PURCHASE AND SALE AGREEMENT

Exhibit 10.31

 

PURCHASE AND SALE AGREEMENT

by and between

ONEOK, INC.

and

NORTHERN BORDER PARTNERS, L.P.

February 14, 2006

 

TABLE OF CONTENTS

 

 

ii

 

 

iii

PURCHASE AND SALE AGREEMENT

This PURCHASE AND SALE AGREEMENT (this “ Agreement ”) is entered into as of February 14, 2006 by and between ONEOK, Inc., an Oklahoma corporation (“ ONEOK ”), and Northern Border Partners, L.P., a Delaware limited partnership (“ Northern Border ”) (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, Texas and Louisiana (the “ Business ”); and

WHEREAS , ONEOK wishes to sell the Shares to Northern Border and Northern Border wishes to purchase 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. PURCHASE AND SALE

1.1 Interests . At the Closing, ONEOK shall deliver or cause to be delivered to Northern Border good and sufficient instruments of transfer transferring all of the Shares to Northern Border. Such instruments of transfer shall effectively vest in Northern Border good and marketable title to all of the Shares free and clear of all Liens other than transfer restrictions imposed by applicable securities laws.

1.2 Consideration and Payment . As consideration for the Shares, Northern Border will, at Closing, pay to ONEOK $1,350,000,000 (the “ Purchase Price ”) by wire transfer of immediately available funds to an account designated by ONEOK in writing not less than two (2) business days prior to the Closing Date.

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

(vii) 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) An executed copy of the Services Agreement;

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

(iii) 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 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,

 

2

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 1.4(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 1.4(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 1.4(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

 

3

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 1.4(b) hereof or resulting from the determinations made by the Neutral Auditors in accordance with this Section 1.4(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 1.4(d) are referred to as the “ Net Working Capital Adjustment ”).

All payments made pursuant to this Section 1.4 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

 

4

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.

 

5

(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 Chisholm Pipeline Company, 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

 

6

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 .

 

7

(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;

 

8

(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.

 

9

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;

 

10

(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

 

11

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

 

12

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 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

 

13

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 2.17 , 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.

2.18 Operating Assets .

(a) Except as identified to the contrary in Schedule 2.18(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 (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; and (v) the Entities collectively own all of the rights, title and interest in and to any and all of the properties, rights, claims, contracts, permits and other assets acquired by ONEOK and its Affiliates, either directly by asset purchase or indirectly by purchase of equity interests, pursuant to the terms of (A) that certain Limited Liability Company Membership Interest and Stock Purchase Agreement by and between Koch Hydrocarbon Management Company, LLC and ONEOK, Inc. dated May 9, 2005 (relating to the purchase and sale of a 100% membership interest in NGL/LP, LLC and all of the outstanding capital stock of Koch Underground Storage Company), (B) that certain Asset Purchase Agreement by and between Koch Pipeline Company, L.P. and ONEOK dated May 9, 2005 (relating to the purchase and sale of Mid-Continent NGL Assets), (C) that certain Limited Liability Company Membership Interest Purchase Agreement by and between Koch Holdings Enterprises, LLC and ONEOK dated May 9, 2005 (relating to the purchase and sale of a 100% membership interest in MB1/LP, LLC), and (D) that certain Limited Liability Company Membership Interest Purchase Agreement by and between Koch Hydrocarbon Management Company, LLC and ONEOK dated May 9, 2005 (relating to the purchase and sale of a 100% membership interest in Koch Vesco Holdings, LLC), other than any

 

14

such properties, rights, claims, contracts, permits and other assets as have been disposed of in the ordinary course of business.

(b) Except as identified to the contrary in Schedule 2.18(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.

2.19 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.

2.20 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.

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

2.22 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 WARRANTY, EXPRESS OR IMPLIED, OF MERCHANTABILITY, FITNESS FOR A

 

15

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 NORTHERN BORDER

Except as set forth in the disclosure schedules (the “ Northern Border Disclosure Schedules ”) delivered by Northern Border to ONEOK on the date hereof (it being agreed that any matter disclosed in a particular Schedule of the Northern Border 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), Northern Border represents and warrants 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 Northern Border represents and warrants that such statements are true, correct and complete as of such specified date.

3.1 Organization and Authority of Northern Border .

(a) Northern Border is a limited partnership duly organized, validly existing and in good standing under the laws of Delaware.

(b) Northern Border has 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 Northern Border of this Agreement and each of the other Northern Border Transaction Agreements have been duly authorized by all necessary action of Northern Border and no other action on the part of Northern Border is required in connection therewith.

(d) This Agreement and each Related Agreement (including, without limitation, the Amendment) executed and delivered by Northern Border constitutes, or when executed and delivered will constitute, valid and binding obligations of Northern Border enforceable in accordance with their respective terms, except as such enforceability may be

 

16

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 Northern Border of this Agreement and each Related Agreement (including, without limitation, the Amendment) executed and delivered by Northern Border, 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 Northern Border;

(ii) do not and will not conflict with or violate any Legal Requirements applicable to Northern Border or, except as set forth in Schedule 3.1(e)(ii) and any filings required to be made under the HSR Act, require Northern Border 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 Northern Border 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 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 Northern Border to perform its 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 Northern Border or result in or permit the termination of any such contract; and

(v) do not require the consent or approval of the holders of common units representing limited partnership interests in Northern Border (“ Common Units ”).

(f) The Northern Border Partnership Agreement is in full force and effect and is 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 Litigation . Except as set forth on Schedule 3.2 , there are no Legal Proceedings pending or, to the Knowledge of Northern Border, threatened that challenges or otherwise seeks to prevent, enjoin, alter or delay the consummation of the transactions contemplated hereby.

3.3 Securities Act . Northern Border is 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. Northern Border acknowledges 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

 

17

registration provisions of the Securities Act or pursuant to an applicable exemption therefrom and pursuant to state securities laws and regulations as applicable.

3.4 Brokers’ Fees . Except for the fees payable to the financial advisor referenced in Section 3.5 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.

3.5 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.

3.6 Disclaimer .

(a) Except as and to the extent expressly set forth in Section 3, (i) Northern Border makes no representations or warranties, express or implied, and (ii) Northern Border expressly disclaims 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 Northern Border or any of its Subsidiaries).

(b) WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, EXCEPT AS EXPRESSLY REPRESENTED OTHERWISE IN SECTION 3, NORTHERN BORDER 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 NORTHERN BORDER OR ANY OF ITS SUBSIDIARIES, (II) THE CONTENTS, CHARACTER OR NATURE OF ANY DESCRIPTIVE MEMORANDUM OR REPORT RELATING TO THE PROPERTIES OR OTHER ASSETS OF NORTHERN BORDER OR ANY OF ITS SUBSIDIARIES, (III) ANY ESTIMATES OF THE VALUE OF THE ASSETS OR FUTURE REVENUES GENERATED BY THE PROPERTIES OR OTHER ASSETS OF NORTHERN BORDER OR ANY OF ITS SUBSIDIARIES, (IV) THE MAINTENANCE, REPAIR, CONDITION, QUALITY, SUITABILITY, DESIGN OR MARKETABILITY OF THE PROPERTIES OR OTHER ASSETS OF NORTHERN BORDER OR ANY OF ITS SUBSIDIARIES, OR (V) ANY OTHER MATERIALS OR INFORMATION THAT MAY HAVE BEEN MADE 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.

 

18

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 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.

 

19

(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 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.

 

20

(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 NORTHERN BORDER

5.1 Northern Border’s Efforts Regarding Financing Arrangements .

(a) Northern Border shall use commercially reasonable efforts to obtain commitments from sources of financing (the “Financing Commitments”), before the Closing, in amounts, when added to available unrestricted funds are sufficient to enable Northern Border to satisfy its obligations under Section 1.2 of this Agreement.

(b) Northern Border will promptly notify ONEOK if any of the institutions party to a Financing Commitment withdraws, terminates or makes a material change in the amount or terms of such Financing Commitment that could reasonably be expected to adversely affect the ability of Northern Border to satisfy its obligations under Section 1.2 of this Agreement. In addition, upon ONEOK’s reasonable request, Northern Border will advise ONEOK with respect to the status, proposed closing date, and material terms of the Financing Commitments.

(c) Northern Border will, and will cause its Affiliates to, use commercially reasonable efforts to (i) maintain the effectiveness of the Financing Commitments in accordance with their terms or obtain alternative financing if necessary to satisfy its obligations under Section 1.2 of this Agreement, (ii) enter into definitive documentation with respect to the Financing Commitments, or any alternative financing necessary satisfy its obligations under Section 1.2 of this Agreement, (iii) satisfy all funding conditions to the Financing Commitments or any alternative financing set forth in the definitive documentation with respect to the financing contemplated by the Financing Commitments, or alternative financing necessary to satisfy its obligations under Section 1.2 of this Agreement, (iv) consummate the financing contemplated by the Financing Commitments, (v) procure the execution and delivery of the Northern Border Credit Agreement Amendments and (vi) procure the execution and delivery of the waiver to the Viking Indenture described in Section 7.2(m).

5.2 Books and Records .

(a) No later than ten (10) days after Closing, ONEOK will make available to Northern Border or its 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

 

21

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) Northern Border 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 Northern Border 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 Northern Border, ONEOK may notify Northern Border that it wishes to receive such Books and Records, and Northern Border 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 Northern Border of a written agreement in form and substance reasonably satisfactory to Northern Border in which ONEOK agrees to maintain the confidentiality of such Books and Records. If ONEOK does not notify Northern Border within 30 days of receipt of such notice, Northern Border may dispose of or destroy the Books and Records.

(ii) Northern Border 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 Northern Border has received a written agreement in form and substance reasonably satisfactory to Northern Border 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) Northern Border shall make available to ONEOK upon reasonable notice to ONEOK and at reasonable times and upon written request Northern Border’s personnel to assist ONEOK in locating and obtaining any Books and Records.

SECTION 6. COVENANTS OF ONEOK AND NORTHERN BORDER

The parties hereto agree that:

6.1 Access to Information . During the Pre-Closing Period, ONEOK will, and will cause each Entity to, (i) give Northern Border and its Representatives reasonable access during normal business hours and on reasonable notice to the officers, personnel, properties, