CONTRIBUTION AGREEMENT

Exhibit 10.32

CONTRIBUTION AGREEMENT

by and among

ONEOK, INC.

NORTHERN BORDER PARTNERS, L.P.

and

NORTHERN BORDER INTERMEDIATE LIMITED PARTNERSHIP

February 14, 2006

 

TABLE OF CONTENTS

 

 

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CONTRIBUTION AGREEMENT

This CONTRIBUTION AGREEMENT (this “ Agreement ”) is entered into as of February 14, 2006 by and among ONEOK, Inc., an Oklahoma corporation (“ ONEOK ”), Northern Border Partners, L.P., a Delaware limited partnership (“ Northern Border ”), and Northern Border Intermediate Limited Partnership (“ NBILP ”, and together with Northern Border, the “ NBP Partnerships ”) (each a “ Party ” and together, the “ Parties ”). Capitalized terms used but not defined shall have the meaning given in Section 11.18.

W I T N E S S E T H

WHEREAS , ONEOK owns all of the issued and outstanding Equity Interests (the “ Shares ”) of each of the Persons listed on Exhibit A hereto under the heading “Companies” (the “ Companies ”, and each, individually, a “ Company ”);

WHEREAS , the Companies and their Subsidiaries, all of which are listed on Exhibit A under the heading “Company Subsidiaries”, own and operate natural gas gathering, processing, fractionating, transportation, storage, pipelines and natural gas liquids assets located in Kansas, Oklahoma and Texas (the “ Business ”); and

WHEREAS , ONEOK wishes to contribute the Shares to the NBP Partnerships and the NBP Partnerships wish to accept the contribution of the Shares, upon the terms and conditions set forth herein.

NOW, THEREFORE , in consideration of the premises and mutual agreements and covenants herein contained, and intending to be legally bound hereby, the Parties hereto hereby agree as follows:

SECTION 1. CONTRIBUTION

1.1 Contribution to Northern Border . Immediately before Closing, ONEOK shall deliver or cause to be delivered to Northern Plains Natural Gas Company, LLC (“ Northern Plains ”) and Pan Border Gas Company, LLC (“ Pan Border ”, and collectively, the “ Contributing NBP General Partners ”), good and sufficient instruments of transfer transferring the NBP GP Shares and the NBILP GP Shares to the Contributing NBP General Partners. At the Closing, ONEOK and the Contributing NBP General Partners shall deliver or cause to be delivered to Northern Border good and sufficient instruments of transfer transferring the NBP Shares and the NBP GP Shares, respectively, to Northern Border. Such instruments of transfer shall effectively vest in Northern Border good and marketable title to the NBP Shares and the NBP GP Shares free and clear of all Liens other than transfer restrictions imposed by applicable securities laws. The contribution of the NBP GP Shares by the Contributing NBP General Partners will be made in order to comply with the NBP General Partners’ obligations to maintain general partner capital accounts in accordance with Section 4.2 of the Northern Border Partnership Agreement and NBP acknowledges that the contribution of the NBP GP Shares by the Contributing NBP general Partners is sufficient to maintain the aggregate general partner capital accounts in NBP required by Section 4.2 of the Northern Border Partnership Agreement.

1.2 Issuance of the Units . As consideration for the NBP Shares, Northern Border will, at Closing, issue to ONEOK 36,494,126 units representing limited partnership interests in Northern Border with the rights and preferences contained in the form of amendment (the “ Amendment ”) to the Amended and Restated Agreement of Limited Partnership of Northern Border, dated as of October 1, 1993 (the “ Northern Border Partnership Agreement ”), attached hereto as Exhibit B (the “ Units ”), which Units shall be convertible, as set forth in the Amendment, into common units representing limited partnership interests in Northern Border (“ Common Units ;” and the Common Units into which the Units are convertible, the “ Conversion Units ”).

1.3 The Closing .

(a) Subject to the provisions of Section 8, the closing of the transactions contemplated by this Agreement (the “ Closing ”) shall take place at the offices of Gable & Gotwals, 100 W. 5 ^th Street, Tulsa, OK 74103, commencing at 10:00 a.m. local time on the first business day of the calendar month immediately following the satisfaction or waiver of all conditions to the obligations of the Parties to consummate the transactions contemplated hereby (other than conditions with respect to actions the Parties shall take at the Closing itself, including without limitation, conditions in Section 7.1(h) and 7.2(h) herein) or such other date as Northern Border and ONEOK may mutually determine (the “ Closing Date ”).

(b) At the Closing, ONEOK will deliver the following documents and deliverables to Northern Border:

(i) Good and sufficient instruments of transfer transferring all of the Shares to Northern Border free and clear of all Liens other than transfer restrictions imposed by applicable securities laws;

(ii) An executed copy of a Services Agreement substantially in the form attached hereto as Exhibit E (the “ Services Agreement ”);

(iii) A certificate certifying that the transactions contemplated hereby are exempt from withholding under Code Section 1445 executed in accordance with the requirements of the Treasury regulations promulgated thereunder;

(iv) Resignations of the officers, directors and managers identified prior to Closing by Northern Border;

(v) An executed copy of a Guaranty substantially in the form attached hereto as Exhibit C (the “ ONEOK Guaranty Agreement ”);

(vi) An executed copy of a Payment, Performance, Indemnity and Support Agreement substantially in the form attached hereto as Schedule 1.3(b)(vi) ;

(vii) A written opinion from legal counsel to ONEOK addressed to Northern Border substantially in the form attached hereto as Schedule 1.3(b)(vii) ; and

 

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(viii) Such other certificates, instruments of conveyance, and documents as may be reasonably requested by Northern Border prior to the Closing Date to carry out the intent and purposes of this Agreement.

(c) At the Closing, Northern Border will deliver the following documents and deliverables to ONEOK:

(i) Certificates (or appropriate evidence of a book entry transfer to the account designated by ONEOK) representing the Units;

(ii) An executed copy of the Services Agreement;

(iii) An Agreement and Guaranty with respect to each of the equipment leases relating to ONEOK Bushton Processing, Inc., in a form reasonably acceptable to ONEOK and Northern Border, and such other agreements, certificates and assurances necessary in connection with the transfer of ONEOK Bushton Processing, Inc. to Northern Border;

(iv) An executed copy of a Payment, Performance, Indemnity and Support Agreement substantially in the form attached hereto as Schedule 1.3(b)(vi) ;

(v) A written opinion from legal counsel to Northern Border addressed to ONEOK substantially in the form attached hereto as Schedule 1.3(c)(v) ; and

(vi) Such other certificates, instruments, and documents as may be reasonably requested by ONEOK prior to the Closing Date to carry out the intent and purposes of this Agreement.

1.4 GP Contribution and Dropdown To NBILP . At the Closing and immediately following the contribution set forth in Section 1.1, (i) Northern Border shall deliver to NBILP good and sufficient instruments of transfer transferring the NBP Shares and the NBP GP Shares to NBILP, and (ii) ONEOK shall cause the Contributing NBP General Partners to deliver to NBILP good and sufficient instruments of transfer transferring the NBILP GP Shares to NBILP. Such instruments of transfer shall effectively vest in NBILP good and marketable title to the Shares free and clear of all Liens other than transfer restrictions imposed by applicable securities laws. The contribution of the NBILP GP Shares by the Contributing NBP General Partners will be made in order to comply with the NBP General Partners’ obligations to maintain general partner capital accounts in accordance with Section 4.2 of the Amended and Restated Agreement of Limited Partnership of NBILP, dated as of October 1, 1993 (the “ NBILP Partnership Agreement ”) and NBILP acknowledges that the contribution of the NBILP GP Shares by the Contributing NBP General Partners is sufficient to maintain the aggregate general partner capital accounts in NBILP required by Section 4.2 of the NBILP Partnership Agreement.

1.5 Working Capital Adjustment .

(a) As soon as practicable, but in no event later than 60 days following the Closing, ONEOK shall prepare and deliver to Northern Border a calculation (the “ Closing Working Capital Statement ”) of the Net Working Capital of the Entities, on a consolidated basis,

 

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as of the close of business on the last day of the month immediately preceding the Closing Date (the “ Closing Working Capital ”). The Closing Working Capital Statement shall be prepared in accordance with the principles set forth in the definition of Net Working Capital.

(b) ONEOK shall deliver a copy of the Closing Working Capital Statement to Northern Border promptly after it has been prepared. After receipt of the Closing Working Capital Statement, Northern Border shall have 30 days to review the Closing Working Capital Statement, together with the work papers used in the preparation thereof. ONEOK shall (i) provide Northern Border and its Representatives reasonable access during normal business hours to all relevant personnel, work papers, trial balances and other financial information to the extent necessary or useful to complete their review of the Closing Working Capital Statement, and (ii) cooperate with Northern Border’s and its Representatives’ reasonable requests with respect to the review of the Closing Working Capital Statement, including by providing on a timely basis all information necessary or useful in reviewing the Closing Working Capital Statement. Unless Northern Border delivers written notice to ONEOK on or prior to the 30th day after Northern Border’s receipt of the Closing Working Capital Statement specifying in reasonable detail the amount, nature and basis of all disputed items, Northern Border shall be deemed to have accepted and agreed to the calculation of the Closing Working Capital. If Northern Border (or one of its Representatives) notifies ONEOK of an objection to the calculation of the Closing Working Capital, ONEOK and Northern Border shall, within 20 days (or such longer period as the Parties may agree in writing) following such notice (the “ Resolution Period ”), attempt to resolve their differences and any resolution by them as to any disputed amounts shall be final, binding and conclusive (other than as a result of manifest error or fraud).

(c) If, at the conclusion of the Resolution Period, there are any amounts remaining in dispute, then such amounts remaining in dispute shall be submitted to a nationally recognized public accounting firm agreed by Northern Border and ONEOK (the “ Neutral Auditors ”). Northern Border and ONEOK shall execute, if requested by the Neutral Auditors, a reasonable engagement letter, including customary indemnities. The Neutral Auditors shall act as an arbitrator to determine, based solely on the provisions of this Section 1.5(c) and the presentations by ONEOK and Northern Border, and not by independent review, only those issues still in dispute. The Neutral Auditors’ determination shall be made within 30 days of the dispute being submitted for their determination, shall be set forth in a written statement delivered to ONEOK and Northern Border and shall be final, non-appealable and binding on the Parties hereto, absent manifest error or fraud. A judgment of a court of competent jurisdiction may be entered upon the Neutral Auditors’ determination. The Neutral Auditors shall have exclusive jurisdiction over, and resort to the Neutral Auditors as provided in this Section 1.5(c) shall be the only recourse and remedy of the Parties against one another with respect to, any disputes arising out of or relating to the adjustments pursuant to this Section 1.5(c). The fees, costs and expenses of the Neutral Auditors shall be borne by Northern Border, on the one hand, and by ONEOK, on the other, based upon the percentage which the portion of the contested amount not awarded to each Party bears to the amount actually contested by such Party. For example, if Northern Border claims that the Closing Working Capital is $1,000 less than the amount determined by ONEOK, and ONEOK contests only $500 of the amount claimed by Northern Border, and if the Neutral Auditors ultimately resolve the dispute by awarding Northern Border $300 of the $500 contested, then the costs and expenses of the Neutral Auditors will be allocated 60% (i.e., 300 ÷ 500) to ONEOK and 40% (i.e., 200 ÷ 500) to Northern Border. The term “ Final Closing

 

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Working Capital ” shall mean the definitive Closing Working Capital agreed to (or deemed to be agreed to) by Northern Border and ONEOK in accordance with Section 1.5(b) hereof or resulting from the determinations made by the Neutral Auditors in accordance with this Section 1.5(c) (in addition to those items theretofore agreed to by ONEOK and Northern Border).

(d) In the event the Final Closing Working Capital

(i) exceeds the Target Working Capital, Northern Border shall pay the excess in cash to ONEOK; or

(ii) is less than the Target Working Capital, ONEOK shall pay the difference in cash to Northern Border (the payments contemplated by this Section 1.5(d) are referred to as the “ Net Working Capital Adjustment ”).

All payments made pursuant to this Section 1.5 shall be made by wire transfer of immediately available funds within five (5) days of the determination of the Final Closing Working Capital to an account designated in writing by the applicable Party.

SECTION 2. REPRESENTATIONS AND WARRANTIES OF ONEOK

Except as set forth in the disclosure schedules delivered by ONEOK (the “ ONEOK Disclosure Schedules ”) to Northern Border on the date hereof (it being agreed that any matter disclosed in a particular Schedule of the Disclosure Schedules delivered by ONEOK shall be deemed to have been disclosed with respect to any other Sections of this Agreement to the extent that the relevance of such matter to such other Section is readily apparent from the information disclosed), ONEOK represents and warrants to Northern Border that the statements contained in this Section 2 are true, correct and complete as of the date of this Agreement and will be true, correct and complete as of the Closing, except in each case to the extent that such statements are expressly made only as of a specified date, in which case ONEOK represents and warrants that such statements are true, correct and complete as of such specified date.

2.1 Organization and Authority of ONEOK .

(a) ONEOK is a corporation duly incorporated, validly existing and in good standing under the laws of Oklahoma.

(b) ONEOK has all requisite right, authority and power to enter into this Agreement and each Related Agreement to be executed and delivered by ONEOK and to carry out the transactions contemplated hereby and thereby.

(c) The execution, delivery and performance by ONEOK of this Agreement and each Related Agreement have been duly authorized by all necessary action of ONEOK and no other action on the part of ONEOK is required in connection therewith.

(d) This Agreement and each Related Agreement to be executed and delivered by ONEOK constitutes, or when executed and delivered will constitute, valid and binding obligations of ONEOK enforceable in accordance with their respective terms, except as such

 

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enforceability may be limited by bankruptcy, insolvency or other similar laws from time to time in effect which affect the enforcement of creditors’ rights generally.

(e) The execution, delivery and performance by ONEOK of this Agreement and each Related Agreement to be executed and delivered by ONEOK, with or without the giving of notice or the passage of time, or both:

(i) do not and will not conflict with or violate any provision of the organizational documents of ONEOK or any Entity;

(ii) do not and will not conflict with or violate any Legal Requirements applicable to ONEOK or any of the Entities, or, except as set forth in Schedule 2.1(e)(ii) and any filings required to be made under the HSR Act, require ONEOK or any Entity to obtain any approval, consent or waiver of, or make any filing with, any Governmental Authority that has not been obtained or made;

(iii) do not and will not require the consent, approval or waiver of any Person (other than any Governmental Authority), except as set forth in Schedule 2.1(e)(iii) , or except for any such consents, approvals or waivers as have been obtained or the failure of which to be obtained would not, individually or in the aggregate, have a Material Adverse Effect; and

(iv) does not and will not breach any Material Contract or result in or permit the termination of any such Material Contract.

2.2 Organization, Authority and Qualification of the Entities . Each Company and each Subsidiary thereof (each, a “ Company Subsidiary ” and, together with the Companies, each an “ Entity ” and, collectively, the “Entities”) is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, as set forth on Exhibit A , and has all necessary power and authority to own, operate or lease the properties and assets now owned, operated or leased by it and to carry on its business as it is currently conducted. Each Entity is duly licensed or qualified to do business and is in good standing (to the extent applicable) in each jurisdiction in which the properties owned or leased by it or the operation of its business makes such licensing or qualification necessary, except where the failure to be so qualified or licensed would not, individually or in the aggregate, have a Material Adverse Effect. All material actions taken by the Entities have been duly authorized, and no Entity has taken any action that in any material respect conflicts with, constitutes a material default under or results in a material violation of the organizational documents of such Entities. True and correct copies of the organizational documents of each Entity, each as in effect on the date hereof, have previously been made available to Northern Border.

2.3 Capital of Companies; Beneficial Ownership .

(a) All of the issued and outstanding shares of capital stock of each of the Companies that is a corporation are validly issued, fully paid and nonassessable and are owned beneficially and of record, directly or indirectly, by ONEOK, and all of the limited liability company interests in each of the Companies that is a limited liability company are validly issued, fully paid and nonassessable and are owned beneficially and of record, directly or indirectly, by ONEOK, in each case free and clear of all Liens.

 

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(b) There are no outstanding options, warrants, rights, commitments, preemptive rights or agreements of any kind for the issuance or sale of, or outstanding securities convertible into, any additional shares of capital stock of any class or limited liability company interests, as the case may be, of any Company which would entitle the holders thereof to an interest in or rights in respect of that Company, and there are no agreements of any kind that may obligate ONEOK or any of its Affiliates (including the Companies) to sell, issue, purchase, redeem or otherwise transfer any Shares to any Person. There are no voting agreements, proxies or other similar agreements or understandings with respect to the Shares.

2.4 Subsidiaries .

(a) Exhibit A lists, for each Company Subsidiary, its name, type of entity, jurisdiction of its incorporation, formation or organization and the percentage Equity Interest owned by a Company. Except as set forth in Schedule 2.4(a) , the Companies own, directly or indirectly, all of the issued and outstanding Equity Interests of each Company Subsidiary, free and clear of all Liens other than transfer restrictions imposed by applicable securities laws, and the owner beneficially and of record of each Company Subsidiary is either a Company or a Company Subsidiary, as applicable, and all Equity Interests of each Company Subsidiary are validly issued, fully paid and nonassessable. There are no options, warrants, convertible securities or other rights, agreements, arrangements or commitments of any character relating to the Equity Interests of the Company Subsidiaries or that may obligate the Company Subsidiaries to issue or sell any Equity Interests of any Company Subsidiary, and there are no agreements of any kind that may obligate any Company to sell, issue, purchase, redeem or otherwise transfer any Equity Interests in any Company Subsidiary to any Person. There are no voting agreements, proxies or other similar agreements or understandings with respect to the Equity Interests of the Company Subsidiaries.

(b) Other than the Company Subsidiaries, no Entity owns any Equity Interest in any Person except as set forth in Schedule 2.4(b) . The Entities own, directly or indirectly, 50% of the outstanding Equity Interests in Fox Plant, L.L.C. and 10.1765% of the Equity Interests in Venice Energy Services Company, L.L.C., in each case free and clear of all Liens, other than transfer restrictions imposed by applicable securities laws.

2.5 Financial Statements .

(a) ONEOK has delivered to Northern Border true, correct and complete copies of a consolidated unaudited balance sheet of the Entities (the “ Balance Sheet ”) as of December 31, 2005 (the “ Balance Sheet Date ”) and an unaudited statement of income of the Acquired Entities for the 12 months then ended (together, the “ Financial Statements ”) copies of which are attached hereto as Schedule 2.5(a) . The long-term Indebtedness listed in the Financial Statements under the caption “Long-term Debt, excluding current maturities” is all owed to ONEOK or its Affiliates.

(b) Except (i) to the extent set forth in or reserved against in the Balance Sheet or as identified in Schedule 2.5(b) hereto, (ii) for current liabilities (determined in accordance with GAAP) incurred in the ordinary course of business consistent with past practices since the Balance Sheet Date, and (iii) for immaterial Liabilities, none of the Entities has any Liabilities of

 

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the type that would be required to be disclosed on a balance sheet of that Entity (or the notes thereto) prepared in accordance with GAAP.

(c) The Financial Statements have been prepared in accordance with GAAP (except as disclosed herein) during the periods covered thereby, are complete and correct in all material respects, and present fairly in all material respects the financial condition of the applicable Entities at the dates of said statements and the results of their operations for the periods covered thereby, except for normal year or period end adjustments and the absence of footnotes.

2.6 Taxes.

(a) The Entities have (giving effect to extensions) (x) duly and timely filed (or there has been filed on their behalf) with the appropriate Governmental Authority all income and other material Tax Returns required to be filed by them, and all such Tax Returns are true, correct and complete in all material respects and (y) timely paid or accrued on the their books, or there has been paid on their behalf, all material Taxes due and payable.

(b) The Entities have complied in all material respects with all applicable Tax Laws relating to the payment and withholding of Taxes.

(c) There are no Liens that arose in connection with Taxes upon the assets or properties of the Entities except for Liens described in clause (a) of the definition of “Permitted Liens”.

(d) The Entities have not requested (nor has any request been made by any Person on behalf of any of the Entities) in writing any extension of time within which to file any Tax Return in respect of any taxable year which has not since been filed, and no outstanding written waivers or comparable written consents regarding the application of the statute of limitations with respect to any Taxes or Tax Returns has been given by or on behalf of the Entities.

(e) To the Knowledge of ONEOK, no U.S. federal, state, local or foreign audits, reviews or other administrative proceedings or court proceedings (“ Audits ”) are ongoing or have been initiated with regard to any Taxes or Tax Returns of the Entities, and the Entities have not received any written notice of any such Audits.

(f) None of the Entities has agreed or is required to make any adjustment by reason of a change in accounting method that would affect any taxable year ending after the Closing Date, and no Tax Authority has proposed any such adjustment or change in accounting method that would affect any taxable year ending after the Closing Date. None of the Entities have an application pending with any Tax Authority requesting permission for any change in accounting method that relates to their business or operations and that would affect any taxable year ending after the Closing Date.

(g) Each of the Entities is classified as a partnership or a disregarded entity for U.S. federal income tax purposes, except for those Entities listed in Schedule 2.6 .

 

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(h) No written claim has been made, and to the Knowledge of ONEOK there has been no oral or threatened claim, by any Tax Authority in a jurisdiction where an Entity does not file a Tax Return that it is or may be subject to Tax in that jurisdiction.

(i) None of the Entities is a party to any Tax allocation or sharing agreement or has any liability for the Taxes of another Person under Treasury Regulations Section 1.1502-6 or similar law, as a transferee, successor, by contract or otherwise.

(j) ONEOK is a United States person within the meaning of the Code.

(k) The unpaid Taxes of the Companies (A) did not, as of the Balance Sheet Date, exceed the reserves established on the Financial Statements, and (B) do not exceed the reserve as adjusted for the passage of time through the Closing Date in accordance with past custom and practice of the Entities in filing their Tax Returns.

(l) None of the assets or properties of the Entities (A) secures any debt the interest on which is tax-exempt under Code Section 103(a), (B) is “tax-exempt use property” within the meaning of Code Section 168(h), (C) is “tax exempt bond financed property” within the meaning of Code Section 168(g)(5), (D) is “limited use property” within the meaning of Revenue Procedure 76-30 or (E) will be treated as owned by another Person pursuant to the provisions of Code Section 168(f)(8).

(m) The transactions contemplated herein are not subject to tax withholding pursuant to the provisions of Section 3406 or Subchapter A of Chapter 3 of the Code or any other Legal Requirement.

2.7 Absence of Certain Changes . As of the date hereof, except as identified on Schedule 2.7 , since the Balance Sheet Date there has not been:

(a) any change in the financial condition, properties, assets, Liabilities, business or operations of the Entities that has had or would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect;

(b) any contingent Liability incurred by any of the Entities as guarantor or otherwise with respect to the obligations of others (other than any other Entity) in excess of $500,000, or any cancellation of any material debt or claim owing to any Entity, or waiver of any right that has had or would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect;

(c) other than Permitted Liens, any Lien placed on any of the material properties of the Entities, that remain in existence on the date hereof and that will remain in existence on the Closing Date;

(d) any material obligation or Liability of any nature incurred by any of the Entities, whether accrued, absolute, contingent or otherwise, asserted or unasserted, known or unknown, other than obligations and Liabilities incurred in the ordinary course of business consistent with past practice and in accordance with the terms of this Agreement;

 

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(e) any purchase, sale or other disposition, or any agreement or other arrangement for the purchase, sale or other disposition, of any of the material properties or assets of any Entity other than in the ordinary course of business consistent with past practice and in accordance with the terms of this Agreement;

(f) any material change in accounting principles, methods or practices used by any Entity;

(g) any loss, damage, destruction or other casualty to any Entity’s property, plants, equipment or inventories (whether or not covered by insurance) that has had or would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect;

(h) any material change in the compensation levels of any Entity’s senior executives, any material changes in the manner in which other employees are generally compensated or any provision of additional or supplemental benefits for its employees generally, except, in each case, normal periodic increases or promotions effected in the ordinary course of business consistent with past practice;

(i) any material commitment, guarantee, contractual obligation, capital expenditure or transaction entered into by any Entity, other than in the ordinary course of business consistent with past practice, or any borrowing or other incurrence, assumption or guarantee of Indebtedness by any Entity other than short term Indebtedness owed to ONEOK or its Affiliates; or

(j) any agreement or understanding whether in writing or otherwise, for any Entity to take any of the actions specified in paragraphs (a) through (i) above.

For purposes of this Section 2.7, materiality, as to any matter, shall be determined with respect to all the Entities, taken as a whole.

2.8 Ordinary Course . Since the Balance Sheet Date, the Entities have conducted their respective businesses in the ordinary course of business consistent with past practices.

2.9 Intellectual Property . Each Entity owns or has the right to use all Intellectual Property Assets necessary for or used in the conduct of its business as currently conducted (“ Entity Intellectual Property Assets ”), and all such Entity Intellectual Property Assets owned by any Entity are free and clear of all Liens (other than Permitted Liens). Neither the execution or delivery of this Agreement, nor the consummation of the transactions contemplated hereby will, with or without notice or lapse of time, result in, or give any other Person the right or option to cause or declare, a breach or termination of, or cancellation or reduction in rights of any Entity under any Contract providing for the license of any Entity Intellectual Property Assets to such Entity, except for any such terminations, cancellations or reductions that, individually or in the aggregate, would not have a Material Adverse Effect. No Entity is infringing or otherwise violating in any material respect the Intellectual Property Assets of any other Person.

 

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2.10 Contracts .

(a) As of the date hereof, Schedule 2.10(a) contains a true and complete listing of the following Contracts to which any Entity is a party (collectively, the “ Material Contracts ”):

(i) except for any intercompany Indebtedness that will be cancelled prior to Closing, each Contract for Indebtedness or the borrowing of money, or securing Indebtedness or the borrowing of money, by any Entity involving an obligation in excess of $500,000;

(ii) each natural gas transportation, storage, gathering or processing Contract that individually involves revenues of the Entities in excess of $500,000 for the year to date period ended on the Balance Sheet Date;

(iii) each executory Contract for the purchase of any fixed asset or service for a price in excess of $500,000, whether or not such purchase is in the ordinary course of business;

(iv) each Contract involving a remaining commitment by the Entities to pay capital expenditures in excess of $500,000;

(v) each Contract for lease of personal property or real property involving aggregate payments in excess of $500,000 in any calendar year;

(vi) each employment Contract and each Contract providing retention, severance or project bonus payments, in each case that have not been paid in full as of the date of this Agreement;

(vii) each Contract with any union, trade organization or bargaining unit representative;

(viii) each material acquisition, divestiture or merger agreement;

(ix) each joint venture or partnership agreement;

(x) except for Contracts otherwise described in this Section 2.10, each Contract between ONEOK or any of its Affiliates (other than the Entities) or any officer, director or manager of any Entity, on the one hand, and any Entity on the other hand, involving payments by or to Entities in excess of $500,000 in any calendar year;

(xi) each Contract that provides for a limit on the ability of an Entity or its Affiliates to compete in any line of business or with any Person or in any geographic area during any period of time after the Closing;

(xii) each Shared Contract involving payments by or to Entities in excess of $500,000 in any calendar year;

 

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(xiii) each Drop-Down Contract involving payments by or to Entities in excess of $500,000 in any calendar year; and

(xiv) each Contract not otherwise listed above involving aggregate payments (contingent or otherwise), by or to the Entities in excess of $500,000 in any future calendar year that cannot be terminated by the Entities upon 60 days or less notice without penalty.

(b) True and complete copies of all Material Contracts have been made available to Northern Border.

(c) Except as would not, individually or in the aggregate, have a Material Adverse Effect, (i) each Material Contract is in full force and effect and represents the legal, valid and binding obligation of the Entity that is a party thereto and, to the Knowledge of ONEOK, represents the legal, valid and binding obligation of the other parties thereto, and (ii) the Entities are not and, to the Knowledge of ONEOK, no other party is in material breach of any Material Contract, and neither ONEOK nor any Entity has received any written or, to the Knowledge of ONEOK, oral notice of termination or breach of any Material Contract. For purposes of this Section 2.10(c) only, “Material Contracts” shall also include all Contracts of the types described in Section 2.10(a) above entered into by any Entity between the date hereof through and including the Closing Date.

2.11 Compliance . Each Entity is, and at all times since January 1, 2001 has been, in material compliance with all applicable Legal Requirements, except for such instances of non-compliance that, individually or in the aggregate would not have a Material Adverse Effect. Since January 1, 2001, none of ONEOK or any Entity has received any written notice from any Governmental Authority regarding any actual or possible material violation of or material failure by any Entity to comply with any Legal Requirement that has resulted, or would reasonably be expected to result, in any material fine, penalty or Liability. Each Entity holds all Permits necessary for it to own and operate its assets and for the conduct of the Business as now being conducted, other than any Permits, the failure of which to hold would not, individually or in the aggregate, have a Material Adverse Effect and there is no suspension or cancellation of any such Permits pending or, to the Knowledge of ONEOK, threatened.

2.12 Litigation . Except as disclosed in Schedule 2.12 , there are no Legal Proceedings pending or, to the Knowledge of ONEOK, threatened (a) that (i) seeks more than $1,000,000 in damages for which any Entity could be liable, (ii) seeks injunctive relief against any Entity, its assets or its activities or (iii) is, or seeks to be certified as, a class or similar representative action and involves any Entity or the material assets of any Entity, or (b) that challenges or otherwise seeks to prevent, enjoin, alter or delay the consummation of the transactions contemplated hereby. No Entity (nor any of the material assets of any Entity) is subject to any outstanding Governmental Order.

2.13 Insurance . Schedule 2.13 identifies all insurance policies maintained by, at the expense of or for the benefit of any Entity and identifies any material unresolved claims made thereunder. ONEOK has previously made available to Northern Border accurate and complete copies of the insurance policies identified on Schedule 2.13 . Each of such insurance

 

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policies is in full force and effect, and the Entities have paid all premiums due thereunder. Since January 1, 2005, no Entity has received any written notice or other communication regarding any actual or possible (a) cancellation or invalidation of any insurance policy, (b) refusal of any coverage or rejection of any material claim under any insurance policy, or (c) material adjustment in the amount of the premiums payable with respect to any insurance policy.

2.14 Related Transactions . Except as set forth on Schedule 2.14 , and other than through ownership of the Shares, no Related Party (a) has any direct or indirect ownership interest in any material asset used in or otherwise relating to the Business; (b) is indebted to any Entity in an amount exceeding $500,000; (c) has any direct or indirect financial interest in any Material Contract; and (d) has any claim against any Entity in excess of $500,000 (other than rights to receive compensation for services performed as an employee of the Entity or its Subsidiaries). Each of the following shall be deemed to be a “ Related Party ”: (i) ONEOK and its Affiliates (other than the Entities); (ii) each individual who is an officer or director of ONEOK, its Affiliates or any Entity; (iii) each member of the immediate family of each of the individuals referred to in clause “(ii)” above; and (iv) any trust or other entity (other than ONEOK or any Entity, Northern Border and any Subsidiary of Northern Border) in which any one of the individuals referred to in clauses “(ii)” and “(iii)” above holds (or in which more than one of such individuals collectively hold), beneficially or otherwise, a controlling voting, proprietary or equity interest.

2.15 Employee Benefit Matters . Except as set forth on Schedule 2.15 :

(a) All of the employees engaged in running and operating the Business are employees of ONEOK or its Affiliates (other than the Entities). None of the Entities have any employees or any Liabilities under any current or former Employee Benefit Plan.

(b) No Entity has any Liabilities in respect of Employee Benefit Plans or employment matters relating to current or former employees of such Entity or any current or former ERISA Affiliate of such Entity.

(c) Neither ONEOK or any of its Affiliates (including the Entities) is a party to, or bound by, any collective bargaining agreement, Contract or other understanding with a labor union with respect to any employees who perform services in connection with the businesses of the Entities, and, to the Knowledge of ONEOK, there are not any union organizing efforts underway with respect to any such employees. There are no unfair labor practice or labor arbitration proceedings pending or, to the Knowledge of ONEOK, threatened against any Entity.

(d) Each Entity is in compliance, in all material respects, with all applicable Legal Requirements respecting employment, employment practices, labor, terms and conditions of employment and wages and hours, and no Entity has or would reasonably be expected to have any Liability arising out of any failure of ONEOK or its Affiliates (other than the Entities) to comply with any such Legal Requirements.

(e) None of the Entities is obligated to make any payments, or is party to any agreement that could obligate it to make any payments, that would not be deductible under Code

 

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section 162(m) or 280G of the Code, or would be considered a payment under a nonqualified deferred compensation plan, as contemplated in Code section 409A.

2.16 Environmental Matters . Notwithstanding any other provision in this Agreement, this Section 2.16 contains the exclusive representations of ONEOK concerning Environmental Matters. Except as set forth on Schedule 2.16 :

(a) Each Entity is, and at all times since January 1, 2001 has been, in material compliance with all applicable Environmental Laws;

(b) There have been no releases of Hazardous Materials from, at, on or under any property now owned or leased (or formerly owned or leased) by any Entity which are required by applicable Environmental Laws to be remediated (or would, upon discovery, be required to be remediated) by any Entity, except for any releases that have been fully remediated or that would not, individually or in the aggregate, have a Material Adverse Effect;

(c) Neither ONEOK nor any Entity has received any written request for information or written notification that it is a potentially responsible party under CERCLA or any similar state Legal Requirement with respect to any on-site or off-site location for which liability is currently being asserted against them with respect to the activities or operations of the Entities and no Entity has sent or contributed waste to any facility that is subject to a potential claim under CERCLA or any similar state Legal Requirement;

(d) There are no material writs, injunctions, decrees, notices of violation, Governmental Orders or judgments outstanding, or any Legal Proceedings pending or, to ONEOK’s Knowledge, threatened, involving any Entity relating to (i) its compliance with any Environmental Law or (ii) the release, discharge, spill, treatment, storage or disposal of Hazardous Materials into the environment at any location that could reasonably be expected to result in any Entity incurring any material Liability under Environmental Law;

(e) Each Entity has obtained, currently maintains and is in material compliance with all Environmental Permits, and all such Environmental Permits are in effect and no Legal Proceeding is pending with respect to any such Environmental Permit;

(f) Except as otherwise disclosed in the Balance Sheet, no material expenditures, capital improvements or changes in operation are, or, to the Knowledge of ONEOK, will be, necessary to achieve or maintain compliance with any Environmental Permit or Environmental Law, or will be necessary as a condition or result of the renewal, amendment or necessary modification of any Environmental Permit; and

(g) ONEOK has provided or made available to Northern Border all information relevant to the environmental compliance and condition of the Entities and all of their respective Business Facilities, and the estimated or reasonably anticipated remediation costs related thereto.

2.17 Securities Act . ONEOK is acquiring the Units solely for the purpose of investment and not with a view to, or for offer or sale in connection with, any distribution thereof in violation of the Securities Act or state securities laws. ONEOK acknowledges that the Units

 

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are not registered under the Securities Act or any applicable state securities law, and that such Units may not be transferred or sold except pursuant to the registration provisions of the Securities Act or pursuant to an applicable exemption therefrom and pursuant to state securities laws and regulations as applicable. ONEOK acknowledges that each certificate representing the Units shall bear a legend in substantially the following form:

THE UNITS REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS (“ACTS”). THE UNITS HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD OR OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE UNITS UNDER THE ACTS OR AN OPINION OF COUNSEL SATISFACTORY TO THE PARTNERSHIP THAT SUCH REGISTRATION IS NOT REQUIRED.

2.18 Regulatory Matters . No Entity is a “public utility company,” “holding company” or “subsidiary” or “affiliate” of a holding company as such terms are defined in the Public Utility Holding Company Act of 1935 (the “ 1935 Act ”). Each Entity that is a “Natural Gas Company” as that term is defined in Section 2 of the Natural Gas Act (“ NGA ”) is in compliance, in all material respects, with all provisions of the NGA and all rules and regulations promulgated by FERC pursuant thereto. Each such Natural Gas Company is in compliance, in all material respects, with all orders issued by FERC that pertain to material terms and conditions and material rates charged for services. No approval of (a) the SEC under the 1935 Act or (b) FERC under the NGA or the Federal Power Act is required in connection with the execution of this Agreement by ONEOK or the transactions contemplated hereby with respect to ONEOK or the Entities. The Form No. 2 Annual Reports filed by each Natural Gas Company with FERC for the years ended December 31, 2004 and December 31, 2003 were true, correct and complete, in all material respects, as of the dates thereof and since December 31, 2004 no Natural Gas Company has become subject to any proceeding under Section 5 of the NGA or any general rate case proceeding commenced under Section 4 of the NGA by reason of a filing made with the FERC after December 31, 2004. Except as set forth on Schedule 2.18 , no approvals of state Governmental Authorities are required in connection with the execution of this Agreement by ONEOK or the transactions contemplated hereby with respect to ONEOK or the Entities.

2.19 Operating Assets .

(a) Except as identified to the contrary in Schedule 2.19(a) , (i) except for the Drop-Down Contracts and the Shared Contracts and except as would not reasonably be expected to have a Material Adverse Effect, the Entities own or have the right to use the pipelines, storage facilities, gas processing facilities, fractionators, plants, equipment and related facilities and assets (“ Operating Assets ”) necessary to enable them to conduct their business in the manner currently being conducted and the Entities own or have the right to use the Operating Assets that are reflected as being owned or leased by such Entities on the Financial Statements; (ii) the Operating Assets are free and clear of Liens other than Permitted Liens; (iii) each Entity has good and indefeasible title to the real property it owns in fee, free and clear of all Liens other than Permitted Liens; and (iv) each Entity has title to its rights-of-way and easements (A) free and clear of all Liens and claims of those claiming by, through or under ONEOK or its Affiliates

 

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(other than the Entities), other than Permitted Liens; and (B) sufficient to allow such Entity to conduct its business in substantially the same manner as such business is currently being conducted.

(b) Except as identified to the contrary in Schedule 2.19(b) , the Operating Assets are in good operating condition and repair, ordinary wear and tear excepted, are free of material defects and are suitable for the use for which such assets are currently used.

2.20 Brokers’ Fees . Except for UBS Investment Bank (the fees of which shall be paid solely by ONEOK), no broker, finder, investment banker or other Person is entitled to any brokerage fee, finders’ fee or other commission in connection with the transactions contemplated by this Agreement based upon arrangements made by ONEOK or any of its Affiliates.

2.21 Books and Records . The respective books of account, minute books, stock or other equity record books and other records of each Entity, all of which have been made available to Northern Border, are complete and correct.

2.22 Indebtedness . No Entity has any Indebtedness to any Person other than Indebtedness owed to the other Entities or to ONEOK or its other Affiliates.

2.23 Disclaimer .

(a) Except as and to the extent expressly set forth in Section 2, (i) ONEOK makes no representations or warranties, express or implied, and (ii) ONEOK expressly disclaims all Liability and responsibility for any representation, warranty, statement or information made or communicated (orally or in writing) to Northern Border or any of its Subsidiaries, employees, agents, consultants or representatives (including, without limitation, any opinion, information, projection or advice that may have been provided to Northern Border by any officer, director, employee, agent, consultant, representative or advisor of ONEOK or any of its Affiliates).

(b) WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, EXCEPT AS EXPRESSLY REPRESENTED OTHERWISE IN SECTION 2, ONEOK EXPRESSLY DISCLAIMS ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, ORAL OR WRITTEN, AS TO (I) TITLE TO ANY OF THE PROPERTIES OR OTHER ASSETS OF ANY OF THE ENTITIES, (II) THE CONTENTS, CHARACTER OR NATURE OF ANY DESCRIPTIVE MEMORANDUM OR REPORT RELATING TO THE PROPERTIES OR OTHER ASSETS OF ANY OF THE ENTITIES, (III) ANY ESTIMATES OF THE VALUE OF THE ASSETS OR FUTURE REVENUES GENERATED BY THE PROPERTIES OR OTHER ASSETS OF ANY OF THE ENTITIES, (IV) THE MAINTENANCE, REPAIR, CONDITION, QUALITY, SUITABILITY, DESIGN OR MARKETABILITY OF THE PROPERTIES OR OTHER ASSETS OF ANY OF THE ENTITIES, OR (V) ANY OTHER MATERIALS OR INFORMATION THAT MAY HAVE BEEN MADE AVAILABLE OR COMMUNICATED TO NORTHERN BORDER OR ITS AFFILIATES, OR ITS OR THEIR EMPLOYEES, AGENTS, CONSULTANTS, REPRESENTATIVES OR ADVISORS IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR ANY DISCUSSION OR PRESENTATION RELATING THERETO, AND FURTHER DISCLAIMS ANY REPRESENTATION OR

 

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WARRANTY, EXPRESS OR IMPLIED, OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR CONFORMITY TO MODELS OR SAMPLES OF MATERIALS OF ANY EQUIPMENT, IT BEING EXPRESSLY UNDERSTOOD AND AGREED BY THE PARTIES HERETO THAT, EXCEPT AS EXPRESSLY REPRESENTED OTHERWISE IN SECTION 2, NORTHERN BORDER SHALL BE DEEMED TO BE OBTAINING PIPELINES, STORAGE FACILITIES, PLANTS, EQUIPMENT AND RELATED FACILITIES AND OTHER ASSETS IN ITS PRESENT STATUS, CONDITION AND STATE OF REPAIR, “AS IS” AND “WHERE IS” WITH ALL FAULTS AND THAT NORTHERN BORDER HAS MADE OR CAUSED TO BE MADE SUCH INSPECTIONS AS IT DEEMS APPROPRIATE.

SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE NBP PARTNERSHIPS

Except as set forth in the disclosure schedules (the “ NBP Partnerships Disclosure Schedules ”) delivered by the NBP Partnerships to ONEOK on the date hereof (it being agreed that any matter disclosed in a particular Schedule of the NBP Partnerships Disclosure Schedules shall be deemed to have been disclosed with respect to any other Sections of this Agreement to the extent that the relevance of such matter to such other Section is readily apparent from the information disclosed), the NBP Partnerships represent and warrant to ONEOK that the statements contained in this Section 3 are true, correct and complete as of the date of this Agreement and will be true, correct and complete as of the Closing, except in each case to the extent that such statements are expressly made only as of a specified date, in which case the NBP Partnerships represent and warrant that such statements are true, correct and complete as of such specified date.

3.1 Organization and Authority of the NBP Partnerships .

(a) The NBP Partnerships are limited partnerships duly organized, validly existing and in good standing under the laws of Delaware.

(b) The NBP Partnerships have all requisite right, authority and power to enter into this Agreement and each Related Agreement to be executed and delivered by Northern Border and to carry out the transactions contemplated hereby.

(c) The Partnership Policy Committee and the Audit Committee of Northern Border have each approved the execution, delivery and performance of this Agreement and each of the other Northern Border Transaction Agreements, and the Audit Committee has determined that the Northern Border Transaction is fair and reasonable to Northern Border. Except as contemplated by this Agreement, the execution, delivery and performance by the NBP Partnerships of this Agreement and each of the other Northern Border Transaction Agreements have been duly authorized by all necessary action of the NBP Partnerships and no other action on the part of the NBP Partnerships is required in connection therewith.

(d) This Agreement and each Related Agreement (including, without limitation, the Amendment) executed and delivered by the NBP Partnerships constitutes, or when executed and delivered will constitute, valid and binding obligations of the NBP Partnerships

 

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enforceable in accordance with their respective terms, except as such enforceability may be limited by bankruptcy, insolvency or other similar laws from time to time in effect which affect the enforcement of creditors’ rights generally.

(e) The execution, delivery and performance by the NBP Partnerships of this Agreement and each Related Agreement (including, without limitation, the Amendment) executed and delivered by the NBP Partnerships, with or without the giving of notice or the passage of time, or both, and the issuance of the Units or the Conversion Units, as applicable:

(i) do not and will not conflict with or violate any provision of the organizational documents of the NBP Partnerships;

(ii) do not and will not conflict with or violate any Legal Requirements applicable to the NBP Partnerships or, except as set forth in Schedule 3.1(e)(ii) and any filings required to be made under the HSR Act, require the NBP Partnerships to obtain any approval, consent or waiver of, or make any filing with, any Governmental Authority that has not been obtained or made, except for such violations or failures to obtain such approval, consent or waiver would not, individually or in the aggregate, have a material adverse effect on the ability of the NBP Partnerships to perform its obligations hereunder and consummate the transactions contemplated hereby on the Closing Date;

(iii) except as set forth on Schedule 3.1(e)(iii) , do not and will not require the consent, approval or waiver of any Person (other than any Governmental Authority), except for the approval of the issuance of the Conversion Units by the holders of the Common Units and except for any such consents, approvals or waivers as have been obtained or the failure of which to be obtained would not, individually or in the aggregate, have a material adverse effect on the ability of the NBP Partnerships to perform their obligations hereunder and consummate the transactions contemplated hereby on the Closing Date;

(iv) does not and will not breach any contract material to the business or operations of the NBP Partnerships or result in or permit the termination of any such contract; and

(v) except for issuance of the Conversion Units, do not require the consent or approval of the holders of Common Units.

(f) The Northern Border Partnership Agreement and the NBILP Partnership Agreement are in full force and effect and are binding on all the partners thereto. After the Closing, the Amendment will be effective to amend the Northern Border Partnership Agreement in accordance with the provisions and terms of the Amendment.

3.2 Capitalization .

(a) As of the date hereof, Northern Border has 46,397,214 Common Units issued and outstanding and the partnership interests in Northern Border are as described in the Northern Border Partnership Agreement. Except as set forth on Schedule 3.2(a) , there are no options, warrants, convertible securities or other rights, agreements, arrangements or commitments of any character relating to the partnership interests of Northern Border or obliging

 

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Northern Border to issue or sell any partnership interests of Northern Border. NBILP has a 1.0101% general partner interest issued and outstanding. All of the limited partner interests in NBILP are held by Northern Border. Except as set forth on Schedule 3.2(a) , there are no options, warrants, convertible securities or other rights, agreements, arrangements or commitments of any character relating to the partnership interests in NBILP or obligating NBILP to issue or sell any partnership interests of NBILP.

(b) All of the Units and Conversion Units issuable to ONEOK pursuant to this Agreement, when issued, will at time of such issuance or conversion, as applicable, be duly authorized, validly issued, fully paid, and nonassessable and free of preemptive rights, with no personal liability attaching to ownership thereof, except as such non-assessability and absence of personal liability may be affected by section 18-607 of the Delaware Revised Limited Partnership Act. At the Closing, Northern Border will deliver to ONEOK good and valid title to the Units, and, upon conversion, to the Conversion Units, in each case, free and clear of any Liens, other than those imposed by section 18-607 of the Delaware Revised Limited Partnership Act, applicable securities laws or the Northern Border Partnership Agreement.

3.3 Litigation . Except as disclosed in Schedule 3.3 , there are no Legal Proceedings pending or, to the Knowledge of the NBP Partnerships, threatened (a) that (i) seeks more than $1,000,000 in damages for which the NBP Partnerships or any of their Subsidiaries could be liable, (ii) seeks injunctive relief against the NBP Partnerships or any of their Subsidiaries or any of their respective assets or activities or (iii) is, or seeks to be certified as, a class or similar representative action involving the NBP Partnerships or any of their Subsidiaries or any of their respective assets, or (b) that challenges or otherwise seeks to prevent, enjoin, alter or delay the consummation of the transactions contemplated hereby. Neither of the NBP Partnerships nor any of their Subsidiaries (nor any of their material assets) is subject to any outstanding Governmental Order.

3.4 Compliance . Except as set forth on Schedule 3.4 , the NBP Partnerships and their Subsidiaries are, and at all times since January 1, 2001 have been, in material compliance with all applicable Legal Requirements, except for such instances of non-compliance that, individually or in the aggregate would not have a Northern Border Material Adverse Effect. Except as set forth on Schedule 3.4 , since January 1, 2001, neither of the NBP Partnerships nor any of their Subsidiaries have received any written notice from any Governmental Authority regarding any actual or possible material violation of or material failure to comply with any Legal Requirement that has resulted, or would reasonably be expected to result, in any material fine, penalty or Liability. Except as set forth on Schedule 3.4 , the NBP Partnerships and their Subsidiaries hold all Permits necessary for the conduct of their business as now being conducted, other than any Permits the failure of which to hold would not, individually or in the aggregate, have a Northern Border Material Adverse Effect, and there is no suspension or cancellation of any such Permits pending or, to the Knowledge of the NBP Partnerships, threatened.

3.5 Employee Matters . Except for the Black Mesa Companies:

(a) Neither of the NBP Partnerships nor any of their Subsidiaries has at any time maintained, sponsored or been obligated to contribute to any Employee Benefit Plan.

 

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(b) There are no liabilities owed by the NBP Partnerships or any of their Subsidiaries in respect of current or former employees or employment related matters, other than to employees or former employees of ONEOK or its Affiliates who provide services primarily to one or more of the Entities.

