<PAGE>
EXHIBIT 3.1
AMENDED AND RESTATED AGREEMENT
OF
LIMITED PARTNERSHIP
OF
NORTHERN BORDER INTERMEDIATE LIMITED PARTNERSHIP
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S>
<C>
ARTICLE I-ORGANIZATIONAL MATTERS
1
1.1 FORMATION AND CONTINUATION
...................... 1
1.2 NAME
............................................ 1
1.3 REGISTERED OFFICE; PRINCIPAL
OFFICE ............. 2
1.4 POWER OF ATTORNEY
............................... 2
1.5 TERM
............................................ 3
1.6 POSSIBLE RESTRICTIONS ON TRANSFER
............... 3
ARTICLE II-DEFINITIONS
................................... 3
"ADDITIONAL LIMITED
PARTNER" ......................... 3
"ADJUSTED CAPITAL
ACCOUNT" ........................... 3
"ADJUSTED PROPERTY"
.................................. 4
"ADMINISTRATIVE
SERVICES AGREEMENT" .................. 4
"AFFILIATE"
.......................................... 4
"AGREED ALLOCATION"
.................................. 4
"AGREED VALUE"
....................................... 4
"AGREEMENT"
.......................................... 5
"ARBITRATOR"
......................................... 5
"AUDIT COMMITTEE"
.................................... 5
"AUTHORIZED OFFICER"
................................. 5
"AVAILABLE CASH"
..................................... 5
"BOOK-TAX DISPARITY"
................................. 6
"BUSINESS DAY"
....................................... 6
"CAPITAL ACCOUNT"
.................................... 6
"CAPITAL CONTRIBUTION"
............................... 6
"CARRYING VALUE"
..................................... 6
"CERTIFICATE OF
LIMITED PARTNERSHIP" ................. 6
"CLOSING DATE"
....................................... 6
"CODE"
............................................... 6
"COMMON UNIT"
........................................ 7
"CONTRIBUTED PROPERTY"
............................... 7
"CONVEYANCE AGREEMENT"
............................... 7
"CREDIT AGREEMENT"
................................... 7
"CURATIVE ALLOCATION"
................................ 7
"DELAWARE ACT"
....................................... 7
"DEPARTING PARTNER"
.................................. 7
"ECONOMIC RISK OF
LOSS" .............................. 7
"ENRON"
.............................................. 7
"EVENT OF WITHDRAWAL"
................................ 7
"GENERAL PARTNERS"
................................... 7
"GENERAL PARTNER
PERCENTAGE INTEREST" ................ 7
"INDEMNITTEE"
........................................ 7
"INDEMNITY AGREEMENT"
................................ 8
"INITIAL LIMITED
PARTNERS" ........................... 8
"INITIAL SUBSTITUTED
LIMITED PARTNER" ................ 8
"LIMITED PARTNER"
.................................... 8
"LIQUIDATION DATE"
................................... 8
"LIQUIDATOR"
......................................... 8
"MERGER AGREEMENT"
................................... 8
"MLP"
................................................ 8
"MLP AGREEMENT"
...................................... 8
"NBPL CAPITAL PROJECT"
............................... 8
</TABLE>
-i-
<PAGE>
<TABLE>
<S>
<C>
"NBPL MANAGEMENT
COMMITTEE" .......................... 8
"NET AGREED VALUE"
................................... 8
"NET INCOME"
......................................... 9
"NET LOSS"
........................................... 9
"NET TERMINATION GAIN"
............................... 9
"NET TERMINATION LOSS"
............................... 9
"NONRECOURSE BUILT-IN
GAIN" .......................... 10
"NONRECOURSE
DEDUCTIONS" ............................. 10
"NONRECOURSE
LIABILITY" .............................. 10
"NORTHERN BORDER
PIPELINE" ........................... 10
"NORTHERN BORDER
PIPELINE PARTNERSHIP AGREEMENT" ..... 10
"NORTHERN PLAINS"
.................................... 10
"NORTHWEST BORDER"
................................... 10
"OPINION OF COUNSEL"
................................. 10
"ORGANIZATIONAL
LIMITED PARTNER" ..................... 10
"PAN BORDER"
......................................... 10
"PANHANDLE"
.......................................... 10
"PARTNER NONRECOURSE
DEBT" ........................... 10
"PARTNER NONRECOURSE
DEBT MINIMUM GAIN" .............. 10
"PARTNER NONRECOURSE
DEDUCTIONS" ..................... 11
"PARTNERS"
........................................... 11
"PARTNERSHIP"
........................................ 11
"PARTNERSHIP INTEREST"
............................... 11
"PARTNERSHIP MINIMUM
GAIN" ........................... 11
"PARTNERSHIP POLICY
COMMITTEE" ....................... 11
"PERCENTAGE INTEREST"
................................ 11
"PERSON"
............................................. 11
"RECAPTURE INCOME"
................................... 11
"REGISTRATION
STATEMENT" ............................. 11
"REQUIRED ALLOCATIONS"
............................... 11
"RESIDUAL GAIN"
...................................... 11
"RESIDUAL LOSS"
...................................... 11
"SECURITIES ACT"
..................................... 11
"SPECIAL APPROVAL"
................................... 12
"SUBSTITUTED LIMITED
PARTNER" ........................ 12
"SURVIVING BUSINESS
ENTITY" .......................... 12
"UNDERWRITER"
........................................ 12
"UNDERWRITING
AGREEMENT" ............................. 12
"UNREALIZED GAIN"
.................................... 12
"UNREALIZED LOSS"
.................................... 12
"WILLIAMS"
........................................... 12
"WITHDRAWAL OPINION OF
COUNSEL" ...................... 12
ARTICLE III-PURPOSE
...................................... 12
3.1 PURPOSE AND BUSINESS
............................ 12
3.2 POWERS
.......................................... 13
ARTICLE IV-CAPITAL CONTRIBUTIONS
......................... 13
4.1 CONTRIBUTIONS BY THE GENERAL
PARTNERS ........... 13
4.2 ADDITIONAL CAPITAL CONTRIBUTIONS
................
13
4.3 NO PREEMPTIVE RIGHTS
............................ 13
4.4 CAPITAL ACCOUNTS
................................ 14
4.5 INTEREST
........................................ 16
4.6 NO WITHDRAWAL
................................... 16
</TABLE>
-ii-
<PAGE>
<TABLE>
<S>
<C>
4.7 LOANS FROM PARTNERS
......................................................................
16
ARTICLE V-ALLOCATIONS AND DISTRIBUTIONS
...........................................................
16
5.1 ALLOCATIONS FOR CAPITAL ACCOUNT
PURPOSES .................................................
16
(a) Net Income
..........................................................................
16
(b) Net Losses
..........................................................................
17
(c) Net Termination
Gains and Losses
.................................................... 17
(d) Special
Allocations
.................................................................
18
(i)
Partnership Minimum Gain Chargeback
....................................... 18
(ii) Chargeback
of Partner Nonrecourse Debt Minimum Gain .......................
18
(iii) Qualified Income
Offset ...................................................
18
(iv) Gross
Income Allocations
.................................................. 18
(v)
Nonrecourse Deductions
.................................................... 19
(vi) Partner
Nonrecourse Deductions ............................................
19
(vii) Nonrecourse
Liabilities ...................................................
19
(viii)
Code Section 754 Adjustments
.............................................. 19
(ix) Curative
Allocation .......................................................
19
5.2 ALLOCATIONS FOR TAX PURPOSES
.............................................................
20
5.3 REQUIREMENT AND CHARACTERIZATION
OF DISTRIBUTIONS ........................................
22
ARTICLE VI-MANAGEMENT AND OPERATION OF
BUSINESS ...................................................
22
6.1 PARTNERSHIP POLICY COMMITTEE
.............................................................
22
6.2 MANAGEMENT
...............................................................................
24
6.3 CERTIFICATE OF LIMITED PARTNERSHIP
.......................................................
26
6.4 RESTRICTIONS ON THE PARTNERSHIP
POLICY COMMITTEE'S AUTHORITY .............................
26
6.5 REIMBURSEMENT OF THE GENERAL
PARTNERS, THE MEMBERS OF THE PARTNERSHIP
POLICY COMMITTEE AND THE PARTNERSHIP'S REPRESENTATIVES ON THE
NBPL
MANAGEMENT COMMITTEE
.....................................................................
27
6.6 OUTSIDE ACTIVITIES
.......................................................................
28
6.7 LOANS TO AND FROM THE GENERAL
PARTNERS; CONTRACTS WITH AFFILIATES ........................
28
6.8 INDEMNIFICATION
..........................................................................
30
6.9 LIABILITY OF INDEMNITEES
.................................................................
31
6.10 RESOLUTION OF CONFLICTS OF
INTEREST ......................................................
32
6.11 OTHER MATTERS CONCERNING THE
GENERAL PARTNERS AND THE PARTNERSHIP POLICY COMMITTEE .......
33
6.12 TITLE TO PARTNERSHIP ASSETS
..............................................................
34
6.13 SPECIAL PROVISIONS REGARDING
PARTNERSHIP'S INTEREST IN NORTHERN BORDER PIPELINE ..........
34
6.14 RELIANCE BY THIRD PARTIES
................................................................
35
ARTICLE VII-RIGHTS AND OBLIGATIONS OF
LIMITED PARTNERS ............................................
35
7.1 LIMITATION OF LIABILITY
..................................................................
35
7.2 MANAGEMENT OF BUSINESS
...................................................................
35
7.3 RETURN OF CAPITAL
........................................................................
36
7.4 RIGHTS OF LIMITED PARTNERS
RELATING TO THE PARTNERSHIP ...................................
36
ARTICLE VIII-BOOKS, RECORDS, ACCOUNTING AND
REPORTS ...............................................
37
8.1 RECORDS AND ACCOUNTING
...................................................................
37
8.2 FISCAL YEAR
..............................................................................
37
ARTICLE IX-TAX MATTERS
............................................................................
37
9.1 PREPARATION OF TAX RETURNS
...............................................................
37
9.2 TAX ELECTIONS
............................................................................
37
9.3 TAX CONTROVERSIES
........................................................................
37
</TABLE>
-iii-
<PAGE>
<TABLE>
<S>
<C>
9.4 ORGANIZATIONAL EXPENSES
..................................................................
37
9.5 WITHHOLDING
..............................................................................
38
9.6 OPINIONS OF COUNSEL
......................................................................
38
ARTICLE X-TRANSFER OF INTERESTS
...................................................................
38
10.1 TRANSFER
.................................................................................
38
10.2 TRANSFER OF A GENERAL PARTNER'S
PARTNERSHIP INTEREST .....................................
38
10.3 TRANSFER OF THE LIMITED PARTNER'S
PARTNERSHIP INTEREST ...................................
38
ARTICLE XI-ADMISSION OF PARTNERS
..................................................................
39
11.1 ADMISSION OF INITIAL LIMITED
PARTNERS AND INITIAL SUBSTITUTED LIMITED PARTNER ............
39
11.2 ADMISSION OF SUBSTITUTED LIMITED
PARTNER .................................................
39
11.3 ADMISSION OF SUCCESSOR GENERAL
PARTNER ...................................................
39
11.4 ADMISSION OF ADDITIONAL LIMITED
PARTNERS .................................................
39
11.5 AMENDMENT OF AGREEMENT AND
CERTIFICATE OF LIMITED PARTNERSHIP ............................
40
ARTICLE XII-WITHDRAWAL OR REMOVAL OF
PARTNERS .....................................................
40
12.1 WITHDRAWAL OF A GENERAL PARTNER
..........................................................
40
12.2 REMOVAL OF A GENERAL PARTNER
.............................................................
41
12.3 INTEREST OF DEPARTING PARTNER AND
SUCCESSOR GENERAL PARTNER ..............................
42
12.4 REIMBURSEMENT OF DEPARTING PARTNER
.......................................................
42
12.5 WITHDRAWAL OF THE LIMITED PARTNER
........................................................
42
ARTICLE XIII-DISSOLUTION AND LIQUIDATION
..........................................................
42
13.1 DISSOLUTION
..............................................................................
42
13.2 CONTINUATION OF THE BUSINESS OF
THE PARTNERSHIP AFTER DISSOLUTION ........................
43
13.3 LIQUIDATION
..............................................................................
44
13.4 DISTRIBUTIONS IN KIND
....................................................................
44
13.5 CANCELLATION OF CERTIFICATE OF
LIMITED PARTNERSHIP .......................................
45
13.6 REASONABLE TIME FOR WINDING UP
...........................................................
45
13.7 RETURN OF CAPITAL
........................................................................
45
13.8 NO CAPITAL ACCOUNT RESTORATION
...........................................................
45
13.9 WAIVER OF PARTITION
......................................................................
45
ARTICLE XIV-AMENDMENT OF PARTNERSHIP
AGREEMENT ....................................................
45
14.1 AMENDMENT TO BE ADOPTED SOLELY BY
PARTNERSHIP POLICY COMMITTEE ...........................
45
14.2 AMENDMENT PROCEDURES
.....................................................................
46
ARTICLE XV-MERGER
.................................................................................
46
15.1 AUTHORITY
................................................................................
46
15.2 PROCEDURE FOR MERGER OR
CONSOLIDATION ....................................................
47
15.3 APPROVAL BY LIMITED PARTNERS OF
MERGER OR CONSOLIDATION ..................................
47
15.4 CERTIFICATE OF MERGER
....................................................................
48
15.5 EFFECT OF MERGER
.........................................................................
48
ARTICLE XVI-GENERAL PROVISIONS
....................................................................
48
16.1 ADDRESSES AND NOTICES
....................................................................
48
16.2 REFERENCES
...............................................................................
49
16.3 PRONOUNS AND PLURALS
.....................................................................
49
16.4 FURTHER ACTION
...........................................................................
49
16.5 BINDING EFFECT
...........................................................................
49
16.6 INTEGRATION
..............................................................................
49
16.7 CREDITORS
................................................................................
49
16.8 WAIVER
...................................................................................
49
</TABLE>
-iv-
<PAGE>
<TABLE>
<S>
<C>
16.9 COUNTERPARTS
.............................................................................
49
16.10 APPLICABLE LAW
...........................................................................
49
16.11 INVALIDITY OF
PROVISIONS
.................................................................
49
</TABLE>
-v-
<PAGE>
AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF
NORTHERN BORDER INTERMEDIATE LIMITED PARTNERSHIP
THIS
AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF
NORTHERN
BORDER INTERMEDIATE LIMITED PARTNERSHIP,
dated as of October 1, 1993, is entered
into by and among Northern Plains Natural
Gas Company, a Delaware corporation,
Pan Border Gas Company, a Delaware
corporation, and Northwest Border Pipeline
Company, a Delaware corporation, each in
its capacity as a General Partner and
as an Initial Limited Partner, Northwest
Border Pipeline Company, a Delaware
corporation, in its capacity as the
Organizational Limited Partner, and Northern
Border Partners, L.P. a Delaware limited
partnership, as the Initial
Substituted Limited Partner, together with
any other Persons who become Partners
in the Partnership or parties hereto as
provided herein. In consideration of the
covenants, conditions and agreements
contained herein, the parties hereto hereby
agree as follows:
ARTICLE I
ORGANIZATIONAL MATTERS
1.1
FORMATION AND
CONTINUATION. (a) The General Partners and the
Organizational Limited Partner have
previously formed the Partnership as a
limited partnership pursuant to the
provisions of the Delaware Act and, together
with the Initial Limited Partners and the
Initial Substituted Limited Partner,
hereby amend and restate the original
Agreement of Limited Partnership of
Northern Border Intermediate Limited
Partnership in its entirety. Subject to the
provisions of this Agreement, the General
Partners, the Initial Limited
Partners, the Initial Substituted Limited
Partner and the Organizational Limited
Partner hereby continue the Partnership as
a limited partnership pursuant to the
provisions of the Delaware Act. Except as
expressly provided to the contrary in
this Agreement, the rights and obligations
of the Partners and the
administration, dissolution and termination
of the Partnership shall be governed
by the Delaware Act. All Partnership
Interests shall constitute personal
property of the owner thereof for all
purposes.
(b)
In connection
with the formation of the Partnership, Northern
Plains, Pan Border and Northwest Border
have been admitted as general partners
of the Partnership (each owning a general
partner interest in the Partnership
equal to its General Partner Percentage
Interest), and the Organizational
Limited Partner has been admitted as a
limited partner of the Partnership. As of
the Closing Date, after giving effect to
the transactions contemplated by
Section 4.1, the limited partner interest
in the Partnership of the
Organizational Limited Partner shall be
terminated and the Organizational
Limited Partner shall withdraw as a Limited
Partner of the Partnership.
1.2
NAME. The name
of the Partnership shall be, and the business of the
Partnership shall be conducted under the
name of, "Northern Border Intermediate
Limited Partnership " The Partnership's
business may be conducted under any
other name or names deemed necessary or
appropriate by the Partnership Policy
Committee. The words "Limited Partnership,"
"L.P.," "Ltd." or similar words or
letters shall be included in the
Partnership's name where necessary for the
purposes of complying with the laws of any
jurisdiction that so requires. The
Partnership Policy Committee in its sole
discretion may change the name of the
Partnership at any time and from time to
time and shall notify the Limited
Partners of such change in the next regular
communication to Limited Partners.
1
<PAGE>
1.3
REGISTERED
OFFICE; PRINCIPAL OFFICE. Unless and until changed by the
Partnership Policy Committee, the
registered office of the Partnership in the
State of Delaware shall be located at The
Corporation Trust Center, 1209 Orange
Street, New Castle County, Wilmington,
Delaware 19801, and the registered agent
for service of process on the Partnership
in the State of Delaware at such
registered office shall be The Corporation
Trust Company. The principal office
of the Partnership shall be located at 1400
Smith Street, Houston, Texas 77002,
or such other place as the Partnership
Policy Committee may from time to time
designate by notice to the Limited
Partners. The Partnership may maintain
offices at such other place or places
within or outside the State of Delaware as
the Partnership Policy Committee deems
necessary or appropriate.
1.4
POWER OF
ATTORNEY. (a) Each Limited Partner hereby constitutes and
appoints each member of the Partnership
Policy Committee and, if a Liquidator
shall have been selected pursuant to
Section 13.3, the Liquidator severally (and
any successor to either thereof by merger,
transfer, assignment, election or
otherwise) and each of their authorized
officers and attorneys-in-fact, with
full power of substitution, as his true and
lawful agent and attorney-in-fact,
with full power and authority in his name,
place and stead, to:
(i) execute, swear to, acknowledge, deliver, file and record in
the
appropriate public offices (A) all certificates, documents and
other
instruments (including, without limitation, this Agreement and
the
Certificate of Limited Partnership and all amendments or
restatements
thereof)
that the Partnership Policy Committee or the Liquidator deems
necessary
or appropriate to form, qualify or continue the existence or
qualification of the Partnership as a limited partnership (or a
partnership in which the limited partners have limited liability)
in the
State of
Delaware and in all other jurisdictions in which the
Partnership
may
conduct business or own property; (B) all certificates, documents
and
other
instruments that the Partnership Policy Committee or the
Liquidator
deems
necessary or appropriate to reflect, in accordance with its
terms,
any
amendment, change, modification or restatement of this Agreement;
(C)
all
certificates, documents and other instruments (including,
without
limitation, conveyances and a certificate of cancellation) that
the
Partnership Policy Committee or the Liquidator deems necessary
or
appropriate to reflect the dissolution and liquidation of the
Partnership
pursuant
to the terms of this Agreement; (D) all certificates, documents
and other
instruments relating to the admission, withdrawal, removal or
substitution of any Partner pursuant to, or other events described
in,
Article X,
XI, XII or XIII or the Capital Contribution of any Partner; (E)
all
certificates, documents and other instruments relating to the
determination of the rights, preferences and privileges of any
class or
series of
Partnership Interests; and (F) all certificates, documents and
other
instruments (including, without limitation, agreements and a
certificate of merger) relating to a merger or consolidation of
the
Partnership pursuant to Article XV; and
(ii) execute, swear to, acknowledge, deliver, file and record
all
ballots,
consents, approvals, waivers, certificates, documents and other
instruments necessary or appropriate, in the sole discretion of
the
Partnership Policy Committee or the Liquidator, to make, evidence,
give,
confirm or
ratify any vote, consent, approval, agreement or other action
that is
made or given by the Partners hereunder or is consistent with
the
terms of
this Agreement or is necessary or appropriate, in the sole
discretion
of the Partnership Policy Committee or the Liquidator, to
effectuate
the terms or intent of this Agreement; provided, that when the
consent or
approval of the Limited Partners is required by any provision
of this
Agreement, the Partnership Policy Committee or the Liquidator
may
exercise
the power of attorney made in this Section 1.4(a)(ii) only
after
the
necessary consent or approval of the Limited Partners is
obtained.
2
<PAGE>
Nothing contained in this Section 1.4(a)
shall be construed as authorizing the
Partnership Policy Committee to amend this
Agreement except in accordance with
Article XIV or as may be otherwise
expressly provided for in this Agreement.
(b)
The foregoing
power of attorney is hereby declared to be irrevocable
and a power coupled with an interest, and
it shall survive and not be affected
by the subsequent death, incompetency,
disability, incapacity, dissolution,
bankruptcy or termination of a Limited
Partner and the transfer of all or any
portion of such Limited Partner's
Partnership Interest and shall extend to such
Limited Partner's heirs, successors,
assigns and personal representatives. Each
Limited Partner hereby agrees to be bound
by any representation made by the
Partnership Policy Committee or the
Liquidator acting in good faith pursuant to
such power of attorney; and each Limited
Partner hereby waives any and all
defenses that may be available to contest,
negate or disaffirm the action of the
Partnership Policy Committee or the
Liquidator taken in good faith under such
power of attorney. Each Limited Partner
shall execute and deliver to the
Partnership Policy Committee or the
Liquidator, within 15 days after receipt of
the Partnership Policy Committee's or the
Liquidator's request therefor, such
further designation, powers of attorney and
other instruments as the Partnership
Policy Committee or the Liquidator deems
necessary to effectuate this Agreement
and the purposes of the Partnership.
1.5 TERM. The Partnership
commenced upon the filing of the Certificate
of Limited Partnership in accordance with
the Delaware Act and shall continue in
existence until the close of Partnership
business on December 31, 2083, or until
the earlier termination of the Partnership
in accordance with the provisions of
Article XIII.
1.6
POSSIBLE
RESTRICTIONS ON TRANSFER. Notwithstanding anything to the
contrary contained in this Agreement, in
the event of (a) the enactment (or
imminent enactment) of any legislation, (b)
the publication of any temporary or
final regulation by the Treasury
Department, (c) any ruling by the Internal
Revenue Service or (d) any judicial
decision, that, in any such case, in the
Opinion of Counsel, would result in the
taxation of the Partnership or Northern
Border Pipeline as an association taxable
as a corporation or would otherwise
result in the Partnership or Northern
Border Pipeline being taxed as an entity
for federal income tax purposes, then, the
Partnership Policy Committee may
impose such restrictions on the transfer of
Partnership Interests as may be
required, in the Opinion of Counsel, to
prevent the Partnership or Northern
Border Pipeline from being taxed as an
association taxable as a corporation or
otherwise as an entity for federal income
tax purposes, including, without
limitation, making such amendments to this
Agreement as the Partnership Policy
Committee in its sole discretion may
determine to be necessary or appropriate to
impose such restrictions.
ARTICLE II
DEFINITIONS
The
following definitions shall be for all purposes, unless
otherwise
clearly indicated to the contrary, applied
to the terms used in this Agreement.
"ADDITIONAL LIMITED PARTNER" means a Person admitted to the
Partnership as a Limited Partner pursuant to Section 11.4 and who
is shown
as such on
the books and records of the Partnership.
"ADJUSTED CAPITAL ACCOUNT" means the Capital Account maintained
for
each
Partner as of the end of each fiscal year of the Partnership,
(a)
increased
by any amounts that such
3
<PAGE>
Partner is
obligated to restore under the standards set by Treasury
Regulation
Section 1.704-1 (b)(2)(ii)(c) (or is deemed obligated to
restore
under Treasury Regulation Sections 1.704-2(g) and
1.704-2(i)(5))
and (b)
decreased by (i) the amount of all losses and deductions that,
as
of the end
of such fiscal year, are reasonably expected to be allocated to
such
Partner in subsequent years under Sections 704(e)(2) and 706(d)
of
the Code
and Treasury Regulation Section 1.751 -1 (b)(2)(ii), and (ii)
the
amount of
all distributions that, as of the end of such fiscal year, are
reasonably
expected to be made to such Partner in subsequent years in
accordance
with the terms of this Agreement or otherwise to the extent
they
exceed offsetting increases to such Partner's Capital Account
that
are
reasonably expected to occur during (or prior to) the year in
which
such
distributions are reasonably expected to be made (other than
increases
as a result of a minimum gain chargeback pursuant to Section
5.1 (d)(i) or
5.1 (d)(ii)) The foregoing definition of Adjusted Capital
Account is
intended to comply with the provisions of Treasury Regulation
Section
1.704-1 (b)(2)(ii)(d) and shall be interpreted consistently
therewith.
"ADJUSTED
PROPERTY" means any property the Carrying Value of which
has been
adjusted pursuant to Section 4.4(d)(i) or 4.4(d)(ii) Once an
Adjusted
Property is deemed distributed by, and recontributed to, the
Partnership for federal income tax purposes upon a termination
thereof
pursuant
to Section 708 of the Code, such property shall thereafter
constitute
a Contributed Property until the Carrying Value of such
property
is subsequently adjusted pursuant to Section 4.4(d)(i) or
4.4(d)
(ii).
"ADMINISTRATIVE SERVICES AGREEMENT" means that certain
Administrative Services Agreement, dated the Closing Date, among
NBP
Services
Corporation, a Delaware corporation, the Partnership and the
MLP.
"AFFILIATE" means, with respect to any Person, any other Person
that
directly
or indirectly controls, is controlled by or is under common
control
with, the Person in question. As used herein, 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
ownership of voting securities, by contract or otherwise.
"AGREED ALLOCATION" means any allocation, other than a Required
Allocation, of an item of income, gain, loss or deduction pursuant
to the
provisions
of Section 5.1, including, without limitation, a Curative
Allocation
(if appropriate to the context in which the term "Agreed
Allocation" is used).
"AGREED VALUE" of any Contributed Property means the fair
market
value of
such property or other consideration at the time of
contribution
as
determined by the Partnership Policy Committee using such
reasonable
method of
valuation as it may adopt; provided, however, that the Agreed
Value of
any property deemed contributed to the Partnership for federal
income tax
purposes upon termination and reconstitution thereof pursuant
to Section
708 of the Code shall be determined in accordance with Section
4.4(c).
Subject to Section 4.4(c), the Partnership Policy Committee
shall,
in its
sole discretion, use such method as it deems reasonable and
appropriate to allocate the aggregate Agreed Value of
Contributed
Properties
contributed to the Partnership in a single or integrated
transaction among each separate property on a basis proportional to
the
fair
market value of each Contributed Property.
4
<PAGE>
"AGREEMENT" means this Amended and Restated Agreement of
Limited
Partnership of Northern Border Intermediate Limited Partnership, as
it may
be
amended, supplemented or restated from time to time.
"ARBITRATOR" has the meaning assigned to such term in Section
6.1(b)
(iii)(A).
"AUDIT COMMITTEE" means a committee consisting of two persons
appointed
by the Partnership Policy Committee who are neither officers
nor
employees of any
General Partner or any of their Affiliates, and the same
persons
who serve as the Audit Committee under the MLP Agreement may
serve
as the
Audit Committee under this Agreement.
"AUTHORIZED OFFICER" means the Chief Executive Officer and the
Chief
Financial
and Accounting Officer and such other officers as may be
authorized
from time to time by the Partnership Policy Committee to
execute
contracts, certificates and other instruments on behalf of the
Partnership.
"AVAILABLE CASH" means, with respect to any calendar quarter
and
without
duplication:
(a) the sum
of:
(i) all cash receipts of the Partnership during such
quarter from all sources (including, without limitation,
distributions of cash received by the Partnership in respect
of its interest in Northern Border Pipeline), plus, in the
case of the calendar quarter ending December 31, 1993, the
cash balance of the Partnership as of the close of business on
the Closing Date; and
(ii) any reduction in a reserve with respect to such
quarter from the level of such reserve at the end of the prior
quarter;
(b) less the sum
of:
(i) all cash disbursements of the Partnership during
such quarter, including, without limitation, disbursements for
operating expenses, taxes, if any, debt service (including,
without limitation, the payment of principal, premium and
interest), capital expenditures and contributions, if any, to
Northern Border Pipeline (but excluding all cash distributions
to Partners and any cash disbursements with respect to which,
and to the extent that, a reserve was established in a prior
quarter); and
(ii) any reserves established with respect to such
quarter, and any increase in reserves established with respect
to prior quarters, in such amounts as the Partnership Policy
Committee determines in its reasonable discretion to be
necessary or appropriate (x) to provide for the proper conduct
of the business of the Partnership (including, without
limitation, reserves for future capital expenditures or
capital contributions to Northern Border Pipeline) or (y)
because the distribution of such amounts would be prohibited
by applicable law or by any loan agreement, security
agreement, mortgage, debt instrument or other agreement or
obligation to which the Partnership is a party or by which it
is bound or its assets are subject
5
<PAGE>
Notwithstanding the foregoing, "Available Cash" with respect to
any
calendar
quarter (A) shall not include any cash receipts or reductions
in
reserves
or take into account any disbursements made or reserves
established
after the Liquidation Date and (B) shall include any
distributions of cash (to the extent such distributions are
attributable
to
transactions and operations during such quarter) received by
the
Partnership in respect of its interest in Northern Border Pipeline
after
the end of
such quarter but on or before the date on which the Partnership
makes its
distribution of Available Cash in respect of such quarter
pursuant
to Section 5.3.
"BOOK-TAX DISPARITY" means with respect to any item of
Contributed
Property
or Adjusted Property, as of the date of any determination, the
difference
between the Carrying Value of such Contributed Property or
Adjusted
Property and the adjusted basis thereof for federal income tax
purposes
as of such date. A Partner's share of the Partnership's
Book-Tax
Disparities in all of its Contributed Property and Adjusted
Property will
be
reflected by the difference between such Partner's Capital
Account
balance as
maintained pursuant to Section 4.4 and the hypothetical balance
of such
Partner's Capital Account computed as if it had been maintained
strictly
in accordance with federal income tax accounting principles.
"BUSINESS DAY" means Monday through Friday of each week, except
that
a legal
holiday recognized as such by the government of the United
States
or the
states of New York or Texas shall not be regarded as a Business
Day.
"CAPITAL ACCOUNT" means the capital account maintained for a
Partner
pursuant
to Section 4.4.
"CAPITAL CONTRIBUTION" means any cash, cash equivalents or the
Net
Agreed
Value of Contributed Property that a Partner contributes to the
Partnership pursuant to the Conveyance Agreement or Sections 4.1 or
4.2.
"CARRYING VALUE" means (a) with respect to a Contributed
Property,
the Agreed
Value of such property reduced (but not below zero) by all
depreciation, amortization and cost recovery deductions charged to
the
Partners'
Capital Accounts in respect of such Contributed Property, and
(b) with
respect to any other Partnership property, the adjusted basis
of
such
property for federal income tax purposes, all as of the time of
determination. The Carrying Value of any property shall be adjusted
from
time to
time in accordance with Sections 4.4(d)(i) and 4.4(d)(ii) and
to
reflect
changes, additions or other adjustments to the Carrying Value
for
dispositions and acquisitions of Partnership properties, as
deemed
appropriate by the Partnership Policy Committee.
"CERTIFICATE OF LIMITED PARTNERSHIP" means the Certificate of
Limited
Partnership filed with the Secretary of State of the State of
Delaware
as referenced in Section 6.3, as such Certificate of Limited
Partnership may be amended, supplemented or restated from time to
time.
"CLOSING DATE" means the first date on which Common Units are
sold
by
Northern Plains and Pan Border to the Underwriters pursuant to
the
provisions
of the Underwriting Agreement.
"CODE" means the Internal Revenue Code of 1986, as amended and
in
effect
from time to time, as interpreted by the applicable regulations
thereunder. Any reference herein
6
<PAGE>
to a
specific section or sections of the Code shall be deemed to include
a
reference
to any corresponding provision of future law.
"COMMON UNIT" has the meaning assigned to such term in the MLP
Agreement.
"CONTRIBUTED PROPERTY" means each property or other asset, in
such
form as
may be permitted by the Delaware Act, but excluding cash,
contributed to the Partnership (or deemed contributed to the
Partnership
on
termination and reconstitution thereof pursuant to Section 708 of
the
Code).
Once the Carrying Value of a Contributed Property is adjusted
pursuant
to Section 4.4(d), such property shall no longer constitute a
Contributed Property, but shall be deemed an Adjusted Property.
"CONVEYANCE AGREEMENT" has the meaning assigned to such term in
the
MLP
Agreement.
"CREDIT AGREEMENT" means the Credit Agreement dated as of October
1,
1993,
among the Partnership, as Borrower, Northern Plains, Pan Border
and
Northwest
Border, as Lenders, and NB Services Corporation, as agent for
the
Lenders.
"CURATIVE ALLOCATION" means any allocation of an item of
income,
gain,
deduction, loss or credit pursuant to the provisions of Section
5.1(d)(ix).
"DELAWARE ACT" means the Delaware Revised Uniform Limited
Partnership Act, 6 Del C Section 17-101, et seq., as amended,
supplemented
or
restated from time to time, and any successor to such statute.
"DEPARTING PARTNER" means a General Partner with respect to which
an
Event of
Withdrawal of the type described in Section 12.1 has occurred.
"ECONOMIC RISK OF LOSS" has the meaning set forth in Treasury
Regulation
Section 1.752-2(a).
"ENRON" means Enron Corp. , a Delaware corporation.
"EVENT OF WITHDRAWAL" HAS the meaning assigned to such term in
Section
12.1(a).
"GENERAL PARTNERS" means Northern Plains, Pan Border and
Northwest
Border, as
the initial general partners of the Partnership, and any Person
or Persons
that either (i) acquires the general partner interest of such
Person in
the Partnership pursuant to and in accordance with the terms of
Section
10.2 or (ii) is approved as a successor General Partner
pursuant
to Section
12.1 or 12.2 and, in either case, is admitted to the
Partnership as a general partner in accordance with the terms of
Section
11.3.
"GENERAL PARTNER PERCENTAGE INTEREST" means (a) as to Northern
Plains and
its permitted successors and assigns, 0.50505%, (b) as to Pan
Border and
its permitted successors and assigns, 0.32828%, and (c) as to
Northwest
Border and its permitted successors and assigns, 0.17677%.
"INDEMNITEE" means any General Partner, any member of the
Partnership Policy Committee, any representative of the Partnership
on the
NBP
Management Committee, any
7
<PAGE>
Departing
Partner, any Person who is or was an Affiliate of any General
Partner or
any Departing Partner, any Person who is or was an officer,
director,
employee, partner, agent or trustee of any General Partner, the
Partnership or any Departing Partner or any such Affiliate, or any
Person
who is or
was serving at the request of any General Partner, the
Partnership Policy Committee or any Departing Partner or any
such
Affiliate
as a director, officer, employee, partner, agent or trustee of
another
Person.
"INDEMNITY AGREEMENT" means the Indemnity Agreement dated as of
September 23,
1993 among Northern Plains, Pan Border and Northwest Border.
"INITIAL LIMITED PARTNERS "means Northern Plains, Pan Border
and
Northwest
Border, upon being admitted to the Partnership as limited
partners
in accordance with Section 11.1.
"INITIAL SUBSTITUTED LIMITED PARTNER" means the MLP, upon being
admitted
to the Partnership as a limited partner in accordance with
Section
11.1.
"LIMITED PARTNER" means the Organizational Limited Partner,
each
Initial
Limited Partner, the Initial Substituted Limited Partner, each
Substituted Limited Partner, each Additional Limited Partner and
any
Departing
Partner upon the change of its status from General Partner to
Limited
Partner pursuant to Section 12.3.
"LIQUIDATION DATE" means (a) in the case of an event giving rise
to
the
dissolution of the Partnership of the type described in clauses
(a)
and (b) of
the first sentence of Section 13.2, the date on which the
applicable
time period during which the Partners have the right to elect
to
reconstitute the Partnership and continue its business has
expired
without
such an election being made, and (b) in the case of any other
event
giving rise to the dissolution of the Partnership, the date on
which
such event
occurs.
"LIQUIDATOR" means the Partnership Policy Committee or other
Person
approved
pursuant to Section 13.3 who performs the functions described
therein.
"MERGER AGREEMENT" has the meaning assigned to such term in
Section
15.1.
"MLP" means Northern Border Partners, L.P. , a Delaware limited
partnership.
"MLP AGREEMENT" means the Amended and Restated Agreement of
Limited
Partnership of Northern Border Partners, L.P., as it may be
amended,
supplemented or restated from time to time.
"NBPL CAPITAL PROJECT" means any project considered by the NBP
Management
Committee that would require capital contributions to be made
by the
Partnership to Northern Border Pipeline, including, without
limitation, any projects providing for the expansion or extension
of the
pipeline
system owned by Northern Border Pipeline on the Closing Date.
"NBPL MANAGEMENT COMMITTEE" means the management committee
responsible for management of the business and affairs of Northern
Border
Pipeline
pursuant to the terms of the Northern Border Pipeline
Partnership
Agreement.
"NET AGREED VALUE" means, (a) in the case of any Contributed
Property,
the Agreed Value of such property reduced by any liabilities
either
assumed by the Partnership upon such contribution or to which
such
property
is subject when contributed, and (b) in the case
8
<PAGE>
of any
property distributed to a Partner by the Partnership, the
Partnership's Carrying Value of such property (as adjusted pursuant
to
Section
4.4(d)(ii)) at the time such property is distributed, reduced
by
any
indebtedness either assumed by such Partner upon such distribution
or
to which
such property is subject at the time of distribution, in either
case, as
determined under Section 752 of the Code.
"NET INCOME" means, for any taxable period, the excess, if any,
of
the
Partnership's items of income and gain (other than those items
attributable to dispositions constituting Termination Capital
Transactions) for such taxable period over the Partnership's items
of loss
and
deduction (other than those items attributable to dispositions
constituting Termination Capital Transactions) for such taxable
period.
The items
included in the calculation of Net Income shall be determined
in
accordance
with Section 4.4(b) and shall not include any items specially
allocated
under Section 5.1(d). Once an item of income, gain, loss or
deduction
that has been included in the initial computation of Net Income
is
subjected to a Required Allocation or a Curative Allocation, Net
Income
or Net
Loss, whichever the case may be, shall be recomputed without
regard
to such
item.
"NET LOSS" means, for any taxable period, the excess, if any, of
the
Partnership's items of loss and deduction (other than those
items
attributable to dispositions constituting Termination Capital
Transactions) for such taxable period over the Partnership's items
of
income and
gain (other than those items attributable to dispositions
constituting Termination Capital Transactions) for such taxable
period.
The items
included in the calculation of Net Loss shall be determined in
accordance
with Section 4.4(b) and shall not include any items specially
allocated
under Section 5.1(d). Once an item of income, gain, loss or
deduction
that has been included in the initial computation of Net Loss
is
subjected
to a Required Allocation or a Curative Allocation, Net Income,
or Net
Loss, whichever the case may be, shall be recomputed without
regard
to such
item.
"NET TERMINATION GAIN" means, for any taxable period, the sum,
if
positive,
of all items of income, gain, loss or deduction recognized by
the
Partnership (including, without limitation, such amounts
recognized
through
Northern Border Pipeline) from Termination Capital Transactions
occurring
in such taxable period. The items included in the determination
of Net
Termination Gain shall be determined in accordance with Section
4.4 (b)
and shall not include any items of income, gain or loss
specially
allocated
under Section 5.1(d). Once an item of income, gain or loss that
has been
included in the initial computation of Net Termination Gain is
subjected
to a Required Allocation or a Curative Allocation, Net
Termination Gain or Net Termination Loss, whichever the case may
be, shall
be
recomputed without regard to such item.
"NET TERMINATION LOSS" means, for any taxable period, the sum,
if
negative,
of all items of income, gain, loss or deduction recognized by
the
Partnership (including, without limitation, such amounts
recognized
through
Northern Border Pipeline) from Termination Capital Transactions
occurring
in such taxable period. The items included in the determination
of Net
Termination Loss shall be determined in accordance with Section
4.4 (b)
and shall not include any items of income, gain or loss
specially
allocated
under Section 5.1(d). Once an item of gain or loss that has
been
included
in the initial computation of Net Termination Loss is subjected
to a
Required Allocation or a Curative Allocation, Net Termination Gain
or
Net
Termination Loss, whichever the case may be, shall be
recomputed
without
regard to such item.
9
<PAGE>
"NONRECOURSE BUILT-IN GAIN" means with respect to any
Contributed
Properties
or Adjusted Properties that are subject to a mortgage or pledge
securing a
Nonrecourse Liability, the amount of any taxable gain that
would be
allocated to the Partners pursuant to Sections 5.2(b)(i)(A),
5.2
(b)(ii)(A)
or 5.2(b)(iv) if such properties were disposed of in a taxable
transaction in full satisfaction of such liabilities and for no
other
consideration.
"NONRECOURSE DEDUCTIONS" means any and all items of loss,
deduction
or
expenditures (described in Section 705(a)(2)(B) of the Code) that,
in
accordance
with the principles of Treasury Regulation Section 1.704-2(b),
are
attributable to a Nonrecourse Liability.
"NONRECOURSE LIABILITY" has the meaning set forth in Treasury
Regulation
Section 1.752-1 (a) (2).
"NORTHERN BORDER PIPELINE" means Northern Border Pipeline Company,
a
Texas
general partnership among Northern Plains, Pan Border,
Northwest
Border,
TransCanada Border Pipeline Ltd., a Nevada corporation, and
TransCan
Northern Ltd., a Delaware corporation.
"NORTHERN BORDER PIPELINE PARTNERSHIP AGREEMENT" means that
certain
General
Partnership Agreement of Northern Border Pipeline Company dated
effective
as of March 9, 1978, among Northern Plains, Pan Border,
Northwest
Border, TransCanada Border PipeLine Ltd. and TransCan Northern
Ltd., as
amended and supplemented.
"NORTHERN PLAINS" means Northern Plains Natural Gas Company, a
Delaware
corporation.
"NORTHWEST BORDER" means Northwest Border Pipeline Company, a
Delaware
corporation.
"OPINION OF COUNSEL" means a written opinion of counsel (who may
be
regular counsel
to any of the General Partners, their Affiliates or the
Partnership) acceptable to the Partnership Policy Committee.
"ORGANIZATIONAL LIMITED PARTNER" means Northwest Border, in its
capacity
as the organizational limited partner of the Partnership
pursuant
to this
Agreement, it being recognized that Northern Plains was such
organizational limited partner at the time of the original
Agreement of
Limited
Partnership of Northern Border Intermediate Limited Partnership
but
previously has transferred its rights in such capacity to
Northwest
Border.
"PAN BORDER" means Pan Border Gas Company, a Delaware
corporation.
"PANHANDLE" means Panhandle Eastern Corporation, a Delaware
corporation.
"PARTNER NONRECOURSE DEBT" has the meaning set forth in
Treasury
Regulation
Section 1.704-2(b)(4).
"PARTNER NONRECOURSE DEBT MINIMUM GAIN" has the meaning set forth
in
Treasury
Regulation Section 1.704-2(1)(2).
10
<PAGE>
"PARTNER NONRECOURSE DEDUCTIONS" means any and all items of
loss,
deduction
or expenditure (including, without limitation, any expenditure
described
in Section 705(a)(2)(B) of the Code) that, in accordance with
the
principles of Treasury Regulation Section 1.704-2(i), are
attributable
to a
Partner Nonrecourse Debt.
"PARTNERS" means the General Partners and the Limited Partners.
"PARTNERSHIP" means the limited partnership heretofore formed
and
continued
pursuant to this Agreement.
"PARTNERSHIP INTEREST" means the interest of a Partner in the
Partnership.
"PARTNERSHIP MINIMUM GAIN" means that amount determined in
accordance
with the principles of Treasury Regulation Section 1.704-2(d).
"PARTNERSHIP POLICY COMMITTEE" has the meaning assigned to such
term
in Section
6.1.
"PERCENTAGE INTEREST" means, as of the date of determination, (a)
as
to a
General Partner, its General Partner Percentage Interest, (b) as to
a
Limited
Partner, 98.9899% multiplied by a fraction equal to the portion
of
the
Partnership Interests of all Limited Partners represented by
the
Partnership Interests of such Limited Partner.
"PERSON" means an individual or a corporation, partnership,
trust,
unincorporated organization, association or other entity.
"RECAPTURE INCOME" means any gain recognized by the Partnership
(computed
without regard to any adjustment required by Sections 734 or
743
of the
Code) upon the disposition of any property or asset of the
Partnership, which gain is characterized as ordinary income because
it
represents
the recapture of deductions previously taken with respect to
such
property or asset.
"REGISTRATION STATEMENT" means the Registration Statement on
Form
S-1
(Registration No. 33-66158), as it has been or as it may be amended
or
supplemented from time to time, filed by the MLP with the
Securities and
Exchange
Commission under the Securities Act to register the offering
and
sale of
the Common Units in the Initial Offering.
"REQUIRED ALLOCATIONS" means any allocation (or limitation
imposed
on any
allocation) of an item of income, gain, deduction or loss
pursuant
to (a)
Section 5.1(b)(i) or (b) Sections 5.1(d)(i)-(vi) and (viii),
such
allocations (or limitations thereon) being directly or indirectly
required
by the
Treasury regulations promulgated under Section 704(b) of the
Code.
"RESIDUAL GAIN" or "RESIDUAL LOSS" means any item of gain or
loss,
as the
case may be, of the Partnership recognized for federal income
tax
purposes
resulting from a sale, exchange or other disposition of a
Contributed Property or Adjusted Property, to the extent such item
of gain
or loss is
not allocated pursuant to Sections 5.2(b)(i)(A) or 5.2(b)(ii)
(A),
respectively, to eliminate Book-Tax Disparities.
"SECURITIES ACT" means the Securities Act of 1933, as amended,
supplemented or restated from time to time and any successor to
such
statute.
11
<PAGE>
"SPECIAL APPROVAL" means approval by the Audit Committee.
"SUBSTITUTED LIMITED PARTNER" means a Person who is admitted as
a
Limited
Partner to the Partnership pursuant to Section 11.2 in place of
and with all the
rights of a Limited Partner and who is shown as a Limited
Partner on
the books and records of the Partnership.
"SURVIVING BUSINESS ENTITY" has the meaning assigned to such term
in
Section
15.2(b).
"UNDERWRITER" means each Person named as an underwriter in
Schedule
I to the
Underwriting Agreement who purchases Common Units pursuant
thereto.
"Underwriting Agreement" means the Underwriting Agreement dated
September
23, 1993, among the Underwriters, the Partnership, Northern
Plains,
Pan Border, the MLP, Panhandle, and Enron providing for the
purchase
of Common Units by such Underwriters.
"UNREALIZED GAIN" attributable to any item of Partnership
property
means, as
of any date of determination, the excess, if any, of (a) the
fair
market value of such property as of such date (as determined
under
Section
4.4(d)) over (b) the Carrying Value of such property as of such
date
(prior to any adjustment to be made pursuant to Section 4.4(d) as
of
such
date).
"UNREALIZED LOSS" attributable to any item of Partnership
property
means, as
of any date of determination, the excess, if any, of (a) the
Carrying
Value of such property as of such date (prior to any adjustment
to be made
pursuant to Section 4.4(d) as of such date) over (b) the fair
market
value of such property as of such date (as determined under
Section
4.4(d)).
"WILLIAMS" means The Williams Companies, Inc., a Delaware
corporation.
"WITHDRAWAL OPINION OF COUNSEL" has the meaning assigned to
such
term in
Section 12.1(b).
ARTICLE III
PURPOSE
3.1
PURPOSE AND
BUSINESS. The purpose and nature of the business to be
conducted by the Partnership shall be (a)
to serve as a general partner in
Northern Border Pipeline and, in connection
therewith, to exercise all of the
rights and powers conferred upon the
Partnership as a general partner in
Northern Border Pipeline pursuant to the
Northern Border Pipeline Partnership
Agreement or otherwise, (b) to engage
directly in, or to enter into or form any
corporation, limited liability company,
partnership, joint venture or other
arrangement to engage indirectly in, any
business activity that is approved by
unanimous vote of the Partnership Policy
Committee and which lawfully may be
conducted by a limited partnership
organized pursuant to the Delaware Act and,
in connection therewith, to exercise all of
the rights and powers conferred upon
the Partnership pursuant to the agreements
relating to such business activity,
and (c) to do anything necessary or
appropriate to the foregoing, including,
without limitation, the making of capital
contributions or loans to Northern
Border Pipeline (including, without
limitation, those contributions or loans
that may be required in connection with its
involvement in the activities
referred to in clause (b) of this
sentence). The Partnership Policy Committee
has no obligation or duty to the
Partnership or the Limited Partners
12
<PAGE>
The Partnership Policy Committee has no
obligation or duty to the Partnership or
the Limited Partners to propose or approve,
and in its sole discretion may
decline to propose or approve, the conduct
by the Partnership of any business.
3.2
POWERS. The
Partnership shall be empowered to do any and all acts
and things necessary, appropriate, proper,
advisable, incidental to or
convenient for the furtherance and
accomplishment of the purposes and business
described in Section 3.1 and for the
protection and benefit of the Partnership.
ARTICLE IV
CAPITAL CONTRIBUTIONS
4.1
CONTRIBUTIONS BY
THE GENERAL PARTNERS. On the Closing Date, as set
forth in the Conveyance Agreement, (i)
Northern Plains shall contribute,
transfer, assign and deliver to the
Partnership, as a Capital Contribution, a
general partner interest in Northern Border
Pipeline representing a 35%
Partner's Percentage (which term, for
purposes of this Section 4.1, shall have
the meaning assigned to it in the Northern
Border Pipeline Partnership
Agreement) in Northern Border Pipeline in
exchange for a limited partner
interest in the Partnership representing a
49.495% Percentage Interest in the
Partnership and the continuation of its
general partner interest in the
Partnership in the amount of Northern
Plains' General Partner Percentage
Interest, (ii) Pan Border shall contribute,
transfer, assign and deliver to the
Partnership, as a Capital Contribution, a
general partner interest in Northern
Border Pipeline representing a 22.75%
Partner's Percentage in Northern Border
Pipeline in exchange for a limited partner
interest in the Partnership
representing a 32.1717% Percentage Interest
in the Partnership and the
continuation of its general partner
interest in the Partnership in the amount of
Pan Border's General Partner Percentage
Interest, and (iii) Northwest Border
shall contribute, transfer, assign and
deliver to the Partnership, as a Capital
Contribution, a general partner interest in
Northern Border Pipeline
representing a 12.25% Partner's Percentage
in Northern Border Pipeline in
exchange for a limited partner interest in
the Partnership representing a
17.3232% Percentage Interest in the
Partnership and the continuation of its
general partner interest in the Partnership
in the amount of Northwest Border's
General Partner Percentage Interest.
4.2
ADDITIONAL
CAPITAL CONTRIBUTIONS. With the consent of the
Partnership Policy Committee, a Limited
Partner may, but shall not be obligated
to, make additional Capital Contributions
to the Partnership. Contemporaneously
with the making of any such additional
Capital Contributions by a Limited
Partner, the General Partners shall be
obligated to make additional Capital
Contributions to the Partnership (in
accordance with their relative General
Partner Percentage Interests) such that the
General Partners shall at all times,
in the aggregate, have at least a 1.0101%
interest in each item of Partnership
income, gain, loss, deduction and credit.
Except as set forth in the immediately
preceding sentence, the General Partners
shall not be obligated to make any
additional Capital Contributions to the
Partnership.
4.3
NO PREEMPTIVE
RIGHTS. Except as provided in Section 4.2, no Person
shall have any preemptive, preferential or
other similar right with respect to
(a) additional Capital Contributions; (b)
issuance or sale of any class or
series of Partnership Interests, whether
unissued, held in the treasury or
hereafter created; (c) issuance of any
obligations, evidences of indebtedness or
other securities of the Partnership
convertible into or exchangeable for, or
carrying or accompanied by any rights to
receive, purchase or subscribe to, any
such Partnership Interests; (d) issuance of
any right of subscription to or
right to receive, or any warrant or option
for the purchase of, any such
Partnership Interests; or (e) issuance or
sale of any other securities that may
be issued or sold by the Partnership.
13
<PAGE>
4.4
CAPITAL
ACCOUNTS. (a) The Partnership shall maintain for each
Partner owning a Partnership Interest a
separate Capital Account with respect to
such Partnership Interest in accordance
with the rules of Treasury Regulation
Section 1.704-1 (b)(2)(iv). Such Capital
Account shall be increased by (i) the
amount of all Capital Contributions made to
the Partnership with respect to such
Partnership Interest pursuant to this
Agreement and (ii) all items of
Partnership income and gain (including,
without limitation, income and gain
exempt from tax) computed in accordance
with Section 4.4(b) and allocated with
respect to such Partnership Interest
pursuant to Section 5.1, and decreased by
(x) the amount of cash or Net Agreed Value
of all actual and deemed
distributions of cash or property made with
respect to such Partnership Interest
pursuant to this Agreement and (y) all
items of Partnership deduction and loss
computed in accordance with Section 4.4(b)
and allocated with respect to such
Partnership Interest pursuant to Section
5.1.
(b)
For purposes of
computing the amount of any item of income, gain,
loss or deduction to be reflected in the
Partners' Capital Accounts, the
determination, recognition and
classification of any such item shall be the same
as its determination, recognition and
classification for federal income tax
purposes (including, without limitation,
any method of depreciation, cost
recovery or amortization used for that
purpose), provided, that:
(i) Solely for purposes of this Section 4.4, the Partnership
shall
be treated
as owning directly its proportionate share (as determined by
the
Partnership Policy Committee based upon the provisions of the
Northern
Border
Pipeline Partnership Agreement) of all property owned by
Northern
Border
Pipeline.
(ii) All fees and other expenses incurred by the Partnership to
promote
the sale of (or to sell) a Partnership Interest that can
neither
be
deducted nor amortized under Section 709 of the Code, if any,
shall,
for
purposes of Capital Account maintenance, be treated as an item
of
deduction
at the time such fees and other expenses are incurred and shall
be
allocated among the Partners pursuant to Section 5.1.
(iii) Except as otherwise provided in Treasury Regulation
Section
1.704-1
(b)(2)(iv)(m), the computation of all items of income, gain,
loss
and
deduction shall be made without regard to any election under
Section
754 of the
Code which may be made by the Partnership and, as to those
items
described in Section 705(a)(1)(B) or 705(a)(2)(B) of the Code,
without
regard to the fact that such items are not includable in gross
income or
are neither currently deductible nor capitalized for federal
income tax
purposes.
(iv) Any income, gain or loss attributable to the taxable
disposition of any Partnership property shall be determined as if
the
adjusted
basis of such property as of such date of disposition were
equal
in amount
to the Partnership's Carrying Value with respect to such
property
as of such date.
(v) In accordance with the requirements of Section 704(b) of
the
Code, any
deductions for depreciation, cost recovery or amortization
attributable to any Contributed Property shall be determined as if
the
adjusted
basis of such property on the date it was acquired by the
Partnership were equal to the Agreed Value of such property Upon
an
adjustment
pursuant to Section 4.4(d) to the Carrying Value of any
Partnership property subject to depreciation, cost recovery or
amortization, any further deductions for such depreciation, cost
recovery
or
amortization attributable to such property shall be determined (A)
as
if the
adjusted basis of such property were equal to the Carrying Value
of
such
property immediately following such adjustment and (B) using a
rate
of
depreciation, cost
14
<PAGE>
recovery
or amortization derived from the same method and useful life
(or,
if
applicable, the remaining useful life) as is applied for federal
income
tax
purposes; provided, however, that, if the asset has a zero
adjusted
basis for
federal income tax purposes, depreciation, cost recovery or
amortization deductions shall be determined using any reasonable
method
that the
Partnership Policy Committee may adopt.
(vi) If the Partnership's adjusted basis in a depreciable or
cost
recovery
property is reduced for federal income tax purposes pursuant to
Section
48(q)(1) or 48(q)(3) of the Code, the amount of such reduction
shall,
solely for purposes hereof, be deemed to be an additional
depreciation or cost recovery deduction in the year such property
is
placed in
service and shall be allocated among the Partners pursuant to
Section
5.1. Any restoration of such basis pursuant to Section 48(q)(2)
of
the Code
shall, to the extent possible, be allocated in the same manner
to
the Partners to whom such deemed
deduction was allocated.
(c)
A transferee of
a Partnership Interest shall succeed to a pro rata
portion of the Capital Account of the
transferor relating to the Partnership
Interest so transferred; provided, however,
that, if the transfer causes a
termination of the Partnership under
Section 708(b)(1)(B) of the Code, the
Partnership's properties shall be deemed to
have been distributed in liquidation
of the Partnership to the Partners
(including any transferee of a Partnership
Interest that is a party to the transfer
causing such termination) pursuant to
Sections 13.3 and 13.4 and recontributed by
such Partners in reconstitution of
the Partnership. Any such deemed
distribution shall be treated as an actual
distribution for purposes of this Section
4.4. In such event, the Carrying
Values of the Partnership properties shall
be adjusted immediately prior to such
deemed distribution pursuant to Section
4.4(d)(ii) and such Carrying Values
shall then constitute the Agreed Values of
such properties upon such deemed
contribution to the reconstituted
Partnership. The Capital Accounts of such
reconstituted Partnership shall be
maintained in accordance with the principles
of this Section 4.4.
(d)
(i) Consistent
with the provisions of Treasury Regulation Section
1.704-1
(b)(2)(iv)(f), on an issuance of additional Partnership
Interests
for cash
or Contributed Property, the Capital Account of all Partners
and
the
Carrying Value of each Partnership property immediately prior to
such
issuance
shall be adjusted upward or downward to reflect any Unrealized
Gain or
Unrealized Loss attributable to such Partnership property, as
if
such
Unrealized Gain or Unrealized Loss had been recognized on an
actual
sale of
each such property immediately prior to such issuance and had
been
allocated
to the Partners at such time pursuant to Section 5.1. In
determining such Unrealized Gain or Unrealized Loss, the aggregate
cash
amount and
fair market value of all Partnership assets (including, without
limitation, cash or cash equivalents) immediately prior to the
issuance of
additional
Partnership Interests shall be determined by the Partnership
Policy
Committee using such reasonable method of valuation as it may
adopt;
provided, however, the Partnership Policy Committee, in arriving
at
such
valuation, must take fully into account the fair market value of
the
Partnership Interests of all Partners at such time. The Partnership
Policy
Committee
shall allocate such aggregate value among the assets of the
Partnership (in such manner as it determines in its sole discretion
to be
reasonable) to arrive at a fair market value for individual
properties.
(ii) In accordance with Treasury Regulation Section
1.704-1(b)(2)(iv)(f), immediately prior to any actual or deemed
distribution to a Partner of any Partnership property (other than
a
distribution of cash that is not in redemption or retirement of
a
Partnership Interest), the Capital Accounts of all Partners and
the
Carrying
Value of such Partnership property shall be adjusted upward or
downward
to reflect any Unrealized Gain or Unrealized
15
<PAGE>
Loss
attributable to such Partnership property, as if such Unrealized
Gain
or
Unrealized Loss had been recognized in a sale of such property
immediately prior to such distribution for an amount equal to its
fair
market
value, and had been allocated to the Partners, at such time,
pursuant
to Section 5.1. Any Unrealized Gain or Unrealized Loss
attributable to such property shall be allocated in the same manner
as Net
Termination Gain or Net Termination Loss pursuant to Section 5.1
(c);
provided,
however, that, in making any such allocation, Net Termination
Gain or
Net Termination Loss actually realized shall be allocated
first.
In
determining such Unrealized Gain or Unrealized Loss the aggregate
cash
amount and
fair market value of all Partnership assets (including, without
limitation, cash or cash equivalents) immediately prior to a
distribution
shall (A)
in the case of a deemed distribution occurring as a result of a
termination of the Partnership pursuant to Section 708 of the Code,
be
determined
and allocated in the same manner as that provided in Section
4.4(d)(i)
or (B) in the case of a liquidating distribution pursuant to
Section 14.3 or
14.4, be determined and allocated by the Liquidator using
such
reasonable method of valuation as it may adopt.
4.5
INTEREST. No interest shall be paid by the Partnership on
Capital
Contributions or on balances in Partners'
Capital Accounts.
4.6 NO
WITHDRAWAL. No Partner shall be entitled to withdraw any part
of
his Capital Contributions or its Capital
Account or to receive any distribution
from the Partnership, except as provided in
Section 4.2, Articles V, VII and
XIII.
4.7 LOANS
FROM PARTNERS. Loans by a Partner to the Partnership shall not
constitute Capital Contributions. If any
Partner shall advance funds to the
Partnership in excess of the amounts
required hereunder to be contributed by it
to the capital of the Partnership, the
making of such excess advances shall not
result in any increase in the amount of the
Capital Account of such Partner. The
amount of any such excess advances shall be
a debt obligation of the Partnership
to such Partner and shall be payable or
collectible only out of the Partnership
assets in accordance with the terms and
conditions upon which such advances are
made.
ARTICLE V
ALLOCATIONS AND DISTRIBUTIONS
5.1
ALLOCATIONS FOR
CAPITAL ACCOUNT PURPOSES. For purposes of
maintaining the Capital Accounts and in
determining the rights of the Partners
among themselves, the Partnership's items
of income, gain, loss and deduction
(computed in accordance with Section
4.4(b)) shall be allocated among the
Partners in each taxable year (or portion
thereof) as provided hereinbelow.
