B) if the transfer will be made pursuant to Rule 903 or Rule 904 under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in Item (2) thereof; (C) if the transfer will be made pursuant to an exemption from the registration requirements of the Securities Act in accordance with Rule 144 22 under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in Item (3)(a) thereof; (D) if the transfer will be made to an Institutional Accredited Investor or in reliance on any other exemption from the registration requirements of the Securities Act, in either case, other than those listed in subparagraphs (A), (B) and (C) above, a certificate in the form of Exhibit B hereto, including the certifications, certificates and Opinion of Counsel required by Item(3)(d) thereof, if applicable; (E) if the transfer will be made to the Partnership or any of its Subsidiaries, a certificate to the effect set forth in Exhibit B hereto, including the certifications in Item (3)(b) thereof; or (F) if the transfer will be made pursuant to an effective registration statement under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in Item (3)(c) thereof. (ii) Any Restricted Definitive Note may be exchanged by the Holder thereof for an Unrestricted Definitive Note or transferred to a Person or Persons who take delivery thereof in the form of an Unrestricted Definitive Note if: (A) such exchange or transfer is effected pursuant to the Exchange Offer in accordance with the Registration Rights Agreement; (B) any such transfer is effected pursuant to the Shelf Registration Statement in accordance with the Registration Rights Agreement; (C) [intentionally omitted]; or (D) the Registrar receives the following: (1) if the Holder of such Restricted Definitive Note proposes to exchange such Note for an Unrestricted Definitive Note, a certificate from such Holder in the form of Exhibit C hereto, including the certifications in Item (4) thereof; (2) if the Holder of such Restricted Definitive Note proposes to transfer such Note to a Person who shall take delivery thereof in the form of an Unrestricted Definitive Note, a certificate from such Holder in the form of Exhibit B hereto, including the certifications in Item (4) thereof; and (3) in each such case set forth in this subparagraph (D), an Opinion of Counsel in form reasonably acceptable to the Partnership to the effect that such exchange or transfer is in compliance with the Securities Act, that the restrictions on transfer contained herein and in the Private Placement Legend are not required in order to maintain compliance with the Securities Act, and such 23 Restricted Definitive Note is being exchanged or transferred in compliance with any applicable blue sky securities laws of any State of the United States. (iii) A Holder of Unrestricted Definitive Notes may transfer such Notes to a Person who takes delivery thereof in the form of an Unrestricted Definitive Note. Upon receipt of a request for such a transfer, the Registrar shall register the Unrestricted Definitive Notes pursuant to the instructions from the Holder thereof. Unrestricted Definitive Notes cannot be exchanged for or transferred to Persons who take delivery thereof in the form of a Restricted Definitive Note. (f) Exchange Offer. Upon the occurrence of the Exchange Offer in accordance with the Registration Rights Agreement, the Partnership shall issue and, upon receipt of (A) an authentication order in accordance with Section 2.02 hereof and (B) an Opinion of Counsel opining as to the enforceability of the Exchange Notes and the guarantees thereof, the Trustee shall authenticate (i) one or more Unrestricted Global Notes in an aggregate principal amount equal to the principal amount of the beneficial interests in the Restricted Global Notes tendered and accepted for exchange in the Exchange Offer in accordance with the Registration Rights Agreement and (ii) Definitive Notes in an aggregate principal amount equal to the principal amount of the Restricted Definitive Notes accepted for exchange in the Exchange Offer. Concurrent with the issuance of such Notes, the Trustee shall cause the aggregate principal amount of the applicable Restricted Global Notes to be reduced accordingly, and the Partnership shall execute and the Trustee shall authenticate and make available for delivery to the Persons designated by the Holders of Definitive Notes so accepted Definitive Notes in the appropriate principal amount. (g) Legends. The following legends shall appear on the face of all Global Notes and Definitive Notes issued under this Indenture unless specifically stated otherwise in the applicable provisions of this Indenture. (i) Private Placement Legend. (A) Except as permitted by subparagraph (B) below, each Global Note and each Definitive Note (and all Notes issued in exchange therefor or substitution thereof) shall bear the legend in substantially the following form: "THIS NOTE (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. ACCORDINGLY, THIS NOTE MAY NOT BE OFFERED, SOLD, PLEDGED, OR OTHERWISE TRANSFERRED WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS, EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR IN ACCORDANCE WITH AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (SUBJECT TO THE DELIVERY OF SUCH EVIDENCE, IF ANY, REQUIRED UNDER THE INDENTURE PURSUANT TO WHICH THIS NOTE IS ISSUED) AND IN ACCORDANCE WITH APPLICABLE SECURITIES LAWS OF ANY STATE OF 24 THE UNITED STATES OR ANY OTHER JURISDICTION. BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST HEREIN, THE HOLDER: (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) (A "QIB"), (B) IT IS ACQUIRING THIS NOTE IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT OR (C) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT (AN "IAI")), (2) AGREES THAT, PRIOR TO THE DATE WHICH IS TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE PARTNERSHIP OR ANY AFFILIATE OF THE PARTNERSHIP WAS THE OWNER OF THIS NOTE (OR ANY PREDECESSOR OF THIS NOTE) (THE "RESALE RESTRICTION TERMINATION DATE"), IT WILL NOT RESELL, OR OTHERWISE TRANSFER THIS NOTE EXCEPT (A) TO NORTHERN BORDER PARTNERS, L.P. OR ANY OF ITS SUBSIDIARIES, (B) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QIB PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QIB IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (C) IN AN OFFSHORE TRANSACTION MEETING THE REQUIREMENTS OF RULE 903 OR 904 UNDER THE SECURITIES ACT, (D) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (E) TO AN IAI, (F) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, OR (G) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, AND, IN EACH CASE, IN ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND ACCOMPANIED BY SUCH CERTIFICATIONS, OPINIONS OF COUNSEL AND OTHER INFORMATION AS MAY BE REQUIRED BY THE INDENTURE, AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS NOTE OR AN INTEREST HEREIN IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION", "U.S. PERSONS" AND UNITED STATES HAVE THE MEANINGS ASSIGNED TO THEM IN RULE 902 OF REGULATION S UNDER THE SECURITIES ACT. THE INDENTURE CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS NOTE IN VIOLATION OF THE FOREGOING." (B) Notwithstanding the foregoing, any Global Note or Definitive Note issued pursuant to subparagraph (b)(iv), (c)(iii), (d)(ii), (d)(iii), 25 (e)(ii), (e)(iii) or (f) of this Section 2.06 (and all Notes issued in exchange therefor or substitution thereof) shall not bear the Private Placement Legend. (ii) Global Note Legend. Each Global Note shall bear a legend in substantially the following form: UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN DEFINITIVE FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. THE DEPOSITORY TRUST COMPANY SHALL ACT AS THE DEPOSITARY UNTIL A SUCCESSOR SHALL BE APPOINTED BY THE COMPANY AND THE REGISTRAR. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) ("DTC"), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR SUCH OTHER ENTITY AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. (h) Cancellation and/or Adjustment of Global Notes. At such time as all beneficial interests in a particular Global Note have been exchanged for Definitive Notes or a particular Global Note has been redeemed, repurchased or canceled in whole and not in part, each such Global Note shall be returned to or retained and canceled by the Trustee in accordance with Section 2.11 hereof. At any time prior to such cancellation, if any beneficial interest in a Global Note is exchanged for or transferred to a Person who will take delivery thereof in the form of a beneficial interest in another Global Note or for Definitive Notes, the principal amount of Notes represented by such Global Note shall be reduced accordingly and an endorsement shall be made on such Global Note, by the Trustee, the Note Custodian or the Depositary at the direction of the Trustee, to reflect such reduction; and if the beneficial interest is being exchanged for or transferred to a Person who will take delivery thereof in the form of a beneficial interest in another Global Note, such other Global Note shall be increased accordingly and an endorsement shall be made on such Global Note, by the Trustee, the Note Custodian or by the Depositary at the direction of the Trustee, to reflect such increase. (i) General Provisions Relating to Transfers and Exchanges. (i) To permit registrations of transfers and exchanges, the Partnership shall execute and the Trustee shall authenticate Global Notes and Definitive Notes upon the Partnership's order or at the Registrar's request. 26 (ii) No service charge shall be made to a Holder of a beneficial interest in a Global Note or to a Holder of a Definitive Note for any registration of transfer or exchange, but the Partnership may require payment of a sum sufficient to cover any transfer tax or similar governmental charge payable in connection therewith (other than any such transfer taxes or similar governmental charge payable upon exchange or transfer pursuant to Sections 2.10, 3.06 and 9.05 hereof). (iii) The Registrar shall not be required to register the transfer or exchange of any Note selected for redemption in whole or in part, except the unredeemed portion of any Note being redeemed in part. (iv) All Global Notes and Definitive Notes issued upon any registration of transfer or exchange of Global Notes or Definitive Notes shall be the valid obligations of the Partnership, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Global Notes or Definitive Notes surrendered upon such registration of transfer or exchange. (v) The Partnership shall not be required (A) to issue, to register the transfer of or to exchange Notes during a period beginning at the opening of business 15 days before the day of any selection of Notes for redemption under Section 3.02 hereof and ending at the close of business on the day of selection, (B) to register the transfer of or to exchange any Note so selected for redemption in whole or in part, except the unredeemed portion of any Note being redeemed in part or (C) to register the transfer of or to exchange a Note between a record date and the next succeeding Interest Payment Date. (vi) Prior to due presentment for the registration of a transfer of any Note, the Trustee, any Agent, the Partnership and the Guarantor may deem and treat the Person in whose name any Note is registered as the absolute owner of such Note for the purpose of receiving payment of principal of and interest on such Notes and for all other purposes, and none of the Trustee, any Agent, the Partnership or the Guarantor shall be affected by notice to the contrary. (vii) The Trustee shall authenticate Global Notes and Definitive Notes in accordance with the provisions of Section 2.02 hereof. (viii) All certifications, certificates and Opinions of Counsel required to be submitted to the Registrar pursuant to this Section 2.06 to effect a transfer or exchange may be submitted by facsimile. SECTION 2.07 Replacement Notes. If any mutilated Note is surrendered to the Trustee or the Partnership and the Trustee receives evidence to its satisfaction of the destruction, loss or theft of any Note, the Partnership shall issue and the Trustee, upon the written order of the Partnership signed by two Officers of the Partnership, shall authenticate a replacement Note of the same series if the Trustee's requirements are met. If required by the Trustee or the Partnership, an indemnity bond must be supplied by the Holder that is sufficient in the judgment of the Trustee and the Partnership to 27 protect the Partnership, the Trustee, any Agent and any Authenticating Agent from any loss that any of them may suffer if a Note is replaced. The Partnership may charge for its expenses in replacing a Note. Every replacement Note is an additional obligation of the Partnership and shall be entitled to all of the benefits of this Indenture equally and proportionately with all other Notes duly issued hereunder. SECTION 2.08 Outstanding Notes. The Notes outstanding at any time are all the Notes authenticated by the Trustee except for those canceled by it, those delivered to it for cancellation, those reductions in the interest in a Global Note effected by the Trustee in accordance with the provisions hereof, and those described in this Section as not outstanding. Except as set forth in Section 2.09 hereof, a Note does not cease to be outstanding because the Partnership or an Affiliate of the Partnership holds the Note. If a Note is replaced pursuant to Section 2.07 hereof, it ceases to be outstanding unless the Trustee receives proof satisfactory to it that the replaced Note is held by a bona fide purchaser. If the principal amount of any Note is considered paid under Section 4.01 hereof, it ceases to be outstanding and interest and Liquidated Damages, if any, on it cease to accrue. If the Paying Agent (other than the Partnership, a Subsidiary or an Affiliate of any thereof) holds, on a Redemption Date or maturity date, money sufficient to pay Notes payable on that date, then on and after that date such Notes shall be deemed to be no longer outstanding and shall cease to accrue interest and Liquidated Damages, if any. SECTION 2.09 Treasury Notes. In determining whether the Holders of the required principal amount of Notes have concurred in any direction, waiver or consent, the Initial Notes and the Exchange Notes shall be treated as a single class and any Notes owned by the Partnership, or by any Person directly or indirectly controlling or controlled by or under direct or indirect common control with the Partnership, shall be considered as though not outstanding, except that for the purposes of determining whether the Trustee shall be protected in relying on any such direction, waiver or consent, only Notes that a Responsible Officer of the Trustee actually knows are so owned shall be so disregarded. SECTION 2.10 Temporary Notes. Until Definitive Notes are ready for delivery, the Partnership may prepare and the Trustee shall authenticate temporary Notes upon a written order of the Partnership signed by two Officers of the Partnership. Temporary Notes shall be substantially in the form of Definitive Notes but may have variations that the Partnership considers appropriate for temporary Notes and as shall be reasonably acceptable to the Trustee. Without unreasonable delay, the Partnership shall prepare and the Trustee shall authenticate Definitive Notes in exchange for temporary Notes. 28 Holders of temporary Notes shall be entitled to all of the benefits of this Indenture. SECTION 2.11 Cancellation. The Partnership at any time may deliver Notes to the Trustee for cancellation. The Registrar and Paying Agent shall forward to the Trustee any Notes surrendered to them for registration of transfer, exchange or payment. The Trustee and no one else shall cancel all Notes surrendered for registration of transfer, exchange, payment, replacement or cancellation and shall return such canceled Notes to the Partnership upon the Partnership's written request. The Partnership may not issue new Notes to replace Notes that it has paid or that have been delivered to the Trustee for cancellation. SECTION 2.12 Defaulted Interest. If the Partnership defaults in a payment of interest on the Notes, it shall pay the defaulted interest in any lawful manner plus, to the extent lawful, interest payable on the defaulted interest, to the Persons who are Holders on a subsequent record date, in each case at the rate provided in the Notes. The Partnership shall promptly notify the Trustee in writing of the amount of defaulted interest proposed to be paid on each Note and the date of the proposed payment. The Partnership shall fix or cause to be fixed each such record date and payment date, provided that no such record date shall be less than 10 days prior to the related payment date for such defaulted interest. At least 15 days before the record date, the Partnership (or, upon the written request of the Partnership, the Trustee in the name and at the expense of the Partnership) shall mail or cause to be mailed to Holders a notice that states the record date, the related payment date and the amount of such interest to be paid. SECTION 2.13 CUSIP Numbers. The Partnership in issuing the Notes may use "CUSIP" numbers (if then generally in use), and, if so, the Trustee shall use "CUSIP" numbers in notices of redemption as a convenience to Holders; provided that any such notice may state that no representation is made as to the correctness of such numbers either as printed on the Notes or as contained in any notice of a redemption and that reliance may be placed only on the other identification numbers printed on the Notes, and any such redemption shall not be affected by any defect in or omission of such numbers. The Partnership will promptly notify the Trustee of any change in the "CUSIP" numbers. ARTICLE III REDEMPTION AND PREPAYMENT SECTION 3.01 Notices to Trustee. The Partnership may elect to redeem Notes in whole or in part; provided, however, that it shall furnish to the Trustee, at least 30 days but not more than 60 days before a Redemption Date, an Officers' Certificate setting forth (i) the Redemption Date, (ii) the principal amount of Notes to be redeemed and (iii) the redemption price. 29 SECTION 3.02 Selection of Notes to be Redeemed. If less than all of the Notes are to be redeemed at any time, selection of Notes for redemption shall be made by the Trustee in compliance with the requirements of the principal national securities exchange, if any, on which the Notes are listed or, if the Notes are not so listed, on a pro rata basis, by lot or in accordance with any other method the Trustee considers fair and appropriate; provided that no Notes of $1,000 or less shall be redeemed in part. In the event of partial redemption by lot, the particular Notes to be redeemed shall be selected, unless otherwise provided herein, not less than 30 nor more than 60 days prior to the Redemption Date by the Trustee from the outstanding Notes not previously called for redemption. The Trustee shall promptly notify the Partnership in writing of the Notes selected for redemption and, in the case of any Note selected for partial redemption, the principal amount thereof to be redeemed. Notes and portions of Notes selected shall be in amounts of $1,000 or integral multiples of $1,000. Except as provided in the preceding sentence, provisions of this Indenture that apply to Notes called for redemption also apply to portions of Notes called for redemption. SECTION 3.03 Notice of Redemption. At least 30 days but not more than 60 days before a Redemption Date, the Partnership shall mail or cause to be mailed, by first class mail, a notice of redemption to each Holder whose Notes are to be redeemed at its registered address. The notice shall identify the Notes (including CUSIP numbers) to be redeemed and shall state (a) the Redemption Date; (b) the redemption price as computed in accordance with the terms of the Notes; (c) if any Note is being redeemed in part, the portion of the principal amount of such Note to be redeemed and that, after the Redemption Date upon surrender of such Note, a new Note or Notes in principal amount equal to the unredeemed portion shall be issued upon cancellation of the original Note; (d) the name and address of the Paying Agent; (e) that Notes called for redemption must be surrendered to the Paying Agent to collect the redemption price; (f) that, unless the Partnership defaults in making such redemption payment, interest and Liquidated Damages, if any, on Notes called for redemption cease to accrue on and after the Redemption Date; (g) the paragraph of the Notes and/or Section of this Indenture pursuant to which the Notes called for redemption are being redeemed; and 30 (h) that no representation is made as to the correctness or accuracy of the CUSIP number, if any, listed in such notice or printed on the Notes. At the Partnership's request, the Trustee shall give the notice of redemption in the Partnership's name and at its expense; provided, however, that the Partnership shall have delivered to the Trustee, at least 30 days prior to the Redemption Date, an Officers' Certificate requesting that the Trustee give such notice and setting forth the information to be stated in such notice as provided in the preceding paragraph. SECTION 3.04 Effect of Notice of Redemption. Once notice of redemption is mailed in accordance with Section 3.03 hereof, Notes called for redemption become irrevocably due and payable on the Redemption Date at the redemption price. A notice of redemption may not be conditional. SECTION 3.05 Deposit of Redemption Price. No later than 10:00 a.m. New York City Time on the Redemption Date, the Partnership shall deposit with the Trustee or with the Paying Agent money sufficient to pay the redemption price (as calculated in accordance with the terms of the Notes) of and accrued interest and Liquidated Damages, if any, on all Notes to be redeemed on that date. The Trustee or the Paying Agent shall promptly return to the Partnership any money deposited with the Trustee or the Paying Agent by the Partnership in excess of the amounts necessary to pay the redemption price of, and accrued and unpaid interest and Liquidated Damages, if any, on, all Notes to be redeemed. If the Partnership complies with the provisions of the preceding paragraph, on and after the Redemption Date, interest, and Liquidated Damages, if any, shall cease to accrue on the Notes or the portions of Notes called for redemption. If a Note is redeemed on or after an interest record date but on or prior to the related Interest Payment Date, then any accrued and unpaid interest and Liquidated Damages, if any, shall be paid to the Person in whose name such Note was registered at the close of business on such record date. If any Note called for redemption shall not be so paid upon surrender for redemption because of the failure of the Partnership to comply with the preceding paragraph, interest shall be paid on the unpaid principal, from the Redemption Date until such principal is paid, and to the extent lawful on any interest not paid on such unpaid principal, in each case at the rate provided in the Notes and in Section 4.01 hereof. SECTION 3.06 Notes Redeemed in Part. Upon surrender of a Note that is redeemed in part, the Partnership shall issue and, upon the Partnership's written request, the Trustee shall authenticate for the Holder at the expense of the Partnership a new Note equal in principal amount to the unredeemed portion of the Note surrendered. 31 SECTION 3.07 Mandatory Redemption. The Partnership shall not be required to make mandatory redemption or sinking fund payments with respect to the Notes. ARTICLE IV COVENANTS SECTION 4.01 Payment of Notes. The Partnership shall pay or cause to be paid the principal of, premium, if any, and interest and Liquidated Damages, if any, on the Notes on the dates and in the manner provided in the Notes. Principal, premium, if any, interest and Liquidated Damages, if any, shall be considered paid on the date due if the Paying Agent, if other than the Partnership or a Subsidiary thereof, holds as of 10:00 a.m. New York City Time on the due date money deposited by the Partnership in immediately available funds and designated for and sufficient to pay all principal, premium, if any, interest and Liquidated Damages, if any, then due. The Partnership shall pay all Liquidated Damages, if any, in the same manner on the dates and in the amounts set forth in the Registration Rights Agreement. The Partnership shall pay interest (including post-petition interest in any proceeding under the Bankruptcy Code) on overdue principal at the rate borne on the Notes to the extent lawful; it shall pay interest (including post-petition interest in any proceeding under the Bankruptcy Code) on overdue installments of interest and Liquidated Damages, if any, (without regard to any applicable grace period) at the same rate to the extent lawful. SECTION 4.02 Maintenance of Office or Agency. The Partnership shall maintain in the Borough of Manhattan, the City of New York, an office or agency (which may be an office of the Trustee or an affiliate of the Trustee, Registrar or co-registrar) where Notes may be surrendered for registration of transfer or for exchange and where notices and demands to or upon the Partnership in respect of the Notes and this Indenture may be served. The Partnership shall give prompt written notice to the Trustee of the location, and any change in the location, of such office or agency. If at any time the Partnership shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office of the Trustee. The Partnership may also from time to time designate one or more other offices or agencies where the Notes may be presented or surrendered for any or all such purposes and may from time to time rescind such designations; provided, however, that no such designation or rescission shall in any manner relieve the Partnership of its obligation to maintain an office or agency in the Borough of Manhattan, the City of New York for such purposes. The Partnership shall give prompt written notice to the Trustee of any such designation or rescission and of any change in the location of any such other office or agency. 32 The Partnership hereby designates the office of the Trustee at 14 Wall Street, 8th floor, New York, New York 10005, as one such office or agency of the Partnership in accordance with Section 2.03 hereof. SECTION 4.03 Reports. (a) The Partnership, pursuant to Section 314(a) of the Trust Indenture Act, shall: (i) For as long as the Partnership is required to file information with the SEC pursuant to the Exchange Act, file with the Trustee, within 15 days after the Partnership is required to file with the SEC, copies of the annual reports and of the information, documents and other reports which the Partnership may be required to file with the SEC pursuant to the Exchange Act; or if the Partnership is not required to file information with the SEC pursuant to the Exchange Act, file with the Trustee and the SEC in accordance with rules and regulations prescribed from time to time by the SEC any supplementary and periodic information, documents and reports which may be required pursuant to the Exchange Act, in respect of a security listed and registered on a national securities exchange as may be prescribed in such rules and regulations. (ii) Transmit within 30 days after the filing thereof with the Trustee, in the manner and to the extent provided in Section 313(c) of the Trust Indenture Act, such summaries of any information, documents and reports required to be filed by the Partnership pursuant to paragraph (i) of this Section as may be required by rules and regulations prescribed from time to time by the SEC. (b) For so long as any Initial Notes remain outstanding, the Partnership shall furnish to the Holders and to securities analysts and prospective investors, upon their request, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act. (c) Delivery of such reports, information and documents to the Trustee is for informational purposes only and the Trustee's receipt of such shall not constitute constructive notice of any information contained therein or determinable from information contained therein, including the Partnership's compliance with any of its covenants hereunder (as to which the Trustee is entitled to rely exclusively on Officers' Certificates). SECTION 4.04 Statement by Officers as to Default. The Partnership will deliver to the Trustee, within 150 days after the end of each fiscal year of the Partnership ending after the date hereof, an Officers' Certificate, stating whether or not to the best knowledge of the signers thereof the Partnership or the Guarantor is in default in the performance and observance of any of the terms, provisions and conditions of this Indenture (without regard to any period of grace or requirement of notice provided hereunder) and, if the Partnership or the Guarantor shall be in default, specifying all such defaults and the nature and status thereof of which they may have knowledge. 33 SECTION 4.05 Existence. Subject to Article V, the Partnership will do or cause to be done all things necessary to preserve and keep in full force and effect its existence, rights (charter and statutory) and franchises; provided, however, that the Partnership shall not be required to preserve any such right or franchise if it shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Partnership. SECTION 4.06 Limitations on Liens. The Partnership will not, nor will it permit any Subsidiary of the Partnership to, issue, create, assume or guarantee any Indebtedness of the character specified in clause (i)(A) of the definition of the term "Indebtedness" secured by a Lien upon any Property or upon any Capital Interests or indebtedness of any Subsidiary that owns or leases any Property (whether such Property, Capital Interests or Indebtedness is existing or owned on the date of this Indenture or is hereafter created or acquired), without in any such case making effective provision whereby all of the Notes outstanding hereunder shall be secured equally and ratably with, or prior to, such Indebtedness so long as such Indebtedness shall be so secured. This restriction shall not apply to (1) any Permitted Lien and (2) any Lien securing Exempted Indebtedness. SECTION 4.07 Restriction of Sale-Leaseback Transactions. The Partnership will not, nor will it permit any Subsidiary to, engage in a Sale-Leaseback Transaction with respect to any Property unless: (a) the Partnership or such Subsidiary, as the case may be, would be entitled to incur Indebtedness of the character specified in clause (i)(A) of the definition of the term "Indebtedness" secured by a Lien on the Property to be leased pursuant to such Sale-Leaseback Transaction in a principal amount at least equal to the Attributable Indebtedness with respect to such Sale-Leaseback Transaction without securing the Notes pursuant to Section 4.06; or (b) within a one-year period after the effective date of such Sale-Leaseback Transaction, the Partnership or such Subsidiary applies or causes to be applied an amount equal to not less than the Attributable Indebtedness of such Sale-Leaseback Transaction to (i) the voluntary defeasance or the repayment, redemption or retirement of the Notes or other Indebtedness of the Partnership or any Subsidiary of the character specified in clause (i)(A) of the definition of the terms "Indebtedness" that matures more than one year after the creation of such Indebtedness, (ii) the acquisition, construction, development or improvement of any Property used or useful in the business of the Partnership or any of its Subsidiaries, or (iii) any combination of applications referred to in clauses (b)(i) and (b)(ii) of this Section 4.07. SECTION 4.08 Waiver of Certain Covenants. The Partnership may omit in any particular instance to comply with any term, provision or condition set forth in Section 4.05, 4.06 or 4.07 with respect to the Notes or any negative covenant with respect to the Notes contained in resolutions of the Partnership Policy Committee, Officers' Certificate or supplemental indenture authorizing the Notes if before the time for such compliance the Holders of at least a majority in aggregate principal amount of the Notes (voting 34 as one class) shall, by act of such Holders, either waive such compliance in such instance or generally waive compliance with such term, provision or condition, but no such waiver shall extend to or affect such term, provision or condition except to the extent so expressly waived, and, until such waiver shall become effective, the obligations of the Partnership and the Guarantor and the duties of the Trustee in respect of any such term, provision or condition shall remain in full force and effect. A waiver which changes or eliminates any term, provision or condition of this Indenture which has expressly been included solely for the benefit of the Holders, or which modifies the rights of the Holders with respect to such term, provision or condition, shall be deemed not to affect the rights under this Indenture of the Holders. SECTION 4.09 Payments for Consent. The Partnership will not, and will not permit any of its Subsidiaries to, directly or indirectly, pay or cause to be paid any consideration, whether by way of interest, fee or otherwise, to or for the benefit of any Holder of Notes for or as an inducement to any consent, waiver or amendment of any of the terms or provisions of this Indenture or the Notes unless such consideration is offered to be paid and is paid to all Holders of the Notes that consent, waive or agree to amend in the time frame set forth in the solicitation documents relating to such consent, waiver or agreement. SECTION 4.10 Money for Note Payments to Be Held in Trust. If the Partnership shall at any time act as its own Paying Agent with respect to the Notes, it will, on or before each due date of the principal of, premium, if any, interest or Liquidated Damages, if any, on the Notes, segregate and hold in trust for the benefit of the Persons entitled thereto a sum sufficient to pay the principal of, premium, if any, interest and Liquidated Damages, if any, so becoming due until such sums shall be paid to such Persons or otherwise disposed of as herein provided and will promptly notify the Trustee of its action or failure so to act. Whenever the Partnership shall have one or more Paying Agents for the Notes, it will, on or prior to each due date of the principal of, premium, if any, interest or Liquidated Damages, if any, on the Notes, deposit with a Paying Agent a sum sufficient to pay such amount, such sum to be held as provided by the Trust Indenture Act, and (unless such Paying Agent is the Trustee) the Partnership will promptly notify the Trustee of its action or failure so to act. The Partnership will cause each Paying Agent for the Notes other than the Trustee to execute and deliver to the Trustee an instrument in which such Paying Agent shall agree with the Trustee, subject to the provisions of this Section, that such Paying Agent will (a) hold all sums held by it for the payment of the principal of (and premium, if any), interest or Liquidated Damages, if any, on the Notes in trust for the benefit of the Persons entitled thereto until such sums shall be paid to such Persons or otherwise disposed of as herein provided; (b) give the Trustee notice of any default by the Partnership (or any other obligor upon the Notes) in the making of any payment of principal (and premium, if any), interest or Liquidated Damages, if any, on the Notes; and (c) during the continuance of any such default, upon the written request of 35 the Trustee, forthwith pay to the Trustee all sums held in trust by such Paying Agent for payment in respect of the Notes. The Partnership may at any time, for the purpose of obtaining the satisfaction and discharge of this Indenture or for any other purpose, pay, or by Partnership Order direct any Paying Agent to pay, to the Trustee all sums held in trust by the Partnership or such Paying Agent, such sums to be held by the Trustee upon the same trusts as those upon which such sums were held by the Partnership or such Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such Paying Agent shall be released from all further liability with respect to such money. Any money deposited with the Trustee or any Paying Agent, or then held by the Partnership, in trust for the payment of the principal of or premium, if any, interest or Liquidated Damages, if any, on any of the Notes and remaining unclaimed for two years after such principal, premium, if any, interest or Liquidated Damages, if any, has become due and payable shall be paid to the Partnership on Partnership Request, or (if then held by the Partnership) shall be discharged from such trust; and the Holder of such Notes shall thereafter, as an unsecured general creditor, look only to the Partnership for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Partnership as trustee thereof, shall thereupon cease; provided, however, that the Trustee or such Paying Agent, before being required to make any such repayment, may at the expense of the Partnership cause to be published once, in an Authorized Newspaper in each Place of Payment with respect to the Notes, notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such publication, any unclaimed balance of such money then remaining will be repaid to the Partnership. SECTION 4.11 Repurchase Upon a Rating Decline. (a) If a Rating Decline occurs and an Investment Grade rating has not been reinstated within 40 days after such occurrence, the Partnership shall make an offer (a "Rating Decline Offer") to repurchase all or any part (equal to $1,000 or an integral multiple thereof) of each Holder's Notes at an offer price in cash equal to 100% of the aggregate principal amount thereof, plus accrued and unpaid interest and Liquidated Damages, if any, thereon to the date of repurchase (the "Rating Decline Payment"). Within 10 days following any Rating Decline, the Partnership shall mail an initial notice to each Holder and the Trustee stating a Rating Decline has occurred and a repurchase of the Notes by the Partnership may be required. If within 30 days following such initial notice, the Rating Agency or Agencies which downgraded the Notes shall have failed to reinstate an Investment Grade rating to the Notes, then the Partnership shall, on the 40th day following such Rating Decline, mail a subsequent notice to each Holder with a copy to the Trustee stating that: (1) an Investment Grade rating of the Notes has not been reinstated and that such Holder has the right to require the Partnership to repurchase such Holder's notes at a repurchase price in cash equal to 100% of the principal amount thereof plus accrued and unpaid interest and Liquidated Damages, if any, to the date of repurchase (the "Repurchase Date"); (2) the Repurchase Date, which shall be a Business Day and be not earlier than 30 days or later than 60 days from the date the initial notice is mailed; (3) interest on any Note not tendered will continue to accrue; (4) interest on any Note accepted for payment in a Rating Decline Offer shall cease to accrue after the Repurchase Date; (5) Holders electing to 36 have a Note purchased will be required to surrender the Note with the form entitled "Option of Holder to Elect Purchase" on the reverse of the Note completed, to the Paying Agent at the address specified in the notice prior to the close of business on the Repurchase Date; (6) Holders will be entitled to withdraw their election if the Paying Agent receives, not later than the close of business on the third Business Day, or such shorter periods as may be required by applicable law, preceding the repurchase date, a telegram, facsimile transmission or letter setting forth the name of the Holder, the principal amount of Notes the Holder delivered for purchase, and a statement that such Holder is withdrawing his election to have such Notes purchased; and (7) Holders which elect to have their Notes purchased only in part will be issued new Notes in a principal amount equal to the portion of the Notes surrendered that are not purchased in the Rating Decline Offer. If any of the Notes subject to a Rating Decline Offer are in the form of a Global Note, then the Partnership shall modify such notice to the extent necessary to accord with the procedures of the Depositary applicable to repurchases. Further, the Partnership and the Guarantor shall comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws and regulations are applicable in connection with the Rating Decline Offer or repurchase of Notes in accordance with this Section 4.11. (b) On or before 10:00 a.m. New York time on the Repurchase Date, the Partnership shall, to the extent lawful, (a) accept for payment all Notes or portions thereof properly tendered pursuant to the Rating Decline Offer, (b) deposit with the Paying Agent money in an amount equal to the Rating Decline Payment in respect of all Notes or portions thereof so properly tendered and accepted for payment and (c) deliver or cause to be delivered to the Trustee the Notes so accepted together with an Officers' Certificate stating the aggregate principal amount of Notes or portions thereof being purchased by the Partnership. The Paying Agent shall promptly mail to each holder of Notes so tendered the Rating Decline Payment for such Notes, and the Trustee shall promptly authenticate and mail (or cause to be transferred by book entry) to each Holder a new Note equal in principal amount to the portion of the Notes surrendered that are not purchased in the Rating Decline Offer, if any; provided, however, that each such new Note will be in a principal amount of $1,000 or an integral multiple thereof. The Partnership shall publicly announce the results of the Rating Decline Offer on or as soon as practicable after the Repurchase Date. (c) Notwithstanding anything in this Indenture or in the Notes to the contrary, the Partnership shall not have any obligation under this Section 4.11 to make a Rating Decline Offer in respect of any of the Notes, and shall not be obligated to repurchase any Notes following a Rating Decline, if the Rating Decline occurs after the Partnership's $250,000,000 original principal amount of 8?% Senior Notes due June 15, 2010 (the "8?% Senior Notes") ceases to be outstanding, whether such 8?% Senior Notes ceases to be outstanding due to their stated maturity, redemption, repurchase, legal defeasance or otherwise. 37 ARTICLE V SUCCESSORS SECTION 5.01 Partnership and Guarantor May Consolidate, Etc., Only on Certain Terms. Except as provided in Section 5.02, neither the Partnership nor the Guarantor shall merge, amalgamate or consolidate with or into any other Person (other than a merger or amalgamation with any Subsidiary of the Partnership or the Guarantor, as the case may be, in which the Partnership or the Guarantor is the surviving entity) or sell, convey, lease, transfer or otherwise dispose of its properties and assets as, or substantially as, an entirety to, any Person, whether in a single transaction or series of related transactions, unless: (a) (A) in the case of a merger, the Partnership or the Guarantor, as the case may be, is the surviving entity, or (B) the Person formed by such consolidation or amalgamation or into which the Partnership or the Guarantor is merged or amalgamated or the Person which acquires by sale, conveyance, transfer or disposition, or which leases, all or substantially all of the properties and assets of the Partnership or the Guarantor (i) is an entity organized under the laws of the United States, a state thereof or the District of Columbia, or Canada or a province thereof and (ii) shall expressly assume, by an indenture supplemental hereto, executed and delivered to the Trustee, in form reasonably satisfactory to the Trustee, the due and punctual payment of the principal of, premium, if any, and Liquidated Damages, if any, and interest on all the Notes and the performance or observance of every other covenant and condition of this Indenture on the part of the Partnership or the Guarantor, as the case may be, to be performed or observed; (b) immediately before and immediately after giving effect to such transaction, no Default or Event of Default has occurred and is continuing; and (c) the Partnership has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that such merger, amalgamation, consolidation, sale, conveyance, transfer, lease or other disposition and the supplemental indenture required in connection with such transaction, if any, comply with this Article and that all conditions precedent herein provided for relating to such transaction have been complied with. SECTION 5.02 Successor Substituted. Upon any consolidation of the Partnership or the Guarantor with, or merger of the Partnership or Guarantor into, any other Person or any sale, transfer, lease or other disposition of the properties and assets of the Partnership or the Guarantor as, or substantially as, an entirety in accordance with Section 5.01, the successor Person formed by such consolidation or into which the Partnership or the Guarantor is merged or to which such sale, transfer, lease or other disposition is made shall succeed to, and be substituted for, and may exercise every right and power of, the Partnership or the Guarantor under this Indenture with the same effect as if such successor Person had been named originally as the Partnership or Guarantor herein, and 38 thereafter, except in the case of a lease, the predecessor Person shall be relieved of all obligations and covenants under this Indenture and the Notes. ARTICLE VI DEFAULTS AND REMEDIES SECTION 6.01 Events of Default. "Event of Default", wherever used herein with respect to the Notes, means any one of the following events (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body): (a) default in the payment of any interest or any Liquidated Damages upon the Notes when it becomes due and payable, and continuance of such default for a period of 30 days; or (b) (default in the payment of the principal of (or premium, if any, on) the Notes at their Stated Maturity; or (c) default in the performance, or breach, of any term, covenant or warranty of the Partnership or the Guarantor in this Indenture, and continuance of such default or breach for a period of 90 days after there has been given, by registered or certified mail, to the Partnership or the Guarantor by the Trustee or to the Partnership or the Guarantor and the Trustee by the Holders of at least 25% in principal amount of the Notes then outstanding a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a "Notice of Default" hereunder; or (d) the Partnership pursuant to or within the meaning of the Bankruptcy Code (A) commences a voluntary case, (B) consents to the entry of any order for relief against it in an involuntary case, (C) consents to the appointment of a Custodian of it or for all or substantially all of its property, or (D) makes a general assignment for the benefit of its creditors; or (e) a court of competent jurisdiction enters an order or decree under the Bankruptcy Code that (A) is for relief against the Partnership in an involuntary case, (B) appoints a Custodian of the Partnership or for all or substantially all of its property, or (C) orders the liquidation of the Partnership; and the order or decree remains unstayed and in effect for 90 days; or (f) any default by the Partnership or any of its Subsidiaries in the payment, at the final maturity date and after the expiration of any applicable grace period, of principal of, premium, if any, or interest on indebtedness for money borrowed in the principal amount then outstanding of $25,000,000 or more, or acceleration of any indebtedness of such amount, such that the indebtedness becomes due and payable prior to its maturity date and such acceleration is not rescinded within 60 days after notice to the Partnership in accordance with this Indenture. 39 SECTION 6.02 Acceleration of Maturity; Rescission and Annulment. If an Event of Default with respect to the Notes occurs and is continuing (other than an Event of Default described in clause (d) or (e) of Section 6.01), then in every such case the Trustee or the Holders of not less than 25% in principal amount of the Notes may declare the principal amount of the Notes to be due and payable immediately, by a notice in writing to the Partnership (and to the Trustee if given by Holders), and upon any such declaration such principal amount (or specified amount) shall become immediately due and payable. Notwithstanding the foregoing, if an Event of Default specified in clause (d) or (e) of Section 6.01 occurs, the Notes then outstanding shall be due and payable immediately without further action or notice. At any time after such a declaration of acceleration with respect to the Notes has been made and before a judgment or decree for payment of the money due has been obtained by the Trustee as hereinafter in this Article provided, the Holders of a majority in principal amount of the notes then outstanding, by written notice to the Partnership and the Trustee, may rescind and annul such declaration and its consequences if (a) the Partnership has paid or deposited with the Trustee a sum sufficient to pay (i) all overdue interest on all the Notes, (ii) the principal of (and premium, if any, on) and Liquidated Damages, if any, on the Notes which have become due otherwise than by such declaration of acceleration and any interest thereon at the rate or rates prescribed therefor in the Notes, (iii) to the extent that payment of such interest is lawful, interest upon overdue interest at the rate or rates prescribed therefor in the Notes, and (iv) all sums paid or advanced by the Trustee hereunder and the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel; and (b) all Events of Default with respect to the Notes, other than the non-payment of the principal of the Notes which have become due solely by such declaration of acceleration, have been cured or waived as provided for below. If an Event of Default occurs and is not subsequently cured, the Trustee shall, in the exercise of its power, use the degree of care of a prudent man in the conduct of his affairs. No such rescission shall affect any subsequent Default or impair any right consequent thereon. 40 SECTION 6.03 Collection of Indebtedness and Suits for Enforcement by Trustee. The Partnership covenants that if (a) default is made in the payment of any interest or Liquidated Damages on the Notes when such interest or Liquidated Damages become due and payable and such default continues for a period of 30 days, or (b) default is made in the payment of the principal of (or premium, if any, on) the Notes at the maturity date thereof, the Partnership will, upon demand of the Trustee, pay to it, for the benefit of the Holders of the Notes, the whole amount then due and payable on the Notes for principal, premium, if any, and Liquidated Damages, if any, and interest and, to the extent that payment of such interest shall be legally enforceable, interest on any overdue principal and premium, Liquidated Damages and on any overdue interest, at the rate or rates prescribed therefor in the Notes, and, in addition thereto, such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel. If the Partnership fails to pay such amounts forthwith upon such demand, the Trustee, in its own name and as trustee of an express trust, may institute a judicial proceeding for the collection of the sums so due and unpaid, may prosecute such proceeding to judgment or final decree and may enforce the same against the Partnership, the Guarantor or any other obligor upon the Notes and collect the moneys adjudged or decreed to be payable in the manner provided by law out of the property of the Partnership, the Guarantor or any other obligor upon the Notes, wherever situated. If an Event of Default with respect to the Notes occurs and is continuing, the Trustee may in its discretion proceed to protect and enforce its rights and the rights of the Holders of the Notes by such appropriate judicial proceedings as the Trustee shall deem most effectual to protect and enforce any such rights, whether for the specific enforcement of any covenant or agreement in this Indenture or in aid of the exercise of any power granted herein, or to enforce any other proper remedy. SECTION 6.04 Trustee May File Proofs of Claim. In case of any judicial proceeding relative to the Partnership, the Guarantor or any other obligor upon the Notes, their property or their creditors, the Trustee shall be entitled and empowered, by intervention in such proceeding or otherwise, to take any and all actions authorized under the Trust Indenture Act in order to have claims of the Holders and the Trustee allowed in any such proceeding. In particular, the Trustee shall be authorized to collect and receive any moneys or other property payable or deliverable on any such claims and to distribute the same; and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due it for the reasonable 41 compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 7.07 hereof. No provision of this Indenture shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Notes or the rights of any Holder thereof or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding; provided, however, that the Trustee may, on behalf of the Holders, vote for the election of a trustee in bankruptcy or similar official and be a member of a creditors' committee or other similar committee. SECTION 6.05 Trustee May Enforce Claims Without Possession of Notes. All rights of action and claims under this Indenture or the Notes may be prosecuted and enforced by the Trustee without the possession of any of the Notes or the production thereof in any proceeding relating thereto, and any such proceeding instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment shall, after provision for the payment of the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, be for the ratable benefit of the Holders of the Notes in respect of which such judgment has been recovered. SECTION 6.06 Application of Money Collected. Any money collected by the Trustee pursuant to this Article shall be applied in the following order, at the date or dates fixed by the Trustee and, in case of the distribution of such money on account of principal, premium, if any, or Liquidated Damages, if any, or interest, upon presentation of the Notes and the notation thereon of the payment if only partially paid and upon surrender thereof if fully paid: FIRST: To the payment of all amounts due the Trustee under Section 7.07; SECOND: To the payment of the amounts then due and unpaid for principal of, premium, if any, and Liquidated Damages, if any, and interest on the Notes, ratably, without preference or priority of any kind, according to the amounts due and payable on the Notes for principal, premium, if any, and Liquidated Damages, if any, and interest, respectively; and THIRD: The balance, if any, to the Partnership. SECTION 6.07 Limitation on Suits. No Holder of the Notes shall have any right to institute any proceeding, judicial or otherwise, with respect to this Indenture, or for the appointment of a receiver or trustee, or for any other remedy hereunder, unless (a) such Holder has previously given written notice to the Trustee of a continuing Event of Default with respect to the Notes; 42 (b) the Holders of not less than 25% in principal amount of the Notes then outstanding shall have made written request to the Trustee to institute proceedings in respect of such Event of Default in its own name as Trustee hereunder; (c) such Holder or Holders have offered to the Trustee indemnity satisfactory to the Trustee against the costs, expenses and liabilities to be incurred in compliance with such request; (d) the Trustee for 60 days after its receipt of such notice, request and offer of indemnity has failed to institute any such proceeding; and (e) no direction inconsistent with such written request has been given to the Trustee during such 60-day period by the Holders of a majority in principal amount of the Notes then outstanding; it being understood and intended that no one or more of such Holders shall have any right in any manner whatever by virtue of, or by availing of, any provision of this Indenture to affect, disturb or prejudice the rights of any other of such Holders, or to obtain or to seek to obtain priority or preference over any other of such Holders or to enforce any right under this Indenture, except in the manner herein provided and for the equal and ratable benefit of all of such Holders. SECTION 6.08 Unconditional Right of Holders to Receive Principal, Premium, Liquidated Damages and Interest. Notwithstanding any other provision in this Indenture, Holders shall have the right, which is absolute and unconditional, to receive payment of the principal of, premium, if any, and Liquidated Damages, if any, and (subject to Sections 2.06 and the provisions hereof regarding the payment of interest) interest on the Notes on the maturity date expressed in the Notes (or, in the case of redemption, on the Redemption Date) and to institute suit for the enforcement of any such payment, and such rights shall not be impaired without the consent of such Holder. SECTION 6.09 Restoration of Rights and Remedies. If the Trustee or any Holder has instituted any proceeding to enforce any right or remedy under this Indenture and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Trustee or to such Holder, then and in every such case, subject to any determination in such proceeding, the Partnership, the Guarantor, the Trustee and the Holders shall be restored severally and respectively to their former positions hereunder, and thereafter all rights and remedies of the Trustee and the Holders shall continue as though no such proceeding had been instituted. SECTION 6.10 Rights and Remedies Cumulative. Except as otherwise provided with respect to the replacement or payment of mutilated, destroyed, lost or stolen Notes herein, no right or remedy herein conferred upon or reserved to the Trustee or to the Holders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or 43 otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy. SECTION 6.11 Delay or Omission Not Waiver. No delay or omission of the Trustee or of any Holder to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Every right and remedy given by this Article or by law to the Trustee or to the Holders may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or by the Holders, as the case may be. SECTION 6.12 Control by Holders. The Holders of a majority in aggregate principal amount of the Notes shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred on the Trustee, with respect to the Notes; provided, however, that (a) such direction shall not be in conflict with any rule of law or with this Indenture; (b) the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction; and (c) subject to the provisions of Section 7.01, the Trustee shall have the right to decline to follow any such direction if the Trustee in good faith shall determine that the proceeding so directed would involve the Trustee in personal liability. SECTION 6.13 Waiver of Past Defaults. The Holders of a majority in aggregate principal amount of the Notes may on behalf of the Holders of all the Notes waive any past default hereunder and its consequences, except (a) a continuing default in the payment of the principal of, premium, if any, or Liquidated Damages, if any, or interest on the Notes, or (b) a default in respect of a covenant or provision hereof which cannot be modified or amended hereunder without the consent of each Holder. Upon any such waiver, such default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured, for every purpose of this Indenture, but no such waiver shall extend to any subsequent or other default or impair any right consequent thereon. SECTION 6.14 Undertaking for Costs. In any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Trustee for any action taken, suffered or omitted by it as Trustee, a court may require any party litigant in such suit to file an undertaking to pay the costs of such suit, and may assess 44 reasonable costs, including reasonable legal fees and expenses, against any such party litigant, in the manner and to the extent provided in the Trust Indenture Act; provided, however, that neither this Section nor the Trust Indenture Act shall be deemed to authorize any court to require such an undertaking or to make such an assessment in any suit instituted by the Partnership or the Trustee. SECTION 6.15 Waiver of Usury, Stay or Extension Laws. The Partnership covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any usury, stay or extension law wherever enacted, now or at any time hereafter in force, which may affect the covenants or the performance of this Indenture; and the Partnership (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted. ARTICLE VII TRUSTEE SECTION 7.01 Certain Duties and Responsibilities. (a) If an Event of Default has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in its exercise, as a prudent man would exercise or use under the circumstances in the conduct of his own affairs. (b) Except during the continuance of an Event of Default: (i) the duties of the Trustee shall be determined solely by the express provisions of this Indenture and the Trustee need perform only those duties that are specifically set forth in this Indenture and no others, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and (ii) in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture. However, in the case of any such certificates or opinions which by any provision hereof are specifically required to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Indenture (but need not confirm or investigate the accuracy of mathematical calculations or other facts stated therein). (c) The Trustee may not be relieved from liabilities for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that: 45 (i) this paragraph does not limit the effect of paragraph (b) of this Section; (ii) the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer, unless it is proved that the Trustee was negligent in ascertaining the pertinent facts; and (iii) the Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 6.12 hereof. (d) Whether or not therein expressly so provided, every provision of this Indenture that in any way relates to the Trustee is subject to paragraphs (a), (b), and (c) of this Section. (e) No provision of this Indenture shall require the Trustee to expend or risk its own funds or incur any liability. (f) The Trustee shall not be liable for interest on any money received by it except as the Trustee may agree in writing with the Partnership. Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law. SECTION 7.02 Notice of Defaults. If a Default occurs and is continuing with respect to the Notes, the Trustee shall, within 90 days after it occurs, transmit, in the manner and to the extent provided in Section 313(c) of the Trust Indenture Act, notice of all uncured or unwaived Defaults actually known to it; provided, however, that, except in the case of a Default in payment of the principal of or interest on the Notes, the Trustee may withhold the notice if and so long as the board of directors, the executive committee or a trust committee of its directors and/or its Responsible Officers in good faith determines that withholding such notice is in the interests of Holders; provided further, however, that, in the case of any default or breach of the character specified in Section 6.01(c) with respect to the Notes, no such notice to Holders shall be given until at least 60 days after the occurrence thereof. SECTION 7.03 Certain Rights of Trustee. Subject to the provisions of Section 7.01: (a) the Trustee may conclusively rely on and shall be protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document reasonably believed by it to be genuine and to have been signed or presented by the proper party or parties; (b) any request, direction, order or demand of the Partnership mentioned herein shall be sufficiently evidenced by a Partnership Request or Partnership Order (other than delivery of any Security to the Trustee for authentication and delivery pursuant to Section 2.02, 46 which shall be sufficiently evidenced as provided therein) and any resolution of the Partnership Policy Committee shall be sufficiently evidenced; (c) whenever in the administration of this Indenture the Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Trustee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, rely upon an Officers' Certificate; (d) the Trustee may consult with counsel of its selection and the advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon; (e) the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders pursuant to this Indenture, unless such Holders shall have offered to the Trustee security or indemnity satisfactory to it against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction; (f) the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit; (g) the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys and the Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder; (h) the Trustee may request that the Partnership deliver an Officers' Certificate setting forth the names of individuals and/or titles of officers authorized at such time to take specified actions pursuant to this Indenture, which Officers' Certificate may be signed by any person authorized to sign an Officers' Certificate, including any person specified as so authorized in any such certificate previously delivered and not superseded; (i) the Trustee shall not be liable for any action taken, suffered, or omitted to be taken by it in good faith and reasonably believed by it to be authorized or within the discretion or rights or powers conferred upon it by this Indenture; (j) the Trustee shall not be deemed to have notice of any Default or Event of Default unless a Responsible Officer of the Trustee has actual knowledge thereof or unless written notice of any event which is in fact such a default is received by the Trustee at the Corporate Trust Office of the Trustee, and such notice references the Notes and this Indenture; and (k) the rights, privileges, protections, immunities and benefits given to the Trustee, including, without limitation, its right to be indemnified, are extended to, and shall be 47 enforceable by, the Trustee in each of its capacities hereunder, and to each agent, custodian and other Person employed to act hereunder. SECTION 7.04 Not Responsible for Recitals or Issuance of Notes. The recitals contained herein and in the Notes, except the Trustee's certificates of authentication, shall be taken as the statements of the Partnership, and the Trustee or any Authenticating Agent assumes no responsibility for their correctness. Neither the Trustee nor any Authenticating Agent makes any representations as to the validity or sufficiency of this Indenture or of the Notes. The Trustee or any Authenticating Agent shall not be accountable for the use or application by the Partnership of Notes or the proceeds thereof. SECTION 7.05 May Hold Notes. The Trustee, any Authenticating Agent, any Paying Agent, any Registrar or any other agent of the Partnership, in its individual or any other capacity, may become the owner or pledgee of Notes and, subject to Sections 7.08 and 7.13, may otherwise deal with the Partnership with the same rights it would have if it were not Trustee, Authenticating Agent, Paying Agent, Registrar or such other agent. SECTION 7.06 Money Held in Trust. Money held by the Trustee in trust hereunder need not be segregated from other funds except to the extent required by law. The Trustee shall be under no liability for interest on any money received by it hereunder except as otherwise agreed in writing with the Partnership. SECTION 7.07 Compensation and Reimbursement. The Partnership and the Guarantor jointly and severally agree: (a) to pay to the Trustee from time to time such compensation as shall be agreed in writing from time to time between the Partnership and the Trustee for all services rendered by it hereunder (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust); (b) except as otherwise expressly provided herein, to reimburse the Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by the Trustee in accordance with any provision of this Indenture (including the reasonable compensation and the expenses and disbursements of its agents and counsel), except any such expense, disbursement or advance as may be attributable to its negligence or willful misconduct; and (c) to indemnify each of the Trustee and any predecessor Trustee for, and to hold it harmless against, any and all loss, liability, damages, claim or expense incurred without negligence or bad faith on its part, arising out of or in connection with the acceptance or administration of the trust or trusts hereunder, including the costs and expenses of defending itself against any claim (whether asserted by the Partnership, a Holder or another Person) or 48 liability in connection with the exercise or performance of any of its powers or duties hereunder, except those attributable to its negligence or willful misconduct. The obligations of the Partnership and the Guarantor under this Section to compensate the Trustee and to pay or reimburse the Trustee for expenses, disbursements and advances shall constitute additional indebtedness when such obligations have been past due for 90 days. Such additional indebtedness shall be secured by a lien prior to that of the Notes upon all property and funds held or collected by the Trustee as such, except funds held in trust for the benefit of the Holders of particular Notes. Without limiting any rights available to the Trustee under applicable law, when the Trustee incurs expenses or renders services in connection with an Event of Default specified in Section 6.01(d) or Section 6.01(e), the expenses (including the reasonable charges and expenses of its counsel) and the compensation for such services are intended to constitute expenses of administration under any applicable provisions of the Bankruptcy Code. The provisions of this Section shall survive the satisfaction and discharge of this Indenture, the resignation or removal of the Trustee and the defeasance of the Notes. SECTION 7.08 Disqualification; Conflicting Interests. If the Trustee has or shall acquire a conflicting interest within the meaning of the Trust Indenture Act, the Trustee shall either eliminate such interest or resign, to the extent and in the manner provided by, and subject to the provisions of, the Trust Indenture Act and this Indenture. SECTION 7.09 Corporate Trustee Required; Eligibility. There shall at all times be one Trustee hereunder which shall be a Person that is eligible pursuant to the Trust Indenture Act to act as such and has a combined capital and surplus required by the Trust Indenture Act. If such Person publishes reports of condition at least annually, pursuant to law or to the requirements of a supervising or examining authority, then for the purposes of this Section, the combined capital and surplus of such Person shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section, it shall resign immediately in the manner and with the effect hereinafter specified in this Article. SECTION 7.10 Resignation and Removal; Appointment of Successor. No resignation or removal of the Trustee and no appointment of a successor Trustee pursuant to this Article shall become effective until the acceptance of appointment by the successor Trustee in accordance with the applicable requirements of Section 7.11. The Trustee may resign at any time with respect to the Notes by giving written notice thereof to the Partnership and the Guarantor. If the instrument of acceptance by a successor Trustee required by Section 7.11 shall not have been delivered to the Trustee within 30 days after the giving of such notice of resignation, the resigning Trustee may petition, at the expense of the 49 Partnership, any court of competent jurisdiction for the appointment of a successor Trustee with respect to the Notes. The Trustee may be removed at any time with respect to the Notes by Act of the Holders of a majority in principal amount of the Notes then outstanding, delivered to the Trustee and to the Partnership. If the instrument of acceptance by a successor Trustee required by Section 7.11 shall not have been delivered to the Trustee within 30 days after the giving of such notice of removal, the Trustee being removed may petition, at the expense of the Partnership, any court of competent jurisdiction for the appointment of a successor Trustee with respect to the Notes. If at any time: (1) the Trustee shall fail to comply with Section 7.08 after written request therefor by the Partnership, the Guarantor, or by any Holder who has been a bona fide Holder of a Security for at least six months, or (2) the Trustee shall cease to be eligible under Section 7.09 and shall fail to resign after written request therefor by the Partnership, the Guarantor, or by any such Holder, or (3) the Trustee shall become incapable of acting or shall be adjudged a bankrupt or insolvent or a receiver of the Trustee or of its property shall be appointed or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation, then, in any such case, (A) the Partnership may remove the Trustee, or (B) subject to Section 6.14, any Holder who has been a bona fide Holder of a Security for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Trustee with respect to all Notes and the appointment of a successor Trustee or Trustees. If the Trustee shall resign, be removed or become incapable of acting, or if a vacancy shall occur in the office of Trustee for any cause, with respect to the Notes, the Partnership shall promptly appoint a successor Trustee or Trustees with respect to the Notes (it being understood that any such successor Trustee may be appointed with respect to the Notes and that at any time there shall be only one Trustee with respect to the Notes) and shall comply with the applicable requirements of Section 7.11. If, within one year after such resignation, removal or incapability, or the occurrence of such vacancy, a successor Trustee with respect to the Notes shall be appointed by Act of the Holders of a majority in principal amount of the Notes delivered to the Partnership, the Guarantor, and the retiring Trustee, the successor Trustee so appointed shall, forthwith upon its acceptance of such appointment in accordance with the applicable requirements of Section 7.11, become the successor Trustee with respect to the Notes and to that extent supersede the successor Trustee appointed by the Partnership. If no successor Trustee with respect to the Notes shall have been so appointed by the Partnership or the Holders and accepted appointment in the manner required by Section 7.11, any Holder who has been a bona fide Holder of Notes for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the appointment of a successor Trustee with respect to the Notes. 50 The Partnership shall give notice of each resignation and each removal of the Trustee and each appointment of a successor Trustee in the manner provided in Section 10.02. Each notice shall include the name of the successor Trustee with respect to the Notes and the address of its Corporate Trust Office. SECTION 7.11 Acceptance of Appointment by Successor. (a) In case of the appointment hereunder of a successor Trustee with respect to all Notes, every such successor Trustee so appointed shall execute, acknowledge and deliver to the Partnership, the Guarantor, and to the retiring Trustee an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Trustee shall become effective and such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee; but, on the request of the Partnership, the Guarantor, or the successor Trustee, such retiring Trustee shall, upon payment of its charges, execute and deliver an instrument transferring to such successor Trustee all the rights, powers and trusts of the retiring Trustee and shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee hereunder. (b) Upon request of any such successor Trustee, the Partnership and the Guarantor shall execute any and all instruments for more fully and certainly vesting in and confirming to such successor Trustee all such rights, powers and trusts referred to in paragraph (a) of this Section. (c) No successor Trustee shall accept its appointment unless at the time of such acceptance such successor Trustee shall be qualified and eligible under this Article. SECTION 7.12 Merger, Conversion, Consolidation or Succession to Business. Any corporation into which the Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any corporation succeeding to all or substantially all the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, provided such corporation shall be otherwise qualified and eligible under this Article, without the execution or filing of any paper or any further act on the part of any of the parties hereto. In case any Notes shall have been authenticated, but not delivered, by the Trustee then in office, any successor by merger, conversion or consolidation to such authenticating Trustee may adopt such authentication and deliver the Notes so authenticated with the same effect as if such successor Trustee had itself authenticated such Notes. SECTION 7.13 Preferential Collection of Claims Against Partnership. If and when the Trustee shall be or become a creditor directly or indirectly, secured or unsecured, of the Partnership, the Guarantor, or any other obligor upon the Notes, the Trustee shall be subject to the provisions of the Trust Indenture Act regarding the collection of claims against the Partnership, the Guarantor, or any such other obligor. 51 SECTION 7.14 Appointment of Authenticating Agent. The Trustee (upon notice to the Partnership and the Guarantor) may appoint an Authenticating Agent or Agents which shall be authorized to act on behalf of the Trustee to authenticate the Notes (in accordance with procedures acceptable to the Trustee) and upon exchange, registration of transfer or partial redemption thereof or pursuant to Section 2.06, and Notes so authenticated shall be entitled to the benefits of this Indenture and shall be valid and obligatory for all purposes as if authenticated by the Trustee hereunder. Wherever reference is made in this Indenture to the authentication and delivery of Notes by the Trustee or the Trustee's certificate of authentication, such reference shall be deemed to include authentication and delivery on behalf of the Trustee by an Authenticating Agent and a certificate of authentication executed on behalf of the Trustee by an Authenticating Agent. Each Authenticating Agent shall be acceptable to the Partnership and shall at all times be a corporation organized and doing business under the laws of the United States of America, any State thereof or the District of Columbia, authorized under such laws to act as Authenticating Agent, having a combined capital and surplus of not less than $50,000,000 and subject to supervision or examination by federal or state authority. If such Authenticating Agent publishes reports of condition at least annually, pursuant to law or to the requirements of said supervising or examining authority, then for the purposes of this Section, the combined capital and surplus of such Authenticating Agent shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time an Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section, such Authenticating Agent shall resign immediately in the manner and with the effect specified in this Section. Any corporation into which an Authenticating Agent may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which such Authenticating Agent shall be a party, or any corporation succeeding to all or substantially all of the corporate agency or corporate trust business of such Authenticating Agent, shall continue to be an Authenticating Agent, provided such corporation shall be otherwise eligible under this Section, without the execution or filing of any paper or any further act on the part of the Trustee or such Authenticating Agent. An Authenticating Agent may resign at any time by giving written notice thereof to the Trustee, to the Partnership, and to the Guarantor. The Trustee may at any time terminate the agency of an Authenticating Agent by giving written notice thereof to such Authenticating Agent, to the Partnership, and to the Guarantor. Upon receiving such a notice of resignation or upon such a termination, or in case at any time such Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section, the Trustee may appoint a successor Authenticating Agent which shall be acceptable to the Partnership and shall mail written notice of such appointment by first-class mail, postage prepaid, to all Holders, as their names and addresses appear in the security register of the Trustee. Any successor Authenticating Agent upon acceptance of its appointment hereunder shall become vested with all the rights, powers and duties of its predecessor hereunder, with like effect as if originally named as an Authenticating Agent. No successor Authenticating Agent shall be appointed unless eligible under the provisions of this Section. 52 The Partnership agrees to pay to each Authenticating Agent from time to time reasonable compensation for its services under this Section. If an appointment is made pursuant to this Section, the Notes may have endorsed thereon, in addition to the Trustee's certificate of authentication, an alternative certificate of authentication in the following form: This is one of the Notes. BANK ONE TRUST COMPANY, N.A. As Trustee By: ________________________________________ As Authenticating Agent By: ________________________________________ Authorized Officer SECTION 7.15 Reports by Trustee to Holders of the Notes. (a) Within 60 days after each May 15 commencing April 1, 2002, the Trustee shall transmit to Holders such reports concerning the Trustee and its actions under this Indenture to the extent required pursuant to the Trust Indenture Act at the times and in the manners provided pursuant thereto. (b) A copy of each such report shall, at the time of such transmission to Holders, be filed by the Trustee with each stock exchange upon which the Notes are listed, with the Commission and with the Partnership. The Partnership will promptly notify the Trustee when the Notes are listed on any stock exchange. ARTICLE VIII LEGAL DEFEASANCE AND COVENANT DEFEASANCE SECTION 8.01 Option to Effect Legal Defeasance or Covenant Defeasance. The Partnership may, at the option of the Partnership Policy Committee evidenced by a resolution set forth in an exhibit to an Officers' Certificate, at any time, elect to have either Section 8.02 or 8.03 hereof be applied to all outstanding Notes upon compliance with the conditions set forth below in this Article VIII. 53 SECTION 8.02 Legal Defeasance and Discharge. Upon the Partnership's exercise under Section 8.01 hereof of the option applicable to this Section 8.02, the Partnership shall, subject to the satisfaction of the conditions set forth in Section 8.04 hereof, be deemed to have been discharged from its obligations with respect to all outstanding Notes on the date the conditions set forth below are satisfied (hereinafter, "Legal Defeasance"), except for (i) the rights of Holders of outstanding Notes to receive payments in respect of the principal of, premium, if any, and interest and Liquidated Damages, if any, on such Notes when such payments are due from the trust referred to below, (ii) the Partnership's obligations with respect to the Notes concerning issuing temporary Notes, registration of Notes, mutilated, destroyed, lost or stolen Notes and the maintenance of an office or agency for payment and money for security payments held in trust, (iii) the rights, powers, trusts, duties and immunities of the Trustee, and the Partnership's and Guarantor's obligations in connection therewith, (iv) rights of registration of transfer and exchange of the Notes and the Partnership's optional rights, (v) the obligations of the Partnership under Section 4.02, (vi) rights of registration of transfer and exchange of the Notes and the Partnership's optional right of redemption and (iv) the Legal Defeasance provisions of this Indenture. For this purpose, Legal Defeasance means that the Partnership, the Guarantor, and any other obligor on the Notes shall be deemed to have paid and discharged the entire Indebtedness represented by the outstanding Notes, which shall thereafter be deemed to be "outstanding" only for the purposes of Section 8.05 hereof and the other Sections of this Indenture referred to in clauses (a) and (b) set forth in this sentence below, and to have satisfied all its other obligations under such Notes and this Indenture (and the Trustee, on demand of and at the expense of the Partnership, shall execute proper instruments acknowledging the same), except for the following provisions which shall survive until otherwise terminated or discharged hereunder: (a) the rights of Holders of outstanding Notes to receive solely from the trust fund described in Section 8.04 hereof, and as more fully set forth in such Section, payments in respect of the principal of, premium, if any, and interest and Liquidated Damages, if any, on such Notes when such payments are due, (b) the Partnership's obligations with respect to such Notes under Article II and Section 4.02 hereof, (c) the rights, powers, trusts, duties and immunities of the Trustee hereunder and the Partnership's obligations in connection therewith and (d) this Article VIII. Subject to compliance with this Article VIII, the Partnership may exercise its option under this Section 8.02 notwithstanding the prior exercise of its option under Section 8.03 hereof. SECTION 8.03 Covenant Defeasance. Upon the Partnership's exercise under Section 8.01 hereof of the option applicable to this Section 8.03, the Partnership and any other obligor, including the Guarantor, shall, subject to the satisfaction of the conditions set forth in Section 8.04 hereof, be released from its obligations under the covenants contained in Sections 4.03, 4.04, 4.06, 4.07 and Article V hereof with respect to the outstanding Notes on and after the date the conditions set forth below are satisfied (hereinafter, "Covenant Defeasance"), and the Notes shall thereafter be deemed not "outstanding" for the purposes of any direction, waiver, consent or declaration or act of Holders (and the consequences of any thereof) in connection with such covenants, but shall continue to be deemed "outstanding" for all other purposes hereunder (it being understood that such Notes shall not be deemed outstanding for accounting purposes). For this purpose, Covenant Defeasance means that, with respect to the outstanding Notes, the Partnership and the Guarantor 54 may omit to comply with and shall have no liability in respect of any term, condition or limitation set forth in any such covenant, whether directly or indirectly, by reason of any reference elsewhere herein to any such covenant or by reason of any reference in any such covenant to any other provision herein or in any other document and such omission to comply shall not constitute a Default or an Event of Default under Section 6.01 hereof, but, except as specified above, the remainder of this Indenture and such Notes shall be unaffected thereby. In addition, upon the Partnership's exercise under Section 8.01 hereof of the option applicable to this Section 8.03 hereof, subject to the satisfaction of the conditions set forth in Section 8.04 hereof, Sections 6.01(c) through 6.01(g) hereof shall not constitute Events of Default. SECTION 8.04 Conditions to Legal or Covenant Defeasance. The following shall be the conditions to the application of either Section 8.02 or 8.03 hereof to the outstanding Notes: In order to exercise either Legal Defeasance or Covenant Defeasance: (a) the Partnership must irrevocably deposit with the Trustee, in trust, for the benefit of the Holders, cash in U.S. dollars, non-callable Government Securities, or a combination thereof, in such amounts as will be sufficient, in the opinion of a nationally recognized firm of independent public accountants, to pay the principal of, premium, if any, and interest and Liquidated Damages, if any, on the outstanding Notes on the Stated Maturity or on the applicable Redemption Date, as the case may be, and the Partnership must specify whether the Notes are being defeased to maturity or to a particular Redemption Date; (b) in the case of an election under Section 8.02 hereof, the Partnership shall have delivered to the Trustee an Opinion of Counsel in the United States reasonably acceptable to the Trustee confirming that (A) the Partnership has received from, or there has been published by, the Internal Revenue Service a ruling or (B) since the date of this Indenture, there has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon such Opinion of Counsel shall confirm that, the Holders of the outstanding Notes will not recognize income, gain or loss for federal income tax purposes as a result of such Legal Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance had not occurred; (c) in the case of an election under Section 8.03 hereof, the Partnership shall have delivered to the Trustee an Opinion of Counsel in the United States reasonably acceptable to the Trustee confirming that the Holders of the outstanding Notes will not recognize income, gain or loss for federal income tax purposes as a result of such Covenant Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred; (d) no Default or Event of Default shall have occurred and be continuing on the date of such deposit (other than a Default or Event of Default resulting from the borrowing of funds to be applied to such deposit) or insofar as Section 6.01(d) or 6.01(e) hereof is concerned, at any time in the period ending on the 91st day after the date of deposit; 55 (e) such Legal Defeasance or Covenant Defeasance will not result in a breach or violation of, or constitute a default under, any material agreement or instrument (other than this Indenture) to which the Partnership or any of its Subsidiaries is a party or by which the Partnership or any of its Subsidiaries is bound; (f) the Partnership shall have delivered to the Trustee an Opinion of Counsel to the effect that on the 91st day following the deposit, the trust funds will not be subject to the effect of any applicable bankruptcy, insolvency, reorganization or similar laws affecting creditors' rights generally; (g) the Partnership shall have delivered to the Trustee an Officers' Certificate stating that the deposit was not made by the Partnership with the intent of preferring the Holders of Notes over the other creditors of the Partnership with the intent of defeating, hindering, delaying or defrauding creditors of the Partnership or others; and (h) the Partnership shall have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent provided for or relating to the Legal Defeasance or the Covenant Defeasance have been complied with. SECTION 8.05 Deposited Money and Government Securities to be Held in Trust; Other Miscellaneous Provisions. Subject to Section 8.06 hereof, all money and non-callable Government Securities (including the proceeds thereof) deposited with the Trustee (or other qualifying trustee, collectively, for purposes of this Section 8.05, the "Trustee") pursuant to Section 8.04 hereof in respect of the outstanding Notes shall be held in trust and applied by the Trustee, in accordance with the provisions of such Notes and this Indenture, to the payment, either directly or through any Paying Agent (including the Partnership acting as Paying Agent) as the Trustee may determine, to the Holders of such Notes of all sums due and to become due thereon in respect of principal, premium, if any, and interest and Liquidated Damages, if any, but such money need not be segregated from other funds except to the extent required by law. The Partnership shall pay and indemnify the Trustee against any tax, fee or other charge imposed on or assessed against the cash or non-callable Government Securities deposited pursuant to Section 8.04 hereof or the principal and interest received in respect thereof other than any such tax, fee or other charge which by law is for the account of the Holders of the outstanding Notes. Anything in this Article VIII to the contrary notwithstanding, the Trustee shall deliver or pay to the Partnership from time to time upon the request of the Partnership any money or non-callable Government Securities held by it as provided in Section 8.04 hereof which, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee (which may be the opinion delivered under Section 8.04(h) hereof), are in excess of the amount thereof that would then be required to be deposited to effect an equivalent Legal Defeasance or Covenant Defeasance. 56 SECTION 8.06 Repayment to Partnership. Any money deposited with the Trustee or any Paying Agent, or then held by the Partnership, in trust for the payment of the principal of, premium, if any, or interest and Liquidated Damages, if any, on any Note and remaining unclaimed for two years after such principal, and premium, if any, or interest and Liquidated Damages, if any, has become due and payable shall be paid to the Partnership on its request or (if then held by the Partnership) shall be discharged from such trust; and the Holder of such Note shall thereafter, as a secured creditor, look only to the Partnership for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Partnership as trustee thereof, shall thereupon cease; provided, however, that the Trustee or such Paying Agent, before being required to make any such repayment, may at the expense of the Partnership cause to be published once, in an Authorized Newspaper in each Place of Payment with respect to the Notes, notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such notification or publication, any unclaimed balance of such money then remaining will be repaid to the Partnership. SECTION 8.07 Reinstatement. If the Trustee or Paying Agent is unable to apply any U.S. dollars or non-callable Government Securities in accordance with Section 8.02 or 8.03 hereof, as the case may be, by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, then the Partnership's and the Guarantor's obligations under this Indenture and the Notes shall be revived and reinstated as though no deposit had occurred pursuant to Section 8.02 or 8.03 hereof until such time as the Trustee or Paying Agent is permitted to apply all such money in accordance with Section 8.02 or 8.03 hereof, as the case may be; provided, however, that, if the Partnership or the Guarantor makes any payment of principal of, premium, if any, or interest and Liquidated Damages, if any, on any Note following the reinstatement of its obligations, the Partnership or the Guarantor shall be subrogated to the rights of the Holders of such Notes to receive such payment from the money held by the Trustee or Paying Agent. ARTICLE IX AMENDMENT, SUPPLEMENT AND WAIVER SECTION 9.01 Without Consent of Holders of Notes. Notwithstanding Section 9.02 hereof, the Partnership, the Guarantor and the Trustee may amend or supplement this Indenture or the Notes without the consent of any Holder of a Note: (a) to cure any ambiguity, defect or inconsistency; (b) to provide for uncertificated Notes in addition to or in place of certificated Notes or to alter the provisions of Article II hereof (including the related definitions) in a manner that does not materially adversely affect any Holder; 57 (c) to provide for the assumption of the Partnership's or the Guarantor's obligations to the Holders of the Notes in the case of a merger, consolidation or sale of assets of the Partnership pursuant to Article V hereof; (d) to make any change that would provide any additional rights or benefits to the Holders of the Notes or that does not adversely affect the legal rights hereunder of any such Holder; (e) to comply with requirements of the SEC in order to effect or maintain the qualification of this Indenture under the TIA; or (f) to reflect the release of the Guarantor from its Guarantee, or the addition of any Holding Subsidiary of the Partnership or any other Person as a guarantor hereunder, in the manner provided by this Indenture. Upon the request of the Partnership accompanied by a resolution of the Partnership Policy Committee authorizing the execution of any such amended or supplemental Indenture, and upon receipt by the Trustee of the documents described in Section 7.03 hereof, the Trustee shall join with the Partnership and the Guarantor in the execution of any amended or supplemental Indenture authorized or permitted by the terms of this Indenture and to make any further appropriate agreements and stipulations that may be therein contained, but the Trustee shall not be obligated to enter into such amended or supplemental Indenture that affects its own rights, duties, liabilities or immunities under this Indenture or otherwise. SECTION 9.02 With Consent of Holders of Notes. Except as provided below in this Section 9.02, the Partnership, the Guarantor and the Trustee may amend or supplement this Indenture and the Notes may be amended or supplemented with the consent of the Holders of at least a majority in principal amount of the Notes then outstanding (including, without limitation, consents obtained in connection with a tender offer or exchange offer for the Notes), and, subject to Sections 6.08 and 6.13 hereof, any existing Default or Event of Default (other than a Default or Event of Default in the payment of the principal of, premium, if any, or interest and Liquidated Damages, if any, on the Notes, except a payment default resulting from an acceleration that has been rescinded) or compliance with any provision of this Indenture or the Notes may be waived with the consent of the Holders of a majority in principal amount of the then outstanding Notes (including consents obtained in connection with a tender offer or exchange offer for the Notes). Upon the request of the Partnership accompanied by a resolution of the Partnership Policy Committee authorizing the execution of any such amended or supplemental Indenture, and upon the filing with the Trustee of evidence satisfactory to the Trustee of the consent of the Holders of Notes as aforesaid, and upon receipt by a Responsible Officer of the Trustee of the documents described in Section 7.03 hereof, the Trustee shall join with the Partnership and the Guarantor in the execution of such amended or supplemental Indenture unless such amended or supplemental Indenture affects the Trustee's own rights, duties, liabilities or immunities under this Indenture or otherwise, in which case the Trustee may in its discretion, but shall not be obligated to, enter into such amended or supplemental Indenture. 58 It shall not be necessary for the consent of the Holders of Notes under this Section 9.02 to approve the particular form of any proposed amendment or waiver, but it shall be sufficient if such consent approves the substance thereof. After an amendment, supplement or waiver under this Section becomes effective, the Partnership shall mail to the Holders of Notes affected thereby a notice briefly describing the amendment, supplement or waiver. Any failure of the Partnership to mail such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such amended or supplemental Indenture or waiver. Subject to Sections 6.08 and 6.13 hereof, the Holders of a majority in aggregate principal amount of the Notes then outstanding may waive compliance in a particular instance by the Partnership with any provision of this Indenture or the Notes. However, without the consent of each Holder affected, an amendment or waiver may not (with respect to any Notes held by a nonconsenting Holder): (a) reduce the principal amount of Notes whose Holders must consent to an amendment, supplement or waiver of any provision of this Indenture or the Notes; (b) reduce the principal of or change the fixed maturity of any Note or alter or waive in any manner that adversely affects the rights of any Holder of Notes any of the provisions with respect to the redemption of the Notes; (c) reduce the rate of or change the time for payment of interest, including default interest, or Liquidated Damages, if any, on any Note; (d) waive a Default or Event of Default in the payment of principal of or premium, if any, or interest or Liquidated Damages, if any, on the Notes (except a rescission of acceleration of the Notes by the Holders of at least a majority in aggregate principal amount of the then outstanding Notes and a waiver of the payment default that resulted from such acceleration); (e) make any Note payable in money other than that stated in the Notes; (f) make any change that adversely affects the rights of any Holder of Notes in the provisions of this Indenture relating to waivers of past Defaults or make any change to the rights of Holders of Notes to receive payments of principal of or interest or Liquidated Damages, if any, on the Notes; (g) waive a redemption payment with respect to any Note; or (h) make any change in Section 6.08 or 6.13 hereof or in the foregoing amendment and waiver provisions. SECTION 9.03 Compliance with Trust Indenture Act. Every amendment or supplement to this Indenture or the Notes shall be set forth in a amended or supplemental Indenture that complies with the TIA as then in effect. 59 SECTION 9.04 Revocation and Effect of Consents. Until an amendment, supplement or waiver becomes effective, a consent to it by a Holder of a Note is a continuing consent by the Holder of a Note and every subsequent Holder of a Note or portion of a Note that evidences the same debt as the consenting Holder's Note, even if notation of the consent is not made on any Note. However, any such Holder of a Note or subsequent Holder of a Note may revoke the consent as to its Note if the Trustee receives written notice of revocation before the date the waiver, supplement or amendment becomes effective. An amendment, supplement or waiver becomes effective in accordance with its terms and thereafter binds every Holder. SECTION 9.05 Notation on or Exchange of Notes. The Trustee may place an appropriate notation about an amendment, supplement or waiver on any Note thereafter authenticated. The Partnership, in exchange for all Notes, may issue and the Trustee shall authenticate new Notes that reflect the amendment, supplement or waiver. Failure to make the appropriate notation or issue a new Note shall not affect the validity and effect of such amendment, supplement or waiver. SECTION 9.06 Trustee to Sign Amendments, Etc. The Trustee shall sign any amended or supplemental Indenture authorized pursuant to this Article IX if the amendment or supplement does not adversely affect the rights, duties, liabilities or immunities of the Trustee. The Trustee may, but shall not be obligated to, enter into any such supplemental indenture which affects the Trustee's own rights, duties, liabilities or immunities under this Indenture or otherwise. The Partnership may not sign an amendment or supplemental Indenture until the Partnership Policy Committee approves it. In executing any amended or supplemental indenture, the Trustee shall be entitled to receive and (subject to Section 7.01 hereof) shall be fully protected in relying upon, an Officers' Certificate and an Opinion of Counsel stating that the execution of such amended or supplemental indenture is authorized or permitted by this Indenture. ARTICLE X MISCELLANEOUS SECTION 10.01 Trust Indenture Act Controls. If any provision of this Indenture limits, qualifies or conflicts with the duties imposed by TIA ss.318(c), the imposed duties shall control. SECTION 10.02 Notices. Any notice or communication by the Partnership or the Trustee to the others is duly given if in writing and delivered in Person or mailed by first class mail (registered or certified, return 60 receipt requested), telecopier or overnight air courier guaranteeing next day delivery, to the others' address: If to the Partnership: Northern Border Partners, L.P. c/o Northern Plains Natural Gas Company 1111 South 103rd Street Omaha, Nebraska 68124-1000 Telecopier No.: (402) 398-7871 Attention: Director of Finance If to the Trustee: Bank One Trust Company, N.A. 1 Bank One Plaza, Suite IL1-0126 Chicago, Illinois 60670-0126 Telecopier No.: (312) 407-1708 Attention: Corporate Trust Services Division The Partnership or the Trustee, by notice to the others may designate additional or different addresses for subsequent notices or communications. All notices and communications (other than those sent to Holders) shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; five Business Days after being deposited in the mail, postage prepaid, if mailed; when answered back; when receipt acknowledged, if telecopied; and the next Business Day after timely delivery to the courier, if sent by overnight air courier guaranteeing next day delivery. Any notice or communication to a Holder shall be mailed by first class mail, certified or registered, return receipt requested, or by overnight air courier guaranteeing next day delivery to its address shown on the register kept by the Registrar. Any notice or communication shall also be so mailed to any Person described in TIA ss. 313(c), to the extent required by the TIA. Failure to mail a notice or communication to a Holder or any defect in it shall not affect its sufficiency with respect to other Holders. If a notice or communication is mailed in the manner provided above within the time prescribed, it is duly given, whether or not the addressee receives it. If the Partnership mails a notice or communication to Holders, it shall mail a copy to the Trustee and each Agent at the same time. SECTION 10.03 Communication by Holders of Notes with Other Holders of Notes. Holders may communicate pursuant to TIA ss. 312(b) with other Holders with respect to their rights under this Indenture or the Notes. The Partnership, the Trustee, the Registrar and anyone else shall have the protection of TIA ss. 312(c). 61 SECTION 10.04 Certificate and Opinion as to Conditions Precedent. Upon any request or application by the Partnership or the Guarantor to the Trustee to take any action under this Indenture, the Partnership shall furnish to the Trustee: (a) an Officers' Certificate in form and substance reasonably satisfactory to the Trustee (which shall include the statements set forth in Section 10.05 hereof) stating that, in the opinion of the signers, all conditions precedent and covenants, if any, provided for in this Indenture relating to the proposed action have been satisfied; and (b) an Opinion of Counsel in form and substance reasonably satisfactory to the Trustee (which shall include the statements set forth in Section 10.05 hereof) stating that, in the opinion of such counsel, all such conditions precedent and covenants have been satisfied. SECTION 10.05 Statements Required in Certificate or Opinion. Each certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture (other than a certificate provided pursuant to TIA ss. 314(a)(4)) shall comply with the provisions of TIA ss. 314(e) and shall include: (a) a statement that the Person making such certificate or opinion has read such covenant or condition; (b) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (c) a statement that, in the opinion of such Person, he or she has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been satisfied; and (d) a statement as to whether or not, in the opinion of such Person, such condition or covenant has been satisfied. SECTION 10.06 Rules by Trustee and Agents. The Trustee may make reasonable rules for action by or at a meeting of Holders. The Registrar or Paying Agent may make reasonable rules and set reasonable requirements for its functions. SECTION 10.07 Non-Recourse to the General Partners; No Personal Liability of Directors, Officers, Employees or Partners. Obligations of the Partnership, or the Guarantor, as such, under this Indenture and the Notes hereunder are non-recourse to the General Partners, and their respective Affiliates (other than the Partnership and the Guarantor), and payable only out of cash flow and assets of the Partnership and the Guarantor. The Trustee, and each Holder of a Note by its acceptance thereof, will be deemed to have agreed in this Indenture that (1) none of the General Partners nor 62 their assets (nor any of their respective Affiliates other than the Partnership or the Guarantor, or their respective assets) shall be liable for any of the obligations of the Partnership or the Guarantor under this Indenture or such Notes, and (2) no director, officer, employee, stockholder or unitholder, as such, of the Partnership, the Guarantor, the Trustee, the General Partners or any Affiliate of any of the foregoing entities and no member of the Partnership Policy Committee or the Partnership's Audit Committee shall have any personal liability in respect of the obligations of the Partnership or the Guarantor under this Indenture or such Notes by reason of his, her or its status. SECTION 10.08 Governing Law. THE INTERNAL LAWS OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO CONSTRUE THIS INDENTURE AND THE NOTES. SECTION 10.09 No Adverse Interpretation of Other Agreements. This Indenture may not be used to interpret any other indenture, loan or debt agreement of the Partnership or its Subsidiaries or of any other Person. Any such indenture, loan or debt agreement may not be used to interpret this Indenture. SECTION 10.10 Successors. All agreements of the Partnership in this Indenture and the Notes shall bind its successors. All agreements of the Trustee in this Indenture shall bind its successors. SECTION 10.11 Severability. In case any provision in this Indenture or in the Notes shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. SECTION 10.12 Counterpart Originals. The parties may sign any number of copies of this Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. SECTION 10.13 Table of Contents, Headings, Etc. The Table of Contents, Cross-Reference Table and Headings of the Articles and Sections of this Indenture have been inserted for convenience of reference only, are not to be considered a part of this Indenture and shall in no way modify or restrict any of the terms or provisions hereof. SECTION 10.14 Acts of Holders; Record Dates. Any request, demand, authorization, direction, notice, consent, waiver or other action provided or permitted by this Indenture to be given or taken by Holders may be embodied in and evidenced by (a) one or more instruments of substantially similar tenor signed (either physically or by means of a facsimile or an electronic transmission, provided that such electronic 63 transmission is transmitted through the facilities of a Depositary) by such Holders in person or by agent duly appointed in writing; (b) the record of the Holders voting in favor thereof at any meeting of Holders duly called and held in accordance with the provisions of Article IX, or (c) a combination of such instruments and record. Except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments or record are delivered (either physically or by means of a facsimile or an electronic transmission, provided that such electronic transmission is transmitted through the facilities of a Depositary) to the Trustee and, where it is hereby expressly required, to the Partnership. Such instrument or instruments or record (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the "Act" of the Holders signing such instrument or instruments or of the Holders reflected by such record. Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and (subject to Section 315 of the Trust Indenture Act) conclusive in favor of the Trustee and the Partnership, if made in the manner provided in this Section. The fact and date of the execution by any Person of any such instrument or writing may be proved by the affidavit of a witness of such execution or by a certificate of a notary public or other officer authorized by law to take acknowledgments of deeds, certifying that the individual signing such instrument or writing acknowledged to him the execution thereof. Where such execution is by a signer acting in a capacity other than his individual capacity, such certificate or affidavit shall also constitute sufficient proof of his authority. The fact and date of the execution of any such instrument or writing, or the authority of the Person executing the same, may also be proved in any other manner which the Trustee deems sufficient. The ownership, principal amount and serial numbers of Notes held by any Person, and the date of commencement of such Person's holding the same, shall be proved by the security register of the Trustee. Any request, demand, authorization, direction, notice, consent, waiver or other action of the Holder of any Note shall bind every future Holder of the same Note and the Holder of every Note issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof in respect of anything done, omitted or suffered to be done by the Trustee or the Partnership in reliance thereon, whether or not notation of such action is made upon such Note. Without limiting the foregoing, a Holder entitled hereunder to give or take any action hereunder with regard to any particular Note may do so with regard to all or any part of the principal amount of such Note or by one or more duly appointed agents each of which may do so pursuant to such appointment with regard to all or any different part of such principal amount. The Partnership may set any day as the record date for the purpose of determining the Holders entitled to give or take any request, demand, authorization, direction, notice, consent, waiver or other action provided or permitted by this Indenture to be given or taken by Holders, but the Partnership shall have no obligation to do so. With regard to any record date set pursuant to this paragraph, the Holders of Notes on such record date (or their duly appointed agents), and only such Persons, shall be entitled to give or take the relevant action, whether or not such Holders remain Holders after such record date. 64 The record of any meeting of Holders shall be proved as provided in Section 11.06. ARTICLE XI MEETINGS OF HOLDERS OF NOTES SECTION 11.01 Purposes for Which Meetings May Be Called. A meeting of Holders may be called at any time and from time to time pursuant to this Article to make, give or take any request, demand, authorization, direction, notice, consent, waiver or other act provided by this Indenture to be made, given or taken by Holders. SECTION 11.02 Call, Notice and Place of Meetings. (a) The Trustee may at any time call a meeting of Holders for any purpose specified in Section 11.01, to be held at such time and at such place in the Borough of Manhattan, The City of New York as the Trustee shall determine. Notice of every meeting of Holders, setting forth the time and the place of such meeting and in general terms the action proposed to be taken at such meeting, shall be given, in the manner provided in Section 10.02, not less than 21 nor more than 180 days prior to the date fixed for the meeting. (b) In case at any time the Partnership (by or pursuant to a resolution of the Partnership Policy Committee or Officers' Certificate) or the Holders of at least 10% in principal amount of the Notes then outstanding have requested the Trustee to call a meeting of the Holders for any purpose specified in Section 11.01, by written request setting forth in reasonable detail the action proposed to be taken at the meeting, and the Trustee shall not have mailed notice of such meeting within 21 days after receipt of such request (whichever shall be required pursuant to Section 10.02) or shall not thereafter proceed to cause the meeting to be held as provided herein, then the Partnership or the Holders in the amount above specified, as the case may be, may determine the time and the place in the Borough of Manhattan, The City of New York for such meeting and may call such meeting for such purposes by giving notice thereof as provided in Section 11.02(a). SECTION 11.03 Persons Entitled to Vote at Meetings. To be entitled to vote at any meeting of Holders, a Person shall be (a) a Holder of one or more Notes, or (b) a Person appointed by an instrument in writing as proxy for a Holder or Holders by such Holder or Holders. The only Persons who shall be entitled to be present or to speak at any meeting of Holders shall be the Persons entitled to vote at such meeting and their counsel, any representatives of the Trustee and its counsel and any representatives of the Partnership and its counsel. SECTION 11.04 Quorum; Action. The presence of Persons holding Notes in an aggregate principal amount sufficient to take action upon the matter for which such meeting was called shall constitute a quorum for a meeting of Holders. In the absence of a quorum within 30 minutes after the time appointed for 65 any such meeting, the meeting shall, if convened at the request of Holders, be dissolved. In any other case, the meeting may be adjourned for a period of not less than 10 days as determined by the chairman of the meeting prior to the adjournment of such adjourned meeting. Notice of the reconvening of any adjourned meeting shall be given as provided in Section 11.02(a), except that such notice need be given only once not less than five days prior to the date on which the meeting is scheduled to be reconvened. Notice of the reconvening of an adjourned meeting shall state expressly the percentage, as provided above, of the principal amount of the Notes that shall constitute a quorum. A resolution presented to a meeting or adjourned meeting duly reconvened at which a quorum is present as aforesaid may be adopted only by the affirmative vote of the Holders of a majority in principal amount of the Notes; provided, however, that any resolution with respect to any request, demand, authorization, direction, notice, consent, waiver or other Act which this Indentures expressly provides may be made, given or taken by the Holders of a specified percentage, which is less or more than a majority in principal amount of the Notes may be adopted at a meeting or an adjourned meeting duly reconvened and at which a quorum is present as aforesaid by the affirmative vote of the Holders of such specified percentage in principal amount of the Notes. Any resolution passed or decision taken at any meeting of Holders of Notes duly held in accordance with this Section shall be binding on all the Holders, whether or not such Holders were present or represented at the meeting. SECTION 11.05 Determination of Voting Rights; Conduct and Adjournment of Meetings. (a) Notwithstanding any other provisions of this Indenture, the Trustee may make such reasonable regulations as it may deem advisable for any meeting of Holders in regard to proof of the holding of Notes and of the appointment of proxies and in regard to the appointment and duties of inspectors of votes, the submission and examination of proxies, certificates and other evidence of the right to vote, and such other matters concerning the conduct of the meeting as it shall deem appropriate. Except as otherwise permitted or required by any such regulations, the holding of Notes shall be proved in the manner specified in Section 10.14 and the appointment of any proxy shall be proved in executing the proxy witnessed or guaranteed by any trust partnership, bank or banker authorized by Section 10.14 to certify to the holding of Notes. Such regulations may provide that written instruments appointing proxies, regular on their face, may be presumed valid and genuine without the proof specified in Section 10.14 or other proof. (b) The Trustee shall, by an instrument in writing, appoint a temporary chairman of the meeting, unless the meeting shall have been called by the Partnership, or by Holders as provided in Section 11.02(b), in which case the Partnership or the Holders calling the meeting, as the case may be, shall in like manner appoint a temporary chairman. A permanent chairman and a permanent secretary of the meeting shall be elected by vote of the Persons entitled to vote a majority in principal amount of the Notes represented at the meeting. (c) At any meeting each Holder of a Note or proxy shall be entitled to one vote for each $1,000 principal amount of Notes held or represented by him; provided, however, 66 that no vote shall be cast or counted at any meeting in respect of any Note challenged as not then outstanding and ruled by the chairman of the meeting to be not then outstanding. The chairman of the meeting shall have no right to vote, except as a Holder of a Note or proxy. (d) Any meeting of Holders duly called pursuant to Section 11.02 at which a quorum is present may be adjourned from time to time by Persons entitled to vote a majority in principal amount of the Notes then outstanding represented at the meeting; and the meeting may be held as so adjourned without further notice. SECTION 11.06 Counting Votes and Recording Action of Meetings. The vote upon any resolution submitted to any meeting of Holders shall be by written ballots on which shall be subscribed the signatures of the Holders or of their representatives by proxy and the principal amounts and serial numbers of the Notes held or represented by them. The permanent chairman of the meeting shall appoint two inspectors of votes who shall count all votes cast at the meeting for or against any resolution and who shall make and file with the secretary of the meeting their verified written reports in triplicate of all votes cast at the meeting. A record of the proceedings of each meeting of Holders shall be prepared by the secretary of the meeting and there shall be attached to said record the original reports of the inspectors of votes on any vote by ballot taken thereat and affidavits by one or more persons having knowledge of the facts setting forth a copy of the notice of the meeting and showing that said notice was given as provided in Section 11.02 and, if applicable, Section 11.04. Such record shall be signed and verified by the affidavits of the permanent chairman and secretary of the meeting and a copy of same shall be delivered to the Company and another to the Trustee to be preserved by the Trustee, the latter to have attached thereto the ballots voted at the meeting. Any record so signed and verified shall be conclusive evidence of the matters therein stated. ARTICLE XII GUARANTEE OF NOTES SECTION 12.01 Unconditional Guarantee. (a) For value received, the Guarantor, hereby fully, unconditionally and absolutely guarantees (the "Guarantee") to the Holders and to the Trustee the due and punctual payment of the principal of, and premium, if any, and interest on the Notes and all other amounts due and payable under this Indenture and the Notes by the Partnership, when and as such principal, premium, if any, and interest shall become due and payable, whether at the Stated Maturity or by declaration of acceleration, call for redemption or otherwise, according to the terms of the Notes and this Indenture. (b) Failing payment when due of any amount guaranteed pursuant to the Guarantee, for whatever reason, the Guarantor will be obligated to pay the same immediately. The Guarantee hereunder is intended to be a general, unsecured, senior obligation of the Guarantor and will rank pari passu in right of payment with all Debt of the Guarantor that is not, by its terms, expressly subordinated in right of payment to the Guarantee of the Guarantor. The 67 Guarantor hereby agrees that its obligations hereunder shall be full, unconditional and absolute, irrespective of the validity, regularity or enforceability of the Notes, the Guarantee or this Indenture, the absence of any action to enforce the same, any waiver or consent by any Holder of the Notes with respect to any provisions hereof or thereof, the recovery of any judgment against the Partnership, any action to enforce the same or any other circumstance which might otherwise constitute a legal or equitable discharge or defense of the Guarantor. The Guarantor hereby agrees that in the event of a default in payment of the principal of, or premium, if any, or interest on the Notes, whether at the Stated Maturity or by declaration of acceleration, call for redemption or otherwise, legal proceedings may be instituted by the Trustee on behalf of the Holders or, subject to Section 6.07, by the Holders, on the terms and conditions set forth in this Indenture, directly against the Guarantor to enforce the Guarantee without first proceeding against the Partnership. (c) The obligations of the Guarantor under this Article XII shall be as aforesaid full, unconditional and absolute and shall not be impaired, modified, released or limited by any occurrence or condition whatsoever, including, without limitation, (i) any compromise, settlement, release, waiver, renewal, extension, indulgence or modification of, or any change in, any of the obligations and liabilities of the Partnership or the Guarantor contained in the Notes or this Indenture, (ii) any impairment, modification, release or limitation of the liability of the Partnership, the Guarantor or any of their estates in bankruptcy, or any remedy for the enforcement thereof, resulting from the operation of any present or future provision of any applicable Bankruptcy Law, as amended, or other statute or from the decision of any court, (iii) the assertion or exercise by the Partnership, the Guarantor or the Trustee of any rights or remedies under the Notes or this Indenture or their delay in or failure to assert or exercise any such rights or remedies, (iv) the assignment or the purported assignment of any property as security for the Notes, including all or any part of the rights of the Partnership or the Guarantor under this Indenture, (v) the extension of the time for payment by the Partnership or the Guarantor of any payments or other sums or any part thereof owing or payable under any of the terms and provisions of the Notes or this Indenture or of the time for performance by the Partnership or the Guarantor of any other obligations under or arising out of any such terms and provisions or the extension or the renewal of any thereof, (vi) the modification or amendment (whether material or otherwise) of any duty, agreement or obligation of the Partnership or the Guarantor set forth in this Indenture, (vii) the voluntary or involuntary liquidation, dissolution, sale or other disposition of all or substantially all of the assets, marshalling of assets and liabilities, receivership, insolvency, bankruptcy, assignment for the benefit of creditors, reorganization, arrangement, composition or readjustment of, or other similar proceeding affecting, the Partnership or the Guarantor or any of its respective assets, or the disaffirmance of the Notes, the Guarantee or this Indenture in any such proceeding, (viii) the release or discharge of the Partnership or the Guarantor from the performance or observance of any agreement, covenant, term or condition contained in any of such instruments by operation of law, (ix) the unenforceability of the Notes, the Guarantee or this Indenture or (x) any other circumstance which might otherwise constitute a legal or equitable discharge of a surety or guarantor. (d) The Guarantor hereby (i) waives diligence, presentment, demand of payment, filing of claims with a court in the event of the merger, insolvency or bankruptcy of the Partnership or the Guarantor, and all demands whatsoever, (ii) acknowledges that any agreement, instrument or document evidencing the Guarantee may be transferred and that the benefit of its 68 obligations hereunder shall extend to each holder of any agreement, instrument or document evidencing the Guarantee without notice to them and (iii) covenants that its Guarantee will not be discharged except by complete performance of the Guarantee. The Guarantor further agrees that if at any time all or any part of any payment theretofore applied by any person to the Guarantee is, or must be, rescinded or returned for any reason whatsoever, including without limitation, the insolvency, bankruptcy or reorganization of the Partnership or the Guarantor, the Guarantee shall, to the extent that such payment is or must be rescinded or returned, be deemed to have continued in existence notwithstanding such application, and the Guarantee shall continue to be effective or be reinstated, as the case may be, as though such application had not been made. (e) The Guarantor shall be subrogated to all rights of the Holders and the Trustee against the Partnership in respect of any amounts paid by the Guarantor pursuant to the provisions of this Indenture, provided, however, that the Guarantor shall not be entitled to enforce or to receive any payments arising out of, or based upon, such right of subrogation until all of the Notes and the Guarantee shall have been paid in full or discharged. (f) A director, officer, employee or unitholder, as such, of the Guarantor shall not have any liability for any obligations of the Guarantor under this Indenture or for any claim based on, in respect of or by reason of such obligations or their creation. SECTION 12.02 Limitation of Guarantor's Liability. The Guarantor and by its acceptance hereof each Holder hereby confirms that it is the intention of all such parties that the guarantee by the Guarantor pursuant to its Guarantee not constitute a fraudulent transfer or conveyance for purposes of any federal, state or foreign law. To effectuate the foregoing intention, the Holders and the Guarantor hereby irrevocably agree that the obligations of the Guarantor under its Guarantee shall be limited to the maximum amount as will, after giving effect to all other contingent and fixed liabilities of the Guarantor, result in the obligations of the Guarantor under its Guarantee not constituting a fraudulent conveyance or fraudulent transfer under federal, state or foreign law. SECTION 12.03 Execution and Delivery of Guarantee. To further evidence the Guarantee set forth in Section 12.01, the Guarantor hereby agrees that a notation relating to the Guarantee shall be endorsed on each Note authenticated and delivered by the Trustee and executed by either manual or facsimile signature of two officers of the Guarantor. The Guarantor hereby agrees that its Guarantee set forth in Section 12.01 shall remain in full force and effect notwithstanding any failure to endorse on each Note a notation relating to the Guarantee. If an officer of the Guarantor whose signature is on this Indenture or a Note no longer holds that office at the time the Trustee authenticates such Note or at any time thereafter, the Guarantor's Guarantee of such Note shall be valid nevertheless. 69 The delivery of any Note by the Trustee, after the authentication thereof hereunder, shall constitute due delivery of the Guarantee set forth in this Indenture on behalf of the Guarantor. SECTION 12.04 Addition of Guarantors. (a) If any Holding Subsidiary of the Partnership incurs, creates, assumes or guarantees any Funded Debt other than the Notes at any time subsequent to the Issue Date (including, without limitation, following any release of such Holding Subsidiary pursuant to Section 12.05 from the Guarantee previously provided by it under this Article XII), then the Partnership shall (i) cause the Notes to be equally and ratably guaranteed by such Holding Subsidiary, but only to the extent that the Notes are not already guaranteed by such Holding Subsidiary on reasonably comparable terms and (ii) cause such Holding Subsidiary to execute and deliver a supplemental indenture evidencing its provision of the Guarantee in accordance with Section 12.04(b) below. (b) Any Person that was not the Guarantor on the Issue Date may become a Guarantor by executing and delivering to the Trustee (i) a supplemental indenture in form and substance satisfactory to the Trustee, which subjects such Person to the provisions (including the representations and warranties) of this Indenture as the Guarantor and (ii) an Opinion of Counsel and Officers' Certificate to the effect that such supplemental indenture has been duly authorized and executed by such Person and constitutes the legal, valid, binding and enforceable obligation of such Person (subject to such customary exceptions concerning creditors' rights and equitable principles as may be acceptable to the Trustee in its discretion and provided that no opinion need be rendered concerning the enforceability of the Guarantee). SECTION 12.05 Release of Guarantee. Notwithstanding anything to the contrary in this Article XII, if the Guarantor shall no longer be a guarantor of any Funded Debt other than the Notes, and so long as no Default or Event of Default shall have occurred or be continuing, the Guarantor, upon giving notice to the Trustee to the foregoing effect, shall be deemed to be released from all of its obligations under this Indenture and the Guarantee shall be of no further force or effect. Following the receipt by the Trustee of any such notice, the Partnership shall cause this Indenture to be amended as provided in Section 9.01; provided, however, that the failure to so amend this Indenture shall not affect the validity of the termination of the Guarantee of the Guarantor. [SIGNATURES PAGE(S) FOLLOW] 70 SIGNATURES Dated as of March 21, 2001 ISSUER: NORTHERN BORDER PARTNERS, L.P. By: ---------------------------------------- Name: Title: GUARANTOR: NORTHERN BORDER INTERMEDIATE LIMITED PARTNERSHIP By: ---------------------------------------- Name: Title: TRUSTEE: BANK ONE TRUST COMPANY, N.A. By: ---------------------------------------- Name: Title: 71 FORM OF GUARANTEE The Guarantor (which term includes any successor person under the Indenture), has fully, unconditionally and absolutely guaranteed, to the extent set forth in the Indenture and subject to the provisions in the Indenture, the due and punctual payment of the principal of, and premium, if any, and interest on the Notes and all other amounts due and payable under the Indenture and the Notes by the Partnership. The obligations of the Guarantor to the Holders of Notes and to the Trustee pursuant to the Guarantee and the Indenture are expressly set forth in Article XII of the Indenture and reference is hereby made to the Indenture for the precise terms of the Guarantee. NORTHERN BORDER INTERMEDIATE LIMITED PARTNERSHIP By: ------------------------------- Name Title 72 EXHIBIT A (FACE OF NOTE) CUSIP: 664785AD4(Rule 144A); 664785AE2(IAI)[664785AF9] 7.10% SENIOR NOTES DUE 2011[, SERIES A] No. ____________ $________________ NORTHERN BORDER PARTNERS, L.P. promises to pay to or registered assigns, the principal sum of ____________________________________DOLLARS AND NO CENTS on March 15, 2011. Interest Payment Dates: March 15 and September 15 Record Dates: March 1 and September 1 NORTHERN BORDER PARTNERS, L.P. By: -------------------------------- Name Title This is one of the Notes referred to in the within-mentioned Indenture: BANK ONE TRUST COMPANY, N.A. as Trustee By: ------------------------------- Name Title Dated: , Exhibit A-1 (BACK OF NOTE) 7.10% SENIOR NOTES DUE 2011[, SERIES A] [Unless and until it is exchanged in whole or in part for Notes in definitive form, this Note may not be transferred except as a whole by the Depositary to a nominee of the Depositary or by a nominee of the Depositary to the Depositary or another nominee of the Depositary or by the Depositary or any such nominee to a successor Depositary or a nominee of such successor Depositary. The Depository Trust Company shall act as the Depositary until a successor shall be appointed by the Company and the Registrar. Unless this certificate is presented by an authorized representative of The Depository Trust Company (55 Water Street, New York, New York) ("DTC"), to the issuer or its agent for registration of transfer, exchange or payment, and any certificate issued is registered in the name of Cede & Co. or such other name as may be requested by an authorized representative of DTC (and any payment is made to Cede & Co. or such other entity as may be requested by an authorized representative of DTC), any transfer, pledge or other use hereof for value or otherwise by or to any person is wrongful inasmuch as the registered owner hereof, Cede & Co., has an interest herein.](1) [THIS NOTE (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. ACCORDINGLY, THIS NOTE MAY NOT BE OFFERED, SOLD, PLEDGED, OR OTHERWISE TRANSFERRED WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS, EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR IN ACCORDANCE WITH AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (SUBJECT TO THE DELIVERY OF SUCH EVIDENCE, IF ANY, REQUIRED UNDER THE INDENTURE PURSUANT TO WHICH THIS NOTE IS ISSUED) AND IN ACCORDANCE WITH APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER JURISDICTION. BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST HEREIN, THE HOLDER: (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) (A "QIB"), (B) IT IS ACQUIRING THIS NOTE IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT OR (C) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT (AN "IAI")), (2) AGREES THAT, PRIOR TO THE DATE WHICH IS TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE PARTNERSHIP OR ANY AFFILIATE OF THE PARTNERSHIP WAS THE OWNER OF THIS NOTE (OR ANY PREDECESSOR OF THIS NOTE) THE "RESALE RESTRICTION - ------------------------------ (1) This should be included only if the Note is a Global Note. Exhibit A-2 TERMINATION DATE"), IT WILL NOT RESELL, OR OTHERWISE TRANSFER THIS NOTE EXCEPT (A) TO NORTHERN BORDER PARTNERS, L.P. OR ANY OF ITS SUBSIDIARIES, (B) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QIB PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QIB IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (C) IN AN OFFSHORE TRANSACTION MEETING THE REQUIREMENTS OF RULE 903 OR 904 UNDER THE SECURITIES ACT, (D) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (E) TO AN IAI, (F) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, OR (G) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, AND, IN EACH CASE, IN ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND ACCOMPANIED BY SUCH CERTIFICATIONS, OPINIONS OF COUNSEL AND OTHER INFORMATION AS MAY BE REQUIRED BY THE INDENTURE, AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS NOTE OR AN INTEREST HEREIN IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "U.S. PERSONS" AND UNITED STATES HAVE THE MEANINGS ASSIGNED TO THEM IN RULE 902 OF REGULATION S UNDER THE SECURITIES ACT. THE INDENTURE CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS NOTE IN VIOLATION OF THE FOREGOING.](2) Capitalized terms used herein shall have the meanings assigned to them in the Indenture referred to below unless otherwise indicated. 1. Interest. Northern Border Partners, L.P., a Delaware limited partnership (the "Partnership"), promises to pay interest on the principal amount of this Note at 7.10% per annum, from March 21, 2001 until maturity [and shall pay the Liquidated Damages, if any, payable pursuant to Section 5 of the Registration Rights Agreement referred to below].(3) The Partnership will pay interest and Liquidated Damages, if any, semiannually in arrears on - ------------------------------ (2) This bracketed provision applies only to Notes that have not been exchanged for Exchange Notes in the Exchange Offer, and it should be removed upon the exchange of such Notes for Exchange Notes in the Exchange Offer or upon the transfer of such Notes that have been sold pursuant to the terms of the Shelf Registration contemplated by the Registration Rights Agreement. (3) This bracketed provision applies only to Notes that have not been exchanged for Exchange Notes in the Exchange Offer, and it should be removed upon the exchange of such Notes for Exchange Notes in the Exchange Offer or upon the transfer of such Notes that have been sold pursuant to the terms of the Shelf Registration Statement contemplated by the Registration Rights Agreement. Exhibit A-3 March 15 and September 15 of each year, or if any such day is not a Business Day, on the next succeeding Business Day (each an "Interest Payment Date"). Interest on the Notes will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from the date of issuance; provided that if there is no existing Default in the payment of interest, and if this Note is authenticated between a record date referred to on the face hereof and the next succeeding Interest Payment Date, interest shall accrue from such next succeeding Interest Payment Date; provided, further, that the first Interest Payment Date shall be September 15, 2001. The Partnership shall pay interest (including post-petition interest in any proceeding under the Bankruptcy Code) on overdue principal and premium, if any, from time to time on demand at the rate borne on the Notes; it shall pay interest (including post- petition interest in any proceeding under the Bankruptcy Code) on overdue installments of interest and Liquidated Damages, if any, (without regard to any applicable grace periods) from time to time on demand at the same rate to the extent lawful. Interest will be computed on the basis of a 360-day year of twelve 30-day months. 2. Method of Payment. The Partnership will pay interest on the Notes (except defaulted interest) and Liquidated Damages, if any, to the Persons who are registered Holders of Notes at the close of business on the March 1 or September 1 next preceding the Interest Payment Date, even if such Notes are canceled after such record date and on or before such Interest Payment Date, except as provided in Section 2.12 of the Indenture with respect to defaulted interest. The Notes will be payable as to principal of, premium, if any, interest and Liquidated Damages, if any, at the office or agency of the Partnership maintained for such purpose within the City and State of New York, or, at the option of the Partnership, payment of interest and Liquidated Damages, if any, may be made by check mailed to the Holders at their addresses set forth in the register of Holders, and provided that payment by wire transfer of immediately available funds will be required with respect to principal of, premium, if any, interest and Liquidated Damages, if any, on, all Global Notes and all other Notes the Holders of which shall have provided wire transfer instructions to the Partnership or the Paying Agent. Such payment shall be in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts. 3. Paying Agent and Registrar. Initially, Bank One Trust Company, N.A., the Trustee under the Indenture, will act as Paying Agent and Registrar. The Partnership may change any Paying Agent or Registrar without notice to any Holder. The Partnership may act in any such capacity. 4. Indenture. The Partnership issued the Notes under an Indenture dated as of March 21, 2001 (the "Indenture") among the Partnership, Northern Border Intermediate Limited Partnership, as guarantor (the "Guarantor"), and the Trustee. The terms of the Notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939, as amended ("TIA"). The Notes are subject to all such terms, and Holders are referred to the Indenture and such Act for a statement of such terms. To the extent any provision of this Note conflicts with the express provisions of the Indenture, the provisions of the Indenture shall govern and be controlling. The Notes are obligations of the Partnership and the Guarantor limited to $225,000,000.00 in aggregate principal amount, subject to the right of the Partnership to re-open the offering of the Notes in accordance with Section 2.02 of the Indenture. Exhibit A-4 5. Optional Redemption. The Notes will be subject to redemption at any time at the option of the Partnership, in whole or in part, at a redemption price equal to the principal amount of the Notes to be redeemed, plus any accrued and unpaid interest and Liquidated Damages, if any, thereon to the applicable Redemption Date plus the "make-whole premium" as defined below. The "make-whole premium" or "premium" with respect to any Note to be redeemed shall be equal to the excess, if any, of: (a) the sum of the present values, calculated as of the Redemption Date, of (i) each interest payment that, but for such redemption, would have been payable on the Note or portion thereof being redeemed on each Interest Payment Date occurring after the Redemption Date (excluding any accrued interest for the period prior to the Redemption Date); and (ii) the principal amount that, but for such redemption, would have been payable at the final maturity of the Note being redeemed; over (b) the principal amount of the Note being redeemed. The present values of interest and principal payments referred to in clause (a) of the immediately preceding paragraph will be determined in accordance with generally accepted principles of financial analysis. These present values will be calculated by discounting the amount of each payment of interest or principal from the date that each such payment would have been payable, but for the redemption, to the Redemption Date at a discount rate equal to the comparable treasury yield (as defined below) plus 35 basis points. The make-whole premium will be calculated by an independent investment banking institution of national standing appointed by the Partnership. If the Partnership fails to appoint an independent investment banker not less than 45 days prior to the Redemption Date, or if such independent investment banker is unwilling or unable to make the calculation, the calculation will be made by Banc of America Securities L.L.C. If Banc of America Securities L.L.C. is unwilling or unable to make the calculation, the Partnership will appoint an independent investment banking institution of national standing to make the calculation. For purposes of determining the make-whole premium, comparable treasury yield means a rate of interest per annum equal to the weekly average yield to maturity of United States Treasury Securities that have a constant maturity that corresponds to the remaining term to maturity of the Notes, calculated to the nearest 1/12th of a year. The comparable treasury yield will be determined as of the third business day immediately preceding the applicable Redemption Date. The weekly average yields of United States Treasury Securities will be determined by reference to the most recent statistical release published by the Federal Reserve Bank of New York and designated "H.15(519) Selected Interest Rates" or any successor release. If the H.15 statistical release sets forth a weekly average yield for United States Treasury Securities having a constant maturity that is the same as the remaining term calculated as set forth above, then the comparable treasury yield will be equal to such weekly average yield. In all other cases, the comparable treasury yield will be calculated by interpolation on a straight-line basis, between the weekly average yields on the United States Treasury Securities that have a constant maturity closest to and greater than the remaining term and the United States Treasury Securities that have a constant maturity closest to and less than the remaining term (in each case as set forth in the H.15 statistical release or any successor release). Any weekly average yields Exhibit A-5 calculated by interpolation will be rounded to the nearest 1/100th of 1%, with any figure of 1/200th of 1% or above being rounded upward. If weekly average yields for United States Treasury Securities are not available in the H.15 statistical release or otherwise, then the comparable treasury yield will be calculated by interpolation of comparable rates selected by an independent investment banking institution of national standing selected in the manner described in the second preceding paragraph. 6. Mandatory Redemption. The Partnership shall not be required to make mandatory redemption payments with respect to the Notes. 7. Notice of Redemption. Notice of redemption will be mailed at least 30 days but not more than 60 days before the Redemption Date to each Holder whose Notes are to be redeemed at its registered address. Notes in denominations larger than $1,000 may be redeemed in part but only in whole multiples of $1,000, unless all of the Notes held by a Holder are to be redeemed. On and after the Redemption Date, interest and Liquidated Damages, if any, cease to accrue on Notes or portions thereof called for redemption. 8. Repurchase Upon a Rating Decline. If a Rating Decline occurs and an Investment Grade rating has not been reinstated within 40 days after such occurrence, each Holder of Notes shall have the right to require the Partnership to repurchase all or any part (equal to $1,000 or an integral multiple thereof) of such Holder's Notes at an offer price in cash equal to 100% of the aggregate principal amount thereof plus accrued and unpaid interest and Liquidated Damages, if any, thereon to the date of purchase (the "Rating Decline Payment"). Within 10 days following any Rating Decline, the Partnership shall mail an initial notice to each Holder with a copy to the Trustee stating that a Rating Decline has occurred and a repurchase of the Notes by the Partnership may be required. If within 30 days following such initial notice, the Rating Agency or Agencies which downgraded the Notes shall have failed to reinstate an Investment Grade rating to the Notes, then the Partnership shall, on the 40th day following such Rating Decline, mail a subsequent notice to each Holder with a copy to the Trustee stating that an Investment Grade rating of the Notes has not been reinstated and that such Holder has the right to require the Partnership to repurchase such Holder's Notes pursuant to the terms of the Indenture. The repurchase date of all Notes so tendered for purchase shall be made on a Business Day not less than 30 days nor more than 60 days after such initial notice is mailed. The Partnership and the Guarantor will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws and regulations are applicable in connection with the repurchase of the Notes as a result of a Rating Decline. Notwithstanding anything herein to the contrary, the Partnership shall not be required to make a Rating Decline Offer, and shall not be obligated to repurchase any Notes following a Rating Decline, if the Rating Decline occurs after the Partnership's $250 million original principal amount of 8?% Senior Notes due June 15, 2010 ceases to be outstanding. 9. Denominations, Transfer, Exchange. The Notes are in registered form without coupons in denominations of $1,000 and integral multiples of $1,000. The transfer of Notes may be registered and Notes may be exchanged as provided in the Indenture. The Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and the Partnership may require a Holder to pay any taxes and fees required by law or permitted by the Indenture. The Partnership need not exchange or register the transfer Exhibit A-6 of any Note or portion of a Note selected for redemption, except for the unredeemed portion of any Note being redeemed in part. Also, it need not exchange or register the transfer of any Notes for a period of 15 days before a selection of Notes to be redeemed or during the period between a record date and the corresponding Interest Payment Date. 10. Persons Deemed Owners. The registered Holder of a Note may be treated as its owner for all purposes. 11. Amendment, Supplement and Waiver. Subject to certain exceptions, the Indenture or the Notes may be amended or supplemented with the consent of the Holders of at least a majority in principal amount of the then outstanding Notes, and any existing default or compliance with any provision of the Indenture or the Notes may be waived with the consent of the Holders of a majority in principal amount of the then outstanding Notes. Without the consent of any Holder of a Note, the Indenture or the Notes may be amended or supplemented to cure any ambiguity, defect or inconsistency, to provide for uncertificated Notes in addition to or in place of certificated Notes, to provide for the assumption of the Partnership's or the Guarantor's obligations to Holders of the Notes in case of a merger or consolidation or to make any change that would provide any additional rights or benefits to the Holders of the Notes or that does not adversely affect the legal rights under the Indenture of any such Holder, or to comply with the requirements of the SEC in order to effect or maintain the qualification of the Indenture under the TIA. 12. Defaults and Remedies. Events of Default include: (a) default in the payment of any interest or Liquidated Damages, if any, upon the Notes when it becomes due and payable, and continuance of such default for a period of 30 days; or (b) default in the payment of the principal of (or premium, if any, on) the Notes at their Stated Maturity; or (c) default in the performance, or breach, of any term, covenant or warranty of the Partnership in this Indenture, and continuance of such default or breach for a period of 90 days after there has been given, by registered or certified mail, to the Partnership by the Trustee or to the Partnership and the Trustee by the Holders of at least 25% in principal amount of the Notes then outstanding a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a "Notice of Default" under the Indenture; or (d) the Partnership pursuant to or within the meaning of the Bankruptcy Code (i) commences a voluntary case, (ii) consents to the entry of any order for relief against it in an involuntary case, (iii) consents to the appointment of a Custodian of it or for all or substantially all of its property, or (iv) makes a general assignment for the benefit of its creditors; or (e) a court of competent jurisdiction enters an order or decree under the Bankruptcy Code that (i) is for relief against the Partnership in an involuntary case, (ii) appoints a Custodian of the Partnership or for all or substantially all of its property, or (iii) orders the liquidation of the Partnership; and the order or decree remains unstayed and in effect for 90 days; or (f) any default by the Partnership or any of its Subsidiaries in the payment, at the final maturity date and after the expiration of any applicable grace period, of principal of, premium, if any, or interest on indebtedness for money borrowed in the principal amount then outstanding of $25,000,000 or more, or acceleration of any indebtedness of such amount, such that such indebtedness becomes due and payable prior to its maturity date and such acceleration is not rescinded within 60 days after notice to the Partnership. If any Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the then outstanding Notes may declare all the Notes to be due and payable immediately. Notwithstanding the foregoing, in the case of an Exhibit A-7 Event of Default arising from certain events (as described in (d) and (e) above) of bankruptcy or insolvency, all outstanding Notes will become due and payable without further action or notice. Holders may not enforce the Indenture or the Notes except as provided in the Indenture. Subject to certain limitations, Holders of a majority in principal amount of the then outstanding Notes may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders of the Notes notice of any continuing Default or Event of Default (except a Default or Event of Default relating to the payment of principal or interest) if it determines that withholding notice is in their interest. The Holders of a majority in aggregate principal amount of the Notes then outstanding by notice to the Trustee may on behalf of the Holders of all of the Notes waive any existing Default or Event of Default and its consequences under the Indenture except a continuing Default or Event of Default in the payment of interest on, or the principal of, the Notes. The Partnership is required to deliver to the Trustee annually a statement regarding compliance with the Indenture, and the Partnership is required upon becoming aware of any Default or Event of Default, to deliver to the Trustee a statement specifying such Default or Event of Default. 13. Trustee Dealings with Partnership. The Trustee, in its individual or any other capacity, may make loans to, accept deposits from, and perform services for the Partnership or its Affiliates, and may otherwise deal with the Partnership or its Affiliates, as if it were not the Trustee. 14. No Recourse Against Others. Obligations of the Partnership, or the Guarantor, as such, under the Indenture and the Notes are non-recourse to the Partnership's general partners, and their affiliates (other than the Partnership and the Guarantor), and payable only out of cash flow and assets of the Partnership and the Guarantor. None of the Partnership's Policy Committee members or Audit Committee members, or the Partnership's general partners and their assets and Affiliates (other than the Partnership and the Guarantor), if any, and no director, officer, employee, stockholder or unitholder, as such, of the Partnership, the Guarantor, the Trustee, the general partners of the Partnership or any Affiliate of any of the foregoing entities shall have any liability for any obligations of the Partnership under the Notes or the Indenture, the Guaranty or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for the issuance of the Notes. 15. Authentication. This Note shall not be valid until authenticated by the manual signature of a Responsible Officer of the Trustee or an Authenticating Agent. 16. Abbreviations. Customary abbreviations may be used in the name of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act). 17. Additional Rights of Holders of Restricted Global Notes and Restricted Definitive Notes. In addition to the rights provided to Holders of Notes under the Indenture, Holders of Restricted Global Notes and Restricted Definitive Notes shall have all the rights set forth in and Exhibit A-8 shall be bound by the provisions of the Registration Rights Agreement, dated as of March 21, 2001, between the Partnership and the parties named on the signature pages thereof (the "Registration Rights Agreement"). The Partnership will furnish to any Holder, upon written request, a copy of the Indenture and/or the Registration Rights Agreement. Requests may be made to: BANK ONE TRUST COMPANY, N.A. 1 BANC ONE PLAZA, SUITE IL1-0126 CHICAGO, ILLINOIS 60670-0126 TELECOPIER NO.: (312) 407-1708 ATTENTION: CORPORATE TRUST SERVICES DIVISION Exhibit A-9 ASSIGNMENT FORM To assign this Note, fill in the form below: (I) or (we) assign and transfer this Note to ________________________________________________________________________________ (Insert assignee's soc. sec. or tax I.D. no.) ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ (Print or type assignee's name, address and zip code) and irrevocably appoint ________________________________________________________ to transfer this Note on the books of the Partnership. The agent may substitute another to act for him. ________________________________________________________________________________ Date: Your Signature: ________________________________________________________________ (Sign exactly as your name appears on the face of this Note) Exhibit A-10 SIGNATURE GUARANTEE ________________________________________________________________________________ Signatures must be guaranteed by an "eligible guarantor institution" meeting the requirements of the Registrar, which requirements include membership or participation in the Security Transfer Agent Medallion Program ("STAMP") or such other "signature guarantee program" as may be determined by the Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended. Exhibit A-11 SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE(4) The following exchanges of a part of this Global Note for an interest in another Global Note or for a Definitive Note, or exchanges of a part of another Global Note or Definitive Note for an interest in this Global Note, have been made:
Principal Amount Signature of Amount of Amount of of this Global Note authorized decrease in increase in following such signatory of Principal Amount Principal Amount decrease (or Trustee or Note Date of Exchange of this Global Note of this Global Note increase) Custodian - --------------------- ---------------------- -------------------- -------------------- ----------------
- ------------------------------ (4) This should be included only if the Note is a Global Note. Exhibit A-12 OPTION OF HOLDER TO ELECT PURCHASE(5) If you want to elect to have this Note purchased by the Partnership pursuant to Section 4.11 of the Indenture, check the box below: o If you want to elect to have only part of the Note purchased by the Partnership pursuant to Section 4.11 of the Indenture, state the amount you elect to have purchased: $ Date: Your Signature:_______________________________________________ (Sign exactly as your name appears on the Note) Social Security or Tax Identification No.: Signature Guarantee: - --------------------------------- (5) This should be included only if the Note is issued in certificated form. Exhibit A-13 EXHIBIT B FORM OF CERTIFICATE OF TRANSFER Northern Border Partners, L.P. c/o Northern Plains Natural Gas Company 1111 South 103rd Street Omaha, Nebraska 68124-1000 Telecopier No.: (402) 398-7780 Attention: Director of Finance Bank One Trust Company, N.A. as Trustee and Registrar 1 Bank One Plaza, Suite IL1-0126 Chicago, Illinois 60670-0126 Telecopier No.: (312) 407-1708 Attention: Corporate Trust Services Division Re: 7.10% Senior Notes due 2011 Reference is hereby made to the Indenture, dated as of March 21, 2001 (the "Indenture"), among Northern Border Partners, L.P., as issuer (the "Partnership"), Northern Border Intermediate Limited Partnership, as guarantor, and Bank One Trust Company, N.A., as trustee. Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture. The undersigned (the "Transferor") owns and proposes to transfer the Note[s] or beneficial interest in such Note[s] specified in Annex A hereto, in the principal amount of $__________ (the "Transfer"), to _______________ (the "Transferee"), as further specified in Annex A hereto. In connection with the Transfer, the Transferor hereby certifies that: [CHECK ALL THAT APPLY] (1) o CHECK IF THE TRANSFER IS PURSUANT TO RULE 144A. The Transfer is being effected pursuant to and in accordance with Rule 144A under the United States Securities Act of 1933, as amended (the "Securities Act"), and, accordingly, the Transferor hereby further certifies that the beneficial interest is being transferred to a Person that the Transferor reasonably believed and believes is purchasing the beneficial interest for its own account, or for one or more accounts with respect to which such Person exercises sole investment discretion, and such Person and each such account is a "qualified institutional buyer" within the meaning of Rule 144A in a transaction meeting the requirements of Rule 144A and such Transfer is in compliance with any applicable blue sky securities laws of any state of the United States. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Note[s] will be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Global Note and in the Indenture and the Securities Act. Exhibit B-1 (2) o CHECK IF THE TRANSFER IS PURSUANT TO REGULATION S. The Transfer is being effected pursuant to and in accordance with Rule 903 or Rule 904 under the Securities Act and, accordingly, the Transferor hereby further certifies that (i) the Transfer is not being made to a person in the United States and (x) at the time the buy order was originated, the Transferee was outside the United States or such Transferor and any Person acting on its behalf reasonably believed and believes that the Transferee was outside the United States or (y) the transaction was executed in, on or through the facilities of a designated offshore securities market and neither such Transferor nor any Person acting on its behalf knows that the transaction was prearranged with a buyer in the United States, (ii) no directed selling efforts have been made in contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation S under the Securities Act, (iii) the transaction is not part of a plan or scheme to evade the registration requirements of the Securities Act and (iv) the transfer is not being made to a U.S. Person or for the account or benefit of a U.S. Person (other than an Initial Purchaser). Upon consummation of the proposed transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Note[s] will be subject to the restrictions on Transfer enumerated in the Private Placement Legend printed on the Global Note and/or the Definitive Note and in the Indenture and the Securities Act. (3) o CHECK AND COMPLETE IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN A RESTRICTED GLOBAL NOTE OR OF A RESTRICTED DEFINITIVE NOTE PURSUANT TO ANY PROVISION OF THE SECURITIES ACT OTHER THAN RULE 144A OR REGULATION S. The Transfer is being effected in compliance with the transfer restrictions applicable to beneficial interests in Restricted Global Notes and Restricted Definitive Notes and pursuant to and in accordance with the Securities Act and any applicable blue sky securities laws of any state of the United States, and accordingly the Transferor hereby further certifies that (check one): (a) o such Transfer is being effected pursuant to and in accordance with Rule 144 under the Securities Act; or (b) o such Transfer is being effected to the Partnership or a subsidiary thereof; or (c) o such Transfer is being effected pursuant to an effective registration statement under the Securities Act and in compliance with the prospectus delivery requirements of the Securities Act; or (d) o such Transfer is being effected pursuant to an exemption under the Securities Act other than Rule 144A, Rule 144 or Rule 904 to a Person who is an Institutional Accredited Investor and the Transferor further certifies that the transfer complies with the transfer restrictions applicable to the Restricted Global Exhibit B-2 Notes or the Restricted Definitive Notes bearing the legend set forth in Section 2.06(g) of the Indenture and the requirements of the exemption claimed, which certification is supported by (i) if such transfer is in respect of a principal amount of Notes at the time of transfer of $250,000 or more, a certificate executed by the Transferee containing certain representations and agreements relating to the transfer (the form of which can be obtained from the Trustee), or (ii) if such transfer is in respect of a principal amount of Notes at the time of transfer of less than $250,000, (A) the certificate referenced in clause (i) above and (B) an Opinion of Counsel provided by the Transferor or the Transferee (a copy of which the Transferor has attached to this certification), to the effect that (1) such transfer is in compliance with the Securities Act and (2) such transfer complies with any applicable blue sky securities laws of any state of the United States; (4) o CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE OR OF AN UNRESTRICTED DEFINITIVE NOTE. (a) o CHECK IF TRANSFER IS PURSUANT TO RULE 144. (i) The Transfer is being effected pursuant to and in accordance with Rule 144 under the Securities Act and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any state of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Note[s] will no longer be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Notes, on Restricted Definitive Notes and in the Indenture. (b) o CHECK IF TRANSFER IS PURSUANT TO REGULATION S. (i) The transfer is being effected pursuant to and in accordance with Rule 903 or Rule 904 under the Securities Act and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any state of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Note[s] will no longer be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Notes, on Restricted Definitive Notes and in the Indenture. (c) o CHECK IF TRANSFER IS PURSUANT TO OTHER EXEMPTION. (i) The Transfer is being effected pursuant to and in compliance with an exemption from the registration requirements of the Securities Act other than Rule 144, Rule 903 or Rule 904 and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any state of the United States and (ii) the restrictions on transfer contained in the Indenture and the Exhibit B-3 Private Placement Legend are not required in order to maintain compliance with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Note[s] will not be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Notes or Restricted Definitive Notes and in the Indenture. Exhibit B-4 This certificate and the statements contained herein are made for your benefit and the benefit of the Partnership. _______________________________________________________________________ [Insert Name of Transferor] By: ____________________________________ Name: Title: Dated: _________________________________ Exhibit B-5 ANNEX A TO CERTIFICATE OF TRANSFER The Transferor owns and proposes to transfer the following: [CHECK ONE] o a beneficial interest in the Global Note o a Restricted Definitive Note. After the Transfer the Transferee will hold: [CHECK ONE] o a beneficial interest in the: o Restricted Global Note; or o Unrestricted Global Note; or o a Restricted Definitive Note; or o an Unrestricted Definitive Note, in accordance with the terms of the Indenture. Exhibit B-6 EXHIBIT C FORM OF CERTIFICATE OF EXCHANGE Northern Border Partners, L.P. c/o Northern Plains Natural Gas Company 1111 South 103rd Street Omaha, Nebraska 68124-1000 Telecopier No.: (402) 398-7780 Attention: Director of Finance Bank One Trust Company, N.A. as Trustee and Registrar 1 Bank One Plaza, Suite IL1-0126 Chicago, Illinois 60670-0126 Telecopier No.: (312) 407-1708 Attention: Corporate Trust Services Division Re: 7.10% Senior Notes due 2011 Reference is hereby made to the Indenture, dated as of March 21, 2001 (the "Indenture"), among Northern Border Partners, L.P., as issuer (the "Partnership"), Northern Border Intermediate Limited Partnership, as guarantor, and Bank One Trust Company, N.A., as trustee. Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture.____________________, (the "Owner") owns and proposes to exchange the Note[s] or beneficial interest in such Note[s] specified herein, in the principal amount of $__________ (the "Exchange"). In connection with the Transfer, the Owner hereby certifies that: EXCHANGE OF RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN A RESTRICTED GLOBAL NOTE FOR UNRESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN AN UNRESTRICTED GLOBAL NOTE (1) o CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED GLOBAL NOTE TO BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE. In connection with the Exchange of the Owner's beneficial interest in a Restricted Global Note for a beneficial interest in an Unrestricted Global Note in an equal principal amount, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owner's own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Global Notes and pursuant to and in accordance with the United States Securities Act of 1933, as amended (the "Securities Act"), (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the beneficial interest in an Unrestricted Global Note is being acquired in compliance with any applicable blue sky securities laws of any state of the United States. (2) o CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED GLOBAL NOTE TO UNRESTRICTED DEFINITIVE NOTE. In connection with the Exchange of the Owner's beneficial interest in a Restricted Global Note for an Unrestricted Definitive Note, the Exhibit C-1 Owner hereby certifies (i) the Definitive Note is being acquired for the Owner's own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Restricted Global Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the Definitive Note is being acquired in compliance with any applicable blue sky securities laws of any state of the United States. (3) o CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE. In connection with the Owner's Exchange of a Restricted Definitive Note for a beneficial interest in an Unrestricted Global Note, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owner's own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to Restricted Definitive Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the beneficial interest is being acquired in compliance with any applicable blue sky securities laws of any state of the United States. (4) o CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO UNRESTRICTED DEFINITIVE NOTE. In connection with the Owner's Exchange of a Restricted Definitive Note for an Unrestricted Definitive Note, the Owner hereby certifies (i) the Unrestricted Definitive Note is being acquired for the Owner's own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to Restricted Definitive Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the Unrestricted Definitive Note is being acquired in compliance with any applicable blue sky securities laws of any state of the United States. EXCHANGE OF RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN RESTRICTED GLOBAL NOTES FOR RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN RESTRICTED GLOBAL NOTES (5) o CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED GLOBAL NOTE TO RESTRICTED DEFINITIVE NOTE. In connection with the Exchange of the Owner's beneficial interest in a Restricted Global Note for a Restricted Definitive Note with an equal principal amount, the Owner hereby certifies that the Restricted Definitive Note is being acquired for the Owner's own account without transfer. Upon consummation of the proposed Exchange in accordance with the terms of the Indenture, the Restricted Definitive Note issued will continue to be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Definitive Note and in the Indenture and the Securities Act. (6) o CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO BENEFICIAL INTEREST IN A RESTRICTED GLOBAL NOTE. In connection with the Exchange of the Owner's Restricted Definitive Note for a beneficial interest in the Global Note with an equal principal Exhibit C-2 amount, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owner's own account without transfer and (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Restricted Global Notes and pursuant to and in accordance with the Securities Act, and in compliance with any applicable blue sky securities laws of any state of the United States. Upon consummation of the proposed Exchange in accordance with the terms of the Indenture, the beneficial interest issued will be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the relevant Restricted Global Note and in the Indenture and the Securities Act. This certificate and the statements contained herein are made for your benefit and the benefit of the Partnership. [Insert Name of Owner] By: _____________________________________ Name: Title: Dated: _______________________ Exhibit C-3 EX-4 3 exh44.txt INSTUMENTS DEFINING THE RIGHTS OF SECURITY HOLDER EXHIBIT 4.4 Execution Copy REGISTRATION RIGHTS AGREEMENT This Registration Rights Agreement (this "Agreement") is made and entered into as of March 21, 2001 by and among Northern Border Partners, L.P., a Delaware limited partnership (the "Partnership"), Northern Border Intermediate Limited Partnership, a Delaware limited partnership, and Banc of America Securities LLC ("BOA"), SunTrust Equitable Securities Corporation, Banc One Capital Markets, Inc. and BMO Nesbitt Burns Corp. (the "Initial Purchasers"), who have agreed to purchase the Partnership's 7.10% Senior Notes due 2011 (the "Senior Notes") pursuant to and subject to the terms and conditions of a certain Purchase Agreement, dated March 14, 2001 (the "Purchase Agreement") pursuant to which the Partnership issued and sold an aggregate of $225,000,000 of the Senior Notes (the "Senior Notes"). In order to induce the Initial Purchasers to purchase the Senior Notes, the Partnership has agreed to provide the registration rights set forth in this Agreement. The execution and delivery of this Agreement is a condition to the obligation of the Initial Purchasers to purchase the Senior Notes pursuant to the Purchase Agreement. The parties hereby agree as follows: SECTION 1. DEFINITIONS As used in this Agreement, the following capitalized terms shall have the following meanings: Advice: As defined in Section 6(d) hereof. Affiliate: With respect to any specified Person, "Affiliate" shall mean any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, "control," when used with respect to any Person, means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise and the terms "affiliated," "controlling" and "controlled" have meanings correlative to the foregoing. Notwithstanding the foregoing, with respect to the Partnership "Affiliate" shall mean Northern Border Pipeline Company, Northern Border Intermediate Limited Partnership, Northern Plains Natural Gas Company, Pan Border Gas Company and Northwest Border Pipeline Company. Authorized Officer: Any of the Chief Executive Officer, Chief Financial and Accounting Officer or any vice president of the Partnership, acting singly. Broker-Dealer: Any broker or dealer registered under the Exchange Act. Broker-Dealer Transfer Restricted Securities: New Senior Notes that are acquired by a Broker-Dealer in the Exchange Offer in exchange for Senior Notes that such Broker-Dealer acquired for its own account as a result of market-making activities or other trading activities (other than Senior Notes acquired directly from the Partnership or any of its Affiliates). Business Day: Any day except a Saturday, Sunday or other day in the City of New York, or in the city of the corporate trust office of the Trustee, on which banks are authorized to close. Closing Date: March 21, 2001. Commission: The Securities and Exchange Commission. Consummate: The Exchange Offer shall be deemed "consummated" for purposes of this Agreement upon the occurrence of (i) the filing and effectiveness under the Securities Act of the Exchange Offer Registration Statement relating to the New Senior Notes to be issued in the Exchange Offer, (ii) the maintenance of such Exchange Offer Registration Statement continuously effective and the keeping of the Exchange Offer open for a period not less than the minimum period required pursuant to Section 3(b) hereof, and (iii) the delivery by the Partnership to the Trustee under the Indenture of New Senior Notes in the same aggregate principal amount as the aggregate principal amount of Senior Notes that were tendered by Holders thereof pursuant to the Exchange Offer. Damages Payment Date: With respect to the Transfer Restricted Securities, each Interest Payment Date until the earlier of (i) the date on which Liquidated Damages are no longer payable and (ii) maturity of the Notes. Definitive Notes: As defined in the Indenture. Effectiveness Target Date: As defined in Section 5. Exchange Act: The Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder. Exchange Offer: The registration by the Partnership under the Securities Act of the New Senior Notes pursuant to an Exchange Offer Registration Statement pursuant to which the Partnership offers the Holders of all outstanding Transfer Restricted Securities the opportunity to exchange all such outstanding Transfer Restricted Securities held by such Holders for New Senior Notes in an aggregate principal amount equal to the aggregate principal amount of the Transfer Restricted Securities tendered in such exchange offer by such Holders. Exchange Offer Registration Statement: The Registration Statement relating to the Exchange Offer, including the related Prospectus. Exempt Resales: The transactions in which the Initial Purchasers propose to sell the Senior Notes (a) to certain "qualified institutional buyers," as such term is defined in Rule 144A -2- under the Securities Act and (b) to certain institutional "accredited investors" as such term is defined in Rule 501(a)(1),(2),(3) or (7) of Regulation D under the Securities Act. General Partners: Northern Plains Natural Gas Company, a Delaware corporation, Pan Border Gas Company, a Delaware corporation, and Northwest Border Pipeline Company, a Delaware corporation. Global Note Holder: A "Holder" as defined in the Indenture. Holders: As defined in Section 2(b) hereof. Indenture: The Indenture, dated as of March 21, 2001 among the Partnership and Bank One Trust Company, N.A., as trustee (the "Trustee"), pursuant to which the Notes are to be issued, as such Indenture is amended or supplemented from time to time in accordance with the terms thereof. Initial Purchasers: As defined in the preamble hereto. Interest Payment Date: As defined in the Indenture and the Notes. Liquidated Damages: As defined in Section 5 hereof. Memorandum: As defined in the Purchase Agreement. NASD: National Association of Securities Dealers, Inc. Notes: The Senior Notes and the New Senior Notes. New Senior Notes: The Partnership's 7.10% Senior Notes due 2011, Series A to be issued pursuant to the Indenture (i) in the Exchange Offer or (ii) upon the request of any holder of Senior Notes covered by a Shelf Registration Statement, in exchange for such Senior Notes. Person: An individual, partnership, corporation, limited liability company, joint venture, association, joint-stock company, trust or unincorporated organization, or a government or agency or political subdivision thereof or any other entity. Prospectus: The prospectus included in a Registration Statement at the time such Registration Statement is declared effective, as amended or supplemented by any prospectus supplement and by all other amendments thereto, including post-effective amendments, and all material incorporated by reference into such Prospectus. -3- Record Holder: With respect to any Damages Payment Date relating to Notes, each Person who is a Holder of Notes on the record date with respect to the Interest Payment Date on which such Damages Payment Date shall occur. Registration Default: As defined in Section 5 hereof. Registration Statement: Any registration statement of the Partnership relating to (a) an offering of New Senior Notes pursuant to an Exchange Offer or (b) the registration for resale of Transfer Restricted Securities pursuant to the Shelf Registration Statement, in each case (i) which is filed pursuant to the provisions of this Agreement, and (ii) including the Prospectus included therein, all amendments and supplements thereto (including post-effective amendments) and all exhibits and material incorporated by reference therein. Restricted Broker-Dealer: Any Broker-Dealer that holds Broker-Dealer Transfer Restricted Securities. Securities Act: The Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder. Shelf Filing Deadline: As defined in Section 4 hereof. Shelf Registration Statement: As defined in Section 4 hereof. TIA: The Trust Indenture Act of 1939, as amended, as in effect on the date of the Indenture. Transfer Restricted Securities: Each Senior Note, until the earliest to occur of (a) the date on which such Senior Note is exchanged in the Exchange Offer and entitled to be resold to the public by the Holder thereof without complying with the prospectus delivery requirements of the Securities Act, (b) the date on which such Senior Note has been effectively registered under the Securities Act and disposed of in accordance with a Shelf Registration Statement, (c) the date on which such Senior Note is distributed to the public pursuant to Rule 144 or is saleable pursuant to Rule 144(k) under the Securities Act and (d) the date on which such Senior Note is distributed by a Broker-Dealer pursuant to the "Plan of Distribution" contemplated by the Exchange Offer Registration Statement (including delivery of the Prospectus contained therein). Underwritten Registration or Underwritten Offering: A registration in which securities of the Partnership are sold to an underwriter for reoffering to the public. SECTION 2. SECURITIES SUBJECT TO THIS AGREEMENT (a) Transfer Restricted Securities. The securities entitled to the benefits of this Agreement are the Transfer Restricted Securities. -4- (b) Holders of Transfer Restricted Securities. A Person is deemed to be a holder of Transfer Restricted Securities (each, a "Holder") whenever such Person owns Transfer Restricted Securities. SECTION 3. REGISTERED EXCHANGE OFFER (a) Unless the Exchange Offer shall not be permissible under applicable law or Commission policy (after the procedures set forth in Section 6(a) below have been complied with), the Partnership shall (i) cause to be filed with the Commission as soon as practicable after the Closing Date, but in no event later than 120 days after the Closing Date, the Exchange Offer Registration Statement under the Securities Act relating to the New Senior Notes and the Exchange Offer, (ii) use its reasonable best efforts to cause such Exchange Offer Registration Statement to become effective at the earliest possible time, but in no event later than 180 days after the Closing Date, (iii) in connection with the foregoing, (A) file all pre-effective amendments to such Exchange Offer Registration Statement as may be necessary in order to cause such Exchange Offer Registration Statement to become effective, (B) if applicable, file a post-effective amendment to such Exchange Offer Registration Statement pursuant to Rule 430A under the Securities Act and (C) cause all necessary filings, if any, in connection with the registration and qualification of the New Senior Notes to be made under the Blue Sky laws of such jurisdictions as are necessary to permit Consummation of the Exchange Offer and (iv) upon the effectiveness of such Exchange Offer Registration Statement, commence and Consummate the Exchange Offer. The Exchange Offer Registration Statement shall be on the appropriate form permitting registration of the New Senior Notes to be offered in exchange for the Transfer Restricted Securities and to permit sales of Broker-Dealer Transfer Restricted Securities by Broker-Dealers as contemplated by Section 3(c) below. (b) The Partnership shall use its reasonable best efforts to cause the Exchange Offer Registration Statement to be effective continuously for a period of thirty (30) days from the date on which the Exchange Offer Registration Statement is declared effective and shall keep the Exchange Offer open for a period of not less than the minimum period required under applicable federal and state securities laws to Consummate the Exchange Offer; provided, however, that in no event shall such period be less than 20 Business Days. The Partnership shall cause the Exchange Offer to comply with all applicable federal and state securities laws. No securities other than the Notes shall be included in the Exchange Offer Registration Statement. The Partnership shall use its reasonable best efforts to cause the Exchange Offer to be Consummated on the earliest practicable date after the Exchange Offer Registration Statement has become effective, but in no event later than 30 Business Days thereafter. (c) The Partnership shall include a "Plan of Distribution" section in the Prospectus contained in the Exchange Offer Registration Statement and indicate that any Restricted Broker-Dealer who holds Senior Notes that are Transfer Restricted Securities and that were acquired for the account of such Broker-Dealer as a result of market-making activities or other trading activities (other than Transfer Restricted Securities acquired directly from the Partnership or one of its Affiliates) may exchange such Senior Notes pursuant to the Exchange Offer; however, such -5- Broker-Dealer may be deemed to be an "underwriter" within the meaning of the Securities Act and must, therefore, deliver a prospectus meeting the requirements of the Securities Act in connection with its initial sale of the New Senior Notes received by such Broker-Dealer in the Exchange Offer, which prospectus delivery requirement may be satisfied by the delivery by such Broker-Dealer of the Prospectus contained in the Exchange Offer Registration Statement. Such "Plan of Distribution" section shall also contain all other information with respect to such resales of Broker-Dealer Transfer Restricted Securities that the Commission may require in order to permit such sales pursuant thereto but such "Plan of Distribution" shall not name any such Broker-Dealer or disclose the amount of Notes held by any such Broker-Dealer except to the extent required by the Commission as a result of a change in policy after the date of this Agreement. The Partnership shall use its reasonable best efforts to keep the Exchange Offer Registration Statement continuously effective, supplemented and amended as required by the provisions of Section 6(c) below to the extent necessary to ensure that it is available for resales of Broker-Dealer Transfer Restricted Securities acquired by Restricted Broker-Dealers and to ensure that it conforms with the requirements of this Agreement, the Securities Act and the policies, rules and regulations of the Commission as announced from time to time, for a period of 120 days from the date on which the Exchange Offer Registration Statement is declared effective or, if shorter, until all Broker-Dealer Transfer Restricted Securities have been sold thereunder. The Partnership shall provide sufficient copies of the latest version of such Prospectus to such Restricted Broker-Dealers promptly upon request at any time during such 120 day period in order to facilitate such sales. SECTION 4. SHELF REGISTRATION (a) Shelf Registration. If (i) the Partnership is not required to file an Exchange Offer Registration Statement or to consummate the Exchange Offer because the Exchange Offer is not permitted by applicable law or Commission policy (after the procedures set forth in Section 6(a) below have been complied with) or (ii) if any Holder of Transfer Restricted Securities shall notify the Partnership within twenty (20) Business Days of the Consummation of the Exchange Offer that (A) such Holder is prohibited by applicable law or Commission policy from participating in the Exchange Offer, or (B) such Holder may not resell the New Senior Notes acquired by it in the Exchange Offer to the public without delivering a prospectus and that the Prospectus contained in the Exchange Offer Registration Statement is not appropriate or available for such resales by such Holder, or (C) such Holder is a Broker-Dealer and holds Senior Notes acquired directly from the Partnership or one of its Affiliates, then the Partnership shall: (x) cause to be filed a shelf registration statement pursuant to Rule 415 under the Securities Act, which may be an amendment to the Exchange Offer Registration Statement (in either event, the "Shelf Registration Statement") on or prior to the earliest to occur of (1) the 60th day after the date on which the Partnership receives notice from the Commission or determines that it is not required to file the Exchange Offer Registration Statement -6- pursuant to clause (i) above, (2) the 60th day after the date on which the Partnership receives notice from a Holder of Transfer Restricted Securities as contemplated by clause (ii) above, and (3) the 150th day after the Closing Date (such earliest date being the "Shelf Filing Deadline"), which Shelf Registration Statement shall provide for resales of all Transfer Restricted Securities the Holders of which shall have provided the information required pursuant to Section 4(b) hereof; and (y) use its reasonable best efforts to cause such Shelf Registration Statement to be declared effective by the Commission on or before the 60th day after the Shelf Filing Deadline. The Partnership shall use its reasonable best efforts to keep such Shelf Registration Statement continuously effective, supplemented and amended as required by and subject to the provisions of Sections 6(b) and (c) hereof to the extent necessary to ensure that it is available for sales of Transfer Restricted Securities by the Holders thereof entitled to the benefit of this Section 4(a), and to ensure that it conforms with the requirements of this Agreement, the Securities Act and the policies, rules and regulations of the Commission as announced from time to time, for a period of at least 18 months (as extended pursuant to Section 6(c)(i)) following the date on which such Shelf Registration Statement first becomes effective under the Securities Act or such shorter period ending when all of the Transfer Restricted Securities available for sale thereunder have been sold pursuant thereto. (b) Provision by Holders of Certain Information in Connection with the Shelf Registration Statement. No Holder of Transfer Restricted Securities may include any of its Transfer Restricted Securities in any Shelf Registration Statement pursuant to this Agreement unless and until such Holder furnishes to the Partnership in writing, within 15 Business Days after receipt of a request therefor, such information as the Partnership may reasonably request for use in connection with any Shelf Registration Statement or Prospectus or preliminary Prospectus included therein. No Holder of Transfer Restricted Securities shall be entitled to Liquidated Damages pursuant to Section 5 hereof unless and until such Holder shall have provided all such reasonably requested information. Each Holder as to which any Shelf Registration Statement is being effected agrees to furnish promptly to the Partnership all information required to be disclosed in order to make the information previously furnished to the Partnership by such Holder not materially misleading. SECTION 5. LIQUIDATED DAMAGES If (i) any of the Registration Statements required by this Agreement are not filed with the Commission on or prior to the date specified for such filing in this Agreement then additional interest shall accrue on the principal amount of the Senior Notes at a rate of 0.25% per annum from the date such filing was required; (ii) any of such Registration Statements have not been declared effective by the Commission on or prior to the date specified for such effectiveness in this Agreement (the "Effectiveness Target Date") then additional interest shall accrue on the principal amount of the Senior Notes at a rate of 0.25% per annum from the Effectiveness Target Date; -7- (iii) the Exchange Offer has not been Consummated within 30 Business Days after the Effectiveness Target Date with respect to the Exchange Offer Registration Statement then additional interest shall accrue on the principal amount of the Senior Notes at a rate of 0.25% per annum from the 31st Business Day after the Effectiveness Target Date; or (iv) any Registration Statement required by this Agreement is filed and declared effective but shall thereafter cease to be effective or fail to be usable for its intended purpose without being succeeded within 30 days by a post-effective amendment to such Registration Statement, the effectiveness of another Registration Statement or the use of the Prospectus (as amended or supplemented) is again permitted that cures such failure then additional interest shall accrue on the principal amount of the Senior Notes at a rate of 0.25% per annum from the 31st day following such Registration Statement ceasing to be effective (each such event referred to in clauses (i) through (iv), a "Registration Default"). The additional interest rate owing pursuant to the preceding clauses (i) through (iv) shall be increased by 0.25% per annum each 90-day period that such Registration Default continues, provided such additional interest does not exceed the Maximum Rate, as defined below. All accrued Liquidated Damages (as defined below) shall be paid to the Global Note Holders or Holders of certificated Notes by the Partnership on each Interest Payment Date generally in accordance with the provisions in the Indenture regarding payment of interest. Notwithstanding anything to the contrary set forth herein, (1) upon filing of the Exchange Offer Registration Statement (and/or, if applicable, the Shelf Registration Statement), in the case of (i) above, (2) upon the effectiveness of the Exchange Offer Registration Statement (and/or, if applicable, the Shelf Registration Statement), in the case of (ii) above, (3) upon Consummation of the Exchange Offer, in the case of (iii) above, or (4) upon the filing of a post-effective amendment to the Registration Statement or an additional Registration Statement that causes the Exchange Offer Registration Statement (and/or, if applicable, the Shelf Registration Statement) to again be declared effective or the Prospectus to be made usable in the case of (iv) above, the Liquidated Damages payable with respect to the Transfer Restricted Securities as a result of such clause (i), (ii), (iii) or (iv) ("Liquidated Damages"), as applicable, shall cease. Liquidated Damages on the Senior Notes may not exceed, in the aggregate, 1% of the face amount of the Senior Notes per annum (the "Maximum Rate"). All obligations of the Partnership set forth in the preceding paragraph that are outstanding with respect to any Transfer Restricted Security at the time such security ceases to be a Transfer Restricted Security shall survive until such time as all such obligations with respect to such security shall have been satisfied in full. SECTION 6. REGISTRATION PROCEDURES (a) Exchange Offer Registration Statement. In connection with the Exchange Offer, the Partnership shall comply with all applicable provisions of Section 6(c) below, shall use its reasonable best efforts to effect such exchange to permit the sale of Broker-Dealer Transfer Restricted Securities being sold in accordance with the intended method or methods of distribution -8- thereof (which shall be in a manner consistent with the terms of this Agreement), and shall comply with all of the following provisions: (i) If, following the date hereof and prior to the Consummation of the Exchange Offer, there has been published a change in Commission policy with respect to exchange offers such as the Exchange Offer, such that in the reasonable opinion of counsel to the Partnership there is a substantial question as to whether the Exchange Offer is permitted by applicable law or Commission policy, the Partnership hereby agrees to seek a no-action letter or other favorable decision from the Commission staff allowing the Partnership to Consummate an Exchange Offer for such Senior Notes. The Partnership hereby agrees to pursue the issuance of such a decision to the Commission staff level but shall not be required to take commercially unreasonable action to effect a change of Commission policy. The Partnership hereby agrees, however, to take all such other actions as are reasonably requested by the Commission or the Commission staff or otherwise required in connection with the issuance of such decision, including without limitation, to (A) participate in telephonic conferences with the Commission or the Commission staff, (B) deliver to the Commission or the Commission staff an analysis prepared by counsel to the Partnership setting forth the legal bases, if any, upon which such counsel has concluded that such an Exchange Offer should be permitted and (C) diligently pursue a resolution (which need not be favorable) by the Commission staff of such submission. (ii) As a condition to its participation in the Exchange Offer pursuant to the terms of this Agreement, each Holder of Transfer Restricted Securities shall furnish, upon the request of the Partnership, prior to the Consummation thereof, a written representation to the Partnership (which may be contained in the letter of transmittal contemplated by the Exchange Offer Registration Statement) to the effect that (A) it is not an Affiliate of the Partnership, (B) it is not engaged in, and does not intend to engage in, and has no arrangement or understanding with any Person to participate in, a distribution (within the meaning of the Securities Act) of the New Senior Notes to be issued in the Exchange Offer and (C) it is acquiring the New Senior Notes in its ordinary course of business. In addition, all such Holders of Transfer Restricted Securities shall otherwise reasonably cooperate in the Partnership's preparations for the Exchange Offer. Each Holder hereby acknowledges and agrees that any Broker-Dealer and any such Holder using the Exchange Offer to participate in a distribution of the securities to be acquired in the Exchange Offer (1) could not under Commission policy as in effect on the date of this Agreement rely on the position of the Commission enunciated in Morgan Stanley and Co., Inc. (available June 5, 1991) and Exxon Capital Holdings Corporation (available May 13, 1988), as interpreted in the Commission's letter to Sherman & Sterling dated July 2, 1993, and similar no-action letters (including any no-action letter obtained pursuant to clause (i) above), and (2) must comply with the registration and prospectus delivery requirements of the Securities Act in connection with a secondary resale transaction and that such a secondary resale transaction should be covered by an effective registration statement containing the selling security holder information required by Item 507 or 508, as applicable, of Regulation S-K if the resales are of New -9- Senior Notes obtained by such Holder in exchange for Senior Notes acquired by such Holder directly from the Partnership or an Affiliate thereof. (iii) Prior to effectiveness of the Exchange Offer Registration Statement, the Partnership shall provide a supplemental letter to the Commission (A) stating that the Partnership is registering the Exchange Offer in reliance on the position of the Commission enunciated in Exxon Capital Holdings Corporation (available May 13, 1988), Morgan Stanley and Co., Inc. (available June 5, 1991) and, if applicable, any no-action letter obtained pursuant to clause (i) above, (B) including a representation that the Partnership has not entered into any arrangement or understanding with any Person to distribute the New Senior Notes to be received in the Exchange Offer and that, to the best of the Partnership's information and belief, each Holder participating in the Exchange Offer is acquiring the New Senior Notes in its ordinary course of business and has no arrangement or understanding with any Person to participate in the distribution of the New Senior Notes received in the Exchange Offer and (C) any other undertaking or representation required by the Commission as set forth in any no-action letter obtained pursuant to clause (i) above. (b) Shelf Registration Statement. In connection with the Shelf Registration Statement, the Partnership shall comply with all the provisions of Section 6(c) below and shall use its reasonable best efforts to effect such registration to permit the sale of the Transfer Restricted Securities being sold in accordance with the intended method or methods of distribution thereof, and pursuant thereto the Partnership will as expeditiously as possible, and in any event within the time periods and otherwise in accordance with the provisions hereof, prepare and file with the Commission a Registration Statement relating to the registration on any appropriate form under the Securities Act, which form shall be available for the sale of the Transfer Restricted Securities in accordance with the intended method or methods of distribution thereof. (c) General Provisions. In connection with any Registration Statement and any Prospectus required by this Agreement to permit the sale or resale of Transfer Restricted Securities (including, without limitation, any Exchange Offer Registration Statement and the related Prospectus required to permit resales of Transfer Restricted Securities by Restricted Broker-Dealers), the Partnership shall: (i) use its reasonable best efforts to keep such Registration Statement continuously effective and provide all requisite financial statements for the period specified in Section 3 or 4 of this Agreement, as applicable, or such shorter period as will terminate when all Transfer Restricted Securities covered by such Registration Statement have been sold; upon the occurrence of any event that would cause any such Registration Statement or the Prospectus contained therein (A) to contain a material misstatement or omission or (B) not to be effective and usable for resale of Transfer Restricted Securities during the period required by this Agreement, the Partnership shall (1) file promptly an appropriate amendment to such Registration Statement, in the case of clause (A), correcting any such misstatement or omission, and (2) in the case of either clause (A) or (B), use its reasonable -10- best efforts to cause such amendment to be declared effective and such Registration Statement and the related Prospectus to become usable for their intended purpose(s) as soon as practicable thereafter; (ii) prepare and file with the Commission such amendments and post-effective amendments to the Registration Statement as may be necessary to keep the Registration Statement effective for the applicable period set forth in Section 3 or 4 hereof, as applicable, or such shorter period as will terminate when all Transfer Restricted Securities covered by such Registration Statement have been sold; cause the Prospectus to be supplemented by any required Prospectus supplement, and as so supplemented to be filed pursuant to Rule 424 under the Securities Act, and to comply fully with the applicable provisions of Rules 424, 430A and 462, as applicable under the Securities Act in a timely manner; and comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such Registration Statement during the applicable period in accordance with the intended method or methods of distribution by the sellers thereof set forth in such Registration Statement or supplement to the Prospectus; (iii) advise the managing underwriter(s), if any, and selling Holders promptly and, if requested by such Persons, to confirm such advice in writing, (A) when the Prospectus or any Prospectus supplement or post-effective amendment thereto has been filed, and, with respect to any Registration Statement or any post-effective amendment thereto, when the same has become effective, (B) of any request by the Commission for amendments to the Registration Statement or amendments or supplements to the Prospectus or for additional information relating thereto, (C) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement under the Securities Act or of the suspension by any state securities commission of the qualification of the Transfer Restricted Securities for offering or sale in any jurisdiction, or the initiation of any proceeding for any of the preceding purposes, (D) of the existence of any fact or the happening of any event that makes any statement of a material fact made in the Registration Statement, the Prospectus, any amendment or supplement thereto, or any document incorporated by reference therein untrue in any material respect, or that requires the making of any additions to or changes in the Registration Statement or the Prospectus in order to make the statements therein, in light of the circumstances under which they were made, not misleading. If at any time the Commission shall issue any stop order suspending the effectiveness of the Registration Statement, or any state securities commission or other regulatory authority shall issue an order suspending the qualification or exemption from qualification of the Transfer Restricted Securities under state securities or Blue Sky laws, the Partnership shall use its reasonable best efforts to obtain the withdrawal or lifting of such order at the earliest practicable time; (iv) upon written request, furnish to the Initial Purchasers, and, upon written request, to each of the selling Holders and each of the managing underwriter(s) in connection with such sale, if any, before filing with the Commission, copies of any Registration Statement or any Prospectus included therein or any amendments or supplements to any such -11- Registration Statement or Prospectus, which documents will be subject to the review of such selling Holders and underwriter(s) in connection with such sale, if any, for a period of at least five Business Days, and the Partnership will not file any such Registration Statement or Prospectus or any amendment or supplement to any such Registration Statement or Prospectus to which a selling Holder of Transfer Restricted Securities covered by such Registration Statement or the underwriter(s) in connection with such sale, if any, shall reasonably object within five Business Days after the receipt thereof. A selling Holder or managing underwriter in connection with such sale, if any, shall be deemed to have reasonably objected to such filing (A) if such Registration Statement, amendment, Prospectus or supplement, as applicable, as proposed to be filed, contains a material misstatement or omission or fails to comply with the applicable requirements of the Securities Act or (B) if any of the information furnished to the Partnership by the selling Holder or managing underwriter in connection with such sale, if any, and included in such Registration Statement, amendment, Prospectus or supplement, as applicable, as proposed to be filed is incorrect in any respect; (v) upon written request, promptly prior to the filing of any document that is to be incorporated by reference into a Registration Statement or Prospectus, provide copies of such document to the selling Holders and to the underwriter(s) in connection with such sale, if any, make the Partnership's representatives available for discussion of such document and other customary due diligence matters, and include such information in such document prior to the filing thereof as such selling Holders or underwriters, if any, reasonably may request; (vi) in the case of a shelf registration, make available at reasonable times for inspection by the selling Holders, any managing underwriter participating in the disposition pursuant to such Registration Statement, if any, and any attorney or accountant retained by such selling Holders or any of the underwriter(s), all relevant financial and other records, pertinent corporate documents and properties of the Partnership and cause the officers, directors and employees of the Partnership to supply all information reasonably requested by any such underwriter, attorney or accountant in connection with such Registration Statement or any post-effective amendment thereto subsequent to the filing thereof and prior to its effectiveness; (vii) if requested by any selling Holders or the managing underwriter(s) in connection with such sale, if any, promptly incorporate in any Registration Statement or Prospectus, pursuant to a supplement or post-effective amendment if necessary, such information as such managing underwriter(s), if any, may request to have included therein, including, without limitation, information relating to the "Plan of Distribution" of the Transfer Restricted Securities, information with respect to the principal amount of Transfer Restricted Securities being sold to such underwriter(s), the purchase price being paid therefor and any other terms of the offering of the Transfer Restricted Securities to be sold in such offering; and make all required filings of such Prospectus supplement or post-effective -12- amendment as soon as practicable after the Partnership is notified of the matters to be incorporated in such Prospectus supplement or post-effective amendment; (viii) cause the Transfer Restricted Securities covered by the Registration Statement to be rated by the appropriate rating agencies, if so requested by the Holders of a majority in aggregate principal amount of Notes covered thereby or the managing underwriter(s) in connection with such sale, if any, unless such Transfer Restricted Securities are already so rated; (ix) furnish to each selling Holder and each of the managing underwriter(s) in connection with such sale, if any, without charge, at least one copy of the Registration Statement, as first filed with the Commission, and of each amendment thereto, including all documents incorporated by reference therein and all exhibits (including exhibits incorporated therein by reference); (x) deliver to each selling Holder and each of the managing underwriter(s), if any, without charge, as many copies of the Prospectus (including each preliminary prospectus) and any amendment or supplement thereto as such Persons reasonably may request; the Partnership hereby consents to the use of the Prospectus and any amendment or supplement thereto by each of the selling Holders and each of the underwriter(s), if any, in connection with the offering and the sale of the Transfer Restricted Securities covered by the Prospectus or any amendment or supplement thereto; (xi) enter into such agreements (including an underwriting agreement), and make such representations and warranties with respect to the business of the Partnership as are customarily addressed in representations and warranties made by issuers to underwriters in underwritten offerings, and take all such other actions in connection therewith in order to expedite or facilitate the disposition of the Transfer Restricted Securities pursuant to any Registration Statement contemplated by this Agreement, all to such extent as may be requested by the Initial Purchasers or by any Holder of Transfer Restricted Securities or managing underwriter in connection with any sale or resale pursuant to any Registration Statement contemplated by this Agreement; and whether or not an underwriting agreement is entered into and whether or not the registration is an Underwritten Registration, the Partnership shall: (A) furnish to each Initial Purchaser, each selling Holder and each managing underwriter, if any, in such substance and scope as they may reasonably request and as are customarily made by issuers to underwriters in primary underwritten offerings, upon the date of the Consummation of the Exchange Offer and, if applicable, the effectiveness of the Shelf Registration Statement: (1) a certificate, dated the date of Consummation of the Exchange Offer or the date of effectiveness of the Shelf Registration Statement, as the case may be, -13- signed on behalf of the Partnership by any Authorized Officer, confirming, as of the date thereof, the matters set forth in paragraph (g) of Section 7 of the Purchase Agreement and such other matters as such parties may reasonably request; (2) opinions, dated the date of Consummation of the Exchange Offer or of effectiveness of the Shelf Registration Statement, as the case may be, of counsel or counsels for the Partnership, covering the matters set forth in paragraphs (c) and (d) of Section 7 of the Purchase Agreement and such other matters as such parties may reasonably request, and in any event including a statement to the effect that such counsel for the Partnership has participated in conferences with officers of the Partnership and other representatives of the Partnership, representatives of the independent public accountants for the Partnership and representatives of and counsel to the Initial Purchasers at which the contents of such Registration Statement and the related Prospectus were discussed and, although such counsel is not passing upon and does not assume any responsibility for the accuracy, completeness or fairness of the statements contained therein (except as specifically stated in such opinion), on the basis of the foregoing, no facts have come to the attention of such counsel that have caused such counsel to believe that the applicable Registration Statement, at the time such Registration Statement or any post-effective amendment thereto became effective, and, in the case of the Exchange Offer Registration Statement, as of the date of Consummation, contained an untrue statement of a 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, or that the Prospectus contained in such Registration Statement as of its date and, in the case of the opinion dated the date of Consummation of the Exchange Offer, as of the date of Consummation, contained an untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading (it being understood that such counsel need make no comment as to the financial statements and related statistical or financial information and schedules included in any Registration Statement contemplated by this Agreement or the related Prospectus); and (3) customary comfort letters, dated as of the date of Consummation of the Exchange Offer or the date of effectiveness of the Shelf Registration Statement, as the case may be, from the Partnership's independent accountants, in the customary form and covering matters of the type customarily covered in comfort letters by underwriters in connection with Underwritten Offerings, and affirming the matters set forth in the comfort letters delivered pursuant to Section 7(e) and (f) of the Purchase Agreement, without exception; -14- (B) set forth in full or incorporate by reference in the underwriting agreement, if any, the indemnification provisions and procedures of Section 8 hereof with respect to all parties to be indemnified pursuant to said Section; and (C) deliver such other documents and certificates as may be reasonably requested by such parties to evidence compliance with clause (A) above and with any customary conditions contained in the underwriting agreement or other agreement entered into by the Partnership pursuant to this clause (xi), if any. The above shall be done at each closing under such underwriting or similar agreement, as and to the extent required thereunder, and, if at any time the representations and warranties of the Partnership contemplated in clause (A)(1) above cease to be true and correct in any material respect, the Partnership shall so advise the Initial Purchasers and the managing underwriter(s), if any, each selling Holder and each Restricted Broker-Dealer promptly and, if requested by such Persons, shall confirm such advice in writing; (xii) prior to any public offering of Transfer Restricted Securities, cooperate with the selling Holders, the managing underwriter(s), if any, and its counsel in connection with the registration and qualification of the Transfer Restricted Securities under the securities or Blue Sky laws of such jurisdictions in the United States as the selling Holders or managing underwriter(s), if any, may request and do any and all other acts or things necessary or advisable to enable the disposition in such jurisdictions of the Transfer Restricted Securities covered by the applicable Registration Statement; provided, however, that the Partnership shall not be required to register or qualify as a foreign entity where it is not now so qualified or to take any action that would subject it to the service of process in suits or to taxation, other than as to matters and transactions relating to the Registration Statement, in any jurisdiction where it is not now so subject; (xiii) shall issue, upon the request of any Holder of Senior Notes covered by any Shelf Registration Statement contemplated by this Agreement, New Senior Notes, having an aggregate principal amount equal to the aggregate principal amount of the Senior Notes surrendered to the Partnership by such Holder in exchange therefor or being sold by such Holder; such New Senior Notes to be registered in the name of such Holder or in the name of the purchaser(s) of such Notes, as the case may be; in return, the Senior Notes held by such Holder shall be surrendered to the Partnership for cancellation; (xiv) cooperate with the selling Holders and the managing underwriter(s), if any, to facilitate the timely preparation and delivery of certificates representing Transfer Restricted Securities to be sold and not bearing any restrictive legends; and enable such Transfer Restricted Securities to be in such denominations and registered in such names as the Holders or the underwriter(s), if any, may request at least two Business Days prior to any sale of Transfer Restricted Securities made by such underwriter(s); -15- (xv) use its reasonable best efforts to cause the disposition of the Transfer Restricted Securities covered by the Registration Statement to be registered with or approved by such other governmental agencies or authorities as may be necessary to enable the seller or sellers thereof or the underwriter(s), if any, to consummate the disposition of such Transfer Restricted Securities, subject to the proviso contained in clause (xii) above; (xvi) subject to Section 6(c)(i), if any fact or event contemplated by clause 6(c)(iii)(D) above shall exist or have occurred, prepare a supplement or post-effective amendment to the Registration Statement or related Prospectus or any document incorporated therein by reference or file any other required document so that, as thereafter delivered to the purchasers of Transfer Restricted Securities, the Prospectus will not contain an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein in the light of the circumstances under which they were made not misleading; (xvii) provide a CUSIP number for all Transfer Restricted Securities not later than the effective date of the Registration Statement covering such Transfer Restricted Securities and provide the Trustee under the Indenture with printed certificates for the Transfer Restricted Securities which are in a form eligible for deposit with The Depository Trust Company; (xviii) cooperate and assist in any filings required to be made with the NASD and in the performance of any due diligence investigation by any underwriter (including any "qualified independent underwriter" that is required to be retained in accordance with the rules and regulations of the NASD), and use its reasonable best efforts to cause such Registration Statement to become effective and approved by such governmental agencies or authorities as may be necessary to enable the Holders selling Transfer Restricted Securities to consummate the disposition of such Transfer Restricted Securities; (xix) otherwise use its reasonable best efforts to comply with all applicable rules and regulations of the Commission, and make generally available to its security holders, as soon as practicable, a consolidated earnings statement meeting the requirements of Rule 158 (which need not be audited) for the twelve-month period (A) commencing at the end of any fiscal quarter in which Transfer Restricted Securities are sold to underwriters in a firm or reasonable best efforts Underwritten Offering or (B) if not sold to underwriters in such an offering, beginning with the first month of the Partnership's first fiscal quarter commencing after the effective date of the Registration Statement; (xx) cause the Indenture to be qualified under the TIA not later than the effective date of the first Registration Statement required by this Agreement, and, in connection therewith, cooperate with the Trustee and the Holders of Notes to effect such changes to the Indenture as may be required for such Indenture to be so qualified in accordance with the terms of the TIA; and execute and use its reasonable best efforts to cause the Trustee to -16- execute, all documents that may be required to effect such changes and all other forms and documents required to be filed with the Commission to enable such Indenture to be so qualified in a timely manner; (xxi) cause all Transfer Restricted Securities covered by the Registration Statement to be listed on each securities exchange on which similar securities issued by the Partnership are then listed if requested by the Holders of a majority in aggregate principal amount of Senior Notes or the managing underwriter(s), if any; and (xxii) promptly provide or make available to the Holders of the Notes, all financial information and reports at the time and in the manner provided for in Section 4.03 of the Indenture. (d) Restrictions on Holders. (i) Each Holder agrees by acquisition of a Transfer Restricted Security that, upon receipt of the notice from the Partnership of the existence of any fact of the kind described in Section 6(c)(iii)(D) hereof, such Holder will forthwith discontinue disposition of Transfer Restricted Securities pursuant to the applicable Registration Statement until such Holder's receipt of the copies of the supplemented or amended Prospectus contemplated by Section 6(c)(xvi) hereof, or until it is advised in writing (the "Advice") by the Partnership that the use of the Prospectus may be resumed, and has received copies of any additional or supplemental filings that are incorporated by reference in the Prospectus. If so directed by the Partnership, each Holder will deliver to the Partnership (at the Partnership's expense) all copies, other than permanent file copies then in such Holder's possession, of the Prospectus covering such Transfer Restricted Securities that was current at the time of receipt of such notice. In the event the Partnership shall give any such notice, the time period regarding the effectiveness of such Registration Statement set forth in Section 3 or 4 hereof, as applicable, shall be extended by the number of days during the period from and including the date of the giving of such notice pursuant to Section 6(c)(i) or Section 6(c)(iii)(D) hereof to and including the date when each selling Holder covered by such Registration Statement shall have received the copies of the supplemented or amended Prospectus contemplated by Section 6(c)(xvi) hereof or shall have received the Advice. (ii) The Partnership may require a Holder of Transfer Restricted Securities to be included in a Registration Statement to furnish to the Partnership such information as required by law to be disclosed by such Holder in such Registration Statement, and the Partnership may exclude from such Registration Statement the Transfer Restricted Securities of any Holder who unreasonably fails to furnish such information within a reasonable time after receiving such request. SECTION 7. REGISTRATION EXPENSES All expenses incident to the Partnership's performance of or compliance with this Agreement will be borne by the Partnership, regardless of whether a Registration Statement becomes effective, including, without limitation: (i) all registration and filing fees and expenses (including filings made by any Initial Purchaser or Holder with the NASD (and, if applicable, the fees and -17- expenses of any "qualified independent underwriter") and its counsel may be required by the rules and regulations of the NASD); (ii) all fees expenses of compliance with federal securities and state Blue Sky or laws; (iii) all expenses of printing (including printing certificates the New Senior Notes to be issued in the Exchange Offer and printing of (iv) all fees and disbursements of counsel for the Partnership; (v) all messenger and delivery services and telephone expenses of the Partnership; and (vi) all fees and disbursements of independent certified public accountants of the Partnership (including the expenses of any special audit and comfort letters required by or incident to such performance). The Partnership will, in any event, bear its internal expenses (including, without limitation, all salaries and expenses of any of the Partnership's officers and employees performing legal or accounting duties), the expenses of any annual audit and the fees and expenses of any Person, including special experts, retained by the Partnership. SECTION 8. INDEMNIFICATION (a) The Partnership shall indemnify and hold harmless each Holder, its directors, officers and employees and each Person, if any, who controls such Holder within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act, from and against any and all losses, claims, damages, liabilities, judgments and actions, joint or several, or any action in respect thereof (including, but not limited to, any loss, claim, damage, liability, judgment or action relating to purchases and sales of Notes), to which that Holder, its directors, officers, employees or controlling Persons may become subject, under the Securities Act or otherwise, insofar as such loss, claim, damage, liability, judgment or action arises out of, or is based upon, (i) any untrue statement or alleged untrue statement of a material fact contained (A) in any Registration Statement, Preliminary Prospectus or Prospectus or in any amendment or supplement thereto or (B) in any Blue Sky application or other document prepared or executed by the Partnership (or based upon any written information furnished by the Partnership) specifically for the purpose of qualifying any or all of the Notes under the securities laws of any state or other jurisdiction (any such application, document or information being hereinafter called a "Blue Sky Application") or (ii) the omission or alleged omission to state in any Registration Statement, Preliminary Prospectus or Prospectus, or in any amendment or supplement thereto, or in any Blue Sky Application any material fact required to be stated therein or necessary to make the statements therein not misleading, and shall reimburse such Holder and each director, officer, employee or controlling Person promptly upon demand for any legal or other expenses reasonably incurred by such Holder, director, officer, employee or controlling Person in connection with investigating or defending or preparing to defend against any such loss, claim, damage, liability, judgment or action as such expenses are incurred; provided, however, that the Partnership shall not be liable in any such case to the extent that any such loss, claim, damage, liability, judgment or action arises out of, or is based upon, any untrue statement or alleged untrue statement or omission or alleged omission made in any Registration Statement, Preliminary Prospectus or Prospectus, or in any such amendment or supplement or in any Blue Sky Application in reliance upon and in conformity with written information furnished to the Partnership by or on behalf of such Holder specifically for inclusion therein. -18- (b) Each Holder, severally and not jointly, shall indemnify and hold harmless the Partnership, the Partnership Policy Committee of the Partnership, the Audit Committee of the Partnership, the employees and officers of the Partnership, the General Partners, the employees, officers and directors of the General Partners, and each Person, if any, who controls the Partnership within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act (collectively, the "Partnership Indemnitees"), from and against any and all losses, claims, damages, liabilities, judgments or actions, joint or several, or any action in respect thereof, to which the Partnership Indemnitees may become subject, under the Securities Act or otherwise, insofar as such loss, claim, damage, liability, judgment or action arises out of, or is based upon, (i) any untrue statement or alleged untrue statement of a material fact contained in any Registration Statement, Preliminary Prospectus or Prospectus or in any amendment or supplement thereto, or in any Blue Sky Application or (ii) the omission or alleged omission to state in any Registration Statement, Preliminary Prospectus or Prospectus, or in any amendment or supplement thereto, or in any Blue Sky Application any material fact required to be stated therein or necessary to make the statements therein not misleading, but in each case only to the extent that the untrue statement or alleged untrue statement or omission or alleged omission was made in reliance upon and in conformity with written information furnished to the Partnership by or on behalf of such Holder specifically for inclusion therein and described in Section 8(e), and shall reimburse the Partnership Indemnitee or controlling Person for any legal or other expenses reasonably incurred by the Partnership Indemnitee in connection with investigating or defending or preparing to defend against any such loss, claim, damage, liability, judgment or action as such expenses are incurred. The foregoing indemnity agreement is in addition to any liability which any Holder may otherwise have to the Partnership Indemnitees. (c) Promptly after receipt by any indemnified party under this Section 8 of notice of any claim or the commencement of any action, the indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party under this Section 8, notify the indemnifying party in writing of the claim or the commencement of that action; provided, however, that the failure to notify the indemnifying party shall not relieve it from any liability which it may have under this Section 8 except to the extent it has been materially prejudiced by such failure and, provided further, that the failure to notify the indemnifying party shall not relieve it from any liability which it may have to an indemnified party otherwise than under this Section 8. If any such claim or action shall be brought against an indemnified party, and it shall notify the indemnifying party thereof, the indemnifying party shall be entitled to participate therein and, to the extent that it wishes, jointly with any other similarly notified indemnifying party, to assume the defense thereof with counsel satisfactory to the indemnified party and the payment of all fees and expenses of such counsel shall be the responsibility of the indemnifying party. After notice from the indemnifying party to the indemnified party of its election to assume the defense of such claim or action, the indemnifying party shall not be liable to the indemnified party under this Section 8 for any legal or other expenses subsequently incurred by the indemnified party in connection with the defense thereof other than reasonable costs of investigation, provided, however, that the indemnified party shall have the right to employ separate counsel to represent all indemnified parties who may be subject to liability arising out of any claim in respect of which indemnity may be sought by the indemnified parties against the -19- indemnifying parties under this Section 8 if, (i) the employment of such counsel shall have been specifically authorized in writing by the indemnifying party, (ii) the indemnifying party shall have failed to assume the defense of such action or employ counsel reasonably satisfactory to the indemnified party or (iii) counsel for any of the indemnified parties shall have reasonably concluded that there may be defenses available to the indemnified parties that are in addition to or in conflict with those available to the indemnifying party. In any case, the indemnifying party shall not, in connection with any one action or separate but substantially similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances, be liable for the fees and expenses of more than one separate firm of attorneys (in addition to any local counsel) of all indemnified parties, and all such fees and expenses shall be reimbursed as they are incurred. Such firm shall be designated in writing by BOA, in the case of the parties indemnified pursuant to Section 8(a) and by the Partnership, in the case of parties indemnified pursuant to Section 8(b). No indemnifying party shall (i) without the prior written consent of the indemnified parties (which consent shall not be unreasonably withheld), settle or compromise or consent to the entry of any judgment with respect to any pending or threatened claim, action, suit or proceeding in respect of which indemnification or contribution may be sought hereunder (whether or not the indemnified parties are actual or potential parties to such claim or action) unless such settlement, compromise or consent includes an unconditional release of each indemnified party from all liability arising out of such claim, action, suit or proceeding, or (ii) be liable for any settlement of any such action effected without its written consent (which consent shall not be unreasonably withheld), but if settled with the consent of the indemnifying party or if there be a final judgment of the plaintiff in any such action, the indemnifying party agrees to indemnify and hold harmless any indemnified party from and against any loss or liability by reason of such settlement or judgment. (d) If the indemnification provided for in this Section 8 shall for any reason be unavailable or insufficient to hold harmless an indemnified party under Section 8(a) or 8(b) in respect of any loss, claim, damage, liability, judgment or any action in respect thereof, referred to therein, then each indemnifying party shall, in lieu of indemnifying such indemnified party, contribute to the amount paid or payable by such indemnified party as a result of such loss, claim, damage, liability, judgment or action in respect thereof, (i) in such proportion as shall be appropriate to reflect the relative benefits received by the Partnership, on the one hand, and the Holders, on the other, from the offering of the Notes or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Partnership, on the one hand, and the Holders, on the other, with respect to the statements or omissions which resulted in such loss, claim, damage, liability, judgment or action in respect thereof, as well as any other relevant equitable considerations. The relative benefits received by the Partnership, on the one hand, and the Holders, on the other, with respect to such offering shall be deemed to be in the same proportion as the total net proceeds from the offering of the Notes purchased under the Purchase Agreement (before deducting expenses) received by the Partnership as set forth in the table on the cover page of the Memorandum, on the one hand, and the total net proceeds received by such Holder upon its resale of Notes less the amount paid by such Holder for such Notes, on the other hand, bear to the total sum of such amounts. The relative fault shall be determined by reference to whether the untrue or alleged -20- untrue statement of a material fact or omission or alleged omission to state a material fact relates to information supplied by the Partnership or such Holder, the intent of the parties and their relative knowledge, access to information and opportunity to correct or prevent such statement or omission. The Partnership and the Holders agree that it would not be just and equitable if contributions pursuant to this Section 8 were to be determined by pro rata allocation or by any other method of allocation which does not take into account the equitable considerations referred to herein. The amount paid or payable by an indemnified party as a result of the loss, claim, damage, liability, judgment or action in respect thereof, referred to above in this Section 8 shall be deemed to include, for purposes of this Section 8(d), any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Section 8(d), no Holder, and none of its directors, officers, employees or controlling Persons, shall be required to contribute, in the aggregate, any amount in excess of the amount by which the total net proceeds received by such Holder upon its resale of Notes exceeds the sum of the amount paid by such Holder for such Notes and the amount of any damages which such Holder has otherwise paid or become liable to pay by reason of any untrue or alleged untrue statement or omission or alleged omission. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation. The Holders' obligations to contribute as provided in this Section 8(d) are several in proportion to the respective principal amount of Notes held by each of the Holders hereunder and not joint. (e) The Holders severally confirm, and the Partnership acknowledges, that the statements with respect to the offering of the Notes set forth in the bottom paragraph on the cover page of, and the table contained in the first paragraph and the disclosure in the second, fifth, sixth and seventh paragraphs and the last sentence of the fourth paragraph under the caption "Plan of Distribution" in the Memorandum are correct and constitute the only information furnished in writing to the Partnership by or on behalf of the Holders specifically for inclusion in the Memorandum. SECTION 9. RULE 144A The Partnership hereby agrees with each Holder, for so long as any Transfer Restricted Securities remain outstanding and during any period in which the Partnership is not subject to Section 13 or 15(d) of the Exchange Act, to make available to any Holder or beneficial owner of Transfer Restricted Securities in connection with any sale thereof and any prospective purchaser of such Transfer Restricted Securities from such Holder or beneficial owner, the information required by Rule 144A(d)(4) under the Securities Act in order to permit resales of such Transfer Restricted Securities pursuant to Rule 144A. SECTION 10. PARTICIPATION IN UNDERWRITTEN REGISTRATION No Holder may participate in any Underwritten Registration hereunder unless such Holder (a) agrees to sell such Holder's Transfer Restricted Securities on the basis provided in any -21- underwriting arrangements approved by the Persons entitled hereunder to approve such arrangements and (b) completes and executes all reasonable questionnaires, powers of attorney, indemnities, underwriting agreements, lock-up letters and other documents required under the terms of such underwriting arrangements. SECTION 11. SELECTION OF UNDERWRITERS For any Underwritten Offering, the investment banker or investment bankers and manager or managers that will administer such offering will be selected by the Holders of a majority in aggregate principal amount of the Transfer Restricted Securities included in such offering; provided, that such investment bankers and managers must be reasonably satisfactory to the Partnership. Such investment bankers and managers are referred to herein as the "managing underwriters." SECTION 12. MISCELLANEOUS (a) Remedies. Each Holder, in addition to being entitled to exercise all rights provided herein, in the Indenture, the Purchase Agreement or granted by law, including recovery of liquidated or other damages, will be entitled to specific performance of its rights under this Agreement. The Partnership agrees that monetary damages (including the Liquidated Damages contemplated hereby) would not be adequate compensation for any loss incurred by reason of a breach by them of the provisions of this Agreement and hereby agree to waive the defense in any action for specific performance that a remedy at law would be adequate. (b) No Inconsistent Agreements. The Partnership will not on or after the date of this Agreement, enter into any agreement with respect to its securities that is inconsistent with the rights granted to the Holders in this Agreement or otherwise conflicts with the provisions hereof. The Partnership is not currently bound by any agreement granting registration rights with respect to its securities that conflicts with the registration rights set forth herein. (c) Adjustments Affecting the Notes. The Partnership will not take any action, or permit any change to occur, with respect to the Notes that would materially and adversely affect the ability of the Holders to Consummate any Exchange Offer. (d) Amendments and Waivers. The provisions of this Agreement may not be amended, modified or supplemented, and waivers or consents to or departures from the provisions hereof may not be given unless the Partnership has obtained the written consent of (i) in the case of Section 5 hereof and this Section 12(d), the Holders of all outstanding Transfer Restricted Securities and (ii) in the case of all other provisions hereof, Holders of a majority of the outstanding principal amount of Transfer Restricted Securities. Notwithstanding the foregoing, a waiver or consent to departure from the provisions hereof that relates exclusively to the rights of Holders whose securities are being tendered pursuant to the Exchange Offer and that does not affect directly or indirectly the rights of other Holders whose securities are not being tendered pursuant to such Exchange Offer may -22- be given by the Holders of a majority of the outstanding principal amount of Transfer Restricted Securities being tendered or registered. (e) Notices. All notices and other communications provided for or permitted hereunder shall be made in writing by hand-delivery, first-class mail (registered or certified, return receipt requested), telex, telecopier, or air courier guaranteeing overnight delivery: (i) if to a Holder, at the address set forth on the records of the Registrar under the Indenture, with a copy to the Registrar under the Indenture; and With a copy to: Banc of America Securities LLC 100 North Tryon Street Charlotte, North Carolina 28255 Attention: Syndicate Operations Telecopy No.: (704) 388-9212 (ii) if to the Initial Purchasers, to the Initial Purchasers' address specified in Section 12 of the Purchase Agreement. (iii) if to the Partnership: Northern Border Partners, L.P. c/o Northern Plains Natural Gas Company 1111 South 103rd Street Omaha, Nebraska 68124-1000 Telecopy No.: (402) 398-7871 Attention: Director of Finance All such notices and communications shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; five Business Days after being deposited in the mail, postage prepaid, if mailed; when answered back, if telexed; when receipt acknowledged, if telecopied; and on the next Business Day, if timely delivered to an air courier guaranteeing overnight delivery. Copies of all such notices, demands or other communications shall be concurrently delivered by the Person giving the same to the Trustee at the address specified in the Indenture. (f) Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the successors and assigns of each of the parties, including without limitation and without the need for an express assignment, subsequent Holders of Transfer Restricted Securities; provided, however, that nothing herein shall be deemed to permit any assignment, transfer or other -23- disposition of Transfer Restricted Securities in violation of the terms hereof or of the Purchase Agreement or the Indenture. If any transferee of any Holder shall acquire Transfer Restricted Securities in any manner, whether by operation of law or otherwise, such Transfer Restricted Securities shall be held subject to all of the terms of this Agreement, and by owning and holding such Transfer Restricted Securities such Person shall be conclusively deemed to have agreed to be bound by and to perform all of the terms and provisions of this Agreement, including the restrictions on resale set forth in this Agreement and, if applicable, the Purchase Agreement, and such Person shall be entitled to receive the benefits hereof. (g) Counterparts. This Agreement may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. (h) Headings. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof. (i) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE AND PERFORMED ENTIRELY WITHIN THE STATE OF NEW YORK. (j) Severability. In the event that any one or more of the provisions contained herein, or the application thereof in any circumstance, is held invalid, illegal or unenforceable by a court of competent jurisdiction, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions contained herein shall not be affected or impaired thereby. (k) Entire Agreement. This Agreement is intended by the parties as a final expression of their agreement and intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained herein. There are no restrictions, promises, warranties or undertakings, other than those set forth or referred to herein with respect to the registration rights granted by the Partnership with respect to the Transfer Restricted Securities. This Agreement supersedes all prior agreements and understandings between the parties with respect to such subject matter. (l) No Personal Liability. None of the members of the Partnership Policy Committee or the Partnership Audit Committee, the General Partners, or the Partnership's or the General Partners' directors, officers, employees, stockholders or unit holders, if any, shall have any liability for any of the Partnership's obligations under the notes or the indenture or hereunder or for any claim based on, in respect of, or by reason of, such obligations or their creation. -24- IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above. NORTHERN BORDER PARTNERS, L.P. By: ----------------------------------------- Name: Title: NORTHERN BORDER INTERMEDIATE LIMITED PARTNERSHIP By: ----------------------------------------- Name: Title: BANC OF AMERICA SECURITIES LLC SUNTRUST EQUITABLE SECURITIES CORPORATION BANC ONE CAPITAL MARKETS, INC. BMO NESBITT BURNS CORP. By: BANC OF AMERICA SECURITIES LLC By: ------------------------------------------- Name: Title: EX-10 4 exh1020.txt MATERIAL CONTRACTS EXHIBIT 10.20 EXECUTION COPY REVOLVING CREDIT AGREEMENT among NORTHERN BORDER PARTNERS, L.P., Borrower SUNTRUST BANK, Administrative Agent and BANK OF MONTREAL AND BANK OF AMERICA, N.A. Co-Syndication Agents and BANK ONE, NA Documentation Agent and THE LENDERS NAMED HEREIN, Lenders $200,000,000 DATED AS OF MARCH 21, 2001 SUNTRUST EQUITABLE SECURITIES CORPORATION Lead Arranger and Book Manager TABLE OF CONTENTS