(c) Neither of the NBP Partnerships nor any of their Subsidiaries is a party to, or bound by, any collective bargaining agreement, Contract or other understanding with a labor union. There are no unfair labor practice or labor arbitration proceedings pending or, to the Knowledge of the NBP Partnerships, threatened in writing against the NBP Partnerships or any of their Subsidiaries.

3.6 Environmental Matters . Notwithstanding any other provision in this Agreement, this Section 3.6 contains the exclusive representations of the NBP Partnerships concerning Environmental Matters. Except as set forth on Schedule 3.6 :

(a) The NBP Partnerships and their Subsidiaries are, and at all times since January 1, 2005 have been, in material compliance, with all applicable Environmental Laws;

(b) There have been no releases of Hazardous Materials at, on or under any property now owned or leased (or formerly owned or leased) by the NBP Partnerships or any of their Subsidiaries which are required by applicable Environmental Laws to be remediated by the NBP Partnerships or any of their Subsidiaries, except for any releases that have been fully remediated or that would not, individually or in the aggregate, have a Northern Border Material Adverse Effect;

(c) Neither of the NBP Partnerships nor any of their Subsidiaries has received any written request for information or written notification that it is a potentially responsible party under CERCLA or any similar state Legal Requirement with respect to any on-site or off-site location for which liability is currently being asserted against them with respect to the activities or operations of the NBP Partnerships and their Subsidiaries and neither of the NBP Partnerships nor any of their Subsidiaries has sent or contributed waste to any facility that is subject to a potential claim under CERCLA or any similar state Legal Requirement;

(d) There are no material writs, injunctions, decrees, notices of violation, Governmental Orders or judgments outstanding, or any Legal Proceedings pending or, to the Knowledge of the NBP Partnerships, threatened, involving the NBP Partnerships or any of their Subsidiaries relating to (i) its compliance with any Environmental Law or (ii) the release, discharge, spill, treatment, storage or disposal of Hazardous Materials into the environment at any location that could reasonably be expected to result in the NBP Partnerships or any of their Subsidiaries incurring any material Liability under Environmental Law;

(e) The NBP Partnerships and each of their Subsidiaries has obtained, currently maintains and is in material compliance with all Environmental Permits, and all such Environmental Permits are in effect and no Legal Proceeding is pending with respect to any such Environmental Permit; and

(f) Except to the extent set forth in or reserved against in the consolidated financial statements of Northern Border contained in the Northern Border SEC Documents, no

 

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material expenditures, capital improvements or changes in operation are, or, to the Knowledge of the NBP Partnerships, will be, necessary to achieve or maintain compliance with any Environmental Permit or Environmental Law, or will be necessary as a condition or result of the renewal, amendment or necessary modification of any Environmental Permit.

3.7 Absence of Certain Changes . As of the date hereof, since September 30, 2005 (a) there has not been any Northern Border Material Adverse Effect and (b) the business of Northern Border and its consolidated Subsidiaries has been conducted in all material respects only in the ordinary course consistent with past practice.

3.8 Securities Act . The NBP Partnerships are acquiring the Shares solely for the purpose of investment and not with a view to, or for offer or sale in connection with, any distribution thereof in violation of the Securities Act or state securities laws. The NBP Partnerships acknowledge that the Shares are not registered under the Securities Act or any applicable state securities law, and that such Shares may not be transferred or sold except pursuant to the registration provisions of the Securities Act or pursuant to an applicable exemption therefrom and pursuant to state securities laws and regulations as applicable.

3.9 SEC Filings .

(a) The NBP Partnerships have made available to ONEOK true and complete copies of all SEC Documents filed by Northern Border with the SEC since January 1, 2004 (the “ Northern Border SEC Documents ”), which are all of the documents (other than preliminary material) that Northern Border was required to file with the SEC since such date. As of their respective dates, the Northern Border SEC Documents complied in all material respects with the applicable requirements of the Securities Act or the Exchange Act, as the case may be, and the rules and regulations promulgated thereunder. None of the Northern Border SEC Documents, including, without limitation, any exhibits, financial statements or schedules included therein, at the time filed contained any untrue statement of material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. The financial statements (including the related notes and schedules) of Northern Border included in the Northern Border SEC Documents comply as to form in all material respects with the published rules and regulations of the SEC with respect thereto, were prepared in accordance with GAAP applied on a consistent basis during the periods involved (except as may be indicated in the notes thereto or, in the case of the unaudited statements, as permitted by the rules of the SEC) and fairly present in accordance with the applicable requirements of GAAP (subject, in the case of the unaudited statements, to normal, recurring adjustments, none of which will be material), the consolidated financial position of Northern Border and its consolidated Subsidiaries as of their respective dates and the consolidated results of operations and the consolidated cash flows of Northern Border and its consolidated Subsidiaries for the periods presented therein.

(b) Except (i) to the extent set forth in or reserved against in the consolidated financial statements of Northern Border contained in the Northern Border SEC Documents, (ii) for current liabilities (determined in accordance with GAAP) incurred in the ordinary course of business consistent with past practices since the date of the most recent consolidated financial statements of Northern Border contained in the Northern Border SEC Documents and (iii) except

 

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for immaterial Liabilities, Northern Border has no Liabilities of the type that would be required to be disclosed on a balance sheet of Northern Border (or the notes thereto) prepared in accordance with GAAP.

3.10 Brokers’ Fees . Except for the fees payable to the financial advisor referenced in Section 3.11 herein (the fees of which shall be paid solely by Northern Border), no broker, finder, investment banker or other Person is entitled to any brokerage fee, finders’ fee or other commission in connection with the transactions contemplated by this Agreement based upon arrangements made by Northern Border or any of its Affiliates.

3.11 Opinion of Financial Adviser . Lehman Brothers Inc. has provided the Audit Committee of Northern Border (with a copy to the Partnership Policy Committee of Northern Border) with its opinion that, as of the date hereof and based upon and subject to the matters set forth therein, the net consideration involved in the Northern Border Transaction is fair to Northern Border from a financial point of view.

3.12 Registration Rights . The Units and the Conversion Units, when issued, will be Partnership Securities (as such term is used in the Northern Border Partnership Agreement) and ONEOK will be entitled to exercise all of the registration rights provided for in Section 6.14 of the Northern Border Partnership Agreement with respect to the Units and the Conversion Units.

3.13 Disclaimer .

(a) Except as and to the extent expressly set forth in Section 3, (i) the NBP Partnerships make no representations or warranties, express or implied, and (ii) the NBP Partnerships expressly disclaim all Liability and responsibility for any representation, warranty, statement or information made or communicated (orally or in writing) to ONEOK or any of its Affiliates, employees, agents, consultants or representatives (including, without limitation, any opinion, information, projection or advice that may have been provided to ONEOK by any officer, director, employee, agent, consultant, representative or advisor of the NBP Partnerships or any of their Subsidiaries).

(b) WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, EXCEPT AS EXPRESSLY REPRESENTED OTHERWISE IN SECTION 3, THE NBP PARTNERSHIPS EXPRESSLY DISCLAIM ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, ORAL OR WRITTEN, AS TO (I) TITLE TO ANY OF THE PROPERTIES OR OTHER ASSETS OF THE NBP PARTNERSHIPS OR ANY OF THEIR SUBSIDIARIES, (II) THE CONTENTS, CHARACTER OR NATURE OF ANY DESCRIPTIVE MEMORANDUM OR REPORT RELATING TO THE PROPERTIES OR OTHER ASSETS OF THE NBP PARTNERSHIPS OR ANY OF THEIR SUBSIDIARIES, (III) ANY ESTIMATES OF THE VALUE OF THE ASSETS OR FUTURE REVENUES GENERATED BY THE PROPERTIES OR OTHER ASSETS OF THE NBP PARTNERSHIPS OR ANY OF THEIR SUBSIDIARIES, (IV) THE MAINTENANCE, REPAIR, CONDITION, QUALITY, SUITABILITY, DESIGN OR MARKETABILITY OF THE PROPERTIES OR OTHER ASSETS OF THE NBP PARTNERSHIPS OR ANY OF THEIR SUBSIDIARIES, OR (V) ANY OTHER MATERIALS OR INFORMATION THAT MAY HAVE BEEN MADE

 

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AVAILABLE OR COMMUNICATED TO ONEOK OR ITS AFFILIATES, OR ITS OR THEIR EMPLOYEES, AGENTS, CONSULTANTS, REPRESENTATIVES OR ADVISORS IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR ANY DISCUSSION OR PRESENTATION RELATING THERETO, AND FURTHER DISCLAIMS ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR CONFORMITY TO MODELS OR SAMPLES OF MATERIALS OF ANY EQUIPMENT.

SECTION 4. COVENANTS OF ONEOK

4.1 Conduct of the Entities . Except as set forth on Schedule 4.1 , during the period from the date of this Agreement until the Closing (the “ Pre-Closing Period ”), ONEOK agrees that, except as otherwise contemplated by this Agreement, the ONEOK Disclosure Schedules, or as Northern Border shall otherwise consent in writing (such consent not to be unreasonably withheld, delayed or conditioned):

(a) Ordinary Course . ONEOK shall cause the Entities to, (i) conduct their Business in the ordinary course consistent with past practice and (ii) use commercially reasonable efforts to (A) preserve intact their current business organization, (B) preserve the relationships of the Entities with customers, suppliers, landlords, creditors, employees and other Persons having business dealings with the Entities, (C) preserve and maintain in force all of the insurance policies of the Entities and each of the Permits of the Entities, (D) maintain and repair all property material to the operation of the Business in a manner consistent with past practice, (E) make the capital expenditures identified in the budget previously provided to Northern Border and (F) make payments to all employees, vendors and other trade creditors in a timely manner consistent with past practice.

(b) Governing Documents . ONEOK shall cause each Entity not to amend or waive any rights under the organizational documents of such Entity, other than amendments or waivers necessary to execute, deliver and perform the transactions contemplated by this Agreement including, without limitation, pursuant to Section 6.12.

(c) Issuance of Securities . ONEOK shall cause each Entity not to issue, transfer, sell or dispose of, or authorize or agree to the issuance, transfer, sale or disposition of (whether through the issuance or granting of options, rights, warrants, or otherwise), any Equity Interests of any Entity or any options, rights, warrants or other securities convertible into or exchangeable or exercisable for any Equity Interests of any Entity or amend any of the terms of any securities or agreements relating to such Equity Interests outstanding on the date hereof.

(d) Reclassifications . ONEOK shall cause each Entity not to split, combine or reclassify any Equity Interests of any Entity, or redeem, purchase or otherwise acquire or offer to acquire any such Equity Interests of any Entity.

(e) No Acquisitions . ONEOK shall cause each Entity not to form any Subsidiary or acquire or agree to acquire, by merging or consolidating with, or by purchasing an equity interest in or any of the assets of, any Person; provided, however, that, subject to Section

 

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4.1(h), the foregoing shall not restrict ONEOK or any Entity from purchasing assets in the ordinary course of operating the Entities.

(f) No Dispositions . ONEOK shall cause each Entity not to transfer, sell, lease, license, encumber or otherwise dispose of or agree to transfer, sell, lease, license, encumber or otherwise dispose of, any of their respective assets other than (i) in the ordinary course of business consistent with past practice, (ii) pursuant to existing contractual obligations, (iii) the imposition of Permitted Liens and (iv) the transfer of assets among the Entities.

(g) Material Contracts . ONEOK shall cause each Entity not to enter into, or permit any of the material assets owned or used by Entity to become bound by or modify, amend or prematurely terminate, or waive any material right or remedy under:

(i) any Contract containing covenants limiting the freedom of any of the Entities, Northern Border or any of its Subsidiaries or their assignees or successors to compete in any line of business or with any Person or in any geographic area during any period of time following the Closing;

(ii) any Contract for the borrowing of money or related to Indebtedness of any Entity in excess of $500,000;

(iii) any Contract with any officer, employee, director of any Entity or ONEOK or any of their respective Affiliates;

(iv) any Contract with any union, trade organization or bargaining unit representative; or

(v) any acquisition, divestiture, merger, joint venture or partnership agreement that is material to the Business.

(h) Capital Expenditures . ONEOK shall cause each Entity not to make, authorize or enter into commitments to make capital expenditures in an amount that, when added to all other capital expenditures made during the Pre-Closing Period on behalf of any Entity, exceeds $500,000, other than any capital expenditures contemplated by the budget previously provided to Northern Border.

(i) Indebtedness . ONEOK shall cause each Entity not to (i) lend money to any Person (except that any Entity may make routine advances to employees in the ordinary course of business) or (ii) incur, assume, guarantee or otherwise become liable in respect of any Indebtedness.

(j) Accounting . ONEOK shall cause each Entity not to change any of its methods of accounting or accounting practices in any material respect except as may be required by any Legal Requirement or GAAP.

(k) Tax Elections . ONEOK shall cause each Entity not to make any Tax election, other than (A) any Tax election made consistent with prior practice of the Entity, (B) a Tax election that would not adversely affect Northern Border or any Entity for any taxable

 

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period or portion thereof beginning after the Closing Date or (C) a Tax election to effect a Conversion Transaction as contemplated by Section 6.11.

(l) Proceedings . ONEOK shall cause each Entity not to settle any material Legal Proceeding if, as a result of the settlement, the Entity would be liable after the Closing for settlement payments in excess of $5,000,000 or subject to any injunctive or similar equitable relief or otherwise be subject to any ongoing obligations following the payment of any settlement amounts.

(m) Regulatory Actions . ONEOK shall cause each Entity not to, other than routine compliance filings, make any filings or submit any documents or information to FERC or any other Governmental Authority, other than routine compliance filings, without prior consultation with Northern Border.

(n) Agreements to Take Action . ONEOK shall cause each Entity not to agree or commit to take any of the actions described in clauses “(b)” through “(m)” above.

4.2 Cash Management . Nothing contained in this Agreement shall prevent or limit the ability of any Entity to distribute, dividend or otherwise transfer any cash to ONEOK, any other Entity or any other Affiliate of ONEOK during the Pre-Closing Period.

SECTION 5. COVENANTS OF THE NBP PARTNERSHIPS

5.1 Books and Records .

(a) No later than ten (10) days after Closing, ONEOK will make available to the NBP Partnerships or their designee, at ONEOK’s sole cost and expense, originals of all files, records, information and data (in all formats) owned by or primarily relating to the Entities that are in the possession or control of ONEOK or its Affiliates (together with all ONEOK’s and its Affiliate’s contractual rights to request other such files, records, information and data from any third party).

(b) For a period of five (5) years from the Closing Date:

(i) The NBP Partnerships shall not dispose of or destroy any of the material books and records relating to the Business for periods prior to the Closing (the “ Books and Records ”) without first offering to turn over possession thereof to ONEOK by written notice from the NBP Partnerships to ONEOK at least 60 days prior to the proposed date of such disposition or destruction. Within 30 days after receipt of such notice from the NBP Partnerships, ONEOK may notify the NBP Partnerships that it wishes to receive such Books and Records, and the NBP Partnerships shall deliver such Books and Records (to the extent such Books and Records are not subject to an attorney-client or similar privilege or other confidentiality obligation) to a designated Representative of ONEOK upon receipt by the NBP Partnerships of a written agreement in form and substance reasonably satisfactory to the NBP Partnerships in which ONEOK agrees to maintain the confidentiality of such Books and Records. If ONEOK does not notify the NBP Partnerships within 30 days of receipt of such notice, the NBP Partnerships may dispose of or destroy the Books and Records.

 

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(ii) The NBP Partnerships shall, on reasonable notice and at reasonable times at Northern Border’s principal place of business or at any location where any Books and Records are stored, allow ONEOK and its agents reasonable access to all Books and Records that are not subject to attorney-client or similar privilege or other confidentiality obligation, to the extent such access is requested for any legitimate purpose related to ONEOK’s prior ownership of the Entities and provided that the NBP Partnerships have received a written agreement in form and substance reasonably satisfactory to the NBP Partnerships in which ONEOK agrees to maintain the confidentiality of such Books and Records. ONEOK shall have the right, at its own expense, to make copies of any such Books and Records; provided, however, that any such access or copying shall be had or done in such a manner so as not to unduly interfere with the normal conduct of the Business.

(iii) The NBP Partnerships shall make available to ONEOK upon reasonable notice to ONEOK and at reasonable times and upon written request the personnel of the NBP Partnerships to assist ONEOK in locating and obtaining any Books and Records.

5.2 Approval of Issuance of Common Units Upon Conversion Units . Northern Border shall, as soon as reasonably practicable following the Closing (but in any event prior to the one year anniversary of the Closing Date), (i) take action to call and hold a meeting of holders of the Common Units for the purposes of approving the issuance of the Conversion Units to ON