(a) Net Income.
After giving effect to the special allocations set
forth in
Section 5.1 (d), Net Income for each taxable period and all
items
of income,
gain, loss and deduction taken into account in computing Net
Income for
such taxable period shall be allocated as follows:
(i) First, 100% to the General Partners in accordance with
their relative General Partner Percentage Interests until the
aggregate Net Income allocated to each General Partner pursuant
to
this Section 5.1 (a)(i) for the current taxable year and all
previous taxable years is equal to the aggregate Net Losses
allocated to such General Partner pursuant to Section 5.1(b)(ii)
for
all previous taxable years;
16
<PAGE>
(ii) Second, the balance, if any, 100% to the General Partners
and the Limited Partners in the same proportion as Net Losses
were
allocated pursuant to Section 5.1(b)(i) and thereafter in
accordance
with their respective Percentage Interests.
(b) Net Losses.
After giving effect to the special allocations set
forth in
Section 5.1(d), Net Losses for each taxable period and all
items
of income,
gain, loss and deduction taken into account in computing Net
Losses for
such taxable period shall be allocated as follows:
(i) First, 100% to the General Partners and the Limited
Partners in proportion to, and to the extent of, the positive
balances in their respective Adjusted Capital Accounts; and
(ii) Second, the balance, if any, 100% to the General Partners
in accordance with their relative General Partner Percentage
Interests.
(c) Net
Termination Gains and Losses. After giving effect to the
special
allocations set forth in Section 5.1(d), all items of income
gain,
loss and
deduction taken into account in computing Net Termination Gain
or
Net
Termination Loss for such taxable period shall be allocated in
the
same
manner as such Net Termination Gain or Net Termination Loss is
allocated
hereunder. All allocations under this Section 5.1(c) shall be
made after
Capital Account balances have been adjusted by all other
allocations provided under this Section 5.1 and after all
distributions of
Available
Cash provided under Section 5.3 have been made with respect to
the
taxable period ending on the date of the Partnership's
liquidation
pursuant
to Section 13.3.
(i) If a Net
Termination Gain is recognized (or deemed
recognized pursuant to Section 4.4(d)) from Termination Capital
Transactions, such Net Termination Gain shall be allocated
between
the General Partners and the Limited Partners in the following
manner (and the Adjusted Capital Accounts of the Partners shall
be
increased by the amount so allocated in each of the following
subclauses, in the order listed, before an allocation is made
pursuant to the next succeeding subclause):
(A) First, to each Partner having a deficit balance in
its Adjusted Capital Account, in the proportion that such
deficit balance bears to the total deficit balances in the
Adjusted Capital Accounts of all Partners, until each such
Partner has been allocated Net Termination Gain equal to any
such deficit balance in its Adjusted Capital Account; and
(B) Second, 100% to the General Partners and the Limited
Partners in accordance with their respective Percentage
Interests.
(ii) If a Net
Termination Loss is recognized (or deemed
recognized pursuant to Section 4.4(d)) from Termination Capital
Transactions, such Net Termination Loss shall be allocated to
the
Partners in the following manner:
(A) First, 100% to the General Partners and the Limited
Partners in proportion to, and to the extent of, the positive
balances in their respective Adjusted Capital Accounts; and
17
<PAGE>
(B) Second, the
balance, if any, 100% to the General
Partners, in accordance with their relative General Partner
Percentage Interests.
(d) Special Allocations. Notwithstanding any other provision of
this
Section 5.1, the
following special allocations shall be made for such
taxable
period:
(i) Partnership
Minimum Gain Chargeback. Notwithstanding any
other provision of this Section 5.1, if there is a net decrease
in
Partnership Minimum Gain during any Partnership taxable period,
each
Partner shall be allocated items of Partnership income and gain
for
such period (and, if necessary, subsequent periods) in the
manner
and amounts provided in Treasury Regulation Sections
1.704-2(f)(6),
1.704-2(g)(2) and 1.704-(j)(2)(i), or any successor provision.
For
purposes of this Section 5.1 (d), each Partner's Adjusted
Capital
Account balance shall be determined, and the allocation of income
or
gain required hereunder shall be effected, prior to the
application
of any other allocations pursuant to this Section 5.1 (d) with
respect to such taxable period (other than an allocation pursuant
to
Sections 5.1 (d)(v) and 5.1(d)(vi)). This Section 5.1(d)(i) is
intended to comply with the Partnership Minimum Gain chargeback
requirement in Treasury Regulation Section 1.704-2(f) and shall
be
interpreted consistently therewith.
(ii) Chargeback of
Partner Nonrecourse Debt Minimum Gain.
Notwithstanding the other provisions of this Section 5.1 (other
than
Section 5.1(d)(i)), except as provided in Treasury Regulation
Section 1.704-2(i)(4), if there is a net decrease in Partner
Nonrecourse Debt Minimum Gain during any Partnership taxable
period,
any Partner with a share of Partner Nonrecourse Debt Minimum Gain
at
the beginning of such taxable period shall be allocated items
of
Partnership income and gain for such period (and, if necessary,
subsequent periods) in the manner and amounts provided in
Treasury
Regulation Sections 1.704-2(i)(4) and 1.704-2(j)(2)(ii), or any
successor provisions. For purposes of this Section 5.1 (d),
each
Partner's Adjusted Capital Account balance shall be determined,
and
the allocation of income or gain required hereunder shall be
effected, prior to the application of any other allocations
pursuant
to this Section 5.1 (d), other than Section 5.1(d)(i) and other
than
an allocation pursuant to Sections 5.1 (d)(v) and 5.1(d)(vi),
with
respect to such taxable period. This Section 5.1 (d)(ii) is
intended
to comply with the chargeback of items of income and gain
requirement in Treasury Regulation Section 1.704-2(i)(4) and
shall
be interpreted
consistently therewith.
(iii) Qualified Income Offset. In the event any Partner
unexpectedly receives any adjustments, allocations or
distributions
described in Treasury Regulation Sections 1.704-1
(b)(2)(ii)(d)(4),
1.704-1(b)(2)(ii)(d)(5), or 1.704-1 (b)(2)(ii)(d)(6), items of
Partnership income and gain shall be specifically allocated to
such
Partner in an amount and manner sufficient to eliminate, to the
extent required by the Treasury regulations promulgated under
Section 704(b) of the Code, the deficit balance, if any, in its
Adjusted Capital Account created by such adjustments, allocations
or
distributions as quickly as possible unless such deficit balance
is
otherwise eliminated pursuant to Section 5.1(d)(i) or (ii).
(iv) Gross Income
Allocations. In the event any Partner has a
deficit balance in its Adjusted Capital Account at the end of
any
Partnership taxable period, such Partner shall be specially
allocated items of Partnership gross income and gain in the
amount
of such excess as quickly as possible; provided, that an
allocation
18
<PAGE>
pursuant to this Section 5.1 (d)(iv) shall be made only if and
to
the extent that such Partner would have a deficit balance in
its
Adjusted Capital Account after all other allocations provided for
in
this Section 5.1 have been tentatively made as if this Section
5.1(d)(iv) were not in this Agreement.
(v) Nonrecourse
Deductions. Nonrecourse Deductions for any
taxable period shall be allocated to the Partners in accordance
with
their respective Percentage Interests. If the Partnership
Policy
Committee determines in its good faith discretion that the
Partnership's Nonrecourse Deductions must be allocated in a
different ratio to satisfy the safe harbor requirements of the
Treasury Regulations promulgated under Section 704(b) of the
Code,
the Partnership Policy Committee is authorized, upon notice to
the
Limited Partners, to revise the prescribed ratio to the
numerically
closest ratio that does satisfy such requirements.
(vi) Partner
Nonrecourse Deductions. Partner Nonrecourse
Deductions for any taxable period shall be allocated 100% to
the
Partner that bears the Economic Risk of Loss with respect to
the
Partner Nonrecourse Debt to which such Partner Nonrecourse
Deductions are attributable in accordance with Treasury
Regulation
Section 1.704-2(i). If more than one Partner bears the Economic
Risk
of Loss with respect to a Partner Nonrecourse Debt, such
Partner
Nonrecourse Deductions attributable thereto shall be allocated
between or
among such Partners in accordance with the ratios in
which they share such Economic Risk of Loss.
(vii) Nonrecourse Liabilities. For purposes of Treasury
Regulation Section 1.752-3(a)(3), the Partners agree that
Nonrecourse Liabilities of the Partnership in excess of the sum
of
(A) the amount of Partnership Minimum Gain and (B) the total
amount
of Nonrecourse Built-in Gain shall be allocated among the
Partners
in accordance with their respective Percentage Interests.
(viii) Code Section 754 Adjustments. To the extent an
adjustment to the adjusted tax basis of any Partnership asset
pursuant to Section 734(b) or 743(b) of the Code is required,
pursuant to Treasury Regulation Section 1.704-1(b)(2)(iv)(m), to
be
taken into account in determin