PAGE ARTICLE I DEFINITIONS AND TERMS...................................................................................1 SECTION 1.1. Definitions.................................................................................1 SECTION 1.2. Number and Gender of Words; Other References...............................................16 SECTION 1.3. Accounting Principles......................................................................17 ARTICLE II BORROWING PROVISIONS..................................................................................17 SECTION 2.1. Facility...................................................................................17 SECTION 2.2. LC Subfacility.............................................................................17 SECTION 2.3. Terminations, Reductions or Increases of Commitments.......................................21 SECTION 2.4. Borrowing Procedure........................................................................21 SECTION 2.5. Extension of Maturity Date.................................................................22 ARTICLE III TERMS OF PAYMENT.....................................................................................23 SECTION 3.1. Loan Accounts, Notes, and Payments.........................................................23 SECTION 3.2. Interest and Principal Payments............................................................24 SECTION 3.3. Prepayments................................................................................24 SECTION 3.4. Interest Options...........................................................................25 SECTION 3.5. Quotation of Rates.........................................................................26 SECTION 3.6. Default Rate...............................................................................26 SECTION 3.7. Interest Recapture.........................................................................26 SECTION 3.8. Interest Calculations......................................................................26 SECTION 3.9. Maximum Rate...............................................................................26 SECTION 3.10. Interest Periods..........................................................................27 SECTION 3.11. Conversions...............................................................................27 SECTION 3.12. Order of Application......................................................................28 SECTION 3.13. Sharing of Payments, Etc..................................................................29 SECTION 3.14. Offset....................................................................................29 SECTION 3.15. Booking Borrowings........................................................................29 ARTICLE IV CHANGE IN CIRCUMSTANCES...............................................................................29 SECTION 4.1. Increased Cost and Reduced Return..........................................................29 SECTION 4.2. Limitation on Types of Loans...............................................................31 SECTION 4.3. Illegality.................................................................................31 SECTION 4.4. Treatment of Affected Loans................................................................32 SECTION 4.5. Compensation...............................................................................32 SECTION 4.6. Taxes......................................................................................33 ARTICLE V FEES...................................................................................................35 SECTION 5.1. Treatment of Fees..........................................................................35 SECTION 5.2. Fees of Administrative Agent and Arranger..................................................35 SECTION 5.3. Facility Fees..............................................................................35 SECTION 5.4. LC Fees....................................................................................35
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PAGE SECTION 5.5. Utilization Fee............................................................................36 ARTICLE VI GUARANTY..............................................................................................36 SECTION 6.1. Guaranty...................................................................................36 ARTICLE VII CONDITIONS PRECEDENT.................................................................................36 SECTION 7.1. Conditions Precedent to Closing............................................................36 SECTION 7.2. Conditions Precedent to Each Borrowing.....................................................36 ARTICLE VIII REPRESENTATIONS AND WARRANTIES......................................................................37 SECTION 8.1. Purpose of Credit Facility.................................................................37 SECTION 8.2. Existence, Good Standing, Authority, and Authorizations....................................37 SECTION 8.3. Subsidiaries...............................................................................38 SECTION 8.4. Authorization and No Contravention.........................................................38 SECTION 8.5. Binding Effect.............................................................................38 SECTION 8.6. Financial Statements.......................................................................38 SECTION 8.7. Litigation, Claims, Investigations.........................................................39 SECTION 8.8. Taxes......................................................................................39 SECTION 8.9. Environmental Matters......................................................................39 SECTION 8.10. Employee Benefit Plans....................................................................39 SECTION 8.11. Properties; Liens.........................................................................40 SECTION 8.12. Government Regulations....................................................................40 SECTION 8.13. Transactions with Affiliates..............................................................40 SECTION 8.14. Material Agreements.......................................................................40 SECTION 8.15. Insurance.................................................................................40 SECTION 8.16. Compliance with Laws......................................................................41 SECTION 8.17. Regulation U..............................................................................41 SECTION 8.18. Full Disclosure...........................................................................41 SECTION 8.19. No Default................................................................................41 ARTICLE IX AFFIRMATIVE COVENANTS.................................................................................41 SECTION 9.1. Use of Proceeds............................................................................41 SECTION 9.2. Books and Records..........................................................................42 SECTION 9.3. Items to be Furnished......................................................................42 SECTION 9.4. Inspections................................................................................43 SECTION 9.5. Taxes......................................................................................43 SECTION 9.6. Payment of Obligations.....................................................................43 SECTION 9.7. Maintenance of Existence, Assets, and Business.............................................43 SECTION 9.8. Compliance with Laws, etc..................................................................44 SECTION 9.9. Insurance..................................................................................44 SECTION 9.10. Preservation and Protection of Rights.....................................................44 SECTION 9.11. Pari Passu Status.........................................................................44 SECTION 9.12. Maintenance of Tax Status.................................................................44 ARTICLE X NEGATIVE COVENANTS.....................................................................................44 SECTION 10.1. Debt and Guaranties.......................................................................45 SECTION 10.2. Liens.................................................................................... 46
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PAGE SECTION 10.3. Transactions with Affiliates..............................................................46 SECTION 10.4. Assignment................................................................................47 SECTION 10.5. Government Regulations....................................................................47 SECTION 10.6. Mergers; Sale of Assets...................................................................47 SECTION 10.7. Loan and Investments......................................................................47 SECTION 10.8. Distributions.............................................................................48 SECTION 10.9. Limitation on Business Activities.........................................................48 SECTION 10.10. Certain Amendments to Cash Distribution Policies and Partnership Agreements..............48 SECTION 10.11. Restrictive Agreements, etc..............................................................49 SECTION 10.12. Employee Benefit Plans...................................................................49 SECTION 10.13. Interest Coverage Ratio..................................................................49 SECTION 10.14. Consolidated Leverage Ratio..............................................................49 ARTICLE XI DEFAULT...............................................................................................49 SECTION 11.1. Payment of Obligation.....................................................................49 SECTION 11.2. Covenants.................................................................................49 SECTION 11.3. Debtor Relief.............................................................................50 SECTION 11.4. Judgments and Attachments.................................................................50 SECTION 11.5. Misrepresentation.........................................................................50 SECTION 11.6. Change of Control.........................................................................50 SECTION 11.7. Default Under Other Debt and Agreements...................................................50 SECTION 11.8. Employee Benefit Plans....................................................................51 SECTION 11.9. Validity and Enforceability of Loan Documents.............................................51 SECTION 11.10. Environmental Liability..................................................................51 SECTION 11.11. Dissolution..............................................................................52 ARTICLE XII RIGHTS AND REMEDIES..................................................................................52 SECTION 12.1. Remedies Upon Default.....................................................................52 SECTION 12.2. Loan Party Waivers........................................................................52 SECTION 12.3. Performance by Administrative Agent.......................................................53 SECTION 12.4. Delegation of Duties and Rights...........................................................53 SECTION 12.5. Not in Control............................................................................53 SECTION 12.6. Course of Dealing.........................................................................54 SECTION 12.7. Cumulative Rights.........................................................................54 SECTION 12.8. Application of Proceeds...................................................................54 SECTION 12.9. Certain Proceedings.......................................................................54 SECTION 12.10. Expenditures by Lenders..................................................................54 SECTION 12.11. INDEMNIFICATION..........................................................................55 ARTICLE XIII AGREEMENT AMONG LENDERS.............................................................................56 SECTION 13.1. Administrative Agent......................................................................56 SECTION 13.2. Expenses..................................................................................57 SECTION 13.3. Proportionate Absorption of Losses........................................................58 SECTION 13.4. Delegation of Duties; Reliance............................................................58 SECTION 13.5. Limitation of Liability...................................................................58
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PAGE SECTION 13.6. Default...................................................................................59 SECTION 13.7. Limitation of Liability...................................................................60 SECTION 13.8. Relationship of Lenders...................................................................60 SECTION 13.9. Benefits of Agreement.....................................................................60 SECTION 13.10. Agents...................................................................................60 SECTION 13.11. Obligations Several......................................................................61 ARTICLE XIV MISCELLANEOUS........................................................................................61 SECTION 14.1. Headings..................................................................................61 SECTION 14.2. Nonbusiness Days..........................................................................61 SECTION 14.3. Communications............................................................................61 SECTION 14.4. Form and Number of Documents..............................................................62 SECTION 14.5. Exceptions to Covenants...................................................................62 SECTION 14.6. Survival..................................................................................62 SECTION 14.7. GOVERNING LAW.............................................................................62 SECTION 14.8. Invalid Provisions........................................................................62 SECTION 14.9. Entirety..................................................................................62 SECTION 14.10. Jurisdiction; Venue; Service of Process..................................................63 SECTION 14.11. Amendments, Consents, Conflicts, and Waivers.............................................63 SECTION 14.12. Multiple Counterparts....................................................................64 SECTION 14.13. Successors and Assigns; Assignments and Participations...................................64 SECTION 14.14. Confidentiality..........................................................................67 SECTION 14.15. Discharge Only Upon Payment in Full; Reinstatement in Certain Circumstances..............68 SECTION 14.16. No General Partners' Liability...........................................................68
iv EXHIBITS AND SCHEDULES
Exhibit A - Form of Note Exhibit B-1 - Form of Borrowing Notice Exhibit B-2 - Form of Conversion Notice Exhibit B-3 - Form of LC Request Exhibit C - Form of Guaranty Exhibit D - Form of Compliance Certificate Exhibit E - Form of Assignment and Acceptance Agreement Exhibit F-1 - Form of Opinion of Counsel of Borrower Exhibit F-2 - Form of Opinion of General Counsel Exhibit F-3 - Form of Opinion of Counsel of Pan Border Exhibit F-4 - Form of Opinion of Counsel of Northwest Border Schedule 2.1 - Lenders and Commitments Schedule 7.1 - Conditions Precedent to Closing Schedule 8.3 - Subsidiaries and Partnership Interests Schedule 10.1 - Existing Debt Schedule 14.3 - Address for Notices
v REVOLVING CREDIT AGREEMENT THIS CREDIT AGREEMENT is entered into as of March 21, 2001, among NORTHERN BORDER PARTNERS, L.P., a Delaware limited partnership ("BORROWER"), Lenders (hereinafter defined) and SUNTRUST BANK, as Administrative Agent (hereinafter defined) for itself and the other Lenders, Bank of Montreal and Bank of America, N.A. as Co-Syndication Agents (hereinafter defined) and BANK ONE, NA, as Documentation Agent (hereinafter defined). RECITALS A. Borrower has requested that Lenders extend credit to Borrower, providing for a revolving loan and standby letter of credit facility in the aggregate principal amount of $200,000,000, to refinance bank debt and to finance investments permitted hereunder, working capital, capital expenditures, acquisitions and other general business purposes. B. Upon and subject to the terms and conditions of this Agreement, Lenders are willing to extend such credit to Borrower. Accordingly, in consideration of the mutual covenants contained herein, the parties agree as follows: ARTICLE I DEFINITIONS AND TERMS SECTION 1.1. DEFINITIONS. As used herein: "2001 SENIOR NOTES" means unsecured notes to be issued by Borrower in an aggregate principal amount not to exceed $250,000,000 with a maturity of not less than three (3) years from date of issuance. "2001 SENIOR NOTE INDENTURE" means the indenture authorizing the issuance of the 2001 Senior Notes, as the same may from time to time be amended or supplemented. "ACQUISITION" means any transaction or series of related transactions for the purpose of, or resulting in, directly or indirectly, (a) the acquisition by a Person of all or substantially all of the assets of another Person or of any business or division of another Person, (b) the acquisition by a Person of more than 50% of any class of Voting Stock (or similar ownership interests) of any other Person (provided that, formation or organization of any entity shall not constitute an "Acquisition" to the extent that the amount of the loan, advance, investment, or capital contribution in such entity constitutes a permitted investment under Section 10.7); or (c) a merger, consolidation, amalgamation, or other combination by any Person with another Person if a Loan Party is the surviving entity; provided that, in any merger involving Borrower, Borrower must be the surviving entity. "ADJUSTED CONSOLIDATED EBITDA" means, for any fiscal period of Borrower, the sum of Consolidated EBITDA of Borrower for such period plus, to the extent not already reflected in 2 Consolidated EBITDA for such period, Consolidated EBITDA for such period of (i) any other Person or (ii) all or substantially all of the business or assets of any other Person or (iii) operating division or business unit of any other Person, acquired during such period. "ADMINISTRATIVE AGENT" means SunTrust Bank, and its permitted successors or assigns as "Administrative Agent" for Lenders under the Loan Documents. "AFFILIATE" of any Person means any other individual or entity who directly or indirectly controls, or is controlled by, or is under common control with, such Person, and, for purposes of this definition only, "control," "controlled by," and "under common control with" mean possession, directly or indirectly, of the power to direct or cause the direction of management or policies (whether through ownership of voting securities, by contract, or otherwise). "AGENTS" means, collectively, Administrative Agent, the Co-Syndication Agents and Documentation Agent. "AGREEMENT" means this Revolving Credit Agreement (as the same may hereafter be amended, modified, supplemented, or restated from time to time). "ANNIVERSARY DATE" means each of March 21, 2002, March 21, 2003 and March 21, 2004. "APPLICABLE LENDING OFFICE" means, for each Lender and for each Type of Borrowing, the "Lending Office" of such Lender (or an affiliate of such Lender) designated on Schedule 14.3 attached hereto or such other office that such Lender (or an affiliate of such Lender) may from time to time specify to Administrative Agent and Borrower by written notice in accordance with the terms hereof. "APPLICABLE AMOUNT AND APPLICABLE MARGIN" means, on any date of determination, with respect to Borrowings under the Facility and facility fees, letter of credit fees and utilization fees under the Facility the following annualized rates (stated in terms of basis points ("BPS")) that correspond to the ratings established by both S&P and Moody's applicable to the Borrower's long-term senior unsecured non-credit enhanced indebtedness for borrowed money ("INDEX DEBT") at such date of determination: 3
- --------------------------------------------------------------------------------------------------------------- APPLICABLE MARGIN APPLICABLE AMOUNT ---------------------------------------------------------------------------------- EURODOLLAR RATE BORROWINGS AND SENIOR UNSECURED BASE RATE LETTERS OF CREDIT UTILIZATION FEE FACILITY FEE DEBT RATING BORROWINGS (BPS) (BPS) (BPS) (BPS) - --------------------------------------------------------------------------------------------------------------- Category 1 0.0 75.0 10.0 12.5 Greater than or equal to A-/A3 - --------------------------------------------------------------------------------------------------------------- Category 2 0.0 85.0 12.5 15.0 BBB+/Baa1 - --------------------------------------------------------------------------------------------------------------- Category 3 0.0 100.0 12.5 17.5 BBB/Baa2 - --------------------------------------------------------------------------------------------------------------- Category 4 12.5 112.5 15.0 25.0 BBB-/Baa3 - --------------------------------------------------------------------------------------------------------------- Category 5 37.5 137.5 17.5 37.5 Less than BBB- /Baa3 - ---------------------------------------------------------------------------------------------------------------
For purposes of determining the Applicable Amount and the Applicable Margin, with respect to the debt ratings criteria: (i) if neither Moody's nor S&P shall have in effect a rating for Index Debt (other than by reason of the circumstances referred to in the last sentence of this definition), then both such rating agencies will be deemed to have established ratings for Index Debt in Category 5; (ii) if either of Moody's or S&P shall fail to have in effect a rating for Index Debt (other than by reason of the circumstances referred to in the last sentence of this definition), then such rating agency shall be deemed to have established a rating in Category 5; (iii) if the ratings established by Moody's and S&P shall differ, the Applicable Amount and the Applicable Margin shall be based on the higher of the two ratings unless one of the ratings is two or more Categories lower than the other, in which case the Applicable Amount and the Applicable Margin shall be determined by reference to the Category next above that of the lower of the two ratings; and (iv) if any rating established by Moody's or S&P shall be changed (other than as a result of a change in the rating system of either Moody's or S&P), such change shall be effective as of the date on which such change is first announced by the rating agency making such change. If the rating system of either Moody's or S&P shall change, or if either Moody's or S&P shall cease to be in the business of rating corporate debt obligations, Borrower and the Lenders shall negotiate in good faith to amend this definition to reflect such changed rating system or the unavailability of ratings from such rating agency and pending the effectiveness of such amendment, the Applicable Amount and the Applicable Margin shall be determined by reference to the rating most recently in effect prior to such change or cessation. "ARRANGER" means SunTrust Equitable Securities Corporation, and its successors and assigns, in its capacity as lead arranger and book manager under the Loan Documents. "AUTHORIZATIONS" means all filings, recordings, and registrations with, and all validations or exemptions, approvals, orders, authorizations, consents, franchises, licenses, certificates, and permits from, any Governmental Authority. 4 "BASE RATE" means, for any day, the rate per annum equal to the higher of (a) the Federal Funds Rate for such day plus one-half of one percent (0.5%) and (b) the Prime Rate for such day. Any change in the Base Rate due to a change in the Prime Rate or the Federal Funds Rate shall be effective on the effective date of such change in the Prime Rate or the Federal Funds Rate. "BASE RATE BORROWING" means a Borrowing bearing interest at the sum of the Base Rate plus the Applicable Margin for Base Rate Borrowings. "BORROWER" is defined in the preamble to this Agreement. "BORROWING" means any amount disbursed (a) by one or more Lenders under the Loan Documents (under the Facility or the LC Subfacility), whether such amount constitutes an original disbursement of funds, the continuation or conversion of an amount outstanding, or payment of a draft under an LC, or (b) by any Lender in accordance with, and to satisfy the obligations of any Loan Party under, any Loan Document. "BORROWING DATE" is defined in Section 2.4(a). "BORROWING NOTICE" means a request for Borrowing made pursuant to Section 2.4(a), substantially in the form of Exhibit B-1. "BUSINESS DAY" means (a) for all purposes, any day other than Saturday, Sunday, and any other day on which commercial banking institutions are required or authorized by Law to be closed in Atlanta, Georgia, and (b) in addition to the foregoing, in respect of any Eurodollar Rate Borrowing, a day on which dealings in United States dollars are conducted in the London interbank market and commercial banks are open for international business in London. "CAPITAL LEASE" means any capital lease or sublease which should be capitalized on a balance sheet in accordance with GAAP. "CHANGE OF CONTROL" means (i) the failure of Subsidiaries of Enron Corp. and/or the Williams Companies to own, free and clear of all Liens, general partner interests in Borrower and the Intermediate Partnership such that the aggregate voting rights of such Persons is greater than 50% of the outstanding voting rights of all general partners of Borrower and the Intermediate Partnership, or (ii) the failure of Borrower directly, or indirectly through Intermediate Partnership, to own as a general partner, free and clear of all Liens, at least 60% of the partnership interests in NBPC. "CLOSING DATE" means the date upon which this Agreement has been executed by Borrower, Lenders, and Administrative Agent and all conditions precedent specified in Section 7.1 have been satisfied or waived. "CODE" means the Internal Revenue Code of 1986, as amended, together with the rules and regulations promulgated thereunder. "COMMITMENT" means, on any date of determination, the sum of all Committed Sums then in effect for all Lenders in respect of the Facility. 5 "COMMITMENT PERCENTAGE" means, at any date of determination, for any Lender, the proportion (stated as a percentage) that its Committed Sum bears to the aggregate Committed Sums of all Lenders. "COMMITMENT USAGE" means, at the time of any determination thereof, the sum of (a) the aggregate Principal Debt plus, without duplication, (b) the LC Exposure. "COMMITTED SUM" means for any Lender, with respect to the Facility, at any date of determination occurring prior to the Termination Date for the Facility, the amount stated beside such Lender's name on the most-recently amended Schedule 2.1 to this Agreement (which amount is subject to reduction or cancellation in accordance with the Loan Documents). "COMMON UNIT" means units representing limited partnership interests in Borrower offered for sale to the public. "COMPLIANCE CERTIFICATE" means a certificate signed by a Responsible Officer, substantially in the form of Exhibit D. "CONSEQUENTIAL LOSS" means any loss or expense which any Lender may reasonably incur in respect of a Eurodollar Rate Borrowing as a consequence of any event described in Section 4.5. "CONSOLIDATED EBITDA" means, for any Person and its consolidated Subsidiaries and for any period, the sum of, without duplication, (i) Net Income of such Person and its consolidated Subsidiaries for such period plus (ii) to the extent actually deducted in determining Net Income of such Person and its consolidated Subsidiaries for such period, Consolidated Interest Expense, income taxes, depreciation and amortization, in each case, of such Person and its consolidated Subsidiaries for such period. "CONSOLIDATED FUNDED DEBT" means, at any time, the total Funded Debt reported in the consolidated Current Financials of Borrower. "CONSOLIDATED INTEREST EXPENSE" means, for any Person and its consolidated Subsidiaries and for any period, the amount of interest expense, both expensed and capitalized, of such Person for such period, determined on a consolidated basis in accordance with GAAP. "CONSTITUENT DOCUMENTS" means, for any Person, the documents for its formation and organization, which, for example, (i) for a corporation are its corporate charter and bylaws, (ii) for a partnership is its partnership agreement, (iii) for a limited liability company are its certificate of organization and regulations, and (iv) for a trust is the trust agreement or indenture under which it is created. "CONVERSION NOTICE" means a request pursuant to Section 3.11, substantially in the form of Exhibit B-2. "CURRENT FINANCIALS" means, at the time of any determination thereof, the more recently delivered to Lenders of either (a) the Financial Statements of the type described in Section 9.3(b) 6 for the fiscal year ended December 31, 1999, or (b) the most recent Financial Statements required to be delivered under Sections 9.3(a) and (b). "DEBT" means (without duplication), for any Person, the sum of the following: (a) all liabilities, obligations, and indebtedness of such Person which in accordance with GAAP should be classified upon such Person's balance sheet as liabilities in respect of (i) money borrowed, including, without limitation, the Principal Debt, (ii) obligations of such Person under Capital Leases, and (iii) obligations of such Person issued or assumed as the deferred purchase price of property, all conditional sale obligations, and obligations under any title retention agreement (but excluding trade accounts payable arising in the ordinary course of business); (b) the face amount of all letters of credit and banker's acceptances issued for the account of such Person, and without duplication, all drafts drawn and unpaid thereunder; (c) any liability with respect to obligations to deliver goods or services in consideration of advance payments therefor, including any liability with respect to payments received in consideration of oil, gas, or other minerals yet to be acquired or produced at the time of payment (such as obligations under contracts to deliver oil or gas in return for payments already received and production payments created by such Person or for the creation of which such Person directly or indirectly received payment); (d) all obligations of the type referred to in clauses (a) through (c) preceding of other Persons for the payment of which such Person is responsible or liable as obligor, guarantor, or otherwise; and (e) all obligations of the type referred to in clauses (a) through (d) preceding of other Persons secured by any Lien on any property or asset of such Person whether or not such obligation is assumed by such Person (except obligations of others secured by Liens, neither assumed nor guaranteed by such Person nor on which it customarily pays interest, existing upon real estate or rights in or relating to real estate acquired by such Person for substation, metering station, gathering line, transmission line, transportation line, distribution line or right of way purposes, and any Liens reserved in leases for rent and for compliance with the terms of the leases in the case of leasehold estates, to the extent that any such Lien referred to in this clause (e) does not materially impair the use of the property), and, the amount of such obligation being deemed to be the lesser of the value of such property or assets or the amount of the obligation so secured, provided, however, that the obligations referenced in this subclause (e) shall not include indebtedness (which is not assumed or guaranteed by Borrower or any Subsidiary of Borrower) under the Fort Union Project Finance Documents which is secured by Liens on the limited liability company interests of Crestone Powder River, L.L.C. in Fort Union, L.L.C., nor indebtedness (which is not assumed or guaranteed by Borrower or any Subsidiary of Borrower) which is secured by Liens on the limited liability company interests of Crestone Wind River, L.L.C. in Lost Creek, L.L.C. The Debt of any Person shall include the Debt of any other Person (including any partnership in which such Person is a general partner) to the extent such Person is liable therefor as a result of such Person's ownership interest in or other relationship with such entity, except to the extent the terms of such Debt provide that such Person is not liable therefor. "DEBTOR RELIEF LAWS" means the Bankruptcy Code of the United States of America and all other applicable liquidation, conservatorship, bankruptcy, moratorium, rearrangement, receivership, insolvency, reorganization, fraudulent transfer or conveyance, suspension of payments, or similar Laws from time to time in effect affecting the Rights of creditors generally. "DEFAULT" is defined in Article 11. 7 "DEFAULT RATE" means an interest rate equal to the lesser of (a) Base Rate plus the Applicable Margin, if any, applicable to Base Rate Borrowings plus 2% per annum and (b) the Maximum Rate; provided, however, that with respect to a Eurodollar Rate Borrowing, until the end of the applicable Interest Period, the Default Rate shall be an interest rate equal to the lesser of (x) the interest rate (including any Applicable Margin) otherwise applicable to such Borrowing plus 2% per annum, and (y) the Maximum Rate. "DERIVATIVE TRANSACTION" means (a) any rate, basis, commodity, currency, debt or equity swap, (b) any cap, collar or floor agreement, (c) any rate, basis, commodity, currency, debt or equity exchange or forward agreement, (d) any rate, basis, commodity, currency, debt or equity option, (e) any other similar agreement, (f) any option to enter into any of the foregoing, (g) any master agreement or other agreement providing for any of the foregoing and (h) any combination of any of the foregoing. "DISTRIBUTION" for any Person means, with respect to any shares of any capital stock or other equity securities issued by such Person, (a) the retirement, redemption, purchase, or other acquisition for value of any such securities, (b) the declaration or payment of any dividend on or with respect to any such securities, and (c) any other payment by such Person with respect to such securities. "DOCUMENTATION AGENT" means Bank One, NA and its respective permitted successors and assigns as "Documentation Agent" under the Loan Documents. "DOLLARS" and the symbol "$" means lawful money of the United States of America. "ELIGIBLE ASSIGNEE" means a Lender or any other Person approved by Administrative Agent (which approval will not be unreasonably withheld or delayed by Administrative Agent) and, unless a Default or Potential Default has occurred and is continuing at the time any assignment is effected in accordance with Section 14.13, Borrower, such approval not to be unreasonably withheld or delayed by Borrower and such approval to be deemed given by Borrower if no objection is received by the assigning Lender and Administrative Agent from Borrower within five Business Days after notice of such proposed assignment has been provided by the assigning Lender to Borrower; provided, however, that neither Borrower nor any Affiliate of Borrower shall qualify as an Eligible Assignee. "EMPLOYEE PLAN" means an employee pension benefit plan covered by Title IV of ERISA or subject to the minimum funding standards under Section 412 of the Code and established or maintained by any Loan Party, Subsidiary thereof, or ERISA Affiliate, but not including any Multiemployer Plan. "ENVIRONMENTAL LAW" means any applicable Law that relates to (a) the condition or protection of air, groundwater, surface water, soil, or other environmental media, (b) the environment, including natural resources or any activity which affects the environment, (c) the regulation of any pollutants, contaminants, wastes, substances, and Hazardous Substances, or (d) the Release or threatened Release of Hazardous Substances. "ENVIRONMENTAL LIABILITY" means any obligation, liability (including, without limitation, any strict liability), loss, fine, penalty, charge, Lien, damage, cost, or expense of any kind to the 8 extent that it results (a) from any violation of or any obligation or liability under any Environmental Law, (b) from the presence, Release, or threatened Release of any Hazardous Substance, or (c) from actual or threatened damages to natural resources. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended, and the regulations and rulings thereunder. "ERISA AFFILIATE" means any company or trade or business (whether or not incorporated) which, for purposes of Title IV of ERISA, is, or has been within the past six years, a member of any Loan Party's controlled group or which is, or has been within the past six years, under common control with any Loan Party within the meaning of Section 414(b), (c), (m), or (o) of the Code. "ERISA EVENT" means any of the following: (a) the occurrence of a Reportable Event; (b) the application for a minimum funding waiver with respect to an Employee Plan, or becoming obligated to file with the PBGC a notice of failure to make a required payment with respect to any Employee Plan; (c) the provision by the administrator of any Employee Plan of a notice of intent to terminate such Employee Plan; (d) the withdrawal by any Loan Party, Subsidiary thereof, or ERISA Affiliate, in whole or in part, from a Multiemployer Plan; (e) the occurrence of any condition (under ERISA, the Code, or otherwise) for the imposition of a Lien in favor of the PBGC on the assets of any Loan Party, Subsidiary thereof, or ERISA Affiliate; (f) the adoption of an amendment to an Employee Plan requiring the provision of security to such Employee Plan; (g) institution by the PBGC of proceedings to terminate or impose liability in respect of (other than premiums under Section 4007 of ERISA), any Employee Plan, or the occurrence of any event or condition that constitutes grounds for termination of, or the appointment of a trustee to administer, any Employee Plan; (h) institution by the sponsor of a Multiemployer Plan of proceedings to terminate or reorganize such Multiemployer Plan, or to impose withdrawal liability on any Loan Party, Subsidiary thereof, or ERISA Affiliate with respect to such Multiemployer Plan; (i) the cessation of operations at a facility of any Loan Party, Subsidiary thereof, or ERISA Affiliate in the circumstances described in Section 4062(e)of ERISA; or (j) any Loan Party, Subsidiary thereof, or ERISA Affiliate has engaged in any "prohibited transaction" (as defined in Section 406 of ERISA or Section 4975 of the Code). "EURODOLLAR RATE" means, for any Eurodollar Rate Borrowing for any Interest Period therefor, the rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) appearing on Dow Jones Markets Page 3750 (or any successor page) as the London interbank offered rate for deposits in Dollars at approximately 11:00 a.m. (London time) two Business Days prior to the first day of such Interest Period for a term comparable to such Interest Period. If for any reason such rate is not available, the term "EURODOLLAR RATE" shall mean, for any Eurodollar Rate Borrowing for any Interest Period therefor, the rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) appearing on Reuters Screen LIBO Page as the London interbank offered rate for deposits in Dollars at approximately 11:00 a.m. (London time) two Business Days prior to the first day of such Interest Period for a term comparable to such Interest Period; provided, however, if more than one rate is specified on Reuters Screen LIBO Page, the applicable rate shall be the arithmetic mean of all such rates (rounded upwards, if necessary, to the nearest 1/100 of 1%). 9 "EURODOLLAR RATE BORROWING" means a Borrowing bearing interest at the sum of the Eurodollar Rate plus the Applicable Margin for Eurodollar Rate Borrowings. "EXISTING CREDIT AGREEMENTS" means the 364-Day Credit Agreement and the Revolving Credit Agreement, each dated as of June 28, 2000, as amended, among Borrower, Bank of America, N.A., as administrative agent and the lenders named therein. "EXHIBIT" means an exhibit to this Agreement unless otherwise specified. "EXISTING TERMINATION DATE" is defined in Section 2.5(a). "FACILITY" means the credit facility as described in and subject to the limitations set forth in Section 2.1 hereof, including the LC Subfacility. "FEDERAL FUNDS RATE" means, for any day, the rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) determined (which determination shall be conclusive and binding, absent manifest error) by Administrative Agent to be equal to the weighted average of the rates on overnight Federal funds transactions with member banks of the Federal Reserve System arranged by Federal funds brokers on such day, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day; provided that (a) if such day is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day, and (b) if no such rate is so published on such next succeeding Business Day, the Federal Funds Rate for such day shall be the average rate charged to Administrative Agent (in its individual capacity) on such day on such transactions as determined by Administrative Agent (which determination shall be conclusive and binding, absent manifest error). "FINANCIAL STATEMENTS" is defined in Section 9.3(a). "FORT UNION, L.L.C." means Fort Union Gas Gathering, L.L.C., a Delaware limited liability company. "FORT UNION PROJECT FINANCE DOCUMENTS" means the Construction and Term Credit Agreement dated as of April 16, 1999 among Fort Union, L.L.C. as Borrower, Fleet National Bank, as Administrative Agent and the other Lenders and Agents parties thereto, and the other agreements executed as security therefor or pursuant thereto, as the same may from time to time be amended. "FUNDED DEBT" means (without duplication), for any Person, the sum of the following: (a) all liabilities, obligations, and indebtedness of such Person which in accordance with GAAP should be classified upon such Person's balance sheet as liabilities in respect of (i) money borrowed, including, without limitation, the Principal Debt, (ii) obligations of such Person under Capital Leases, and (iii) obligations of such Person issued or assumed as the deferred purchase price of property, all conditional sale obligations, and obligations under any title retention agreement (but excluding trade accounts payable arising in the ordinary course of business); (b) all reimbursement obligations with respect to letters of credit, banker's acceptances, surety bonds and similar instruments; (c) any liability with respect to obligations to deliver goods or services in consideration of advance payments therefor, including any liability with respect to 10 payments received in consideration of oil, gas, or other minerals yet to be acquired or produced at the time of payment (such as obligations under contracts to deliver oil or gas in return for payments already received and production payments created by such Person or for the creation of which such Person directly or indirectly received payment); (d) all obligations of the type referred to in clauses (a) through (c) preceding of other Persons for the payment of which such Person is responsible or liable as obligor, guarantor, or otherwise; and (e) all obligations of the type referred to in clauses (a) through (d) preceding of other Persons secured by any Lien on any property or asset of such Person whether or not such obligation is assumed by such Person (except obligations of others secured by Liens, neither assumed nor guaranteed by such Person nor on which it customarily pays interest, existing upon real estate or rights in or relating to real estate acquired by such Person for substation, metering station, gathering line, transmission line, transportation line, distribution line or right of way purposes, and any Liens reserved in leases for rent and for compliance with the terms of the leases in the case of leasehold estates, to the extent that any such Lien referred to in this clause (e) does not materially impair the use of the property), and the amount of such obligation being deemed to be the lesser of the value of such property or assets or the amount of the obligation so secured, provided, however, that the obligations referenced in this subclause (e) shall not include indebtedness (which is not assumed or guaranteed by Borrower or any Subsidiary of Borrower) under the Fort Union Project Finance Documents which is secured by Liens on the limited liability company interests of Crestone Powder River, L.L.C. in Fort Union, L.L.C., nor indebtedness (which is not assumed or guaranteed by Borrower or any Subsidiary of Borrower) which is secured by Liens on the limited liability company interests of Crestone Wind River, L.L.C. in Lost Creek, L.L.C. The Funded Debt of any Person shall include the Funded Debt of any other Person (including any partnership in which such Person is a general partner) to the extent such Person is liable therefor as a result of such Person's ownership interest in or other relationship with such entity, except to the extent the terms of such Funded Debt provide that such Person is not liable therefor. "GAAP" means generally accepted accounting principles of the Accounting Principles Board of the American Institute of Certified Public Accountants and the Financial Accounting Standards Board which are applicable from time to time. "GENERAL PARTNER" means any of Northern Plains, Pan Border, Northwest Border, any other general partner of Borrower and each of their successors and assigns in such capacity. "GOVERNMENTAL AUTHORITY" means any (a) local, state, municipal, or federal judicial, executive, or legislative instrumentality, (b) private arbitration board or panel, or (c) central bank. "GUARANTOR" means Intermediate Partnership and any other Person that becomes a "Guarantor" under the Guaranty. "GUARANTY" means (a) a Guaranty in substantially the form and upon the terms of Exhibit C, executed and delivered by any Person pursuant to the requirements of the Loan Documents; and (b) any amendments, modifications, supplements, restatements, ratifications, or reaffirmations of any Guaranty made in accordance with the Loan Documents. 11 "HAZARDOUS SUBSTANCE" means (a) any substance that is designated, defined, or classified as a hazardous waste, hazardous material, pollutant, contaminant, or toxic or hazardous substance, or that is otherwise regulated, under any Environmental Law, including without limitation, any hazardous substance within the meaning of Section 101(14) of CERCLA, (b) petroleum, oil, gasoline, natural gas, fuel oil, motor oil, waste oil, diesel fuel, jet fuel, and other petroleum hydrocarbons, (c) asbestos and asbestos-containing materials in any form, (d) polychlorinated biphenyls, or (e) urea formaldehyde foam. "INTEREST PERIOD" is determined in accordance with Section 3.10. "INTERMEDIATE PARTNERSHIP" means Northern Border Intermediate Limited Partnership, a Delaware limited partnership. "INTERMEDIATE PARTNERSHIP AGREEMENT" means that certain Amended and Restated Agreement of Limited Partnership of Northern Border Intermediate Limited Partnership dated as of October 1, 1993 as the same may have been or may hereafter be amended, supplemented, restated or otherwise modified from time to time. "LAWS" means all applicable statutes, laws, treaties, ordinances, tariff requirements, rules, regulations, orders, writs, injunctions, decrees, judgments, opinions, awards or interpretations of any Governmental Authority. "LC" means the letter(s) of credit issued hereunder in the form agreed upon among Borrower, Administrative Agent, and the beneficiary thereof at the time of issuance thereof and participated in by Lenders pursuant to the terms and conditions of Section 2.2 hereof. "LC AGREEMENT" means a letter of credit application and agreement (in form and substance satisfactory to Administrative Agent) submitted by Borrower to Administrative Agent for an LC for its own account (and for its benefit or the benefit of any of Borrower's Subsidiaries); provided that this Agreement shall control any conflict between this Agreement and any such LC Agreement. "LC EXPOSURE" means, at any time and without duplication, the sum of (a) the aggregate undrawn portion of all uncancelled and unexpired LCs plus (b) the aggregate unpaid reimbursement obligations of Borrower in respect of drawings of drafts under any LC. "LC REQUEST" means a request pursuant to Section 2.2(a), substantially in the form of Exhibit B-3. "LC SUBFACILITY" means a subfacility of the Facility for the issuance of LCs as described in and subject to the limitations of Section 2.2, under which the LC Exposure may never (a) collectively exceed $50,000,000 and (b) together with the Principal Debt may never exceed the Commitment. "LENDERS" means, on any date, the financial institutions named on Schedule 2.1 (as the same may be amended from time to time by Administrative Agent to reflect the assignments made in accordance with Section 14.13(b) of this Agreement), and subject to the terms and 12 conditions of this Agreement, and their respective successors and assigns (but not any Participant who is not otherwise a party to this Agreement). "LETTER OF CREDIT CASH COLLATERAL ACCOUNT" means a blocked deposit account held by Administrative Agent with respect to which Borrower hereby pledges and grants a security interest in and lien on such account to Administrative Agent for and on behalf of the Lenders as security for LC Exposure and with respect to which Borrower agrees to execute and deliver from time to time such documentation as Administrative Agent may reasonably request to further assure and confirm such security interest. "LIEN" means any lien, mortgage, security interest, pledge, assignment, charge, title retention agreement, encumbrance of any kind, Right or arrangement with or for the benefit of any creditor (other than under or relating to subordination or other intercreditor arrangements) to have its claim satisfied out of any property or assets, or the proceeds therefrom, prior to the general creditors of the owner thereof. "LIMITED PARTNERSHIP UNITS" means Common Units and any other units representing a limited partner's interest in Borrower. "LITIGATION" means any action by or before any Governmental Authority. "LOAN DOCUMENTS" means (a) this Agreement and all schedules and exhibits attached hereto, the Notes, each Guaranty, LCs, and LC Agreements, (b) all agreements, documents, or instruments in favor of Agents or Lenders now or hereafter delivered pursuant to this Agreement or otherwise delivered in connection herewith, and (c) any and all future renewals, extensions, restatements, reaffirmations, or amendments of, or supplements to, all or any part of the foregoing. "LOAN PARTIES" means, on any date of determination, Borrower and all Guarantors. "LOST CREEK CONSTRUCTION LOAN SPONSOR GUARANTEE" means the Sponsor Guarantee dated as of September 24, 1999 in favor of Barclays Bank PLC, as administrative agent, as supplemented by Guarantee Supplement No. 1 dated September 24, 1999, as in effect on September 21, 2000. "LOST CREEK L.L.C." means Lost Creek Gathering Company, L.L.C., a Delaware limited liability company. "LOST CREEK PROJECT FINANCE DOCUMENTS" means the Construction and Term Credit Agreement dated as of September 24, 1999 among Lost Creek, L.L.C. as Borrower, Barclays Bank PLC, as Administrative Agent and the other Lenders party thereto and the other agreements executed as security therefor or pursuant thereto, as the same may from time to time be amended. "MATERIAL ADVERSE EVENT" means any set of one or more circumstances or events which, individually or collectively, result in any (a) material impairment of the ability of any Loan Party to perform any of its payment or other material obligations under the Loan Documents or the ability of Administrative Agent or any Lender to enforce any such obligations or any of their 13 respective Rights under the Loan Documents, (b) material and adverse effect on the business, properties, condition (financial or otherwise), or results of operations of any Loan Party, NBPC, or any Loan Party and its Subsidiaries taken as a whole, or (c) a Default or Potential Default. "MATERIAL SUBSIDIARY" means any Subsidiary the assets of which comprised more than 5% of consolidated assets of Borrower and its Subsidiaries at the end of the fiscal year of Borrower immediately prior to the date of determination, or the gross revenue of which for any of the three fiscal years of Borrower immediately prior to the date of determination comprised more than 5% of consolidated gross revenue, all as determined by reference to the applicable financial statements of such Subsidiary and Borrower. "MAXIMUM AMOUNT" and "MAXIMUM RATE" respectively mean, for each Lender, the maximum non-usurious amount and the maximum non-usurious rate of interest which, under applicable Law, such Lender is permitted to contract for, charge, take, reserve, or receive on the Obligation. "MOODY'S" means Moody's Investor Service, Inc. or any successor thereto. "MULTIEMPLOYER PLAN" means a multiemployer plan as defined in Sections 3(37) or 4001(a)(3) of ERISA or Section 414(f) of the Code to which Borrower or any of its Subsidiaries, or any ERISA Affiliate of Borrower or any of its Subsidiaries is making, has made, is accruing, or has accrued, an obligation to make contributions or has, within any of the preceding five plan years, made or accrued an obligation to make contributions. "NBPC" means Northern Border Pipeline Company, a Texas general partnership. "NBPC CAPITALIZATION RATIO" means the ratio calculated in accordance with Section 6.3 of the Credit Agreement dated June 16, 1997 among NBPC, First National Bank of Chicago, as Agent, and the Lenders therein defined, as in effect on the date hereof, without regard to whether said Credit Agreement is amended or ceases to be in effect after the date hereof. "NET INCOME" means, for any Person and its consolidated Subsidiaries and for any period, the profit or loss of such Person and its consolidated Subsidiaries for such period after deducting all operating expenses, provision for income taxes and reserves, and all other deductions calculated, in each case, in accordance with GAAP, but excluding (a) extraordinary items, and (b) the profit or loss of any Subsidiary accrued before the date that (i) it becomes a Subsidiary of such Person, (ii) it is merged with such Person or any of its Subsidiaries, or (iii) its assets are acquired by such Person of any of its Subsidiaries. "NONEXTENDING LENDER" is defined in Section 2.5(d). "NORTHERN BORDER PARTNERSHIP AGREEMENT" means that certain General Partnership Agreement relating to the formation of NBPC effective as of March 9, 1978 as heretofore amended, modified and supplemented and as such agreement may hereafter from time to time be further amended, modified or supplemented. "NORTHERN PLAINS" means Northern Plains Natural Gas Company, a Delaware corporation. 14 "NORTHWEST BORDER" means Northwest Border Pipeline Company, a Delaware corporation. "NOTE" means a promissory note substantially in the form of Exhibit A, and all renewals and extensions of all or any part thereof. "OBLIGATION" means all present and future indebtedness, liabilities, and obligations, and all renewals and extensions thereof, or any part thereof, now or hereafter owed to Administrative Agent, any other Agent, any Lender, or any Affiliate of any Lender by any Loan Party or any Subsidiary thereof arising from, by virtue of, or pursuant to any Loan Document, together with all interest accruing thereon, fees, costs, and expenses (including, without limitation, all attorneys' fees and expenses incurred in the enforcement or collection thereof) payable under the Loan Documents. "PAN BORDER" means Pan Border Gas Company, a Delaware corporation. "PARTICIPANT" is defined in Section 14.13(e). "PARTNERSHIP AGREEMENT" means the Amended and Restated Agreement of Limited Partnership of Northern Border Partners, L.P., dated as of October 1, 1993 as the same may have been or may hereafter be amended, supplemented, restated or otherwise modified from time to time. "PBGC" means the Pension Benefit Guaranty Corporation, or any successor thereof, established pursuant to ERISA.. "PERMITTED LIENS" means Liens permitted under Section 10.2 as described in such Section. "PERSON" means any individual, partnership, firm, corporation, association, joint venture, limited liability company, trust or other entity, or any Governmental Authority. "POTENTIAL DEFAULT" means the occurrence of any event or existence of any circumstance which, with the giving of notice or lapse of time or both, would become a Default. "PRIME RATE" means the per annum rate of interest established from time to time by SunTrust Bank, as its prime rate, which rate may or may not be the lowest rate of interest charged by SunTrust Bank to its customers. "PRINCIPAL DEBT" means, on any date of determination, the aggregate unpaid principal balance of all Borrowings under the Facility, together with the aggregate unpaid reimbursement obligations of Borrower in respect of drawings under any LC. "PRO RATA" or "PRO RATA PART," for each Lender, means on any date of determination (a) for purposes of sharing any amount or fee payable to any Lender in respect of the Facility or the LC Subfacility (as the case may be) the proportion which the portion of the Principal Debt for the Facility or LC Subfacility owed to such Lender (whether held directly or through a participation in respect of the LC Subfacility and determined after giving effect thereto) bears to 15 the Principal Debt under the Facility or LC Subfacility (as the case may be) owed to all Lenders at the time in question, and (b) for all other purposes, the proportion which the portion of the Principal Debt owed to such Lender bears to the Principal Debt owed to all Lenders at the time in question, or if no Principal Debt is outstanding, then the proportion that the aggregate of such Lender's Committed Sum then in effect under the Facility and LC Subfacility bears to the Commitment then in effect. "REGISTER" is defined in Section 14.13(c). "REGULATION T" means Regulation T of the Board of Governors of the Federal Reserve System, as amended. "REGULATION U" means Regulation U of the Board of Governors of the Federal Reserve System, as amended. "REGULATION X" means Regulation X of the Board of Governors of the Federal Reserve System, as amended. "RELEASE" means any spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping, disposal, deposit, dispersal, migrating, or other movement into the air, ground, or surface water, or soil. "RELEVANT ANNIVERSARY DATE" is defined in Section 2.5(a). "REPLACEMENT LENDER" is defined in Section 2.5(d). "REPORTABLE EVENT" shall have the meaning specified in Section 4043 of ERISA or the regulations issued thereunder in connection with an Employee Plan, excluding events for which the notice requirement is waived under applicable PBGC regulations other than those events described in Sections 4043.21, 4043.24, and 4043.28 of such regulations, including each such provision as it may subsequently be renumbered. "REPORTING ENTITIES" is defined in Section 8.6. "REPRESENTATIVES" means representatives, officers, directors, employees, attorneys, and agents. "REQUEST FOR EXTENSION" is defined in Section 2.5(a). "REQUIRED LENDERS" means (a) on any date of determination on and after the Closing Date and prior to the initial Borrowing Date under the Loan Documents, those Lenders holding 51% or more of the Commitment; (b) on any date of determination on and after the initial Borrowing Date under the Loan Documents and prior to the Termination Date for the Facility, those Lenders holding 51% of the Commitment; and (c) on any date of determination on or after the Termination Date for the Facility, those Lenders holding 51% or more of the Principal Debt. "RESPONSIBLE OFFICER" means the chief executive officer, chief financial officer, senior vice president, or treasurer of Borrower, or, for all purposes under the Loan Documents, any 16 other officer designated from time to time by the Partnership Policy Committee of Borrower, which designated officer is acceptable to Administrative Agent. "RIGHTS" means rights, remedies, powers, privileges, and benefits. "ROLLING PERIOD" means, on any date of determination, the most recent four fiscal quarters ended on March 31, June 30, September 30, or December 31 (as the case may be). "S&P" means Standard and Poor's Rating Group (a division of McGraw-Hill, Inc.). "SCHEDULE" means, unless specified otherwise, a schedule attached to this Agreement, as the same maybe supplemented and modified from time to time in accordance with the terms of the Loan Documents. "SENIOR NOTE INDENTURE" means the indenture authorizing the issuance of the Senior Notes, as the same may from time to time be amended or supplemented. "SENIOR NOTES" is defined in Section 11.7(a). "SUBSIDIARY" of any Person means (a) any entity of which an aggregate of more than 50% (in number of votes) of the stock is owned of record or beneficially, directly or indirectly, by such Person, or (b) any partnership (limited or general) of which such Person shall, directly or indirectly, at any time be the controlling general partner determined in accordance with GAAP or own fifty percent (50%) or more of the issued and outstanding partnership interests. "TAXES" means, for any Person, taxes, assessments, or other governmental charges or levies imposed upon such Person, its income, or any of its properties, franchises, or assets. "TERMINATION DATE" means, the earlier of (i) March 21, 2004 (or such later date as may be established pursuant to Section 2.5), and (ii) the effective date of any other termination, cancellation, or acceleration of all commitments to lend under the Facility. "TYPE" means any type of Borrowing determined with respect to the interest option applicable thereto. "VOTING STOCK" means securities (as such term is defined in Section 2(1) of the Securities Act of 1933, as amended) of any class or classes, the holders of which are ordinarily, in the absence of contingencies, entitled to elect a majority of the corporate directors (or Persons performing similar functions). SECTION 1.2. NUMBER AND GENDER OF WORDS; OTHER REFERENCES. Unless otherwise specified in the Loan Documents, (a) where appropriate, the singular includes the plural and vice versa, and words of any gender include each other gender, (b) heading and caption references may not be construed in interpreting provisions, (c) monetary references are to currency of the United States of America, (d) section, paragraph, annex, schedule, exhibit, and similar references are to the particular Loan Document in which they are used, (e) references to "telecopy," "facsimile," "fax," or similar terms are to facsimile or 17 telecopy transmissions, (f) references to "including" mean including without limiting the generality of any description preceding that word, (g) the rule of construction that references to general items that follow references to specific items are limited to the same type or character of those specific items is not applicable in the Loan Documents, (h) references to any Person include that Person's heirs, personal representatives, successors, trustees, receivers, and permitted assigns, (i) references to any Law include every amendment or supplement to it, rule and regulation adopted under it, and successor or replacement for it, and (j) references to any Loan Document or other document include every renewal and extension of it, amendment and supplement to it, and restatement, replacement or substitution for it. SECTION 1.3. ACCOUNTING PRINCIPLES. All accounting and financial terms used in the Loan Documents and the compliance with each financial covenant therein shall be determined in accordance with GAAP, and, all accounting principles shall be applied on a consistent basis so that the accounting principles in a current period are comparable in all material respects to those applied during the preceding comparable period. ARTICLE II BORROWING PROVISIONS SECTION 2.1. FACILITY. Each Lender severally, but not jointly, agrees to lend to Borrower such Lender's Commitment Percentage of one or more Borrowings under the Facility not to exceed such Lender's Committed Sum under the Facility, which Borrowings may be repaid and reborrowed from time to time in accordance with the terms and provisions of the Loan Documents; provided that, (a) each such Borrowing must occur on a Business Day and no later than the Business Day immediately preceding the Termination Date for the Facility; (b) each such Borrowing shall be in an amount not less than $5,000,000 or a greater integral multiple of $1,000,000; and (c) on any date of determination, the Commitment Usage shall never exceed the Commitment. SECTION 2.2. LC SUBFACILITY. (a) CONDITIONS. Subject to the terms and conditions of this Agreement and applicable Law, Administrative Agent agrees to issue LCs upon Borrower's application therefor (denominated in Dollars) by delivering to Administrative Agent a properly completed LC Request and an LC Agreement with respect thereto no later than 11:00 a.m. Atlanta, Georgia time three Business Days before such LC is to be issued; provided that, (i) on any date of determination and after giving effect to any LC to be issued on such date, the Commitment Usage shall never exceed the Commitment then in effect, (ii) on any date of determination and after giving effect to any LC to be issued on such date, the LC Exposure shall never exceed $50,000,000 (as such commitment under the LC Subfacility may be reduced or canceled as herein provided), (iii) at the time of issuance of such LC, no Default or Potential Default shall have occurred and be continuing and (iv) each LC must expire no later than the earlier of the 30th day prior to the Termination Date or one year from its issuance. 18 (b) PARTICIPATIONS. Immediately upon the issuance by Administrative Agent of any LC, Administrative Agent shall be deemed to have sold and transferred to each other Lender, and each other such Lender shall be deemed irrevocably and unconditionally to have purchased and received from Administrative Agent, without recourse or warranty, an undivided interest and participation, to the extent of such Lender's Commitment Percentage (based upon the Facility), in such LC, the LC Agreement related thereto, and all Rights of Administrative Agent in respect thereof (other than Rights to receive certain fees provided for in Section 5.4(b)). (c) REIMBURSEMENT OBLIGATION. To induce Administrative Agent to issue and maintain LCs and to induce Lenders to participate in issued LCs, Borrower agrees to pay or reimburse Administrative Agent (i) on the date on which any draft is presented under any LC, the amount of any draft paid or to be paid by Administrative Agent and (ii) promptly, upon demand, the amount of any fees (in addition to the fees described in Article 5) which Administrative Agent customarily charges to a Person similarly situated in the ordinary course of its business for amending LC Agreements, for honoring drafts under letters of credit, and taking similar action in connection with letters of credit. If Borrower has not reimbursed Administrative Agent for any drafts paid or to be paid within 24 hours of demand therefor by Administrative Agent, Administrative Agent is hereby irrevocably authorized to fund such reimbursement obligations as a Base Rate Borrowing under the Facility to the extent of availability under the Facility and if the conditions precedent in this Agreement for such a Borrowing (other than any notice requirements or minimum funding amounts) have, to Administrative Agent's knowledge, been satisfied. The proceeds of such Borrowing under the Facility shall be advanced directly to Administrative Agent in payment of Borrower's unpaid reimbursement obligation. If for any reason, funds cannot be advanced under the Facility, then Borrower's reimbursement obligation shall continue to be due and payable. Borrower's obligations under this Section 2.2(c) shall be absolute and unconditional under any and all circumstances and irrespective of any setoff, counterclaim, or defense to payment which Borrower may have at any time against Administrative Agent or any other Person. From the date that Administrative Agent pays a draft under an LC until the related reimbursement obligation of Borrower is paid or funded by proceeds of a Borrowing, (x) unpaid reimbursement obligations which are funded pursuant to a Base Rate Borrowing shall accrue interest at the rate then applicable to Base Rate Borrowings, and (y) unpaid reimbursement obligations which are not so funded shall accrue interest at the Default Rate, which accrued interest shall be payable on demand. (d) GENERAL. Administrative Agent shall promptly notify Borrower of the date and amount of any draft presented for honor under any LC (but failure to give any such notice shall not affect Borrower's obligations under this Agreement). Administrative Agent shall pay the requested amount upon presentment of a draft for honor unless such presentment on its face does not comply with the terms of the applicable LC. When making payment, Administrative Agent may disregard (i) any default or potential default that exists under any other agreement and (ii) the obligations under any other agreement that have or have not been performed by the beneficiary or any other Person (and Administrative Agent shall not be liable for any obligation of any Person thereunder). Borrower's reimbursement obligations to Administrative Agent and Lenders, and each Lender's obligations to Administrative Agent, under this Section 2.2 are absolute and unconditional irrespective of, and Administrative Agent is not responsible for, (i) the validity, enforceability, sufficiency, accuracy, or genuineness of documents or endorsements which appear appropriate on their face (even if they are in any respect invalid, 19 unenforceable, insufficient, inaccurate, fraudulent, or forged), (ii) any dispute by Borrower or any of its Subsidiaries with Borrower's or any of its Subsidiaries' claims, setoffs, defenses, counterclaims, or other Rights against Administrative Lender, any Lender, or any other Person, or (iii) the occurrence of any Potential Default or Default. However, nothing in this Section 2.2 constitutes a waiver of the Rights of Borrower or any Lender to assert any claim or defense based upon the gross negligence or willful misconduct of Administrative Agent. To the extent any Lender has funded its ratable share of any draft under an LC, then Administrative Agent shall promptly distribute reimbursement payments received from Borrower to such Lender according to its ratable share. In the event any payment by Borrower received by Administrative Agent with respect to an LC and distributed to Lenders on account of their participations therein is thereafter set aside, avoided, or recovered from Administrative Agent in connection with any receivership, liquidation, or bankruptcy proceeding, each Lender which received such distribution shall, upon demand by Administrative Agent, contribute such Lender's ratable portion of the amount set aside, avoided, or recovered, together with interest at the rate required to be paid by Administrative Agent upon the amount required to be repaid by it. (e) OBLIGATION OF LENDERS. If Borrower fails to reimburse Administrative Agent as provided in Section 2.2(c) within twenty-four (24) hours of the demand therefor by Administrative Agent and funds cannot be advanced under the Facility to satisfy the reimbursement obligations, then Administrative Agent shall promptly notify each Lender of Borrower's failure, of the date and amount of the draft paid, and of such Lender's Commitment Percentage (based upon the Facility) thereof. Each Lender shall promptly and unconditionally fund its participation interest in such unreimbursed draft by making available to Administrative Agent in immediately available funds such Lender's Commitment Percentage (based upon the Facility) of the unreimbursed draft. Funds are due and payable to Administrative Agent on or before the close of business on the Business Day when Administrative Agent gives notice to each Lender of Borrower's reimbursement failure (if given prior to 2:00 p.m., Atlanta, Georgia time) or on the next succeeding Business Day (if notice was given after 2:00 p.m., Atlanta, Georgia time). All amounts payable by any Lender shall accrue interest at the Federal Funds Rate from the day the applicable draft is paid by Administrative Agent to (but not including) the date the amount is paid by the Lender to Administrative Agent. (f) DUTIES OF ADMINISTRATIVE AGENT AS ISSUING LENDER. Administrative Agent agrees with each Lender that it will exercise and give the same care and attention to each LC as it gives to its other letters of credit. Administrative Agent's sole liability to each Lender with respect to such LCs (other than liability arising from the gross negligence or willful misconduct of Administrative Agent) shall be to distribute promptly to each Lender who has acquired a participating interest therein such Lender's ratable portion of any payments made to Administrative Agent by Borrower pursuant to Section 2.2(d). Each Lender and Borrower agree that, in paying any draw under any LC, Administrative Agent shall not have any responsibility to obtain any document (other than any documents required by the respective LC) or to ascertain or inquire as to any document's validity, enforceability, sufficiency, accuracy, or genuineness or the authority of any Person delivering any such document. Administrative Agent, Lenders, and their respective Representatives shall not be liable to any other Lender or Borrower or any of its Subsidiaries for any LCs use or for any beneficiary's acts or omissions. 20 (g) CASH COLLATERAL. On the Termination Date for the Facility, or on any date that the LC Exposure exceeds the then-effective commitment under the LC Subfacility, or upon any demand by Administrative Agent upon the occurrence and during the continuance of a Default, Borrower shall provide to Administrative Agent, for the benefit of the Lenders, (i) cash collateral in Dollars in an amount equal to 110% of the LC Exposure existing on such date, such cash and all interest thereon shall constitute cash collateral for all LCs, and (ii) such additional cash collateral as Administrative Agent may from time to time require, so that the cash collateral amount shall at all times equal or exceed 110% the LC Exposure. Any cash collateral deposited under this clause (g), and all interest earned thereon, shall be deposited into a Letter of Credit Cash Collateral Account. (h) LETTER OF CREDIT CASH COLLATERAL ACCOUNT. (i) Borrower hereby pledges and grants a security interest in and lien on the Letter of Credit Cash Collateral Account and all funds, cash and instruments at any time on deposit or held therein to the Administrative Agent for and on behalf of the Lenders as security for the Obligation. The Letter of Credit Cash Collateral Account shall be under the exclusive dominion and control of the Administrative Agent. The Administrative Agent may, at any time during the continuation of a Default without notice to Borrower, apply funds then held in the Letter of Credit Cash Collateral Account to the payment of the Obligation in respect of LCs (and, if no LCs are outstanding or the face amount thereof is less than the amount on deposit in the Cash Collateral Account, to other amounts owed under this Agreement). (ii) The rate of interest earned on the Letter of Credit Cash Collateral Account shall be comparable to the rates paid by Administrative Agent on other similar accounts as in effect time to time; provided, however, that Administrative Agent shall not be obligated to pay interest on said account during the continuation of a Default. (iii) There shall be no release to Borrower of funds from the Letter of Credit Cash Collateral Account at any time during the continuance of a Potential Default or a Default. (iv) Borrower agrees to pay to SunTrust Bank all customary fees, costs and expenses which SunTrust Bank incurs in connection with opening and maintaining the Letter of Credit Cash Collateral Account. (i) INDEMNIFICATION. BORROWER SHALL PROTECT, INDEMNIFY, PAY, AND SAVE ADMINISTRATIVE AGENT AND EACH LENDER HARMLESS FROM AND AGAINST ANY AND ALL CLAIMS, DEMANDS, LIABILITIES, DAMAGES, OR LOSSES OF, OR OWED TO THIRD PARTIES (INCLUDING ANY OF THE FOREGOING ARISING FROM THE NEGLIGENCE OF ADMINISTRATIVE AGENT, LENDERS, OR THEIR RESPECTIVE REPRESENTATIVES), AND ANY AND ALL RELATED COSTS, CHARGES, AND EXPENSES (INCLUDING REASONABLE ATTORNEYS' FEES), WHICH ADMINISTRATIVE AGENT, OR ANY LENDER MAY INCUR OR BE SUBJECT TO AS A CONSEQUENCE, DIRECT OR INDIRECT, OF (A) THE ISSUANCE OF ANY LC, (B) ANY DISPUTE ABOUT AN LC, OR (C) THE 21 FAILURE OF ADMINISTRATIVE AGENT TO HONOR A DRAFT UNDER SUCH LC AS A RESULT OF ANY ACT OR OMISSION (WHETHER RIGHT OR WRONG) OF ANY PRESENT OR FUTURE GOVERNMENTAL AUTHORITY. HOWEVER, NO PERSON IS ENTITLED TO INDEMNITY HEREUNDER FOR ITS OWN GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. THE FOREGOING INDEMNITY PROVISIONS SHALL SURVIVE THE SATISFACTION AND PAYMENT OF THE OBLIGATION AND TERMINATION OF THIS AGREEMENT. (j) LC AGREEMENTS. Although referenced in any LC, terms of any particular agreement or other obligation to the beneficiary are not incorporated into this Agreement in any manner. The fees and other amounts payable with respect to each LC are as provided in this Agreement, drafts under any LC shall be deemed part of the Obligation, and in the event of any conflict between the terms of this Agreement and any LC Agreement, the terms of this Agreement shall be controlling. SECTION 2.3. TERMINATIONS, REDUCTIONS OR INCREASES OF COMMITMENTS. (a) VOLUNTARY COMMITMENT REDUCTION. Without premium or penalty, and upon giving not less than three Business Days prior written and irrevocable notice to Administrative Agent, Borrower may terminate in whole or in part the unused portion of the Commitment, or the commitment under the LC Subfacility; provided that: (i) each partial termination of the Commitment shall be in an amount of not less than $5,000,000 or a greater integral multiple of $1,000,000; each partial termination of the commitment under the LC Subfacility shall be in an amount of not less than $1,000,000 or a greater integral multiple of $500,000; and (ii) on any date of determination, the amount of the Commitment may not be reduced below the Commitment Usage, and the commitment under the LC Subfacility shall not be reduced below the LC Exposure. At the time of any commitment termination under this Section 2.3, Borrower shall pay to Administrative Agent, for the account of each Lender any amounts that may then be due under Section 3.3(c), all accrued and unpaid fees then due and payable under this Agreement, the interest attributable to the amount of that reduction, and any related Consequential Loss. Any part of the Commitment or the commitment under the LC Subfacility that is terminated may not be reinstated. (b) ADDITIONAL REDUCTIONS. The commitment under the LC Subfacility shall be reduced from time to time on the date of any mandatory or voluntary reduction of the Commitment by the amount, if any, by which such LC Subfacility exceeds the Commitment after giving effect to such reduction of the Commitment. (c) RATABLE ALLOCATION OF COMMITMENT REDUCTIONS. Each reduction of the Commitment under this Section 2.3 shall be allocated among the Lenders in accordance with their respective Commitment Percentages under the Facility. SECTION 2.4. BORROWING PROCEDURE. The following procedures apply to all Borrowings: (a) BORROWING REQUEST. Borrower may request a Borrowing by making or delivering a Borrowing Notice to Administrative Agent requesting that Lenders fund a Borrowing on a 22 certain date (the "BORROWING DATE"), which Borrowing Notice (i) shall be irrevocable and binding on Borrower, (ii) shall specify the Facility or LC Subfacility, (iii) shall specify the Borrowing Date, amount, Type, and (for a Borrowing comprised of Eurodollar Rate Borrowings) Interest Period, and (iv) must be received by Administrative Agent no later than 11:00 a.m. Atlanta, Georgia time on the third Business Day preceding the Borrowing Date for any Eurodollar Rate Borrowing or on the requested Borrowing Date (which shall be a Business Day for any Base Rate Borrowing. Administrative Agent shall timely notify each Lender with respect to each Borrowing Notice. (b) FUNDING. Each Lender shall remit its Commitment Percentage for the Facility of each requested Borrowing to Administrative Agent's office in Atlanta, Georgia, in funds which are or will be available for immediate use by Administrative Agent by 2:00 p.m. Atlanta, Georgia time on the applicable Borrowing Date. Subject to receipt of such funds, Administrative Agent shall (unless to its actual knowledge any of the conditions precedent therefor have not been satisfied by Borrower or waived by the requisite Lenders under Section 14.11) make such funds available to Borrower by causing such funds to be deposited to Borrower's account as designated to Administrative Agent by Borrower. (c) FUNDING ASSUMED. Absent contrary written notice from a Lender, Administrative Agent may assume that each Lender has made its Commitment Percentage of the requested Borrowing available to Administrative Agent on the applicable Borrowing Date, and Administrative Agent may, in reliance upon such assumption (but shall not be required to), make available to Borrower a corresponding amount. If a Lender fails to make its Commitment Percentage of any requested Borrowing available to Administrative Agent on the applicable Borrowing Date, Administrative Agent may recover the applicable amount on demand, (i) from that Lender together with interest, commencing on the Borrowing Date and ending on (but excluding) the date Administrative Agent recovers the amount from that Lender, at an annual interest rate equal to the Federal Funds Rate, or (ii) if that Lender fails to pay its amount upon demand, then from Borrower. No Lender is responsible for the failure of any other Lender to make its Commitment Percentage of any Borrowing available as required by Section 2.4(b); however, failure of any Lender to make its Commitment Percentage of any Borrowing so available does not excuse any other Lender from making its Commitment Percentage of any Borrowing so available. SECTION 2.5. EXTENSION OF MATURITY DATE. (a) Borrower may, by written notice to the Administrative Agent (a "REQUEST FOR EXTENSION") given not less than 45 nor more than 60 days prior to each Anniversary Date, advise the Lenders that it requests an extension of the then effective Termination Date (the "EXISTING TERMINATION DATE") by one year, effective on the relevant Anniversary Date (the "RELEVANT ANNIVERSARY DATE"). The Administrative Agent will promptly, and in any event within five Business Days of the receipt of such Request for Extension, notify the Lenders of the contents of each such Request for Extension. (b) Each Request for Extension shall (i) be irrevocable and (ii) constitute a representation by Borrower that (A) neither any Default nor any Potential Default has occurred and is continuing and (B) the representations and warranties contained in Article 8 are correct in all 23 material respects on and as of the Relevant Anniversary Date, as though made on and as of such date (unless any representation and warranty expressly relates to an earlier date). (c) In the event a Request for Extension is given to the Administrative Agent as provided in Section 2.5(a) and the Administrative Agent notifies a Lender of the contents thereof, such Lender shall on or before the 30th day next preceding the then Relevant Anniversary Date advise the Administrative Agent in writing whether or not such Lender consents to the extension requested thereby. Each Lender shall have the right to consent to or reject such extension request in the exercise of its sole discretion. If any Lender fails so to advise the Administrative Agent, such Lender shall be deemed to have not consented to such extension. If all Lenders consent, the then effective Termination Date shall be extended by one year from the then effective Termination Date. (d) If (i) any Lender notifies the Administrative Agent that it will not consent to a Request for Extension, or (ii) all of the Lenders have not in writing expressly consented to a Request for Extension within the time period set forth in Section 2.5(c), then Borrower may, at its option, replace each Lender which has not agreed to the Request for Extension (a "NONEXTENDING LENDER") with one or more existing Lenders and/or another bank or financial institution approved by the Administrative Agent (which approval shall not be unreasonably withheld or delayed) (a "REPLACEMENT LENDER") by giving (not less than 10 days prior to the Relevant Anniversary Date) notice of the name of such Replacement Lender or such existing Lenders to the Administrative Agent. Each Nonextending Lender shall promptly assign all of its interests hereunder to such Replacement Lender and/or existing Lenders in accordance with Section 14.13. In connection with any such assignment, the Borrower shall be responsible for payment of the processing fee set forth in Section 14.13(b)(iii). (e) If all Lenders consent to a Request for Extension (or, if all Nonextending Lenders are replaced in accordance with this Section), then, as of the Relevant Anniversary Date, the Termination Date shall be deemed to have been extended for, and shall be the date that is, one year after the then effective Termination Date. If any Lender declines to consent to any such Request for Extension and such Lender is not replaced in accordance with this Section, then the Termination Date then in effect shall not be extended. ARTICLE III TERMS OF PAYMENT SECTION 3.1. LOAN ACCOUNTS, NOTES, AND PAYMENTS. (a) LOAN ACCOUNTS. The Principal Debt owed to each Lender shall be evidenced by one or more loan accounts or records maintained by such Lender in the ordinary course of business. The loan accounts or records maintained by Administrative Agent (including, without limitation, the Register) and each Lender shall be prima facie evidence absent manifest error of the amount of the Borrowings made by Borrower from each Lender under this Agreement (and the LC Subfacility hereunder) and the interest and principal payments thereon. Any failure to so record or any error in doing so shall not, however, limit or otherwise affect the obligation of Borrower under the Loan Documents to pay any amount owing with respect to the Obligation. 24 (b) NOTES. Upon the request of any Lender, made through Administrative Agent, the Commitment amount of such Lender may be evidenced by a Note. (c) PAYMENT. All payments of principal, interest, and other amounts to be made by Borrower under this Agreement and the other Loan Documents shall be made to Administrative Agent at its office in Atlanta, Georgia in Dollars and in funds which are or will be available for immediate use by Administrative Agent by 1:00 p.m., Atlanta, Georgia time on the day due, without setoff, deduction, or counterclaim. Payments made after 1:00 p.m., Atlanta, Georgia, time shall be deemed made on the Business Day next following. Administrative Agent shall pay to each Lender any payment of principal, interest, or other amount to which such Lender is entitled hereunder on the same day Administrative Agent shall have received the same from Borrower; provided such payment is received by Administrative Agent prior to 1:00 p.m., Atlanta, Georgia time, and otherwise before 1:00 p.m., Atlanta, Georgia time on the Business Day next following. (d) PAYMENT ASSUMED. Unless Administrative Agent has received notice from Borrower prior to the date on which any payment is due under this Agreement that Borrower will not make that payment in full, Administrative Agent may assume that Borrower has made the full payment due and Administrative Agent may, in reliance upon that assumption, cause to be distributed to the appropriate Lender on that date the amount then due to such Lenders. If and to the extent Borrower does not make the full payment due to Administrative Agent, each Lender shall repay to Administrative Agent on demand the amount distributed to that Lender by Administrative Agent together with interest for each day from the date that Lender received payment from Administrative Agent until the date that Lender repays Administrative Agent (unless such repayment is made on the same day as such distribution), at an annual interest rate equal to the Federal Funds Rate. SECTION 3.2. INTEREST AND PRINCIPAL PAYMENTS. (a) INTEREST. Accrued interest on each Eurodollar Rate Borrowing is due and payable on the last day of its respective Interest Period and on the Termination Date for the Facility; provided that, if any Interest Period is greater than three months, then accrued interest is also due and payable on the three month anniversary of the date on which such Interest Period commences and on each three month anniversary thereafter, as well as on the last day of such Interest Period. Accrued interest on each Base Rate Borrowing shall be due and payable on each March 31, June 30, September 30, and December 31, and on the Termination Date for the Facility. Notwithstanding the foregoing, interest accrued at the Default Rate shall be due and payable on demand. (b) PRINCIPAL DEBT. The Principal Debt is due and payable on the Termination Date. SECTION 3.3. PREPAYMENTS. (a) OPTIONAL PREPAYMENTS. Except as set forth herein, after giving Administrative Agent advance written notice of the intent to prepay, Borrower may voluntarily prepay all or any part of the Principal Debt, from time to time and at any time, in whole or in part, without premium or penalty; provided that: (i) such notice must be received by Administrative Agent by 1:00 p.m., 25 Atlanta, Georgia time, on or before the date of prepayment of any Borrowing; (ii) each such partial prepayment must be in a minimum amount of at least $5,000,000 or a greater integral multiple of $1,000,000 thereof or such lesser amount as may be outstanding under the Facility; (iii) any Eurodollar Rate Borrowing may only be prepaid at the end of an applicable Interest Period (unless Borrower pays the amount of any Consequential Loss); and (iv) Borrower shall pay any related Consequential Loss within ten (10) days after demand therefor. Conversions under Section 3.11 are not prepayments. Each notice of prepayment shall specify the prepayment date, the applicable loan hereunder of Principal Debt being prepaid, and the Type of Borrowing(s) and amount(s) of such Borrowing(s) to be prepaid and shall constitute a binding obligation of Borrower to make a prepayment on the date stated therein, together with (unless such prepayment is made with respect to a Base Rate Borrowing) accrued and unpaid interest to the date of such payment on the aggregate principal amount prepaid. Any voluntary prepayment of the Principal Debt shall be applied to the Principal Debt and shall be allocated Pro Rata to each Lender. Unless a Default or Potential Default has occurred and is continuing (or would arise as a result thereof), any payment or prepayment of the Principal Debt may be reborrowed by Borrower, subject to the terms and conditions of the Loan Documents. (b) MANDATORY PAYMENTS/REDUCTIONS. On any date of determination if the Commitment Usage exceeds the Commitment then in effect, then Borrower shall make a mandatory prepayment of the Principal Debt, in at least the amount of such excess, together with (x) all accrued and unpaid interest on the principal amount so prepaid and (y) any Consequential Loss arising as a result thereof; provided that, on any such reduction date, if no Principal Debt is then outstanding, but the LC Exposure exceeds the Commitment, then Borrower shall provide to Administrative Agent, for the benefit of Lenders, cash collateral in Dollars for deposit into the Letter of Credit Cash Collateral Account in an amount at least equal to 110% such excess. All mandatory prepayments or commitment reductions under the Facility hereunder shall be allocated among the Lenders in accordance with their respective Commitment Percentages under the Facility. (c) MANDATORY PREPAYMENTS OF INTEREST/CONSEQUENTIAL LOSS. All prepayments under this Section 3.3 shall be made, together with accrued interest to the date of such prepayment on the principal amount prepaid, together with any Consequential Loss arising as a result thereof. SECTION 3.4. INTEREST OPTIONS. Except that the Eurodollar Rate may not be selected when a Default or Potential Default exists and except as otherwise provided in this Agreement, Borrowings bear interest at a rate per annum equal to the lesser of (a) as to the respective Type of Borrowing (as designated by Borrower in accordance with this Agreement), the Base Rate, plus the Applicable Margin for Base Rate Borrowings, or the Eurodollar Rate plus the Applicable Margin for Eurodollar Rate Borrowings, and (b) the Maximum Rate. Each change in the Base Rate or the Maximum Rate, subject to the terms of this Agreement, will become effective, without notice to Borrower or any other Person, upon the effective date of such change. 26 SECTION 3.5. QUOTATION OF RATES. It is hereby acknowledged that an appropriately designated Representative of Borrower may call Administrative Agent on or before the date on which a Borrowing Notice is to be delivered by Borrower in order to receive an indication of the rates then in effect, but such indicated rates shall neither be binding upon Administrative Agent or Lenders nor affect the rate of interest which thereafter is actually in effect when the Borrowing Notice is given or on the Borrowing Date. SECTION 3.6. DEFAULT RATE. While any Default exists or after acceleration, Borrower shall pay interest on the principal amount of all Borrowings at the Default Rate until paid, regardless whether such payment is made before or after entry of a judgment. SECTION 3.7. INTEREST RECAPTURE. If the designated rate applicable to any Borrowing exceeds the Maximum Rate, the rate of interest on such Borrowing shall be limited to the Maximum Rate, but any subsequent reductions in such designated rate shall not reduce the rate of interest thereon below the Maximum Rate until the total amount of interest accrued thereon equals the amount of interest which would have accrued thereon if such designated rate had at all times been in effect. In the event that at maturity (stated or by acceleration), or at final payment of the Principal Debt, the total amount of interest paid or accrued is less than the amount of interest which would have accrued if such designated rates had at all times been in effect, then, at such time and to the extent permitted by Law, Borrower shall pay an amount equal to the difference between (a) the lesser of the amount of interest which would have accrued if such designated rates had at all times been in effect and the amount of interest which would have accrued if the Maximum Rate had at all times been in effect, and (b) the amount of interest actually paid or accrued on the Principal Debt. SECTION 3.8. INTEREST CALCULATIONS. Interest will be calculated on the basis of actual number of days (including the first day but excluding the last day) elapsed but computed as if each calendar year consisted of 360 days in the case of an Eurodollar Rate Borrowing (unless the calculation would result in an interest rate greater than the Maximum Rate, in which event interest will be calculated on the basis of a year of 365 or 366 days, as the case may be) and 365 or 366 days, as the case may be, in the case of a Base Rate Borrowing. All interest rate determinations and calculations by Administrative Agent are conclusive and binding absent manifest error. SECTION 3.9. MAXIMUM RATE. Regardless of any provision contained in any Loan Document, neither Administrative Agent nor any Lender shall ever be entitled to contract for, charge, take, reserve, receive, or apply, as interest on all or any part of the Obligation, any amount in excess of the Maximum Rate, and, if Lenders ever do so, then such excess shall be deemed a partial prepayment of principal and treated hereunder as such and any remaining excess shall be refunded to Borrower. 27 In determining if the interest paid or payable exceeds the Maximum Rate, Borrower and Lenders shall, to the maximum extent permitted under applicable Law, (a) treat all Borrowings as but a single extension of credit (and Lenders and Borrower agree that such is the case and that provision herein for multiple Borrowings is for convenience only), (b) characterize any nonprincipal payment as an expense, fee, or premium rather than as interest, (c) exclude voluntary prepayments and the effects thereof, and (d) amortize, prorate, allocate, and spread the total amount of interest throughout the entire contemplated term of the Obligation. However, if the Obligation is paid and performed in full prior to the end of the full contemplated term thereof, and if the interest received for the actual period of existence thereof exceeds the Maximum Amount, Lenders shall refund such excess, and, in such event, Lenders shall not, to the extent permitted by Law, be subject to any penalties provided by any Laws for contracting for, charging, taking, reserving, or receiving interest in excess of the Maximum Amount. SECTION 3.10. INTEREST PERIODS. When Borrower requests any Eurodollar Rate Borrowing, Borrower may elect the interest period (each an "INTEREST PERIOD") applicable thereto, which shall be, at Borrower's option and subject to availability, one, two, three, or six months; provided, however, that: (a) the initial Interest Period for a Eurodollar Rate Borrowing shall commence on the date of such Borrowing (including the date of any conversion thereto), and each Interest Period occurring thereafter in respect of such Borrowing shall commence on the day on which the next preceding Interest Period applicable thereto expires; (b) if any Interest Period for a Eurodollar Rate Borrowing begins on a day for which there is no numerically corresponding Business Day in the calendar month at the end of such Interest Period, such Interest Period shall end on the next Business Day immediately following what otherwise would have been such numerically corresponding day in the calendar month at the end of such Interest Period (unless such date would be in a different calendar month from what would have been the month at the end of such Interest Period, or unless there is no numerically corresponding day in the calendar month at the end of the Interest Period; whereupon, such Interest Period shall end on the last Business Day in the calendar month at the end of such Interest Period); (c) no Interest Period may be chosen with respect to any portion of the Principal Debt which would extend beyond the scheduled repayment date (including any dates on which mandatory prepayments are required to be made) for such portion of the Principal Debt; and (d) no more than an aggregate of five (5) Interest Periods shall be in effect at one time. SECTION 3.11. CONVERSIONS. Borrower may (a) convert a Eurodollar Rate Borrowing on the last day of the applicable Interest Period to a Base Rate Borrowing, (b) convert a Base Rate Borrowing at any time to a Eurodollar Rate Borrowing, and (c) elect a new Interest Period (in the case of a Eurodollar Rate Borrowing), by giving a Conversion Notice of such intent to Administrative Agent no later than 11:00 a.m. Atlanta, Georgia time on the third Business Day prior to the date of conversion or the last day of the Interest Period, as the case may be (in the case of a conversion to a Eurodollar Rate Borrowing or an election of a new Interest Period), and no later than 11:00 a.m. Atlanta, Georgia time on the last Business Day of the Interest Period (in the case of a conversion to a Base Rate Borrowing); provided that, the principal amount converted to, or continued as, a Eurodollar Rate Borrowing shall be in an amount not less than $5,000,000 or a greater integral 28 multiple of $1,000,000 (or such lesser amount as may be outstanding under the Facility). Administrative Agent shall timely notify each Lender with respect to each Conversion Notice. Absent Borrower's Conversion Notice or election of a new Interest Period, a Eurodollar Rate Borrowing shall be deemed converted to a Base Rate Borrowing effective as of the expiration of the Interest Period applicable thereto. No Eurodollar Rate Borrowing may be either made or continued as a Eurodollar Rate Borrowing, and no Base Rate Borrowing may be converted to a Eurodollar Rate Borrowing, if the interest rate for such Eurodollar Rate Borrowing would exceed the Maximum Rate. The right to convert from a Base Rate Borrowing to a Eurodollar Rate Borrowing, or to continue as a Eurodollar Rate Borrowing shall not be available if a Default or Potential Default has occurred and is continuing. SECTION 3.12. ORDER OF APPLICATION. (a) NO DEFAULT. If no Default or Potential Default exists and if no order of application is otherwise specified in Section 3.3 or otherwise in the Loan Documents, payments and prepayments of the Obligation shall be applied first to fees, second to accrued interest then due and payable on the Principal Debt, and then to the remaining Obligation in the order and manner as Borrower may direct. (b) DEFAULT. If a Default or Potential Default exists (or if Borrower fails to give directions as permitted under Section 3.12(a)), any payment or prepayment (including proceeds from the exercise of any Rights) shall be applied to the Obligation in the following order: (i) to the ratable payment of all fees, expenses, and indemnities for which Agents or Lenders have not been paid or reimbursed in accordance with the Loan Documents (as used in this Section 3.12(b)(i), a "RATABLE PAYMENT" for any Lender or any Agent shall be, on any date of determination, that proportion which the portion of the total fees, expenses, and indemnities owed to such Lender or such Agent bears to the total aggregate fees and indemnities owed to all Lenders and Agents on such date of determination); (ii) to the ratable payment of accrued and unpaid interest on the Principal Debt (as used in this Section 3.12(b)(ii), "RATABLE PAYMENT" means, for any Lender, on any date of determination, that proportion which the accrued and unpaid interest on the Principal Debt owed to such Lender bears to the total accrued and unpaid interest on the Principal Debt owed to all Lenders); (iii) to the ratable payment of any reimbursement obligation with respect to any LC issued pursuant to the Agreement which is due and payable and which remains unfunded by any Borrowing under the Facility; provided that, such payments shall be allocated ratably among the issuer of the LC and the Lenders which have funded their participations in such LC; (iv) to the ratable payment of the Principal Debt (as used in this Section 3.12(b)(iv), "RATABLE PAYMENT" means for any Lender, on any date of determination, that proportion which the Principal Debt owed to such Lender bears to the Principal Debt owed to all Lenders); (v) to provide cash collateral in an amount equal to 110% of the LC Exposure then existing in accordance with Section 2.2(g); and (vi) to the payment of the remaining Obligation in the order and manner Required Lenders deem appropriate. Subject to the provisions of Article 12 and provided that Administrative Agent shall not in any event be bound to inquire into or to determine the validity, scope, or priority of any interest or entitlement of any Lender and may suspend all payments or seek appropriate relief (including, without limitation, instructions from Required Lenders or an action in the nature of interpleader) in the event of any doubt or dispute as to any apportionment or distribution contemplated hereby, 29 Administrative Agent shall promptly distribute such amounts to each Lender in accordance with the Agreement and the related Loan Documents. SECTION 3.13. SHARING OF PAYMENTS, ETC. If any Lender shall obtain any payment or prepayment with respect to the Obligation (whether voluntary, involuntary, or otherwise, including, without limitation, as a result of exercising its Rights under Section 3.14) which is in excess of its share of any such payment in accordance with the relevant Rights of the Lenders under the Loan Documents, then such Lender shall purchase from the other Lenders such participations as shall be necessary to cause such purchasing Lender to share the excess payment with each other Lender in accordance with the relevant Rights under the Loan Documents. If all or any portion of such excess payment is subsequently recovered from such purchasing Lender, then the purchase shall be rescinded and the purchase price restored to the extent of such recovery. Borrower agrees that any Lender purchasing a participation from another Lender pursuant to this Section may, to the fullest extent permitted by Law, exercise all of its Rights of payment (including the Right of offset) with respect to such participation as fully as if such Lender were the direct creditor of Borrower in the amount of such participation. SECTION 3.14. OFFSET. If a Default exists, each Lender shall be entitled to exercise (for the benefit of all Lenders in accordance with Section 3.13) the Rights of offset and/or banker's Lien against each and every account and other property, or any interest therein, which any Loan Party may now or hereafter have with, or which is now or hereafter in the possession of, such Lender to the extent of the full amount of the Obligation. SECTION 3.15. BOOKING BORROWINGS. To the extent permitted by Law, any Lender may make, carry, or transfer its Borrowings at, to, or for the account of any of its branch offices or the office of any of its Affiliates; provided that, no Affiliate shall be entitled to receive any greater payment under Article 4 than the transferor Lender would have been entitled to receive with respect to such Borrowings. In the event a Lender shall transfer its Borrowings to or make its Borrowings from any office other than that designated on Schedule 13.3, it shall notify the Administrative Agent and the Administrative Agent shall provide a copy of such notice to Borrower; provided, however, that the failure of a Lender or of Administrative Agent to provide notice under this Section shall not relieve Borrower from any obligations under this Agreement. ARTICLE IV CHANGE IN CIRCUMSTANCES SECTION 4.1. INCREASED COST AND REDUCED RETURN. (a) CHANGES IN LAW. If, after the date hereof, the adoption of any applicable Law or any change in any applicable Law or any change in the interpretation or administration thereof by any Governmental Authority, or compliance by any Lender (or its Applicable Lending Office) 30 with any request or directive (whether or not having the force of law) of any such Governmental Authority: (i) shall subject such Lender (or its Applicable Lending Office) to any Tax or other charge with respect to any Eurodollar Rate Borrowing, its Notes, or its obligation to loan Eurodollar Rate Borrowings, or change the basis of taxation of any amounts payable to such Lender (or its Applicable Lending Office) under the Loan Documents in respect of any Eurodollar Rate Borrowings (other than Taxes imposed on the overall net income of such Lender by the jurisdiction in which such Lender has its principal office or such Applicable Lending Office); (ii) shall impose, modify, or deem applicable any reserve, special deposit, assessment, or similar requirement relating to any extensions of credit or other assets of, or any deposits with or other liabilities or commitments of, such Lender (or its Applicable Lending Office), including the commitment of such Lender hereunder; or (iii) shall impose on such Lender (or its Applicable Lending Office) or the London interbank market any other condition affecting the Loan Documents or any of such extensions of credit or liabilities or commitments; and the result of any of the foregoing is to increase the cost to such Lender (or its Applicable Lending Office) of making, converting into, continuing, or maintaining any Eurodollar Rate Borrowings or to reduce any sum received or receivable by such Lender (or its Applicable Lending Office) under the Loan Documents with respect to any Eurodollar Rate Borrowing, then Borrower shall pay to such Lender within 15 days after demand such amount or amounts as will compensate such Lender for such increased cost or reduction. If any Lender requests compensation by Borrower under this Section 4.1(a), Borrower may, by notice to such Lender (with a copy to Administrative Agent), suspend the obligation of such Lender to loan or continue Borrowings of the Type with respect to which such compensation is requested, or to convert Borrowings of any other Type into Borrowings of such Type, until the event or condition giving rise to such request ceases to be in effect (in which case the provisions of Section 4.4 shall be applicable); provided, that such suspension shall not affect the Right of such Lender to receive the compensation so requested. (b) CAPITAL ADEQUACY. If, after the date hereof, any Lender shall have determined that the adoption of any applicable Law regarding capital adequacy or any change therein or in the interpretation or administration thereof by any Governmental Authority charged with the interpretation or administration thereof, or any request or directive regarding capital adequacy (whether or not having the force of law) of any such Governmental Authority has or would have the effect of reducing the rate of return on the capital of such Lender or any corporation controlling such Lender as a consequence of such Lender's obligations hereunder to a level below that which such Lender or such corporation could have achieved but for such adoption, change, request, or directive (taking into consideration its policies with respect to capital adequacy), then from time to time within 15 days after demand Borrower shall pay to such Lender such additional amount or amounts as will compensate such Lender for such reduction. 31 (c) CHANGES IN APPLICABLE LENDING OFFICE; COMPENSATION STATEMENT. Each Lender shall promptly notify Borrower and Administrative Agent of any event of which it has knowledge, occurring after the date hereof, which will entitle such Lender to compensation pursuant to this Section and will designate a different Applicable Lending Office if such designation will avoid the need for, or reduce the amount of, such compensation and will not, in the judgment of such Lender, be otherwise disadvantageous to it. Any Lender claiming compensation under this Section shall furnish to Borrower and Administrative Agent a statement setting forth the additional amount or amounts to be paid to it hereunder and calculations in reasonable detail which shall be conclusive in the absence of manifest error. In determining such amount, such Lender may use any reasonable averaging and attribution methods. Borrower shall not be obligated to compensate any Lender pursuant to this Section 4.1 for any amounts attributable to a period more than 120 days prior to the giving of notice by such Lender to Borrower of its request for compensation under this Section 4.1. SECTION 4.2. LIMITATION ON TYPES OF LOANS. If on or prior to the first day of any Interest Period for any Eurodollar Rate Borrowing: (a) INABILITY TO DETERMINE EURODOLLAR RATE. Administrative Agent determines (which determination shall be conclusive) that by reason of circumstances affecting the relevant market, adequate and reasonable means do not exist for ascertaining the Eurodollar Rate for such Interest Period; or (b) COST OF FUNDS. Required Lenders determine (which determination shall be conclusive) and notify Administrative Agent that the Eurodollar Rate will not adequately and fairly reflect the cost to the Lenders of funding Eurodollar Rate Borrowings for such Interest Period; then Administrative Agent shall give Borrower prompt notice thereof specifying the relevant amounts or periods, and so long as such condition remains in effect, the Lenders shall be under no obligation to fund additional Eurodollar Rate Borrowings, continue Eurodollar Rate Borrowings, or to convert Base Rate Borrowings into Eurodollar Rate Borrowings, and Borrower shall, on the last day(s) of the then current Interest Period(s) for the outstanding Eurodollar Rate Borrowings, either prepay such Borrowings or convert such Borrowings into Base Rate Borrowings in accordance with the terms of this Agreement. SECTION 4.3. ILLEGALITY. Notwithstanding any other provision of the Loan Documents, in the event that it becomes unlawful for any Lender or its Applicable Lending Office to make, maintain, or fund Eurodollar Rate Borrowings hereunder, then such Lender shall promptly notify Borrower thereof and such Lender's obligation to make or continue Eurodollar Rate Borrowings and to convert other Base Rate Borrowings into Eurodollar Rate Borrowings shall be suspended until such time as such Lender may again make, maintain, and fund Eurodollar Rate Borrowings (in which case the provisions of Section 4.4 shall be applicable). 32 SECTION 4.4. TREATMENT OF AFFECTED LOANS. If the obligation of any Lender to fund Eurodollar Rate Borrowings or to continue, or to convert Base Rate Borrowings into Eurodollar Rate Borrowings, shall be suspended pursuant to Sections 4.1, 4.2, or 4.3 hereof, such Lender's Eurodollar Rate Borrowings shall be automatically converted into Base Rate Borrowings on the last day(s) of the then current Interest Period(s) for Eurodollar Rate Borrowings (or, in the case of a conversion required by Section 4.3 hereof, on such earlier date as such Lender may specify to Borrower with a copy to Administrative Agent) and, unless and until such Lender gives notice as provided below that the circumstances specified in Sections 4.1, 4.2, or 4.3 hereof that gave rise to such conversion no longer exist: (a) to the extent that such Lender's Eurodollar Rate Borrowings have been so converted, all payments and prepayments of principal that would otherwise be applied to such Lender's Eurodollar Rate Borrowings shall be applied instead to its Base Rate Borrowings; and (b) all Borrowings that would otherwise be made or continued by such Lender as Eurodollar Rate Borrowings shall be made or continued instead as Base Rate Borrowings, and all Borrowings of such Lender that would otherwise be converted into Eurodollar Rate Borrowings shall be converted instead into (or shall remain as) Base Rate Borrowings. If such Lender gives notice to Borrower (with a copy to Administrative Agent) that the circumstances specified in Sections 4.1, 4.2, or 4.3 hereof that gave rise to the conversion of such Lender's Eurodollar Rate Borrowings pursuant to this Section 4.4 no longer exist (which such Lender agrees to do promptly upon such circumstances ceasing to exist) at a time when Eurodollar Rate Borrowings made by other Lenders are outstanding, such Lender's Base Rate Borrowings shall be automatically converted, on the first day(s) of the next succeeding Interest Period(s) for such outstanding Eurodollar Rate Borrowings, to the extent necessary so that, after giving effect thereto, all Eurodollar Rate Borrowings held by the Lenders and by such Lender are held pro rata (as to principal amounts, Types, and Interest Periods) in accordance with their respective Committed Sums. SECTION 4.5. COMPENSATION. Upon the request of any Lender, Borrower shall pay to such Lender such amount or amounts as shall be sufficient (in the reasonable opinion of such Lender) to compensate it for any loss, cost, or expense (excluding loss of anticipated profits) incurred by it as a result of: (a) any payment, prepayment, or conversion of a Eurodollar Rate Borrowing for any reason (including, without limitation, the acceleration of the loan pursuant to Section 12.1) on a date other than the last day of the Interest Period for such Borrowing; or (b) any failure by Borrower for any reason (including, without limitation, the failure of any condition precedent specified in Section 7.2 to be satisfied) to borrow, convert, continue, or prepay a Eurodollar Rate Borrowing on the date for such borrowing, conversion, continuation, or prepayment specified in the relevant Borrowing Notice, prepayment, continuation, or conversion under this Agreement. 33 SECTION 4.6. TAXES. (a) GENERAL. Any and all payments by Borrower to or for the account of any Lender or Administrative Agent hereunder or under any other Loan Document shall be made free and clear of and without deduction for any and all present or future Taxes, excluding, in the case of each Lender and Administrative Agent, Taxes imposed on its income and franchise Taxes imposed on it by the jurisdiction under the laws of which such Lender (or its Applicable Lending Office) or Administrative Agent (as the case may be) is organized, or any political subdivision thereof. If Borrower shall be required by law to deduct any Taxes from or in respect of any sum payable under any Loan Document to any Lender or Administrative Agent, (i) the sum payable shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section 4.6) such Lender or Administrative Agent receives an amount equal to the sum it would have received had no such deductions been made, (ii) Borrower shall make such deductions, (iii) Borrower shall pay the full amount deducted to the relevant taxation authority or other authority in accordance with applicable law, and (iv) Borrower shall furnish to Administrative Agent, at its address listed in Schedule 2.1, the original or a certified copy of a receipt evidencing payment thereof. (b) STAMP AND DOCUMENTARY TAXES. In addition, Borrower agrees to pay any and all present or future stamp or documentary taxes and any other excise or property taxes or charges or similar levies which arise from any payment made under any Loan Document or from the execution or delivery of, or otherwise with respect to, any Loan Document (hereinafter referred to as "OTHER TAXES"), other than any such taxes, charges or levies resulting from an assignment or participation pursuant to Section 14.13 by a Lender of all or any portion of its interest in this Agreement or any other Loan Document ("EXCLUDED TAXES"). (c) INDEMNIFICATION FOR TAXES. Borrower agrees to indemnify each Lender and Administrative Agent for the full amount of Taxes, excluding, in the case of each Lender and Administrative Agent, (i) Excluded Taxes, (ii) Taxes imposed on its income and (iii) franchise Taxes imposed on it by the jurisdiction under the laws of which such Lender (or its Applicable Lending Office) or Administrative Agent (as the case may be) is organized, or any political subdivision thereof and Other Taxes (including, without limitation, any Taxes or Other Taxes imposed or asserted by any jurisdiction on amounts payable under this Section 4.6) paid by such Lender or Administrative Agent (as the case may be) and any liability (including penalties, interest, and expenses) arising therefrom or with respect thereto. (d) WITHHOLDING TAX FORMS. Each Lender organized under the Laws of a jurisdiction outside the United States, on or prior to the Closing Date in the case of each Lender listed on the signature pages hereof and on or prior to the date on which it becomes a Lender in the case of each other Lender, and from time to time thereafter if requested in writing by Borrower or Administrative Agent (but only so long as such Lender remains lawfully able to do so), shall provide Borrower and Administrative Agent with (i) if such Lender is a "bank" within the meaning of Section 881(c)(3)(A) of the Code, Internal Revenue Service Form W-8 ECI or W-8 BEN, as appropriate, or any successor form prescribed by the Internal Revenue Service, certifying that such Lender is entitled to benefits under an income tax treaty to which the United States is a party which reduces the rate of withholding tax on payments of interest or certifying that the income receivable pursuant to the Loan Documents is effectively connected with the 34 conduct of a trade or business in the United States, or (ii) if such Lender is not a "bank" within the meaning of Section 881(c)(3)(A) of the Code and intends to claim an exemption from United States withholding tax under Section 871(h) or 881(c) of the Code with respect to payments of "portfolio interest," a Form W-8, or any successor form prescribed by the Internal Revenue Service, and a certificate representing that such Lender is not a bank for purposes of Section 881(c) of the Code, is not a 10-percent shareholder (within the meaning of Section 871(h)(3)(B) of the Code) of Borrower, and is not a controlled foreign corporation related to Borrower (within the meaning of Section 864(d)(4) of the Code). Each Lender which so delivers a W-8, Form 1001, or 4224 further undertakes to deliver to Borrower and Administrative Agent additional forms (or a successor form) on or before the date such form expires or becomes obsolete or after the occurrence of any event requiring a change in the most recent form so delivered by it, in each case certifying that such Lender is entitled to receive payments from Borrower under any Loan Document without deduction or withholding (or at a reduced rate of deduction or withholding) of any United States federal income taxes, unless an event (including without limitation any change in treaty, law, or regulation) has occurred prior to the date on which any such delivery would otherwise be required which renders all such forms inapplicable or which would prevent such Lender from duly completing and delivering any such form with respect to it, and such Lender advises Borrower and Administrative Agent that it is not capable of receiving such payments without any deduction or withholding of United States federal income tax. (e) FAILURE TO PROVIDE WITHHOLDING FORMS; CHANGES IN TAX LAWS. For any period with respect to which a Lender has failed to provide Borrower and Administrative Agent with the appropriate form pursuant to Section 4.6(d) (unless such failure is due to a change in Law occurring subsequent to the date on which a form originally was required to be provided), such Lender shall not be entitled to indemnification under Section 4.6(a) or 4.6(b) with respect to Taxes imposed by the United States; provided, however, that should a Lender, which is otherwise exempt from or subject to a reduced rate of withholding tax, become subject to Taxes because of its failure to deliver a form required hereunder, Borrower shall take such steps as such Lender shall reasonably request to assist such Lender to recover such Taxes. (f) CHANGE IN APPLICABLE LENDING OFFICE. If Borrower is required to pay additional amounts to or for the account of any Lender pursuant to this Section 4.6, then such Lender will agree to use reasonable efforts to change the jurisdiction of its Applicable Lending Office so as to eliminate or reduce any such additional payment which may thereafter accrue if such change, in the judgment of such Lender, is not otherwise disadvantageous to such Lender. (g) TAX PAYMENT RECEIPT. Within thirty (30) days after the date of any payment of Taxes, Borrower shall furnish to Administrative Agent the original or a certified copy of a receipt evidencing such payment. (h) SURVIVAL. Without prejudice to the survival of any other agreement of Borrower hereunder, the agreements and obligations of Borrower contained in this Section 4.6 shall survive the termination of the Commitment and the payment in full of the Obligation. 35 ARTICLE V FEES SECTION 5.1. TREATMENT OF FEES. Except as otherwise provided by Law, the fees described in this Article 5: (a) do not constitute compensation for the use, detention, or forbearance of money, (b) are in addition to, and not in lieu of, interest and expenses otherwise described in the Loan Documents, (c) shall be payable in accordance with Section 3.1(c), (d) shall be non-refundable (subject to the provisions of Section 3.9, if applicable), (e) shall, to the fullest extent permitted by Law, bear interest, if not paid when due, at the Default Rate, and (f) shall be calculated on the basis of actual number of days (including the first day but excluding the last day) elapsed, but computed as if each calendar year consisted of 360 days, unless such computation would result in interest being computed in excess of the Maximum Rate in which event such computation shall be made on the basis of a year of 365 or 366 days, as the case may be. SECTION 5.2. FEES OF ADMINISTRATIVE AGENT AND ARRANGER. Borrower shall pay to Administrative Agent and Arranger, as the case may be, solely for their respective accounts, the fees described in that certain separate letter agreement dated February 26, 2001, among Borrower, Administrative Agent, and Arranger. SECTION 5.3. FACILITY FEES. Following the Closing Date, Borrower shall pay to Administrative Agent, for the Pro Rata account of Lenders, a facility fee, calculated daily from the Closing Date but payable in installments in arrears each March 31, June 30, September 30, and December 31 and on the Termination Date for the Facility, commencing March 31, 2001. On any day of determination, the facility fee shall be an amount equal to the Applicable Amount for the facility fee multiplied by the Commitment on such day (regardless of usage). Each such installment shall be calculated in accordance with Section 5.1(f). SECTION 5.4. LC FEES. As an inducement for the issuance (including, without limitation, any extension) of each LC, Borrower agrees to pay to Administrative Agent: (a) For the account of each Lender, according to each Lender's Commitment Percentage under the Facility, a letter of credit fee payable quarterly in arrears for so long as each such LC is outstanding, on the last Business Day of each March, June, September, and December and on the expiry date of the LC. The issuance fee for each LC or any extension thereof shall be in an amount equal to the product of (a) the letter of credit fee set forth in the definition of Applicable Amount in effect on the date of determination of such fee (calculated on a per annum basis) multiplied by (b) the stated amount of such LC. If there is any change in the Applicable Amount during any period, the stated amount of such LC shall be multiplied by the Applicable Amount separately for each such period that such Applicable Amount was in effect. 36 (b) For the account of Administrative Agent, as the issuer of LCs, payable on the date of issuance of any LC (or any extension thereof) a fronting fee equal to one-eighth of one percent (0.125%) of the face amount of such LC (or extensions thereof). In addition, Borrower shall pay to Administrative Agent, for its individual account, standard administrative charges for LC amendments. SECTION 5.5. UTILIZATION FEE. Borrower shall pay to the Administrative Agent for the Pro Rata account of the Lenders a utilization fee equal to the amount set forth in the definition of Applicable Amount multiplied by the Commitment Usage hereunder. Such fee shall be payable for each day that the Commitment Usage hereunder exceeds fifty percent (50.0%) of the Commitment hereunder. Such utilization fee shall accrue from the Closing Date to the Termination Date for the Facility and shall be due and payable each March 31, June 30, September 30 and December 31 and on the Termination Date for the Facility, commencing March 31, 2001. ARTICLE VI GUARANTY SECTION 6.1. GUARANTY. As an inducement to Agents and Lenders to enter into this Agreement, Borrower shall cause Intermediate Partnership to execute and deliver to Administrative Agent a Guaranty substantially in the form and upon the terms of Exhibit C, providing for the guaranty of payment and performance of the Obligation. ARTICLE VII CONDITIONS PRECEDENT SECTION 7.1. CONDITIONS PRECEDENT TO CLOSING. This Agreement shall not become effective, and Lenders shall not be obligated to advance any Borrowing or issue any LC, unless Administrative Agent has received all of the agreements, documents, instruments, and other items described on Schedule 7.1. SECTION 7.2. CONDITIONS PRECEDENT TO EACH BORROWING. In addition to the conditions stated in Section 7.1, Lenders will not be obligated to fund (as opposed to continue or convert) any Borrowing, and Administrative Agent will not be obligated to issue any LC, as the case may be, unless on the date of such Borrowing or issuance (and after giving effect thereto), as the case may be: (a) Administrative Agent shall have timely received therefor a Borrowing Notice or a LC Request (together with the applicable LC Agreement), as the case may be; (b) Administrative Agent shall have received the LC fronting fees provided for in Section 5.4(b) hereof; (c) all of the representations and warranties of any Loan Party set forth in the Loan Documents are true and correct in all material respects (except such representations and warranties which expressly refer to an earlier date, which are true and correct in all material respects as of such earlier date); (d) no Default or Potential Default shall 37 have occurred and be continuing; and (e) the funding of such Borrowings and issuance of such LC, as the case may be, is permitted by Law. Each Borrowing Notice and LC Request delivered to Administrative Agent shall constitute the representation and warranty by Borrower to Administrative Agent that, as of the Borrowing Date or the date of issuance of the request LC, as the case may be, the statements above are true and correct in all respects. Each condition precedent in this Agreement is material to the transactions contemplated in this Agreement, and time is of the essence in respect of each thereof. Subject to the prior approval of Required Lenders, Lenders may fund any Borrowing, and Administrative Agent may issue any LC, without all conditions being satisfied, but, to the extent permitted by Law, the same shall not be deemed to be a waiver of the requirement that each such condition precedent be satisfied as a prerequisite for any subsequent funding or issuance, unless Required Lenders specifically waive each such item in writing. ARTICLE VIII REPRESENTATIONS AND WARRANTIES Borrower represents and warrants to Administrative Agent and Lenders as follows: SECTION 8.1. PURPOSE OF CREDIT FACILITY. (a) Borrower will use all proceeds of Borrowings for one or more of the following (or will loan such proceeds to, or make capital contributions to, Intermediate Partnership to so use such proceeds) (i) to repay the Debt existing under the Existing Credit Agreements; (ii) to finance capital expenditures and non-hostile acquisitions; (iii) to finance investments permitted hereunder; (iv) for working capital; and (v) for general business purposes. No proceeds of any Borrowing will be used to make any Distribution with respect to the Limited Partnership Units or General Partners' interests in Borrower, or to make any Distribution with respect to partnership interests in Intermediate Partnership. (b) Borrower is not engaged principally, or as one of its important activities, in the business of extending credit for the purpose of purchasing or carrying any "margin stock" within the meaning of Regulation U. No part of the proceeds of any Borrowing will be used, directly or indirectly, for a purpose which violates any Law, including, without limitation, the provisions of Regulations T, U or X (as enacted by the Board of Governors of the Federal Reserve System, as amended). SECTION 8.2. EXISTENCE, GOOD STANDING, AUTHORITY, AND AUTHORIZATIONS. Each of the Loan Parties and each Subsidiary thereof is duly organized, validly existing, and in good standing under the Laws of its jurisdiction of organization. Each of the Loan Parties and its Subsidiaries is duly qualified to transact business and is in good standing in each jurisdiction where the nature and extent of its business and properties require the same, except to the extent failure to so qualify or be in good standing is not reasonably likely, in the aggregate, to result in a Material Adverse Event. Each of the Loan Parties, and each Subsidiary thereof, possesses all Authorizations necessary or required in the conduct of its respective business(es), except to the extent that failure to possess such Authorization(s) is not reasonably likely, in the aggregate, to result in a Material Adverse Event. No authorization, consent, approval, waiver, 38 license, or formal exemptions from, nor any filing, declaration, or registration with, any Governmental Authority (federal, state, or local), non-governmental entity, or Person under the terms of contracts or otherwise, is required by reason of or in connection with the execution and performance of the Loan Documents by the Loan Parties or their respective Subsidiaries. SECTION 8.3. SUBSIDIARIES. Borrower has no direct Subsidiaries except as disclosed on Schedule 8.3. As of the Closing Date, Intermediate Partnership has no Subsidiaries except as disclosed on Schedule 8.3. As of the Closing Date, the number and percentage of shares or partnership and other equity interests in each Subsidiary, and the ownership thereof, are accurately set forth on Schedule 8.3 attached hereto. All such partnership and other equity interests are validly issued under the terms of the applicable Constituent Documents of the issuer and applicable Law. SECTION 8.4. AUTHORIZATION AND NO CONTRAVENTION. The execution and delivery by each Loan Party of each Loan Document to which it is a party and the performance by such Loan Party of its obligations thereunder (a) are within its partnership power; (b) will have been duly authorized by all necessary partnership action when such Loan Document is executed and delivered (c) require no action by or in respect of, or filing with, any Governmental Authority, which action or filing has not been taken or made on or prior to the Closing Date (or if later, the date of execution and delivery of such Loan Document); (d) will not violate any provision of the partnership agreement of such Loan Party, (e) will not violate any provision of Law applicable to it; (f) will not violate any material written or oral agreements, contracts, commitments, or understandings to which it is a party, other than such violations which could not be a Material Adverse Event; and (g) will not result in the creation or imposition of any Lien on any asset of any Loan Party. SECTION 8.5. BINDING EFFECT. Upon execution and delivery by all parties thereto, each Loan Document will constitute a legal, valid, and binding obligation of each Loan Party party thereto, enforceable against each such Loan Party in accordance with its terms, except as enforceability may be limited by applicable Debtor Relief Laws and general principles of equity. SECTION 8.6. FINANCIAL STATEMENTS. (a) The Current Financials were prepared in accordance with GAAP and present fairly, in all material respects, the consolidated financial condition, results of operations, and cash flows of the Loan Parties and Subsidiaries thereof covered thereby ("REPORTING ENTITIES") as of and for the portion of the fiscal year ending on the date or dates thereof (subject only to normal year-end audit adjustments for interim statements). There were no material liabilities, direct or indirect, fixed or contingent, of the Reporting Entities as of the date or dates of the Current Financials which are required under GAAP to be reflected therein or in the notes thereto, and are not so reflected. (b) Since December 31, 2000, there has been no Material Adverse Event. 39 SECTION 8.7. LITIGATION, CLAIMS, INVESTIGATIONS. No Loan Party is subject to, or aware of the threat of, any Litigation which is reasonably likely to be determined adversely to any Loan Party, or any Subsidiary thereof, and, if so adversely determined, could (individually or collectively with other Litigation) be a Material Adverse Event. There are no formal complaints, suits, claims, investigations, or proceedings initiated at or by any Governmental Authority pending or threatened by or against any Loan Party, or any Subsidiary thereof, which could reasonably be expected to result in a Material Adverse Event, nor any judgments, decrees, or orders of any Governmental Authority outstanding against any Loan Party, or any Subsidiary thereof, that could reasonably be expected to result in a Material Adverse Event. SECTION 8.8. TAXES. All Tax returns of each Loan Party and each Subsidiary thereof required to be filed have been filed (or extensions have been granted) prior to delinquency, and all Taxes imposed upon each Loan Party and each Subsidiary thereof which are due and payable have been paid prior to delinquency, other than Taxes or charges which are being diligently contested in good faith by appropriate proceedings and for which adequate reserves in accordance with GAAP shall have been set aside on its books. SECTION 8.9. ENVIRONMENTAL MATTERS. No Loan Party (a) knows of any environmental condition or circumstance, such as the presence or Release of any Hazardous Substance, on any property presently or previously owned by any Loan Party and any Subsidiary thereof that could reasonably be expected to be a Material Adverse Event, (b) knows of any violation by any Loan Party, any Subsidiary thereof of any Environmental Law, except for such violations that could not reasonably be expected to be a Material Adverse Event, or (c) knows that any Loan Party and any Subsidiary thereof is under any obligation to remedy any violation of any Environmental Law, except for such obligations that could not reasonably be expected to be a Material Adverse Event. SECTION 8.10. EMPLOYEE BENEFIT PLANS. (a) No Employee Plan has incurred an "accumulated funding deficiency" (as defined in Section 302 of ERISA and Section 412 of the Code), (b) no Loan Party or any Subsidiary or ERISA Affiliate thereof has incurred material liability to the PBGC or with respect to an Employee Plan, which liability is currently due and remains unpaid under Title IV of ERISA, (c) each Employee Plan subject to ERISA and the Code complies in all material respects, both in form and operation, with ERISA and the Code, (d) no ERISA Event has occurred or is reasonably expected to occur with respect to any Employee Plan or Multiemployer Plan which, individually or collectively with all other ERISA Events then existing, could reasonably be expected to be a Material Adverse Event, (e) the present value of all accrued benefits under each Employee Plan (based on actuarial assumptions used for funding purposes in the most recent actuarial valuation prepared by the Employee Plan's actuary with respect to such Employee Plan) did not, as of the last annual actuarial valuation date for such Employee Plan, exceed the then-current value of the assets of such Employee Plan in such an amount which could 40 reasonably be expected to result in a Material Adverse Event, and (f) the present value of vested benefits under each Employee Plan (based on PBGC actuarial assumptions used for plan termination), does not exceed the value of the assets of such Employee Plan in such an amount which could reasonably be expected to result in a Material Adverse Event. SECTION 8.11. PROPERTIES; LIENS. Each Loan Party has good and marketable title to all its property reflected on the Current Financials and each of its Subsidiaries has sufficient title to permit such Subsidiary to operate its facilities. Except for Permitted Liens, there is no Lien on any property of any Loan Party, and the execution, delivery, performance, or observance of the Loan Documents will not require or result in the creation of any Lien on such property. SECTION 8.12. GOVERNMENT REGULATIONS. No Loan Party or Subsidiary thereof is subject to regulation under the Investment Company Act of 1940, as amended, the Public Utility Holding Company Act of 1935, as amended, the Federal Power Act, as amended, or any other Law (other than Regulations T, U, and X of the Board of Governors of the Federal Reserve System and the requirements of any public service commission) which regulates the incurrence of Debt. SECTION 8.13. TRANSACTIONS WITH AFFILIATES. No Loan Party or any Subsidiary thereof is a party to a material transaction with any of its Affiliates (excluding (i) transactions between or among such Loan Parties or any Subsidiary thereof, (ii) the Operating Agreement, dated February 28, 1980, by and between NBPC and Northern Plains and (iii) the Administrative Services Agreement by and between NBP Services Corporation, the Borrower and Intermediate Partnership), other than transactions upon fair and reasonable terms not materially less favorable than such entity could obtain or could become entitled to in an arm's-length transaction with a Person that was not its Affiliate. SECTION 8.14. MATERIAL AGREEMENTS. No Loan Party or any Subsidiary thereof is in default with respect to any material agreements, contracts, commitments, or understandings which could reasonably be expected to be a Material Adverse Event. SECTION 8.15. INSURANCE. Each Loan Party and each Subsidiary thereof maintains, with financially sound, responsible, and reputable insurance companies or associations, insurance concerning its properties and businesses against such casualties and contingencies and of such types and in such amounts (and with self-insurance, co-insurance and deductibles) as is customary in the case of same or similar businesses. 41 SECTION 8.16. COMPLIANCE WITH LAWS. No Loan Party or any Subsidiary thereof is in violation of any Laws (including, without limitation, Environmental Laws), other than such violations which could not, individually or collectively, reasonably be expected to be a Material Adverse Event. No Loan Party or any Subsidiary thereof has received notice alleging any noncompliance with any Laws, except for such noncompliance which no longer exists, or which could not reasonably be expected to be a Material Adverse Event. SECTION 8.17. REGULATION U. "Margin Stock" (as defined in Regulation U) constitutes less than 25% of those assets of the Loan Parties which are subject to any limitation on sale, pledge, or other restrictions hereunder. SECTION 8.18. FULL DISCLOSURE. All information heretofore furnished by any Loan Party to any Lender or Administrative Agent in connection with the Loan Documents was, and all such information hereafter furnished by any Loan Party to any Lender or Administrative Agent will be, taken as a whole, true and accurate in all material respects or based on reasonable estimates on the date as of which such information is stated or certified. SECTION 8.19. NO DEFAULT. No Default or Potential Default has occurred and is continuing or will arise as a result of the execution of the Loan Documents or of any Borrowing hereunder. ARTICLE IX AFFIRMATIVE COVENANTS Each of Borrower, and Guarantor, by its execution and delivery of a Guaranty, covenants and agrees to perform, observe, and comply with each of the following covenants from the Closing Date and so long thereafter as Lenders are committed to fund Borrowings and Administrative Agent is committed to issue LCs under this Agreement and thereafter until the payment in full of the Principal Debt (and termination of outstanding LCs, if any) and payment in full of all other interest, fees, and other amounts of the Obligation then due and owing, unless Borrower receives a prior written consent to the contrary by Administrative Agent as authorized by Required Lenders: SECTION 9.1. USE OF PROCEEDS. Borrower shall, and shall cause each of its Subsidiaries to, use the proceeds of Borrowings only for the purposes represented in Section 8.1(a). 42 SECTION 9.2. BOOKS AND RECORDS. The Loan Parties shall, and shall cause each of their Subsidiaries to, maintain books, records, and accounts necessary to prepare financial statements in all material respects in accordance with GAAP. SECTION 9.3. ITEMS TO BE FURNISHED. Borrower shall cause the following to be furnished to Administrative Agent for delivery to Lenders: (a) Promptly after preparation, and no later than 60 days after the last day of each of the first three fiscal quarters of Borrower, balance sheets and statements of earnings and cash flow ("FINANCIAL STATEMENTS") showing the consolidated financial condition and results of operations calculated for Borrower and its Subsidiaries, for such fiscal quarter and for the period from the beginning of the then-current fiscal year to such last day, and each accompanied by a Compliance Certificate. (b) Promptly after preparation, and no later than 120 days after the last day of each fiscal year of Borrower, Financial Statements showing the consolidated financial condition and results of operations for Borrower and its Subsidiaries, as of, and for the year ended on, such day, each accompanied by: (i) the unqualified opinion of a firm of nationally-recognized independent certified public accountants, based on an audit using generally accepted auditing standards, that such Financial Statements were prepared in accordance with GAAP and present fairly the consolidated financial condition and results of operations of Borrower; and (ii) a Compliance Certificate. (c) Promptly upon receipt thereof, and in any event within ten (10) Business Days after receipt thereof, copies of all auditor's annual management letters delivered to Borrower. (d) Notice, promptly (but in any event within five (5) Business Days) after any Loan Party knows or has reason to know of (i) a Default or Potential Default specifying the nature thereof and what action any Loan Party or any Subsidiary thereof has taken, is taking, or proposes to take with respect thereto, (ii) any other event or circumstance that results in, or could reasonably be expected to result in, a Material Adverse Event, or (iii) the filing or commencement of any action, suit or proceeding by or before any arbitrator or Governmental Authority against or, to the knowledge of the Borrower, affecting any Loan Party or any Subsidiary of any Loan Party that, if adversely determined, could reasonably be expected to result in a Material Adverse Event. (e) Promptly after the filing thereof, a true, correct, and complete copy of each Form 10-K, Form 10-Q, and Form 8-K filed by or on behalf of any Loan Party or any Subsidiary thereof with the Securities and Exchange Commission, and of all material reports or filings filed by or on behalf of any Loan Party with any Governmental Authority. 43 (f) Promptly upon request therefor by Administrative Agent or Lenders, such information (not otherwise required to be furnished under the Loan Documents) respecting the business affairs, assets, and liabilities of the Loan Parties or Subsidiary thereof, and such opinions, certifications, and documents, in addition to those mentioned in this Agreement, as reasonably requested. SECTION 9.4. INSPECTIONS. Upon reasonable notice, the Loan Parties shall allow, and shall cause their Subsidiaries to allow, Administrative Agent or any Lender (or their respective Representatives) to inspect any of their properties, to review reports, files, and other records and to make and take away copies thereof, to conduct tests or investigations, and to discuss any of their respective affairs, conditions, and finances with other creditors, directors, officers, employees, other representatives, and independent accountants of the Loan Parties and their Subsidiaries, from time to time, during reasonable business hours. SECTION 9.5. TAXES. Each Loan Party shall, and shall cause each of its Subsidiaries to, promptly pay when due any and all Taxes other than Taxes the applicability, amount, or validity of which is being contested in good faith by lawful proceedings diligently conducted, and against which reserve or other provision required by GAAP has been made, and in respect of which levy and execution of any lien securing same have been and continue to be stayed. SECTION 9.6. PAYMENT OF OBLIGATIONS. Borrower shall pay the Obligation in accordance with the terms and provisions of the Loan Documents. Each Loan Party shall, and shall cause its Subsidiaries to, promptly pay (or renew and extend) all of its material obligations as the same become due (unless such obligations other than the Obligation are being contested in good faith by appropriate proceedings). SECTION 9.7. MAINTENANCE OF EXISTENCE, ASSETS, AND BUSINESS. Except as otherwise permitted by Section 10.9, each Loan Party shall, and shall cause each of its Subsidiaries to, at all times: (a) maintain its existence and good standing in the jurisdiction of its organization and its authority to transact business in all other jurisdictions where the nature of its business so requires; (b) maintain all licenses, permits, and franchises necessary for the normal conduct of its business; (c) keep all of its assets which are useful in and necessary to its business in good working order and condition (ordinary wear and tear excepted) and make all necessary repairs thereto and replacements thereof; and (d) do all things necessary to obtain, renew, extend, and continue in effect all Authorizations which may at any time and from time to time be necessary for the Loan Parties and Subsidiaries thereof to operate their businesses in compliance with applicable Law; except in the case of each of clauses (a) through (d), where the failure to so renew, extend, or continue in effect could not reasonably be expected to be a Material Adverse Event. 44 SECTION 9.8. COMPLIANCE WITH LAWS, ETC. The Loan Parties will comply, and will cause each of its Subsidiaries to comply, in all material respects with all applicable Laws (including Environmental Laws and ERISA) and contractual obligations except where the failure to so comply will not reasonably be expected to cause a Material Adverse Event. SECTION 9.9. INSURANCE. Each Loan Party will, and will cause each of its Subsidiaries to, maintain or cause to be maintained with responsible insurance companies insurance with respect to its properties and business against such casualties and contingencies and of such types and in such amounts as is consistent with prudent industry practice and will, upon request of the Administrative Agent, furnish to each Lender at reasonable intervals a certificate of insurance setting forth the nature and extent of all insurance maintained by the Borrower in accordance with this Section. SECTION 9.10. PRESERVATION AND PROTECTION OF RIGHTS. Each Loan Party shall perform such acts and duly authorize, execute, acknowledge, deliver, file, and record any additional agreements, documents, instruments, and certificates as Administrative Agent or Required Lenders may reasonably deem necessary or appropriate in order to preserve and protect the Rights of Administrative Agent and Lenders under any Loan Document. SECTION 9.11. PARI PASSU STATUS. Each Loan Party will ensure the claims and rights of the Lenders against it under this Agreement and each other Loan Document will not be subordinate to, and will rank at all times at least pari passu with, all other unsecured Debt of such Loan Party. SECTION 9.12. MAINTENANCE OF TAX STATUS. Borrower shall take all action necessary to prevent Borrower, Intermediate Partnership or NBPC from being, and will take no action which would have the effect of causing any of Borrower, Intermediate Partnership or NBPC to be, treated as an association taxable as a corporation or otherwise to be taxed as an entity for federal income tax purposes. ARTICLE X NEGATIVE COVENANTS Each of Borrower, and Guarantor, by its execution and delivery of a Guaranty, covenants and agrees to perform, observe, and comply with each of the following covenants from the Closing Date and so long thereafter as Lenders are committed to fund Borrowings and Administrative Agent is committed to issue LCs under this Agreement and thereafter until the payment in full of the Principal Debt (and termination of outstanding LCs, if any) and payment in full of all other interest, fees, and other amounts of the Obligation then due and owing, unless 45 Borrower receives a prior written consent to the contrary by Administrative Agent as authorized by Required Lenders: SECTION 10.1. DEBT AND GUARANTIES. No Subsidiary of Borrower shall, directly or indirectly, create, incur, or suffer to exist any direct, indirect, fixed, or contingent liability for any Debt, other than: (i) The Obligation and Guaranties thereof; (ii) Debt of Black Mesa Holdings, Inc. and Black Mesa Pipeline, Inc. existing on the Closing Date as described in Schedule 10.1 (but not renewals, extensions or increases in or of, such Debt); (iii) Trade Debt for goods furnished or services rendered in the ordinary course of business and payable in accordance with customary trade terms that are not more than 90 days past due; (iv) Endorsements of checks or drafts in the ordinary course of business; (v) Debt of NBPC described on Schedule 10.1 and other Debt of NBPC, so long as the NBPC Capitalization Ratio does not exceed 0.65 to 1.0; (vi) Other Debt of Subsidiaries (other than NBPC and other than Black Mesa Holdings, to the extent otherwise permitted under clause (ii) above) which does not exceed $40,000,000 outstanding at any time in the aggregate; (vii) Debt of Subsidiaries resulting from loans made by Borrower to Intermediate Partnership, loans by Intermediate Partnership to another Subsidiary or other loans by a Subsidiary to another Subsidiary; provided, however, that any Debt of Intermediate Partnership resulting from loans made by any Subsidiary to Intermediate Partnership shall be subordinated on terms and conditions satisfactory to Administrative Agent and the Required Lenders in right of payment to its obligations under the Guaranty; (viii) The guaranty by Intermediate Partnership of Borrower's obligations under the Senior Notes and the guaranty by Intermediate Partnership of Borrower's obligations under the 2001 Senior Notes; and (ix) Debt of Intermediate Partnership and Borrower pursuant to the Lost Creek Construction Loan Sponsor Guarantee, provided that the principal amount of the loan guaranteed pursuant thereto may not exceed 35% of $66 million; provided, however, no Debt otherwise permitted under this Section 10.1 shall be permitted if, after giving effect to the incurrence thereof, any Default or Potential Default shall have occurred and be continuing. 46 SECTION 10.2. LIENS. No Loan Party shall, or permit any of its Subsidiaries (except NBPC) to, directly or indirectly, create, incur, or suffer or permit to be created or incurred or to exist any Lien upon any of its assets, except: (a) Liens existing as a result of any Capital Lease, to the extent permitted pursuant to Section 10.1; (b) Liens for taxes, assessments or other governmental charges or levies not at the time delinquent or thereafter payable without penalty or being diligently contested in good faith by appropriate proceedings and for which adequate reserves in accordance with GAAP shall have been set aside on its books; (c) Liens of carriers, operators, warehousemen, mechanics, materialmen and landlords, and statutory Liens of producers of hydrocarbons, incurred in the ordinary course of business for sums not overdue or being diligently contested in good faith by appropriate proceedings and for which adequate reserves in accordance with GAAP shall have been set aside on its books; (d) Deposits in the ordinary course of business in connection with workmen's compensation, unemployment insurance or other forms of governmental insurance or benefits, or to secure performance of tenders, statutory obligations, leases and contracts (other than for borrowed money) entered into in the ordinary course of business or to secure obligations on surety or appeal bonds; (e) Judgment Liens in existence less than 30 days after the entry thereof or with respect to which execution has been stayed or the payment of which is covered in full (subject to a customary deductible) by insurance maintained with responsible insurance companies; (f) Liens on the limited liability company interests in Fort Union, L.L.C. which are owned by Crestone Powder River L.L.C., a Delaware limited liability company, which Liens secure amounts owed under the Fort Union Project Finance Documents; (g) Liens on the limited liability company interests in Lost Creek, L.L.C. which are owned by Crestone Wind River, L.L.C., a Delaware limited liability company, which Liens secure amounts owed under the Lost Creek Project Finance Documents; and (h) Liens in favor of the Administrative Agent or any Lender, under Section 2.2(h). SECTION 10.3. TRANSACTIONS WITH AFFILIATES. No Loan Party shall, or permit any of its Subsidiaries to, enter into any transaction with any of its Affiliates, other than transactions upon fair and reasonable terms not less favorable than such Loan Party or Subsidiary could obtain or could become entitled to in an arm's-length transaction with a Person that was not its Affiliate. 47 SECTION 10.4. ASSIGNMENT. No Loan Party shall assign or transfer any of its Rights, duties, or obligations under any of the Loan Documents. SECTION 10.5. GOVERNMENT REGULATIONS. No Loan Party will conduct its business in such a way that it will become subject to regulation under the Investment Company Act of 1940, as amended, the Public Utility Holding Company Act of 1935, as amended, the Federal Power Act, as amended, or any other Law (other than Regulations T, U, and X of the Board of Governors of the Federal Reserve System) which regulates the incurrence of Debt. SECTION 10.6. MERGERS; SALE OF ASSETS. (a) No Loan Party will, nor will it permit any Subsidiary to, merge into or consolidate with any other Person, or permit any other Person to merge into or consolidate with it, or sell, transfer, lease or otherwise dispose of (in one transaction or in a series of transactions) all (or substantially all) of its assets, or all or substantially all of the stock of or other equity interest in any of its Subsidiaries (in each case, whether now owned or hereafter acquired), unless: (i) at the time thereof and immediately after giving effect thereto no Default or Potential Default shall have occurred and be continuing, (ii) if the Borrower is involved in any such transaction, the Borrower is the surviving entity or the recipient of any such sale, transfer, lease or other disposition of assets, and if any other Loan Party is involved in any such transaction a Loan Party is the surviving entity or the recipient of any such sale, transfer, lease or other disposition of assets; provided, however, that in no event shall any such merger, consolidation, sale, transfer, lease or other disposition whether or not otherwise permitted by this Section 10.6 have the effect of releasing any Loan Party from any of its obligations and liabilities under this Agreement. The Loan Parties will not permit NBPC to merge or consolidate with or into any other Person, or sell, assign, lease or otherwise dispose of (whether in one transaction or in a series of transactions) all or substantially all of its business and assets (whether now owned or hereafter acquired) to, any Person, except pursuant to Section 14 or Section 15 (to the extent it applies to a merger pursuant to Section 14) of NBPC's Partnership Agreement. (b) The Loan Parties shall not permit NBPC to lease, sell or otherwise dispose of its assets to any other Person except: (i) sales of inventory and other assets in the ordinary course of business, (ii) leases, sales or other dispositions of its assets that, together with all other assets of NBPC previously leased, sold or disposed of (other than disposed of pursuant to this Section 10.6(b)) during the twelve-month period ending with the month in which any such lease, sale or other disposition occurs, do not constitute a substantial portion of the assets of NBPC, (iii) sales of assets which are concurrently leased back, (iv) dispositions of assets which are obsolete or no longer used or useful in the business of NBPC, and (v) as permitted by the last sentence of 10.6(a). SECTION 10.7. LOAN AND INVESTMENTS. Borrower shall not purchase or acquire or make any commitment therefor, any capital stock, equity interest, or any obligations or other securities of, or any interest in, any Person, or 48 commit to make any Acquisitions, or make or commit to make any advance, loan, extension of credit or capital contribution to or any other investment in, any Person including any Affiliate of the Borrower (together, "INVESTMENTS"), except for: (a) Investments held by Borrower in the form of cash equivalents or short-term marketable securities; and (b) Investments in and through Intermediate Partnership permitted by Section 10.9. SECTION 10.8. DISTRIBUTIONS. Borrower will not declare, pay or make any Distribution (in cash, property or obligations) on any interests (now or hereafter outstanding) in Borrower or apply any of its funds, property or assets to the purchase of any partnership interests in Borrower; provided, that at any time during which no Default or Potential Default has occurred and is continuing, Borrower (a) may make Distributions on the Limited Partnership Units and General Partners' interests in accordance with the Partnership Agreement and (b) may purchase its partnership interests provided that the aggregate purchase price therefor does not exceed $20 million in the aggregate during the term of this Agreement. SECTION 10.9. LIMITATION ON BUSINESS ACTIVITIES. Borrower shall not engage in any business activity except the ownership of a limited partner interest in Intermediate Partnership and such activities as may be incidental or related thereto. Intermediate Partnership shall not, and the Loan Parties shall not permit any of their Subsidiaries to, engage, directly or indirectly, in any business activity except (a) existing business activities consisting of the ownership and operation of natural gas and coal pipelines, the extension and expansion of such pipelines and related facilities, services related to transportation and marketing of natural gas and coal and such activities as may be incidental or related to the aforementioned and (b) new business activities in the area of exploration, development, production, processing, refining, transportation or marketing of gas, oil, coal or products thereof, provided the gross income of such activities allows Borrower to meet the exception in Section 7704 of the Code. SECTION 10.10. CERTAIN AMENDMENTS TO CASH DISTRIBUTION POLICIES AND PARTNERSHIP AGREEMENTS. Each Loan Party agrees that it shall not consent to, vote in favor of or permit any amendment of (a) the cash distribution policies of NBPC or Intermediate Partnership in any manner which would result in a Material Adverse Event with respect to any Loan Party or materially adversely affect the rights and remedies of the Lenders under and in connection with this Agreement, the Notes or any other Loan Document; or (b) the Partnership Agreement, the Northern Border Partnership Agreement or the Intermediate Partnership Agreement in any manner which would (i) have a material adverse effect on the rights and remedies of the Lenders under and in connection with this Agreement, the Notes or any other Loan Document; or (ii) result in a Material Adverse Event. 49 SECTION 10.11. RESTRICTIVE AGREEMENTS, ETC. Except as set forth in Section 8.10 of the Note Purchase Agreement, dated as of July 15, 1992, among NBPC and the purchasers party thereto, as amended by Supplemental Agreement, dated as of June 1, 1995, as in effect on the date hereof, no Loan Party will, nor will it permit any of its Material Subsidiaries to, enter into any agreement restricting the ability of any Material Subsidiary to make any payments, directly or indirectly, to a Loan Party by way of distributions, advances, repayments of loans or advances, reimbursements of management and other intercompany charges, expenses and accruals or other returns on investments, or any other agreement or arrangement which restricts the ability of any such Material Subsidiary to make any payment, directly or indirectly, to a Loan Party or to guarantee Debt of a Loan Party. SECTION 10.12. EMPLOYEE BENEFIT PLANS. No Loan Party shall, or shall permit any of its ERISA Affiliates to, permit any of the events or circumstances described in Section 8.10 to exist or occur. SECTION 10.13. INTEREST COVERAGE RATIO. As of the last day of each fiscal quarter of Borrower, Borrower shall not permit the ratio of Consolidated EBITDA of Borrower to Consolidated Interest Expense of Borrower for the Rolling Period ending on such date to be 3.00:1.00 or lower. SECTION 10.14. CONSOLIDATED LEVERAGE RATIO. As of the last day of each fiscal quarter of Borrower, Borrower shall not permit the ratio of Consolidated Funded Debt to Adjusted Consolidated EBITDA for the Rolling Period ending on such date to be greater than 5.00 to 1.00 from the date hereof until December 30, 2001 and 4.50 to 1.00 thereafter. ARTICLE XI DEFAULT The term "DEFAULT" means the occurrence of any one or more of the following events: SECTION 11.1. PAYMENT OF OBLIGATION. The failure of Borrower to pay (a) any amount of principal of any Borrowing or any reimbursement obligation in respect of a drawing under an LC when the same becomes due (whether by its terms, by acceleration, or as otherwise provided in the Loan Documents); or (b) within five (5) days after the same becomes due, any interest, fee or any other amount payable hereunder or under any other Loan Document. SECTION 11.2. COVENANTS. The failure or refusal of Borrower (and, if applicable, any other Loan Party or Subsidiary of any Loan Party) to punctually and properly perform, observe, and comply with: 50 (a) Any covenant, agreement, or condition contained in Sections 10.1 through 10.14 or any reporting requirement contained in Section 9.3(d); and (b) Any other covenant, agreement, or condition contained in any Loan Document (other than the covenants to pay the Obligation set forth in Section 11.1 and the covenants in Section 11.2(a)), and such failure or refusal continues for 30 days after the earlier of (i) the date upon which a Responsible Officer (or, in the case of a failure or refusal of Guarantor to perform, observe or comply, an officer of Guarantor) knew or reasonably should have known of such failure or refusal, or (ii) the date upon which written notice thereof is given to Borrower (or, if applicable, Guarantor) by the Administrative Agent or any Lender. SECTION 11.3. DEBTOR RELIEF. Any Loan Party or any Material Subsidiary thereof (a) fails to pay, or admits in writing its inability to pay its Debts generally as they become due, (b) voluntarily seeks, consents to, or acquiesces in the benefit of any Debtor Relief Law, other than as a creditor or claimant, or (c) becomes a party to or is made the subject of any proceeding provided for by any Debtor Relief Law, other than as a creditor or claimant, (unless, in the event such proceeding is involuntary, the petition instituting same is dismissed within 60 days after its filing). SECTION 11.4. JUDGMENTS AND ATTACHMENTS. Any Loan Party or any Material Subsidiary thereof fails, within 60 days after entry, to pay, bond, or otherwise discharge any judgment or order for the payment of money in excess of $15,000,000 (individually or collectively) or any warrant of attachment, sequestration, or similar proceeding against any of their respective assets having a value (individually or collectively) of $15,000,000 which is not stayed on appeal. SECTION 11.5. MISREPRESENTATION. Any representation or warranty made herein or in any Loan Document shall at any time prove to have been incorrect in any material respect when made. SECTION 11.6. CHANGE OF CONTROL. A Change of Control shall occur. SECTION 11.7. DEFAULT UNDER OTHER DEBT AND AGREEMENTS. (a) A default shall occur in the payment when due (subject to any applicable notice requirement or grace period), whether by acceleration or otherwise, of any Debt (other than Debt described in Section 11.1) of any Loan Party or any of its Material Subsidiaries having a principal amount (including undrawn or committed or available amounts), individually or in the aggregate, in excess of $15,000,000, or a default shall occur in the performance or observance of any covenant, or obligation with respect to such Debt, or any other event shall occur or condition exist under any agreement relating to such Debt the effect of which default, condition or event is to cause, or to permit the holder or holders of such Debt (or any trustee or agent for such holders) to cause (with the giving of notice if required or lapse of time or both), such Debt to become due 51 and payable prior to its expressed maturity (whether by acceleration, redemption, repurchase or otherwise); provided, that no Default will result from a Rating Decline Offer (as such term is defined in the Senior Note Indenture), or the event causing such offer, under Borrower's 8-7/8% Senior Notes due 2010 (the "SENIOR NOTES") unless one or more holders of Senior Note(s) elect to exercise its or their rights to have all or any portion of their Senior Notes repurchased by Borrower; and provided further, that no Default will result from a Rating Decline Offer (as such term is defined in the 2001 Senior Note Indenture), or the event causing such offer, under the 2001 Senior Notes, unless one or more holders of 2001 Senior Notes elect to exercise its or their rights to have all or any portion of their 2001 Senior Notes repurchased by Borrower. (b) A Loan Party or any of its Subsidiaries shall: (i) default in making any payment, delivery or exchange, or in the performance of any of its other obligations, under one or more agreements or instruments (individually or collectively) governing or otherwise relating to one or more Derivative Transactions, which default shall have resulted in early termination, liquidation or other similar payments in an aggregate amount in excess of $15,000,000 becoming, or becoming capable at such time (after giving effect to any applicable notice requirement or grace period) of being declared or designated, due and payable by a Loan Party, or one or more of its Subsidiaries; or (ii) default (after giving effect to any applicable notice requirement or grace period) in making any payment or delivery due on the last payment, delivery or exchange date of, or on the early termination or liquidation of, one or more Derivative Transactions and such default relates to one or more payments or deliveries of cash or property having an aggregate value in excess of $15,000,000. SECTION 11.8. EMPLOYEE BENEFIT PLANS. (a) Any Loan Party or ERISA Affiliate shall fail to pay when due an amount or amounts for which it is liable under Title IV of ERISA, which aggregate unpaid amounts for all such entities exceed $15,000,000 in the aggregate; or (b) an ERISA Event shall occur or exist with respect to any Employee Plan or Multiemployer Plan, and as a result of such ERISA Event and all other ERISA Events then-existing, the aggregate liabilities incurred (or in the reasonable judgment of Required Lenders, likely to be incurred) of the Loan Parties and the ERISA Affiliates to any Employee Plan, Multiemployer Plan, or the PBGC (or any combination thereof) shall exceed $15,000,000. SECTION 11.9. VALIDITY AND ENFORCEABILITY OF LOAN DOCUMENTS. Any Loan Document shall, at any time after its execution and delivery and for any reason, cease to be in full force and effect in any material respect or be declared to be null and void (other than in accordance with the terms hereof or thereof) or the validity or enforceability thereof be contested by any Loan Party thereto or any Loan Party shall deny in writing that it has any or any further liability or obligations under any Loan Document to which it is a party. SECTION 11.10. ENVIRONMENTAL LIABILITY. If any event or condition shall occur or exist with respect to any activity or substance regulated under the Environmental Law and, as a result of such event or condition, any Loan Party or any of their respective Subsidiaries shall have incurred or in the opinion of the Required 52 Lenders will be reasonably likely to incur a liability in excess of $15,000,000 during any consecutive twelve (12) month period. SECTION 11.11. DISSOLUTION. Any Loan Party or NBPC shall dissolve, liquidate, or otherwise terminate their existence, except, with respect to NBPC, pursuant to Section 14 or Section 15 (to the extent it applies to a merger pursuant to Section 14) of NBPC's Partnership Agreement. ARTICLE XII RIGHTS AND REMEDIES SECTION 12.1. REMEDIES UPON DEFAULT. (a) DEBTOR RELIEF. If a Default exists under Section 11.3(b) or 11.3(c), the commitment to extend credit hereunder shall automatically terminate and the entire unpaid balance of the Obligation shall automatically become due and payable without any action or notice of any kind whatsoever, and Borrower shall be required to deposit cash collateral in the Letter of Credit Cash Collateral Account in an amount equal to 110% of the LC Exposure then existing in accordance with Section 2.2(g). (b) OTHER DEFAULTS. If any Default exists, Administrative Agent may (and, subject to the terms of Article 13, shall upon the request of Required Lenders) or Required Lenders may, do any one or more of the following: (i) if the maturity of the Obligation has not already been accelerated under Section 12.1(a), declare the entire unpaid balance of the Obligation, or any part thereof, immediately due and payable, whereupon it shall be due and payable; (ii) terminate the commitments of Lenders to extend credit hereunder; (iii) reduce any claim to judgment; (iv) to the extent permitted by Law, exercise (or request each Lender to, and each Lender shall be entitled to, exercise) the Rights of offset or banker's Lien against the interest of each Loan Party in and to every account and other property of any Loan Party which are in the possession of Administrative Agent or any Lender to the extent of the full amount of the Obligation (to the extent permitted by Law, each Loan Party being deemed directly obligated to each Lender in the full amount of the Obligation for such purposes); (v) if the maturity of the Obligation has not already been accelerated under Section 12.1(a), demand Borrower to deposit cash collateral in the Letter of Credit Cash Collateral Account in an amount equal to 110% of the LC Exposure then existing in accordance with Section 2.2(g); and (vi) exercise any and all other legal or equitable Rights afforded by the Loan Documents, the Laws of the State of New York, or any other applicable jurisdiction as Administrative Agent or Required Lenders (as the case may be) shall deem appropriate, or otherwise, including, but not limited to, the Right to bring suit or other proceedings before any Governmental Authority either for specific performance of any covenant or condition contained in any of the Loan Documents or in aid of the exercise of any Right granted to Administrative Agent or any Lender in any of the Loan Documents. SECTION 12.2. LOAN PARTY WAIVERS. To the extent permitted by Law, the Loan Parties hereby waive presentment and demand for payment, protest, notice of intention to accelerate, notice of acceleration, and notice of protest 53 and nonpayment, and agree that their respective liability with respect to the Obligation (or any part thereof) shall not be affected by any renewal or extension in the time of payment of the Obligation (or any part thereof), by any indulgence, or by any release or change in any security for the payment of the Obligation (or any part thereof). SECTION 12.3. PERFORMANCE BY ADMINISTRATIVE AGENT. If any covenant, duty, or agreement of any Loan Party is not performed in accordance with the terms of the Loan Documents, after the occurrence and during the continuance of a Default, Administrative Agent may, at its option (but subject to the approval of Required Lenders), perform or attempt to perform such covenant, duty, or agreement on behalf of such Loan Party. In such event, any amount expended by Administrative Agent in such performance or attempted performance shall be payable by the Loan Parties, jointly and severally, to Administrative Agent on demand, shall become part of the Obligation, and shall bear interest at the Default Rate from the date of such expenditure by Administrative Agent until paid. Notwithstanding the foregoing, it is expressly understood that Administrative Agent does not assume, and shall never have, except by its express written consent, any liability or responsibility for the performance of any covenant, duty, or agreement of any Loan Party. SECTION 12.4. DELEGATION OF DUTIES AND RIGHTS. Lenders may perform any of their duties or exercise any of their Rights under the Loan Documents by or through their respective Representatives. SECTION 12.5. NOT IN CONTROL. Nothing in any Loan Document shall, or shall be deemed to (a) give any Agent or any Lender the Right to exercise control over the assets (including real property), affairs, or management of any Loan Party or any Subsidiary thereof, (b) preclude or interfere with compliance by any Loan Party or any Subsidiary thereof with any Law, or (c) require any act or omission by any Loan Party or any Subsidiary thereof that may be harmful to Persons or property. Any "Material Adverse Event" or other materiality qualifier in any representation, warranty, covenant, or other provision of any Loan Document is included for credit documentation purposes only and shall not, and shall not be deemed to, mean that any Agent or any Lender acquiesces in any non-compliance by any Loan Party or any Subsidiary thereof with any Law or document, or that any Agent or any Lender does not expect the Loan Parties and their respective Subsidiaries to promptly, diligently, and continuously carry out all appropriate removal, remediation, and termination activities required or appropriate in accordance with all Environmental Laws. The Agents and the Lenders have no fiduciary relationship with or fiduciary duty to any Loan Party or any Subsidiary thereof arising out of or in connection with the Loan Documents, and the relationship between the Agents and the Lenders, on the one hand, and Loan Parties, on the other hand, in connection with the Loan Documents is solely that of debtor and creditor. The power of the Agents and Lenders under the Loan Documents is limited to the Rights provided in the Loan Documents, which Rights exist solely to assure payment and performance of the Obligation and may be exercised in a manner calculated by the Agents and Lenders in their respective good faith business judgment. 54 SECTION 12.6. COURSE OF DEALING. The acceptance by Administrative Agent or Lenders at any time and from time to time of partial payment on the Obligation shall not be deemed to be a waiver of any Default then existing. No waiver by Administrative Agent, Required Lenders, or Lenders of any Default shall be deemed to be a waiver of any other then-existing or subsequent Default. No delay or omission by Administrative Agent, Required Lenders, or Lenders in exercising any Right under the Loan Documents shall impair such Right or be construed as a waiver thereof or any acquiescence therein, nor shall any single or partial exercise of any such Right preclude other or further exercise thereof, or the exercise of any other Right under the Loan Documents or otherwise. SECTION 12.7. CUMULATIVE RIGHTS. All Rights available to Administrative Agent and Lenders under the Loan Documents are cumulative of and in addition to all other Rights granted to Administrative Agent and Lenders at law or in equity, whether or not the Obligation is due and payable and whether or not Administrative Agent or Lenders have instituted any suit for collection, foreclosure, or other action in connection with the Loan Documents. SECTION 12.8. APPLICATION OF PROCEEDS. Any and all proceeds ever received by Administrative Agent or Lenders from the exercise of any Rights pertaining to the Obligation shall be applied to the Obligation in the order and manner set forth in Section 3.12. SECTION 12.9. CERTAIN PROCEEDINGS. Each Loan Party will promptly execute and deliver, or cause the execution and delivery of, all applications, certificates, instruments, registration statements, and all other documents and papers Administrative Agent or Lenders may reasonably request in connection with the obtaining of any consent, approval, registration, qualification, permit, license, or Authorization of any Governmental Authority or other Person necessary or appropriate for the effective exercise of any Rights under the Loan Documents. SECTION 12.10. EXPENDITURES BY LENDERS. Borrower shall promptly pay within fifteen (15) Business Days after request therefor (a) all reasonable costs, fees, and expenses paid or incurred by Administrative Agent and Arranger, incident to any Loan Document (including, but not limited to, the reasonable fees and expenses of counsel to Administrative Agent and Arranger in connection with the negotiation, preparation, delivery, execution, coordination and administration of the Loan Documents and any related amendment, waiver, or consent) and (b) all costs and expenses of Lenders and Administrative Agent incurred by Administrative Agent or any Lender in connection with the enforcement of the obligations of any Loan Party arising under the Loan Documents (including, without limitation, costs and expenses incurred in connection with any workout or bankruptcy) or the exercise of any Rights arising under the Loan Documents (including, but not limited to, reasonable attorneys' fees, court costs and other costs of collection), all of which shall be a part 55 of the Obligation and shall bear interest at the Default Rate from the date due until the date repaid. SECTION 12.11. INDEMNIFICATION. BORROWER AND EACH OTHER LOAN PARTY (BY EXECUTION OF A GUARANTY) AGREES TO INDEMNIFY AND HOLD HARMLESS EACH AGENT, ARRANGER, AND EACH LENDER AND EACH OF THEIR RESPECTIVE AFFILIATES AND THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, ATTORNEYS, AND ADVISORS (EACH, AN "INDEMNIFIED PARTY") FROM AND AGAINST ANY AND ALL CLAIMS, DAMAGES, LOSSES, LIABILITIES (INCLUDING, WITHOUT LIMITATION, ANY ENVIRONMENTAL LIABILITIES), COSTS, AND EXPENSES (INCLUDING, WITHOUT LIMITATION, ATTORNEYS' FEES) THAT MAY BE INCURRED BY OR ASSERTED OR AWARDED AGAINST ANY INDEMNIFIED PARTY, IN EACH CASE ARISING OUT OF OR IN CONNECTION WITH OR BY REASON OF (INCLUDING, WITHOUT LIMITATION, IN CONNECTION WITH ANY INVESTIGATION, LITIGATION, OR PROCEEDING OR PREPARATION OF DEFENSE IN CONNECTION THEREWITH) THE LOAN DOCUMENTS, ANY OF THE TRANSACTIONS CONTEMPLATED HEREIN OR THE ACTUAL OR PROPOSED USE OF THE PROCEEDS OF THE BORROWINGS (INCLUDING ANY OF THE FOREGOING ARISING FROM THE NEGLIGENCE OF THE INDEMNIFIED PARTY), EXCEPT TO THE EXTENT SUCH CLAIM, DAMAGE, LOSS, LIABILITY, COST, OR EXPENSE IS FOUND IN A FINAL, NON-APPEALABLE JUDGMENT BY A COURT OF COMPETENT JURISDICTION TO HAVE RESULTED FROM SUCH INDEMNIFIED PARTY'S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. IN THE CASE OF AN INVESTIGATION, LITIGATION OR OTHER PROCEEDING TO WHICH THE INDEMNITY IN THIS SECTION 12.11 APPLIES, SUCH INDEMNITY SHALL BE EFFECTIVE WHETHER OR NOT SUCH INVESTIGATION, LITIGATION OR PROCEEDING IS BROUGHT BY THE BORROWER, ITS DIRECTORS, SHAREHOLDERS OR CREDITORS OR AN INDEMNIFIED PARTY OR ANY OTHER PERSON OR ANY INDEMNIFIED PARTY IS OTHERWISE A PARTY THERETO AND WHETHER OR NOT THE TRANSACTIONS CONTEMPLATED HEREBY ARE CONSUMMATED. BORROWER AND EACH OTHER LOAN PARTY (BY EXECUTION OF A GUARANTY) AGREE NOT TO ASSERT ANY CLAIM AGAINST ANY INDEMNIFIED PARTY ON ANY THEORY OF LIABILITY, FOR SPECIAL, INDIRECT, CONSEQUENTIAL, OR PUNITIVE DAMAGES ARISING OUT OF OR OTHERWISE RELATING TO THE LOAN DOCUMENTS, ANY OF THE TRANSACTIONS CONTEMPLATED HEREIN OR THE ACTUAL OR PROPOSED USE OF THE PROCEEDS OF THE BORROWINGS. WITHOUT PREJUDICE TO THE SURVIVAL OF ANY OTHER AGREEMENT OF THE BORROWER OR GUARANTORS HEREUNDER, THE AGREEMENTS AND OBLIGATIONS OF THE LOAN PARTIES CONTAINED IN THIS SECTION 12.11 SHALL SURVIVE THE PAYMENT IN FULL OF THE BORROWINGS AND ALL OTHER AMOUNTS PAYABLE UNDER THE LOAN DOCUMENTS. 56 ARTICLE XIII AGREEMENT AMONG LENDERS SECTION 13.1. ADMINISTRATIVE AGENT. (a) APPOINTMENT OF ADMINISTRATIVE AGENT. Each Lender hereby appoints SunTrust Bank (and SunTrust Bank hereby accepts such appointment) as its nominee and agent, in its name and on its behalf: (i) to act as nominee for and on behalf of such Lender in and under all Loan Documents; (ii) to arrange the means whereby the funds of Lenders are to be made available to Borrower under the Loan Documents; (iii) to take such action as may be requested by any Lender under the Loan Documents (when such Lender is entitled to make such request under the Loan Documents and after such requesting Lender has obtained the concurrence of such other Lenders as may be required under the Loan Documents); (iv) to receive all documents and items to be furnished to Lenders under the Loan Documents; (v) to timely distribute, and Administrative Agent agrees to so distribute, to each Lender all material information, requests, documents, and items received from Borrower under the Loan Documents; (vi) to promptly distribute to each Lender its ratable part of each payment or prepayment (whether voluntary, as proceeds of collateral upon or after foreclosure, as proceeds of insurance thereon, or otherwise) in accordance with the terms of the Loan Documents; (vii) to deliver to the appropriate Persons requests, demands, approvals, and consents received from Lenders; and (viii) to execute, on behalf of Lenders, such releases or other documents or instruments as are permitted by the Loan Documents or as directed by Lenders from time to time; provided, however, Administrative Agent shall not be required to take any action which exposes Administrative Agent to personal liability or which is contrary to the Loan Documents or applicable Law. (b) RESIGNATION OF ADMINISTRATIVE AGENT; SUCCESSOR ADMINISTRATIVE AGENTS. Administrative Agent may resign at any time as Administrative Agent under the Loan Documents by giving written notice thereof to Lenders and to Borrower. Should the initial or any successor Administrative Agent ever cease to be a party hereto or should the initial or any successor Administrative Agent ever resign as Administrative Agent, then Required Lenders shall elect the successor Administrative Agent from among the Lenders (other than the resigning Administrative Agent). If no successor Administrative Agent shall have been so appointed by Required Lenders, within 30 days after the retiring Administrative Agent's giving of notice of resignation, then the retiring Administrative Agent may, on behalf of Lenders, appoint a successor Administrative Agent, which shall be a commercial bank having a combined capital and surplus of at least $1,000,000,000. Unless a Default or Potential Default has occurred and is continuing, any such successor Administrative Agent appointed under this Section shall be subject to Borrower's approval, which approval shall not be unreasonably withheld or delayed. Upon the acceptance of any appointment as Administrative Agent under the Loan Documents by a successor Administrative Agent, such successor Administrative Agent shall thereupon succeed to and become vested with all the Rights of the retiring Administrative Agent, and the retiring Administrative Agent shall be discharged from its duties and obligations of Administrative Agent under the Loan Documents (provided, however, that when used in connection with LCs issued and outstanding prior to the appointment of the successor Administrative Agent, "ADMINISTRATIVE AGENT" shall continue to refer solely to the bank that issued the outstanding LC; provided further that any LCs issued or renewed after the appointment of any successor Administrative Agent shall be issued by such successor Administrative Agent), and each Lender 57 shall execute such documents as any Lender may reasonably request to reflect such change in and under the Loan Documents. After any retiring Administrative Agent's resignation as Administrative Agent under the Loan Documents, the provisions of this Article 13 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Administrative Agent under the Loan Documents. (c) ADMINISTRATIVE AGENT AS A LENDER; NON-FIDUCIARY. Administrative Agent, in its capacity as a Lender, shall have the same Rights under the Loan Documents as any other Lender and may exercise the same as though it were not acting as Administrative Agent; the term "LENDER" shall, unless the context otherwise indicates, include Administrative Agent and any issuer of an LC hereunder; and any resignation, or removal of by Administrative Agent hereunder shall not impair or otherwise affect any Rights which it has or may have in its capacity as an individual Lender. Each Lender and Borrower agree that Administrative Agent is not a fiduciary for Lenders or for Borrower but simply is acting in the capacity described herein to alleviate administrative burdens for both Borrower and Lenders, that Administrative Agent has no duties or responsibilities to Lenders or Borrower except those expressly set forth herein, and that Administrative Agent in its capacity as a Lender has all Rights of any other Lender. (d) OTHER ACTIVITIES OF ADMINISTRATIVE AGENT. Administrative Agent and its Affiliates may now or hereafter be engaged in one or more loan, letter of credit, leasing, or other financing transactions with Borrower, act as trustee or depositary for Borrower, or otherwise be engaged in other transactions with Borrower (collectively, the "OTHER ACTIVITIES") not the subject of the Loan Documents. Without limiting the Rights of Lenders specifically set forth in the Loan Documents, Administrative Agent and its Affiliates shall not be responsible to account to Lenders for such other activities, and no Lender shall have any interest in any other activities, any present or future guaranties by or for the account of Borrower which are not contemplated or included in the Loan Documents, any present or future offset exercised by Administrative Agent and its Affiliates in respect of such other activities, any present or future property taken as security for any such other activities, or any property now or hereafter in the possession or control of Administrative Agent or its Affiliates which may be or become security for the obligations of Borrower arising under the Loan Documents by reason of the general description of indebtedness secured or of property contained in any other agreements, documents or instruments related to any such other activities; provided that, if any payments in respect of such guaranties or such property or the proceeds thereof shall be applied to reduction of the Obligation arising under the Loan Documents, then each Lender shall be entitled to share in such application ratably. SECTION 13.2. EXPENSES. Upon demand by Administrative Agent, each Lender shall pay its ratable portion of any expenses (including, without limitation, court costs, attorneys' fees, and other costs of collection) incurred by Administrative Agent in connection with any of the Loan Documents if and to the extent Administrative Agent does not receive reimbursement therefor from other sources within 60 days after incurred; provided that, each Lender shall be entitled to receive its ratable portion of any reimbursement for such expenses, or part thereof, which Administrative Agent subsequently receives from such other sources. 58 SECTION 13.3. PROPORTIONATE ABSORPTION OF LOSSES. Except as otherwise provided in the Loan Documents, nothing in the Loan Documents shall be deemed to give any Lender any advantage over any other Lender insofar as the Obligation arising under the Loan Documents is concerned, or to relieve any Lender from absorbing its ratable portion of any losses sustained with respect to the Obligation (except to the extent such losses result from unilateral actions or inactions of any Lender that are not made in accordance with the terms and provisions of the Loan Documents). SECTION 13.4. DELEGATION OF DUTIES; RELIANCE. Administrative Agent may perform any of its duties or exercise any of its Rights under the Loan Documents by or through its Representatives. Administrative Agent and its Representatives shall (a) be entitled to rely upon (and shall be protected in relying upon) any writing, resolution, notice, consent, certificate, affidavit, letter, cablegram, telecopy, telegram, telex or teletype message, statement, order, or other documents or conversation believed by it or them to be genuine and correct and to have been signed or made by the proper Person and, with respect to legal matters, upon opinion of counsel selected by Administrative Agent, (b) be entitled to deem and treat each Lender as the owner and holder of the Obligation owed to such Lender for all purposes until, subject to Section 14.13, written notice of the assignment or transfer thereof shall have been given to and received by Administrative Agent (and any request, authorization, consent, or approval of any Lender shall be conclusive and binding on each subsequent holder, assignee, or transferee of the Obligation owed to such Lender or portion thereof until such notice is given and received), (c) not be deemed to have notice of the occurrence of a Default or Potential Default unless a responsible officer of Administrative Agent, who handles matters associated with the Loan Documents and transactions thereunder, has received written notice from a Lender or Borrower and stating that such notice is a "Notice of Default," and (d) be entitled to consult with legal counsel (including counsel for Borrower), independent accountants, and other experts selected by Administrative Agent and shall not be liable for any action taken or omitted to be taken in good faith by it in accordance with the advice of such counsel, accountants or experts. SECTION 13.5. LIMITATION OF LIABILITY. (a) GENERAL. Neither the Administrative Agent nor any of its Representatives shall be liable for any action taken or omitted to be taken by it under the Loan Documents in good faith and reasonably believed by it to be within the discretion or power conferred upon it by the Loan Documents or be responsible for the consequences of any error of judgment, except for gross negligence, or willful misconduct; and neither the Administrative Agent nor any of its Representatives has a fiduciary relationship with any Lender by virtue of the Loan Documents (provided that, nothing herein shall negate the obligation of Administrative Agent to account for funds received by it for the account of any Lender). (b) NON-DISCRETIONARY ACTIONS; INDEMNIFICATION. Unless indemnified to its satisfaction against loss, cost, liability, and expense, the Administrative Agent shall not be compelled to do any act under the Loan Documents or to take any action toward the execution or enforcement of the powers thereby created or to prosecute or defend any suit in respect of the Loan Documents. 59 If Administrative Agent requests instructions from Lenders or Required Lenders, as the case may be, with respect to any act or action (including, but not limited to, any failure to act) in connection with any Loan Document, Administrative Agent shall be entitled (but shall not be required) to refrain (without incurring any liability to any Person by so refraining) from such act or action unless and until it has received such instructions. Except where action of Required Lenders or all Lenders is required in the Loan Documents, Administrative Agent may act hereunder in its own discretion without requesting instructions. In no event, however, shall Administrative Agent or any of its respective Representatives be required to take any action which it or they determine could incur for it or them criminal or onerous civil liability. Without limiting the generality of the foregoing, no Lender shall have any right of action against Administrative Agent as a result of Administrative Agent's acting or refraining from acting hereunder in accordance with the instructions of Required Lenders (or all Lenders if required in the Loan Documents). (c) INDEPENDENT CREDIT DECISION. Neither Administrative Agent nor any other Agent shall be responsible in any manner to any Lender or any Participant for, and each Lender represents and warrants that it has not relied upon Administrative Agent or any other Agent in respect of, (i) the creditworthiness of any Loan Party and the risks involved to such Lender, (ii) the effectiveness, enforceability, genuineness, validity, or the due execution of any Loan Document, (iii) any representation, warranty, document, certificate, report, or statement made therein or furnished thereunder or in connection therewith, or (iv) observation of or compliance with any of the terms, covenants, or conditions of any Loan Document on the part of any Loan Party. Each Lender agrees to indemnify Administrative Agent and its respective Representatives and hold them harmless from and against (but limited to such Lender's Pro Rata Part of) any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses, and disbursements of any kind or nature whatsoever which may be imposed on, asserted against, or incurred by them in any way relating to or arising out of the Loan Documents or any action taken or omitted by them under the Loan Documents (including any of the foregoing arising from the negligence of Administrative Agent or its Representatives), to the extent Administrative Agent and its respective Representatives are not reimbursed for such amounts by any Loan Party (provided that, Administrative Agent and its respective Representatives shall not have the right to be indemnified hereunder for its or their own gross negligence, or willful misconduct). SECTION 13.6. DEFAULT. (a) Upon the occurrence and continuance of a Default, Lenders agree to promptly confer in order that Required Lenders or Lenders, as the case may be, may agree upon a course of action for the enforcement of the Rights of Lenders; and Administrative Agent shall be entitled to refrain from taking any action (without incurring any liability to any Person for so refraining) unless and until Administrative Agent shall have received instructions from Required Lenders. All Rights of action under the Loan Documents, if any, hereunder may be enforced by Administrative Agent and any suit or proceeding instituted by Administrative Agent in furtherance of such enforcement shall be brought in its name as Administrative Agent without the necessity of joining as plaintiffs or defendants any other Lender, and the recovery of any judgment shall be for the benefit of Lenders subject to the expenses of Administrative Agent. In actions with respect to any property of Borrower, Administrative Agent is acting for the ratable benefit of each Lender. Any and all agreements to subordinate (whether made heretofore or 60 hereafter) other indebtedness or obligations of Borrower to the Obligation shall be construed as being for the ratable benefit of each Lender. (b) Except to the extent unanimity is required hereunder, each Lender agrees that any action taken by the Required Lenders in accordance with the provisions of the Loan Documents, and the exercise by the Required Lenders of the powers set forth herein or therein, together with such other powers as are reasonably incidental thereto, shall be authorized and binding upon all of the Lenders. SECTION 13.7. LIMITATION OF LIABILITY. To the extent permitted by Law, (a) neither Administrative Agent nor any other Agent (acting in their respective agent capacities) shall incur any liability to any other Lender, Agent, or Participant except for acts or omissions resulting from its own gross negligence or willful misconduct, and (b) neither Administrative Agent nor any other Agent, Lender, or Participant shall incur any liability to any other Person for any act or omission of any other Lender, Agent, or Participant. SECTION 13.8. RELATIONSHIP OF LENDERS. Nothing herein shall be construed as creating a partnership or joint venture among Agents and Lenders. SECTION 13.9. BENEFITS OF AGREEMENT. None of the provisions of this Article 13 (other than Borrower's right to consent to a successor agent as set forth in Section 13.1(b)) shall inure to the benefit of any Loan Party, Guarantor, or any other Person other than Lenders; consequently, no Loan Party or any other Person shall be entitled to rely upon, or to raise as a defense, in any manner whatsoever, the failure of any Agent or any Lender to comply with such provisions. SECTION 13.10. AGENTS. None of the Persons identified in this Agreement or on the cover page as "Syndication Agent," "Documentation Agent," "Lead Arranger" or "Book Manager" shall have any Rights, powers, obligations, liabilities, responsibilities, or duties under the Loan Documents other than those applicable to all Lenders as such. Without limiting the foregoing, none of the Persons so identified as a "Syndication Agent," "Documentation Agent," "Lead Arranger" or "Book Manager" shall have or be deemed to have any fiduciary relationship with any Lender. Any Person that is a "Syndication Agent," "Documentation Agent," "Lead Arranger" or "Book Manager" may voluntarily relinquish its title by giving written notice thereof to Administrative Agent and Borrower. Upon such relinquishments, a successor "Syndication Agent," "Documentation Agent," "Lead Arranger" or "Book Manager" may be appointed upon the mutual agreement of Borrower and Administrative Agent. 61 SECTION 13.11. OBLIGATIONS SEVERAL. The obligations of Lenders hereunder are several, and each Lender hereunder shall not be responsible for the obligations of the other Lenders hereunder, nor will the failure of one Lender to perform any of its obligations hereunder relieve the other Lenders from the performance of their respective obligations hereunder. ARTICLE XIV MISCELLANEOUS SECTION 14.1. HEADINGS. The headings, captions, and arrangements used in any of the Loan Documents are, unless specified otherwise, for convenience only and shall not be deemed to limit, amplify, or modify the terms of the Loan Documents, nor affect the meaning thereof. SECTION 14.2. NONBUSINESS DAYS. In any case where any payment or action is due under any Loan Document on a day which is not a Business Day, such payment or action may be delayed until the next-succeeding Business Day, but interest and fees shall continue to accrue in respect of any payment to which it is applicable until such payment is in fact made; provided that, if, in the case of any such payment in respect of a Eurodollar Rate Borrowing, the next-succeeding Business Day is in the next calendar month, then such payment shall be made on the next-preceding Business Day. SECTION 14.3. COMMUNICATIONS. Unless specifically otherwise provided, whenever any Loan Document requires or permits any consent, approval, notice, request, or demand from one party to another, such communication must be in writing (which may be by telex or telecopy) to be effective and shall be deemed to have been given (a) if by telecopy, when transmitted to the telecopy number for such party during normal business hours on a Business Day (and all such communications sent by telecopy shall be confirmed promptly thereafter by personal delivery or mailing in accordance with the provisions of this Section; provided, that any requirement in this parenthetical shall not affect the date on which such telecopy shall be deemed to have been delivered), (b) if by mail, on the third Business Day after it is enclosed in an envelope, properly addressed to such party, properly stamped, sealed, and deposited in the appropriate official postal service, or (c) if by any other means, when actually delivered to such party. Until changed by notice pursuant hereto, the address (and telecopy numbers) for Administrative Agent, each Lender and other Agents is set forth on Schedule 14.3, and for each Loan Party is the address set forth by Borrower's signature on the signature page of this Agreement and for each Guarantor is the address set forth by such Guarantor's signature on the signature page of its Guaranty. 62 SECTION 14.4. FORM AND NUMBER OF DOCUMENTS. Each agreement, document, instrument, or other writing to be furnished under any provision of the Loan Documents must be in form and substance and in such number of counterparts as may be reasonably satisfactory to Administrative Agent and its counsel. SECTION 14.5. EXCEPTIONS TO COVENANTS. No Loan Party shall take any action or fail to take any action which is permitted as an exception to any of the covenants contained in any Loan Document if such action or omission would result in the breach of any other covenant contained in any of the Loan Documents. SECTION 14.6. SURVIVAL. All covenants, agreements, undertakings, representations, and warranties made in any of the Loan Documents shall survive all closings under the Loan Documents and, except as otherwise indicated, shall not be affected by any investigation made by any party. All rights of, and provisions relating to, reimbursement and indemnification of Administrative Agent, any Agent, or any Lender (and any other provision of the Loan Documents that expressly provides for such survival) shall survive termination of this Agreement and payment in full of the Obligation. SECTION 14.7. GOVERNING LAW. THE LAWS OF THE STATE OF NEW YORK, AND THE APPLICABLE FEDERAL LAWS OF THE UNITED STATES OF AMERICA, SHALL GOVERN THE VALIDITY, CONSTRUCTION, ENFORCEMENT AND INTERPRETATION OF THE LOAN DOCUMENTS. SECTION 14.8. INVALID PROVISIONS. If any provision in any Loan Document is held to be illegal, invalid, or unenforceable, such provision shall be fully severable; the appropriate Loan Document shall be construed and enforced as if such provision had never comprised a part thereof; and the remaining provisions thereof shall remain in full force and effect and shall not be affected by such provision or by its severance therefrom. Administrative Agent, Lenders, and each Loan Party party to such Loan Document agree to negotiate, in good faith, the terms of a replacement provision as similar to the severed provision as may be possible and be legal, valid, and enforceable. SECTION 14.9. ENTIRETY. THE RIGHTS AND OBLIGATIONS OF EACH LOAN PARTY, LENDERS, AND AGENTS SHALL BE DETERMINED SOLELY FROM WRITTEN AGREEMENTS, DOCUMENTS, AND INSTRUMENTS, AND ANY PRIOR ORAL AGREEMENTS BETWEEN SUCH PARTIES ARE SUPERSEDED BY AND MERGED INTO SUCH WRITINGS. THIS AGREEMENT (AS AMENDED IN WRITING FROM TIME TO TIME) AND THE OTHER WRITTEN LOAN DOCUMENTS EXECUTED BY ANY LOAN PARTY, ANY GUARANTOR, ANY LENDER, AND/OR ANY AGENT 63 (TOGETHER WITH ALL FEE LETTERS AS THEY RELATE TO THE PAYMENT OF FEES AFTER THE CLOSING DATE) REPRESENT THE FINAL AGREEMENT BETWEEN THE LOAN PARTIES, LENDERS, AND AGENTS, AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS BY SUCH PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN SUCH PARTIES. SECTION 14.10. JURISDICTION; VENUE; SERVICE OF PROCESS. EACH PARTY HERETO (INCLUDING EACH GUARANTOR BY EXECUTION OF A GUARANTY), IN EACH CASE FOR ITSELF, ITS SUCCESSORS AND ASSIGNS, HEREBY (A) IRREVOCABLY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK SITTING IN NEW YORK COUNTY OR THE COMMERCIAL DIVISION, CIVIL BRANCH OF THE SUPREME COURT OF THE STATE OF NEW YORK SITTING IN NEW YORK COUNTY, AND AGREES AND CONSENTS THAT SERVICE OF PROCESS MAY BE MADE UPON IT IN ANY LEGAL PROCEEDING ARISING OUT OF OR IN CONNECTION WITH THE LOAN DOCUMENTS AND THE OBLIGATION BY SERVICE OF PROCESS AS PROVIDED BY NEW YORK LAW, (B) IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY LITIGATION ARISING OUT OF OR IN CONNECTION WITH THE LOAN DOCUMENTS AND THE OBLIGATION BROUGHT IN ANY SUCH COURT, (C) IRREVOCABLY WAIVES ANY CLAIMS THAT ANY LITIGATION BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM, AND (D) IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH LITIGATION BY THE MAILING OF COPIES THEREOF BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED, POSTAGE PREPAID, AT ITS ADDRESS SET FORTH HEREIN. The scope of each of the foregoing waivers is intended to be all-encompassing of any and all disputes that may be filed in any court and that relate to the subject matter of this transaction, including, without limitation, contract claims, tort claims, breach of duty claims, and all other common law and statutory claims. The Loan Parties and each other party to the Loan Documents acknowledge that this waiver is a material inducement to the agreement of each party hereto to enter into a business relationship, that each has already relied on this waiver in entering into the Loan Documents, and each will continue to rely on each of such waivers in related future dealings. The Loan Parties and each other party to the Loan Documents warrant and represent that they have reviewed these waivers with their legal counsel, and that they knowingly and voluntarily agree to each such waiver following consultation with legal counsel. THE WAIVERS IN THIS SECTION 14.10 ARE IRREVOCABLE, MEANING THAT THEY MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THESE WAIVERS SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, SUPPLEMENTS, AND REPLACEMENTS TO OR OF THIS OR ANY OTHER LOAN DOCUMENT. SECTION 14.11. AMENDMENTS, CONSENTS, CONFLICTS, AND WAIVERS. (a) Except as otherwise specifically provided, this Agreement and the other Loan Documents may be amended, modified, or waived only by an instrument in writing executed 64 jointly by Borrower and Required Lenders (or by Administrative Agent acting upon directions of the Required Lenders). (b) Any amendment to or consent or waiver under any Loan Document which purports to accomplish any of the following must be by an instrument in writing executed by Borrower and executed (or approved, as the case may be) by each Lender affected thereby, and by Administrative Agent if affected thereby: (i) increases the Commitment Sum of such Lender or extends such Lender's commitment hereunder; (ii) postpones or delays any date fixed by the Loan Documents for any payment or mandatory prepayment of all or any part of the Obligation payable to such Lender or Administrative Agent; (iii) reduces the interest rate or decreases the amount of any payment of principal, interest, fees, or other sums payable to Administrative Agent or any such Lender hereunder; (iv) changes the definition of "Required Lenders"; (v) releases a Guaranty; (vi) changes this clause (b) or any other matter specifically requiring the consent of all Lenders hereunder; or (vii) alters the rights, duties or obligations of Administrative Agent. (c) Any conflict or ambiguity between the terms and provisions of this Agreement and terms and provisions in any other Loan Document shall be controlled by the terms and provisions herein. (d) No course of dealing nor any failure or delay by Administrative Agent, any Lender, or any of their respective Representatives with respect to exercising any Right of Administrative Agent or any Lender hereunder shall operate as a waiver thereof. A waiver must be in writing and signed by Required Lenders (or by all Lenders, if required hereunder) to be effective, and such waiver will be effective only in the specific instance and for the specific purpose for which it is given. SECTION 14.12. MULTIPLE COUNTERPARTS. The Loan Documents may be executed in a number of identical counterparts, each of which shall be deemed an original for all purposes and all of which constitute, collectively, one agreement; but, in making proof of any Loan Document, it shall not be necessary to produce or account for more than one such counterpart. It is not necessary that each Lender execute the same counterpart so long as identical counterparts are executed by Borrower, each Lender, and Administrative Agent. This Agreement shall become effective when counterparts hereof shall have been executed and delivered to Administrative Agent by each Lender, Administrative Agent, and Borrower, or, when Administrative Agent shall have received telecopied, telexed, or other evidence satisfactory to it that such party has executed and is delivering to Administrative Agent a counterpart hereof. SECTION 14.13. SUCCESSORS AND ASSIGNS; ASSIGNMENTS AND PARTICIPATIONS. (a) This Agreement shall be binding upon, and inure to the benefit of the parties hereto and their respective successors and assigns, except that (i) Borrower may not, directly or indirectly, assign or transfer, or attempt to assign or transfer, any of its Rights, duties, or obligations under any Loan Documents without the express written consent of all Lenders, and 65 (ii) except as permitted under this Section, no Lender may transfer, pledge, assign, sell any participation in, or otherwise encumber its portion of the Obligation. (b) Each Lender may assign to one or more Eligible Assignees all or a portion of its Rights and obligations under the Loan Documents (including, without limitation, all or a portion of its Borrowings and its Notes to the extent any Principal Debt owed to such assigning Lender is evidenced by a Note or Notes); provided, however, that: (i) each such assignment shall be to an Eligible Assignee; (ii) except in the case of an assignment to another Lender or in the case of an assignment of all of a Lender's Rights and obligations under the Loan Documents, any such partial assignment under the Facility shall not be less than $5,000,000 unless Borrower and Administrative Agent consent thereto (in their sole discretion) in writing which may be evidenced by their acceptance and execution of the related Assignment and Acceptance Agreement; provided that, no partial assignment for the Facility (including any assignment among Lenders) may result in any Lender holding less than $10,000,000; (iii) the parties to such assignment (including, without limitation, any assignment between Lenders) shall execute and deliver to Administrative Agent for its acceptance an Assignment and Acceptance Agreement in the form of Exhibit E hereto, together with any Notes (to the extent any Principal Debt owed to such assigning Lender is evidenced by a Note or Notes) subject to such assignment and a processing fee of $1,500; (iv) so long as any Lender is an Agent under this Agreement, such Lender (or an Affiliate of such Lender) shall retain an economic interest in the Loan Documents, will not assign all of its Rights, duties, or obligations under the Loan Documents, except to an Affiliate of such Lender, and will not enter into any Assignment and Acceptance Agreement that would have the effect of such Lender assigning all of its Rights, duties, or obligations under the Loan Documents to any Person other than an Affiliate of such Lender unless such Agent has relinquished such title in accordance with Section 13.1 (with respect to Administrative Agent) or Section 13.10 (with respect to the other Agents). Upon execution, delivery, and acceptance of such Assignment and Acceptance Agreement, the assignee thereunder shall be a party hereto and, to the extent of such assignment, have the obligations, Rights, and benefits of a Lender under the Loan Documents and the assigning Lender shall, to the extent of such assignment, relinquish its Rights and be released from its obligations under the Loan Documents. Upon the consummation of any assignment pursuant to this Section, but only upon the request of the assignor or assignee made through Administrative Agent, Borrower shall issue appropriate Notes to the assignor and the assignee, reflecting such Assignment and Acceptance. If the assignee is not incorporated under the laws of the United States of America or a state thereof, it shall deliver to Borrower and Administrative Agent certification as to exemption from deduction or withholding of Taxes in accordance with Section 4.6. 66 (c) Administrative Agent shall maintain at its address referred to in Section 14.3 a copy of each Assignment and Acceptance Agreement delivered to and accepted by it and a register for the recordation of the names and addresses of the Lenders and the Commitment Percentage, and principal amount of the Borrowings owing to, each Lender from time to time (the "REGISTER"). The entries in the Register shall be conclusive and binding for all purposes, absent manifest error, and Borrower, Administrative Agent and the Lenders may treat each Person whose name is recorded in the Register as a Lender hereunder for all purposes of the Loan Documents. The Register shall be available for inspection by Borrower or any Lender at any reasonable time and from time to time upon reasonable prior notice. Upon the consummation of any assignment in accordance with this Section 14.13, Schedule 2.1 shall automatically be deemed amended (to the extent required) by Administrative Agent to reflect the name, address, and, where appropriate, respective Committed Sums under the Facility (as the case may be) of the assignor and assignee. (d) Upon its receipt of an Assignment and Acceptance Agreement executed by the parties thereto, together with any Notes (to the extent any Principal Debt owed to such assigning Lender is evidenced by a Note or Notes) subject to such assignment and payment of the processing fee, Administrative Agent shall, if such Assignment and Acceptance has been completed and is in substantially the form of Exhibit E hereto, (i) accept such Assignment and Acceptance Agreement, (ii) record the information contained therein in the Register, and (iii) give prompt notice thereof to the parties thereto. (e) Subject to the provisions of this Section and in accordance with applicable Law, any Lender may, in the ordinary course of its commercial banking business and in accordance with applicable Law, at any time sell to one or more Persons (each a "PARTICIPANT") participating interests in its portion of the Obligation. In the event of any such sale to a Participant, (i) such Lender shall remain a "Lender" under the Loan Documents and the Participant shall not constitute a "Lender" hereunder, (ii) such Lender's obligations under the Loan Documents shall remain unchanged, (iii) such Lender shall remain solely responsible for the performance thereof, (iv) such Lender shall remain the holder of its share of the Principal Debt for all purposes under the Loan Documents, (v) Borrower and Administrative Agent shall continue to deal solely and directly with such Lender in connection with such Lender's Rights and obligations under the Loan Documents, and (vi) such Lender shall be solely responsible for any withholding taxes or any filing or reporting requirements relating to such participation and shall hold Borrower and Administrative Agent and their respective successors, permitted assigns, officers, directors, employees, agents, and representatives harmless against the same. Participants shall have no Rights under the Loan Documents, other than certain voting Rights as provided below. Subject to the following, each Lender shall be entitled to obtain (on behalf of its Participants) the benefits of Article 4 with respect to all participations in its part of the Obligation outstanding from time to time, so long as Borrower shall not be obligated to pay any amount in excess of the amount that would be due to such Lender under Article 4 calculated as though no participations have been made. No Lender shall sell any participating interest under which the Participant shall have any Rights to approve any amendment, modification, or waiver of any Loan Document, except to the extent such amendment, modification, or waiver extends the due date for payment of any amount in respect of principal (other than mandatory prepayments and other than in connection with an extension of the Termination Date in accordance with Section 2.5), interest, or fees due under the Loan Documents, reduces the interest rate or the amount of principal or fees applicable to the Obligation (except such reductions as are contemplated by the Loan Documents), or releases all 67 or any substantial portion of the Guaranties under the Loan Documents; provided that, in those cases where a Participant is entitled to the benefits of Article 4 or a Lender grants Rights to its Participants to approve amendments to or waivers of the Loan Documents respecting the matters previously described in this sentence, such Lender must include a voting mechanism in the relevant participation agreement or agreements, as the case may be, whereby a majority of such Lender's portion of the Obligation (whether held by such Lender or Participant) shall control the vote for all of such Lender's portion of the Obligation. Except in the case of the sale of a participating interest to another Lender, the relevant participation agreement shall not permit the Participant to transfer, pledge, assign, sell participations in, or otherwise encumber its portion of the Obligation, unless the consent of the transferring Lender has been obtained. (f) Notwithstanding any other provision set forth in this Agreement, any Lender may, without notice to, or the consent of Borrower or Administrative Agent, at any time assign and pledge all or any portion of its Borrowings and its Notes (to the extent any Principal Debt owed to such assigning Lender is evidenced by a Note or Notes) to any Federal Reserve Bank as collateral security pursuant to Regulation A and any Operating Circular issued by such Federal Reserve Bank or any Lender which is a fund may pledge all or any portion of its Borrowings and its Notes (to the extent any Principal Debt owed to such assigning Lender is evidenced by a Note or Notes) to its trustee in support of its obligations to its trustee. No such assignment shall release the assigning Lender from its obligations hereunder. (g) Any Lender may furnish any information concerning the Loan Parties in the possession of such Lender from time to time to Eligible Assignees and Participants (including prospective Eligible Assignees and Participants), subject to the provisions of Section 14.14. SECTION 14.14. CONFIDENTIALITY. (a) The Administrative Agent and each Lender (each, a "LENDING PARTY") agrees to keep confidential any information furnished or made available to it by any Loan Party pursuant to this Agreement that is marked confidential; provided that nothing herein shall prevent any Lending Party from disclosing such information (a) to any other Lending Party or any affiliate of any Lending Party, or any officer, director, employee, agent, or advisor of any Lending Party or affiliate of any Lending Party, (b) to any other Person if reasonably incidental to the administration of the credit facility provided herein, (c) as required by any law, rule, or regulation, (d) upon the order of any court or administrative agency, (e) upon the request or demand of any regulatory agency or authority, (f) that is or becomes available to the public or that is or becomes available to any Lending Party other than as a result of a disclosure by any Lending Party prohibited by this Agreement, (g) in connection with any litigation to which such Lending Party or any of its affiliates may be a party, (h) to the extent necessary in connection with the exercise of any remedy under this Agreement or any other Loan Document, and (i) subject to provisions substantially similar to those contained in this Section, to any actual or proposed Participant or Eligible Assignee. 68 SECTION 14.15. DISCHARGE ONLY UPON PAYMENT IN FULL; REINSTATEMENT IN CERTAIN CIRCUMSTANCES. The obligations of each Loan Party under the Loan Documents shall remain in full force and effect until termination of the Commitment, payment in full of the Principal Debt and of all interest, fees, and other amounts of the Obligation then due and owing, and expiration of all LCs, except that Sections 4, 12, and 14, and any other provisions under the Loan Documents expressly intended to survive by the terms hereof or by the terms of the applicable Loan Documents, shall survive such termination. If at any time any payment of the principal of or interest on any Note or any other amount payable by Borrower under any Loan Document is rescinded or must be otherwise restored or returned upon the insolvency, bankruptcy, or reorganization of Borrower or otherwise, the obligations of each Loan Party under the Loan Documents with respect to such payment shall be reinstated as though such payment had been due but not made at such time. SECTION 14.16. NO GENERAL PARTNERS' LIABILITY. The Administrative Agent and the Lenders agree for themselves and their respective successors, participants and assigns, including any subsequent holder of any Note, that any claim against Borrower which may arise under any Loan Document shall be made only against and shall be limited to the assets of Borrower, except to the extent Intermediate Partnership may have obligations with respect to such claim pursuant to the terms of its Guaranty, and that no judgment, order or execution entered in any suit, action or proceeding, whether legal or equitable, on this Agreement, such Note or any of the other Loan Documents shall be obtained or enforced against any General Partner or its assets for the purpose of obtaining satisfaction and payment of such Note, the Debt evidenced thereby, any other Obligation or any claims arising thereunder or under this Agreement or any other Loan Document, any right to proceed against the General Partners individually or their respective Representatives or assets being hereby expressly waived, renounced and remitted by the Administrative Agent and the Lenders for themselves and their respective successors, participants and assigns. Nothing in this Section 14.16, however, shall be construed so as to prevent the Administrative Agent, any Lender or any other holder of any Note from commencing any action, suit or proceeding with respect to or causing legal papers to be served upon any General Partner for the purpose of obtaining jurisdiction over Borrower. [REMAINDER OF PAGE INTENTIONALLY BLANK. SIGNATURE PAGES FOLLOW.] S-1 NORTHERN BORDER PARTNERS, L.P. By ------------------------------------- Name: Title: Address for Notices: Northern Border Partners, L.P. 1400 Smith Street Houston, TX 77002 Attn: Angus Hardie Davis NBP Services Corporation Telephone: 713/853-6941 Telecopy: 713/646-4970 with a copy to: Mr. Jerry L. Peters Chief Financial and Accounting Officer Northern Border Partners, L.P. 1111 South 103rd Street Omaha, NE 68124-1000 Telephone: 402/398-7722 Telecopy: 402/398-7803 and with a copy to: Ms. Janet Place Vice President and General Counsel Northern Plains Natural Gas Company 1111 South 103rd Street Omaha, NE 68124-1000 Telephone: 402/398-7886 Telecopy: 402/398-7780 S-2 SUNTRUST BANK, as Administrative Agent and Lender By ------------------------------------- Name: Title: EXHIBIT A FORM OF NOTE $_____________ ____________ __,_____ FOR VALUE RECEIVED, the undersigned, NORTHERN BORDER PARTNERS, L.P., a Delaware limited partnership ("BORROWER"), hereby promises to pay to the order of ______________________ ("LENDER"), at the offices of SUNTRUST BANK, as Administrative Agent for Lender and others as hereinafter described, on the Termination Date for the Facility, the lesser of (a) $_______________ and (b) the aggregate Principal Debt disbursed by Lender to Borrower and outstanding and unpaid on the Termination Date for the Facility (together with accrued and unpaid interest thereon). This note has been executed and delivered under, and is subject to the terms of, the Revolving Credit Agreement, dated as of March 21, 2001 (as amended, modified, supplemented, or restated from time to time, the "CREDIT AGREEMENT"), among Borrower, Administrative Agent, and Lender and other lenders and Agents party thereto, and is one of the "Notes" referred to therein. Unless defined herein, capitalized terms used herein that are defined in the Credit Agreement have the meaning given to such terms in the Credit Agreement. Reference is made to the Credit Agreement for provisions affecting this note regarding applicable interest rates, principal and interest payment dates, final maturity, voluntary and mandatory prepayments, acceleration of maturity, exercise of Rights, payment of attorneys' fees, court costs, and other costs of collection, certain waivers by Borrower and others now or hereafter obligated for payment of any sums due hereunder and security for the payment hereof. Without limiting the immediately preceding sentence, reference is made to SECTION 3.9 of the Credit Agreement for usury savings provisions. THE LAWS OF THE STATE OF NEW YORK, AND THE APPLICABLE FEDERAL LAWS OF THE UNITED STATES OF AMERICA SHALL GOVERN THE VALIDITY, CONSTRUCTION, ENFORCEMENT AND INTERPRETATION HEREOF. NORTHERN BORDER PARTNERS, L.P. By: ------------------------------------ Name: ------------------------------ Title: ------------------------------ A-1 EXHIBIT B-1 FORM OF BORROWING NOTICE (Northern Border Partners, L.P.) Dated: ______________ __, ____ SunTrust Bank as Administrative Agent for the Lenders as defined in the Credit Agreement referred to below 303 Peachtree Street, N.E. 3rd Floor, Mail Code 1929 Atlanta, Georgia Attn: _________ Reference is made to the Revolving Credit Agreement, dated as of March 21, 2001 (as amended, modified, supplemented, or restated from time to time, the "CREDIT AGREEMENT"), among Northern Border Partners, L.P., a Delaware limited partnership ("BORROWER"), SunTrust Bank, as Administrative Agent, and Lenders party thereto. Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Credit Agreement. Borrower hereby gives you notice pursuant to SECTION 2.4 of the Credit Agreement that it requests a Borrowing under the Credit Agreement, and in that connection sets forth below the terms on which such Borrowing is requested to be made:
(A) Borrowing Date of Borrowing (1) (A) ____________________________ (B) Amount of Borrowing (2) (B) ____________________________ (C) Type of Borrowing (3) (C) ____________________________ (D) For a Eurodollar Rate Borrowing, the Interest Period and the last day thereof (4) (D) ____________________________
Borrower hereby certifies that the following statements are true and correct on the date hereof, and will be true and correct on the Borrowing Date specified herein after giving effect to such Borrowing: (a) The requested Borrowing will not cause the Principal Debt to exceed the Commitment; B-1-1 (b) All of the representations and warranties of the Loan Parties set forth in the Loan Documents are true and correct in all material respects (except to the extent that the representations and warranties speak to a specific date); (c) No Default or Potential Default has occurred and is continuing or will arise after giving effect to the requested Borrowing. Very truly yours, NORTHERN BORDER PARTNERS, L.P. By: ------------------------------------ Name: ------------------------------ Title: ----------------------------- Notes: (1) For any Borrowing under the Facility must be a Business Day occurring prior to the Termination Date and be at least (a) three Business Days following receipt by Administrative Agent of this Borrowing Notice for any Eurodollar Rate Borrowing, and (b) on or before the Business Day following receipt by Administrative Agent of this Borrowing Notice for any Base Rate Borrowing. (2) Not less than $5,000,000 or an integral multiple of $1,000,000 for the Facility. (3) Eurodollar Rate Borrowing or Base Rate Borrowing. (4) 1, 2, 3, or 6 months - in no event may the Interest Period for the Facility end after the Termination Date. B-1-2 EXHIBIT B-2 FORM OF CONVERSION NOTICE (Northern Border Partners, L.P.) Dated: ______________ __, ____ SunTrust Bank as Administrative Agent for the Lenders as defined in the Credit Agreement referred to below 303 Peachtree Street, N.E. 3rd Floor, Mail Code 1929 Atlanta, Georgia Attn: _________ Reference is made to the Revolving Credit Agreement, dated as of March 21, 2001 (as amended, modified, supplemented, or restated from time to time, the "CREDIT AGREEMENT"), among Northern Border Partners, L.P., a Delaware limited partnership ("BORROWER"), SunTrust Bank, as Administrative Agent, and Lenders party thereto. Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Credit Agreement. Borrower hereby gives you notice pursuant to SECTION 3.11 of the Credit Agreement that it elects to convert a Borrowing under the Credit Agreement from one Type to another Type or elects a new Interest Period for a Eurodollar Rate Borrowing, and in that connection sets forth below the terms on which such election is requested to be made: (A) Date of conversion or last day of applicable Interest Period (1) (A) _______________________________ (B) Principal amount of existing Borrowing being converted or continued (2) (B) _______________________________ (C) New Type of Borrowing selected (or Type of Borrowing continued) (3) (C) _______________________________ (D) For conversion to, or continuation of, a Eurodollar Rate Borrowing, Interest Period and the last day thereof (4) (D) _______________________________
B-2-1 As of the date hereof and of the requested Conversion, no Default or Potential Default has occurred and is continuing. Very truly yours, NORTHERN BORDER PARTNERS, L.P. By: ------------------------------------ Name: ------------------------------ Title: ------------------------------ (1) Must be a Business Day at least (a) three Business Days following receipt by Administrative Agent of this Conversion Notice for any conversion from a Base Rate Borrowing to a Eurodollar Rate Borrowing or a continuation of a Eurodollar Rate Borrowing for an additional Interest Period, and (b) on or before the Business Day following receipt by Administrative Agent of this Conversion Notice for a conversion from a Eurodollar Rate Borrowing to a Base Rate Borrowing. (2) Not less than $5,000,000 or a greater integral multiple of $1,000,000 (if a Eurodollar Rate Borrowing). (3) Eurodollar Rate Borrowing or Base Rate Borrowing. (4) 1, 2, 3, or 6 months - in no event may the Interest Period for the Facility end after the Termination Date. B-2-2 EXHIBIT B-3 FORM OF LC REQUEST (Northern Border Partners, L.P.) ______________ __, ____ SunTrust Bank as Administrative Agent for the Lenders as defined in the Credit Agreement referred to below 303 Peachtree Street, N.E. 3rd Floor, Mail Code 1929 Atlanta, Georgia Attn: _________ Reference is made to the Revolving Credit Agreement, dated as of March 21, 2001 (as amended, modified, supplemented, or restated from time to time, the "CREDIT AGREEMENT"), among Northern Border Partners, L.P., a Delaware limited partnership ("BORROWER"), SunTrust Bank as Administrative Agent, and Lenders party thereto. Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Credit Agreement. Borrower hereby gives you notice pursuant to SECTION 2.2(A) of the Credit Agreement that it requests the issuance of an LC under the LC Subfacility, and in that connection sets forth below the terms on which such LC is requested to be issued: (A) Face amount of the LC (1) -------------------------------- (B) Date on which the LC is to be issued (2) -------------------------------- (C) Expiration date of the LC (3) --------------------------------
Accompanying this notice is a duly executed and properly completed LC Agreement in the form requested by Administrative Agent, together with the payment of any LC fronting fees due and payable pursuant to SECTION 5.4(B) of the Credit Agreement. Borrower hereby certifies that the following statements are true and correct on the date hereof, and will be true and correct on the date specified herein for issuance of the LC, after giving effect to the issuance of such LC: (a) the Commitment Usage does not exceed the Commitment; (b) the LC Exposure does not exceed $50,000,000; (c) all of the representations and warranties of all Loan Parties, and any of its Subsidiaries, set forth in the Loan Documents are true and correct in all material respects; C-1 (d) no Default or Potential Default has occurred and is continuing or will arise after giving effect to the requested LC. Very truly yours, NORTHERN BORDER PARTNERS, L.P. By: ------------------------------------ Name: ------------------------------- Title: ------------------------------ Rate: ----------------------------- Confirmed by: --------------------- - ---------- (1) Amount of requested LC plus the LC Exposure shall not exceed $50,000,000 (as the maximum amount of such LC Subfacility may be reduced or canceled in accordance with the Loan Documents). (2) Must be a Business Day at least three Business Days following receipt by Administrative Agent of this LC Request. (3) Not later than the earlier of one year from the date of issuance or 30 days prior to the Termination Date. B-3-2 EXHIBIT C FORM OF GUARANTY THIS GUARANTY is executed as of March 21, 2001, by the undersigned, for the benefit of SunTrust Bank (in its capacity as Administrative Agent for the benefit of Lenders). A. Contemporaneously herewith Borrower shall enter into that certain Revolving Credit Agreement dated as of even date herewith among Borrower, Lenders, SunTrust Bank, as Administrative Agent, for itself and the other Lenders, Bank of Montreal and Bank of America, as Co-Syndication Agents, and Bank One, NA, as Documentation Agent (as amended, restated or otherwise modified, the "CREDIT AGREEMENT"); and B. As a condition precedent to the making of the initial Borrowing under the Credit Agreement, the Guarantor is required to execute and deliver this Guaranty; and C. The Guarantor has duly authorized the execution, delivery and performance of this Guaranty; and D. It is in the best interests of the Guarantor to execute this Guaranty inasmuch as the Guarantor will derive substantial direct and indirect benefits from the Borrowings made from time to time to Borrower by the Lenders pursuant to the Credit Agreement; and E. This Guaranty is integral to the transactions contemplated by the Loan Documents, and the execution and delivery thereof, is a condition precedent to Lenders' obligations to extend credit under the Loan Documents. ACCORDINGLY, for adequate and sufficient consideration, the receipt and adequacy of which are hereby acknowledged, Guarantor guarantees to Administrative Agent and Lenders the prompt payment of the Guaranteed Debt (defined below) and agrees as follows: 1. DEFINITIONS. Terms defined in the Credit Agreement have the same meanings when used, unless otherwise defined, in this Guaranty. As used in this Guaranty: "BORROWER" means Borrower, Borrower as a debtor-in-possession, and any receiver, trustee, liquidator, conservator, custodian, or similar party appointed for Borrower or for all or substantially all of Borrower's assets under any Debtor Relief Law. "CREDIT AGREEMENT" is defined in the recitals to this Guaranty. "CAPITAL INTERESTS" means any and all shares, interests, participations, rights or other equivalents (however designated) of capital stock, including, without limitation, with respect to partnerships, partnership interests (whether general or limited), with respect to limited member liability companies, interests and any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, such partnership. C-1 "DEBT" means any obligation incurred, created or assumed by any Person for the repayment of money borrowed, any purchase money obligation incurred, created or assumed by such Person and any guarantee of any of the foregoing. "FUNDED DEBT" means all Debt maturing one year or more from the date of the incurrence, creation, assumption, or guarantee thereof, all Debt directly or indirectly renewable or extendable, at the option of the debtor, by its terms or by the terms of any instrument or agreement relating thereto, to a date one year or more from the date of the incurrence, creation, assumption, or guarantee thereof, and all Debt under a revolving credit or similar agreement obligating the lender or lenders to extend credit over a period of one year or more. "GUARANTEED DEBT" means, collectively, (a) the Obligation, (b) any and all present and future indebtedness, obligations and liabilities of any Loan Party under any present or future Derivative Transactions between any Loan Party and any Lender (or Affiliates of any Lender) and (c) all present and future costs, attorneys' fees, and expenses reasonably incurred by Administrative Agent or any Lender to enforce Borrower's, Guarantor's, or any other obligor's payment of any of the Guaranteed Debt, including, without limitation (to the extent lawful), all present and future amounts that would become due but for the operation of ss.ss. 502 or 506 or any other provision of Title 11 of the United States Code and all present and future accrued and unpaid interest (including, without limitation, all post-maturity interest and any post-petition interest in any proceeding under Debtor Relief Laws to which Borrower or Guarantor becomes subject). "GUARANTOR" means Northern Border Intermediate Limited Partnership and each Person that is required to guarantee the Guaranteed Debt pursuant to Section 3. "HOLDING SUBSIDIARY" means (i) each Guarantor and any other Subsidiary of the Borrower that succeeds such Guarantor and (ii) any other Subsidiary of the Borrower that owns or controls, directly or indirectly, Capital Interests in any one or more other Subsidiaries of Borrower. "LENDER" means, individually, or "LENDERS" means, collectively, on any date of determination, Administrative Agent and Lenders. "SUBORDINATED DEBT" means all present and future obligations of Borrower to Guarantor, whether those obligations are (a) direct, indirect, fixed, contingent, liquidated, unliquidated, joint, several, or joint and several, (b) due or to become due to Guarantor, (c) held by or are to be held by Guarantor, (d) created directly or acquired by assignment or otherwise, or (e) evidenced in writing. 2. GUARANTY. This is an absolute, irrevocable, and continuing guaranty of payment, not collection, and the circumstance that at any time or from time to time the Guaranteed Debt may be paid in full does not affect the obligation of Guarantor with respect to the Guaranteed Debt incurred after that. This Guaranty remains in effect until the Guaranteed Debt is fully paid and performed, all commitments to extend any credit under the Loan Documents have terminated, and all LCs have expired or been terminated. Guarantor C-2 may not rescind or revoke its obligations with respect to the Guaranteed Debt. Notwithstanding any contrary provision, it is the intention of Guarantor, Lenders, and Administrative Agent that the amount of the Guaranteed Debt guaranteed by Guarantor by this Guaranty shall be in, but not in excess of, the maximum amount permitted by fraudulent conveyance, fraudulent transfer, or similar Laws applicable to Guarantor. Accordingly, notwithstanding anything to the contrary contained in this Guaranty or any other agreement or instrument executed in connection with the payment of any of the Guaranteed Debt, the amount of the Guaranteed Debt guaranteed by Guarantor by this Guaranty shall be limited to an aggregate amount equal to the largest amount that would not render Guarantor's obligations hereunder subject to avoidance under Section 548 of the United States Bankruptcy Code or any comparable provision of any applicable state law. 3. ADDITION OF GUARANTORS. If any Holding Subsidiary of Borrower incurs, creates, assumes or guarantees any Funded Debt other than the Guaranteed Debt, then Borrower shall (i) cause the Guaranteed Debt to be equally and ratably guaranteed by such Holding Subsidiary, but only to the extent that the Guaranteed Debt is not already guaranteed by such Holding Subsidiary on terms reasonably comparable to those set forth herein and (ii) cause such Holding Subsidiary to execute and deliver a supplement to this Guaranty in form satisfactory to the Administrative Agent evidencing such Holding Subsidiary's provision of a guarantee to Administrative Agent and Lenders for payment of the Guaranteed Debt. Notwithstanding anything to the contrary in this Section 3, if any Holding Subsidiary (other than Northern Border Intermediate Limited Partnership) that was required to become a "Guarantor" hereunder pursuant to this Section 3 shall no longer be liable for any Funded Debt other than the Guaranteed Debt, and so long as no Default or Event of Default shall have occurred and be continuing, such Holding Subsidiary, upon giving notice to the Administrative Agent to the foregoing effect, shall be deemed to be released from all of its obligations under this Guarantee. 4. CONSIDERATION. Guarantor represents and warrants that its liability under this Guaranty may reasonably be expected to directly or indirectly benefit it. 5. CUMULATIVE RIGHTS. If Guarantor becomes liable for any indebtedness owing by Borrower to Administrative Agent or any Lender, other than under this Guaranty, that liability may not be in any manner impaired or affected by this Guaranty. The Rights of Administrative Agent or Lenders under this Guaranty are cumulative of any and all other Rights that Administrative Agent or Lenders may ever have against Guarantor. The exercise by Administrative Agent or Lenders of any Right under this Guaranty or otherwise does not preclude the concurrent or subsequent exercise of any other Right. 6. PAYMENT UPON DEMAND. If a Default exists, Guarantor shall, on demand and without further notice of dishonor and without any notice having been given to Guarantor previous to that demand of either the acceptance by Administrative Agent or Lenders of this Guaranty or the creation or incurrence of any Guaranteed Debt, pay the amount of the Guaranteed Debt then due and payable to Administrative Agent and Lenders; provided that, if a Default exists and Administrative Agent or Lenders can not, for any reason, accelerate the Obligation, then the Guaranteed Debt shall be, as among Guarantor, C-3 Administrative Agent, and Lenders, a fully matured, due, and payable obligation of Guarantor to Administrative Agent and Lenders. It is not necessary for Administrative Agent or Lenders, in order to enforce that payment by Guarantor, first or contemporaneously to institute suit or exhaust remedies against Borrower or others liable on any Guaranteed Debt. 7. SUBORDINATION. The Subordinated Debt is expressly subordinated to the full and final payment of the Guaranteed Debt. Guarantor agrees not to accept any payment of any Subordinated Debt from any Loan Party, or any Subsidiary thereof, if a Default exists. If Guarantor receives any payment of any Subordinated Debt in violation of the foregoing, Guarantor shall hold that payment in trust for Administrative Agent and Lenders and promptly turn it over to Administrative Agent, in the form received (with any necessary endorsements), to be applied to the Guaranteed Debt. 8. SUBROGATION AND CONTRIBUTION. Until payment in full of the Guaranteed Debt, and the termination of the Obligation of Lenders to extend credit under the Loan Documents, (a) Guarantor may not assert, enforce, or otherwise exercise any Right of subrogation to any of the Rights or Liens of Administrative Agent or Lenders or any other beneficiary against Borrower or any other obligor on the Guaranteed Debt or other security or any Right of recourse, reimbursement, subrogation, contribution, indemnification, or similar Right against Borrower or any other obligor on any Guaranteed Debt or any guarantor of it, (b) Guarantor defers all of the foregoing Rights (whether they arise in equity, under contract, by statute, under common law, or otherwise), and (c) Guarantor defers the benefit of, and subordinates any Right to participate in, any security given to Administrative Agent or Lenders or any other beneficiary to secure payment of any Guaranteed Debt. 9. NO RELEASE. Guarantor's obligations under this Guaranty may not be released, diminished, or affected by the occurrence of any one or more of the following events: (a) any taking or accepting of any security or assurance for any Guaranteed Debt; (b) any release, surrender, exchange, subordination, impairment, or loss of any collateral securing any Guaranteed Debt; (c) any full or partial release of the liability of any other obligor on the Obligation, except for any final release resulting from payment in full of such Obligation; (d) the modification of, or waiver of compliance with, any terms of any other Loan Document; (e) the insolvency, bankruptcy, or lack of corporate or partnership power of any other obligor at any time liable for any Guaranteed Debt, whether now existing or occurring in the future; (f) any renewal, extension, or rearrangement of any Guaranteed Debt or any adjustment, indulgence, forbearance, or compromise that may be granted or given by Administrative Agent or any Lender to any other obligor on the Obligation; (g) any neglect, delay, omission, failure, or refusal of Administrative Agent or any Lender to take or prosecute any action in connection with the Guaranteed Debt or to foreclose, take, or prosecute any action in connection with any Loan Document; (h) any failure of Administrative Agent or any Lender to notify Guarantor of any renewal, extension, or assignment of any Guaranteed Debt, or the release of any security or of any other action taken or refrained from being taken by Administrative Agent or any Lender against Borrower or any new agreement between Administrative Agent, any Lender, and Borrower; it being understood that neither Administrative Agent nor any Lender is required to give Guarantor any notice of any kind under any circumstances whatsoever with respect to or in connection C-4 with any Guaranteed Debt, other than any notice required to be given to Guarantor by Law or elsewhere in this Guaranty; (i) the unenforceability of any Guaranteed Debt against any other obligor or any security securing same because it exceeds the amount permitted by Law, the act of creating it is ultra vires, the officers creating it exceeded their authority or violated their fiduciary duties in connection with it, or otherwise; or (j) any payment of the Obligation to Administrative Agent or any Lender is held to constitute a preference under any Debtor Relief Law or for any other reason Administrative Agent or any Lender is required to refund that payment or make payment to someone else (and in each such instance this Guaranty will be reinstated in an amount equal to that payment). 10. WAIVERS. By execution hereof, Guarantor acknowledges and agrees to the waivers set forth in SECTION 12.2 of the Credit Agreement. To the maximum extent lawful, Guarantor waives all Rights by which it might be entitled to require suit on an accrued right of action in respect of any Guaranteed Debt or require suit against Borrower or others. 11. LOAN DOCUMENTS. By execution hereof, Guarantor covenants and agrees that all representations, warranties, terms, covenants, and conditions set forth in the Credit Agreement which state that they apply to Guarantor are applicable to Guarantor and shall be imposed upon Guarantor, and Guarantor reaffirms that each such representation and warranty is true and correct in all material respects and covenants and agrees to promptly and properly perform, observe, and comply in all material respects with each such term, covenant, or condition. Guarantor acknowledges and agrees that this Guaranty is subject to the offset provisions of Section 3.14 of the Credit Agreement in favor of Administrative Agent and Lenders. In the event the Credit Agreement or any other Loan Document shall cease to remain in effect for any reason whatsoever during any period when any part of the Guaranteed Debt remains unpaid, the terms, covenants, and agreements of the Credit Agreement or such other Loan Document incorporated herein by reference shall nevertheless continue in full force and effect as obligations of Guarantor under this Guaranty. 12. RELIANCE AND DUTY TO REMAIN INFORMED. Guarantor confirms that it has executed and delivered this Guaranty after reviewing the terms and conditions of the Loan Documents and such other information as it has deemed appropriate in order to make its own credit analysis and decision to execute and deliver this Guaranty. Guarantor confirms that it has made its own independent investigation with respect to Borrower's creditworthiness and is not executing and delivering this Guaranty in reliance on any representation or warranty by Administrative Agent or any Lender as to that creditworthiness. Guarantor expressly assumes all responsibilities to remain informed of the financial condition of Borrower and any circumstances affecting Borrower's ability to perform under the Loan Documents to which it is a party. 13. NO REDUCTION. The Guaranteed Debt may not be reduced, discharged, or released because or by reason of any existing or future offset, claim, or defense (except for the defense of complete and final payment of the Guaranteed Debt) of Borrower or any other obligor against Administrative Agent or any Lender or against payment of the Guaranteed Debt, whether that offset, claim, or defense arises in connection with the Guaranteed Debt or otherwise. Those claims and defenses include, without limitation, failure of consideration, C-5 breach of warranty, bankruptcy, incapacity/infancy, statute of limitations, lender liability, accord and satisfaction, usury, forged signatures, mistake, impossibility, frustration of purpose, and unconscionability. 14. INSOLVENCY OF GUARANTOR. Should Guarantor become insolvent, or fail to pay Guarantor's debts generally as they become due, or voluntarily seek, consent to, or acquiesce in, the benefit or benefits of any Debtor Relief Law (other than as a creditor or claimant), or become a party to (or be made the subject of) any proceeding provided for by any Debtor Relief Law (other than as a creditor or claimant) that could suspend or otherwise adversely affect the Rights of Administrative Agent or any Lender granted hereunder, then, in any such event, the Guaranteed Debt shall be, as among Guarantor, Administrative Agent and Lenders, a fully matured, due, and payable obligation of Guarantor to Administrative Agent and Lenders (without regard to whether Borrower is then in default under the Loan Documents or whether the Obligation, or any part thereof, is then due and owing by Borrower to any Lender), payable in full by Guarantor to Lenders upon demand, and the amount thereof so payable shall be the estimated amount owing in respect of the contingent claim created hereunder. 15. LOAN DOCUMENT. This Guaranty is a Loan Document and is subject to the applicable provisions of Articles 1 and 14 of the Credit Agreement, including, without limitation, the provisions relating to GOVERNING LAW, JURISDICTION, VENUE AND SERVICE OF PROCESS, all of which are incorporated into this Guaranty by reference the same as if set forth in this Guaranty verbatim. 16. NOTICES. For purposes of SECTION 14.3 of the Credit Agreement, Guarantor's address and telecopy number are as set forth next to Guarantor's signature on the signature page hereof. 17. AMENDMENTS, ETC. No amendment, waiver, or discharge to or under this Guaranty is valid unless it is in writing and is signed by the party against whom it is sought to be enforced and is otherwise in conformity with the requirements of SECTION 14.11 of the Credit Agreement. 18. ADMINISTRATIVE AGENT AND LENDERS. Administrative Agent is Administrative Agent for each Lender under the Credit Agreement. All Rights granted to Administrative Agent under or in connection with this Guaranty are for each Lender's ratable benefit. Administrative Agent may, without the joinder of any Lender, exercise any Rights in Administrative Agent's or Lenders' favor under or in connection with this Guaranty. Administrative Agent's and each Lender's Rights and obligations vis-a-vis each other may be subject to one or more separate agreements between those parties. However, Guarantor is not required to inquire about any such agreement or is subject to any terms of it unless Guarantor specifically joins such agreement. Therefore, neither Guarantor nor its successors or assigns is entitled to any benefits or provisions of any such separate agreement or is entitled to rely upon or raise as a defense any party's failure or refusal to comply with the provisions of such agreement. C-6 19. PARTIES. This Guaranty benefits Administrative Agent, Lenders, and their respective successors and assigns and binds Guarantor and its successors and assigns. Upon appointment of any successor Administrative Agent under the Credit Agreement, all of the Rights of Administrative Agent under this Guaranty automatically vest in that new Administrative Agent as successor Administrative Agent on behalf of Lenders without any further act, deed, conveyance, or other formality other than that appointment. The Rights of Administrative Agent and Lenders under this Guaranty may be transferred with any assignment of the Guaranteed Debt. The Credit Agreement contains provisions governing assignments of the Guaranteed Debt and of Rights and obligations under this Guaranty. 20. NO GENERAL PARTNERS' LIABILITY. By their acceptance of this Guaranty, the Administrative Agent and the Lenders agree for themselves and their respective successors, participants and assigns, including any subsequent holder of any Note, that any claim against Guarantor which may arise under this Guaranty shall be made only against and shall be limited to the assets of Guarantor, and that no judgment, order or execution entered in any suit, action or proceeding, whether legal or equitable, on this Guaranty shall be obtained or enforced against any general partner of Guarantor (individually, a "GENERAL PARTNER", and collectively, "GENERAL PARTNERS") or its or their assets for the purpose of obtaining satisfaction and payment of this Guaranty, the Guaranteed Debt, any other Obligation or any claims arising hereunder, any right to proceed against the General Partners individually or their respective representatives or assets being hereby expressly waived, renounced and remitted by the Administrative Agent and the Lenders for themselves and their respective successors, participants and assigns. Nothing in this Section 20, however, shall be construed so as to prevent the Administrative Agent, any Lender or any other holder of any Note from commencing any action, suit or proceeding with respect to or causing legal papers to be served upon any General Partner for the purpose of obtaining jurisdiction over Guarantor. REMAINDER OF PAGE INTENTIONALLY BLANK. SIGNATURE PAGE TO FOLLOW. C-7 EXECUTED as of the date first stated in this Guaranty. Address: NORTHERN BORDER INTERMEDIATE LIMITED PARTNERSHIP Northern Border Intermediate Partnership GUARANTOR: 1400 Smith Street Houston, TX 77002 Attn: Angus Hardie Davis By: ____________________________________ NBP Services Corporation Name: ______________________________ Telephone: 713/853-6941 Title: _____________________________ Facsimile: 713/646-4970
with a copy to: Mr. Jerry L. Peters Chief Financial and Accounting Officer Northern Border Partners, L.P. 1111 South 103rd Street Omaha, NE 68124-1000 Telephone: 402/398-7722 Telecopy: 402/398-7803 and with a copy to: Ms. Janet Place Vice President and General Counsel Northern Plains Natural Gas Company 1111 South 103rd Street Omaha, NE 68124-1000 Telephone: 402/398-7886 Facsimile: 402/398-7780 C-8 EXHIBIT D FORM OF COMPLIANCE CERTIFICATE (Northern Border Partners, L.P.) FOR ________ ENDED __________________, DATE: ________________________, ADMINISTRATIVE AGENT: SUNTRUST BANK BORROWER: NORTHERN BORDER PARTNERS, L.P. This certificate is delivered under the Revolving Credit Agreement, dated as of March 21, 2001 (as amended, modified, supplemented, or restated from time to time, the "CREDIT AGREEMENT"), among Borrower, Administrative Agent, and Lenders party thereto. Capitalized terms used herein and not otherwise defined herein shall have the meaning given to such terms in the Credit Agreement. I certify to Lenders that: (a) I am a Responsible Officer in the position(s) set forth under my signature below; (b) the Financial Statements of the Loan Parties, and their respective Subsidiaries, as applicable (the "REPORTING ENTITIES"), attached to this certificate were prepared in accordance with GAAP, and present fairly in all material respects the consolidated financial condition and results of operations of the Reporting Entities as of, and for the (three, six, or nine months, or fiscal year) ended on, __________________ (the "SUBJECT PERIOD") (subject only to normal year-end audit adjustments); (c) a review of the activities of the Reporting Entities during the Subject Period has been made under my supervision with a view to determining whether, during the Subject Period, the Loan Parties have fulfilled their respective obligations under the Loan Documents, and during the Subject Period, (i) the Loan Parties have observed or performed all of the covenants and conditions of the Loan Documents (except for the deviations, if any, set forth on ANNEX A to this certificate) in all material respects, (ii) no Default (nor any Potential Default) has occurred and is continuing (except the Defaults or Potential Defaults, if any, described on ANNEX A to this Certificate) and (iii) the representations and warranties of Borrower contained in SECTION 8 of the Agreement are true and correct in all material respects as though made on and as of the date hereof (except such representations and warranties which expressly refer to an earlier date, which are true and correct in all material respects as of such earlier date); and D-1 (d) the status of compliance by the Loan Parties with Sections 10.13 and 10.14 of the Credit Agreement at the end of the Subject Period is as set forth on ANNEX B to this certificate. By: ------------------------------------ Name: ------------------------------ Title: ------------------------------ D-2 ANNEX A TO COMPLIANCE CERTIFICATE DEVIATIONS FROM LOAN DOCUMENTS/ DEFAULTS OR POTENTIAL DEFAULTS ANNEX B TO COMPLIANCE CERTIFICATE Status of Compliance with SECTIONS 10.13 AND 10.14 of the Credit Agreement SECTION 10.13 - INTEREST COVERAGE RATIO SECTION 10.14 - CONSOLIDATED LEVERAGE RATIO EXHIBIT E FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT Reference is made to the Revolving Credit Agreement dated as of March 21, 2001 (as amended, modified, supplemented, or restated to the Effective Date, the "CREDIT AGREEMENT") among Northern Border Partners, L.P., a Delaware limited partnership ("BORROWER"), SunTrust Bank, as Administrative Agent for Lenders ("ADMINISTRATIVE AGENT"), and Lenders party thereto. Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Credit Agreement. "ASSIGNOR" and "ASSIGNEE" referred to on SCHEDULE 1 agree as follows: 1. Assignor hereby sells and assigns to Assignee, without recourse and without representation or warranty except as expressly set forth herein, and Assignee hereby purchases and assumes from Assignor, an interest in and to Assignor's Rights and obligations under the Credit Agreement and the related Loan Documents as of the Effective Date equal to the percentage interest specified on SCHEDULE 1 of all outstanding Rights and obligations with respect to the Facilities under the Credit Agreement as set forth on SCHEDULE 1 (the "ASSIGNED FACILITY"). After giving effect to such sale and assignment, Assignor's and Assignee's Committed Sum under the Facility under the Credit Agreement will be as set forth on SCHEDULE 1. 2. Assignor (a) represents and warrants that it is the legal and beneficial owner of the interest being assigned by it hereunder and that such interest is free and clear of any adverse claim; (b) makes no representation or warranty and assumes no responsibility with respect to any statements, warranties, or representations made in or in connection with the Loan Documents or the execution, legality, validity, enforceability, genuineness, sufficiency, or value of the Loan Documents or any other instrument or document furnished pursuant thereto; (c) makes no representation or warranty and assumes no responsibility with respect to the financial condition of any party to any Loan Document or the performance or observance by any such party of any of its obligations under the Loan Documents or any other instrument or document furnished pursuant thereto; and (d) attaches the Notes held by Assignor (to the extent any of the Principal Debt being assigned and owed to Assignor is evidenced by Notes) and requests that Administrative Agent exchange such Notes for new Notes if so requested by either Assignor or Assignee. Any such new Notes shall be prepared in accordance with the provisions of SECTION 3.1(b) of the Credit Agreement and will reflect the respective Committed Sums or Principal Debt of Assignee and Assignor after giving effect to this Assignment and Acceptance Agreement. 3. Assignee (a) represents and warrants that it is legally authorized to enter into this Assignment and Acceptance Agreement; (b) confirms that it has received a copy of the Credit Agreement, together with copies of the Current Financials and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment and Acceptance Agreement; (c) agrees that it will, independently and without reliance upon Administrative Agent, Assignor, or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own E-1 credit decisions in taking or not taking action under the Credit Agreement; (d) confirms that it is an Eligible Assignee; (e) appoints and authorizes Administrative Agent to take such action as Administrative Agent on its behalf and to exercise such powers and discretion under the Credit Agreement as are delegated to Administrative Agent by the terms thereof, together with such powers and discretion as are reasonably incidental thereto; (f) agrees that it will perform in accordance with their terms all of the obligations that by the terms of the Credit Agreement are required to be performed by it as a Lender; and (g) attaches any U.S. Internal Revenue Service or other forms required under SECTION 4.6(d) of the Credit Agreement. 4. Following the execution of this Assignment and Acceptance Agreement by Assignor, Assignee, and Borrower (to the extent required hereunder), it will be delivered to Administrative Agent for acceptance and recording by Administrative Agent pursuant to the Credit Agreement. The effective date for this Assignment and Acceptance Agreement shall be the date described on SCHEDULE 1 (the "EFFECTIVE DATE"), which shall not, unless otherwise agreed to by Administrative Agent, be earlier than five Business Days from the date of such acceptance and recording by Administrative Agent. 5. Upon such acceptance and recording by Administrative Agent, as of the Effective Date, (a) Assignee shall be a party to the Credit Agreement and, to the extent provided in this Assignment and Acceptance Agreement, have the Rights and obligations of a Lender thereunder, and (b) Assignor shall, to the extent provided in this Assignment and Acceptance Agreement, relinquish its Rights and be released from its obligations under the Agreement. 6. Upon such acceptance and recording by Administrative Agent, from and after the Effective Date, Administrative Agent shall make all payments under the Credit Agreement, the Notes (to the extent any of the Principal Debt owed to Assignee is evidenced by Notes), and loan accounts in respect of the interest assigned hereby (including, without limitation, all payments of principal, interest, and facility fees and other fees with respect thereto) to Assignee. Assignor and Assignee shall make all appropriate adjustments in payments under the Credit Agreement and the other Loan Documents for periods prior to the Effective Date directly between themselves. 7. Unless Assignee is a Lender or an Affiliate of a Lender or unless a Default or Potential Default then exists, this Assignment and Acceptance Agreement is conditioned upon the consent of Borrower and Administrative Agent pursuant to the definition of "Eligible Assignee" in the Credit Agreement. The execution and delivery of this Assignment and Acceptance Agreement by Borrower and Administrative Agent is evidence of this consent. 8. As contemplated by SECTION 14.13(b)(iii) of the Credit Agreement, Assignor or Assignee (as determined between Assignor and Assignee) agrees to pay to Administrative Agent for its account on the Effective Date in federal funds a processing fee of $1,500. 9. THIS ASSIGNMENT AND ACCEPTANCE AGREEMENT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS. E-2 10. This Assignment and Acceptance Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of SCHEDULE 1 to this Assignment and Acceptance Agreement by telecopier shall be effective as delivery of a manually executed counterpart of this Assignment and Acceptance Agreement. IN WITNESS WHEREOF, Assignor and Assignee have caused SCHEDULE 1 to this Assignment and Acceptance Agreement to be executed by their officers thereunto duly authorized as of the date specified thereon. E-3 EFFECTIVE DATE OF ASSIGNMENT: *_________________, ______ * This date should be no earlier than five Business Days after the delivery of this Assignment and Acceptance Agreement to Administrative Agent. [NAME OF ASSIGNOR], as Assignor By: ------------------------------------ Name: ------------------------------ Title: ------------------------------ Date: ---------------------------------- Address for Notice: -------------------- Attn: ---------------------------------- Telephone: ----------------------------- Telecopier: ---------------------------- [NAME OF ASSIGNEE], as Assignee By: ------------------------------------ Name: ------------------------------ Title: ------------------------------ Date: ---------------------------------- Address for Notice: -------------------- Attn: ---------------------------------- Telephone: ----------------------------- Telecopier: ---------------------------- E-4 If SECTION 14.13(b) and the definition of "Eligible Assignee" of the Credit Agreement so require, Borrower and Administrative Agent consent to this Assignment and Acceptance Agreement. NORTHERN BORDER PARTNERS, L.P. By: ------------------------------------ Name: ------------------------------ Title: ------------------------------ Date: ---------------------------------- SUNTRUST BANK as Administrative Agent By: ------------------------------------ Name: ------------------------------ Title: ------------------------------ Dated: --------------------------------- E-5 SCHEDULE 1 TO ASSIGNMENT AND ACCEPTANCE AGREEMENT
- ------------------------------------------------------------------------------------------------------------------- ASSIGNED FACILITY COMMITTED SUM OR PRINCIPAL DEBT COMMITMENT PERCENTAGE ASSIGNED (AS APPLICABLE) (I.E. THE PROPORTION THAT ASSIGNEE'S COMMITTED SUM FOR THE ASSIGNED FACILITY BEARS TO THE AGGREGATE COMMITTED SUM OF ALL LENDERS AFTER GIVING EFFECT TO THE ASSIGNMENT) (SET FORTH TO AT LEAST 8 DECIMAL POINTS) REVOLVER FACILITY - -------------------------------------------------------------------------------------------------------------------
EXHIBIT F-1 FORM OF LEGAL OPINION OF VINSON & ELKINS L.L.P. March 21, 2001 SunTrust Bank 303 Peachtree Street, N.S. 3rd Floor, Mail Code 1929 Atlanta, Georgia 30308 Ladies and Gentlemen: We have acted as special counsel for Northern Border Partners, L.P., a Delaware limited partnership ("BORROWER"), and Northern Border Intermediate Limited Partnership, a Delaware limited partnership ("INTERMEDIATE PARTNERSHIP"), in connection with the transactions contemplated by that certain Revolving Credit Agreement dated as of March 21, 2001 among Borrower, SunTrust Bank, as Lender, and SunTrust Bank, as Administrative Agent (the "CREDIT AGREEMENT"). This opinion letter is being rendered pursuant to Section 7.1 of the Credit Agreement. Capitalized terms used herein and not otherwise defined herein shall have the same meanings herein as ascribed thereto in the Credit Agreement. In rendering the opinions set forth below, we have reviewed an execution copy of the following documents and instruments: (i) Revolving Credit Agreement; (ii) the Note in the original principal amount of $200,000,000, dated March 21, 2001, executed by Borrower and payable to SunTrust Bank; and (iii) the Guaranty, dated as of March 21, 2001, executed by Intermediate Partnership. The documents listed in clauses (i) through (iii) above are referred to herein as the "TRANSACTION DOCUMENTS." As to any facts material to our opinions, we have made no independent investigation of such facts and have relied, to the extent that we deem such reliance proper, upon statements of public officials and officers or other representatives of Borrower and Intermediate Partnership and on the representations and warranties set forth in the Transaction Documents. We have also relied upon the matters contained in those certain opinion letters to you of even date herewith rendered by counsel to Borrower, Intermediate Partnership and the General Partners. F-1-1 In rendering the opinions expressed below, we have assumed the legal capacity of all natural persons, the genuineness of all signatures, the authenticity of all documents submitted to us as originals, and the conformity to authentic original documents of all documents submitted to us as copies. In addition, we have assumed that: (i) each of parties to the Transaction Documents (collectively, the "TRANSACTION PARTIES") is a corporation or other entity duly organized and validly existing under the laws of the jurisdiction of its organization; (ii) each Transaction Party has full power and authority (corporate and otherwise) to execute, deliver and perform the Transaction Documents to which it is a party; (iii) the execution, delivery and performance by each Transaction Party of the Transaction Documents to which it is a party have been duly authorized by all necessary action (corporate and otherwise) and do not (A) contravene the bylaws or other constituent documents of such Transaction Party, (B) conflict with or result in the breach of any document or instrument binding on such Transaction Party, or (C) violate or require any governmental or regulatory authorization or other action under any law, rule or regulation, order, writ, judgment, injunction, decree, determination or award applicable to such Transaction Party other than, in the case of Borrower and Intermediate Partnership, Applicable Laws (as defined in paragraph 2 below); (iv) except as set forth in paragraph 3 below, no authorization approval, consent or other action by, and no notice to or filing with, any governmental authority or regulatory body or any other third party is required for the due execution, delivery of performance by any of the Transaction Parties of any Transaction Document to which it is a party that has not been duly obtained or made and that is not in full force and effect; and (v) each of the Transaction Documents constitutes valid, binding and enforceable obligations of the Transaction Parties (other than Borrower and Intermediate Partnership) and that the laws of any jurisdiction other than the jurisdictions that are the subject of this opinion letter do not affect the terms of the Transaction Documents. Based upon the foregoing, and subject to the assumptions, qualifications, exceptions and limitations set forth herein, it is our opinion that: 1. The Credit Agreement and the Note constitute the valid and binding obligations of Borrower, enforceable against Borrower in accordance with their terms, and the Guaranty constitutes the valid and binding obligations of Intermediate Partnership, enforceable against Intermediate Partnership in accordance with its terms. 2. The execution and delivery by Borrower and Intermediate Partnership of each of the Transaction Documents to which it is a party do not, and the performance by Borrower and Intermediate Partnership of their respective obligations thereunder will not, result in any violation by Borrower or Intermediate Partnership of any Applicable Law (as defined below). "Applicable Laws" means those laws, rules and regulations of the State of New York and the United States of America and the rules and regulations adopted thereunder, which, in our experience, are normally applicable to transactions of the type contemplated by the Transaction Documents. Furthermore, the term "Applicable Laws" does not include, and we express no opinion with regard to (a) any New York or federal law, rule or regulation relating to (i) pollution or protection of the environment, (ii) zoning, land use, building or construction, (iii) occupational, safety and health or other similar matters or (iv) labor, employee rights and benefits, including the Employment Retirement Income Security Act of 1974, as amended, (b) the regulation of utilities or regulated interstate pipelines (other F-1-2 than with respect to the Public Utility Holding Company Act of 1935), (c) antitrust and trade regulation laws, (d) tax laws, rules or regulations and (e) state or federal securities laws. 3. No Governmental Approval (as defined below) which has not been obtained or taken and is not in full force and effect, is required to be obtained or taken by Borrower or Intermediate Partnership to authorize or is required in connection with the execution, delivery or performance of any of the Transaction Documents by Borrower or Intermediate Partnership. "Governmental Approvals" means any consent, approval, license, authorization or validation of, or filing, recording or registration with, any Governmental Authority pursuant to any Applicable Laws (as defined in paragraph 2 above). 4. Neither Borrower nor Intermediate Partnership is an "investment company" or a company "controlled" by an "investment company" within the meaning of the Investment Company Act of 1940, as amended. The opinions set forth above are subject to the following qualifications and exceptions: (a) With respect to our opinion set forth in paragraph 1 above, we express no opinion with respect to the validity or enforceability of the following provisions to the extent that they are contained in the Transaction Documents: (i) provisions releasing, exculpating or exempting a party from, or requiring indemnification or contribution of a party for, liability for its own negligence or to the extent that the same are inconsistent with the public policy underlying any law, rule or regulation; (ii) provisions restricting access to courts or purporting to affect the jurisdiction or venue of courts (other than the courts of the State of New York with respect to Transaction Documents governed by the laws of the State of New York); (iii) provisions stating that a guarantee will not be affected by a modification of the obligation guaranteed in cases in which that modification materially changes the nature or amount of such obligation; (iv) provisions setting out methods or procedures for service of process; (v) provisions purporting to waive, subordinate or not give effect to rights to notice, demands, legal defenses or other rights or benefits that cannot be waived, subordinated or rendered ineffective under applicable law; (vi) provisions relating to powers of attorney, severability or set-offs; and (vii) provisions providing that decisions by a party are conclusive or may be made in its sole discretion. In addition, we express no opinion as to the creation or perfection of the security interest in and to the Letter of Credit Cash Collateral Account granted to the Administrative Agent by Borrower pursuant to Section 2.2(h)(i) of the Credit Agreement. (b) The enforceability of each Transaction Document and the provisions thereof may be limited by bankruptcy, insolvency, reorganization, fraudulent transfer, moratorium or other laws now or hereinafter in effect relating to or affecting enforcement of creditors' rights generally and by general principles of equity (including without limitation, concepts of materiality, reasonableness, good faith and fair dealing), regardless of whether such enforcement is considered in a proceeding in equity or at law. F-1-3 We express no opinion as to the laws of any jurisdiction other than: (i) the laws of the State of New York (except as limited in the definition of "Applicable Laws" set forth in paragraph 2 above), and (ii) the federal laws of the United States of America (except as limited in the definition of "Applicable Laws" set forth in paragraph 2 above). This opinion letter is rendered as of the date set forth above and we expressly disclaim any obligation to update this letter after the date hereof. This opinion letter is given solely for your benefit in connection with the transactions contemplated by the Transaction Documents and may not be relied upon or furnished by any person other than you and for persons who become Lenders after the date hereof in accordance with Section 14.13 of the Credit Agreement or for any other purpose without our prior written consent. Very truly yours, VINSON & ELKINS L.L.P. F-1-4 EXHIBIT F-2 FORM OF OPINION OF GENERAL COUNSEL TO NORTHERN PLAINS NATURAL GAS COMPANY March 21, 2001 To each of the Lenders party to the Credit Agreement referred to below, and SunTrust Bank, as Administrative Agent Re: Northern Border Partners, L.P. Gentlemen: This opinion is furnished to you pursuant to Section 7.1 of the Credit Agreement dated as of March 21, 2001 (the "CREDIT AGREEMENT") among Northern Border Partners L.P., a Delaware limited partnership, as Borrower (the "BORROWER"), the Lenders (defined therein), and SunTrust Bank, as Administrative Agent (in such capacity, the "ADMINISTRATIVE AGENT"). Terms defined in the Credit Agreement not otherwise defined herein are used herein as therein defined. I am Vice President and General Counsel of Northern Plains Natural Gas Company, a general partner of the Borrower ("GENERAL PARTNER"), and in such capacity am familiar with the negotiation, preparation, execution and delivery of the Loan Documents. I am qualified to practice law in the state of Nebraska and do not hold myself out as an expert on, or express any opinion concerning, the laws of any jurisdiction other than the Delaware Revised Uniform Limited Partnership Act ("DRULPA") and the Delaware General Corporation Act ("DGCA"), as set forth in unofficial compilations thereof insofar as the same relate to the due authorization, qualification and power of limited partnerships or corporations, as the case may be, organized in such state, the laws of the state of Nebraska and applicable federal law of the United States of America, in such case as in effect on the date hereof. In that connection, I have examined the Loan Documents and the documents furnished pursuant to Article 7 of the Credit Agreement. I have also examined the originals, or copies certified to my satisfaction, of such other partnership records of the Borrower and the Intermediate Partnership, certificates of public officials and of authorized representatives of the Borrower and the Intermediate Partnership, and such other agreements, instruments and documents, as I have deemed necessary as a basis for the opinions hereinafter expressed. As to questions of fact material to such opinions, I have relied upon certificates of authorized representatives of the Borrower and the Intermediate Partnership or of public officials. In rendering my opinions, I have assumed the due execution and delivery, pursuant to the due authorization, of the Loan Documents by each party thereto other than the Borrower and the F-2-1 Intermediate Partnership, and that the Loan Documents constitute valid and binding agreements of such other parties. Based upon the foregoing and upon the investigation described above, I am of the opinion that: 1. Each of the Borrower and the Intermediate Partnership is a limited partnership duly existing under the DRULPA. Each of the Partnership Agreement and the Intermediate Partnership Agreement is in full force and effect and each of the Borrower and the Intermediate Partnership has full partnership power and authority under its respective partnership agreement and the DRULPA to own its property and to conduct the business in which it is currently engaged and execute and deliver, and to perform its obligations, if any, under each of the Loan Documents to which it is a party. Each of the Borrower and the Intermediate Partnership is duly authorized to do business wherever the nature of its properties or its activities requires such authorization except where failure to have such authorization would not be or result in a Material Adverse Event. 2. The General Partner is a corporation duly incorporated, validly existing and in good standing under the DGCA. The General Partner is duly authorized to do business wherever the nature of its properties or its activities requires such authorization except where failure to have such authorization would not be or result in a Material Adverse Event. The General Partner has full corporate power and authority to own its property and to conduct the business in which it is currently engaged. 3. The Credit Agreement and the Notes have been duly executed and delivered by the Borrower. The Guaranty has been duly executed and delivered by the Intermediate Partnership. 4. The execution, delivery and performance by each of the Borrower and the Intermediate Partnership of each of the Loan Documents to which it is a party are within its partnership powers, have been duly authorized by all necessary partnership action and do not and will not: (i) result in a breach of or constitute a default under any of the following: (A) its respective Partnership agreement or any agreement known to me of the Borrower and the Intermediate Partnership or among the General Partners which governs the management or operations of the Borrower and the Intermediate Partnership, (B) any indenture or loan or credit agreement known to me to which the Borrower or the Intermediate Partnership is a party or by which it or any of its property or assets is bound, or (C) any other agreement, lease or instrument known to me to which the Borrower or the Intermediate Partnership is a party or by which it or any of its property or assets is bound and which is material to the Borrower or the Intermediate Partnership, or (ii) violate any provision of any law, rule or regulation, or, to the best of my knowledge, any order, writ judgment, injunction, decree, determination or award binding on the Borrower or the Intermediate Partnership or any of its property or assets, or (iii) result in or require, under any document referred to above in clause (i), the creation or imposition of any F-2-2 Lien upon or with respect to any of the properties or assets now owned or hereafter acquired by the Borrower or the Intermediate Partnership. 5. Each of the Borrower and the Intermediate Partnership has obtained all material government approvals which are required for its due execution, delivery and performance of the Loan Documents to which it is a party. 6. There is no pending or, to my knowledge, threatened action or proceeding to which the Borrower, the Intermediate Partnership or the General Partner is or would become a party before any court, governmental agency or arbitrator which could reasonably be expected to be or result in any Material Adverse Event. 7. None of the Borrower, the Intermediate Partnership or the General Partner are subject to, or they are exempt from, regulation as a "holding company" or a "subsidiary company" of a "holding company," or an "affiliate" of a "holding company" or of a "subsidiary company" of a "holding company" within the meaning of the Public Utility Holding Company Act of 1935, as amended ("PUHCA"). 8. If all material facts and issues of law were presented and properly argued, a court applying the laws of the State of Nebraska would decide, as a matter of conflicts of laws, to give effect to the governing law provision contained in Section 14.7 of the Credit Agreement and Section 15 of the Guaranty. Very truly yours, Janet K. Place Vice President & General Counsel NORTHERN PLAINS NATURAL GAS COMPANY F-2-3 EXHIBIT F-3 FORM OF OPINION OF COUNSEL TO PAN BORDER March 21, 2001 To each of the Lenders party to the Credit Agreement referred to below, and SunTrust Bank, as Administrative Agent, Re: Northern Border Partners, L.P. Gentlemen: This opinion is furnished to you pursuant to Section 7.1 of the Credit Agreement dated as of March 21, 2001 (the "CREDIT AGREEMENT") among Northern Border Partners, L.P., a Delaware limited partnership, as Borrower (the "BORROWER"), the Lenders (defined therein), and SunTrust Bank, as Administrative Agent (in such capacity, the "ADMINISTRATIVE AGENT"). Terms defined in the Credit Agreement not otherwise defined herein are used herein as therein defined. I am Vice President and General Counsel of Pan Border Gas Company, a general partner of the Borrower ("GENERAL PARTNER"), and in such capacity am familiar with the negotiation, preparation, execution and delivery of the Loan Documents. I am qualified to practice law in the state of Nebraska and do not hold myself out as an expert on, or express any opinion concerning, the laws of any jurisdiction other than the Delaware General Corporation Act ("DGCA"), as set forth in unofficial compilations thereof insofar as the same relate to the due authorization, qualification and power of corporations organized in such state, the laws of the state of Nebraska and applicable federal law of the United States, in each case as in effect on the date hereof. In that connection, I have examined the Loan Documents. I have also examined the originals, or copies certified to my satisfaction, of such other corporate records of the General Partner, certificates of public officials and of authorized representatives of the General Partner, and such other agreements, instruments and documents, as I have deemed necessary as a basis for the opinions hereinafter expressed. As to questions of fact material to such opinions, I have relied upon certificates of authorized representatives of the General Partner or of public officials. In rendering my opinions, I have assumed the due execution and delivery, pursuant to the due authorization, of the Loan Documents by each party thereto other than the General Partner, and that each of the Loan Documents constitutes a valid and binding agreement of such other parties. Based upon the foregoing and upon the investigation described above, I am of the opinion that: F-3-1 1. The General Partner is a corporation duly incorporated, validly existing and in good standing under the DGCA, and has full power and authority under its certificate of incorporation and By-laws to own its property and to conduct the business in which it is currently engaged. The General Partner is duly authorized to do business wherever the nature of its properties or its activities requires such authorization except where failure to have such authorization would not have be or result in a Material Adverse Event. 2. There is no pending or, to my knowledge, threatened action or proceeding to which the General Partner is or would become a party before any court, governmental agency or arbitrator which could reasonably be expected to be or result in a Material Adverse Event. 3. The General Partner is not subject to, or is exempt from, regulation as a "holding company" or a "subsidiary company" of a "holding company," or an "affiliate" of a "holding company" or of a "subsidiary company" of a "holding company," within the meaning of the Public Utility Holding Company Act of 1935, as amended. Very truly yours, Janet K. Place Vice President and General Counsel Pan Border Gas Company F-3-2 EXHIBIT F-4 FORM OF OPINION OF COUNSEL TO NORTHWEST BORDER March 21, 2001 To each of the Lenders party to the Credit Agreement referred to below, and SunTrust Bank, as Administrative Agent. Re: Northern Border Partners, L.P. Gentlemen: I am General Counsel of The Williams Companies, Inc. ("TWC") the ultimate parent corporation of Northwestern Border Pipeline Company, a Delaware corporation, (the "GENERAL PARTNER") and have acted as counsel to the General Partner in connection with the Credit Agreement dated as of March 21, 2001 (the "CREDIT AGREEMENT") among Northern Border Partners, L.P., a Delaware limited partnership, as Borrower (the "BORROWER"), the Lenders (defined therein) and SunTrust Bank, as Administrative Agent (in such capacity, the "ADMINISTRATIVE AGENT"). This opinion is furnished to you pursuant to Section 7.1 of the Credit Agreement. Terms defined in the Credit Agreement not otherwise defined herein are used herein as therein defined. In connection with the opinions expressed herein, I, or other attorneys reporting to me, have examined and relied upon copies of the following documents: (a) the Loan Documents; (b) TWC Secretary's Certificate attached hereto; (c) Certificate of Incorporation and By Laws of the General Partner. Those documents identified in items (a) through (c) above are collectively referred to herein as the "Transaction Documents." In connection with this opinion, I or other attorneys working under my supervision have (i) investigated such questions of law, (ii) examined such corporate documents and records of the General Partner and certificates of public officials, and (iii) received such information from officers and representatives of the General Partner and made such investigations as I or other attorneys under my supervision have deemed necessary or appropriate for the purposes of this opinion. I have not, nor have other attorneys under my supervision, conducted independent investigations or inquiries to determine the existence of matters, actions, proceedings, items, documents, facts, judgments, decrees, franchises, certificates, permits, or the like and have made no independent search of the records of any court, F-4-1 arbitrator, or Governmental Authority affecting any Person, and no inference as to my knowledge thereof shall be drawn from the fact of my representation of any party or otherwise. This opinion is governed by, and shall be interpreted in accordance with, the Legal Opinion Accord (the "ACCORD") of the American Bar Association Section of Business Law (1991). As a consequence, this opinion letter is subject to a number of qualifications, exceptions, definitions, limitations on coverage, and other limitations, in addition to those set forth herein, all as more particularly described in such Accord, and should be read in connection therewith. Based upon and subject to the foregoing and the other qualifications, limitations, and assumptions set forth below and upon such other matters as I have deemed appropriate, I am of the opinion that: 1. The General Partner is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware, and has full power and authority under its certificate of incorporation and By-laws to own its property and to conduct the business in which it is currently engaged. 2. The General Partner is duly authorized to do business wherever the nature of its properties or its activities requires such authorization and where failure to have such authorization would result in a Material Adverse Event. 3. There is no pending or, to my knowledge, threatened action or proceeding to which the General Partner is or would become a party before any court, governmental agency or arbitrator which could reasonably be expected to be or result in a Material Adverse Event. 4. The General Partner is not subject to regulation as a "holding company" or a "subsidiary company" of a "holding company", or an "affiliate" of a "holding company" or of a "subsidiary company" of a "holding company", within the meaning of the Public Utility Holding Company Act of 1935, as amended. The opinions expressed in this letter are subject to the following additional qualifications and limitations: A. My opinions in paragraphs 1 and 2 with respect to incorporation, good standing, and qualification of the General Partner is based solely on the Certificate of the TWC Secretary attesting to the existence, good standing and qualification of the General Partner. B. Qualification of any statement or opinion herein by the use of the words "to my knowledge" means that during the course of representation in connection with the transactions contemplated by the Transaction Documents, no information has come to the attention of me or other attorneys working under my supervision that would give me or such attorneys current actual knowledge of the existence of facts or matters so qualified. Neither I, nor other attorneys working under my supervision, have undertaken any investigation to determine the existence of facts, and no inference as to our knowledge thereof shall be drawn from the fact of the representation by me or attorneys reporting to me of any party or otherwise. F-4-2 I am qualified to practice law in the States of New York and Oklahoma and do not hold myself out as an expert on, or express any opinion herein concerning, the laws of any jurisdiction other than the Delaware Revised Uniform Limited Partnership Act and applicable federal law of the Unites States of America as in effect on the date hereof. This opinion letter is limited to the matters expressly set forth herein, and no opinions are intended to be implied or may be inferred beyond those expressly stated herein. These opinions are rendered as of the date hereof and are based on the facts and circumstances related to the substance of the opinions expressed herein as they exist on the date hereof, and I disclaim any undertaking to advise you of any subsequent events or circumstances that would affect the opinions herein. This opinion letter is solely for the use and benefit of Lenders and Administrative Agent in consummating the transaction contemplated by the Transaction Documents, and may not be used or relied upon by, quoted, transmitted to, or filed with any other Person or for any other purpose whatsoever without in each instance my prior written consent. Very truly yours, William G. von Glahn F-4-3 SCHEDULE 2.1 LENDERS AND COMMITMENTS
COMMITMENT LENDER COMMITMENT PERCENTAGE - --------------------- ---------------------------- --------------------- SunTrust Bank $200,000,000 100% Total $200,000,000 100.000000000%
SCHEDULE 7.1 CONDITIONS PRECEDENT TO CLOSING The Agreement and related Loan Documents shall not become effective unless Administrative Agent has received all of the following (unless otherwise indicated, all documents shall be dated as of the Closing Date, and all terms used with their initial letters capitalized are used herein with their meanings as defined in the Agreement): 1. The Agreement. The Agreement (together with all Schedules and Exhibits thereto) executed by Borrower, each Lender, and Administrative Agent. 2. Delivery of Notes. With respect to any Lender requesting a Note, the Administrative Agent shall have received, for the account of each such Lender, a Note duly executed and delivered by Borrower. 3. Guaranty. The Administrative Agent shall have received the Guaranty duly executed and delivered by Intermediate Partnership. 4. Resolutions, etc. (a) The Administrative Agent shall have received from the Secretary or an Assistant Secretary of the Administrator of each of Borrower and Intermediate Partnership a certificate, dated the Closing Date, as to: (i) copies of action taken by the Partnership Policy Committee of Borrower or Intermediate Partnership or other partnership action of Borrower or Intermediate Partnership with respect to the Agreement, the Notes, the Guaranty and any other Loan Document to be signed by Borrower or Intermediate Partnership, as the case may be; (ii) the incumbency and signatures of those of the officers of Borrower and Intermediate Partnership authorized to act with respect to the Agreement, the Notes, the Guaranty and each other Loan Document executed on behalf of Borrower or Intermediate Partnership, as the case may be; (iii) the Partnership Agreement and all amendments and supplements thereto; (iv) the Northern Border Partnership Agreement and all amendments and supplements thereto; and (v) the Intermediate Partnership Agreement and all amendments and supplements thereto. (b) The Administrative Agent shall have received from the Borrower and Intermediate Partnership certificates of appropriate public officials as to the existence and good standing of such entity in its jurisdiction of organization. (c) The Administrative Agent shall have received a certificate executed by a Responsible Officer stating that the representations and warranties contained in ARTICLE 8 are true and correct in all respects on and as of the Closing Date, and no Potential Default or Default has occurred and is continuing as of the Closing Date. 5. Financial Statements. Delivery of copies of (i) the Current Financials and (ii) the unaudited quarterly financial statements of Borrower and Guarantor for the fiscal quarter ending on September 30, 2000. 6. Opinions of Counsel. The Administrative Agent shall have received opinions, dated the date of the Closing Date and addressed to the Administrative Agent and all Lenders, from (i) Vinson & Elkins, L.L.P. counsel to Borrower and Intermediate Partnership, substantially in the form of EXHIBIT F-1 hereto; (ii) Janet Place, Vice President and General Counsel of Northern Plains Natural Gas Company, substantially in the form of Exhibit F-2 hereto; (iii) counsel for Pan Border, substantially in the form of Exhibit F-3 hereto and (iv) counsel for Northwest Border, substantially in the form of Exhibit F-4 hereto. 7. Terminating Commitments under Existing Credit Agreements. Repayment of all amounts owed under the Existing Credit Agreements and evidence satisfactory to Administrative Agent of termination of commitments to extend credit thereunder. 8. Debt Ratings. Evidence satisfactory to Administrative Agent that Borrower shall have received from Moody's and S&P investment-grade ratings for its long-term senior unsecured, non-credit enhanced debt. 9. Borrowing Notice. If applicable, a duly completed Borrowing Notice for the initial Borrowing, delivered to Administrative Agent. 10. Payment of Fees and Closing Fees. Payment of all fees payable on or prior to the Closing Date to Administrative Agent, Arranger, or any Lender, including those provided for in ARTICLE 5 of the Agreement, together with reimbursements to Administrative Agent and Arranger for all fees and expenses incurred in connection with the negotiation, preparation, and closing of the transactions evidenced by the Loan Documents (including, without limitation, attorneys' fees and expenses). 11. Other Documents. Such other agreements, documents, instruments, opinions, certificates, and evidences as Administrative Agent may reasonably request. 2 SCHEDULE 8.3 SUBSIDIARIES AND INVESTMENT INTERESTS Subsidiary of Borrower
Name of Subsidiary Percentage Owned Material Subsidiary - ------------------ ---------------- ------------------- Northern Border Intermediate Limited Partnership 99% (limited partnership interest) X
Subsidiaries of Intermediate Partnership Name of Subsidiary Percentage Owned Material Subsidiary - ------------------ ---------------- ------------------- Northern Border Pipeline Company, a Texas general partnership 70% (general partnership interest) X Crestone Energy Ventures, L.L.C., a Delaware limited liability company 100% X Black Mesa Holdings, Inc., a Delaware corporation 100% Black Mesa Pipeline Operations, L.L.C., a Delaware limited liability company 100% Black Mesa Technologies, Inc., 100% an Oklahoma corporation Black Mesa Technologies Services, L.L.C. an Oklahoma limited liability company 60% Border Midstream Services, Ltd., 100% an Alberta corporation Bison Pipeline, L.L.C., 100% a Delaware limited liability company Border Midwestern Company 100% a Delaware corporation
Name of Subsidiary Percentage Owned Material Subsidiary - ------------------ ---------------- ------------------- Subsidiaries of Black Mesa Holdings, Inc. Black Mesa Pipeline, Inc., a Delaware corporation 100%
Subsidiaries of Crestone Energy Ventures, L.L.C. Name of Subsidiary Percentage Owned Material Subsidiary - ------------------ ---------------- ------------------- Crestone Powder River, LLC, a Delaware limited liability company 100% Crestone Wind River, LLC, a Delaware limited liability company 100% Crestone Bighorn, L.L.C., 100% a Delaware limited liability company Crestone Gathering Services, L.L.C., a 100% Delaware limited liability company
Other Investments Percentage Owned - ----------------- ---------------- Bighorn Gas Gathering, L.L.C. 49% (common membership interest) 100% of Preferred A shares Fort Union Gas 33.33% Gathering, L.L.C. Lost Creek Gas 35% Gathering L.L.C. China Pipeline Holdings, Ltd. 1.95%
2 SCHEDULE 10.1 EXISTING DEBT (THOUSANDS OF DOLLARS)
Northern Border Pipeline Company 3/15/01 - -------------------------------- ------- Senior Notes - average 8.49% due from 2001-2003 $184,000 Pipeline Credit Agreement Term Loan Due 2002 $424,000 Five-Year Revolving Credit Agreement $ 62,000 Senior Notes - 7.75% Due 2009 $200,000 -------- $870,000 Black Mesa Holdings, Inc. and Black Mesa Pipeline, Inc. - ------------------------------------------------------- 10.7% Note Agreement, due quarterly to 2004 $ 13,078 Northern Border Partners, L.P. - ------------------------------ Note Payable $ 523 Senior Notes - 8.875% due 2010 $250,000 2001 Senior Notes - 7.10% due 2011 $225,000 Lost Creek Construction Guarantee $ 23,100 -------- $498,623
SCHEDULE 14.3 ADDRESSES FOR NOTICES ADMINISTRATIVE AGENT Notices (other than Requests for Extensions of Credit): Sun Trust Bank, Inc. 303 Peachtree Street, N.E. 3rd Floor, Mail Code 1929 Atlanta, Georgia 30308 Attn: Steve Newby Phone: 404-658-4916 Fax: 404-827-6270 Requests for Extensions of Credit (Borrowings and LCs): SunTrust Bank, as Administrative Agent 303 Peachtree Street, N.E. 25th Floor Atlanta, Georgia 30308 Attn: Michael Zeiss Phone: 404-532-0432 Fax: 404-658-4906 SUNTRUST BANK as a Lender 303 Peachtree Street, N.E. 3rd Floor, Mail Code 1929 Atlanta, Georgia 30308 Attn: Steve Newby Phone: 404-658-4916 Fax: 404-827-6270 Applicable Lending Office (Base Rate Borrowings and Eurodollar Rate Borrowings): 303 Peachtree Street, N.E. 3rd Floor, Mail Code 1929 Atlanta, Georgia 30308 Attn: Michael Zeiss Phone: 404-532-0432 Fax: 404-658-4906 BANK OF AMERICA, N.A. as Co-Syndication Agent 901 Main Street, 64th Floor Dallas, TX 75202-3714 Attn: Denise Smith Phone: 214-209-1261 Fax: 214-209-1285 BANK OF MONTREAL as Co-Syndication Agent 700 Louisiana, Suite 4400 Houston. TX 77002 Attn: Cahal Carmody Phone: 713-546-9750 Fax: 713-223-4007 BANK ONE as Documentation Agent 910 Travis, 6th Floor Houston, TX 77002 5860 Attn: Dan Davis Phone: 713 751-3731 Fax: 713-751-3760 EX-10 5 exh1024.txt MATERIAL CONTRACTS EXHIBIT 10.24 PURCHASE AND SALE AGREEMENT THIS PURCHASE AND SALE AGREEMENT (this "Agreement") is made and entered into as of the 21st day of September, 2000 by and between Enron North America Corp., a Delaware corporation ("Seller"), and NBP Energy Pipelines, L.L.C., a Delaware limited liability company ("Purchaser"). RECITALS A. Seller holds, directly or beneficially, all issued and outstanding membership interests in and to Enron Midstream Services, L.L.C., a Delaware limited liability company ("EMS"), ECT Wind River, L.L.C., a Delaware limited liability company ("EWR"), and ECT Powder River, L.L.C., a Delaware limited liability company ("EPR"). EMS, EWR, and EPR are referred to herein individually as a "Transferred Company" and collectively as the "Transferred Companies." B. Subject to the remaining terms and conditions of this Agreement, Seller desires to sell and transfer (or cause to be transferred) to Purchaser, and Purchaser desires to purchase and acquire from Seller, all of the issued and outstanding membership interests in the Transferred Companies. The Membership Interests, defined below, acquired by Purchaser hereunder are collectively referred to as the "Acquired Membership Interests." NOW, THEREFORE, in consideration of the recitals and the representations, warranties and covenants set forth in this Agreement, the Parties hereby agree as follows: ARTICLE I DEFINITIONS 1.1 Defined Terms. As used in this Agreement, each of the following terms has the meaning given in this Section 1.1 or in the Section referred to below: "AAA" has the meaning specified in Section 9.9(a). "Acquired Membership Interests" has the meaning set forth in the Recitals to this Agreement. "Adjusted Purchase Price" has the meaning specified in Section 2.2. "Administrative Services Agreement" means the agreement entered into between Purchaser and Management Company at the Closing in the form attached hereto as Exhibit B. "Affiliate" means, with respect to any Person, each other Person that directly or indirectly (through one or more intermediaries or otherwise) controls, is controlled by or is under common control with such Person, but Seller and its Affiliates (other than Northern Border Partners, L.P. and its subsidiaries, including Purchaser) shall not be considered Affiliates of Purchaser, and Northern Border Partners, L.P. and its subsidiaries (including Purchaser) shall not be considered Affiliates of Seller. The term "control" (including the terms "controlled by" and "under common control with") means the possession, directly or indirectly, of the actual power Purchase and Sale Agreement Page 1 to direct the management or policies of a Person, whether through the ownership of stock, by contract or otherwise. "Agreement" means this Purchase and Sale Agreement, as amended, supplemented or modified from time to time. "Assumed Obligations" means all of Seller's obligations and liabilities under the Fort Union Consent to Assignment, the Firm Gas Gathering Agreements and the NCO Agreements relating to periods of time from and after the Closing Date. "Audit Committee Approval" means the special approval of the audit committee of Northern Border Partners, L.P., the parent company of Purchaser, to the effect that, as of the date of such approval, the transactions contemplated by this Agreement are fair and reasonable to Purchaser. "Bighorn" means Bighorn Gas Gathering, L.L.C., a Delaware limited liability company. "Cash Disbursements" means all cash payments by Seller that are attributable to the Transferred Companies that are incurred in the ordinary course of business consistent with past practices, including expenses and capital expenditures on the EMS Gathering System, capital contributions made by EMS to Bighorn, demand payments made to Fort Union and Lost Creek, employee expenses, general and administrative expenses (excluding Enron Corp internal allocations, capital contributions made by EWR to Lost Creek from the Reserve Account, and cash paid by Seller for activities related to the role of Lost Creek construction manager). "Cash Receipts" means all cash received by Seller that are attributable to the Transferred Companies including revenues received on the EMS Gathering System, distributions made to EMS, EPR, and EWR from Bighorn, Fort Union, and Lost Creek respectively, and interest income and principal payments received from Sapphire Bay, L.L.C. and Quantum Energy, L.L.C., but excluding any cash received by Seller from Lost Creek for activities related to the role of Lost Creek construction manager. "Claimant" has the meaning specified in Section 9.9(b). "Closing" means consummation of the purchase and sale of Acquired Membership Interests in accordance with the terms of this Agreement. "Closing Date" means September 15, 2000, or such other date as may be agreed to by Seller and Purchaser. "Closing Statement" has the meaning specified in Section 2.4. "Completed Systems" means the gathering system described in Part 4 of Schedule 3.1(n). "Covered Systems" means all computer software, computer hardware, firmware, telecommunications and other information technology systems, and equipment containing Purchase and Sale Agreement Page 2 microchips, including any third-party manufactured hardware, software or devices, owned, licensed or used by each Transferred Company, if any, in the performance and operation of its business or in connection with the provision of gathering services by a Transferred Company. "Credit Support Obligations" means the credit support and guarantee obligations described in Schedule 1.1(a). "Disclosure Schedule" means the Schedules included in the Disclosure Schedule attached hereto. "Dispute" has the meaning specified in Section 9.9(a). "Effective Date" means 7:00 a.m., prevailing local time in the Central time zone, on July 1, 2000. "EMS" is defined in the Recitals to this Agreement. "EMS Gathering System" means the gas gathering system of EMS as existing on the date of this Agreement located in Campbell County, Wyoming, as generally depicted on Exhibit A, including the equipment and inventory described on Exhibit A, as well as all related real property, rights of way, surface leases, contracts, contract rights and other tangible and intangible real and personal property and rights held by EMS for use in connection with such system. "Environmental Laws" means any and all laws, regulations, rules, orders, ordinances, requirements or determinations of any Governmental Authority (all as existing on or before the date of this Agreement) pertaining to health or the environment in effect in any and all jurisdictions in the State of Wyoming, including, without limitation, the Comprehensive Environmental Response, Compensation and Liabilities Act ("CERCLA"), the Resource Conservation and Recovery Act, the Clean Air Act, the Federal Water Pollution Control Act, the Toxic Substances Control Act, the Safe Drinking Water Act, the Occupational Safety and Health Act of 1970, the Hazardous Materials Transportation Act, all as they have been amended, and other federal, state and local laws whose purpose is to observe or protect the environment, health, wildlife or natural resources. "EPR" is defined in the Recitals to this Agreement. "Estimated Adjusted Purchase Price" has the meaning specified in Section 2.4. "EWR" is defined in the Recitals to this Agreement. "EWR Pledge Agreement" has the meaning specified in Schedule 3.1(d). "Existing EMS Gas Gathering Contracts" means the contracts and agreements listed in Schedule 1.1(b). "Final Settlement Date" has the meaning specified in Section 2.5. Purchase and Sale Agreement Page 3 "Financial Statements" means the unaudited financial statements of each Transferred Company as of, and for the eight (8) month period ending on, August 31, 2000, as set forth in Schedule 3.1(i). "Firm Gas Gathering Agreements" means the Firm Gas Gathering Agreements described in Schedule 1.1(c). "Fort Union" means Fort Union Gas Gathering, L.L.C., a Delaware limited liability company. "Fort Union Consent to Assignment" means the Consent to Assignment, dated as of April 16, 1999, between Enron North America Corp. and BankBoston, N.A. as Administrative Agent under the Fort Union Credit Agreement. "Fort Union Credit Agreement" has the meaning specified in Schedule 1.1(a). "Fort Union Operating Agreement" means the Limited Liability Company Operating Agreement of Fort Union, as amended. "GAAP" means generally accepted accounting principles, as recognized by the U.S. Financial Accounting Standards Board (as in effect during the period covered by the Financial Statements), consistently applied. "Gathering Company" means Fort Union and Lost Creek individually and "Gathering Companies" means Fort Union and Lost Creek collectively. "Governmental Action" means any authorization, application, approval, consent, exemption, filing, license, notice, registration, permit or other requirement of, to or with any Governmental Authority. "Governmental Authority" means any national, state, county or municipal government, domestic or foreign, any agency, board, bureau, commission, court, department or other instrumentality of any such government, or any arbitrator in any case that has jurisdiction over a Transferred Company or any of its properties or assets. "Hazardous Material" means (a) any "hazardous substance," as defined by the Comprehensive Environmental Response, Compensation and Liability Act of 1980, amended; (b) any "hazardous waste" or "solid waste," in either case as defined by the Resource Conservation and Recovery Act, as amended; (c) any solid, hazardous, dangerous or toxic chemical, material, waste or substance, within the meaning of and regulated by any other Environmental Law; (d) any radioactive material, including any naturally occurring radioactive material, and any source, special or byproduct material as defined in 42 U.S.C. 2011 et seq. and any amendments or authorizations thereof; (e) any asbestos-containing materials in any form or condition; (f) any polychlorinated biphenyls in any form or condition; or (g) petroleum, petroleum hydrocarbons, or any fraction or byproducts thereof. "HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. Purchase and Sale Agreement Page 4 "I-80 Corridor" means the area in the Specified Geographical Area within 3 miles of each side of Interstate 80. "Indemnified Person" has the meaning specified in Section 6.5(a). "Indemnifying Person" has the meaning specified in Section 6.5(a). "Jurisdictional Laws" has the meaning specified in Section 3.1(m)(iii). "Knowledge," "Know" or "Known" (whether or not capitalized), with respect to a Person, means the actual knowledge of that Person and, where such Person is a business entity, means the actual knowledge of each of the officers, directors and managers of such entity. "Legal Requirement" means each of the following (as in existence on or before the date of this Agreement), any law, statute, ordinance, decree, requirement, order, treaty, proclamation, convention, rule or regulation (or interpretation of any of the foregoing) of, and the terms of any Governmental Action issued by, any Governmental Authority, including, without limitation, any applicable law, statute, ordinance, decree, requirement, order, treaty, proclamation, convention, rule or regulation (or interpretation of any of the foregoing) relating to the environment. "Liability" means any debt, obligation, duty or liability of any nature (including any undisclosed, unfixed, unliquidated, unsecured, unmatured, unaccrued, unasserted, contingent, conditional, inchoate, implied, vicarious, joint, several or secondary liability), regardless of whether such debt, obligation, duty or liability would be required to be disclosed on a balance sheet prepared in accordance with GAAP. "Lien" means any lien, mortgage, security interest, pledge, deposit, production payment, restriction, burden, encumbrance, claim, right of first refusal, rights of a vendor under any title retention or conditional sale agreement, or lease or other arrangement substantially equivalent thereto. "Loss" means any loss, damage, injury, harm, detriment, Liability, diminution in value, exposure, claim, demand, proceeding, settlement, judgment, award, punitive damage award, fine, penalty, fee, charge, cost or expense (including, without limitation, costs of attempting to avoid or in opposing the imposition thereof, interest, penalties, costs of preparation and investigation, and the fees, disbursements and expenses of attorneys, accountants and other professional advisors), as well as with respect to compliance with Legal Requirements relating to the environment, expenses of remediation and any other remedial, removal, response, abatement, cleanup, investigative, monitoring or record keeping costs and expenses. "Lost Creek" means Lost Creek Gas Gathering Company, L.L.C., a Delaware limited liability company. "Lost Creek Credit Agreement" has the meaning specified in Schedule 1.1(a). "Lost Creek Operating Agreement" means the Limited Liability Company Operating Agreement of Lost Creek. Purchase and Sale Agreement Page 5 "Management Company" means NBP Services Corporation. "Master Services Agreement" means the agreement, together with the attached Service Schedules 1 through 9, to be entered into between Seller and Purchaser at the Closing in the form attached hereto as Exhibit C. "Material" or "Materially" (whether or not capitalized) means circumstances or results having an economic effect in excess of $250,000, except as otherwise specified. "Material Adverse Effect" means: (a) when used with respect to a Transferred Company, a result or consequence that would materially adversely affect the condition (financial or otherwise), business prospects, results of operations or business of the Transferred Company, or the value of its assets or would materially impair the ability of the Transferred Company to own, hold, develop and operate its assets; (b) when used with respect to Seller, a result or consequence that would materially impair Seller's ability to perform its obligations hereunder or consummate the transactions contemplated hereby; and (c) when used with respect to Purchaser, a result or consequence that would materially adversely affect the condition (financial or otherwise), results of operations or business of Purchaser or the aggregate value of its assets, would materially impair the ability of Purchaser to own, hold, develop and operate its assets, or would impair Purchaser's ability to perform its obligations hereunder or consummate the transactions contemplated hereby. "Material Agreements" means: (a) each Firm Gas Gathering Agreement and NCO Agreement; (b) each contract or agreement (oral or written) that involves performance of services or delivery of goods or materials by a Transferred Company of an amount or value in excess of $100,000; and (c) each contract or agreement (oral or written) that involves performance of services or delivery of goods or materials to a Transferred Company of an amount or value in excess of $100,000. "Membership Interests" has the meaning (for each Transferred Company) specified in the Operating Agreement (defined below) for that Transferred Company, which includes, but is not limited to, the right to receive allocations of profits and losses, distributions of cash flow, a capital account balance and all amounts a member of that Transferred Company is entitled to receive upon liquidation of that Transferred Company, all voting and approval rights and any such other rights, all as provided for in each such Operating Agreement. "NCO Agreements" means the agreements described in Schedule 1.1(d). "Notice of Disagreement" has the meaning specified in Section 2.5. "Operating Agreements" means the Amended and Restated Limited Liability Company Agreement for each of the Transferred Companies. "Other Contracts" has the meaning specified in Section 3.1(l)(ii). "Parties" means Seller and Purchaser, collectively. "Party" means Seller or Purchaser, individually. Purchase and Sale Agreement Page 6 "Permits" shall have the meaning specified in Section 3.1(m)(ii). "Permitted Liens" means (a) Liens for Taxes, assessments or other governmental charges or levies if the same shall not at the particular time in question be due and delinquent or are being contested in good faith by appropriate proceedings; (b) Liens of carriers, warehousemen, mechanics, laborers, materialmen, landlords, vendors, workmen and operators arising by operation of law in the ordinary course of business or by a written agreement existing as of the date hereof for sums not yet due or which are being contested in good faith by appropriate proceedings; (c) Liens incurred in the ordinary course of business in connection with worker's compensation, unemployment insurance and other social security legislation; (d) Liens incurred in the ordinary course of business to secure the performance of bids, tenders, trade contracts, leases, statutory obligations, surety and appeal bonds, performance and repayment bonds and other obligations of a like nature; (e) easements, rights-of-way, restrictions, servitudes, permits, conditions, covenants, exceptions, reservations and other similar encumbrances and defects, irregularities or deficiencies in title to real or personal property, easements, rights of way, surface use agreements or other agreements granting rights in and to real property that do not adversely affect the value of the assets of a Transferred Company by an amount in excess of $100,000, in the aggregate; (f) Liens created or arising by operation of law to secure a party's obligations as a purchaser of oil and gas; and (g) all required notices to and filings with any Governmental Authority to the extent customarily made subsequent to closing. "Person" means any natural person, corporation, company, limited or general partnership, joint stock company, joint venture, association, limited liability company, trust, bank, trust company, land trust, business trust or other entity or organization, whether or not a Governmental Authority. "Purchase Price" has the meaning specified in Section 2.2. "Purchaser" has the meaning specified in the introductory paragraph of this Agreement. "Purchaser Indemnitees" has the meaning specified in Section 6.3. "Request" has the meaning specified in Section 9.9(b). "Reserve Account" means the account held by EWR in the amount of $3,465,000 to fund anticipated capital expenditures to Lost Creek in connection with the term conversion of the financing of the Lost Creek Credit Agreement described in Schedule 1.1(a). "Respondent" has the meaning specified in Section 9.9(b). "Seller" has the meaning set forth in the introductory paragraph of this Agreement. "Seller Indemnitees" has the meaning specified in Section 6.4. "Specified Geographical Area" means the geographical area described in Exhibit D hereto. Purchase and Sale Agreement Page 7 "Specified Project" has the meaning specified in Section 8.1. "Tax Returns" has the meaning specified in Section 3.1(r)(i). "Taxes" means taxes of any kind, levies or other like assessments, customs, duties, imposts, charges or fees, including income, gross receipts, ad valorem, value added, excise, real or personal property, asset, sales, use, federal royalty, license, payroll, transaction, capital, net worth and franchise taxes, estimated taxes, withholding, employment, social security, workers compensation, utility, severance, production, unemployment compensation, occupation, premium, windfall profits, transfer and gains taxes or other governmental taxes imposed or payable to the United States or any state, local or foreign governmental subdivision or agency thereof, and in each instance such term shall include any interest, penalties or additions attributable to any such tax, including penalties for the failure to file any Tax Return or report. "Term Conversion Date" has the meaning given that term in the Lost Creek Credit Agreement. "Transferred Company" or "Transferred Companies" shall have the meaning specified in the Recitals to this Agreement. "Year 2000 Ready" means capable at all times, without additional expense, human intervention or additional programming, of correctly processing (and, if applicable, calculating, comparing, sequencing, storing, retrieving, displaying, printing, inputting and outputting) calendar, date and time data before, on and after January 1, 2000 (and correctly handling each leap year). 1.2 Other Definitional Provisions. (a) All references in this Agreement to Exhibits, Schedules, Articles, Sections, subsections and other subdivisions refer to the corresponding Exhibits, Schedules, Articles, Sections, subsections and other subdivisions of or to this Agreement unless expressly provided otherwise. Titles appearing at the beginning of any Articles, Sections, subsections or other subdivisions of this Agreement are for convenience only, do not constitute any part of this Agreement and shall be disregarded in construing the language hereof. (b) The words "this Agreement," "herein," "hereby," "hereunder" and "hereof," and words of similar import, refer to this Agreement as a whole and not to any particular subdivision unless expressly so limited. The words "this Article," "this Section" and "this subsection," and words of similar import, refer only to the Article, Section or subsection hereof in which such words occur. The word "or" is not exclusive, and the word "including" (in its various forms) means "including without limitation." (c) Pronouns in masculine, feminine or neuter genders shall be construed to state and include any other gender, and words, terms and titles (including terms defined herein) in the singular form shall be construed to include the plural and vice versa, unless the context otherwise requires. Purchase and Sale Agreement Page 8 ARTICLE II PURCHASE AND SALE OF MEMBERSHIP INTERESTS 2.1 Purchase and Sale. At the Closing, Purchaser shall purchase from Seller, and Seller shall sell to Purchaser and transfer (or cause to be transferred), the Acquired Membership Interests, on the terms and subject to the conditions set forth in this Agreement. 2.2 Purchase Price. The purchase price for the sale and transfer of the Acquired Membership Interests to Purchaser is $204,000,000 (the "Purchase Price"), subject to adjustment as provided below. The "Adjusted Purchase Price" shall be the Purchase Price adjusted as follows: (i) adjusted downward by the amount of Cash Receipts after the Effective Date and prior to the Closing Date; (ii) adjusted upward by (A) the amount of Cash Disbursements after the Effective Date and prior to the Closing Date, (B) the amount of regular salaries and related employee benefits paid to the Transferred Employees from the Closing Date through September 30, 2000, and (C) Cash Disbursements after the Closing Date and before October 31, 2000 that relate to periods prior to the Closing Date; and (iii) adjusted by any other amount specifically provided for in this Agreement or agreed upon by the Parties in writing. 2.3 Closing. The Closing with respect to purchase and sale of the Acquired Membership Interests will take place on the Closing Date at 10:00 a.m., Houston time, at the offices of Andrews & Kurth L.L.P. at 600 Travis Street, Houston, Texas, 77002, or at such other place as Seller and Purchaser may otherwise agree. 2.4 Closing Statement. Not later than three (3) Business Days prior to the Closing Date, Seller shall prepare and deliver to Purchaser a statement (the "Closing Statement") of the estimated Purchase Price adjustments and its best estimate of the Adjusted Purchase Price (the "Estimated Adjusted Purchase Price"). As set forth in Section 2.6, the closing payment payable by Purchaser at Closing shall be the Estimated Adjusted Purchase Price. 2.5 Post-Closing Adjustment to the Purchase Price. (a) On or before the date that is sixty (60) days after the Closing Date, Seller shall prepare and deliver to Purchaser a revised Closing Statement setting forth the Purchase Price adjustments and the Adjusted Purchase Price. To the extent reasonably required by Seller, Purchaser shall assist in the preparation of the revised Closing Statement. Seller shall provide to Purchaser such data and information as Purchaser may reasonably request supporting the amounts reflected on the revised Closing Statement in order to permit Purchaser to perform or cause to be performed an audit of the revised Closing Statement at Purchaser's expense. The revised Closing Statement shall become final and binding upon the parties on the date (the "Final Settlement Date") that is thirty (30) days following receipt thereof by Purchaser unless Purchaser gives written notice of Purchase and Sale Agreement Page 9 its disagreement ("Notice of Disagreement") to Seller prior to such date. Any Notice of Disagreement shall specify in detail the dollar amount, nature, and basis of any disagreement so asserted. If a Notice of Disagreement is received by Seller in a timely manner, then Seller and Purchaser shall diligently work in good faith to reach agreement on a final Closing Statement. If the Parties fail to agree on the final Closing Statement within thirty (30) days after the date of the Notice of Disagreement, the matter may be submitted by either party to arbitration under Section 9.9. The Closing Statement shall become final and binding on the Parties on, and the Final Settlement Date shall be, the earlier of (i) the date upon which Seller and Purchaser agree in writing with respect to all matters specified in the Notice of Disagreement or (ii) the date on which the arbitrators' final decision is issued under Section 9.9. (b) If the Adjusted Purchase Price, as finally determined pursuant to this Section 2.5, is less than the Estimated Adjusted Purchase Price delivered pursuant to Section 2.4, then Seller will pay to Purchaser, within two business days, by wire transfer of immediately available funds, the amount of such shortfall. If the Adjusted Purchase Price, as finally determined pursuant to this Section 2.5, is greater than the Estimated Adjusted Purchase Price delivered pursuant to Section 2.4, then Purchaser will pay to Seller, within two business days, by wire transfer of immediately available funds, the amount of such excess. Such payment shall be deemed an adjustment of the Purchase Price in Section 2.2. 2.6 Closing Obligations. At the Closing: (a) Seller shall deliver to Purchaser: (i) A duly executed Assignment and Assumption Agreement, in the form attached hereto as Exhibit E-1, by which (A) the membership interests in EMS are assigned to Purchaser free and clear of all Liens except restrictions created by the Operating Agreement for EMS, (B) the Fort Union Consent to Assignment, the Firm Gas Gathering Agreements, and the NCO Agreements are assigned to Purchaser, and (C) Purchaser assumes the Assumed Obligations and Seller retains liability for gas imbalances under the Firm Gas Gathering Agreements that relate to periods prior to the Closing Date; (ii) A duly executed Assignment and Assumption Agreement, in the form attached hereto as Exhibit E-2, by which the membership interests in EWR and EPR are assigned to Purchaser free and clear of all Liens except restrictions created by the Operating Agreements for EPR and EWR. (iii) A certificate in the form attached hereto as Exhibit F, dated the Closing Date and executed by an officer of Seller, to the effect that each of Seller's representations and warranties contained herein is true and correct as of the Closing Date, as if made on and as of the Closing Date, unless by their terms any such representations or warranties relate to an earlier date; Purchase and Sale Agreement Page 10 (iv) A letter duly executed by the assignors of the membership interests in EWR and EPR waiving the restrictions on dispositions of such membership interests contained in Section 3.03 of the Operating Agreements for EWR and EPR to the extent such restrictions apply to the transactions contemplated hereunder. (v) The Master Services Agreement duly executed by Seller; (vi) A copy of the executed Operating Agreements; and (vii) Such other certificates and documents as may be called for under this Agreement or as Purchaser shall reasonably request. (b) Purchaser shall deliver (or cause to be delivered) to Seller: (i) The Estimated Adjusted Purchase Price, by wire transfer to the account or accounts designated in writing by Seller in immediately available funds; (ii) Assignment and Assumption Agreements executed by Purchaser in the forms attached hereto as Exhibit E-1 and Exhibit E-2; (iii) The Administrative Services Agreement duly executed by Purchaser and Management Company; (iv) A Guaranty executed by Northern Border Intermediate Limited Partnership in the form attached hereto as Exhibit G; (v) The Master Services Agreement duly executed by Purchaser; (vi) A certificate from Purchaser in the form attached hereto as Exhibit H, dated the Closing Date and executed by an officer of Purchaser, to the effect that the representations and warranties of Purchaser contained herein are true and correct as of the Closing Date, as if made on and as of the Closing Date, unless by their terms any such representations or warranties relate to an earlier date; (vii) Such other certificates and documents as may be called for under this Agreement or as Seller shall reasonably request; and (viii) Satisfactory proof of substitute credit support necessary or required to release Seller and its Affiliates from liability under the Credit Support Obligations. 2.7 Allocation of Adjusted Purchase Price. The Parties shall agree upon an allocation of the Adjusted Purchase Price consistent with Section 1060 of the Code and the Treasury regulations thereunder by the Final Settlement Date. The Parties shall report this transaction for federal income tax purposes in accordance with the allocation so agreed upon. Purchase and Sale Agreement Page 11 ARTICLE III REPRESENTATIONS AND WARRANTIES 3.1 Representations and Warranties of Seller. Seller hereby represents and warrants to Purchaser as of the Closing Date, as follows: (a) Authority for Transaction. Seller has full power and authority to execute and deliver this Agreement and to perform Seller's obligations hereunder. This Agreement constitutes the valid and legally binding obligation of Seller, enforceable against Seller in accordance with its terms, except as the same may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors' rights generally and general equitable principles, regardless of whether enforceability is considered in a proceeding at law or in equity. Except for filings under the HSR Act and as shown in Schedule 3.1(a), Seller is not required to give any notice to, make any filing with or obtain any authorization, consent or approval of any Governmental Authority in order to consummate the transactions contemplated by this Agreement. (b) Noncontravention. Except as shown in Schedule 3.1(b), the execution and delivery of this Agreement, and the consummation of the transactions contemplated hereby, will not (i) violate any statute, regulation, rule, injunction, judgment, order, decree, ruling, charge or other restriction of any Governmental Authority or court to which Seller or any Transferred Company is subject, (ii) conflict with, result in a breach of, constitute a default under, result in the acceleration of, create in any party the right to accelerate, terminate, modify or cancel, or require any notice or consent under any agreement, contract, lease, license, instrument or other arrangement to which Seller or any Transferred Company is a party or by which Seller or any Transferred Company is bound, or (iii) conflict with or violate any provision of the Operating Agreement or any other charter document of any Transferred Company, except, in each case, as would not have, individually or in the aggregate, a Material Adverse Effect on any Transferred Company. (c) Consents and Approvals. No consent, approval, order or authorization of, registration, declaration or filing with, or permit from, any Governmental Authority or other Person is required by or with respect to Seller or any Transferred Company in connection with the execution and delivery of this Agreement by Seller or the consummation by Seller of the transactions contemplated hereby, except (i) for filings to be made under the HSR Act, (ii) as shown in Schedule 3.1(c), and (iii) where the failure to obtain such consent, approval, order, authorization, registration, filing or permit would not have, individually or in the aggregate, a Material Adverse Effect on any Transferred Company. (d) Title to Membership Interests. (i) The Acquired Membership Interests being conveyed by Seller to Purchaser pursuant to Section 2.1 were, immediately prior to such conveyance, held directly or beneficially by Seller and are being conveyed to Purchaser free Purchase and Sale Agreement Page 12 and clear of any Lien, claim, pledge, encumbrance, restriction on transfer (other than any restrictions on Purchaser's ability to transfer the Acquired Membership Interests under the Operating Agreements and federal and state securities laws), security interest, option, warrant, purchase right or other contract or commitment (other than the Operating Agreements). Seller is not a party to any voting trust, proxy or other agreement or understanding with respect to the voting of the Acquired Membership Interests, except for the Operating Agreements. (ii) Except as shown in Schedule 3.1(d), EWR holds, beneficially and of record, a 35% membership interest in Lost Creek, and EPR holds, beneficially and of record, a 33.33% membership interest in Fort Union, in each case, free and clear of any Lien, claim, pledge, encumbrance, security interest, option, warrant, purchase right or other contract or commitment (other than as provided in the Fort Union Operating Agreement or the Lost Creek Operating Agreement). (iii) Except as shown in Schedule 3.1(d), EMS holds, beneficially and of record, ten percent (10%) of the common membership interests, and twenty percent (20%) of the Preferred A Units, in Bighorn, free and clear of any Lien, claim, pledge, encumbrance, security interest, option, warrant, purchase right or other contract or commitment (other than as provided in the Amended and Restated Limited Liability Company Operating Agreement of Bighorn). (e) Organization. Seller is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. Each Transferred Company (i) is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Delaware, (ii) has the requisite power and authority to own, lease and operate its properties and to conduct its business as it is presently being conducted, and (iii) is duly qualified to do business as a foreign limited liability company in each jurisdiction where the character of the properties owned or leased by it or the nature of its activities makes such qualification necessary (except where any failure to be so qualified as a foreign limited liability company or to be in good standing would not, individually or in the aggregate, have a Material Adverse Effect on any Transferred Company). Copies of the Certificate of Formation and Operating Agreement (as currently in effect) of each Transferred Company have heretofore been delivered to Purchaser, and such copies are accurate and complete as of the date hereof. (f) No Violations. The execution and delivery of this Agreement does not, and the consummation of the transactions contemplated hereby and compliance by Seller with the provisions hereof will not, conflict with, result in any violation of or default (with or without notice or lapse of time or both) under, give rise to a right of termination, cancellation or acceleration of any obligation or to the loss of a material benefit under, or result in the creation of any Lien on any of the properties or assets of any Transferred Company or Seller under, any provision of: (i) any loan or credit agreement, note, bond, mortgage, indenture, lease, permit, concession, franchise, license or other agreement or instrument applicable to any Transferred Company or Seller, or (ii) subject to compliance with the HSR Act, any judgment, order, decree, statute, law, ordinance, rule or regulation applicable to any Transferred Company or Seller or any of their respective properties or Purchase and Sale Agreement Page 13 assets, other than, in the case of either clause (i) or (ii) above, any such conflict, violation, default, right, loss or Lien that would not have, individually or in the aggregate, a Material Adverse Effect on any Transferred Company or Seller. (g) Capital Structure. (i) At the Closing, the issued and outstanding equity interests of each Transferred Company will be comprised of Membership Interests totaling one hundred percent (100%). The capital account balance, as of August 31, 2000, of each Transferred Company in respect of the Acquired Membership Interests, is set forth on Schedule 3.1(g) attached hereto. (ii) There are outstanding (A) no securities of any Transferred Company or any other Person convertible into or exchangeable or exercisable for equity interests in any Transferred Company, and (B) no subscriptions, options, warrants, calls, rights (including preemptive rights), commitments, understandings or agreements to which any Transferred Company is a party or by which it is bound obligating such Transferred Company to issue, deliver, sell, purchase, redeem or acquire equity interests in such Transferred Company (or securities convertible into or exchangeable or exercisable for equity interests in such Transferred Company) or obligating such Transferred Company to grant, extend or enter into any such subscription, option, warrant, call, right, commitment, understanding or agreement. (h) Business Activities of Transferred Company. Except as disclosed in Schedule 3.1(h), no Transferred Company has engaged in any business activities other than those undertaken in connection with or incidental to the development, construction, ownership and operation of its assets. (i) Financial Statements. The Financial Statements (which are attached hereto as Schedule 3.1(i)) are true and accurate (except to the extent any such untruths or inaccuracies do not result in Losses which exceed $50,000, in the aggregate, for each Transferred Company) and fairly present, in all material respects, the financial position of each Transferred Company as of the date thereof and the results of operations of each Transferred Company for the period then ended, and are in conformity with GAAP (subject to normal year-end adjustments, the effect of which, individually or in the aggregate, will not be materially adverse, and except for footnote disclosures required by GAAP), except as otherwise noted therein, and the accounting records underlying the Financial Statements accurately and fairly reflect in all material respects the transactions of each Transferred Company. Except as set forth on Schedule 3.1(i) hereto, no Transferred Company has any material Liabilities or obligations of a type which are required to be included in or reflected on the Financial Statements if prepared in accordance with GAAP, whether related to Tax or non-Tax matters, accrued or contingent, due or not yet due, liquidated or unliquidated, or otherwise, except as and to the extent disclosed or reflected in the Financial Statements or otherwise set forth on Schedule 3.1(i). Purchase and Sale Agreement Page 14 (j) Absence of Undisclosed Liabilities. Except as set forth in Schedule 3.1(j) and to the extent fully reflected or reserved against on the Financial Statements, as of the date of the Financial Statements, no Transferred Company had any Liabilities or any Tax Liabilities due or to become due and whether incurred in respect of or measured by the income or sales of that Transferred Company for any period, or arising out of any transaction entered into or any state of facts existing, on or before the date of the Financial Statements, that would have, individually or in the aggregate, a Material Adverse Effect on any Transferred Company. Since the date of the Financial Statements, no Transferred Company had incurred any Liabilities except in the ordinary course of business. (k) Absence of Certain Changes or Events. Except as otherwise set forth on Schedule 3.1(k) or as contemplated by this Agreement, since the date of the Financial Statements, no Transferred Company has done any of the following: (i) Discharged or satisfied any Lien or paid any obligation or Liability, absolute or contingent, other than current Liabilities paid in the ordinary course of business; (ii) Made any loans or advances or guaranteed any loans or advances to any Person (other than loans, advances or guaranties made in the ordinary course of business); (iii) Except for Permitted Liens, suffered or permitted any Lien to arise or be granted or created against or upon any of its assets; (iv) Canceled, waived or released any rights or claims against, or indebtedness owed by, third parties; (v) Made or permitted any amendment, supplement, modification or termination of any Material Agreement; (vi) Expended or committed to expend capital in excess of $100,000; (vii) Entered into any swap, hedging or similar arrangements; (viii) Made any change in the accounting methods followed by it; (ix) Received notice or otherwise acquired knowledge of any dispute or any other occurrence, event or condition of any character which could be anticipated to give rise to a legal or administrative action or a Material Adverse Effect on any Transferred Company; (x) Suffered any material adverse change in its working capital, financial condition, assets, Liabilities, reserves, business operations or prospects; or Purchase and Sale Agreement Page 15 (xi) Agreed, whether in writing or otherwise, to do any of the foregoing. (l) Contracts and Agreements. (i) Schedule 3.1(l) contains a listing of (A) the Existing EMS Gas Gathering Contracts, which constitute all of the contracts (whether oral or written) relating to the gathering of natural gas on the EMS Gathering System, and (B) all other Material Agreements of any Transferred Company (provided, however, that inclusion of any agreement or contract on Schedule 3.1(l) does not constitute an admission that such agreement or contract is a Material Agreement). (ii) No Transferred Company is in violation of, or in default in any respect under, and no event has occurred that (with notice or the lapse of time or both) would constitute a violation by such Transferred Company of, or default by such Transferred Company under, (A) its Operating Agreement or its other charter documents, (B) any Material Agreement, (C) any Existing EMS Gas Gathering Contracts, or (D) any other contract, agreement, lease or commitment, whether oral or written to which a Transferred Company is a party ("Other Contracts"), except for any such violation or default that would not have, individually or in the aggregate, a Material Adverse Effect on any Transferred Company. (iii) (A) all of the Existing EMS Gas Gathering Contracts, the Material Agreements and the Other Contracts are in full force and effect and are valid and enforceable in accordance with their terms, except where the failure to be in full force and effect and enforceable would not have, individually or in the aggregate, a Material Adverse Effect on any Transferred Company; (B) there is no material default or material breach under any of the Existing EMS Gas Gathering Contracts, Material Agreement or Other Contract by any Transferred Company; or (C) to Seller's knowledge, there are no material defaults or material breaches on the part of the other party to any of the Existing EMS Gas Gathering Contracts, Material Agreement or Other Contract, and Seller has no knowledge of any condition that exists or event that has occurred which, with notice or lapse of time or both, would constitute a default or a basis for force majeure or other claim of excusable delay or non-performance thereunder. (m) Compliance with Laws; Permits. (i) Except for Jurisdictional Laws (as to which Seller does not make any representation), each Transferred Company is, and at all times since its formation, has been, and, to Seller's knowledge, each Gathering Company is and at all times since its formation has been, in compliance with all Legal Requirements applicable to it or to the ownership of its assets or the operation of its business, where any failure to so be in compliance, or during such period prior to the date hereof to have so been in compliance, would be expected to have, individually or in the aggregate, a Material Adverse Effect on any Transferred Purchase and Sale Agreement Page 16 Company. Neither Seller nor any Transferred Company has received, and to the knowledge of Seller, there is not threatened, any order, notice or other communication from any Governmental Authority of any alleged, actual or potential violation and/or failure to comply with any such Legal Requirements. To Seller's knowledge, no Gathering Company has received any order, notice or other communication from any Governmental Authority of any alleged, actual or potential violation and/or failure to comply with any such Legal Requirements. (ii) Schedule 3.1(m) sets forth a true and accurate list of all material permits, licenses and Governmental Actions that each Transferred Company has heretofore obtained for the conduct of its business (collectively, herein the "Permits"). The Permits have been duly obtained and are in full force and effect, except where the failure to be in full force and effect would not have, individually or in the aggregate, a Material Adverse Effect on any Transferred Company. There are no proceedings pending or, to Seller's knowledge, threatened, which seek to revoke, cancel, suspend or modify any of the Permits. Except as set forth in Schedule 3.1(m), the Permits constitute all of the permits, licenses or Governmental Actions necessary for the conduct of each Transferred Company's business as it is conducted as of the Closing, except where the failure to posses any such permit, license or Governmental Action would not have, individually or in the aggregate, a Material Adverse Effect on any Transferred Company. (iii) NOTWITHSTANDING ANY OTHER PROVISION SET FORTH IN THIS AGREEMENT, SELLER MAKES NO REPRESENTATION REGARDING EXEMPTION FROM OR COMPLIANCE OF THE EMS GATHERING SYSTEM OR THE OTHER ASSETS OF THE TRANSFERRED COMPANIES OR THE GATHERING COMPANIES WITH THE NATURAL GAS ACT OF 1938 (15 U.S.C. ss. 717, et seq.), THE NATURAL GAS POLICY ACT OF 1978 (15 U.S.C. ss.3301 et seq.), THE LAWS OF WYOMING OR OTHER LEGAL REQUIREMENTS (COLLECTIVELY HEREIN, THE "JURISDICTIONAL LAWS") WHICH MAY: (A) REQUIRE SUCH PARTIES TO FILE FOR AND/OR OBTAIN A CERTIFICATE OF PUBLIC CONVENIENCE AND NECESSITY (OR SIMILAR LICENSES OR QUALIFICATIONS, HOWEVER DENOMINATED) WITH RESPECT TO OWNERSHIP OR OPERATION OF THEIR RESPECTIVE ASSETS; (B) REQUIRE SUCH PARTIES TO FILE FOR AND/OR OBTAIN A TARIFF (OR OTHERWISE REGULATE THE RATES WHICH SUCH PARTIES MAY CHARGE FOR GATHERING OR OTHER SERVICES) ON THEIR ASSETS; (C) REQUIRE SUCH PARTIES TO PROVIDE GATHERING OR OTHER SERVICES ON A NON-DISCRIMINATORY BASIS OR OPEN ACCESS BASIS; OR (D) OTHERWISE REQUIRE APPROVAL FROM THE FEDERAL ENERGY REGULATORY COMMISSION, WYOMING PUBIC SERVICE COMMISSION OR MONTANA PUBLIC SERVICE COMMISSION IN ORDER TO PROVIDE GATHERING OR OTHER SERVICES. (n) Title. Except for Permitted Liens and defects or imperfections in title that would not have, individually or in the aggregate, a Material Adverse Effect on any Purchase and Sale Agreement Page 17 Transferred Company and except as set forth on Schedule 3.1(n), each Transferred Company owns, free and clear of all Liens, all of the properties and assets (real, personal and mixed, tangible and intangible) reflected as owned by such Transferred Company in the books and records of such Transferred Company or otherwise used or employed in any manner by such Transferred Company in the conduct of its business including, without limitation, all of the properties and assets reflected in the Financial Statements (except for personal property sold since the date of the Financial Statements in the ordinary course of business), and all the properties and assets acquired by such Transferred Company since the date of the Financial Statements (except for personal property acquired and sold since the date of the Financial Statements in the ordinary course of business). (o) Condition of Property. Except as set forth on Schedule 3.1(o), the buildings, plants, structures and equipment owned or leased by EMS (including the EMS Gathering System), and, to the knowledge of Seller, owned or leased by each Gathering Company, are structurally sound, are in good operating condition and repair, are reasonably fit for the purposes for which they are intended to be used, and none of such buildings, plants, structures or equipment is in need of maintenance or repairs, except for ordinary, routine maintenance and repairs that in the aggregate are not material in nature or cost. WITH RESPECT TO ANY PERSONAL PROPERTY (INCLUDING EQUIPMENT OR INVENTORY) INCORPORATED IN, ASSOCIATED WITH OR HELD FOR USE IN CONNECTION WITH OPERATION OF SUCH ASSETS, SELLER DISCLAIMS ANY OTHER EXPRESS OR IMPLIED REPRESENTATION, COVENANT OR WARRANTY AS TO MERCHANTABILITY, PERFORMANCE, FITNESS (BOTH GENERALLY AND FOR ANY PARTICULAR PURPOSE) OR OTHERWISE (WHICH WARRANTIES SELLER HEREBY EXPRESSLY DISCLAIMS). (p) Litigation. Except as otherwise set forth on Schedule 3.1(p), (i) no litigation, arbitration, investigation or other proceeding of any Governmental Authority or any third party is pending or, to the knowledge of Seller, threatened against any Transferred Company or Seller, or any of their respective assets, and (ii) to Seller's knowledge, no litigation, arbitration, investigation or other proceeding is pending or threatened against either Gathering Company or their respective assets, which, in each case, if adversely determined, will have or could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on any Transferred Company. There is no litigation, proceeding or investigation pending or, to the knowledge of Seller, threatened against or affecting Seller or any Transferred Company that questions the validity or enforceability of this Agreement or any other document, instrument or agreement to be executed and delivered by Seller or any Transferred Company in connection with the transactions contemplated hereby. (q) No Restrictions. Except for the applicable Operating Agreement or as otherwise set forth on Schedule 3.1(q), no Transferred Company is a party to (i) any agreement, indenture or other instrument that contains restrictions with respect to the payment of distributions with respect to its capital; (ii) any financial arrangement with respect to or creating any indebtedness to any Person (other than indebtedness reflected Purchase and Sale Agreement Page 18 in the Financial Statements or indebtedness incurred after the date of the Financial Statements in the ordinary course of business); (iii) any agreement, contract or commitment relating to the making of any advance to, or investment in, any Person (other than advances in the ordinary course of business); (iv) any guaranty or other contingent liability with respect to any indebtedness or obligation of any Person (other than guaranties undertaken in the ordinary course of business and other than the endorsement of negotiable instruments for collection in the ordinary course of business); or (v) any agreement, contract or commitment limiting in any respect its ability to compete with any Person or otherwise conduct business of any line or nature. (r) Taxes. (i) Except as shown in Schedule 3.1(r), each Transferred Company, and to Seller's knowledge, each Gathering Company, has: (A) timely filed all federal, state and local returns, declarations, reports, estimates, information returns and statements required to be filed by it with respect to any Taxes and in any instance where the Transferred Company is not required to file a separate return, Seller has included such Transferred Company in its own timely filed return ("Tax Returns"); and (B) timely paid all Taxes that are reflected on such Tax Returns. Except as shown in Schedule 3.1(r), to Seller's knowledge, all such Tax Returns were correct and complete in all material respects and properly reflect any Tax Liabilities of each Transferred Company or Gathering Company. (ii) Except as provided in Section 4.16, with respect to any Tax Return covering a taxable period beginning on or before the Closing Date and ending after the Closing Date that is required to be filed after the Closing Date with respect to the Transferred Companies, Seller shall cause the Tax Return to be prepared, shall cause to be included in such Tax Return all items of income, gain, loss, deduction and credit and other tax items of the Transferred Companies which are required to be included therein, shall file timely such Tax Return with the appropriate taxing authority, and shall be responsible for the timely payments (and entitled to any refund) of all Taxes due with respect to the period covered by such Tax Return; provided, however, that Seller shall be entitled to reimbursement from Purchaser with respect to any liability for Taxes that relates to any taxable period, or portion thereof, after the Closing Date. (iii) To Seller's knowledge, no audits or other administrative or court proceedings are presently pending with regard to any federal, state or local Taxes for which a Transferred Company or Gathering Company would be liable. To Seller's knowledge, there are no pending requests for rulings from any taxing authority, no outstanding subpoenas or requests for information by any taxing authority with respect to any Taxes, no proposed reassessments by any taxing authority of any property owned or leased, and no agreements in effect to extend the time to file any Tax Return or the period of limitations for the assessment or collection of any material Taxes for which a Transferred Company or Gathering Company would be liable. There are no Liens (other than Permitted Liens) on any assets of any Transferred Company resulting from the failure of that Purchase and Sale Agreement Page 19 Transferred Company to pay any Taxes. Each Transferred Company has, and to Seller's knowledge, each Gathering Company has, withheld and paid all Taxes required to have been paid in connection with amounts paid or owing to any employee, independent contractor, creditor, member or any third party. (s) Brokers. No broker, finder, investment banker or other Person is or will be, in connection with the transactions contemplated by this Agreement, entitled to any other brokerage, finder's or other fee or compensation based on any arrangement or agreement made by or on behalf of Seller (t) Related Transactions. Except as set forth on Schedule 3.1(t), there are no agreements, instruments, commitments, extensions of credit, indebtedness, Tax sharing or allocation agreements or other contractual agreements of any kind between or among a Transferred Company and Seller, or any Affiliate of Seller or a Transferred Company, which require any payment by a Transferred Company to an Affiliate or any payment by an Affiliate of a Transferred Company to a Transferred Company. (u) Year 2000 Readiness. The Covered Systems are Year 2000 Ready. (v) Environmental Compliance. Except as set forth in Schedule 3.1(v): (i) Each Transferred Company is on the date of this Agreement and has been and will be on the Closing Date in compliance with Environmental, Laws in all material respects, and to the knowledge of Seller, each Gathering Company is and has been and will be on the Closing Date in compliance with all Environmental Laws in all material respects; (ii) Each Transferred Company, and, to Seller's knowledge, each Gathering Company, has made all notices and obtained all material permits, licenses and registration required by Environmental Laws, or has submitted applications for them, and is in material compliance with their terms and conditions; (iii) No Governmental Authority or any third person has made any environmental claim against a Transferred Company or, to Seller's knowledge, a Gathering Company, including the filing of any lawsuit, the commencement of any administrative action or proceeding, or the issuance of any order, decree, consent agreement or notice of violation, and, to Seller's knowledge, no such claim is threatened; (iv) No Hazardous Materials that have been generated or transported by a Transferred Company, or to Seller's knowledge, a Gathering Company, have been disposed of at a site which at the time of the Closing is on the National Priorities List, the CERCLIS or any analogous list of State Superfund sites, nor has a Transferred Company or, to Seller's knowledge, a Gathering Company, received notice that any Governmental Authority claims or, to Seller's knowledge, threatens to claim, that a Transferred Company or a Gathering Purchase and Sale Agreement Page 20 Company is a potentially responsible party in connection with a cleanup authorized by CERCLA; and (v) To the Seller's knowledge, there have been no material releases of Hazardous Materials to surface waters or groundwater by a Transferred Company or a Gathering Company in violation of Environmental Laws. THE EXPRESS REPRESENTATIONS AND WARRANTIES OF THE SELLER CONTAINED IN THIS SECTION 3.1 ARE EXCLUSIVE AND ARE IN LIEU OF ALL OTHER REPRESENTATIONS AND WARRANTIES, EXPRESS, IMPLIED, STATUTORY OR OTHERWISE, AND THE SELLER EXPRESSLY DISCLAIMS ANY AND ALL SUCH OTHER WARRANTIES. EXCEPT AS SET FORTH IN THIS AGREEMENT OR ANY DOCUMENT, AGREEMENT OR CERTIFICATE TO BE DELIVERED AT THE CLOSING. (A) THE SELLER SHALL NOT BE DEEMED TO HAVE MADE ANY OTHER REPRESENTATION OR WARRANTY, WHETHER EXPRESS, IMPLIED, STATUTORY OR OTHERWISE, OR RELATING TO THE TITLE, CONDITION, QUANTITY, QUALITY, FITNESS FOR A PARTICULAR PURPOSE OR FITNESS FOR ANY PURPOSE OR AS TO MERCHANTABILITY WITH RESPECT TO ANY TRANSFERRED COMPANY OR GATHERING COMPANY OR ITS ASSETS; AND (B) THE SELLER MAKES NO REPRESENTATION OR WARRANTY, EXPRESS, IMPLIED, STATUTORY OR OTHERWISE, AS TO THE ACCURACY OR COMPLETENESS OF ANY DATA, REPORTS, RECORDS, PROJECTIONS, INFORMATION OR MATERIALS NOW, HERETOFORE OR HEREAFTER FURNISHED OR MADE AVAILABLE TO PURCHASER IN CONNECTION WITH THIS AGREEMENT, INCLUDING WITHOUT LIMITATION, RELATIVE TO PRICING ASSUMPTIONS, OR QUALITY OR QUANTITY OR HYDROCARBON RESERVES (IF ANY) IN THE AREA OF ANY OF THE ASSETS OF ANY TRANSFERRED COMPANY OR THE ABILITY OR POTENTIAL OF ANY OF THE ASSETS OF ANY TRANSFERRED COMPANY TO GATHER SUCH HYDROCARBONS OR ANY OTHER MATTERS CONTAINED IN THE DATA OR ANY OTHER MATERIALS FURNISHED OR MADE AVAILABLE TO PURCHASER BY THE SELLER OR BY SELLER'S AGENTS OR REPRESENTATIVES OR BY ANY OTHER PARTY. 3.2 Representations and Warranties of Purchaser. Purchaser represents and warrants to Seller as follows: (a) Organization of Purchaser. Purchaser is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Delaware. (b) Authority for Transaction. Purchaser has full power and authority to execute and deliver this Agreement and to perform its obligations hereunder. This Agreement constitutes the valid and legally binding obligation of Purchaser, enforceable against Purchaser in accordance with its terms, except as the same may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors' rights generally and general equitable principles, regardless of whether enforceability is considered in a proceeding at law or in equity. Except for filings under the HSR Act, Purchaser is not required to give any notice to, make any Purchase and Sale Agreement Page 21 filing with or obtain any authorization, consent or approval of any Governmental Authority in order to consummate the transactions contemplated by this Agreement. (c) Noncontravention. Neither the execution and delivery of this Agreement, nor the consummation of the transactions contemplated hereby, will (i) subject to compliance with the HSR Act, violate any statute, regulation, rule, injunction, judgment, order, decree, any ruling, charge or other restriction of any Governmental Authority or court to which Purchaser is subject or any provision of Purchaser's charter document; or (ii) conflict with, result in a breach of, constitute a default under, result in the acceleration of, create in any party the right to accelerate, terminate, modify or cancel, or require any notice under any agreement, contract, lease, license, instrument or other arrangement to which Purchaser is a party or by which Purchaser is bound. (d) Consents and Approvals. No consent, approval, order or authorization of, registration, declaration or filing with, or permit from, any Governmental Authority or any other Person is required by or with respect to Purchaser in connection with the execution and delivery of this Agreement by Purchaser or the consummation by Purchaser of the transactions contemplated hereby except for filings to be made under the HSR Act. (e) Litigation. There is no litigation, proceeding or investigation pending or, to the knowledge of Purchaser, threatened against or affecting Purchaser that questions the validity or enforceability of this Agreement or any other document, instrument or agreement to be executed and delivered by Purchaser in connection with the transactions contemplated hereby. (f) Brokers' Fees. Purchaser has no Liability or obligation to pay any brokerage or finder's fee or commission to any broker, finder, investment banker or other Person with respect to the transactions contemplated by this Agreement. ARTICLE IV COVENANTS AND AGREEMENTS 4.1 Public Announcements. Each Party will consult with the other Party before issuing any press release with respect to the transactions contemplated by this Agreement and shall not issue any press release prior to obtaining the approval of the other Party; provided, however, that such approval shall not be required where such release or announcement is required by applicable law, securities regulations or rules of an applicable stock exchange; and provided further, that the Parties will consult each other and give reasonable cooperation to the other Party with respect to the content of any such press releases. 4.2 Payment of Expenses. The Parties to this Agreement shall each bear their own expenses incurred in connection with the transactions contemplated herein, except that Purchaser shall pay all fees related to filings required under the HSR Act. 4.3 Further Assurances. Seller and Purchaser agree that from time to time, whether at or after the Closing Date, they will execute and deliver such further instruments of Purchase and Sale Agreement Page 22 conveyance and transfer and take such other action as the other Parties may reasonably request in order more effectively to consummate the transactions contemplated by this Agreement. 4.4 Employee Matters. (a) Administrative Services Agreement. Purchaser shall cause the Management Company to enter into the Administrative Services Agreement with Purchaser at the Closing. (b) Employment. Purchaser shall cause the Management Company to make offers of employment to certain employees of Seller. The offer of employment by the Management Company will be effective on the first day of the month following the Closing Date, at no less than 100% of the employee's current base salary on the Closing Date (including the incentive structure described in Section 4.4(d) below), with substantially equivalent responsibilities, headquartered in the Denver, Colorado office or such other location as specified in the offer of employment, and with an aggregate value of fringe benefits that are substantially equivalent to benefits maintained by Seller for such employees immediately prior to the Closing Date. (c) Employee Benefit Plans. Purchaser shall cause the Management Company to procure or maintain for Seller's employees who accept offers of employment with the Management Company (the "Transferred Employees") the existing Enron Corp. employee benefit plans for such Transferred Employees that have no less than a substantially equivalent aggregate value of benefits and coverage as the benefit plans that are maintained by Seller immediately prior to the Closing Date for the Transferred Employees. (d) Incentive Structure. The Management Company will implement an incentive compensation program, as described in the Administrative Services Agreement, to encourage the Transferred Employees to develop new business opportunities, develop Purchaser's existing assets, and contribute to the financial performance of Purchaser. 4.5 Conduct of Business Pending Closing. Subject to Section 4.6 and the constraints of the Operating Agreements and other existing agreements, from the date hereof through the Closing Date, except as disclosed in Schedule 4.5 or as otherwise consented to or approved by Purchaser (which consent or approval shall not be unreasonably withheld or delayed), Seller covenants and agrees that: (a) Changes in Business. Seller shall cause each Transferred Company to comply with the following: (i) each Transferred Company shall not make any material change in the conduct of its business or operations; (ii) except in the ordinary course of business and consistent with past practices, each Transferred Company shall not enter into, assign, terminate, or amend, in any material respect, any Material Agreement; Purchase and Sale Agreement Page 23 (iii) each Transferred Company shall not: (a) declare or pay any dividends or make any distributions in respect of, or issue any of, its equity securities or securities convertible into its equity securities, or repurchase, redeem, or otherwise acquire any such securities or make or propose to make any other change in its capitalization; except that on or before the Closing Date, Seller shall have the right to cause each Transferred Company to dividend to Seller any or all of the cash, except the Reserve Account, held by such Transferred Company which dividends shall be reflected in the Closing Statement and the revised Closing Statement prepared pursuant to Section 2.5; (b) merge into or with or consolidate with any other corporation or acquire all or substantially all of the business or assets of any corporation or other Person; (c) make any change in its Certificate of Formation or Operating Agreement; and (d) purchase any securities of any corporation or other Person, except for investments made in the ordinary course of business and consistent with prior practices; (iv) other than pursuant to the requirements of existing contracts or commitments, each Transferred Company shall not sell, lease, or otherwise dispose of any of its assets, except for (a) assets sold, leased, or otherwise disposed of in the ordinary course of business, (b) the sale or disposition of any item of personal property or equipment having a value of less than $100,000, and (c) the pledge by EWR of its membership interests in Lost Creek under the EWR Pledge Agreement; and (v) each Transferred Company shall not take any action or enter into any commitment with respect to or in contemplation of any liquidation, dissolution, recapitalization, reorganization, or other winding up of its business or operations. (b) Liens. Seller shall not, and will cause each Transferred Company not to, grant any express lien or security interest on any assets of each Transferred Company, except to the extent (i) required or permitted incident to the operation of the assets of each Transferred Company and the business of each Transferred Company, (ii) required or evidenced by any Material Agreements, and (iii) required under the EWR Pledge Agreement. (c) Operations. Seller shall: (i) cause each Transferred Company's assets to be maintained and operated in the ordinary course of business in accordance with each Transferred Company's past practices (including the repair or replacement of damaged, Purchase and Sale Agreement Page 24 destroyed, obsolete, depreciated, non-working, or non-economical items of equipment or other personal property), maintain insurance now in force with respect to such Transferred Company's assets, and pay or cause to be paid all costs and expenses in connection therewith promptly when due; (ii) cause each Transferred Company to use its reasonable efforts to maintain its relationships with suppliers, customers, and others having material business relations with each Transferred Company with respect to its assets so that they will be preserved for Purchaser on and after the Closing Date; and (iii) cause EPR to vote in favor of the expansion of the existing gathering system of Fort Union if a vote is taken by the members of Fort Union on such matter prior to the Closing Date. 4.6 Qualifications on Conduct. Seller and each Transferred Company may take (or not take, as the case may be) any of the actions described in Section 4.5 above if reasonably necessary under emergency circumstances (or if required or prohibited pursuant to Law) and provided Purchaser is notified as soon thereafter as practicable. 4.7 Actions by Parties. Each Party agrees to use commercially reasonable efforts to satisfy the conditions to Closing set forth in Article 5. 4.8 Supplement to Schedules. Seller may, from time to time prior to the Closing, by written notice to Purchaser, supplement or amend the Disclosure Schedule to this Agreement to correct any matter that would constitute a breach of any representation or warranty of Seller contained in this Agreement. No such supplement or amendment will affect the rights and obligations of the Parties under Section 5.1 or Section 5.2 until after the Closing Date. Notwithstanding anything in this Agreement to the contrary, if the Closing occurs, any such supplement or amendment of any such schedule will be effective to cure and correct for indemnification purposes any breach of any representation, warranty, or covenant that would have existed by reason of Seller not having made such supplement or amendment. 4.9 Access. Between the date hereof and the Closing Date, Seller shall permit Purchaser and its representatives, during regular business hours and upon reasonable advance notice, access to review the books and records of Seller regarding the Transferred Companies. To the extent the books and records of Seller with respect to the Transferred Companies do not contain information regarding a Gathering Company that Purchaser desires to review, Seller shall use its reasonable efforts to cause each Gathering Company to make such information available to Purchaser. 4.10 Credit Obligation Replacement. Purchaser shall cooperate with Seller and use all commercially reasonable efforts to provide or cause an Affiliate of Purchaser to provide substitute credit support for the Credit Support Obligations and to cause the release of Seller and each Affiliate of Seller from the Credit Support Obligations on or before the Closing Date. 4.11 Name Change. Within 30 days after the Closing Date, Purchaser shall and shall cause the Transferred Companies to cease using the trademarks, service marks, logos, and Purchase and Sale Agreement Page 25 trade names of Seller, including causing each Transferred Company to remove "Enron" and "ECT" from its name. 4.12 Title Defects. On or before 90 days after the Closing Date, Seller shall cure the title defects affecting or burdening the Completed Systems in a manner that would generally be considered prudent by an experienced owner of similar properties. 4.13 Lost Creek. If the Term Conversion Date under the Lost Creek Credit Agreement does not occur on or before the Closing, Purchaser shall execute and deliver, and cause its Affiliates to execute and deliver, all such instruments and documents that may be required to complete the conversion from a Construction Loan to a Term Loan under the Lost Creek Credit Agreement. 4.14 Release of Assumed Obligations. If Seller has not obtained releases of the obligations of Seller under the Firm Gas Gathering Agreements and the NCO Agreements on or before the Closing Date, Purchaser shall, when reasonably requested by Seller, execute and deliver all such instruments and documents, and take such actions, as may be reasonably required to obtain such releases of such obligations of Seller. 4.15 Gas Imbalances -- Further Assistance. From and after the Closing Date, Purchaser shall take all actions reasonably requested by Seller to permit Seller to resolve the gas imbalances existing under the Firm Gas Gathering Agreements as of the Closing Date. 4.16 Certain Tax Matters. Seller shall be responsible for and shall pay all sales and use taxes related to the ownership and operation of the EMS Gathering System and to periods of time prior to the Effective Date and Purchaser shall be responsible for, and shall cause EMS to pay, all sales and use taxes related to the ownership and operation of the EMS Gathering System and to periods of time from and after the Effective Date. ARTICLE V CLOSING CONDITIONS 5.1 Seller's Closing Conditions. The obligation of Seller to proceed with the Closing contemplated hereby is subject, at the option of Seller, to the satisfaction on or prior to the Closing Date of all of the following conditions. (a) Representations, Warranties and Covenants. The representations and warranties of Purchaser contained in Section 3.2 of this Agreement shall be true and correct in all material respects on and as of the Closing Date, and the covenants and agreements of Purchaser to be performed on or before the Closing Date shall have been duly performed in all material respects in accordance with this Agreement. (b) Closing Documents. On or prior to the Closing Date, Purchaser shall have delivered all agreements, instruments, and documents required to be delivered by Purchaser under Section 2.6(b). (c) No Action. On the Closing Date, no suit, action or other proceeding (excluding any such matter initiated by Seller or any of its Affiliates) shall be pending or Purchase and Sale Agreement Page 26 threatened before any court or governmental agency or body of competent jurisdiction seeking to enjoin or restrain the consummation of the Closing or recover damages from Seller or any Affiliate of Seller resulting therefrom. (d) Waiting Period. The waiting period under the HSR Act applicable to the consummation of the transactions contemplated hereby shall have expired or been terminated with no adverse action taken or threatened by applicable Governmental Authorities. (e) Purchase Price. Purchaser shall have delivered the Estimated Adjusted Purchase Price to Seller by wire transfer in immediately available funds. (f) Credit Support. Purchaser shall have provided satisfactory substitute credit support, and Seller and its Affiliates shall have been released from, the Credit Support Obligations. (g) Board of Directors Approval. Seller shall have received the approval of its board of directors to the transactions contemplated by this Agreement. 5.2 Purchaser's Closing Conditions. The obligation of Purchaser to proceed with the Closing contemplated hereby is subject, at the option of Purchaser, to the satisfaction on or prior to the Closing Date of all of the following conditions. (a) Representations, Warranties and Covenants. The representations and warranties of Seller in Section 3.1 of this Agreement shall be true and correct in all material respects on and as of the Closing Date, and the covenants and agreements of Seller to be performed on or before the Closing Date shall have been duly performed in all material respects in accordance with this Agreement. (b) Closing Documents. On or prior to the Closing Date, Seller shall have delivered all agreements, instruments, and documents required to be delivered by Seller under Section 2.6(a). (c) No Action. On the Closing Date, no suit, action or other proceeding (excluding any such matter initiated by Purchaser or any of its Affiliates) shall be pending or threatened before any court or governmental agency or body of competent jurisdiction seeking to enjoin or restrain the consummation of the Closing or recover damages from Purchaser or any Affiliate of Purchaser resulting therefrom. (d) Waiting Period. The waiting period under the HSR Act applicable to the consummation of the transactions contemplated hereby shall have expired or been terminated with no adverse action taken or threatened by applicable Governmental Authorities. (e) Consents. Seller shall have obtained all consents or waivers required to sell and transfer (or cause to be transferred) the Acquired Membership Interests to Purchaser and the terms of such consents or waivers shall be reasonably acceptable to Purchaser. Purchase and Sale Agreement Page 27 (f) Due Diligence Review. Purchaser shall have completed its due diligence review of the Transferred Companies and the Gathering Companies and the results of that review shall be reasonably satisfactory to Purchaser. (g) Approvals. Purchaser shall have received the Audit Committee Approval and the approval of the Partnership Policy Committee of Northern Border Partners, L.P. (h) Lender Consent. Purchaser shall have received from its existing lenders all waivers and consents necessary to consummate the transactions contemplated by this Agreement. ARTICLE VI SURVIVAL OF REPRESENTATIONS AND AGREEMENTS INDEMNIFICATION AND THIRD PARTY CLAIMS 6.1 Survival. The representations, warranties, covenants, agreements, indemnities, and other obligations of each Party in this Agreement and in any certificate delivered in connection herewith shall survive the Closing and shall continue in full force and effect until the second anniversary of the Closing Date; provided, however, (i) if a bona fide claim has been asserted by written notice of such claim delivered to the Indemnifying Person prior to the expiration of the second anniversary of the Closing Date, the applicable representation, warranty, covenant, indemnity or agreement with respect to which such bona fide claim is asserted, insofar as it relates to such bona fide claim, shall not terminate, but shall continue in full force and effect until final resolution of such claim and any indemnification obligations with respect thereto and (ii) if Seller has not been fully released from its obligations under the Firm Gas Gathering Agreements and the NCO Agreements by the second anniversary of the Closing Date, then Purchaser's indemnity obligations in Section 6.4(ii) shall not terminate and continue in full force and effect until the earlier of the date on which Seller obtains such release or the expiration of the applicable statute of limitations. 6.2 Right to Indemnification Not Affected by Knowledge. The right to indemnification in accordance with the provisions of this Article VI will not be affected by any investigation conducted with respect to, or any Knowledge acquired (or capable of being acquired) at any time, whether before or after the Closing Date, with respect to the accuracy or inaccuracy of or compliance with, any such representation, warranty, covenant or obligation. The waiver of any condition based on the accuracy of any representation or warranty, or on the performance of or compliance with any covenant or obligation, will not affect the right to indemnification in accordance with the provisions of this Article VI. 6.3 Indemnification by Seller. Except as otherwise provided in this Article VI, Seller unconditionally, absolutely and irrevocably agrees to and shall defend, indemnify and hold harmless Purchaser and each of its subsidiaries, members, partners, Affiliates, officers, directors, managers, employees, counsel, agents, contractors, successors, assigns, heirs and legal and personal representatives (collectively referred to as the "Purchaser Indemnitees") from and against, and shall reimburse the Purchaser Indemnitees for, each and every Loss, including without limitation those Losses arising out of the strict liability (including, without limitation, strict liability arising pursuant to environmental laws) of any Person, paid, imposed on or Purchase and Sale Agreement Page 28 incurred by the Purchaser Indemnitees, directly or indirectly, relating to, resulting from or arising out of, or any allegation by any third party with respect to, any inaccuracy in any representation or warranty of Seller under this Agreement or any certificate or other agreement or document delivered or to be delivered by Seller under this Agreement, whether or not the Purchaser Indemnitees relied thereon or had Knowledge thereof, or any breach or nonfulfillment of any covenant, agreement or other obligation of Seller under this Agreement or any other agreement or document delivered or to be delivered by Seller under this Agreement. With respect to matters not involving proceedings brought or asserted by third parties, within 10 days after notification from the Purchaser Indemnitees supported by reasonable documentation setting forth the nature of the circumstances entitling the Purchaser Indemnitees to indemnity hereunder, Seller, at no cost or expense to the Purchaser Indemnitees, shall diligently commence resolution of such matters and shall diligently and timely prosecute such resolution to completion. If Seller, within 10 days after notice, fails to diligently commence resolution of such matters, the Purchaser Indemnitees shall have the right to undertake the resolution of such matters at the sole expense of Seller. With respect to those claims that may be satisfied by payment of a liquidated sum of money, including, without limitation, claims for reimbursement of expenses incurred in connection with any circumstances entitling the Purchaser Indemnitees to indemnity hereunder, Seller shall pay the full amount so claimed to the extent supported by reasonable documentation within 15 days of such resolution. If Seller disputes its liability in connection with such claim, it shall pay any undisputed part of such liability, and the Purchaser and Seller shall have 30 days to resolve any remaining dispute. If any proceeding is commenced between Seller and any Purchaser Indemnitee, the prevailing party in such proceeding shall be entitled to recover all reasonable costs and expenses incurred in connection with proceeding, including, without limitation, attorneys' fees. If any proceeding is commenced or threatened by any third party for which the Purchaser Indemnitees are entitled to indemnification under this Section 6.3, the provisions of Section 6.5 shall control. 6.4 Indemnification by Purchaser. Except as otherwise provided in this Article VI, Purchaser unconditionally, absolutely and irrevocably agrees to and shall defend, indemnify and hold harmless Seller and each of Seller's Affiliates, employees, counsel, agents, contractors, successors, assigns, heirs and legal and personal representatives (collectively referred to as the "Seller Indemnitees") from and against, and shall reimburse the Seller Indemnitees for, each and every Loss paid, imposed on or incurred by the Seller Indemnitees, directly or indirectly, relating to, resulting from or arising out of (i) any inaccuracy in any representation or warranty of Purchaser under this Agreement or any agreement, certificate or other document delivered or to be delivered by Purchaser under this Agreement, whether or not the Seller Indemnitees relied thereon or had Knowledge thereof, or any breach or nonfulfillment of any covenant, agreement or other obligation of Purchaser under this Agreement or any agreement or document delivered by Purchaser under this Agreement, (ii) the Assumed Obligations, and (iii) the Acquired Membership Interests, the Transferred Companies or the Gathering Companies (whether relating to periods of time before or after the Closing Date) to the extent such Loss was not properly asserted by Purchaser under Section 6.3 by the dated specified in Section 6.1. With respect to matters not involving proceedings brought or asserted by third parties, within 10 days after notification from the Seller Indemnitees supported by reasonable documentation setting forth the nature of the circumstances entitling the Seller Indemnitees to indemnity hereunder, the Purchaser, at no cost or expense to the Seller Indemnitees, shall Purchase and Sale Agreement Page 29 diligently commence resolution of such matters and shall diligently and timely prosecute such resolution to completion. If Purchaser, within 10 days after notice, fails to diligently commence resolution of such matters, the Seller Indemnitees shall have the right to undertake the resolution of such matters at the expense of the Purchaser. With respect to those claims that may be satisfied by payment of a liquidated sum of money, Purchaser shall pay the amount so claimed to the extent supported by reasonable documentation within 15 days of such resolution. If Purchaser disputes its liability in connection with such claim, it shall pay any undisputed part of such liability, and Purchaser and Seller shall have 30 days to resolve any remaining dispute. If any proceeding is commenced between Purchaser and any Seller Indemnitee, the prevailing party in such proceeding shall be entitled to recover all reasonable costs and expenses incurred in connection with such proceeding, including, without limitation, attorneys' fees. If any proceeding is commenced or threatened by any third party for which the Seller Indemnitees are entitled to indemnification under this Section 6.4, the provisions of Section 6.5 shall control. 6.5 Notice and Defense of Third-Party Claims. (a) If any proceeding (other than a proceeding described in Section 6.5(b)) shall be brought or asserted under this Article against an indemnified party or any successor thereto (the "Indemnified Person") in respect of which indemnity may be sought under this Article from an indemnifying person or any successor thereto (the "Indemnifying Person") pursuant to any civil or regulatory proceeding, the Indemnified Person shall give prompt written notice of such proceeding to the Indemnifying Person who shall assume the defense thereof, including the employment of counsel reasonably satisfactory to the Indemnified Person and the payment of all expenses; provided, that any delay or failure so to notify the Indemnifying Person shall relieve the Indemnifying Person of its obligations hereunder only to the extent, if at all, that it is materially prejudiced by reason of such delay or failure. In no event shall any Indemnified Person be required to make any expenditure or bring any cause of action to enforce the Indemnifying Person's obligations and liability under and pursuant to the indemnifications set forth in this Article. In addition, actual or threatened action by a Governmental Authority or other Person is not a condition or prerequisite to the Indemnifying Person's obligations under this Article. The Indemnified Person shall have the right to employ separate counsel in any of the foregoing proceedings and to participate in the defense thereof, but the reasonable fees and expenses of such counsel shall be at the expense of the Indemnified Person unless the Indemnified Person shall in good faith determine that there exist actual or potential conflicts of interest which make representation by the same counsel inappropriate. The Indemnified Person's right to participate in the defense or response to any proceeding should not be deemed to limit or otherwise modify its obligations under this Article. In the event that the Indemnifying Person, within 20 days after notice of any such proceeding, fails to assume the defense thereof, the Indemnified Person shall have the right to undertake the defense, compromise or settlement of such proceeding for the account of and at the expense of the Indemnifying Person, subject to the right of the Indemnifying Person to assume the defense of such proceeding with counsel reasonably satisfactory to the Indemnified Person at any time prior to the settlement, compromise or final determination thereof. Anything in this Article to the contrary notwithstanding, the Indemnifying Person shall Purchase and Sale Agreement Page 30 not, without the Indemnified Person's prior written consent, settle or compromise any proceeding or consent to the entry of any judgment with respect to any proceeding. (b) Notwithstanding the foregoing, if any proceeding shall be brought or asserted under this Article against an Indemnified Person in respect of which indemnity may be sought under this Article from an Indemnifying Person pursuant to a regulatory proceeding or any criminal proceeding, the Indemnified Person shall assume the defense thereof, including the employment of counsel, all at the expense of the Indemnified Person. The Indemnifying Person, at its expense, shall have the right to employ separate counsel and participate in the defense thereof, subject to the Indemnified Person's right to control such proceeding. The Indemnified Person shall not, without the Indemnifying Person's prior written consent, which will not be unreasonably withheld, settle or compromise any proceeding or consent to the entry of any judgment with respect to any proceeding that requires the payment of money damages. (c) Notwithstanding the foregoing, if an Indemnified Person determines in good faith that there is a reasonable probability that a proceeding or claim may adversely affect it or its Affiliates other than as a result of monetary damages for which it would be entitled to indemnification under this Agreement, the Indemnified Person may, by notice to the Indemnifying Person, assume the exclusive right to defend, compromise, or settle such proceeding or claim, but the Indemnifying Person will not be bound by any determination of a proceeding or claim so defended or any compromise or settlement effected without its consent. 6.6 Limits on Indemnity Obligations. (a) No Indemnified Person shall be entitled to indemnification from an Indemnifying Person pursuant to this Article VI with respect to any Loss unless any Indemnified Person notifies such Indemnifying Party of such Loss prior to the expiration of the survival period applicable thereto. In the event an Indemnified Party delivers notice of any Loss which is subject to indemnification under this Article VI prior to expiration of the survival period, the survival period shall continue with respect to any Loss specified in such notice, without the Indemnified Party being required to specify the amount of such Loss. (b) If the total amount of all Losses covered by this Article VI which the Purchaser Indemnitees have the right to assert against Seller does not exceed an amount equal to one percent (1%) of the Adjusted Purchase Price (the "Deductible Amount"), then Seller shall have no obligation under this Article VI with respect to any such Losses. If the total amount of all of the Purchaser Indemnitees Losses exceeds the Deductible Amount, then Seller's obligations under this Article VI shall be limited to the amount by which the aggregate amount of all such Losses exceeds the Deductible Amount. (c) Seller's liability to the Purchaser Indemnitees under this Article VI for Losses arising out of or attributable to a Transferred Company shall not exceed the amount of the Adjusted Purchase Price allocated to that Transferred Company under Section 2.7. Seller's total aggregate liability to Purchaser under this Article VI or Purchase and Sale Agreement Page 31 otherwise in connection with the Acquired Membership Interests, the Transferred Companies or the transactions contemplated by this Agreement shall not exceed the Adjusted Purchase Price. (d) Notwithstanding anything contained to the contrary in any other provision of this Agreement, Seller and Purchaser agree that the recovery by either Party hereto of any damages suffered or incurred by it as a result of any breach by the other Party of any of its representations, warranties, covenants or obligations or any other matter or claim under this Agreement shall be limited to the actual damages suffered or incurred by the Indemnified Party as a result of the breach by the breaching Party of its representations, warranties, covenants or obligations hereunder, and in no event shall either Party ever be liable to the other Party for any indirect, consequential, special, exemplary or punitive damages, except to the extent constituting part of a third party claim suffered or incurred by an Indemnified Party as a result of the breach or other action or matter by the Indemnifying Party of any of its representations, warranties, covenants or obligations hereunder. (e) The Parties agree that the sole and exclusive remedy for any Losses incurred in connection with or as a result of the transactions contemplated in this Agreement shall be their rights to indemnity under this Article VI (subject to the procedures and limitations set forth herein). (f) ALL RELEASES, DISCLAIMERS, LIMITATIONS ON LIABILITY, AND INDEMNITIES IN THIS AGREEMENT, INCLUDING THOSE IN THIS ARTICLE VI, SHALL APPLY EVEN IN THE EVENT OF THE SOLE, JOINT, AND/OR CONCURRENT NEGLIGENCE, STRICT LIABILITY, OR OTHER FAULT OF THE PARTY WHOSE LIABILITY IS RELEASED, DISCLAIMED, LIMITED, OR INDEMNIFIED. 6.7 Right to Subrogation of Indemnified Party. If an Indemnifying Party is obligated to pay any Losses arising out of its indemnification obligations under and pursuant to the terms of this Article VI, the Indemnifying Party shall be entitled to be subrogated to the rights of any Indemnified Party and/or a Transferred Company (to the extent of the Indemnifying Party's indemnity obligations that have been satisfied under this Agreement) and may pursue (and collect on its own behalf) any and all claims with respect to such indemnified Losses against third parties but not against a Transferred Company. In such event, the Indemnified Party shall give, and shall cause such Transferred Company to give, all necessary cooperation to the Indemnifying Party in order to: (i) file (or cause to be filed) claims under all insurance policies held by such Transferred Company in respect to any indemnified Losses, (ii) pursue all claims for indemnification, contribution or other recoveries (whether for breach of contract or otherwise) under agreements with third parties other than a Transferred Company, and (iii) pursue all rights or contribution or other recoveries afforded under applicable law (including, but not limited to, remedies awarded under Environmental Laws) against third parties but not against a Transferred Company. Pursuit of any and all such claims or rights of recovery shall be at the sole cost and expense, and for the sole benefit, of the Indemnifying Party. Purchase and Sale Agreement Page 32 6.8 General Provisions. Purchase and Sale Agreement Page 32 (a) The amount of any Loss for which indemnification is sought pursuant to this Article VI shall be calculated on an after tax basis, taking into account any tax consequences (including the tax consequences to an Indemnified Person of payments made by an Indemnifying Person under this Article VI) which may be realized by the Indemnified Person under any applicable law on account of the Loss. (b) The term "proceeding" as used in this Article VI means any action, arbitration, audit, hearing, investigation, litigation or suit (whether civil, criminal, administrative, investigative or informal) which is commenced, conducted or heard by or before or otherwise involving any governmental body or arbitrator. ARTICLE VII TERMINATION 7.1 Termination. This Agreement and the transactions contemplated hereby may be terminated at any time prior to the Closing: (a) by the written mutual consent of Seller and Purchaser; or (b) if the Closing has not occurred by the close of business on the Closing Date, then (a) by Seller if any condition specified in Section 5.1 has not been satisfied on or before such close of business, and shall not theretofore have been waived by Seller, or (b) by Purchaser if any condition specified in Section 5.2 has not been satisfied on or before such close of business, and shall not theretofore have been waived by Purchaser; provided, in each case, that the failure to consummate the transactions contemplated hereby on or before such date did not result from the failure by the Party seeking termination of this Agreement to fulfill any undertaking or commitment provided for herein on the part of such Party that is required to be fulfilled on or prior to Closing. 7.2 Effect of Termination. In the event of termination of this Agreement by Seller or Purchaser pursuant to Section 7.1, written notice thereof shall promptly be given by the terminating Party to the other Party, and this Agreement shall terminate upon receipt of such notice. If this Agreement is terminated as provided herein, all filings, applications and other submissions made to any Governmental Authority shall, to the extent practicable, be withdrawn from the Governmental Authority to which they were made. ARTICLE VIII PARTICIPATION RIGHTS 8.1 Purchaser's Rights. If Seller or any of its wholly-owned subsidiaries proposes to develop or acquire an interest in, directly or indirectly, a natural gas processing plant, natural gas gathering system, natural gas transportation pipeline, or natural gas transmission system all or part of which is located in the Specified Geographical Area, other than (i) natural gas sales or distribution pipelines connecting to end users or local distribution companies or (ii) any natural gas transportation pipeline or transmission system in the I-80 Corridor (each a "Specified Project"), then Seller shall promptly give written notice to Purchaser describing in Purchase and Sale Agreement Page 33 reasonable detail the Specified Project. If Purchaser notifies Seller in writing within ten (10) business days after receipt of Seller's notice that Purchaser desires to participate in such Specified Project, Seller and Purchaser shall work together in good faith for a commercially reasonable period (given the nature of the Specified Project) to permit Purchaser the right to participate in the asset based equity portion of the Specified Project on terms that are acceptable to Seller and Purchaser. If after the end of such period, Seller and Purchaser have failed to reach agreement on Purchaser's participation in such Specified Project, Seller shall have no further obligations to Purchaser under this Section 8.1 with respect to such Specified Project. Any Specified Project developed by Seller as part of a transaction that is primarily a producer finance transaction shall not be considered a Specified Project. 8.2 Seller's Rights. If Purchaser or Northern Border Partners, L.P. or any of its wholly-owned subsidiaries proposes to develop or participate in, directly or indirectly, a Specified Project, then Purchaser shall promptly give written notice to Seller describing in reasonable detail the Specified Project. If Seller notifies Purchaser in writing within ten (10) business days after receipt of Purchaser's notice that it desires to participate in such Specified Project, Seller and Purchaser shall work together in good faith for a commercially reasonable period (given the nature of the Specified Project) to permit Seller the right to participate in all gas or other energy linked commodity transactions and producer outsourcing opportunities related to the Specified Project, including access to gathering or transportation services, on terms that are acceptable to Seller and Purchaser. If after the end of such period, Seller and Purchaser have failed to reach agreement on Seller's participation in such Specified Project, Purchaser shall have no further obligations to Seller under this Section 8.2 with respect to such Specified Project. 8.3 Term of Participation Rights. The participation rights created in this Article VII shall terminate on the last day of the sixtieth (60th) month following the Closing Date. 8.4 Certain Proprietary Rights. Except for the Conoco, Inc. Pioneer Pipeline Company project and the Petro Source CO2 project which are either pending or under development by Seller or Seller and Purchaser, the proprietary rights to any Specified Project under development by Seller in the Specified Geographical Area will be assigned to Purchaser. All proprietary rights and information concerning any transactions outside the Specified Geographical Area which are under development by Seller or the Transferred Employees shall remain with Seller. 8.5 No Limitation. The provisions of this Article VIII and the participation rights granted herein shall not limit or restrict the Seller or Purchaser from pursuing or developing transactions outside of the Specified Geographical Area. ARTICLE IX MISCELLANEOUS 9.1 Governing Law. This Agreement shall be governed by and construed in accordance with the substantive law of the State of Texas without giving effect to the principles of conflicts of law thereof. Purchase and Sale Agreement Page 34 9.2 Counterparts. This Agreement may be executed in multiple counterparts, each of which shall be an original, but all of which together shall constitute one and the same agreement. 9.3 Assignment; Binding Effect. Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by any Party (whether by operation of law or otherwise) without the prior written consent of the other Party; provided, however, that Purchaser may assign its rights, interests or obligations hereunder to its Affiliates without the prior written consent of the other Party hereto, but no such assignment shall relieve such Purchaser from its obligations hereunder. Subject to the preceding sentence, this Agreement will be binding upon, inure to the benefit of and be enforceable by the Parties and their respective successors and assigns. 9.4 Entire Agreement. This Agreement (including the Exhibits and the Disclosure Schedule attached hereto) constitutes the entire agreement between the Parties, and supersedes any prior understandings, agreements, arrangements and representations between the Parties, written or oral, to the extent they related in any way to the subject matter hereof. 9.5 Notices. All notices, requests, demands, claims and other communications required or permitted hereunder shall be in writing and shall be sent by (a) personal delivery (effective upon delivery), or (b) registered or certified mail, return receipt requested, postage prepaid, and addressed to the intended recipient as set forth below (effective on the third day after being so mailed): If to Seller: Enron North America Corp. 1400 Smith Street Houston, Texas 77002 Attention: Ms. Barbara Gray Telephone: 713-853-6832 If to Purchaser: NBP Energy Pipelines, L.L.C. 1111 South 103rd Street Omaha, Nebraska 68124-1000 Attention: Mr. Robert Hill Telephone: 402-398-7888 Any Party may change its address for receiving notices by giving written notice of such change to the other Parties in accordance with this Section 9.5. 9.6 Amendment. This Agreement may be amended by the Parties at any time only by a written instrument signed on behalf of each of the Parties. 9.7 Severability. Any term or provision of this Agreement that is invalid or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such Purchase and Sale Agreement Page 35 invalidity or unenforceability without rendering invalid or unenforceable the remaining terms and provisions of this Agreement or affecting the validity or enforceability of any of the terms or provisions of this Agreement in any other jurisdiction. If any provision of this Agreement is so broad as to be unenforceable, such provision shall be interpreted to be only so broad as is enforceable. 9.8 Waivers. Subject to the remaining terms of this Agreement, the rights and remedies of the parties to this Agreement are cumulative and not alternative. Any failure of a Party to comply with any obligation, covenant, agreement or condition herein may be waived by each Party affected thereby only by a written instrument signed by the Party granting such waiver. Except as provided in this Agreement, no action taken pursuant to this Agreement, including any investigation by or on behalf of either Party, shall be deemed to constitute a waiver by the Party taking such action of compliance with any representations, warranties, covenants or agreements contained in this Agreement. The waiver by either Party hereto of a breach of any provision hereof shall not operate or be construed as a waiver of any prior or subsequent breach of the same or any other provisions hereof. 9.9 Arbitration. Notwithstanding anything in this Agreement to the contrary, all Disputes (defined below) between the Parties relating to this Agreement shall be resolved as follows: (a) Any claim, action, dispute or controversy of any kind arising out of or relating to this Agreement ("Dispute") shall be resolved by mandatory and binding arbitration administered by the American Arbitration Association (the "AAA") pursuant to the Federal Arbitration Act (Title 9 of the United States Code) in accordance with this Agreement and the then-applicable Commercial Arbitration Rules of the AAA. The Parties acknowledge and agree that the transactions evidenced and contemplated hereby involve "commerce" as contemplated in Section 2 of the Federal Arbitration Act. If Title 9 of the United States Code is inapplicable to any such Dispute for any reason, such arbitration shall be conducted pursuant to the Delaware Voluntary Alternative Dispute Resolution Act (Del. Code Ann. Tit. 6, ss.ss.7701-21), this Agreement and the then-applicable Commercial Arbitration Rules of the AAA. To the extent that any inconsistency exists between this Agreement and the foregoing statute or rules, this Agreement shall control. Judgment upon the award rendered by the arbitrator acting pursuant to this Agreement may be entered in, and enforced by, any court having jurisdiction, absent manifest disregard by such arbitrator of applicable law; provided, however, that the arbitrator shall not amend, supplement or reform in any manner any of the rights or obligations of either Party hereunder or the enforceability of any of the terms or provisions of this Agreement. Any arbitration proceedings under this Agreement shall be conducted before three (3) arbitrators (selected as set forth in Section 9.9(b) below), who have no direct or indirect relationship with either Party or either Party's Affiliates. (b) The arbitration shall be conducted by three (3) arbitrators. The Party initiating arbitration (the "Claimant") shall appoint its arbitrator in its request for arbitration (the "Request"). The other Party or Parties (the "Respondent") shall appoint its or their arbitrator within thirty (30) days after receipt of the Request and shall notify the Claimant of such appointment in writing. If the Respondent fails to appoint an arbitrator within such thirty (30) day period, the AAA shall appoint an Purchase and Sale Agreement Page 36 arbitrator on behalf of the Respondent, which arbitrator shall be deemed to have been appointed by the Respondent. The two (2) Party-appointed arbitrators shall not be required to be neutral. The two (2) Party-appointed arbitrators shall appoint a third arbitrator within thirty (30) days after the appointment of the Respondent's arbitrator. When the third arbitrator has accepted the appointment, the two (2) Party-appointed arbitrators shall promptly notify the Parties to the Dispute of the appointment. If the two (2) Party-appointed arbitrators fail to appoint a third arbitrator or to notify the Parties to the Dispute within the time period prescribed above, then the appointment of the third arbitrator shall be made by the AAA, which shall promptly notify the Parties of the appointment. The third arbitrator shall act as chair of the panel. (c) Each Party shall bear its own expenses of the arbitration, including, without limitation, fees and expenses of counsel incident to any arbitration. The fees and expenses of the arbitrator and the AAA shall be borne equally by the Parties to the Dispute. The arbitrator shall have the power and authority to award expenses to the prevailing Party to the Dispute if the arbitrator elects to do so. (d) The ruling of the arbitrators shall be in writing and signed and shall be final and binding upon the Parties. The fees and expenses of counsel, witnesses and employees of the Parties and all other costs and expenses incurred in connection with arbitration shall be allocated as determined by the arbitrators. Judgment on the arbitration award or decision may be entered in any court having jurisdiction. Purchase and Sale Agreement Page 37 IN WITNESS WHEREOF, the Parties have executed this Agreement or caused this Agreement to be executed by their duly authorized representatives as of the date first above written. Seller: ENRON NORTH AMERICA CORP. By: /s/ Brian L. Remond ------------------------------------ Name: Brian L. Remond -------------------------------- Title: Managing Director -------------------------------- Purchaser: NBP ENERGY PIPELINES, L.L.C. By: /s/ Jerry L. Peters ------------------------------------ Name: Jerry L. Peters -------------------------------- Title: Vice President -------------------------------- Purchase and Sale Agreement Page 38 EX-10 6 exh1025.txt MATERIAL CONTRACTS EXHIBIT 10.25 MASTER SERVICES AGREEMENT NBP ENERGY PIPELINES, L.L.C. (PROVIDER) AND ENRON NORTH AMERICA CORP. (CUSTOMER) EFFECTIVE AS OF SEPTEMBER 21, 2000 MASTER SERVICES AGREEMENT This MASTER SERVICES Agreement (together with any schedules and exhibits attached and made a part hereof, this "Agreement") is entered into as of September 21, 2000 (the "Effective Date") between NBP Energy Pipelines, L.L.C., a Delaware limited liability company ("Provider") and Enron North America Corp., a Delaware corporation ("Customer"), each a "Party" and together the "Parties." Whereas, Customer desires to contract with Provider for Services, as defined below; and Whereas, Provider desires to provide such Services on the terms and conditions set forth herein. NOW THEREFORE, the Parties hereto acknowledge and agree as follows: 1. DEFINITIONS 1.1 Definitions. Except as otherwise indicated by the context all capitalized terms used in this Agreement have the meanings set forth below: "2001 Option" shall have the meaning as set forth in Section 8.2. "Administrative Services" shall have the meaning as set forth in the Service Operating Schedule. "Affiliate" shall mean, with respect to a person, any other person which directly or indirectly through one or more intermediaries controls, is controlled by, or is under common control with, such person. The term "control" means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting stock, by contract, or otherwise. "Business Day" shall mean any Monday, Tuesday, Wednesday, Thursday and Friday, excluding Federal bank holidays. "British Thermal Unit" shall mean the amount of heat required to raise the temperature of one pound of water from 59 degrees Fahrenheit to 60 degrees Fahrenheit. "Claims" shall have the meaning set forth in Section 14.1 below. "Customer" shall mean Enron North America Corp. "Customer Default" shall mean (a) the failure by Customer to pay an amount due under this Agreement, which failure continues for a period of ten Schedule I Business Days after the receipt of notice thereof from Provider, (b) Customer's failure to comply with any material terms of this Agreement, or (c) Customer dissolves or becomes insolvent or files a petition or otherwise commences, authorizes or acquiesces in the commencement of a proceeding or cause of action under any bankruptcy or similar law for the protection of creditors, or has such petition filed against it and such petition is not withdrawn or dismissed for 30 Days after such filing, makes an assignment for the benefit of creditors, suspends the transaction of its usual business or consents to the appointment of a trustee or receiver, or a trustee or a receiver is appointed therefor or for a substantial part of its property, or reorganization, insolvency, or similar proceedings shall be instituted by or against Customer. "Daily Fee" shall mean a fee of $ 45,000 per Day for the period commencing October 1, 2000 and continuing through December 31, 2000, and a fee of $ 21,600 per Day for the period commencing January 1, 2001 and continuing through December 31, 2001. Provided, however if Customer exercises the 2001 Option, then the Daily Fee for the period commencing January 1, 2001 and continuing through December 31, 2001 shall be $45,000 per Day. "Day" shall mean a period beginning and ending at nine o'clock a.m. Central Clock Time. "Delivery Point" shall have the meaning set forth in the Service Operating Schedule "Effective Date" shall have the meaning set forth in the introductory paragraph of this Agreement. "Fees" shall collectively refer to the Fixed Fee and the Variable Services Fee, together with any other amounts that may be payable by Customer to Provider pursuant to the terms of this Agreement. "Fixed Fee" shall have the meaning set forth in Section 4.2 below. "Force Majeure" shall mean any act that (a) renders it impossible for a Party to perform its obligations under this Agreement or receive Services hereunder, (b) is beyond its reasonable control, (c) is not due to its fault or negligence and (d) cannot be avoided by the exercise of due diligence, including the expenditure of any reasonable sum of money. Subject to the satisfaction of the conditions set forth in (a) through (d) above, Force Majeure shall consist of the following types of events: (i) natural phenomena, such as storms, floods, lightening, earthquakes, hurricanes, tornadoes and fires; (ii) wars, civil disturbances and sabotage; and (iii) actions or omissions of a Governing Body that were not voluntarily induced by Provider, such as the adoption or passage of new or differing laws, statutes, regulations and the like, or changes thereof or in the Schedule I interpretation thereof by or at the instance of a Governing Body. In no event shall Force Majeure include economic hardship or changes in market conditions. "Gas Services" shall have the meaning set in the Service Operating Schedule and any currently effective Service Schedule. "Initial Term" shall have the meaning set forth in Section 3 below. "Maximum Quantity" shall mean shall mean 250,000 MMBtu of gas per Day for the period commencing October 1, 2000 and continuing through December 31, 2000, and 120,000 MMBtu of gas per Day for the period commencing January 1, 2001 and continuing through December 31, 2001. Provided, however if Customer exercises the 2001 Option, then the Maximum Quantity for the period commencing January 1, 2001 and continuing through December 31, 2001 shall be 250,000 MMBtu of gas per Day. "Month" shall mean the period beginning on the first Day of a calendar month and on the first Day of the next succeeding calendar month. "MMBtu" shall mean one million British Thermal Units. "Parties" shall mean Customer and Provider and either of their permitted successors or assigns. "Permitted Services Suspensions" shall mean the failure of Provider to deliver the Services due to any combination of Force Majeure, Customer Default or Customer's failure to comply with provisions of the Service Schedules. "Provider" shall mean NBP Energy Pipelines, L.L.C. "Provider Default" shall have the meaning set forth in Section 13.2. "Provider's Deficiency Quantity" shall have the meaning set forth in Section 13.2. "Receipt Point" shall have the meaning set forth in Schedule I. "Replacement Price Differential" means the positive difference, if any, obtained by subtracting the applicable Variable Services Fee from the cost to Customer to replace the Gas Services for Provider's Deficiency Quantity. "Scheduled Volume" shall have the meaning set forth in Section 2.2 of the Service Operating Schedule. "Service Schedule" shall mean all such Service Schedules as may be entered into by Provider and Customer from time to time for Gas Services, the form of which is attached as Exhibit B. Schedule I "Services" shall mean the provision by Provider of Gas Services and Administrative Services. "Service Operating Schedule" shall mean the document attached to this Agreement as Schedule I, which is incorporated herein for all purposes. "System" shall mean any gas gathering, transportation, processing and treating system utilized in performing the Gas Services hereunder. "Term" shall have the meaning set forth in Section 3 below. "Variable Quantity" shall mean the total Scheduled Volume for Customer's account on a given day hereunder. "Variable Services Fee" shall have the meaning set forth in Section 4.3 below. 1.2 Divisions, Headings and Index. The division of this Agreement into articles, sections and subsections, and the insertion of headings and any table of contents or index, if any, are for convenience of reference only, and shall not affect the construction or interpretation hereof. 1.3 Industry Usage. Words, phrases or expressions which are not defined herein and which, in the usage or custom of the business of the gathering, storage, distribution or sale of natural gas have an accepted meaning, shall have that meaning. 1.4 Extended Meaning. Unless the context otherwise requires, words implying the singular include the plural and vice versa, and words implying gender include all genders. The words "herein", and "hereunder" and words of a similar nature refer to the entirety of this Agreement, including any exhibits, if any, and schedules incorporated into this Agreement, and not only to the Section in which such use occurs. 2. GENERAL MASTER AGREEMENT Subject to and on the terms and conditions herein set forth, Provider hereby agrees to provide for and on behalf of Customer, the Services and Customer hereby agrees to contract for the Services, all as further set forth herein and in the Service Operating Schedule. It is acknowledged that the Parties are relying upon the fact that all Service Schedules, together with this Agreement and the Service Operating Schedule, will form a single integrated agreement and that the Parties would not otherwise enter into any Service Schedules. Each Service Schedule shall be construed as one with this Agreement and the Service Operating Schedule and any discrepancy between this Agreement, the Service Operating Schedule and a Service Schedule shall be resolved in favor of the Service Schedule. Schedule I 3. TERM The Services shall be provided pursuant to this Agreement in accordance with the following: 3.1 Services. The Services shall commence on the Effective Date and shall continue thereafter through December 31, 2001 (the "Initial Term") and Month to Month thereafter unless terminated by either Party upon 30 Days written notice, provided however that all Service Schedules shall remain in full force and effect for the term specified therein (the "Term"). 3.2 Renewal and Extension. Upon expiration of the Term of this Agreement, any monies or other charges due and owing either Party shall be paid and any corrections or adjustments to payments previously made shall be determined and paid within 60 Days. Notwithstanding the foregoing, all confidentiality rights and obligations hereunder shall survive for two (2) years thereafter. The Parties' obligations set forth in this Agreement shall remain in effect for the purpose of complying herewith. 4. FEES 4.1 Fees In General. In consideration of the provision of the Services by Provider for the benefit of and on behalf of Customer, Customer shall pay Provider the Fixed Fee and the Variable Services Fee in the manner set forth in this Section 4. The Fixed Fee shall be comprised of the amount set forth in Section 4.2 below and the Variable Services Fee shall consist of and be computed in the manner set forth in Section 4.3, with each such amount payable in accordance with the requirements of Section 5 below. 4.2 Fixed Fee. Commencing on October 1, 2000, Customer shall pay Provider the Daily Fee multiplied by the number of Days in the Month, for each Monthly period during the Initial Term (the "Fixed Fee"), and Customer shall be entitled to demand the Administrative Services and the Gas Services on a firm basis for Receipt Points and Delivery Points that are interconnects to Systems that are header and/or mainline transportation as set forth in the Service Operating Schedule. The Fixed Fee shall be due and payable by Customer whether or not Customer utilizes all or any portion of the Services for any reason other than the occurrence of a Provider Default, in which event Customer shall be entitled to the remedies set for in Section 13.2 below. The Fixed Fee shall terminate at the end of the Initial Term. 4.3 Variable Services Fee. Customer shall pay Provider a Variable Services Fee as specified in a currently effective Service Schedule for all Variable Quantity Gas (the "Variable Services Fee"). 4.3 Option Fee. Customer shall pay Provider $ 373,750 for the 2001 Option. Schedule I 5. PAYMENT TERMS AND PAST DUE AMOUNTS 5.1 Fixed Fees and Option Payment. On or before the 1st Day of each Month, or the next Business Day occurring thereafter, during the Initial Term, Customer shall pay the Fixed Fee for the previous Month (to the extent then payable), regardless of whether Provider shall have issued an invoice or other manner of billing documentation with respect to same. Customer shall pay the 2001 Option fee as specified in Section 4.3 upon execution of this Agreement. 5.2 Variable Services Fee. On or before the 10th Day of each Month occurring during the Term, Provider shall provide Customer with a written statement setting forth Provider's calculation of the Variable Services Fee for the immediately preceding Month. Customer shall remit any undisputed amounts set forth on such statement no later than the later to occur of the twenty-fifth Day of the Month in which Provider's statement was received by Customer or ten Days after actual receipt of Provider's statement. If the due date for any payment to be made under this Agreement is not a Business Day, the due date for such payment shall be the following Business Day. Disputed amounts that are later determined to be correct shall be assessed past due interest, as specified in Section 5.4, from the original date due until the date paid. 5.3 Payment of Amount Due by Provider to Customer. Any amounts due by Provider to Customer under the provisions of this Agreement shall be payable within 15 Days of Customer's invoice therefor. 5.4 Past Due Interest. If either Party fails to pay any payment or other sum when due, such Party shall also pay to the other Party interest thereon from the due date thereof to the date of payment at a rate equal to the lesser of (a) the prime rate as published in the Wall Street Journal under "Money Rates" plus 2% or (b) the maximum rate permitted by applicable law. 5.5 Wire Transfer Instructions. All payments to be made by Customer to Provider hereunder shall be payable by wire transfer to Provider at such place or account as Provider from time to time may designate in writing. 5.6 Netting. In the event that Customer and Provider are each required to pay an amount in the same Month hereunder, then such amounts with respect to each Party may be aggregated and the Parties may discharge their obligations to pay through netting, in which case the Party, if any, owing the greater aggregate amount may pay to the other Party the difference between the amounts owed. 6. TAXES The Fees include full reimbursement for, and Provider is liable for and shall pay, or cause to be paid, or reimburse Customer if Customer has paid, all taxes applicable to the Services. In the event Customer is required to remit such tax, the amount thereof Schedule I shall be deducted from any sums becoming due to Provider hereunder. Provider shall indemnify, defend and hold harmless Customer from any claims for such Taxes. 7. NOTICES All notices and communications made pursuant to this Agreement shall be made as specified below. Notices required to be in writing shall be delivered in written form by letter, facsimile or other documentary form. Notice by facsimile or hand delivery shall be deemed to have been received by the close of the Day on which it was transmitted or hand delivered (unless transmitted or hand delivered after close of a Business Day in which case it shall be deemed received at the close of the next Business Day) or such earlier time confirmed by the receiving Party. Notice by overnight mail or courier shall be deemed to have been received two Business Days after it was sent or such earlier time confirmed by the receiving Party. Any Party may change its addresses by providing notice of same in accordance herewith. To Customer: Enron North America Corp. 1200 17th Street Denver Colorado 80202 Att: Mark Whitt Phone 303-575-6473 To Provider: NBP Energy Pipelines, LLC 1111 South 103rd Street Omaha, NE 68124 Attn: Mr. Robert Hill Phone: 402-398-7888 8. SERVICES AND 2001 OPTION 8.1 Services. Provider shall provide or procure the Services hereunder on a 24 hour per Day continuous basis in accordance with the provisions of this Agreement, the Service Operating Schedule, any currently effective Services Schedule and industry standards, applicable laws, rules and regulations. 8.2 2001 Option. Customer shall have the option to be exercised, by a notice given to Provider in writing, no later than December 15, 2000, to increase the Maximum Quantity for the period commencing January 1, 2001 through December 31, 2001 from 120,000 MMBtu per day to 250,000 MMBtu per day (the "2001 Option"). If Customer exercises the 2001 Option, then the Daily Fee shall be revised as specified in the Schedule I definition of such term. 9. LIMITATION OF LIABILITY EXCEPT AS MAY BE EXPRESSLY SET FORTH IN THIS AGREEMENT, IN NO EVENT SHALL EITHER PARTY, ITS AGENTS OR EMPLOYEES (FOR PURPOSES OF THIS SECTION 9, SUCH PERSONS SHALL COLLECTIVELY BE REFERRED TO AS A PARTY) BE LIABLE TO THE OTHER PARTY FOR ANY SPECIAL, INDIRECT, INCIDENTAL, PUNITIVE OR CONSEQUENTIAL DAMAGES RELATED TO OR IN CONNECTION WITH THIS AGREEMENT, INCLUDING, WITHOUT LIMITATION, ANY INJURY, LOSS OR DAMAGE TO ANY PROPERTY, ANY LOSS OF PROFITS OR BUSINESS OPPORTUNITY, LOSS OF REVENUE, REGARDLESS OF THE REASON OR CAUSE OF SUCH DAMAGES, WHETHER ANY OF SUCH DAMAGES OCCUR DURING OR AFTER THE TERM, OR THAT THE CLAIM FOR SUCH DAMAGES IS BASED ON WARRANTY, CONTRACT, TORT OR OTHER THEORY OF ANY NATURE WHATSOEVER. 10. REPRESENTATIONS AND WARRANTIES 10.1 Provider Representations and Warranties. Provider represents and warrants to Customer as follows: (a) Provider is duly authorized and empowered to enter into this Agreement and to consummate the transactions contemplated hereby and is duly formed, validly existing, and is in good standing in the State of Delaware. 10.2 Customer Representations and Warranties. Customer represents and warrants to Provider as follows: (a) Customer is duly authorized and empowered to enter into this Agreement and to consummate the transactions contemplated hereby, Customer is duly incorporated, validly existing, and is in good standing in the State of Delaware. 11. LICENSES, PERMITS AND COMPLIANCE Each Party, at its sole expense, shall comply with all applicable, laws, rules and regulations of any Federal, state, local or other regulatory agency relating to the performance of its obligations hereunder and shall obtain and maintain throughout the Term any and all licenses and permits required of it as a result of this Agreement. 12. FORCE MAJEURE Schedule I In the event either Party is rendered unable, wholly or in part, by Force Majeure to carry out its obligations under this Agreement, other than the payment of money, it is agreed that upon its giving notice and full particulars of such Force Majeure event to the other Party as soon as reasonably possible (such notice to be confirmed in writing), the obligations of the other Party, to the extent they are affected by such event, shall be suspended from the inception and during the continuance of the Force Majeure. The Party claiming Force Majeure shall be obligated to cause same to be remedied with all reasonable diligence and dispatch. 13. CERTAIN REMEDIES AVAILABLE FOR DEFAULT 13.1 Remedies for Customer Default. Upon the occurrence of a Customer Default, in addition to any other remedies available to Provider at law or in equity, Provider may take one or more of the following actions: (a) Provider may suspend the provision of further Services until Customer shall have (i) fully remedied the Customer Default and (ii) provided Provider with such further assurances as Provider may determine to ensure that Customer will thereafter promptly pay the Fees owed hereunder in accordance with the terms hereof; (b) Where the Customer Default involves its unjustified failure to pay all or any part of the Fees, and such failure continues for more than ten (10) Business Days following the due date thereof, Provider shall have the right to terminate this Agreement by the delivery of 5 Days prior written notice to Customer; and (c) Proceed by appropriate court action or actions either at law or in equity to enforce performance of the applicable covenants of this Agreement or to recover damages for the breach of this Agreement to the extent permitted under the provisions hereof. 13.2 Remedies for Provider Default. Upon the occurrence of a Provider Default, in addition to any other remedies available to Customer at law or in equity, Customer shall be entitled to the following: (a) If on any Day Provider fails to perform Gas Services in accordance with a currently effective Service Schedule, then such occurrence shall constitute a "Provider Default" and "Provider's Deficiency Quantity" shall be the numerical difference between the volume of gas tendered for delivery under the Service Schedule, and the quantity of Gas for which Gas Services were actually provided for such Day. In the event of a Provider Default, Provider shall pay Customer an amount equal to the product of Provider's Deficiency Schedule I Quantity multiplied by the Replacement Price Differential. Payment to Customer shall be made in accordance Section 5.3 of this Agreement. (b) Proceed by appropriate court action or actions either at law or in equity to enforce performance of the applicable covenants of this Agreement or to recover damages for the breach of this Agreement to the extent permitted under the provisions hereof. 13.3 Right to Self Help. During any cure periods allowed under this Agreement and prior to cure by the defaulting Party, if the defaulting Party is failing to diligently pursue steps to cure the default, the non-defaulting Party shall have the right to take all reasonable actions necessary to remedy the default, and the defaulting Party shall be liable for the expenses associated therewith and reimburse the non-defaulting Party therefor within three Days of receipt of an invoice for such expenses. 13.4 Legal Fees and Expenses. In addition to any other cost, fees, or remedies occasioned by a Party's default, the defaulting Party shall be liable for all legal fees and other costs and expenses resulting from a default by such Party and the exercise of the remedies herein provided by the nondefaulting Party. 13.5 Remedies Not Exclusive. In no event shall the enumeration of the specific remedies set forth in this Agreement preclude a Party from seeking other or alternate remedies to those described herein, nor shall any single or partial exercise of any right or remedy hereunder preclude any other or further exercise thereof or the exercise of any other right. The remedies herein provided are cumulative and not exclusive of any remedies provided by law, by agreement or otherwise. 13.6 Effect of Termination. In the event that Provider terminates this Agreement as a result of the election permitted in Section 13.1(b) above, Provider's remaining obligations hereunder shall cease. 14. ARBITRATION 14.1 Agreement to Arbitrate. Any claim, counterclaim, demand, cause of action, dispute, and controversy arising out of or relating to this Agreement or the relationship established by this Agreement, any provision hereof, the alleged breach thereof, or in any way relating to the subject matter of this Agreement, involving the Parties and/or their respective representatives (collectively the "Claims"), even though some or all of such Claims allegedly are extra-contractual in nature, whether such Claims sound in contract, tort, or otherwise, at law or in equity, under State or federal law, whether provided by statute or the common law, for damages or any other relief, shall be resolved by binding arbitration. Schedule I 14.2 Conduct of the Arbitration, Authority of the Arbitrators, and Choice of Law. Arbitration shall be conducted in accordance with the rules of arbitration of the Federal Arbitration Act and, to the extent an issue is not addressed by the federal law on arbitration, by the Commercial Arbitration Rules of the American Arbitration Association. The validity, construction, and interpretation of this agreement to arbitrate, and all procedural aspects of the arbitration conducted pursuant hereto shall be decided by the arbitrators. In deciding the substance of the Parties' Claims, the arbitrators shall refer to the laws of the State of Texas as required by Section 15.8 hereof. It is agreed that the arbitrators shall have no authority to award treble, exemplary or punitive damages of any type under any circumstances whether or not such damages may be available under state, or federal law, or under the Federal Arbitration Act, or under the Commercial Arbitration Rules of the American Arbitration Association, the Parties hereby waiving their right, if any, to recover any such damages. 14.3 Forum for the Arbitration and Selection of Arbitrators. The arbitration proceeding shall be conducted in Houston, Texas. Within thirty (30) Days of the notice of initiation of the arbitration procedure, each Party shall select one arbitrator. The two arbitrators shall select a third arbitrator. The third arbitrator shall be a person who has over eight (8) years professional experience in the intrastate natural gas pipeline industry and who has not previously been employed by either Party and does not have a direct or indirect interest in either Party or the subject matter of the arbitration. While the third arbitrator shall be neutral, the two Party-appointed arbitrators are not required to be neutral, and it shall not be grounds for removal of either of the two Party-appointed arbitrators or for vacating the arbitrators' award that either of such arbitrators has past or present minimal relationships with the Party that appointed such arbitrator. 14.4 Confidentiality. To the fullest extent permitted by law, any arbitration proceeding and the arbitrators award shall be maintained in confidence by the Parties. 15. MISCELLANEOUS CLAUSES 15.1 Transfer. This Agreement shall inure to and bind the permitted successors and assigns of the Parties; provided, except as permitted herein, neither Party shall transfer this Agreement without the prior written approval of the other Party; provided further, either Party may transfer its interest to an Affiliate by assignment, merger or otherwise without the prior approval of the other Party, but no such transfer shall operate to relieve the assigning Party of its obligations hereunder; provided further, if Provider assigns all or any part of the Fee due Provider hereunder to a third party (which Customer agrees it shall have the right so to do without Customer's prior consent), Customer, upon receiving written notice of any such assignment, shall make all payments hereunder as it may be therein directed. Any Party's transfer in violation hereof shall be void. 15.2 Warranties. EXCEPT AS MAY BE EXPRESSLY PROVIDED HEREIN OR AS OTHERWISE MUTUALLY AGREED IN WRITING BY THE PARTIES, Schedule I THERE ARE NO EXPRESS, STATUTORY OR IMPLIED WARRANTIES WITH RESPECT TO THIS AGREEMENT. 15.3 Enforceability and Irrevocability. If any part of this Agreement is contrary to, prohibited by or deemed invalid under applicable laws or regulations of any jurisdiction, such provision shall be inapplicable and deemed omitted but shall not invalidate the remaining provisions hereof. Each Party admits the receipt of a counterpart of this Agreement. 15.4 Confidentiality and Public Statement. Each Party shall not disclose the terms of this Agreement, or any information concerning gas throughput or the operations of either Party it receives or has knowledge of incident to the performance of the obligations hereunder, to a third party (other than its Affiliates' employees, lenders, direct and indirect owners, shareholders, partners, and/or investors, and each of such person's respective counsel, accountants and investment advisors and other advisors who have agreed to keep such terms confidential) except in order to comply with any applicable law, order, regulation or exchange rule; provided, each Party shall notify the other Party of any proceeding of which it is aware which may result in disclosure and use reasonable efforts to prevent or limit the disclosure. Notwithstanding the foregoing, the Parties, upon mutual written approval of both form and content, may release public communications concerning the transaction contemplated by this Agreement. 15.5 Modification and Waiver. No covenant or condition of this Agreement may be modified by either Party except by the written consent of both Parties. Forbearance or indulgence by either Party in any regard whatsoever shall not constitute a waiver or change of the covenant or condition to be performed by the other Party to which the same may apply, and, until the complete performance of said covenant or condition has occurred. Each Party shall be entitled to invoke any remedy at law or in equity available to it under the provisions of this Agreement despite said forbearance or indulgence. Waiver of any defaults shall not waive any other default. 15.6 Entirety and Relationship. This Agreement constitutes the entire agreement of the Parties related to the provision of the Services by Provider to Customer. There are no prior or contemporaneous agreements or representations (whether oral or written) involving the subject matter of this Agreement other than those herein expressed. This Agreement is not intended to create, and shall not be construed to create, a relationship of partnership, joint venturers, or an association for profit or any kind of real property or leasing relationship between the Parties. 15.7 Control. As between the parties hereto, Customer shall be in control and in possession of the Gas delivered hereunder and responsible for any damages or injuries caused thereby until the same shall have been delivered to Provider at the Receipt Points and after it has been redelivered for Customer's account at the Delivery Points. After such delivery of Gas, Provider shall be deemed to be in exclusive control and possession Schedule I thereof and responsible for any injuries or damages caused thereby until the same shall have been redelivered for the account of Customer at the Delivery Points. 15.8 Law. This Agreement shall be construed under and in accordance with the laws of the State of Texas and Federal law as set forth in Section 14.2. 15.9 Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original and need not be signed by more than one of the Parties and all of which shall constitute one and the same agreement. 15.10 Other. The headings used herein are for convenience and reference purposes only. The Parties agree that the original executed version of this Agreement, Service Operating Schedule, Exhibit or any Services Schedule may be photocopied and stored on computer tapes and disks, with the Parties specifically agreeing that if such items, if introduced as evidence on paper (or if computer records, then introduced into evidence in printed format), in any judicial, arbitration, mediation or administrative proceedings, will be admissible as between the Parties to the same extent and under the same conditions as other business records originated and maintained in documentary form. Neither Party shall object to the admissibility of the foregoing items (or photocopies of the foregoing items) on the basis that such were not originated or maintained in documentary form under either the hearsay rule, the best evidence rule or other rule of evidence. Schedule I This Agreement is executed by each Party effective as of this 21st Day of September 2000.
PROVIDER CUSTOMER NBP ENERGY PIPELINES, L.L.C ENRON NORTH AMERICA CORP. By: /s/ Jerry L. Peters By: /s/ Brian Remond -------------------------------- ------------------------------------- Name: Jerry L. Peters Name: Brian Redmond Title: Vice President Title: Managing Director
Schedule I SCHEDULE I SERVICE OPERATING SCHEDULE The Services described below are subject to the terms and conditions of that certain Master Services Agreement between NBP Energy Pipelines, L.L.C. ("Provider") and Enron North America Corp. ("Customer"), dated as of September __, 2000 (the "Agreement"), and this Schedule I is expressly incorporated into and made a part of the Agreement. I. GAS SERVICES 1.1 GENERAL DESCRIPTION. (a) General Description of Gas Services. Subject to Section 1.1(b) below, Provider agrees to receive, transport, treat, process, and deliver those volumes of gas that are the thermal equivalent of gas tendered by Customer at a given Receipt Point (hereafter defined) in accordance with the terms and provisions of a currently effective Service Schedule on each Day ("Gas Services") (b) System Specifications and Procedures. The Services shall be in accordance with and subject to the specifications and procedures of the System(s) or as otherwise specified in a currently effective Service Schedule. 1.2 QUANTITY Provider shall receive quantities of gas from or for the account of Customer on any Day at the Receipt Point(s) and redeliver to a Delivery Point in accordance with all currently effective Service Schedules, on a firm basis for Receipt Points and Delivery Points that are interconnects to Systems that are header and/or mainline transportation systems for a total quantity of gas not to exceed the Maximum Quantity and on an interruptible basis for quantities of gas at all other Receipt Points and Delivery Points and for quantities of gas in excess of the Maximum Quantity. 1.3 RECEIPT POINTS & DELIVERY POINTS (a) Receipt Points and Delivery Points. The receipt point(s) ("Receipt Point(s)") and delivery points ("Delivery Point(s)") for gas received and delivered or caused to be received and delivered between Customer and Provider hereunder shall be as specified on Exhibit A as the same may be modified from time to time in a currently effective Service Schedule. (b) Point Flexibility. Customer shall have Receipt Point and Delivery Point flexibility and shall not be required to request Gas Services that physically path gas on any one System or interconnected network of Systems. Schedule I (c) System Flexibility. Provider shall have System flexibility and shall not be required to utilize any particular System in providing the Gas Services. 1.4 MEASUREMENT Provider shall provide or contract for measurement services in accordance with industry standards for each Receipt Point and Delivery Point. 1.5 AUDIT RIGHTS Customer shall have the right at all reasonable times to audit the measurement records of the measuring party's custody transfer or check measurement. If any such audits reveal any inaccuracy in any billing or payment therefore made, the necessary adjustments in such billing and payment shall be made within thirty (30) Days after final determination thereof; provided, that no adjustments for any billing or payment shall be made for any inaccuracy claimed after the lapse of twelve (12) Months from the rendition of the invoice(s) relating thereto. II. ADMINISTRATIVE SERVICES 2.1 GENERAL DESCRIPTION Provider agrees to perform nomination, scheduling, allocation, balancing services and to provide gas services and forecasting information all as more fully described below ("Administrative Services") in connection with the Gas Services provided hereunder. 2.2 NOMINATION AND SCHEDULING SERVICES Provider shall coordinate with Customer and/or any other party designated by Customer to determine the quantities to be delivered or received hereunder at each Receipt Point and Delivery Point during the period scheduled (the "Scheduled Volume"). Provider shall properly nominate and schedule gas in accordance with the nomination and scheduling procedures for each System and shall maintain records of such activities for Customer. Provider shall be responsible for coordinating with Customer to adjust the Scheduled Volume on a Daily basis to minimize imbalances. 2.3 BALANCING SERVICES Provider shall continuously monitor the gas volumes actually received and redelivered each month and shall notify Customer of any discrepancy between actual deliveries and Schedule Volumes. Provider shall actively work with Customer to manage and minimize imbalances. Any imbalance resulting from the failure of Provider to provide the Services hereunder shall be resolved by Provider at Provider's expense. Any imbalance resulting from the failure of Customer to properly schedule take away capacity Schedule I at a Delivery Point shall be resolved by Customer at Customer's expense. 2.4 ALLOCATIONS At Customer's request, Provider shall furnish or cause to be furnished to Customer such information as Customer shall reasonably consider to be necessary to allocate volumes received at the Receipt Points and/or delivered at the Delivery Points among the various customers of Customer. 2.5 GAS SERVICES INFORMATION (a) Customer's Gas. Provider shall furnish Customer with Monthly statements detailing the quantity of gas received at each Receipt Point and redelivered at each Delivery Point (in Mcf and MMBtu), together with related fuel and lost and unaccounted for gas volumes. (b) Total Volumes. At Customer's request Provider shall furnish Customer with all scheduled and metered volumes and pressure information for the Receipt Points and the Delivery Points. If such service is available at the applicable Receipt Points and/or Delivery Points, Provider shall furnish to Customer, access to real time total gas flow information. This information shall be provided whether or not Customer is utilizing Gas Services hereunder. 2.6 FORECASTING INFORMATION Provider shall furnish Monthly production forecasting information and projections for the natural gas producing basins that might reasonably be expected to be capable of delivering gas to the Receipt Points. Schedule I EXHIBIT A RECEIPT AND DELIVERY POINTS RECEIPT POINTS: 1. All Points in the Madden Field, Fremont County Wyoming. 2. All Points in the Powder River Basin, Campbell, Converse and Sheridan Counties, Wyoming. DELIVERY POINTS: 1. Interconnects with the Wyoming Interstate Company's Pipeline in Sweetwater, Carbon and Converse Counties, Wyoming. 2. Interconnects with Colorado Interstate Gas Company's Pipeline in Sweetwater, Carbon and Converse Counties, Wyoming. 3. Interconnects with Kinder Morgan Interstate in Sweetwater, Carbon and Converse Counties, Wyoming. Exhibit A EXHIBIT B FORM OF SERVICE SCHEDULE [DATE] Enron North America Corp. RE: MASTER SERVICES AGREEMENT DATED [____________] SERVICE SCHEDULE "[___, SEQUENTIAL LETTER OR NUMBER USED TO SEPARATELY IDENTIFY SERVICE SCHEDULES]" Ladies & Gentlemen: With reference to the above-described Master Service Agreement between NBP Energy Pipelines, L.L.C. ("Provider") and Enron North America Corp. ("Customer") (herein referred to as the "Agreement"), The parties hereby agree to this Service Schedule "[____]" (this "Service Schedule") as follows:
- -------------------------------------------------------------------------------- TERM: [COMMENCEMENT DATE OF SERVICE SCHEDULE THROUGH TERMINATION DATE]. - -------------------------------------------------------------------------------- RECEIPT POINTS: - -------------------------------------------------------------------------------- DELIVERY POINTS: - -------------------------------------------------------------------------------- VARIABLE SERVICES FEE $0.__per MMBtu. - -------------------------------------------------------------------------------- QUANTITY: MMBtu per day. - -------------------------------------------------------------------------------- FUEL & L&U - -------------------------------------------------------------------------------- OTHER PROVISIONS: - --------------------------------------------------------------------------------
This Service Schedule shall govern Gas Services during the Term as specified above and from the Receipt Points to the Delivery Points listed above. If the foregoing represents your understanding of our agreement, please so indicate in the space provided below and return two (2) fully executed copies for our records. Very truly yours, NBP ENERGY PIPELINES, L.L.C. By: ------------------------------------ Title: ACCEPTED AND AGREED TO this ____ day of ______________, 2000 ENRON NORTH AMERICA CORP. By: ---------------------------------- Name: ------------------------------- Title: ------------------------------- Exhibit B EX-10 7 exh1026.txt MATERIAL CONTRACTS EXHIBIT 10.26 EXECUTION COPY - -------------------------------------------------------------------------------- ACQUISITION AGREEMENT AMONG NORTHERN BORDER PARTNERS, L.P. NORTHERN BORDER INTERMEDIATE LIMITED PARTNERSHIP BEAR PAW INVESTMENTS, LLC BEAR PAW ENERGY, LLC AND SELLERS DATED AS OF MARCH 14, 2001 - -------------------------------------------------------------------------------- TABLE OF CONTENTS ARTICLE I DEFINED TERMS 1.1 Defined Terms.........................................................1 1.2 Construction..........................................................7 ARTICLE II AGREEMENT TO CONTRIBUTE, TRANSFER AND ACQUIRE BPI; ASSIGNMENT 2.1 Acquisition of BPI....................................................7 ARTICLE III CLOSING; DELIVERY 3.1 Closing Date..........................................................7 3.2 Delivery..............................................................8 ARTICLE IV PURCHASE PRICE 4.1 Purchase Price........................................................8 4.2 Purchase Price Adjustment.............................................8 4.3 Payment...............................................................8 4.4 Tax Treatment.........................................................9 4.5 Escrow Arrangement....................................................9 4.6 Contingency Payment..................................................10 ARTICLE V CONDUCT AND TRANSACTIONS PRIOR TO THE CLOSING 5.1 Access to Records and Properties.....................................10 5.2 Operation of Business................................................10 5.3 Prohibited Actions...................................................11 5.4 Consents and Approvals...............................................12 5.5 No Inconsistent Actions..............................................12 5.6 Affiliate and Intercompany Transactions..............................12 5.7 Notice of Adverse Developments.......................................12 5.8 Employees............................................................12 5.9 Listing of Common Units on New York Stock Exchange...................14 5.10 Update of Schedules; Notice of Breach or Noncompliance...............14 5.11 Savings Plan.........................................................14 5.12 Brokerage Fees.......................................................14 5.13 Cancellation of Indebtedness of Certain Sellers......................15 ARTICLE VI REPRESENTATIONS AND WARRANTIES OF NBILP AND NBP 6.1 Organization, Standing and Authority.................................15 6.2 Authorization; Enforceability........................................15 6.3 Governmental and Other Consents......................................15
i 6.4 Brokers or Finders......................................................................................15 6.5 Public Filings; Financial Statements....................................................................16 6.6 Partnership Status......................................................................................16 6.7 Compliance with Instruments.............................................................................16 6.8 Litigation..............................................................................................17 6.9 Capitalization..........................................................................................17 ARTICLE VII REPRESENTATIONS AND WARRANTIES OF BPE AND BPI 7.1 Organization, Standing and Authority of the Bear Paw Entities...........................................17 7.2 Authorization; Enforceability...........................................................................18 7.3 Subsidiaries; Investments...............................................................................18 7.4 Capitalization..........................................................................................18 7.5 Title to Assets.........................................................................................18 7.6 Charter Documents.......................................................................................19 7.7 Financial Statements....................................................................................19 7.8 Litigation..............................................................................................19 7.9 Compliance with Instruments.............................................................................20 7.10 Compliance with Laws....................................................................................20 7.11 Governmental and Other Consents.........................................................................20 7.12 Contracts...............................................................................................21 7.13 Employment and Labor Matters............................................................................21 7.14 Employees, Obligations and Benefits.....................................................................22 7.15 Conduct and Transactions Since Date of Financial Statements.............................................22 7.16 Bank Accounts...........................................................................................24 7.17 Environmental Matters...................................................................................24 7.18 Patents and Trademarks..................................................................................25 7.19 Taxes...................................................................................................25 7.20 Indebtedness............................................................................................27 7.21 Powers of Attorney......................................................................................27 7.22 Permits.................................................................................................27 7.23 Affiliated Party Transactions...........................................................................27 7.24 Brokers or Finders......................................................................................27 7.25 Eminent Domain..........................................................................................28 7.26 Indemnification from TransMontaigne.....................................................................28 7.27 Disclosure..............................................................................................28 7.28 Termination of Change in Control Plan...................................................................28 7.29 Net Working Capital of Lodgepole........................................................................28 ARTICLE VIII REPRESENTATIONS AND WARRANTIES OF SELLERS 8.1 Organization, Standing and Authority of Sellers.........................................................28 8.2 Authorization; Enforceability...........................................................................28 8.3 Ownership of the Interests..............................................................................28 8.4 Compliance with Instruments.............................................................................29 8.5 Brokers or Finders......................................................................................29 8.6 Litigation..............................................................................................30
ii 8.7 Governmental and Other Consents.........................................................................30 8.8 Investment..............................................................................................30 8.9 Disclosure..............................................................................................30 8.10 Representation Regarding Tax Liabilities................................................................30 ARTICLE IX CONDITIONS TO SELLERS' OBLIGATION TO CLOSE 9.1 Representations and Warranties Correct..................................................................31 9.2 Performance of Obligations by NBP and NBILP.............................................................31 9.3 Actions to be Taken at Closing..........................................................................31 9.4 Consents and Notices....................................................................................31 9.5 Absence of Litigation...................................................................................31 9.6 Opinion of Counsel for NBP and NBILP....................................................................31 9.7 Material Adverse Change.................................................................................31 9.8 Listing of Common Units on New York Stock Exchange......................................................32 9.9 Liquids Marketing Agreement.............................................................................32 ARTICLE X CONDITIONS TO NBP'S AND NBILP'S OBLIGATION TO CLOSE 10.1 Representations and Warranties Correct..................................................................32 10.2 Performance of Obligations by Sellers...................................................................32 10.3 Actions to be Taken at Closing..........................................................................32 10.4 Miscellaneous Documents.................................................................................32 10.5 Certificates............................................................................................33 10.6 Opinions of Sellers' Counsel............................................................................33 10.7 No Adverse Change.......................................................................................33 10.8 Consents and Notices....................................................................................33 10.9 Absence of Litigation...................................................................................33 10.10 Disposition of Lodgepole................................................................................33 10.11 Liquids Marketing Agreement.............................................................................33 10.12 Execution of Certain Agreements.........................................................................33 10.13 Acceptance of Employment Offers.........................................................................34 10.14 Title Matters...........................................................................................34 10.15 Repayment of Indebtedness of Certain Sellers............................................................34 ARTICLE XI ADDITIONAL COVENANTS OF THE PARTIES 11.1 Affiliate and Intercompany Transactions.................................................................34 11.2 Powers of Attorney......................................................................................34 11.3 Tax Matters.............................................................................................34 11.4 Employment and Benefit Obligations......................................................................36 11.5 Books and Records.......................................................................................36 11.6 Bear Paw Name...........................................................................................36 11.7 Registration Rights of Sellers..........................................................................36 11.8 Sellers' Consent to Disposition of Lodgepole and Other Matters..........................................41 11.9 Indemnification Agreements..............................................................................41 11.10 Novation................................................................................................42
iii 11.11 COBRA Obligations.......................................................................................42 11.12 NBP Limited Partnership Agreement.......................................................................42 11.13 Termination of BPE Credit Agreement.....................................................................42 11.14 Assignment of Claim.....................................................................................42 ARTICLE XII SURVIVAL OF REPRESENTATIONS AND WARRANTIES, ETC. 12.1 Survival................................................................................................43 12.2 Limitation on Liabilities...............................................................................43 ARTICLE XIII INDEMNIFICATION 13.1 Indemnification by NBP and NBILP........................................................................43 13.2 Indemnification by Sellers..............................................................................43 13.3 Indemnifying and Indemnified Party......................................................................44 13.4 Notification of Claims; Right to Contest and Defend.....................................................44 13.5 Cooperation.............................................................................................45 13.6 Right to Participate....................................................................................45 13.7 Payments................................................................................................45 13.8 No Consequential or Punitive Damages....................................................................45 13.9 Indemnification for Costs of Prosecuting Certain Securities Laws Claims.................................46 ARTICLE XIV TERMINATION 14.1 Termination.............................................................................................46 14.2 Effect of Termination...................................................................................46 ARTICLE XV DISPUTE RESOLUTION; ARBITRATION 15.1 Dispute Resolution......................................................................................47 15.2 Mediation...............................................................................................47 15.3 Arbitration.............................................................................................47 ARTICLE XVI MISCELLANEOUS 16.1 Further Cooperation.....................................................................................49 16.2 Amendments and Waivers..................................................................................49 16.3 Expenses................................................................................................49 16.4 Confidentiality.........................................................................................49 16.5 Right to Compete........................................................................................50 16.6 Public Announcements....................................................................................50 16.7 Assignment and Binding Effect...........................................................................51 16.8 Notices.................................................................................................51 16.9 Entire Agreement........................................................................................52 16.10 Descriptive Headings....................................................................................52 16.11 Governing Law...........................................................................................53 16.12 Counterparts............................................................................................53
iv 16.13 Recovery of Costs and Attorneys' Fees...................................................................53 16.14 Severability............................................................................................53 16.15 No Third Party Beneficiaries............................................................................53
v SCHEDULES Schedule 4.6 Area of Mutual Interest Schedule 5.2 Business Conduct Not in the Ordinary Course Schedule 5.3(a) Prohibited Actions Schedule 5.3(b) Prohibited Actions Schedule 5.6 Affiliate Transactions Schedule 5.7 Adverse Developments Schedule 5.8(a) Excluded Employees Schedule 5.8(b) Desired Employees Schedule 6.7 Compliance with Instruments Schedule 6.9 Registration Rights Schedule 7.1 Jurisdictions in which the Bear Paw Entities are Qualified to Conduct Business Schedule 7.3 Subsidiaries and Investments of the Bear Paw Entities Schedule 7.4 Capitalization Schedule 7.5 Real and Personal Property; Permitted Encumbrances Schedule 7.7 Financial Statements of the Bear Paw Entities Schedule 7.8 Pending or Threatened Litigation Schedule 7.9 Noncompliance with Instruments Schedule 7.10 Compliance with Laws Schedule 7.11 Governmental and Other Consents Schedule 7.12(a) Contracts Schedule 7.12(b) Contracts Requiring Notice or Consent Schedule 7.14 Employees; Employee Benefit Plans Schedule 7.15 Conduct and Transaction of Business Since Date of Financial Statements Schedule 7.16 Bank Accounts Schedule 7.17 Environmental Matters Schedule 7.18 Intellectual Property Rights Schedule 7.19(a) Tax Reserves Schedule 7.19(c) Tax Audits Schedule 7.19(d) Tax Sharing Agreements Schedule 7.19(e) Change in Accounting Method Schedule 7.19(f) Partnership Status Schedule 7.20 Indebtedness and Hedge Transactions Schedule 7.21 Powers of Attorney Schedule 7.22 Permits Schedule 7.23 Affiliated Party Transactions Schedule 7.24 Brokers or Finders Schedule 7.29 Net Working Capital of Lodgepole Schedule 8.3 Voting Agreements or Proxies Schedule 8.6 Pending or Threatened Litigation Schedule 8.7 Governmental and Other Consents Schedule 8.8 Non-accredited Investors Schedule 10.14 Titles to be Cured Schedule 11.1 Affiliate and Intercompany Transactions to be Terminated Schedule 11.6 Powder River/Williston Basins vi Schedule 11.7 Underwriters Schedule 11.9 Indemnitees vii EXHIBITS Exhibit A - Form of Escrow Agreement and Instructions Exhibit B - Form of Opinion of Counsel to NBP and NBILP Exhibit C - Form of Liquids Marketing Agreement Exhibit D - Form of Opinion of Sellers' Counsel Exhibit E - Form of Exchange Agreement viii ACQUISITION AGREEMENT THIS ACQUISITION AGREEMENT (this "AGREEMENT") is entered into as of March 14, 2001 (the "SIGNING DATE") by and among Northern Border Partners, L.P., a Delaware limited partnership ("NBP"), Northern Border Intermediate Limited Partnership, a Delaware limited partnership ("NBILP"), Bear Paw Investments, LLC, a Delaware limited liability company ("BPI"), Bear Paw Energy, LLC, a Delaware limited liability company ("BPE"), and the Persons executing the signature pages hereof as Sellers ("SELLERS"). This Agreement is effective as of January 1, 2001 (the "EFFECTIVE DATE"). NBP, NBILP, BPI, BPE and the Sellers are sometimes referred to herein individually as a "PARTY" and collectively as the "PARTIES." RECITALS: WHEREAS, Sellers are the owners of all the issued and outstanding member interests of BPI; BPI and Bear Cub Investments, LLC, a Colorado limited liability company ("BEAR CUB"), are the owners of all of the issued and outstanding member interests of BPE; and BPE is the owner of all the issued and outstanding equity interests in Bear Paw Processing Company (Canada), Ltd., a Canadian company ("BPP"), and the owner of all the issued and outstanding equity interests in Lodgepole Energy Marketing, LLC, a Colorado limited liability company ("LODGEPOLE") (BPI, BPE and BPP are referred to herein collectively as the "BEAR PAW ENTITIES"); WHEREAS, NBP desires to acquire from Sellers, and Sellers desire to contribute and assign to and exchange with NBP all of the member interests in BPI (the "INTERESTS"), which Interests include all of the Common Units, Class M Units, Restricted Common Units, IRR 12 Units and IRR 20 Units of BPI, upon the terms and conditions and in reliance upon the representations, warranties and covenants set forth in this Agreement, and NBP desires to contribute all such Interests to NBILP; NOW, THEREFORE, in consideration of the mutual benefits to be derived from this Agreement and of the representations, warranties, conditions, covenants and agreements hereinafter contained, the Parties hereby agree as follows: ARTICLE I DEFINED TERMS 1.1 Defined Terms. The following capitalized terms when used in this Agreement shall have the meanings set forth below for such terms (with terms defined in the singular having the corresponding meaning when used in the plural and vice versa): "AAA" has the meaning set forth in Section 15.2. "Affiliate" means, with respect to any Person, any other Person that possesses, directly or indirectly, through one or more intermediaries, any of the following: (a) if such Person is a corporation, fifty percent (50%) or more of the outstanding voting securities thereof; (ii) if such Person is a limited liability company, partnership or venture, the right to fifty percent (50%) or more of the distributions therefrom (including liquidating distributions); (iii) if such Person is a trust or estate, including a business trust, fifty percent (50%) or more of the beneficial interest therein; and (iv) if such Person is another entity, fifty percent (50%) or more of the economic or beneficial interest therein; or (b) the power or authority, through the ownership of voting securities, by contract or otherwise, to exercise a controlling influence over the management of such Person; and such Person shall also be deemed to be an Affiliate of such other Person and any Affiliate of such other Person. "Agreement" has the meaning set forth in the introductory paragraph. "Allocation Agreement" has the meaning set forth in Section 4.3(d). "Anticipated Filing Date" has the meaning set forth in Section 11.7(a). "Arbitration Rules" has the meaning set forth in Section 15.3(a). "Bear Cub" has the meaning set forth in the recitals. "Base Purchase Price" has the meaning set forth in Section 4.1. "Bear Paw Entities" has the meaning set forth in the recitals. "Bear Paw Name" means the "Bear Paw" name, logo, trademark, brand, domain name, web site and all other similar signs, words or marks. "Benefit Plans" has the meaning set forth in Section 7.14(b). "BPE" has the meaning set forth in the introductory paragraph. "BPE Change in Control Plan" means that change in control plan effective as of October 1, 2000 adopted by BPE for the benefit of its employees. "BPE Credit Agreement" means BPE's existing Credit Agreement with First Union Bank N.A., et al, dated January 20, 2000, as amended by the amendments listed on Schedule 7.12(a). "BPI" has the meaning set forth in the introductory paragraph. "BPP" has the meaning set forth in the recitals. "Cash Percentage" has the meaning set forth in Section 4.4(b). "Cash Purchase Price Payment" has the meaning set forth in Section 4.3(b). "CERCLA" has the meaning set forth in Section 7.17. 2 "Closing" has the meaning set forth in Section 3.1. "Closing Date" has the meaning set forth in Section 3.1. "Code" means the Internal Revenue Code of 1986, as amended, and any successor statute. "Common Units" has the meaning set forth in Section 4.3. "Confidential Information" has the meaning set forth in Section 16.4(b). "Continuing Employees" has the meaning set forth in Section 5.8(c). "Contracts" has the meaning set forth in Section 7.12(a). "Current Operating Assets" means cash and cash equivalents, trade accounts receivable, inventory, and other current assets, all determined on a consolidated basis in accordance with GAAP. "Current Operating Liabilities" means trade accounts payable, contracts payable, income taxes payable, accrued expenses and other current liabilities, all determined on a consolidated basis in accordance with GAAP. "Damages" has the meaning set forth in Section 13.1. "Desired Employees" has the meaning set forth in Section 5.8(b). "Dispute" has the meaning set forth in Section 15.1. "Effective Date" has the meaning set forth in the introductory paragraph. "Employment Obligations" has the meaning set forth in Section 7.14(a). "Entity Level Taxes" has the meaning set forth in Section 11.3(b). "Environmental Laws" has the meaning set forth in Section 7.17. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended, and any successor statute. "Escrow Agreement" has the meaning set forth in Section 4.5. "Escrowed Funds" has the meaning set forth in Section 4.5. "Exchange Act" has the meaning set forth in Section 6.5(a). "Exchange Agreement" has the meaning set forth in Section 10.10. "Excluded Employees" has the meaning set forth in Section 5.8(a). 3 "Existing Gathering Agreement Gas" has the meaning set forth in Section 4.6. "Former Indemnitees" has the meaning set forth in Section 11.10. "GAAP" means generally accepted accounting principles applied on a consistent basis. "Good and Defensible Title" shall mean title that (i) (a) with respect to easements and rights-of-way, was granted to a Bear Paw Entity under a valid instrument and that covers the land on which constructed pipeline(s) are located, if any, or (b) with respect to personal property, is in the possession of a Bear Paw Entity, (ii) is not held in violation of any applicable Laws, rules, regulations or orders of any Governmental Authority, which violation would have a reasonable likelihood of resulting in impairment or loss of title, (iii) is such that a reasonable and prudent Person engaged in the business of the ownership, development and operation of gas processing facilities and gas gathering pipeline systems with the knowledge of all the facts and their legal bearing would be willing to accept, and (iv) is free and clear from Liens and encumbrances (except Permitted Encumbrances). "Good and Marketable Title" shall mean title that (i) consists of fee simple ownership or of 100% leasehold interest under a lease from the fee simple owner(s) that is valid and in good standing, (ii) can be deduced from the applicable county, state, provincial or federal records, and (iii) is free and clear from defects in title and Liens and encumbrances (except Permitted Encumbrances). "Governmental Authority" or "Governmental" means a federal, state, provincial, local, municipal or foreign governmental or regulatory authority; any executive, administrative, legislative or other governing body of any of the foregoing, or a commission, committee or council of any of the foregoing; and any court or other judicial body. "Holder" has the meaning set forth in Section 11.7(a). "Indemnified Party" has the meaning set forth in Section 13.3. "Indemnified Persons" has the meaning set forth in Section 11.7(d). "Indemnifying Party" has the meaning set forth in Section 13.3. "Income Taxes" has the meaning set forth in Section 11.3(a). "Intellectual Property Rights" has the meaning set forth in Section 7.18. "Interests" has the meaning set forth in the recitals. "Knowledge" means (a) in the case of Robert J. Clark, Jonathan Nixon and Michael R. Henderson, that such Seller has, after reasonable investigation, no reasonable basis to believe otherwise, (b) in the case of each other Seller, the actual knowledge of such other Seller, and (c) in the case of BPI and BPE, that (i) the President, Executive Vice President and Vice President and Chief Financial Officer of BPI have, after reasonable investigation, no reasonable 4 basis to believe otherwise and (ii) each other officer of BPI or BPE does not believe otherwise; provided that solely for purposes of Section 8.9 "Knowledge" means actual knowledge. "Law" means any applicable constitutional provision, statute, act, code (including the Code), law, regulation, rule, ordinance, order, decree, ruling, resolution, judgment, or interpretative or advisory opinion or letter or decision of a Governmental Authority having valid jurisdiction. "Lien" means any lien, claim, pledge, mortgage, title defect, charge, security interest, restriction or other encumbrance of any nature whatsoever. "Liquids Marketing Agreement" has the meaning set forth in Section 9.9. "Lodgepole" has the meaning set forth in the recitals. "Material" and "Materially" means information that would be material as such term has been interpreted by federal courts under the Securities Act and the Exchange Act. "NBILP" has the meaning set forth in the introductory paragraph. "NBP" has the meaning set forth in the introductory paragraph. "NBPS" means NBP Services Corporation, an Enron Corp. subsidiary. "NBP SEC Reports" has the meaning set forth in Section 6.5(a). "Net Purchase Price" has the meaning set forth in Section 4.2. "Net Working Capital" means Current Operating Assets less Current Operating Liabilities. "Operating Agreement" has the meaning set forth in Section 8.3. "OSHA" has the meaning set forth in Section 7.17. "Party" or "Parties" has the meaning set forth in the introductory paragraph. "PBGC" means the Pension Benefit Guaranty Corporation, and any successor thereto. "Percentage Amount" means, with respect to each Seller, the "% profit ownership in Bear Paw" set forth for such Seller in such Seller's Purchase Price Letter. "Permits" means any and all permits, franchises, certificates, licenses, authorizations, approvals, registrations, legal status, rights-of-way, orders or other approvals or licenses (a) under any (i) Law or (ii) contract with any Person, or (b) granted by any Governmental Authority. "Permitted Encumbrances" means (i) the Liens set forth on Schedule 7.5, (ii) statutory Liens for obligations not yet delinquent, (iii) all rights to notice in connection with the sale or 5 assignment of easements or rights-of-way if the same are of the type customarily made subsequent to a sale or conveyance, (iv) concurrent easements, rights-of-way, covenants or permits which do not interfere with or detract from the operation or value of the properties, (v) rights of reassignment, to the extent any exist on the date of this Agreement, upon the surrender or expiration of any instrument, (vi) purchase money mortgages and security interests on leased equipment set forth on Schedule 7.5, (vii) Liens, if any, to be released at Closing set forth on Schedule 7.5, and (viii) Liens for current taxes, assessments and other Governmental charges not yet due and payable and for which adequate reserves have been established on the books of the Bear Paw Entities as indicated on Schedule 7.19(a). "Person" means a natural person, a corporation, a limited liability company, a joint stock company, a partnership, a limited partnership, a joint venture, a trust, an estate, an unincorporated organization, a Governmental Authority, or another entity. "Pre-Closing Financial Statements" has the meaning set forth in Section 7.7. "Projected Gas" has the meaning set forth in Section 4.6. "Purchase Price Letter" has the meaning set forth in Section 4.3(c). "RCRA" has the meaning set forth in Section 7.17. "Receipt Point" has the meaning set forth in Section 4.6. "Registration Statement" has the meaning set forth in Section 11.7(a). "Savings Plan" has the meaning set forth in Section 5.11. "SEC" has the meaning set forth in Section 6.5(a). "Securities Act" means the Securities Act of 1933. "Sellers" has the meaning set forth in the introductory paragraph. "Signing Date" has the meaning set forth in the introductory paragraph. "Special Provisions" has the meaning set forth in Section 15.3(b). "Stay Bonus" has the meaning set forth in Section 5.8(b). "Subtraction from Purchase Price" has the meaning set forth in Section 4.2. "Tax Items" has the meaning set forth in Section 11.3(a). "Tax Proceeding" has the meaning set forth in Section 11.3(c). "Tax Returns" means all reports, information statements and returns required to be filed in connection with any Taxes, including information returns or reports with respect to backup withholding and other payments to any Person. 6 "Taxes" means all taxes, however denominated, including any interest, penalties or other additions to tax that may become payable in respect thereof, imposed by any Governmental Authority, which taxes include all income or profits taxes (including federal income taxes and state income taxes), real property gains taxes, payroll and employee withholding taxes, unemployment insurance taxes, social security taxes, sales and use taxes, ad valorem taxes, excise taxes, franchise taxes, gross receipts taxes, business license taxes, occupation taxes, real and personal property taxes, stamp taxes, environmental taxes, transfer taxes, workers' compensation, PBGC premiums and other Governmental charges, and other obligations of the same or of a similar nature as any of the foregoing, which any Person is required to pay, withhold or collect. "Terminated Employee" has the meaning set forth in Section 5.8(b). "TransMontaigne" has the meaning set forth in Section 7.26. "Units Purchase Price Payment" has the meaning set forth in Section 4.3(a). "Wastes" has the meaning set forth in Section 7.17. "Year-End Financial Statements" has the meaning set forth in Section 7.7. 1.2 Construction. Unless otherwise provided or unless the context clearly requires otherwise, all references to "Articles" and "Sections" are to Articles and Sections of this Agreement, and all references to "Exhibits" and "Schedules" are to Exhibits and Schedules to this Agreement, each of which is made a part of this Agreement and incorporated herein for all purposes; references to any gender include all others if applicable in the context; all uses of "include" or "including" mean "including, without limitation" or "including, but not limited to;" and references to a contract, agreement or other document mean that contract, agreement or document as amended, modified or supplemented, as of the date hereof, if applicable. ARTICLE II AGREEMENT TO CONTRIBUTE, TRANSFER AND ACQUIRE BPI; ASSIGNMENT 2.1 Acquisition of BPI. For the consideration hereinafter specified and upon the terms and subject to the conditions set forth in this Agreement, each of the Sellers agrees to contribute, transfer, assign and deliver to NBP, and NBP, in reliance upon the representations, warranties, covenants and agreements of BPI, BPE and Sellers set forth herein, agrees to acquire from the Sellers all of the Interests; immediately upon acquisition of such Interests NBP will contribute such Interests to NBILP. ARTICLE III CLOSING; DELIVERY 3.1 Closing Date. The contribution and acquisition of the Interests and the other transactions contemplated by this Agreement (the "CLOSING") shall take place at the offices of NBP in Denver, Colorado at 8:00 a.m. (Mountain Standard time) on March 30, 2001, or at such other time and place and on such other date as NBILP and BPI shall agree in writing. The date and time on which the Closing occurs is referred to in this Agreement as the "CLOSING DATE." 7 3.2 Delivery. At the Closing and subject to the satisfaction or waiver of the conditions set forth in Article IX, Sellers shall deliver to NBP, free and clear of all Liens, certificates representing all of the Interests and any other instruments reasonably requested by NBP to give effect to the acquisition. Concurrently with such deliveries, and subject to the satisfaction or waiver of the conditions set forth in Article X of this Agreement, NBP shall deliver to the Sellers: (i) the Cash Purchase Price Payment as calculated in Article IV below; and (ii) the Units Purchase Price Payment as calculated in Article IV below evidenced by certificates representing such Common Units. The foregoing amounts of cash and Common Units shall be distributed on the Closing Date by NBP among the Sellers in the manner and amounts set forth in Article IV below. ARTICLE IV PURCHASE PRICE 4.1 Purchase Price. The consideration for the sale of the Interests by Sellers to NBP shall be Three Hundred Sixty-Six Million Sixty-Three Thousand Dollars ($366,063,000) (the "BASE PURCHASE PRICE"), adjusted pursuant to Section 4.2 and payable in accordance with Section 4.3. 4.2 Purchase Price Adjustment. The Base Purchase Price shall be adjusted by subtracting the "SUBTRACTION FROM PURCHASE PRICE," which is Ninety-Eight Million Two Hundred Thirty-Two Thousand Five Hundred Dollars ($98,232,500). The Base Purchase Price minus the Subtraction from Purchase Price is referred to as the "NET PURCHASE PRICE." 4.3 Payment. The Net Purchase Price shall be paid to the Sellers in cash and in Common Units of NBP ("COMMON UNITS") as follows: (a) Common Units. One-half of the Base Purchase Price shall be paid to Sellers in the form of duly issued Common Units (the "UNITS PURCHASE PRICE PAYMENT"). The aggregate number of Common Units to be delivered by NBP to Sellers shall be determined by dividing one-half of the Base Purchase Price by $32.04375; provided, however, that no Seller shall be entitled to any fractional Common Unit, and the number of Common Units delivered to each Seller shall be rounded to the next lowest whole unit. (b) Cash. The remaining consideration payable (the Net Purchase Price minus the Units Purchase Price Payment) shall be paid to the Sellers in cash (the "CASH PURCHASE PRICE PAYMENT"). The Cash Purchase Price Payment shall be paid via wire transfer in immediately available funds to the accounts designated by the Sellers at least three (3) business days prior to the Closing, except as otherwise provided in Section 4.5. (c) Payment to Which Each Seller is Entitled. BPI has delivered to each Seller a letter dated March 12, 2001 (each, a "PURCHASE PRICE LETTER"), which sets forth (i) the Interests owned by such Seller, (ii) the Units Purchase Price Payment payable to such Seller at the Closing, (iii) the cash amount payable to such Seller at the Closing, assuming that the amount placed in escrow at the Closing is $3,500,000, (iv) the Units Purchase Price Payment payable to all Sellers at the Closing, (v) the total amount of cash payable to all Sellers at the Closing, assuming that the amount placed in escrow at the Closing is $3,500,000, and (vi) such Seller's 8 Percentage Amount (referred to therein as such Seller's "% profit ownership in Bear Paw"). Except as otherwise provided pursuant to Section 4.3(d), the amounts payable at Closing to each Seller shall be the amounts set forth in such Seller's Purchase Price Letter (adjusted, if applicable, to take into account the portion of the Cash Purchase Price Payment to be placed in escrow pursuant to Section 4.5 if the amount thereof is other than $3,500,000). The portion of the Cash Purchase Price Payment payable to each Seller that is placed in escrow pursuant to Section 4.5 shall be equal to such Seller's Percentage Amount of the total amount of Escrowed Funds that are placed in escrow on the Closing Date. (d) Allocation Agreements. Between the date of this Agreement and the close of business on the third business day prior to the Closing Date, any Seller may enter into an agreement with one or more other Sellers (an "ALLOCATION AGREEMENT") to vary the percentages of the consideration represented by cash and Common Units to be received at the Closing by the parties to such Allocation Agreement (prior to taking into account the portion of the Cash Purchase Price Payment to be placed in escrow pursuant to Section 4.5), provided that (i) such Allocation Agreement is in a valid and binding written instrument that is executed by the Sellers that are parties thereto and that is delivered to NBP at least three (3) business days prior to the Closing Date, (ii) such Allocation Agreement states that NBP is entitled to rely thereon, and (iii) such Allocation Agreement does not change the total number of Common Units or the total cash payable by NBP to the Sellers that are parties to such Allocation Agreement. 4.4 Tax Treatment. The Parties agree that for federal income Tax purposes (and, to the extent permissible, state, local and foreign Tax purposes) the transactions contemplated herein shall be treated, as provided in Revenue Ruling 99-6 and Treas. Reg. ss.1.707-3, as follows: (a) Each Seller shall be treated as if such Seller: (i) sold, for all cash consideration received by such Seller hereunder a percentage of the Interests sold by such Seller equal to the quotient of (1) the total cash consideration received hereunder by such Seller divided by (2) the total value of all consideration received by such Seller hereunder (determined by valuing each Common Unit at $32.04375); and (ii) contributed to NBP the remainder of such Seller's Interests in exchange for the Units Purchase Price Payment pursuant to ss.721 of the Code. (b) NBP shall be treated as if it: (i) purchased a portion of each of BPI's and BPE's assets (including the equity interests in BPP) equal to the quotient of (1) the total cash consideration paid by NBP hereunder divided by (2) the total value of all consideration paid by NBP hereunder (determined by valuing each Common Unit at $32.04375) (the "CASH PERCENTAGE") in exchange for all cash consideration paid by NBP hereunder and the assumption by NBP of the Cash Percentage of each of BPI's and BPE's liabilities; and (ii) acquired the remaining portion of such assets in exchange for the Units Purchase Price Payment pursuant to ss.721 of the Code. No Party shall take a position on a Tax Return or with a Tax authority that is inconsistent with the treatment set forth in this Section 4.4. 4.5 Escrow Arrangement. Sellers agree to be responsible for the payment of, or to reimburse BPE for, certain fees, charges and other amounts including, among other things, (i) all 9 third party professional costs borne by any of the Bear Paw Entities relating to the effectuation and consummation of the transactions contemplated by this Agreement and incurred after January 17, 2001 and through the Closing Date, (ii) one-half of the Stay Bonuses as defined in Section 5.8(b), (iii) the aggregate amount of severance payments and severance related expenses for Terminated Employees payable by BPE pursuant to the third sentence of Section 5.8(b), (iv) costs of right-of-way title curative work and (v) BPE employee medical claims and expenses under the Benefit Plans relating to periods prior to the Effective Date in excess of those accrued on the Year-End Financial Statements. These amounts were not taken into account in determining the Subtraction from Purchase Price described in Section 4.2 because they may not be determined by the Closing Date. Therefore, Sellers instruct NBP to place in escrow such portion of the cash consideration payable at Closing as BPI and NBP shall agree (the "ESCROWED FUNDS") (which amount may be increased pursuant to Section 10.14) in accordance with the provisions of the Escrow Agreement and Instructions (the "ESCROW AGREEMENT") substantially in the form of Exhibit A. The Escrow Agreement describes in more detail the amounts for which Sellers are responsible for payment or reimbursement from the Escrowed Funds. BPI agrees to deliver to NBP a schedule at least three (3) days prior to the Closing Date that contains estimates of such costs. 4.6 Contingency Payment. If BPE gathers at least 41,426,291 Mcf of Projected Gas for the period commencing April 1, 2001 through December 31, 2001, NBP shall cause an additional cash payment of Six Million Dollars ($6,000,000) to be made to the Sellers. Such payment shall be placed in escrow pursuant to the Escrow Agreement via wire transfer in immediately available funds on or before February 1, 2002. Such amounts will be distributed to the Sellers in accordance with their Percentage Amounts. "PROJECTED GAS" is gas gathered from the Powder River Basin under gas gathering agreements numbered PDR0001 through PDR0032 as listed on Schedule 7.12(a) Attachment 1 ("EXISTING GATHERING AGREEMENT GAS"), or any gathering business of BPE in Sheridan County, Wyoming that is incremental to Existing Gathering Agreement Gas, or any gas delivered into a new BPE Receipt Point within the area of mutual interest described in Schedule 4.6. For purposes of this paragraph "RECEIPT POINT" shall be defined as a pay meter at the discharge of a screw compressor or a wellhead meter. ARTICLE V CONDUCT AND TRANSACTIONS PRIOR TO THE CLOSING 5.1 Access to Records and Properties. Subject to the confidentiality covenant set forth in Section 16.4, BPI and BPE have given, and until the Closing Date will give, NBP, NBILP and their representatives full access during normal business hours to all properties, books and records of BPI and each of its consolidated subsidiaries and have caused, and until the Closing Date will cause, the representatives of Sellers and the Bear Paw Entities to furnish to NBP, NBILP and their representatives access to all properties, books and records of BPI and each of its consolidated subsidiaries as NBP or NBILP has requested or shall from time to time reasonably request; provided that any such investigation shall be conducted in such manner as not to interfere unreasonably with the operation of the business of BPI and each of its consolidated subsidiaries. 5.2 Operation of Business. Subject to the limitations set forth in Section 5.3, each of BPI, BPE and each of the Sellers agrees that from the date hereof to the Closing Date, except for 10 transactions contemplated by this Agreement or as expressly provided on Schedule 5.2, or to the extent that NBP or NBILP shall otherwise consent in writing, each of the Bear Paw Entities will (a) operate its business only in the ordinary course and substantially as heretofore operated, and (b) consistent with such operation, use commercially reasonable efforts to (i) preserve intact its present business organization and its relationships with Persons having business dealings with it, (ii) ensure that the books of account and records relating to its assets and business are maintained in the usual and ordinary manner consistent with its past practices, and (iii) maintain insurance coverages in such amounts as are necessary to insure, in a manner consistent with its past practices, all risks attendant to the business, assets and properties of the Bear Paw Entities. Nothing in this Agreement shall give rise to any rights on behalf of Persons not Parties to this Agreement nor obligate Sellers to provide any capital, loans or other financial accommodations to the Bear Paw Entities. 5.3 Prohibited Actions. (a) Except as expressly provided in this Agreement and except as expressly provided on Schedule 5.3(a), each of BPI, BPE and each of the Sellers agrees that, without the prior approval of NBP or NBILP, which will not be unreasonably withheld, from the Signing Date to the Closing Date, it will not or will not cause or permit any of the Bear Paw Entities to: (i) amend its certificate of formation, its limited liability company agreement or its operating agreement, (ii) take any action that would reasonably be expected to impair its limited liability company or corporate status; (iii) admit or contract or agree to admit any additional members to any Bear Paw Entity; (iv) except for the disposition of Lodgepole contemplated in Section 10.10, declare, pay or make any distribution with respect to the Interests; (v) consolidate with or merge into any other Person or permit any other Person to consolidate with or merge into it; (vi) create, incur, assume, guarantee or otherwise become liable with respect to any indebtedness for borrowed money, other than pursuant to borrowings in the ordinary course of business under the BPE Credit Agreement; (vii) enter into any capital lease obligations other than capital lease obligations entered into in the ordinary course of business in an amount not to exceed Five Million Dollars ($5,000,000) in the aggregate; (viii) enter into any employment contract or any severance or consulting agreement with any Person; (ix) lend any money of any of the Bear Paw Entities; (x) waive any right that has a value to any of the Bear Paw Entities in excess of One Hundred Thousand Dollars ($100,000); or (xi) voluntarily undertake or permit any of the Bear Paw Entities to voluntarily undertake any course of action inconsistent with the satisfaction of the conditions applicable to the Closing. (b) Except as expressly provided in this Agreement and except as expressly provided on Schedule 5.3(b), each of BPI, BPE and each of the Sellers agrees that, without the prior approval of NBP or NBILP, which will not be unreasonably withheld, from the Signing Date to the Closing Date it will not or will not cause or permit any of the Bear Paw Entities to: (i) increase the compensation payable or to become payable to any manager, officer, director or representative of any of the Bear Paw Entities or otherwise change any compensation arrangement with any manager, officer, director or representative; (ii) purchase or otherwise acquire the assets or properties of any Person other than in the ordinary course of business; (iii) sell, lease or otherwise dispose of any of its assets or properties other than in the ordinary course of business; (iv) enter into any leases or contracts or otherwise make any commitments, with respect thereto other than in the ordinary course of business; (v) make or commit to make 11 any capital expenditures, capital additions or capital improvements other than in the ordinary course of business; (vi) consent to or suffer the imposition of any Lien on any of its assets or properties, other than those set forth on Schedule 7.5 or Permitted Encumbrances; (vii) enter into any hedge transactions; or (viii) amend, modify, terminate or waive any rights under its contracts or any other assets or properties other than amendments, modifications, terminations or waivers not prohibited by Section 5.3(a) and amendments, modifications, terminations or waivers in the ordinary course of business that, individually or in the aggregate, do not and are not reasonably likely to have a Material adverse effect on the Bear Paw Entities or that would not Materially impair or prohibit the consummation of the transactions contemplated by this Agreement. 5.4 Consents and Approvals. (a) Following the execution of this Agreement, each of BPI, BPE and each of the Sellers shall use good faith reasonable efforts to obtain as soon as practicable (but in any event prior to Closing) all consents necessary for all Sellers to consummate the disposition of the Interests to NBP and to perform its other obligations hereunder. Each of BPI, BPE and each of the Sellers will use good faith reasonable efforts to satisfy or cause to be satisfied each of the conditions to Closing set forth in Article X. (b) Following the execution of this Agreement, each of NBP and NBILP shall use good faith reasonable efforts to obtain as soon as practicable (but in any event prior to Closing) all consents necessary for NBP to consummate the acquisition of the Interests from Sellers and for NBP to issue the Common Units to Sellers at the Closing and to perform its other obligations hereunder. NBP and NBILP will use good faith reasonable efforts to satisfy or cause to be satisfied each of the conditions to Closing set forth in Article IX. 5.5 No Inconsistent Actions. No Party will voluntarily undertake any course of action inconsistent with the provisions of this Agreement, and each Party will promptly do all acts and take all such measures as may be reasonably appropriate to comply as soon as practicable with the terms, conditions and provisions of this Agreement. 5.6 Affiliate and Intercompany Transactions. Except as expressly provided in this Agreement or as NBP or NBILP may otherwise consent in writing, and except as expressly provided on Schedule 5.6, no Seller and no Affiliate, agent or representative of any Seller will engage in any transaction with any of the Bear Paw Entities. 5.7 Notice of Adverse Developments. From the date hereof to the Closing Date and except as permitted in this Agreement or otherwise disclosed on Schedule 5.7, BPI, BPE or Sellers shall promptly notify NBP or NBILP in writing of any developments with respect to the assets, liabilities, condition (financial or otherwise), operating results, business or prospects of the Bear Paw Entities that could have a Material adverse effect on any of the Bear Paw Entities, or that would Materially impair or prohibit the consummation of the transactions contemplated by this Agreement. 5.8 Employees. (a) Excluded Employees. BPE shall arrange for the resignation of, or shall terminate the employment of, the employees of BPE listed on Schedule 5.8(a) (the "EXCLUDED 12 EMPLOYEES") as of the Closing Date, and BPE shall pay each Excluded Employee from the Effective Date through the Closing Date at the compensation rate as of January 1, 2001 listed opposite such Excluded Employee's name, and shall also pay a severance payment in an amount equal to the amount listed opposite such Excluded Employee's name, in each case on the schedule previously provided to NBP, which schedule provided for a total severance payment of Two Million One Hundred Sixty-Five Thousand Four Hundred Seventy-Five Dollars ($2,165,475). (b) Desired Employees. NBP and NBILP shall cause NBPS to offer all employees of BPE (the "DESIRED EMPLOYEES"), other than Excluded Employees, employment with NBPS with compensation in the aggregate not less than such Desired Employees' compensation as of January 1, 2001. Schedule 5.8(b) lists all such Desired Employees. If any such Desired Employee fails to accept such offer (a "TERMINATED EMPLOYEE"), his or her employment with BPE will not continue, and any severance payment or severance related expense for such Terminated Employee, if any, will be paid or reimbursed from the Escrowed Funds as described in Section 4.5. NBP and NBILP shall cause NBPS to pay to each Desired Employee who accepts employment with NBPS, and who is not a Seller or a member or owner of any Seller, a one time payment equal to two (2) months of such Desired Employee's regular base salary as of January 1, 2001 ("STAY BONUS"). The Stay Bonuses shall be paid within six (6) months of the Closing Date in the manner determined by NBILP, and one-half of the expense of the Stay Bonuses in the aggregate shall be paid or reimbursed from the Escrowed Funds as described in Section 4.5. (c) Employment of Desired Employees. Upon the Closing, those Desired Employees who become employees of NBPS ("CONTINUING EMPLOYEES") shall be entitled to participate in the employee benefit plans maintained for the benefit of similarly situated employees of NBPS, except for severance plans. With respect to eligibility and vesting requirements (but not benefit accrual, employer contributions, benefit formulas incorporating service, or employer subsidies) of such employee benefit plans, including without limit, vacation plans, retirement plans and health insurance plans, except for retiree medical benefits, the Continuing Employees shall be given credit for past service with BPE and its predecessors, to the extent recognized and credited under BPE's equivalent Benefit Plans. NBP and NBILP agree that any Continuing Employee who is terminated, other than for cause, within twelve (12) months after the Closing Date will receive a severance payment from NBPS that will be no less than the payment such employee would have received under the BPE Change in Control Plan had it not been terminated. The obligation and liability to pay the aggregate cost of the severance payments, if any, pursuant to the preceding sentence shall be borne by NBPS. As used in this paragraph, "cause" shall mean (i) a Continuing Employee's gross negligence or willful misconduct or violation of policy during employment or in the performance of the duties and services required of the Continuing Employee, (ii) a Continuing Employee's failure to meet established performance objectives, or (iii) a Continuing Employee's refusal to accept and agree to a transfer of employment with NBPS or any Affiliate of NBPS at a location within fifty (50) miles of the location at which the Continuing Employee was employed as of the Closing Date and at such Continuing Employee's same or higher base salary or rate of compensation. Failure to meet established performance objectives shall not be such a cause for termination with respect to entitlement to severance benefits unless the objectives are reasonable, have been clearly established and communicated to the Continuing Employee and the Continuing Employee has 13 been counseled about the unacceptable performance and coached to improve performance for at least thirty (30) days. (d) Assistance with Transition. Each of Robert J. Clark and Jonathan Nixon agree that during the twelve (12) months following the Closing he will make himself available to answer questions that NBP or NBILP may have regarding the Bear Paw Entities in order to assist NBP and NBILP in their ownership and operation of the Bear Paw Entities; provided that neither shall be required to devote an unreasonable amount of his time to such matters. 5.9 Listing of Common Units on New York Stock Exchange. Following the execution of this Agreement, NBP shall use commercially reasonable efforts to cause the Common Units to be issued to the Sellers at the Closing to be listed, upon official notice of issuance, on the New York Stock Exchange. 5.10 Update of Schedules; Notice of Breach or Noncompliance. From and after the Signing Date and until the Closing Date, each of BPE, BPI and each of the Sellers shall (i) with respect to any event or development that (A) renders any statement, representation or warranty of such Party in this Agreement (including any Schedule) inaccurate or incomplete or (B) constitutes or results in a breach by such Party of, or a failure by such Party to comply with, any agreement or covenant in this Agreement applicable to it, promptly provide NBP with written notice of such event, development or failure, and (ii) prior to the Closing Date, deliver any update to or correction of the Schedules to NBP, if necessary to correct any Material error in the Schedules or to make any representation or warranty of such Party in this Agreement (including the Schedules) accurate and complete in all Material respects or, in the case of representations or warranties that are qualified as to Materiality, in all respects (it being understood that each of BPE, BPI and each of the Sellers shall have the right to update any Schedule at any time prior to the Closing Date). 5.11 Savings Plan. Effective as of the Closing Date, the Sellers shall cause BPI, BPE and Lodgepole to take the following actions: (i) to amend the Bear Paw Energy, LLC Employees Savings Trust (the "SAVINGS PLAN") so as to fully vest all participants therein in their accounts thereunder; and (ii) to take any and all actions necessary to cause BPI and BPE to cease to have any responsibility for the Savings Plan and to cause Lodgepole to become sole sponsor of and assume all responsibility with respect to the Savings Plan. As soon as practicable following the Closing Date, Thomas J. Edelman will cause Lodgepole to, and NBP will cause Enron Corp. to (i) afford each Continuing Employee a one-time election right to direct that his or her account under the Savings Plan be transferred to the Enron Corp. Savings Plan and (ii) effect a transfer from the Savings Plan to the Enron Corp. Savings Plan of the accounts of the Continuing Employees electing that such transfer be made. Such transfers shall be made in cash, no loans shall be transferred, and such transfers shall be conditioned upon and subject to such approvals by the Internal Revenue Service as Enron Corp. deems appropriate or necessary. 5.12 Brokerage Fees. Each Seller shall pay and indemnify NBP and NBILP from and against any commission, finder's fee, investment banking fee or financial advisory fee (up to such Seller's Percentage Amount of such commission or fee) payable in connection with the sale and purchase of the Interests resulting from any action taken by any of the Sellers or any of their Affiliates (including the Bear Paw Entities). NBP and NBILP shall pay and indemnify Sellers 14 from and against any commission, finder's fee, investment banking fee or financial advisory fee in connection with the sale and purchase of the Interests resulting from any action taken by NBILP, NBP or any of their Affiliates. 5.13 Cancellation of Indebtedness of Certain Sellers. At or prior to the Closing Date, BPI will cancel the notes evidencing the indebtedness owed to BPI by Thomas J. Edelman, Robert J. Clark, Michael R. Henderson, Pierce H. Norton, Jr. and Carl J. Holmgren, and BPI will deliver such cancelled notes to each such Seller at the Closing. ARTICLE VI REPRESENTATIONS AND WARRANTIES OF NBILP AND NBP NBP and NBILP hereby jointly and severally represent and warrant to each of BPI, BPE and the Sellers (with the understanding that Sellers are relying on such representations and warranties in entering into and performing their obligations under this Agreement) that: 6.1 Organization, Standing and Authority. NBP and NBILP are duly organized, validly existing and in good standing under the Laws of the State of Delaware. Each of NBP and NBILP have all requisite power and authority to enter into and perform their respective obligations under this Agreement and to consummate the transactions contemplated hereby. 6.2 Authorization; Enforceability. The execution, delivery and performance of this Agreement by NBP and NBILP (including the issuance of the Common Units to the Sellers) have been duly and validly authorized by all necessary action on the part of NBP and NBILP, respectively. This Agreement has been duly executed and delivered by NBP and NBILP and is a legal, valid and binding obligation of NBP and NBILP, enforceable against them in accordance with its terms, except as the enforcement hereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium and other Laws affecting or limiting the rights of creditors generally. The Common Units to be issued pursuant to this Agreement have been duly authorized by all necessary partnership action of NBP and when issued will be validly issued common limited partner interests in NBP and will not be subject to assessment (except as provided in Section 17-607 of the Delaware Revised Uniform Limited Partnership Act), and (except as so provided) the Sellers will not be subject to any liability to NBP or its creditors as a result of holding the Common Units. 6.3 Governmental and Other Consents. Except as required by Section 5.9 and Section 11.7 and except for such as have been obtained, no authorization, consent or approval of, or registration, qualification or filing with, any Governmental Authority or other Person is required to be obtained by NBP, NBILP or any of their Affiliates in connection with the execution, delivery and performance of this Agreement by NBP or NBILP. 6.4 Brokers or Finders. Neither NBP nor NBILP has incurred, and neither will incur, directly or indirectly, as a result of any action taken by NBP or NBILP, any liability for brokerage or finders' fees or commissions or any similar charges in connection with this Agreement. 15 6.5 Public Filings; Financial Statements. (a) NBP has filed and made available to BPI, BPE and the Sellers all forms, reports and other documents required to be filed by NBP with the Securities and Exchange Commission (the "SEC") under the Securities Exchange Act of 1934 (the "EXCHANGE ACT") since January 1, 2000. All such required forms, reports and other documents (including those that NBP may file after the date hereof and prior to the Closing) are referred to herein as the "NBP SEC REPORTS." The NBP SEC Reports (i) were or will be filed on a timely basis, (ii) were or will be prepared in compliance in all Material respects with the applicable requirements of the Exchange Act and the rules and regulations of the SEC thereunder, and (iii) did not, or will not at the time they were or are filed, contain any untrue statement of a Material fact or omit to state a Material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. Since the last date on which an NBP SEC Report was filed, there has been no Material change in the assets, liabilities, condition (financial or otherwise), operating results, business or prospects of NBP or NBILP or in the ability of NBP or NBILP to perform its obligations under this Agreement or that could Materially impair or prohibit the consummation of the transactions contemplated by this Agreement. (b) Each of the consolidated financial statements (including, in each case, any related notes and schedules) contained or to be contained in the NBP SEC Reports (i) complied or will comply as to form in all Material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto, (ii) were or will be prepared in accordance with GAAP (except as may be indicated in the notes to such financial statements or, in the case of unaudited statements, as permitted by the SEC on Form 10-Q under the Exchange Act) and (iii) fairly presented or will fairly present the consolidated financial position of NBP and its subsidiaries as of the dates and the consolidated results of its operations and cash flows for the periods indicated, consistent with the books and records of NBP and its subsidiaries, except that the unaudited interim financial statements were or will be subject to normal and recurring year-end adjustments that were not or are not expected to be Material. 6.6 Partnership Status. Each of NBP and NBILP currently qualifies, has qualified since the date of its formation, and will qualify immediately after the Closing Date, to be treated as a partnership for federal income tax purposes, and neither NBP, NBILP, any of their respective Affiliates nor any Governmental Authority has taken a position inconsistent with such treatment. 6.7 Compliance with Instruments. Except as disclosed on Schedule 6.7, each of NBP and NBILP is not in violation of or default under (a) any term of its certificate of limited partnership, limited partnership agreement or other organizational or governing documents, (b) any term or provision of any mortgage, indebtedness, indenture, contract, agreement or instrument to which it is a party or by which it is bound or (c) any Permit or Law applicable to NBP or NBILP (as the case may be), except, in the case of clauses (b) or (c), for such violations or defaults that, either individually or in the aggregate, would not Materially and adversely affect the assets, liabilities, condition (financial or otherwise), operating results, business or prospects of NBP or NBILP or the ability of NBP or NBILP to perform its obligations under this Agreement or Materially impair or prohibit the consummation of the transactions contemplated 16 by this Agreement. The execution, delivery and performance of and compliance with this Agreement and the transactions contemplated hereby will not with or without the passage of time or giving of notice or both, (i) result in any violation of, or conflict with, or constitute a default under, (A) the certificate of limited partnership, limited partnership agreement or other organizational or governing documents of NBP or NBILP, (B) any term of provision of any mortgage, indebtedness, indenture, contract, agreement or instrument to which either of them is a party or by which either is bound, or (C) any Permit or Law applicable to NBP or NBILP (as the case may be) or (ii) result in the creation of any Lien upon any of the assets or properties of either of them, except in the case of clauses (i)(B), (i)(C) and (ii) for such violations, conflicts, defaults or Liens that would not, either individually or in the aggregate, Materially and adversely affect the assets, liabilities, condition (financial or otherwise), operating results, business or prospects of NBP or NBILP or the ability of NBP or NBILP to perform its obligations under this Agreement or Materially impair or prohibit the consummation of the transactions contemplated by this Agreement. 6.8 Litigation. There are no actions, suits, proceedings or investigations pending or threatened against NBP or NBILP that (a) question the validity of this Agreement or the right of NBP or NBILP to enter into this Agreement, to perform their respective obligations hereunder or to consummate the transactions contemplated hereby, (b) might result in any change in the current equity ownership of NBP or NBILP, or (c) might Materially impair or prohibit the consummation of the transactions contemplated by this Agreement, nor is there any basis for the foregoing. 6.9 Capitalization. If the Common Units to be issued to the Sellers pursuant to this Agreement were issued on the Signing Date, they would constitute 15% of the outstanding equity interests of NBP on a fully-diluted basis. At the Closing, NBP will provide Sellers with the percentage of the outstanding equity interests of NBP on a fully-diluted basis that will be represented by the Common Units to be issued to the Sellers as of the Closing Date. Except as set forth on Schedule 6.9 and except as granted to the Sellers herein, no Person has, and immediately following the Closing no Person will have, any right to cause NBP to effect the registration under the Securities Act of any securities (including debt securities) of NBP. ARTICLE VII REPRESENTATIONS AND WARRANTIES OF BPE AND BPI BPE and BPI, jointly and severally, hereby represent and warrant to NBP and NBILP (with the understanding that NBP and NBILP are relying on such representations and warranties in entering into and performing their obligations under this Agreement) that: 7.1 Organization, Standing and Authority of the Bear Paw Entities. Each Bear Paw Entity is duly organized, validly existing and in good standing under the Laws of the jurisdiction of its organization and is duly qualified and in good standing to do business in each jurisdiction where the character of the property owned or leased by it or the nature of the business conducted by it makes such qualification necessary (which jurisdictions of qualification are listed on Schedule 7.1). Each Bear Paw Entity has all requisite power and authority to enter into and perform its obligations under this Agreement and to consummate the transactions contemplated 17 hereby and to own, lease and operate its respective properties and to carry on its business as presently conducted. 7.2 Authorization; Enforceability. The execution, delivery and performance of this Agreement by BPE and BPI have been duly and validly authorized by all necessary action on the part of BPE and BPI. This Agreement has been duly executed and delivered by BPE and BPI and is a legal, valid and binding obligation of BPE and BPI, enforceable against them in accordance with its terms, except as the enforcement hereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium and other Laws affecting or limiting the rights of creditors generally. 7.3 Subsidiaries; Investments. Except as set forth on Schedule 7.3, after consummation of the Lodgepole transactions described in Section 10.10, none of the Bear Paw Entities will own any shares of capital stock or other securities or equity interests of any corporation, partnership or other Person (except for ownership interest in other Bear Paw Entities), nor have any of the Bear Paw Entities made any commitment to purchase or subscribe for the purchase of any such interests. 7.4 Capitalization. Schedule 7.4 sets forth the names of each record or beneficial owner of, and the amount of each such owner's record or beneficial ownership of, all outstanding Interests and all outstanding limited liability company interests or other equity interests in each Bear Paw Entity. All of the outstanding Interests and any other equity interests in the Bear Paw Entities have been duly authorized and validly issued and are fully paid, nonassessable and not subject to any preemptive or similar rights. Except as listed on Schedule 7.4 or otherwise contemplated by this Agreement, there are no existing warrants, options, conversion rights, calls or other commitments of any character pursuant to which any Bear Paw Entity is or may become obligated to increase or decrease any Person's equity interest or admit any Person as a member, partner, shareholder or other equity owner. Except as set forth on Schedule 7.4 or otherwise contemplated by this Agreement, no Bear Paw Entity has any commitment or obligation (contingent or otherwise) to increase or decrease any Person's limited liability company interest or other equity interest or admit anyone as a member, partner, shareholder or other equity owner. Except as listed on Schedule 7.4, there are no agreements or understandings that affect or relate to the voting of any of the limited liability company interest or other equity interest of any Bear Paw Entity. Except as listed on Schedule 7.4, since December 31, 2000 there have been no capital contributions made to any of the Bear Paw Entities by the Sellers. 7.5 Title to Assets. Schedule 7.5 contains a list and summary description of all items of real and personal property that are Material and that each of the Bear Paw Entities (a) owns or holds by easement or grant or has agreed to or has an option to purchase or (b) occupies or has a right to occupy as lessee or otherwise than as owner, and such schedule takes into account all items of real and personal property having a value in excess of One Hundred Thousand Dollars ($100,000). Except as set forth on Schedule 7.5, the Bear Paw Entities have Good and Marketable Title to all real property (except for easements or rights-of-way) and Good and Defensible Title to all easements, rights-of-way and personal property reflected on Schedule 7.5. Except as set forth on Schedule 7.5, there is no agreement of any kind whereby any Person or Persons have any option or right to acquire or obtain (by purchase, gift, merger, consolidation or otherwise) an interest in any of the property or assets of the Bear Paw Entities. The personal 18 property listed on Schedule 7.5 constitutes all of the personal property necessary for the continued ownership, use and operation of the business of the Bear Paw Entities consistent in all Material respects with the past practices of the Bear Paw Entities. Each item of personal property listed on Schedule 7.5 is in working order and repair (taking its age and ordinary wear and tear into account), has been operated and maintained in the ordinary course of business and remains in suitable and adequate condition for use consistent with its primary use since its acquisition. None of the Bear Paw Entities have deferred maintenance of any such item of personal property in anticipation of the transactions contemplated by this Agreement. 7.6 Charter Documents. BPI and BPE have delivered to NBILP true, correct and complete copies of the organizational documents, limited liability company agreements, operating agreements and bylaws or other governing instruments of each of the Bear Paw Entities, each as amended to date. The minute books of each of the Bear Paw Entities have been made available for inspection by NBILP and its counsel and contain minutes of all meetings of managers (or directors or persons performing similar functions as the case may be) (including all committees thereof) and members (or stockholders or other equity holders as the case may be) since the time of formation or incorporation and reflect all transactions referred to in such minutes accurately in all Material respects. 7.7 Financial Statements. Schedule 7.7 contains true, correct and complete copies of the audited consolidated financial statements of BPI and its consolidated subsidiaries as of and for the twelve-month period ending December 31, 2000 (the "YEAR-END FINANCIAL STATEMENTS"). The only entities accounted for on a consolidated basis in the Year-End Financial Statements are the Bear Paw Entities and Lodgepole. As of the Closing, Schedule 7.7 will also contain true, correct and complete copies of the consolidated financial statements of BPI and its consolidated subsidiaries as of and for the calendar month whose end falls at least thirty (30) days prior to the Closing Date and for the period from January 1, 2001 to such date (the "PRE-CLOSING FINANCIAL STATEMENTS"). The Year-End Financial Statements consist or will consist of balance sheets and related statements of operations and cash flows and related notes thereto. The Year-End Financial Statements present fairly in all Material respects the financial condition of BPI and its consolidated subsidiaries as of December 31, 2000 and the results of operations and cash flows for the period covered thereby and were prepared in accordance with GAAP (except as indicated in the notes thereto). The Pre-Closing Financial Statements will consist of financial statements prepared in a manner consistent with BPI's regular reporting procedures for interim financial statements. 7.8 Litigation. Except as described on Schedule 7.8, there are no actions, suits, proceedings or investigations pending or, to the Knowledge of BPI or BPE, threatened against any of the Bear Paw Entities, including any actions, suits, proceedings or investigations that (a) question the validity of this Agreement or the right of BPI or BPE to enter into this Agreement or to consummate the transactions contemplated hereby, (b) might result, individually or in the aggregate, in any Material adverse change in the assets, liabilities, condition (financial or otherwise), operating results, business or prospects of any of the Bear Paw Entities, (c) might result in any change in the current equity ownership of any of the Bear Paw Entities, or (d) might adversely affect the transactions contemplated by this Agreement, nor, to the Knowledge of BPI and BPE, is there any basis for the foregoing. The foregoing includes, without limitations, actions pending or threatened involving the prior employment or use of any 19 Person for the business of any of the Bear Paw Entities. Except as described on Schedule 7.8, no Bear Paw Entity is a party or subject to the provisions of any order, writ, injunction, judgment or decree of any Governmental Authority. Except as described on Schedule 7.8, there is no action, suit, proceeding or investigation brought by or on behalf of any of the Bear Paw Entities currently pending or which any of the Bear Paw Entities or any owner thereof intends to initiate. 7.9 Compliance with Instruments. Other than as set forth on Schedule 7.9, to the Knowledge of BPI and BPE, none of the Bear Paw Entities is in violation of or default under (a) any term of its certificate of formation, limited liability company agreement or operating agreement (or other organizational documents, as applicable), (b) any term or provision of any mortgage, indebtedness, indenture, contract, agreement or instrument to which it is a party or by which it is bound or (c) any Permit or Law applicable to any of the Bear Paw Entities, except, in the case of clauses (b) or (c), for such violations or defaults that, either individually or in the aggregate (i) are not reasonably likely to result in Damages to the Bear Paw Entities that exceed Five Hundred Thousand Dollars ($500,000) and (ii) would not Materially and adversely affect the assets, liabilities, condition (financial or otherwise), operating results, business or prospects of any of the Bear Paw Entities, or the transactions contemplated by this Agreement. Except as set forth on Schedule 7.9, the execution, delivery and performance of and compliance with this Agreement and the transactions contemplated hereby will not with or without the passage of time or giving of notice or both, (i) result in any violation of, or conflict with, or constitute a default under, (A) the certificate of formation, limited liability company agreement or operating agreement (or other organizational documents, as applicable) of any of the Bear Paw Entities, (B) any term or provision of any mortgage, indebtedness, indenture, contract, agreement or instrument to which any of the Bear Paw Entities is a party or by which it is bound, or (C) any Permit or Law applicable to any of the Bear Paw Entities, or (ii) result in the creation of any Lien upon any of the assets or properties of any of the Bear Paw Entities, except in the case of clauses (i)(B), (i)(C) and (ii) for such violations, conflicts, defaults or Liens that, either individually or in the aggregate (y) are not reasonably likely to result in Damages to the Bear Paw Entities that exceed Five Hundred Thousand Dollars ($500,000) and (z) would not Materially and adversely affect the assets, liabilities, condition (financial or otherwise), operating results, business or prospects of any of the Bear Paw Entities, or the transactions contemplated by this Agreement. 7.10 Compliance with Laws. Except as set forth on Schedule 7.10, each of the Bear Paw Entities has owned its assets and properties and conducted its business in compliance with, and is not in default or violation in any respect under, any Law affecting or relating to the assets, properties or business of the Bear Paw Entities, including any antitrust, consumer protection, tax, securities Laws and Environmental Laws, except for defaults or violations that, either individually or in the aggregate (a) are not reasonably likely to result in Damages to the Bear Paw Entities that exceed Five Hundred Thousand Dollars ($500,000) and (b) would not have a Material adverse effect on any of the Bear Paw Entities. 7.11 Governmental and Other Consents. Except as set forth on Schedule 7.11 and except for such as have been obtained, no authorization, consent or approval of, or registration, qualification or filing with, any Governmental Authority or other Person is required to be obtained by BPI or BPE or any of their Affiliates in connection with the execution, delivery and performance of this Agreement by BPI or BPE. 20 7.12 Contracts. (a) Schedule 7.12(a) and Schedule 7.14 list all contracts, agreements, leases, loan agreements, mortgages, pledges, employment, management or consulting agreements, bonds, pension plans, guarantees, indemnities, proposals, requests for proposals or other commitments to which any of the Bear Paw Entities is a party or by which the assets of any of the Bear Paw Entities are bound, which (A) require any party thereto to pay an amount (whether in a lump sum or in a series of installments) in excess of One Hundred Thousand Dollars ($100,000) annually, (B) provide for any obligation or liability in excess of Five Hundred Thousand Dollars ($500,000), (C) have a stated term in excess of one year (unless involving an obligation or liability of less than Fifty Thousand Dollars ($50,000)), or (D) are otherwise Material (collectively, the "CONTRACTS"). Schedule 7.12(a) also lists all insurance policies maintained by any of the Bear Paw Entities or, to the Knowledge of BPI or BPE, by any other Person, for the benefit of any of the Bear Paw Entities, including any insurance policies ensuring risks or occurrences in past periods for which any of the Bear Paw Entities may have liability. Except as set forth on Schedule 7.12(a) or as disclosed on Schedule 7.14, each such contract or agreement is in full force and effect and is a valid and binding obligation of BPE, BPI or BPP and the other parties thereto. Except as set forth on Schedule 7.12(a) or as disclosed on Schedule 7.14, each of the Bear Paw Entities has performed all obligations required to be performed by it to date under the Contracts and is not in breach or default of any obligation under any of the Contracts, which breach or default (y) is reasonably likely to result in Damages to the Bear Paw Entities that exceed Five Hundred Thousand Dollars ($500,000) or (z) would Materially and adversely affect the assets, liabilities, condition (financial or otherwise), operating results, business or prospects of any of the Bear Paw Entities, or the transactions contemplated by this Agreement, and there does not exist under any provision of any of the Contracts any event that, with the giving of notice or the lapse of time or both, would constitute such a breach or default. Except as set forth on Schedule 7.12(a) or as disclosed on Schedule 7.14, to the Knowledge of BPI and BPE, no other party to any of the Contracts is in breach or default of any obligation thereunder, which breach or default is reasonably likely to result in Damages to any Person that exceed Five Hundred Thousand Dollars ($500,000) or is Material to the Bear Paw Entities. (b) Schedule 7.12(b) contains a list of all Contracts for which the consent of the other party thereto is required in connection with the consummation of the transactions contemplated by this Agreement. 7.13 Employment and Labor Matters. None of the Bear Paw Entities is a party to any labor agreement (either directly, or indirectly as a result of such Person's membership in any employer associations) with respect to any employees with any labor organization, union, group or association, and there are no employee unions (nor any other similar labor or employee organizations) under local statutes, custom or practice, and no labor organization or group of representatives or employees of any of the Bear Paw Entities has made a demand for recognition, has filed a petition seeking a representation proceeding or given notice to any of the Bear Paw Entities of any intention to hold an election of a collective bargaining representative. No employer associations or multiemployer organizations are presently authorized by any of the Bear Paw Entities to represent it in collective bargaining with any labor organization. No collective bargaining agreement is being negotiated by any of the Bear Paw Entities, nor is any 21 Bear Paw Entity a party to any settlement agreement requiring it to negotiate or enter into a collective bargaining agreement. There is no labor strike, slowdown or other general work stoppage or labor disturbance pending or threatened against any of the Bear Paw Entities, and there is no pending or threatened charge or complaint against any of the Bear Paw Entities by the National Labor Relations Board or any comparable Governmental Authority. None of the Bear Paw Entities nor any representative or employee of the Bear Paw Entities has committed any unfair labor practices in connection with the operation of the business of the Bear Paw Entities. 7.14 Employees, Obligations and Benefits. (a) Except as set forth on Schedule 7.14, there exists no employment, consulting, severance, indemnification, personnel policy, practice, collective bargaining agreement or similar agreement, arrangement or contract related to employment or personal services between any of the Bear Paw Entities and any current or former officer, consultant, director, manager, employee or other Person (all such agreements or contracts are hereinafter referred to as "EMPLOYMENT OBLIGATIONS"), for which any of the Bear Paw Entities has or may have an existing or future obligation. (b) Except as set forth on Schedule 7.14, none of the Bear Paw Entities has ever sponsored, maintained or contributed to, or has had any obligation, or has been a "substantial employer" (as such term is defined in Section 4001(a)(2) of ERISA), with respect to any "employee benefit plan" (or any related trust or funding arrangement) as such term is defined in Section 3(3) of ERISA, or any employee benefit, compensation or remuneration plan, program, practice or arrangement that is not subject to the provisions of ERISA (all such plans or arrangements are hereinafter referred to as "BENEFIT PLANS"), for which any of the Bear Paw Entities has or may have an existing or future obligation. 7.15 Conduct and Transactions Since Date of Financial Statements. Except as disclosed on Schedule 7.15, or as expressly permitted by the terms of this Agreement, since December 31, 2000, each of the Bear Paw Entities has conducted its business only in the ordinary course and substantially in the manner in which such business was being conducted on December 31, 2000, and there has not been: (a) Any change in the assets, liabilities, condition (financial or otherwise), operating results, business or prospects of any of the Bear Paw Entities from that reflected in the Year-End Financial Statements, except changes in the ordinary course of business that have not been, individually or in the aggregate, Materially adverse to the assets, liabilities, condition (financial or otherwise), operating results, business or prospects of any of the Bear Paw Entities, or have not Materially impaired or prohibited the consummation of the transactions contemplated by this Agreement; (b) Any change in the contingent obligations of any of the Bear Paw Entities by way of guaranty, endorsement, indemnity, warranty or otherwise; (c) The failure to continue to be covered by liability, casualty and other insurance of such types and in not less than such amounts as heretofore carried with respect to the Bear Paw Entities; 22 (d) Any waiver by any of the Bear Paw Entities of a valuable right; (e) Any direct or indirect loans made by any of the Bear Paw Entities to any Person, or any forgiveness of indebtedness owed to any of the Bear Paw Entities by any Person; (f) Except as previously disclosed to NBP and NBILP in a letter dated January 1, 2001, any change in any compensation arrangement or agreement with any member, stockholder, officer, manager, director, consultant or representative of any of the Bear Paw Entities, nor any bonus payment arrangements to or with respect to any of its members, stockholders, officers, managers, directors, consultants or representatives; (g) Any declaration, authorization or payment of any dividend or other distribution of assets of any of the Bear Paw Entities, or any capital contribution made to any of the Bear Paw Entities by any Seller; (h) Any debt, obligation or liability incurred, assumed or guaranteed by any of the Bear Paw Entities, other than current liabilities incurred in the ordinary course of business and borrowings in the ordinary course of business under the BPE Credit Agreement; (i) Any sale, assignment or transfer of any Intellectual Property Rights of the Bear Paw Entities; (j) Any change in any Contract, except for changes that, in the aggregate, have not been and are not reasonably expected to be Materially adverse to the assets, liabilities, condition (financial or otherwise), operating results, business or prospects of any of the Bear Paw Entities, or would not Materially impair or prohibit the consummation of the transactions contemplated by this Agreement; (k) Any Lien created on or with respect to any of the assets or properties of any of the Bear Paw Entities, except for Permitted Encumbrances; (l) Any direct or indirect redemption, purchase or other acquisition by any Bear Paw Entity of any of their respective limited liability company or other equity interests, or any change in the capital structure of any Bear Paw Entity, nor has any Bear Paw Entity increased or decreased any Person's limited liability company interest or other equity interest therein (or agreed to do so) or admitted any Person as a member, partner, shareholder or other equity owner; (m) Any sale, lease or disposal of any assets or properties of any of the Bear Paw Entities, except those in the ordinary course of business that, individually or in the aggregate, have not been and are not reasonably expected to be Materially adverse to the assets, liabilities, condition (financial or otherwise), operating results, business or prospects of any of the Bear Paw Entities, or would not Materially impair or prohibit the consummation of the transactions contemplated by this Agreement; (n) Any purchase or agreement to purchase, or lease or agreement to lease, or acquisition or agreement to acquire, any additional assets or properties, except those in the ordinary course of business that, individually or in the aggregate, have not been and are not 23 reasonably expected to be Materially adverse to the assets, liabilities, condition (financial or otherwise), operating results, business or prospects of any of the Bear Paw Entities, or would not Materially impair or prohibit the consummation of the transactions contemplated by this Agreement; (o) Any other event or condition of any character that, individually or in the aggregate, has been or is reasonably expected to be Materially adverse to the assets, liabilities, condition (financial or otherwise), operating results, business or prospects of any of the Bear Paw Entities, or that has or is reasonably expected to Materially impair or prohibit the consummation of the transactions contemplated by this Agreement; (p) Any transaction other than in the ordinary course of business; (q) Any agreement or commitment by any of the Bear Paw Entities to do any of the things described in this Section 7.15; or (r) Any action or failure to act prohibited pursuant to Section 5.3 or that would be so prohibited if it were to occur between the Signing Date and the Closing Date. 7.16 Bank Accounts. Schedule 7.16 sets forth the name of each bank or other financial institution in which any of the Bear Paw Entities has an account, safe deposit box or other relationship and the names of all persons authorized to draw thereon or who have access thereto. 7.17 Environmental Matters. Without limiting Section 7.10, and except as disclosed on Schedule 7.17, each of the Bear Paw Entities (a) has complied with and is in compliance in all Material respects with all Laws and Permits applicable to it or any of its respective properties, assets, operations and businesses relating to health, safety or the environment, including the Clean Air Act, the Comprehensive Environmental, Response, Compensation, and Liability Act of 1980 ("CERCLA"), the Clean Water Act, the Occupational Safety and Health Act of 1970 ("OSHA"), the Resource Conservation and Recovery Act of 1976 ("RCRA"), the Safe Drinking Water Act, the Toxic Substances Control Act, the Hazardous Materials Transportation Act, and all other health, safety and environmental protection Laws (the foregoing collectively, "ENVIRONMENTAL LAWS") and Permits required by Environmental Laws; (b) has obtained all Permits required by Environmental Laws to store, dispose of and otherwise handle Wastes; (c) has not treated, stored or disposed of Wastes, except in compliance with Environmental Laws and Permits required by Environmental Laws; and (d) has not used, stored, released or disposed of any polychlorinated biphenyls, except in compliance with Environmental Laws. Except as listed on Schedule 7.17, there is no Waste in groundwater or soils located on any property currently or previously owned or operated by any of the Bear Paw Entities requiring remediation under applicable Environmental Laws. Except as listed on Schedule 7.17, there is no on-site or off-site location to which any of the Bear Paw Entities has transported or disposed of Wastes or arranged for the transportation or disposal of Wastes, which site is the subject of any investigation which could lead to any claim against any of the Bear Paw Entities or NBILP for any clean-up cost, remedial work, damage to natural resources or personal injury, including claims under CERCLA. None of the Bear Paw Entities has received a request for information from a Governmental Agency or a third party claim with respect to potential liability under CERCLA. For the purpose of this Section 7.17, "WASTES" shall mean any solid or hazardous 24 waste, hazardous substance, pollutant, contaminant, oil, petroleum product or other substance that is listed, regulated or designated as toxic or hazardous under any Environmental Law. 7.18 Patents and Trademarks. Schedule 7.18 lists all patents, patent rights, licenses, trade secrets, trademarks, service marks, trademark rights, trade names or trade name rights, copyrights, inventions and intellectual property rights (collectively, "INTELLECTUAL PROPERTY RIGHTS") of each of the Bear Paw Entities, and each of the Bear Paw Entities has paid all maintenance fees, royalties and other amounts and made all required filings with respect to such Intellectual Property Rights. Except as reflected on Schedule 7.18, each of the Bear Paw Entities owns or has sufficient legal rights to all Intellectual Property Rights necessary for the conduct of its business without any known conflict with or infringement of the rights of others; there are no outstanding options, licenses or agreements of any kind relating to the foregoing, nor is any of the Bear Paw Entities bound by or a party to any Intellectual Property Rights of any other Person other than such licenses or agreements arising from the purchase of "off the shelf" or standard products; none of the Bear Paw Entities has received any communications alleging that any of the Bear Paw Entities has violated or, by conducting its business, would violate any of the Intellectual Property Rights of any other Person; to the Knowledge of BPI and BPE, there are no representatives of any of the Bear Paw Entities obligated under any contract (including licenses, covenants or commitments of any nature) or other agreement or subject to any judgment of any Governmental Authority regarding Intellectual Property Rights that would interfere with their duties to any of the Bear Paw Entities or that would conflict with the business of such Bear Paw Entities; to the Knowledge of BPI and BPE, neither the execution or delivery of this Agreement, nor the carrying on of any of the Bear Paw Entities' business will conflict with or result in a breach of the terms, conditions or provisions of, or constitute a default under, any contract, covenant or instrument under which any such representative is now obligated; and none of the Bear Paw Entities is utilizing any Intellectual Property Rights of any of its representatives, except for Intellectual Property Rights that have been assigned to the Bear Paw Entities, or will be assigned to the Bear Paw Entities prior to the Closing. 7.19 Taxes. (a) Tax Returns Filed and Taxes Paid. All Tax Returns required to be filed by or on behalf of any of the Bear Paw Entities have been duly filed on a timely basis and such Tax Returns are true, complete and correct in all Material respects. All Taxes shown to be payable on the Tax Returns or on subsequent assessments with respect thereto required to be paid by any Bear Paw Entity have been paid in full on a timely basis, and no other Taxes (other than Taxes that, in the aggregate, do not exceed Fifty Thousand Dollars ($50,000)) are payable by any of the Bear Paw Entities with respect to items or periods covered by such Tax Returns (whether or not shown on or reportable on such Tax Returns) or with respect to any period ending on or prior to the Effective Date. Each of the Bear Paw Entities has withheld and paid over all Taxes (other than Taxes that, in the aggregate, do not exceed Fifty Thousand Dollars ($50,000)) required to have been withheld and paid over, and complied in all Material respects with all information reporting and backup withholding requirements, including maintenance of required records with respect thereto, in connection with amounts paid or owing to any member, partner, shareholder or other equity owner and any employee, creditor, independent contractor or other Person. Except as set forth on Schedule 7.5, there are no Liens on any of the assets of the Bear Paw Entities with respect to Taxes, other than Liens for Taxes not yet due and payable or for Taxes 25 that any of the Bear Paw Entities is contesting in good faith through appropriate proceedings and for which appropriate reserves have been established on the Year-End Financial Statements (and which are so identified on Schedule 7.19(a)). (b) Tax Returns Furnished. BPI and BPE have furnished to NBILP true, correct and complete copies of all returns, reports, statements of deficiencies and closing or other agreements filed or received by the Bear Paw Entities relating to Taxes for which any Bear Paw Entity is liable. None of the Bear Paw Entities has ever been a member of an affiliated group filing consolidated federal income Tax Returns. (c) Tax Deficiencies; Audits; Statutes of Limitations. Except as provided on Schedule 7.19(c), no deficiencies exist or have been asserted in writing with respect to Taxes of the Bear Paw Entities, none of the Bear Paw Entities has received written notice that it has not filed a Tax Return or paid Taxes required to be filed or paid by it, and, to the Knowledge of BPI and BPE, there has not been verbal assertion made to any Bear Paw Entity or any other Person with respect to any such deficiency or failure to file a Tax Return or pay Taxes (provided that no officer of BPI or BPE shall have any duty to perform any investigation regarding any verbal assertion made to any other Person). None of the Bear Paw Entities is a party to any action or proceeding for assessment or collection of Taxes, nor has such event been asserted or threatened in writing against any of the Bear Paw Entities. No waiver or extension of any statute of limitation is in effect with respect to Taxes or Tax Returns of any of the Bear Paw Entities. (d) Tax Sharing Agreements. Except as set forth on Schedule 7.19(d), none of the Bear Paw Entities is (nor has it ever been) a party to any tax sharing agreement and none has assumed the tax liability of any other Person under contract. (e) Tax Elections and Special Tax Status. Neither NBP nor NBILP is required to withhold Tax on the purchase of the Interests of the Bear Paw Entities by reason of Section 1445 of the Code. None of the Bear Paw Entities has entered into any compensatory agreements with respect to the performance of services which payment thereunder would result in a nondeductible expense to any of the Bear Paw Entities or any member, partner, shareholder or other equity owner thereof pursuant to Section 280G of the Code or an excise Tax to the recipient of such payment pursuant to Section 4999 of the Code. Except as set forth on Schedule 7.19(e), none of the Bear Paw Entities has agreed, nor is it required, to make any adjustment under Code Section 481(a) by reason of a change in accounting method or otherwise. (f) Partnership Status. Each of the Bear Paw Entities, other than BPP, currently qualifies, and has qualified since the date of its formation, to be treated as a partnership for federal income tax purposes, except as set forth on Schedule 7.19(f), and none of the Bear Paw Entities, Sellers or any Governmental Authority has taken a position inconsistent with such treatment, except as set forth on Schedule 7.19(f). (g) Tax Accruals. The amount of the Bear Paw Entities' liability for unpaid Entity Level Taxes reflected on the Year-End Financial Statements at December 31, 2000 did not, in the aggregate, exceed the amount of the liability for Taxes required to be reflected in consolidated financial statements of the Bear Paw Entities as of December 31, 2000 prepared in accordance with GAAP. 26 7.20 Indebtedness. Schedule 7.20 contains a brief description of all indebtedness for borrowed money owed by any of the Bear Paw Entities as of the Signing Date, listing (a) the entity obligated to pay the indebtedness, (b) the approximate amount of such indebtedness as of the Signing Date, (c) the name and address of the payee or holder of such indebtedness, (d) the interest rate and repayment terms and (e) the security (i.e., mortgage, security interests, guarantees) for such indebtedness. Schedule 7.20 also contains a listing of all capital lease obligations of the Bear Paw Entities and all hedge transactions to which any of the Bear Paw Entities is a party. 7.21 Powers of Attorney. None of the Bear Paw Entities has granted any power of attorney which is outstanding, other than those listed on Schedule 7.21. 7.22 Permits. Each of the Bear Paw Entities has all Permits that are Material to or necessary in the conduct of its business, the lack of which could have a Material adverse effect on any of the Bear Paw Entities. All such Permits are in full force and effect; no violations have been recorded in respect of any such Permits; and no proceeding is pending or, to the Knowledge of BPI and BPE, threatened to revoke or limit any such Permits. Except for easements and rights-of-way described in Schedule 7.5, Schedule 7.22 contains a true, correct and complete list of all of the Material Permits. 7.23 Affiliated Party Transactions. Except as set forth on Schedule 7.14 or on Schedule 7.23, none of the Bear Paw Entities is indebted (or committed to make loans or extend or guarantee credit) directly or indirectly to any of its officers, managers, directors, members, stockholders, partners or representatives, or to their respective spouses or children (i.e., members of their immediate families) in any amount whatsoever; and none of said officers, managers, directors, members, stockholders or representatives, or members of their immediate families, is indebted (or committed to make loans or extend or guarantee credit) to any of the Bear Paw Entities. Except as disclosed on Schedule 7.14 or on Schedule 7.15 or on Schedule 7.23, no officer, manager, director, member, stockholder, partner or representative of any of the Bear Paw Entities, or member of the immediate family of any of them, has a direct or indirect interest in any contract or agreement with any of the Bear Paw Entities. Except as disclosed on Schedule 7.14, on Schedule 7.15 or on Schedule 7.23, no officer, manager, director, member, stockholder, partner or representative of any of the Bear Paw Entities, or member of the immediate family of any of them, is a party to any transaction with any of the Bear Paw Entities, including any contract, agreement or other arrangement providing for the employment of, furnishing of services by, rental of real or personal property from, or otherwise requiring payments to, any such Person. Except as disclosed on Schedule 7.14 or on Schedule 7.15 or on Schedule 7.23, none of the Bear Paw Entities is a guarantor or indemnitor of any indebtedness of any other Person. 7.24 Brokers or Finders. Except as described on Schedule 7.24, none of the Bear Paw Entities has incurred, nor will incur, directly or indirectly, as a result of any action taken by any of them under this Agreement, or in connection with the transactions contemplated hereby, any liability for brokerage or finders' fees or commissions or any similar charges in connection with this Agreement. 27 7.25 Eminent Domain. Except in very limited case specific circumstances, the Bear Paw Entities do not have the power of eminent domain in the jurisdictions in which they are qualified to do business. 7.26 Indemnification from TransMontaigne. BPE has not waived or modified in any way the indemnification provisions made by TransMontaigne Inc. ("TRANSMONTAIGNE") to BPE in the Agreement and Plan of Merger, dated December 27, 1999, by and among TransMontaigne, BPE Acquisition, LLC and Bear Paw Energy Inc., and none of the Bear Paw Entities is subject to any indemnification claims made by TransMontaigne under such agreement. 7.27 Disclosure. To the Knowledge of BPI and BPE, the representations and warranties of BPI and BPE in this Agreement (including all Schedules) and any other written material delivered to NBP or NBILP (other than plans, projections or forecasts) do not and will not omit to state a Material fact necessary to make such information not misleading. 7.28 Termination of Change in Control Plan. The BPE Change in Control Plan has been terminated. 7.29 Net Working Capital of Lodgepole. As of December 31, 2000, the Net Working Capital of Lodgepole included in the Year-End Financial Statements was as set forth on Schedule 7.29. ARTICLE VIII REPRESENTATIONS AND WARRANTIES OF SELLERS Each Seller, severally but not jointly and as to himself or itself and not with respect to any other Seller, hereby represents and warrants to NBP and NBILP that: 8.1 Organization, Standing and Authority of Sellers. If such Seller is an entity or a trustee, it is duly organized, validly existing and in good standing under the Laws of the jurisdiction in which such Seller was organized, and has all requisite power and authority to enter into and perform its obligations under this Agreement and to consummate the transactions contemplated hereby. If such Seller is a natural person, he or she has all requisite power and authority to enter into and perform his or her obligations under this Agreement and to consummate the transactions contemplated hereby. 8.2 Authorization; Enforceability. The execution, delivery and performance of this Agreement by such Seller have been duly and validly authorized on the part of such Seller. This Agreement has been duly executed and delivered by such Seller and is the legal, valid and binding obligation of such Seller, enforceable against such Seller in accordance with its terms, except as the enforcement hereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium and other Laws affecting or limiting the rights of creditors generally. 8.3 Ownership of the Interests. Each Seller acknowledges that it has received the Purchase Price Letter from BPI and that it owns, beneficially and of record, all of the Interests shown in the Purchase Price Letter as owned by such Seller, free and clear of any Liens, other than those set forth on Schedule 8.3. Each Seller acknowledges and agrees that the amount set forth next to such Seller's name under the heading "% profit ownership in Bear Paw" in the 28 Purchase Price Letter accurately reflects such Seller's percentage profit ownership in BPI, determined in accordance with the Operating Agreement of BPI dated January 20, 2000 among the members of BPI (the "OPERATING AGREEMENT"). From and after the Closing, each Seller releases BPI, BPE, NBP and NBILP from any claim that it may be entitled to a different Percentage Amount or that (prior to taking into account Section 4.3(d) and Section 4.5) it is entitled to a different amount of cash or Common Units from that set forth in the Purchase Price Letter (except to the extent that the amounts placed in escrow are more than or less than $3,500,000). Upon the transfer of such Seller's Interests to NBP as contemplated by this Agreement, good and marketable title thereto will be vested in NBP free and clear of any Lien whatsoever, except those created by or claimed through NBP. The Interests owned by such Seller are not subject to any voting trust, voting agreement or other agreement with respect to the voting thereof, nor is any proxy in existence with respect to any such Interests, except as described on Schedule 8.3. There are no actions, suits, proceedings or claims pending or, to such Seller's Knowledge, threatened against such Seller or, to such Seller's Knowledge, pending or threatened against any of the Bear Paw Entities with respect to or in any manner affecting the ownership by such Seller of such Seller's Interests or Seller's rights or powers to transfer all of such Interests to NBP in accordance with this Agreement. Such Seller represents that the joinder of no Person is required to transfer full record and beneficial ownership of such Seller's Interests to NBP. Such Seller has the full legal right and authority to sell, transfer and assign such Interests to NBP free and clear of all Liens, claims, or encumbrances. 8.4 Compliance with Instruments. Such Seller is not in violation of or default under (a) any term of its certificate of formation, limited liability company agreement or other organizational or governing documents, if such Seller is an entity or trustee, or (b) any term or provision of any mortgage, indebtedness, indenture, contract, agreement or instrument to which it is a party or by which it is bound or (c) to the Knowledge of such Seller, any Permit or Law applicable to such Seller, except, in the case of clauses (b) or (c), for such violations or defaults that, either individually or in the aggregate, would not Materially and adversely affect the Bear Paw Entities, the transactions contemplated by this Agreement or the ability of such Seller to perform its obligations under this Agreement. The execution, delivery and performance of and compliance with this Agreement and the transactions contemplated hereby will not with or without the passage of time or giving of notice or both, (i) result in any violation of, or conflict with, or constitute a default under, (A) the certificate of formation, limited liability company agreement or other organizational or governing documents, if such Seller is an entity or trustee, (B) any term or provision of any mortgage, indebtedness, indenture, contract, agreement or instrument to which such Seller is a party or by which it is bound, or (C) to the Knowledge of such Seller, any Permit or Law applicable to such Seller, or (ii) result in the creation of any Lien upon any of the assets or properties of such Seller, except in the case of clauses (i)(B), (i)(C) and (ii) for such violations, conflicts, defaults or Liens that would not, either individually or in the aggregate, Materially and adversely affect the Bear Paw Entities, the transactions contemplated by this Agreement or the ability of such Seller to perform its obligations under this Agreement. 8.5 Brokers or Finders. Such Seller has not incurred, and will not incur, directly or indirectly, as a result of any action taken by it under this Agreement, any liability for brokerage or finders' fees or commissions or any similar charges in connection with this Agreement for which any Bear Paw Entity would be liable. 29 8.6 Litigation. Except as described on Schedule 8.6, there are no actions, suits, proceedings or investigations pending or, to the Knowledge of such Seller, threatened against such Seller (with respect to any of the Bear Paw Entities or such Seller's interests therein), including any actions, suits, proceedings or investigations that (a) question the validity of this Agreement or the right of such Seller to enter into this Agreement or to consummate the transactions contemplated hereby, (b) would reasonably be expected to result in any change in the current equity ownership of the Bear Paw Entities, or (c) would reasonably be expected to adversely affect the transactions contemplated by this Agreement, nor is there any basis for the foregoing. Except as described on Schedule 8.6, there is no action, suit, proceeding or investigation brought by such Seller currently pending or which such Seller intends to initiate, in each case with respect to any of the Bear Paw Entities or any interest therein or thereof. 8.7 Governmental and Other Consents. Except as set forth on Schedule 8.7 and except for such as have been obtained, to the Knowledge of such Seller, no authorization, consent or approval of, or registration, qualification or filing with, any Governmental Authority or other Person is required to be obtained by such Seller or any of its Affiliates in connection with the execution, delivery and performance of this Agreement by such Seller. 8.8 Investment. Such Seller (i) understands that the offering, issuance and sale of the Common Units to such Seller under this Agreement have not been, and will not be, registered under the Securities Act, or under any state securities laws, and that the Common Units are being offered and sold to such Seller in reliance upon federal and state exemptions for transactions not involving any public offering, (ii) is acquiring the Common Units solely for its own account for investment purposes, and not with a view to the distribution thereof except pursuant to an effective registration statement, (iii) is, either alone or together with a purchaser representative designated by such Seller in a written instrument delivered to NBP, a sophisticated investor with knowledge and experience in business and financial matters and, except as set forth on Schedule 8.8, an "accredited investor" within the meaning of Regulation D under the Securities Act, (iv) has received certain information concerning NBP and has had the opportunity to obtain additional information and to ask and receive satisfactory answers to questions as desired in order to evaluate the merits and the risks inherent in investing in and holding the Common Units, (v) is able to bear the economic risk of investing in the Common Units, and (vi) agrees that the certificates representing the Common Units issued to such Seller will bear an appropriate legend referring to restrictions on transfers thereof except in compliance with the registration provisions of applicable state and federal securities laws or pursuant to applicable exemptions therefrom. 8.9 Disclosure. To the Knowledge of any such Seller who is an officer of BPI or BPE and to the Knowledge of Haddington/Chase Energy Partners (Bear Paw) LP and Cub Investment, LLC, the representations and warranties of BPI and BPE in this Agreement (including all Schedules) and any other written material delivered to NBP or NBILP by BPI or BPE (other than plans, projections or forecasts) do not and will not omit to state a Material fact necessary to make such information not misleading. 8.10 Representation Regarding Tax Liabilities. To the Knowledge of such Seller, the representations and warranties of BPI and BPE in Section 7.19(g) are true and correct in all Material respects. 30 ARTICLE IX CONDITIONS TO SELLERS' OBLIGATION TO CLOSE The obligation of each Seller to transfer, assign and deliver the Interests to NBP pursuant hereto is subject to the satisfaction (unless waived in writing by BPI) of each of the following conditions at and as of the Closing Date: 9.1 Representations and Warranties Correct. The representations and warranties of NBP and NBILP contained in Article VI shall be true and correct in all Material respects (except for those representations and warranties that are qualified as to Materiality, which shall be true and correct in all respects) on and as of the Signing Date and at and as of the Closing Date as though made at and as of the Closing Date, except as affected by the transactions contemplated by this Agreement. 9.2 Performance of Obligations by NBP and NBILP. NBP and NBILP shall have performed and complied in all Material respects with all agreements and conditions required to be performed or complied with by them under this Agreement on or prior to the Closing Date. 9.3 Actions to be Taken at Closing. Each of NBP and NBILP shall have delivered to Sellers a certificate, dated the Closing Date, signed by an officer of NBP and NBILP certifying that the conditions specified in Sections 9.1 and 9.2 have been satisfied. 9.4 Consents and Notices. NBP and NBILP shall have obtained or effected all consents, approvals, waivers, notices and filings required by NBP or NBILP in connection with the execution and delivery by NBP and NBILP of this Agreement or consummation by NBP and NBILP of the transactions contemplated hereby, and any notice or waiting period relating thereto shall have expired with all requirements lawfully imposed having been satisfied in all Material respects. 9.5 Absence of Litigation. No order, stay, judgment or decree shall have been issued, and be in effect, by any court restraining or prohibiting the Closing, and no action, suit or proceeding shall have been commenced, be pending or threatened, by any Governmental Authority seeking to restrain, prohibit or delay (or questioning the validity or legality of) the consummation of the transactions contemplated by this Agreement, and no statute, rule, regulation, executive order, decree, temporary restraining order, preliminary or permanent injunction or other order enacted, entered, promulgated, enforced or issued by any Governmental Authority or other legal restraint or prohibition preventing the transactions contemplated by this Agreement shall be in effect. 9.6 Opinion of Counsel for NBP and NBILP. Sellers shall have received an opinion, dated the Closing Date, of Vinson & Elkins L.L.P., legal counsel to NBP and NBILP, substantially in the form of Exhibit B. 9.7 Material Adverse Change. NBP shall not have suffered any Material adverse change in its assets, liabilities, condition (financial or otherwise), operating results, business or prospects since January 19, 2001. 31 9.8 Listing of Common Units on New York Stock Exchange. The Common Units to be issued at the Closing shall have been approved for listing, upon official notice of issuance, on the New York Stock Exchange. 9.9 Liquids Marketing Agreement. Lodgepole and BPE shall have entered into a five (5) year agreement governing the marketing of natural gas liquids (the "LIQUIDS MARKETING AGREEMENT") by Lodgepole substantially in the form of Exhibit C. The Liquids Marketing Agreement shall become effective on the Closing Date, and the Liquids Marketing Agreement currently in effect between Lodgepole and BPE shall be terminated as of the Closing Date. ARTICLE X CONDITIONS TO NBP'S AND NBILP'S OBLIGATION TO CLOSE The obligation of NBP to purchase the Interests from Sellers pursuant hereto is subject to the satisfaction (unless waived in writing by NBP or NBILP) of each of the following conditions at and as of the Closing Date: 10.1 Representations and Warranties Correct. The representations and warranties of BPI and BPE contained in Article VII and the representations and warranties of each of the Sellers contained in Article VIII shall be true and correct in all Material respects (except for those representations and warranties that are qualified as to Materiality which shall be true and correct in all respects) on and as of the Signing Date (without regard to any updated Schedules provided pursuant to Section 5.10) and at and as of the Closing Date as though made at and as of the Closing Date after giving effect to all updated Schedules provided pursuant to Section 5.10, except as affected by the transactions contemplated by this Agreement. 10.2 Performance of Obligations by Sellers. Each of the Sellers, BPI and BPE shall have performed and complied in all Material respects with all agreements and conditions required to be performed or complied with by it under this Agreement on or prior to the Closing Date. 10.3 Actions to be Taken at Closing. (a) BPI and BPE shall have delivered to NBP and NBILP a certificate, dated the Closing Date, signed by an officer of each of BPI and BPE certifying that the conditions specified in Sections 10.1 and 10.2 have been satisfied with respect to BPI and BPE. (b) Each Seller shall have delivered to NBP and NBILP a certificate, dated the Closing Date, signed by such Seller or such Seller's authorized representative, certifying that the conditions specified in Sections 10.1 and 10.2 have been satisfied with respect to such Seller. 10.4 Miscellaneous Documents. NBILP shall have received a certified copy of: (i) a certificate of good standing and existence from the State of Delaware for each of BPI and BPE; (ii) a certificate of good standing and existence in Canada for BPP, if such certificates are issued in Canada; (iii) a certificate of good standing from the State of Colorado for BPE; and (iv) comparable certificates from each jurisdiction in which any of the Bear Paw Entities is qualified to do business or its activities are such that such qualification is required, each dated within twenty (20) days of the Closing Date. 32 10.5 Certificates. Each Seller shall have delivered to NBP such Seller's certificate(s) evidencing such Seller's Interests, in proper form for transfer, duly endorsed or with irrevocable stock powers attached thereto. 10.6 Opinions of Sellers' Counsel. NBILP shall have received opinions, dated the Closing Date, of O'Sullivan, Graev and Karabell, LLP, legal counsel for Haddington/Chase Energy Partners and Cub Investment, LLC, and of Clanahan, Tanner, Downing & Knowlton, P.C., legal counsel for the other Sellers, substantially in the form of Exhibit D. 10.7 No Adverse Change. Except as set forth on Schedule 7.15, since the Signing Date, there shall have been no Material adverse change to the assets, liabilities, condition (financial or otherwise), operating results, business or prospects of any of the Bear Paw Entities. Except for the actions and proceedings set forth on Schedule 7.8, no actions or proceedings shall be pending or threatened which would reasonably be expected to Materially and adversely affect the assets, liabilities, condition (financial or otherwise), operating results, business or prospects of any of the Bear Paw Entities or the transactions contemplated by this Agreement. 10.8 Consents and Notices. BPE, BPI and each Seller shall have obtained or effected, on terms and conditions reasonably satisfactory to NBILP, all consents, approvals, waivers, notices and filings required by BPE, BPI and each Seller in connection with the execution and delivery by BPE, BPI and each Seller of this Agreement or consummation by BPE, BPI and each Seller of the transactions contemplated hereby, and any notice or waiting period relating thereto shall have expired with all requirements lawfully imposed having been satisfied in all Material respects. 10.9 Absence of Litigation. No order, stay, judgment or decree shall have been issued, and be in effect, by any court restraining or prohibiting the Closing, and no action, suit or proceeding shall have been commenced, and be pending, by any Governmental Authority seeking to restrain, prohibit or delay (or questioning the validity or legality of) the consummation of the transactions contemplated by this Agreement, and no statute, rule, regulation, executive order, decree, temporary restraining order, preliminary or permanent injunction or other order enacted, entered, promulgated, enforced or issued by any Governmental Authority or other legal restraint or prohibition preventing the transactions contemplated by this Agreement shall be in effect. 10.10 Disposition of Lodgepole. Bear Cub, BPE, BPI and the Sellers shall have performed all of their respective obligations in connection with the distribution of Lodgepole to Bear Cub in exchange for Bear Cub's member interests in BPE pursuant to the Exchange Agreement substantially in the form of Exhibit E (the "EXCHANGE AGREEMENT"). The Exchange Agreement shall terminate all guarantees of the Bear Paw Entities of any obligations of Lodgepole and shall be a valid and binding obligation of the parties thereto. 10.11 Liquids Marketing Agreement. Lodgepole and BPE shall have entered into the Liquids Marketing Agreement substantially in the form of Exhibit C. 10.12 Execution of Certain Agreements. The following agreements, in form mutually agreeable to BPI and NBP, shall have been executed and shall be valid and binding obligations 33 of all parties to such agreements: (i) the non-competition and non-solicitation agreements that each of Lodgepole, Thomas J. Edelman, Robert J. Clark, Michael R. Henderson and Pierce H. Norton, Jr. will enter into with NBP, NBPS and others; and (ii) the severance agreements that each of the Terminated Employees will enter into with BPE. 10.13 Acceptance of Employment Offers. That number of Desired Employees that, in the reasonable judgment of NBP, are necessary to operate the business of the Bear Paw Entities in a prudent manner consistent with past practices shall have accepted the employment offers extended to them by NBPS, and such employees accepting employment with NBPS shall include Michael R. Henderson and Pierce H. Norton, Jr. 10.14 Title Matters. NBP and NBILP shall have received title insurance policies satisfactory to them for all of BPE's existing owned plant sites, and all Material defects in title to the properties set forth on Schedule 10.14 shall have been cured or, if all such defects have not been cured, the amount of Escrowed Funds shall have been increased by up to Five Hundred Thousand Dollars ($500,000). If such increase in the amount of Escrowed Funds occurs, this condition will be deemed to have been satisfied. 10.15 Repayment of Indebtedness of Certain Sellers. Thomas J. Edelman, Robert J. Clark, Michael R. Henderson, Pierce H. Norton, Jr. and Carl J. Holmgren shall have paid BPI One Million Two Hundred Thousand Dollars ($1,200,000) in cash in full payment of the indebtedness owed by them to BPI, which amount represents the remaining principal and interest outstanding after giving effect to the forgiveness of indebtedness described in Section 11.8. ARTICLE XI ADDITIONAL COVENANTS OF THE PARTIES 11.1 Affiliate and Intercompany Transactions. BPI, BPE and Sellers shall, on or prior to the Closing, terminate the Affiliate and intercompany transactions set forth on Schedule 11.1. 11.2 Powers of Attorney. BPI, BPE and Sellers shall, on or prior to the Closing, terminate or cause to be terminated any and all powers of attorney referenced on Schedule 7.22. 11.3 Tax Matters. (a) Pre-Closing Period Income Taxes. With respect to any U.S. or foreign, state or local Tax Return relating to Taxes based on or measured by income covering a taxable period ending on or before the Closing Date with respect to any of the Bear Paw Entities, which entities are treated as pass-through entities and the liability for such Taxes under applicable Law is incurred by Sellers (collectively, "INCOME TAXES"), Sellers: (i) shall cause such Tax Return to be prepared; (ii) shall cause to be included in such Tax Return all items of income, gain, loss, deduction, credit or other items ("TAX ITEMS") required to be included therein; (iii) shall cause such Tax Return to be timely filed with the appropriate Governmental Authority; and (iv) shall be responsible for the timely payment of all Taxes due with respect to the periods covered by such Tax Returns. (b) Pre-Closing Other Taxes. With respect to all Tax Returns covering Taxes that under applicable Law are incurred by any Bear Paw Entity and the liability for such Taxes 34 under applicable Law is payable by the Bear Paw Entities (collectively, "ENTITY LEVEL TAXES"), NBP and NBILP shall, following the Closing, cause the Bear Paw Entities to prepare and timely file such Tax Returns and to be responsible for the timely payment of all Taxes due with respect to the periods covered by such Tax Returns. (c) Tax Proceedings. NBILP and Sellers shall cooperate fully, and shall cause each of the Bear Paw Entities to cooperate fully, as and to the extent reasonably requested by the other Party, in connection with the filing of Tax Returns pursuant to this Section 11.3 and any audit, litigation or other proceeding (each a "TAX PROCEEDING") with respect to Taxes. Such cooperation shall include the retention and (upon the other Party's request) the provision of records and information that are reasonably relevant to any such Tax Proceeding and making employees available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder. NBILP and Sellers further agree, upon request, to provide the other Party with all information regarding the Bear Paw Entities that either Party may be required to report to any Governmental Authority regarding Taxes. The Sellers further agree, upon request, to use commercially reasonable efforts to obtain any certificate or other document from any Governmental Authority or any other Person as may be necessary to mitigate, reduce or eliminate any Tax that could be imposed on NBP, NBILP or any of the Bear Paw Entities (including, but not limited to, with respect to the transactions contemplated by this Agreement); provided, however, Sellers shall not be required to undertake any unduly burdensome action in connection with the foregoing or incur any expense or otherwise cause any Seller to incur any liability. NBILP agrees that, without the consent of Sellers owning a majority of Interests immediately prior to the Closing, NBILP will not agree, and will not permit any Bear Paw Entity to agree, to the terms of any settlement of any Tax Proceeding with respect to which any of the Sellers may have liability (including any liability under any indemnity). Seller and NBILP shall jointly control any audit, litigation or other proceeding of any Bear Paw Entity that relates to any Income Taxes for a pre-Closing Tax period, or any such proceeding that could reasonably be anticipated to result in a Tax liability for any Seller. In any such jointly controlled proceeding, no Party shall settle or otherwise compromise such proceeding without the prior written consent of the other Party, which consent shall not be unreasonably withheld. (d) Transfer Taxes. NBP and NBILP shall be responsible for the payment of all state and local transfer, sales, use, stamp, registration or other similar Taxes resulting from the transactions contemplated by this Agreement; provided that each Seller shall be responsible for such Seller's income Taxes and any Taxes payable by such Seller by reason of the fact that such Seller is a resident of a state other than Colorado. (e) Non-foreign Status. NBILP shall withhold ten percent (10%) of the Cash Purchase Price Payment to be paid to each Seller unless such Seller provides to NBP on or before the Closing Date a certificate of non-foreign status of such Seller in favor of NBP which meets the requirements of Treasury Regulation Section 1.1445-2(b)(2). (f) Taxes in Connection with Disposition of Lodgepole. Each Seller shall, up to such Seller's Percentage Amount, indemnify NBILP, NBP, BPI and BPE for any and all liability for Taxes incurred as a result of the distribution of Lodgepole to Bear Cub, the redemption of Bear Cub's member interests in BPE, and the distribution to such Seller of the note payable relating to the distribution of Lodgepole. 35 (g) Purchase Price Allocation. The Sellers and NBP agree that for purposes of determining the allocation of the total consideration received hereunder by Sellers, for federal income Taxes, among the assets treated as sold pursuant to Section 4.5, the fair market value of the assets placed in Classes I, II and III (for purposes of Section 1060 of the Code) shall be equal to their respective adjusted tax basis as of the Closing Date and shall be allocated an equivalent amount of the consideration, and the balance of the consideration shall be allocated to the assets in Classes IV and V. The Sellers and NBP agree to use, and be consistent with, the valuations and allocation methodology described above in all their applicable Tax Returns and determinations, including, without limitation, for purposes of the application of Section 704(c) of the Code to the Sellers as Common Unit holders of NBP. (h) Canadian Tax Form 2062. The Sellers shall prepare and timely file with the Canadian tax authorities Form 2062 Certificate of Compliance relating to the disposition of the capital stock of BPP. 11.4 Employment and Benefit Obligations. Prior to the Closing Date, each Seller shall take, and shall cause BPI and BPE to take, such action so that none of the Bear Paw Entities nor NBP nor NBILP shall have any obligation or liability with respect to the Employment Obligations and the Benefit Plans listed on Schedule 7.14. Sellers agree that such Benefit Plans shall be solely liable for all claims incurred prior to the Closing Date under such Benefit Plans and all benefits accrued as a result of employment completed prior to the Effective Date, as applicable, and that none of BPI, BPE, NBP or NBILP shall have any liability with respect to such claims and benefits. Sellers further agree that the assumption of the Benefit Plans as hereinabove provided for shall be complete and total and that from and after such assumption, neither of BPI nor BPE shall be deemed to have any responsibility with respect to such Benefit Plans, including, specifically, but not by way of limitation, any responsibility with respect to their prior administration and operation. Finally, Sellers agree that if there is any Benefit Plan or arrangement which should have been listed on Schedule 7.14 and was not, such Benefit Plan shall be treated as if it had been listed on Schedule 7.14 for all purposes of this Section 11.4, and Sellers agree to take such action as may be appropriate or necessary to achieve such result both with respect to such omitted plan and with respect to any individuals entitled to benefits thereunder. 11.5 Books and Records. On the Closing Date, BPI and BPE shall deliver all books and records of the Bear Paw Entities to NBILP. 11.6 Bear Paw Name. If NBILP decides not to use the Bear Paw Name or fails to use the Bear Paw Name for a period of six (6) months after the Closing, NBILP shall notify the Sellers and offer the rights to the Bear Paw Name to Sellers without any further charge; provided, however, that the Sellers, their Affiliates, and any successors in interest to Sellers or their Affiliates, shall not use the Bear Paw Name to compete with NBILP in the gas transportation, gathering and compression business in the Powder River Basin, or the gas transportation, gathering and processing business in the Williston Basin as are more fully described on Schedule 11.6. 11.7 Registration Rights of Sellers. 36 (a) On or before the earlier of six (6) months after the Closing Date or thirty (30) days after NBP has completed the offering and issuance of at least $50 million of additional equity securities, NBP shall file a shelf registration statement (the "REGISTRATION STATEMENT") under the Securities Act registering the offering and sale of the Sellers' Common Units in (a) market sales on the New York Stock Exchange at prevailing market prices, and (b) underwritten public offerings. Such date is referred to herein as the "ANTICIPATED FILING DATE." Following such filing, NBP will use its commercially reasonable efforts to cause such Registration Statement to become effective; provided, however, that NBP shall not be required to file prospectus supplements in order to effect more than one underwritten public offering of the Sellers' Common Units unless otherwise required by Section 11.7(b) or Section 11.7(c). In connection with any registration pursuant to the immediately preceding sentence, NBP shall promptly prepare and file such documents as may be necessary to register or qualify the securities subject to such registration under the securities laws of such states as any Seller (a "HOLDER," which term shall include any equity holder or Affiliate of a Seller to which the Seller transfers Common Units acquired pursuant to this Agreement other than pursuant to the Registration Statement) shall reasonably request and shall do any and all other acts and things that may reasonably be necessary or advisable to enable the Holder to consummate a public sale of such Common Units in such states; provided, however, that no such qualification or action shall be required in any jurisdiction where, solely as a result of the operation of this sentence, NBP would become subject to general service of process or to taxation or qualification to do business as a foreign corporation or partnership doing business in such jurisdiction. Except as set forth in Section 11.7(b), all reasonable costs and expenses of any such registration shall be paid by NBP. NBP shall be obligated to file only one such Registration Statement and, subject to the provisions of Section 11.7(i), shall use commercially reasonable efforts to maintain the effectiveness of such Registration Statement for a period of twenty-four (24) months from its effective date, except that, subject to the provisions of Section 11.7(i), the obligation of NBP under this Section 11.7(a) shall cease (i) as to any Holder that owns fewer than 50,000 Common Units acquired pursuant to this Agreement, on the second anniversary of the Closing Date and (ii) as to any Holder that owns 50,000 or more Common Units acquired pursuant to this Agreement, at such time as Vinson & Elkins L.L.P. or other counsel for NBP acceptable to such Holder furnishes a written opinion to such Holder and to NBP's transfer agent that such Holder is able to sell freely or otherwise dispose of all of its Common Units under the exemption from registration contained in Rule 144(k) under the Securities Act and that the restrictive legend on the certificates evidencing such Holder's Common Units may be removed in connection with such sale so that the purchaser from such Holder receives certificates evidencing Common Units with no legend referring to restrictions on resale under the Securities Act. Upon receipt of such opinion and upon presentation of such certificates to NBP's transfer agent, NBP will instruct its transfer agent to remove the restrictive legend. (b) Upon effectiveness of the Registration Statement and until such time as NBP no longer has an obligation to maintain the effectiveness of the Registration Statement, the Holders of a majority of the Common Units issued at the Closing shall have a one-time right to cause NBP to effect an underwritten public offering of such Holders' Common Units. Such right shall be exercisable by written notice to NBP signed by the Holders of a majority of the Common Units issued at the Closing, which notice must be delivered prior to the sixtieth day preceding the second anniversary of the effective date of the Registration Statement. Upon receipt of such notice, NBP will notify the remaining Holders of their right to participate in such 37 offering and will use reasonable efforts (i) to engage one or more of the underwriters listed on Schedule 11.7 (or their successor firms) to manage such offering, which underwriters will be selected by a majority of the Holders participating in such offering from those underwriters listed in Schedule 11.7, (ii) to file a prospectus supplement as required under the Securities Act and (iii) otherwise to take all other actions as are customary in connection with such offerings. Such offering shall be at such public offering price with underwriting discounts and commissions as shall be agreed upon by the underwriters and the Holders of a majority of the Common Units participating in such offering. Except as set forth in Section 11.7(d), all costs and expenses of any underwritten public offering pursuant to this Section 11.7(b) (other than the underwriting discounts and commissions) shall be paid by NBP. In the event the selling Holders in such public offering sell fewer than 1,500,000 Common Units in such public offering, then the Holders shall have one additional right to cause NBP to effect an underwritten public offering pursuant to this Section 11.7(b), but in the case of such offering this proviso shall be inapplicable. (c) If NBP shall at any time after the date that the Registration Statement becomes effective propose to make a public offering of Common Units for cash through underwriters chosen by NBP, within a reasonable time prior to the date it desires to make such underwritten public offering, NBP shall deliver written notice of such fact to each Holder who owns at least 15,000 Common Units acquired pursuant to this Agreement and to all other Persons holding "piggy-back" registration rights. Upon receipt of such notice, each such Holder shall have a period of ten (10) days thereafter to notify NBP that it desires to include such Holder's Common Units in such underwritten public offering. Upon receipt of any such request from a Holder, NBP shall use all reasonable efforts to include such number or amount of Common Units held by such Holder in such underwritten public offering as the Holder shall request; provided that nothing herein shall prevent NBP from delaying or abandoning any such offering if it, in its sole discretion, chooses to do so. In the event that the managing underwriter of such offering advises NBP and such Holder in writing that in its good faith opinion the inclusion of all or some of the Holder's Common Units would adversely and materially affect the offering, subject to the terms of the immediately succeeding sentence, NBP shall include in such offering only that number or amount, if any, of Common Units held by such Holder which, in the opinion of the managing underwriter, will not so adversely and materially affect the offering. In the event any other Person holding "piggy-back" registration rights desires to include Common Units held by it in such offering pursuant to an exercise of such "piggy-back" registration rights and some or all of the Common Units that the Holder desires to include are not included as provided in the previous sentence, the number of Common Units that the Holder and such other Person are permitted to include in such offering shall be reduced proportionately, based on the number that each requested to be included in such offering. Except as set forth in Section 11.7(d), all costs and expenses of any such underwritten public offering (other than the underwriting discounts and commissions applicable to such Holder's and any other Person's pro rata share) shall be paid by NBP. It is understood and agreed that any exercise by any Holder of its "piggy-back" registration rights pursuant to this Section 11.7(c) shall not be construed as an exercise of any right granted pursuant to Section 11.7(b). (d) In connection with any underwritten public offering referred to in this Section 11.7, NBP shall provide indemnification, representations, covenants, opinions and other assurances to the underwriters in form and substance reasonably satisfactory to such 38 underwriters. Further, NBP shall, to the fullest extent permitted by law, indemnify and hold harmless the underwriters and each Holder and their respective officers, managers, directors and controlling persons (within the meaning of the Securities Act) and any agent or representative thereof (collectively, "INDEMNIFIED PERSONS") against any losses, claims, demands, actions, causes of action, assessments, damages, liabilities (joint or several), costs and expenses (including, without limitation, interest, penalties and reasonable attorneys' fees and disbursements), imposed upon or incurred by the Indemnified Persons, directly or indirectly, under the Securities Act or otherwise (hereinafter referred to in this Section 11.7(d) as a "claim" and in the plural as "claims"), based upon, arising out of, or resulting from any untrue statement or alleged untrue statement of any Material fact contained in any Registration Statement under which any Common Units were registered under the Securities Act or any state securities or Blue Sky laws, in any preliminary prospectus (if used prior to the effective date of such Registration Statement), or in any summary or final prospectus or in any amendment or supplement thereto (if used during the period NBP is required to keep the Registration Statement and prospectus current), or arising out of, based upon or resulting from the omission or alleged omission to state therein a Material fact required to be stated therein or necessary to make the statements made therein not misleading; provided, however, that NBP shall not be liable to any Indemnified Person to the extent that any such claim arises out of, is based upon or results from an untrue statement or alleged untrue statement or omission or alleged omission made in such Registration Statement, such preliminary, summary or final prospectus or such amendment or supplement, in reliance upon and in conformity with written information furnished to NBP by or on behalf of such Indemnified Person specifically for use in the preparation thereof. (e) Any request pursuant to this Section 11.7 to include Common Units in any underwritten public offering shall (i) specify the Common Units intended to be offered and sold by the Person making the request, (ii) express such Person's present intent to offer such Common Units for distribution, and (iii) contain the undertaking of such Person to provide all such information and materials and take all action as may be required in order to permit NBP to comply with all applicable requirements in connection with the registration of such Common Units. Any Holder exercising "piggy-back" rights pursuant to Section 11.7(c) shall include in such notice a representation that such Holder owns at least 15,000 Common Units acquired pursuant to this Agreement. (f) NBP shall have the right to postpone the filing or effectiveness of the Registration Statement, or sales pursuant to the Registration Statement after it becomes effective, if and only so long as any of the following conditions is satisfied: (i) NBP is involved in a proposed transaction that is Material, and in the good faith judgment of the Partnership Policy Committee of NBP, after consultation with counsel, the inclusion in the Registration Statement or a prospectus of the information regarding such transaction required under the Securities Act would be reasonably likely to jeopardize the success of the transaction or result in a violation by NBP of a confidentiality agreement relating to the transaction, and postponement of such filing, effectiveness or sales would be in the best interests of NBP and the holders of its Common Units; or (ii) a pending investigation or other circumstances prevent NBP from including in the Registration Statement or a prospectus all information required or that may be required under the Securities Act or prevent NBP from verifying the accuracy and completeness in all Material respects of any information in the Registration Statement or a prospectus, and in the good faith judgment of the Partnership Policy Committee of NBP, after consulting with counsel, the 39 postponement of such filing, effectiveness or sales is necessary to protect NBP from risk of violation of the Securities Act. In the case of any of the foregoing conditions NBP shall use reasonable efforts to cause such condition to cease to exist as soon as practicable (but such efforts need not include the abandonment of a proposed transaction). NBP agrees that no postponement pursuant to this Section 11.7(f) shall last more than 120 days without the consent of the Holders of a majority of the Common Units that were issued at the Closing and that remain unsold by Sellers or their successors pursuant to the Registration Statement referred to in Section 11.7(a). (g) If NBP should at any time propose to make an underwritten public offering of its equity securities, and if the managing underwriter of such offering advises NBP in writing that in its opinion the sale of any Holders' Common Units at the time of and following the offering would have a material adverse effect on the success of such offering, each Holder who owns at least 15,000 Common Units acquired pursuant to this Agreement shall, if requested in writing by such underwriter, agree not to sell Common Units (other than Common Units being sold in the offering) on any securities exchange or engage in any derivative transaction that would result in such sale until the expiration of ninety (90) days after the commencement of such public offering, provided that NBP shall use commercially reasonable efforts to persuade the underwriter to waive such restriction as soon as possible following the closing of such public offering. The provisions of this Section 11.7(g) shall not apply unless (i) all executive officers and directors of NBP owning Common Units and (ii) all Persons who have acquired Common Units from NBP after the date of this Agreement other than through a registered public offering (other than Sellers) shall also have agreed not to sell publicly their Common Units of NBP under the circumstances and pursuant to the terms set forth in this Section 11.7(g). NBP agrees to obtain from the underwriter a commitment not to grant any release, waiver or termination of the provisions set forth in any similar agreement with any other Person or Persons unless it also grants such release, waiver or termination to all Holders that are subject to such agreements, pro rata based on the number of Common Units of NBP held by the Holders and such other Person or Persons. (h) Notwithstanding Section 11.7(f) and Section 11.7(g), NBP agrees with each Holder owning at least 15,000 Common Units acquired pursuant to this Agreement that, from and after the Anticipated Filing Date, such Holder will be permitted to make sales of such Common Units pursuant to a current prospectus during periods that aggregate at least one hundred eighty-five (185) days during any twelve (12) month period beginning on or after the Anticipated Filing Date, unless such Holder consents in writing; provided that in the event such Holder executes an agreement pursuant to Section 11.7(g) in connection with any offering in which such Holder participates in such offering as a selling shareholder pursuant to the "piggy-back" registration rights provided in Section 11.7(c), the period of time during which such selling Holder was prevented from disposing of Common Units pursuant to such agreement will not be taken into account (and will be considered time during which such Holder was permitted to make such sales) for purposes of determining whether NBP has complied with this Section 11.7(h) (it being understood that in the event that such Holder exercises its "piggy-back" registration rights pursuant to Section 11.7(c) but sells no Common Units in such offering due to the underwriter "cutback" contemplated thereby, the period of time during which such selling Holder was prevented from disposing of Common Units will be taken into account for purposes of determining whether NBP has complied with this Section 11.7(h)). 40 (i) Notwithstanding anything contained in this Section 11.7 to the contrary, in the event that the Holders have not exercised their right to effect an underwritten public offering pursuant to Section 11.7(b) on or before the date on which NBP's obligation to all Holders under Section 11.7(a) to maintain the effectiveness of the Registration Statement ceases, NBP shall, for the benefit of each Holder owning at least 15,000 Common Units acquired pursuant to this Agreement, continue to maintain the effectiveness of the Registration Statement for an additional period equal to the aggregate number of days that such Holder was prevented from selling Common Units pursuant to the Registration Statement as a result of all postponements referred to in Section 11.7(f) (including any postponement of filing or effectiveness of the Registration Statement) and all lockup agreements referred to in Section 11.7(g) (other than those not taken into account by virtue of the provisions of Section 11.7(h)), including any such postponements or lockup agreements applicable during such additional period. During such additional period, Holders owning at least 15,000 Common Units acquired pursuant to this Agreement shall have a demand registration right and "piggy-back" registration rights that are identical to the rights granted pursuant to the other provisions of this Section 11.7 (including any restrictions on such rights), except that (i) the demand right shall be exercisable by Holders of a majority of the Common Units acquired pursuant to this Agreement by such Holders and (ii) notice of exercise of the demand right must be delivered on or prior to the sixtieth day preceding the third anniversary of the effective date of the Registration Statement. (j) NBP agrees that, until such time as the registration rights granted pursuant to this Section 11.7 have been fully exercised or expired, it will not grant to any Person registration rights or public offering participation rights that are senior to those granted to the Holders pursuant to this Section 11.7, but NBP may grant rights that are pari passu with such rights. Any registration rights containing provisions that are less restrictive on such Person than those set forth in Section 11.7(f), 11.7(g) or 11.7(h) shall be deemed to be senior to those granted to the Holders, but NBP may grant registration rights that provide for more demand rights, that cover different time periods or that contain different notice provisions. 11.8 Sellers' Consent to Disposition of Lodgepole and Other Matters. Effective immediately prior to the Closing, each Seller consents to the distribution of Lodgepole to Bear Cub in exchange for Bear Cub's member interests in BPE and the distribution of the note payable thereunder for the benefit of the Sellers (with payments on such note to be placed in escrow pursuant to the Escrow Agreement), and, from and after the Closing, each Seller releases BPI, BPE, NBP and NBILP from any liability or claims in connection with such distribution and exchange. Effective as of the Closing, each Seller consents to the forgiveness by BPI of indebtedness (consisting of $1,200,000 in principal and interest amounts) owing to BPI pursuant to notes executed by Thomas J. Edelman, Robert J. Clark, Michael R. Henderson, Pierce H. Norton, Jr. and Carl J. Holmgren. 11.9 Indemnification Agreements. Effective as of the Closing, each Bear Paw Entity is hereby released from all obligations under any indemnification agreements that any Bear Paw Entity entered into with any Seller or employee of BPE, whether a current or former employee, in connection with Taxes payable, now or in the future, by such Seller or employee (all of whom are listed on Schedule 11.9). Effective as of the Closing, each Seller and employee of BPE (whether a current or former employee) is hereby released from all obligations under any indemnification agreements that such Seller or employee entered into with any Bear Paw Entity 41 in connection with Taxes payable, now or in the future, by such Seller or employee; provided that no such release shall operate to relieve a Seller from any obligation under this Agreement. 11.10 Novation. Effective as of the Closing, this Agreement supersedes each of the employment agreements between BPE and (i) Thomas J. Edelman effective January 1, 2000, (ii) Robert J. Clark effective January 1, 2000, (iii) Carl Holmgren effective January 1, 2000, (iv) Bruce Duval effective October 1, 2000, (v) Jonathan Nixon effective October 1, 2000, (vi) Michael R. Henderson effective January 1, 2000, and (vii) Pierce H. Norton, Jr. effective January 1, 2000. Effective as of the Closing, this Agreement also supersedes each of the prior indemnity agreements between BPI and the individuals listed on Schedule 11.9 (collectively, the "FORMER INDEMNITEES"), each dated August 22, 2000. By entering into this Agreement, each of Thomas J. Edelman, Robert J. Clark, Carl Holmgren, Bruce Duval, Jonathan Nixon and each of the Former Indemnitees expressly acknowledge and agree that all rights and obligations under their respective prior employment agreements and indemnity agreements identified above are extinguished effective as of the Closing and that, from and after the Closing, no party to such employment agreements or indemnity agreements will have any rights or obligations thereunder. 11.11 COBRA Obligations. NBP and NBILP agree to cause BPI and BPE to adopt the Enron Corp. Medical Plan for the limited purpose of providing benefits required to be provided to any former employee of either of BPI and BPE who is deemed to be an "M&A qualified beneficiary" within the meaning of Treas. Reg. ss. 54.4980B-9 as a result of the transaction contemplated by this Agreement with continued medical benefit coverage to the extent and only to the extent that such coverage is required to be provided by Enron Corp. and its Affiliates pursuant to the provisions of Section 4980B of the Code as a result of the transactions contemplated by this Agreement. To the extent that any such continuing coverage benefits any individual who continues active employment with Lodgepole or any entity controlled by Lodgepole or the Sellers after the Closing Date, the Sellers jointly and severally agree to reimburse BPI and/or BPE, as applicable, for the full cost (net of any contributions made by such individual or individuals for such coverage) of such coverage. The determination of such cost shall be based upon the regular ongoing premium and cost allocation structure then applicable with respect to the Enron Corp. Medical Plan as determined by Enron Corp. and communicated to the Sellers, BPI and BPE. 11.12 NBP Limited Partnership Agreement. Prior to the Closing, NBP will provide the Sellers with true, complete and correct copies of the limited partnership agreement of NBP, including any amendments thereto, which agreement will be in full force and effect. 11.13 Termination of BPE Credit Agreement. The Parties agree that they will work together to terminate the BPE Credit Agreement immediately prior to the Closing and to obtain customary pay-off letters from the lenders under such agreement. At the Closing NBP shall furnish the funds necessary to repay all indebtedness outstanding under such agreement and to terminate such agreement. 11.14 Assignment of Claim. At the Closing, the Bear Paw Entities shall assign to the Sellers the right to the proceeds of all claims related to BPE's unpaid receivables from Imperial Holly Sugar (Savannah Food) as described on Schedule 7.8, which claims are being asserted in the bankruptcy proceeding styled In re Imperial Distributing, Inc. In the event such assignment 42 is not permitted pursuant to applicable law, NBP agrees to provide, or to cause BPE to provide, to the Sellers the aggregate amounts received by NBP or its Affiliates with respect to such claims by placing such amounts in escrow pursuant to the Escrow Agreement. ARTICLE XII SURVIVAL OF REPRESENTATIONS AND WARRANTIES, ETC. 12.1 Survival. Subject in all respects to the other provisions of this Article XII, the representations and warranties made in this Agreement shall not survive the Closing Date, except for the representations and warranties contained in Sections 6.1, 6.2, 6.3, 6.4, 6.6, 6.7, 6.9, 8.1 through 8.5 and 8.8, which shall survive without limitation of time. 12.2 Limitation on Liabilities. From and after the Closing, a Party shall have no liability for any claim based on a breach of any representation or warranty made in this Agreement unless such representation or warranty survives the Closing pursuant to Section 12.1. ARTICLE XIII INDEMNIFICATION 13.1 Indemnification by NBP and NBILP. Subject to the provisions of Article XII, from and after the Closing, NBP and NBILP shall protect, defend, indemnify and hold harmless each of the Sellers and their officers, directors, managers, partners, employees, Affiliates, agents, representatives, successors and assigns, from and against any and all claims, damages, losses, causes of action, expenses and liabilities and Taxes, including reasonable attorneys' fees ("DAMAGES"), sustained by such Persons as a result of: (a) any breach of any representation or warranty of NBP and NBILP contained herein, which survives the Closing pursuant to Section 12.1; (b) any breach of any covenant or agreement of NBP and NBILP contained in this Agreement or in any of the certificates, instruments or documents delivered by NBP and NBILP pursuant hereto, and (c) any liability of any Bear Paw Entity relating to the ownership or operation of the assets of such Bear Paw Entity after the Effective Date except (i) any liability with respect to which any such Person has an indemnity obligation pursuant to Section 13.2 or (ii) any liability of Lodgepole or that Lodgepole has agreed to assume pursuant to the Exchange Agreement. Damages sustained by such Persons that are covered by this indemnity shall include any increase in the cost of insurance resulting from any such breach. Any indemnification payments hereunder shall be reduced by (i) any insurance proceeds receivable or tax benefits realizable by the Indemnified Party as a result of the event that causes such indemnity payment and (ii) any loss realized as a result of such Person's actions or failure to act. 13.2 Indemnification by Sellers. Subject to the provisions of Article XII, from and after the Closing, each Seller shall protect, defend, indemnify and hold harmless NBP, NBILP and the Bear Paw Entities and their officers, directors, managers, partners, employees, Affiliates, agents, representatives, successors and assigns, from and against any and all Damages sustained by such Persons as a result of: (a) any breach of any representation or warranty of such Seller contained herein that survives the Closing pursuant to Section 12.1; (b) any breach of any covenant or agreement of such Seller contained in this Agreement or in any of the certificates, instruments or documents delivered by such Seller pursuant hereto, including the covenants made in Article XI; (c) any federal income Taxes owed by such Seller with respect to its 43 Interests for periods prior to the Closing; and (d) any amounts with respect to which such Seller has agreed to indemnify NBP and NBILP pursuant to Section 11.3(f). Notwithstanding the foregoing, if the aggregate amount of any claim or series of related claims against all Sellers for Damages suffered in connection with the matters described in clause (a) or (b) above does not exceed One Million Dollars ($1,000,000), then such Seller shall not have any indemnification obligation pursuant to this Section 13.2 with respect to such claim or series of related claims; provided, however, that if NBP, NBILP or any Bear Paw Entity suffers any Damages referred to in Section 11.3(f), each Seller shall indemnify NBP and NBILP for such Seller's Percentage Amount of such Damages. Damages sustained by such Persons in connection with any breach described in clauses (a) and (b) above that are covered by this indemnity shall include any increase in the cost of insurance resulting from any such breach. Any indemnification payments hereunder shall be reduced by (i) any insurance proceeds receivable or tax benefits realizable by the Indemnified Party as a result of the event that causes such indemnity payment and (ii) any loss realized as a result of NBP's or NBILP's actions or failure to act. 13.3 Indemnifying and Indemnified Party. For purposes of this Article XIII, the term "INDEMNIFYING PARTY" as to a particular claim shall mean the Party against whom an obligation to indemnify is imposed pursuant to this Article XIII, and the term "INDEMNIFIED PARTY" as to a particular claim shall mean the Party or other Persons entitled to indemnification with respect to such claim by the Indemnifying Party pursuant to this Article XIII. 13.4 Notification of Claims; Right to Contest and Defend. Each Party will, promptly after the receipt of notice of any claim in respect of which indemnity may be sought from any other Party, notify such Party in writing of the receipt of such claim. The omission of the Indemnified Party to notify the Indemnifying Party of any such claim shall not relieve the Indemnifying Party from any liability in respect of such claim which it may have to the Indemnified Party on account of the indemnity agreement herein (except, however, that the Indemnifying Party shall be relieved of liability to the extent that the failure to notify shall have caused prejudice to the defense of such claim), nor shall it relieve the Indemnifying Party from any other liability which it may have to the Indemnified Party. The Indemnifying Party shall be entitled at its cost and expense to contest and defend by all appropriate legal proceedings any claim with respect to which it is called upon to indemnify the Indemnified Party under the provisions of this Agreement; provided, however, that notice of the intention to assume and contest shall be delivered by the Indemnifying Party to the Indemnified Party within thirty (30) days from the date of delivery to the Indemnifying Party of notice by the Indemnified Party of the assertion of the claim. Any such contest may be conducted in the name and on behalf of the Indemnifying Party or the Indemnified Party as may be appropriate. Such contest shall be conducted by attorneys employed or engaged by the Indemnifying Party, but the Indemnified Party shall have the right to participate in such proceedings and to be represented by attorneys of its own choosing at its cost and expense. If the Indemnified Party joins in any such contest, the Indemnifying Party shall coordinate all matters with the Indemnified Party, but the Indemnifying Party shall have full authority to determine all action to be taken with respect thereto. If after notice as provided for herein, the Indemnifying Party does not elect to contest or defend any claim as provided in this Section 13.4, the Indemnifying Party shall be bound by the result obtained with respect thereto by the Indemnified Party, and the Indemnified Party may (but shall have no obligation to) contest any such claim. At any time after the commencement of defense of any claim, the Indemnifying Party may request the Indemnified Party to agree in writing to the 44 abandonment of such contest or to the payment or compromise by the Indemnifying Party of the asserted claim, whereupon such action shall be taken unless the Indemnified Party determines that failure to continue the contest or taking of such action could adversely affect the business of the Indemnified Party or any of its Affiliates, and so notifies the Indemnifying Party in writing within fifteen (15) days of such request from the Indemnifying Party. 13.5 Cooperation. If requested by the Indemnifying Party, the Indemnified Party agrees to cooperate with the Indemnifying Party and its counsel in contesting any claim which the Indemnifying Party elects to contest or, if appropriate, in making any counterclaim against the Person asserting the claim or any cross-complaint against any Person (other than any Affiliates of the Indemnified Party), but the Indemnifying Party will reimburse the Indemnified Party for any expenses incurred by it in so cooperating. 13.6 Right to Participate. Subject to Section 13.4, the Indemnified Party agrees to afford the Indemnifying Party and its counsel the opportunity to be present at, and to participate in, conferences with all Persons, including Governmental Authorities, asserting any claim against the Indemnified Party for which indemnity may be sought hereunder, or conferences with representatives of or counsel for such Persons. 13.7 Payments. The Indemnifying Party shall pay to the Indemnified Party, upon demand, the amount of any Damages to which the Indemnified Party may become entitled by reason of the provisions of this Article XIII, such payment to be made in cash or other immediately available funds at the address of the Indemnified Party specified in Section 16.8. If the Indemnified Party is required to initiate a legal proceeding to enforce its rights to indemnification hereunder and is successful in such proceeding, it is agreed that such Party shall be entitled, in addition to the amount to which it is entitled under this Article XIII, to reimbursement for the reasonable legal fees, proceeding costs and fees of experts incurred by it in prosecuting such action, plus interest on the indemnified amount at the maximum rate permitted by Law from the date the Damages for which it is to be indemnified were incurred. 13.8 No Consequential or Punitive Damages. NOTWITHSTANDING ANYTHING CONTAINED TO THE CONTRARY IN ANY OTHER PROVISION OF THIS AGREEMENT, EACH OF THE SELLERS AND NBP AND NBILP AGREE THAT THE RECOVERY BY ANY PARTY HERETO OF ANY DAMAGES SUFFERED OR INCURRED BY IT AS A RESULT OF ANY BREACH BY THE OTHER PARTY OF ANY OF ITS REPRESENTATIONS, WARRANTIES, COVENANTS OR OBLIGATIONS OR ANY OTHER MATTER OR CLAIM UNDER THIS AGREEMENT SHALL BE LIMITED TO THE ACTUAL DAMAGES SUFFERED OR INCURRED BY THE INDEMNIFIED PARTY AS A RESULT OF THE BREACH BY THE BREACHING PARTY OF ITS REPRESENTATIONS, WARRANTIES, COVENANTS OR OBLIGATIONS HEREUNDER, AND IN NO EVENT SHALL THE INDEMNIFYING PARTY BE LIABLE TO THE INDEMNIFIED PARTY FOR ANY INDIRECT, CONSEQUENTIAL, SPECIAL, EXEMPLARY OR PUNITIVE DAMAGES, EXCEPT TO THE EXTENT THEY CONSTITUTE PART OF A THIRD PARTY CLAIM SUFFERED OR INCURRED BY THE INDEMNIFIED PARTY AS A RESULT OF THE BREACH OR OTHER ACTION OR MATTER BY THE INDEMNIFYING PARTY OF ANY OF ITS REPRESENTATIONS, WARRANTIES, COVENANTS OR OBLIGATIONS HEREUNDER. 45 13.9 Indemnification for Costs of Prosecuting Certain Securities Laws Claims. In the event any Party brings any action, suit or proceeding against any other Party or Parties claiming a violation of the anti-fraud provisions of any federal or state securities law in connection with this Agreement or the transactions contemplated hereby, or makes a counterclaim that such violation occurred, the prevailing Party in such action, suit, proceeding or counterclaim shall be entitled to indemnification under this Article XIII from the opposing Party or Parties for its costs, including reasonable attorneys' fees, in prosecuting or defending such action, suit, proceeding or counterclaim. In the event more than one Seller is required to indemnify a prevailing Party hereunder, each such Seller's obligation to shall be limited to its pro rata portion of such costs. ARTICLE XIV TERMINATION 14.1 Termination. This Agreement and the transactions contemplated hereby may be terminated at any time prior to the Closing: (a) by written mutual consent of BPI and NBILP; or (b) by either BPI or NBILP if the transactions contemplated hereby have not been consummated on or before April 30, 2001; or (c) subject to Section 14.1(b), by BPI on behalf of the Sellers, if any condition set forth in Article IX has not been met as of April 30, 2001 (unless such condition has not been met due to a breach of or a failure to perform, satisfy or comply with any term, condition or provision herein required to be performed, satisfied or complied with by BPI, BPE or Sellers on or before the Closing Date as a condition to Closing hereunder); or (d) subject to Section 14.1(b), by NBILP upon the giving of written notice to BPI, BPE and Sellers, if any condition set forth in Article X has not been met as of April 30, 2001 (unless such condition has not been met due to a breach of or a failure to perform, satisfy or comply with any term, condition or provision herein required to be performed, satisfied or complied with by NBILP or NBP on or before the Closing Date as a condition to Closing hereunder). The right of any Party to terminate this Agreement pursuant to this Article XIV shall remain operative and in full force and effect regardless of any investigation made by or on behalf of any Party, any Person controlling any Party or any of their respective officers, managers, directors, members, partners, stockholders, representatives or agents, whether prior to or after the execution of this Agreement. 14.2 Effect of Termination. In the event of the termination of this Agreement pursuant to this Article XIV, this Agreement shall become void, and have no effect, without any liability on the part of any Party or its respective officers, managers, directors, employees, Affiliates, agents, representatives, successors or assigns; provided, that if such termination is pursuant to Section 14.1(c) or 14.1(d), then, subject to the limitations set forth in Section 13.8, the breaching or non-performing Party shall be fully liable for any and all Damages sustained or incurred by any other Party; and provided, further, that the provisions of Sections 5.12, 13.8, 16.3, 16.4, 16.5, 16.6, 16.9, 16.10, 16.11, 16.12, and 16.13 shall survive any such termination. 46 ARTICLE XV DISPUTE RESOLUTION; ARBITRATION 15.1 Dispute Resolution. The Parties shall attempt in good faith to resolve by negotiations any dispute, claim or controversy arising out of or relating to this Agreement or the performance, application, implementation, validity or breach of this Agreement or any provision of this Agreement (including, without limitation, claims based on contract, tort or statute) (the "DISPUTE"). Any Party may initiate such negotiations by delivery to the other Parties of a written notice describing any Dispute not resolved in the ordinary course of business about which negotiation is requested. (a) Within ten (10) business days after delivery of the notice, the Parties to such Dispute shall schedule to meet at a mutually acceptable time and place, and thereafter as often as necessary, to exchange relevant information and attempt to resolve the Dispute. (b) If the Parties to the Dispute fail to meet within twenty (20) business days or the Dispute is not resolved through negotiations within thirty (30) business days after delivery of the request for negotiations, any Party to the Dispute may initiate mediation of the Dispute as provided below. (c) If a participant intends to be accompanied by an attorney at a meeting held pursuant to this section, the other participant shall be given at least three (3) business days' notice of that intention and may also be accompanied by an attorney. (d) All statements made during meetings pursuant to this Section 15.1 are confidential and shall be treated as settlement negotiations. 15.2 Mediation. If, in the sole discretion of any Party to the Dispute, the negotiation as provided in Section 15.1 is unsuccessful, such Party may submit the Dispute to mediation. The mediation will be submitted to the American Arbitration Association or any successor thereto (the "AAA") and will be held in Houston, Texas. 15.3 Arbitration. (a) Any Dispute that has not been resolved through negotiation as provided in Section 15.1 or mediation as provided in Section 15.2 shall be finally, conclusively and exclusively settled by confidential, binding arbitration in accordance with the Commercial Arbitration Rules of the AAA then in effect (the "ARBITRATION RULES") and this Section 15.3. (b) THE PARTIES TO THIS AGREEMENT HEREBY EXPRESSLY WAIVE THEIR RIGHT TO SEEK REMEDIES IN COURT, INCLUDING THE RIGHT TO TRIAL BY JURY, WITH RESPECT TO ANY MATTER SUBJECT TO ARBITRATION PURSUANT TO THIS SECTION 15.3. ANY PARTY TO THIS AGREEMENT MAY BRING AN ACTION, INCLUDING, WITHOUT LIMITATION, A SUMMARY OR EXPEDITED PROCEEDING IN ANY COURT HAVING JURISDICTION, TO COMPEL ARBITRATION OF ANY DISPUTE, CONTROVERSY OR CLAIM TO WHICH THIS SECTION 15.3 APPLIES. EXCEPT WITH RESPECT TO THE FOLLOWING PROVISIONS (THE "SPECIAL PROVISIONS") WHICH SHALL APPLY WITH RESPECT TO ANY 47 ARBITRATION PURSUANT TO THIS SECTION 15.3, THE INITIATION AND CONDUCT OF ARBITRATION SHALL BE AS SET FORTH IN THE ARBITRATION RULES, WHICH ARBITRATION RULES ARE INCORPORATED IN THIS AGREEMENT BY REFERENCE WITH THE SAME EFFECT AS IF THEY WERE SET FORTH IN THIS AGREEMENT. (c) In the event of any inconsistency between the Arbitration Rules and the Special Provisions, the Special Provisions shall control. Any references in the Arbitration Rules to a sole arbitrator may be deemed to refer to the tribunal of arbitrators provided for under Section 15.3(d). (d) Unless otherwise agreed in writing by the Parties: (i) all hearings and conferences relating to the arbitration will be held in, and the arbitrator's award will be rendered in Houston, Texas; and (ii) a panel of three (3) independent arbitrators shall be chosen to settle the Dispute. Each Party shall select a qualified independent impartial arbitrator, and the two (2) arbitrators so selected shall, within ten (10) days select a third qualified independent impartial arbitrator. (e) All arbitration hearings shall be commenced within ninety (90) days after arbitration is initiated pursuant to the Arbitration Rules, unless, upon a showing of good cause by a Party to the arbitration, the panel permits the extension of the commencement of such hearing; provided, however, that any such extension shall not be longer than sixty (60) days. (f) All claims presented for arbitration shall be particularly identified, and the Parties to the arbitration shall each prepare a statement of their position with recommended courses of action. These statements of position and recommended courses of action shall be submitted to the arbitrators chosen as provided hereinabove for binding decision. The arbitrators shall not be empowered to make decisions beyond the scope of the position papers. (g) The arbitration proceeding will be governed by the substantive laws of the State of Texas and will be conducted in accordance with such procedures as shall be fixed for such purpose by the arbitrators, except that (i) discovery in connection with any arbitration proceeding shall be conducted in accordance with the Federal Rules of Civil Procedure and applicable case law, (ii) the arbitrators shall have the power to compel discovery, and (iii) unless the Parties otherwise agree and except as may be provided in this Article XV, the arbitration shall be governed by the Federal Arbitration Act, 9 U.S. ss.ss.1-16, to the exclusion of any provision of state law or other applicable law or procedure inconsistent therewith or which would produce a different result. The Parties shall preserve their right to assert and to avail themselves of the attorney-client and attorney-work product privileges, and any other privileges to which they may be entitled pursuant to applicable Law. No Party to the arbitration or any arbitrator may compel or require mediation and/or settlement conferences without the prior written consent of all such Parties and the arbitrators. (h) The arbitrators shall make an arbitration award as soon as possible after the later of the close of evidence or the submission of final briefs, and in all cases the award shall be made not later than thirty (30) days following submission of the matter. The finding and decision of the arbitrators shall be final and shall be binding upon the Parties. Judgment upon the arbitration award or decision may be entered in any court having jurisdiction thereof or 48 application may be made to any such court for a judicial acceptance of the award and an order of enforcement, as the case may be. Unless otherwise agreed by the Parties to the arbitration in writing, the arbitration award shall include findings of fact and conclusions of law. If at least two (2) of the arbitrators agree and so order it, the losing Party shall pay the reasonable legal fees and costs incurred by the other Parties with respect to the arbitration. (i) Notwithstanding any provision in this Section 15.3 to the contrary, this Section 15.3 shall not be construed to require arbitration of a claim or dispute brought by a Person who is not a Party to this Agreement, or affect the ability of any Party to interplead or otherwise join another Party in a proceeding brought by a Person who is not a Party to this Agreement. (j) The obligation to arbitrate under this Section 15.3 shall not be binding upon any party with respect to requests for preliminary injunctions, temporary restraining orders or other procedures in a court of competent jurisdiction to obtain interim relief when deemed necessary by such court to preserve the status quo or prevent irreparable injury pending resolution by arbitration of the actual dispute. ARTICLE XVI MISCELLANEOUS 16.1 Further Cooperation. After the Closing, each Party, at the request of the other Party and without additional consideration, shall execute and deliver or cause to be executed and delivered from time to time such further instruments and shall take such further action as the requesting Party may reasonably require in order to carry out more effectively the intent and purpose of this Agreement. 16.2 Amendments and Waivers. Any term or provision of this Agreement may be waived at any time by an instrument in writing signed by the Party who is entitled to the benefits of such term or provision, and this Agreement may be amended or supplemented at any time by an instrument in writing signed by all Parties hereto. 16.3 Expenses. Except as otherwise provided for in this Agreement, each Party shall bear and pay its respective expenses separately incurred in connection with this Agreement, including its own legal and accounting fees and expenses. 16.4 Confidentiality. (a) Until February 26, 2002, no Party will use or disclose Confidential Information furnished to it in connection with the transactions contemplated by this Agreement without the prior written consent of the other Parties, other than to its directors, officers, managers, employees, representatives, partners, lenders, counsel, lenders' counsel, Affiliates (which in the case of NBP and NBILP expressly includes NBPS), and such Affiliates' directors, officers, managers, employees, representatives, lenders, counsel and lenders' counsel (such persons are collectively referred to as "representatives" in this Section 16.4). If this Agreement is terminated, upon a Party's request, each other Party shall return all written Confidential Information of the requesting Party, except for that portion of such Confidential Information that may be found in analyses, compilations, studies or other documents prepared by, or for, the 49 returning Party, and the returning Party and its representatives shall not retain any copies of such written Confidential Information. No Party shall be required to return, destroy or alter any of its computer archival and backup tapes and files, provided same are kept confidential in accordance with the terms of this Section 16.4. (b) For purposes of this Agreement, "CONFIDENTIAL INFORMATION" shall mean all information of any kind concerning the Bear Paw Entities, Lodgepole or a Party to this Agreement (or its Affiliates), or the properties or business of the Bear Paw Entities, Lodgepole or a Party to this Agreement (or its Affiliates), which information is confidential, proprietary or generally not available to the public, but excludes information that: (i) becomes generally available to the public; (ii) a Party or its representative can demonstrate was already known to it at the time of disclosure by another Party (other than disclosures made pursuant to the transactions contemplated by this Agreement or in a Party's evaluation thereof); (iii) was acquired from a third party that was not prohibited from making disclosure; or (iv) is required to be disclosed in order to comply with any applicable Law. (c) Each Party shall promptly inform the other Parties of the substance of any inquiries received by any Party from any Governmental Authority in connection with any attempt to gain access to Confidential Information concerning the transactions contemplated by this Agreement. (d) All information provided to NBP and NBILP pursuant to Section 5.1 shall be deemed Confidential Information. Additional Confidential Information shall be identified as such in writing by the Party claiming confidentiality. (e) Notwithstanding any other provision of this Section 16.4, following the Closing, NBP and NBILP may use and disclose to any Person any information regarding the business of any Bear Paw Entity. 16.5 Right to Compete. The Parties hereby agree that neither Section 16.4 nor any other agreement between the Parties obligates any Party to deal exclusively with any other Party hereto or prevents any Party or any parent, Affiliate, subsidiary or related entity or Person of such Party from competing with any other Party or any parent, Affiliate, subsidiary or related entity or Person of such other Party, so long as such Party remains in compliance with the provisions of Section 16.4. It is understood, agreed and acknowledged by the Parties hereto that except as otherwise expressly provided in this Agreement, the Parties, or any parent, Affiliate, subsidiary or related entity of such Party, may now own or control, have access to, or may hereafter sell or acquire interests in certain businesses, facilities, contract rights or business development information that is the subject of the transactions contemplated by this Agreement and the Confidential Information. Nothing contained in this Section 16.5 shall in any way modify the obligations or limitations imposed upon the Parties regarding their use of the Confidential Information as provided for in Section 16.4. 16.6 Public Announcements. No Party shall make, nor permit any of its Affiliates or representatives to make, any news release or other public disclosure pertaining to this Agreement or the transactions contemplated hereby without the prior approval of the other Parties as to both form and content, which approval shall not be unreasonably withheld. Notwithstanding the 50 foregoing, any Party may make any such news release or other public disclosure which, in the opinion of such Party's counsel, is required to be made by such Party pursuant to applicable Laws and then only with prior written notice to the other Party. 16.7 Assignment and Binding Effect. This Agreement shall be binding upon and inure to the benefit of and be enforceable by each of the Parties hereto and their respective legal representatives, successors and permitted assigns. Neither this Agreement nor any obligation hereunder shall be assigned or assignable by NBILP, NBP, BPI, BPE or Sellers without the prior written consent of all the Parties, which approval shall not be unreasonably withheld or delayed; provided, however, that, after the Closing, any Party may, without the consent of the other Parties hereto, assign its interest in this Agreement to a wholly-owned subsidiary, equity owner or Affiliate of such Party, as the case may be, but no such assignment shall relieve such Party of its obligations hereunder; provided further that any related assignment of Common Units, other than pursuant to a registered offering, must be made pursuant to an exemption from registration under the securities laws. Any purported assignment in violation of this Agreement shall be null and void ab initio. 16.8 Notices. All notices, consents, requests, instructions, approvals and other communications provided for herein and all legal process in regard hereto shall be validly given, made or served if in writing and if delivered personally (including by courier against written receipt), by facsimile or sent by certified or registered mail, postage prepaid, addressed as follows: To Cub Investment, LLC: Cub Investment, LLC c/o J.P. Morgan Partners (23A SBIC), LLC 1221 Avenue of the Americas, New York, New York 10020 Attention: Christopher Behrens Telephone: (212) 899-3400 Facsimile: (212) 899-3401 To Haddington/Chase Haddington/Chase Energy Partners (Bear Paw) LP Energy Partners c/o Haddington Ventures, L.L.C. (Bear Paw) LP: 2603 Augusta, Suite 1130 Houston, Texas 77057 Attention: J. Chris Jones Telephone: (713) 532-7992 Facsimile: (713) 532-9922 With a copy to: O'Sullivan Graev & Karabell, LLP 30 Rockefeller Plaza, 41st Floor New York, NY 10112 Attention: Ilan S. Nissan, Esq. Telephone: (212) 408-2400 Facsimile: (212) 408-2420 51 To the other Sellers: c/o Robert J. Clark 1625 Broadway, 24th Floor Denver, Colorado 80202 Telephone: (303) 626-8288 Facsimile: (303) 626-8259 With a copy to: Clanahan, Tanner, Downing and Knowlton, P.C. 730 17th Street, Suite 500 Denver, Colorado 80202-3580 Attention: Michael J. Wozniak Telephone: (720) 359-9515 Facsimile: (720) 359-9501 To NBP: Northern Border Partners, L.P. 1111 South 103rd Street Omaha, Nebraska 68124 Attention: Janet Place Telephone: (402) 398-7886 Facsimile: (402) 398-7780 To NBILP: Northern Border Intermediate Limited Partnership 1200 17th Street, Suite 2750 Denver, Colorado 80202 Attention: Brian Bierbach Telephone: (303) 575-6479 Facsimile: (303) 534-2205 With a copy to: NBP Services Corporation 1400 Smith Houston, Texas 77002 Attention: Shonnie Daniel Telephone: (713) 853-1463 Facsimile: (713) 854-5425 or to such other address as any Party hereto may, from time to time, designate in writing delivered in a like manner. Notice given by personal delivery shall be deemed to be given on the date delivery was effected. Notice given by mail shall be deemed to be delivered on the date which is three (3) business days following the date the same is postmarked. 16.9 Entire Agreement. This Agreement constitutes the entire agreement between the Parties with respect to the transactions contemplated hereby and supersedes and is in full substitution for any and all prior agreements and understandings (written or oral) between the Parties relating to such transactions. 16.10 Descriptive Headings. The descriptive headings of the several sections of this Agreement are inserted for convenience only and shall not control or affect the meaning or construction of any of the provisions hereof. 52 16.11 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAWS. 16.12 Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which together shall constitute one instrument. 16.13 Recovery of Costs and Attorneys' Fees. In the event any Party brings an action to enforce the terms of this Agreement (or any matter arising out of this Agreement), the prevailing Party, after the entry of a final non-appealable order, shall be entitled to recover from the other Party, as a part of said order, all costs, fees and expenses of such proceeding, including reasonable attorneys' fees and costs. 16.14 Severability. In the event any one or more of the provisions contained in this Agreement should be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby. 16.15 No Third Party Beneficiaries. Nothing herein expressed or implied is intended or shall be construed to confer upon or to give any Person not a party hereto any rights or remedies under or by reason of this Agreement, except as expressly provided herein. (signature pages follow) 53 IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the date first above written. "NBILP" NORTHERN BORDER INTERMEDIATE LIMITED PARTNERSHIP By: ----------------------------------------------- Name: --------------------------------------------- Title: -------------------------------------------- "NBP" NORTHERN BORDER PARTNERS, L.P. By: ----------------------------------------------- Name: --------------------------------------------- Title: -------------------------------------------- "BPI" BEAR PAW INVESTMENTS, LLC By: ----------------------------------------------- Name: --------------------------------------------- Title: -------------------------------------------- "BPE" BEAR PAW ENERGY, LLC By: ----------------------------------------------- Name: --------------------------------------------- Title: -------------------------------------------- 54 "SELLERS" CUB INVESTMENT, LLC By: Haddington Energy Partners LP, Manager By: Haddington Ventures, L.L.C., General Partner By: ----------------------------------------------- Name: --------------------------------------------- Title: -------------------------------------------- HADDINGTON/CHASE ENERGY PARTNERS (BEAR PAW) LP By: Haddington Ventures, L.L.C., General Partner By: ----------------------------------------------- Name: --------------------------------------------- Title: -------------------------------------------- CLEVEPTNRS By: ----------------------------------------------- Name: --------------------------------------------- Title: -------------------------------------------- -------------------------------------------------- Thomas J. Edelman -------------------------------------------------- Robert J. Clark -------------------------------------------------- Michael R. Henderson -------------------------------------------------- Pierce H. Norton, Jr. -------------------------------------------------- Carl J. Holmgren -------------------------------------------------- Dixie Forrester -------------------------------------------------- Linda McNamee 55 -------------------------------------------------- Richard VandeBossche -------------------------------------------------- Cindy K. Rucker -------------------------------------------------- Chris M. Conley -------------------------------------------------- Bruce A. Duval -------------------------------------------------- Terry Herauf -------------------------------------------------- Christine M. Eklund -------------------------------------------------- Nancy Rife -------------------------------------------------- Jonathan Nixon -------------------------------------------------- Stephanie Gork -------------------------------------------------- Jon Whitney -------------------------------------------------- Dean A. Volesky -------------------------------------------------- Michael D. Rafter -------------------------------------------------- Michael A. Armstrong -------------------------------------------------- John O. Quinnell -------------------------------------------------- Betty C. Duffell SECURITY TRUST COMPANY, TRUSTEE FBO BEAR PAW ENERGY, LLC 56 DEFERRED COMPENSATION PLAN FBO PIERCE H. NORTON, JR. By: ----------------------------------------------- Name: --------------------------------------------- Title: -------------------------------------------- SECURITY TRUST COMPANY, TRUSTEE FBO BEAR PAW ENERGY, LLC DEFERRED COMPENSATION PLAN FBO MICHAEL R. HENDERSON By: ----------------------------------------------- Name: --------------------------------------------- Title: -------------------------------------------- SECURITY TRUST COMPANY, TRUSTEE FBO BEAR PAW ENERGY, LLC COMPENSATION PLAN FBO NANCY RIFE By: ----------------------------------------------- Name: --------------------------------------------- Title: -------------------------------------------- SECURITY TRUST COMPANY, TRUSTEE FBO BEAR PAW ENERGY, LLC DEFERRED COMPENSATION PLAN FBO CHRISTINE M. EKLUND By: ----------------------------------------------- Name: --------------------------------------------- Title: -------------------------------------------- R&K VENTURES, LLLP By: ----------------------------------------------- Name: --------------------------------------------- Title: -------------------------------------------- THOMAS J. EDELMAN IRREVOCABLE TRUST FBO ELEANOR A. EDELMAN By: ----------------------------------------------- Name: --------------------------------------------- Title: -------------------------------------------- 57 THOMAS J. EDELMAN IRREVOCABLE TRUST FBO ELIZABETH A. EDELMAN By: ----------------------------------------------- Name: --------------------------------------------- Title: -------------------------------------------- THE ALBERT I. EDELMAN, ELEANOR W. EDELMAN AND THOMAS J. EDELMAN IRREVOCABLE TRUST FBO JENNIFER EDELMAN LEMLER By: ----------------------------------------------- Name: --------------------------------------------- Title: -------------------------------------------- THE ALBERT I. EDELMAN, ELEANOR W. EDELMAN AND THOMAS J. EDELMAN IRREVOCABLE TRUST FBO CORNELIA S. EDELMAN By: ----------------------------------------------- Name: --------------------------------------------- Title: -------------------------------------------- THE ALBERT I. EDELMAN, ELEANOR W. EDELMAN AND THOMAS J. EDELMAN IRREVOCABLE TRUST FBO GWEN A. EDELMAN By: ----------------------------------------------- Name: --------------------------------------------- Title: -------------------------------------------- 58 EXHIBIT A FORM OF ESCROW AGREEMENT SEE ATTACHED EXHIBIT B FORM OF OPINION OF COUNSEL TO NBP AND NBILP SEE ATTACHED EXHIBIT C FORM OF LIQUIDS MARKETING AGREEMENT SEE ATTACHED EXHIBIT D FORM OF OPINIONS OF SELLERS' COUNSEL SEE ATTACHED EXHIBIT E FORM OF EXCHANGE AGREEMENT SEE ATTACHED EX-23 8 exh23.txt CONSENTS OF EXPERTS AND COUNSEL EXHIBIT 23.01 Consent of Independent Public Accountants As independent public accountants, we hereby consent to the incorporation of our reports included in this Annual Report on Form 10-K, into the Company's previously filed Registration Statement File No. 333-40601, Registration Statement File No. 333- 66949, Registration Statement File No. 333-72323, and Registration Statement File No. 333-72351. Omaha, Nebraska, March 27, 2001 -----END PRIVACY-ENHANCED MESSAGE-----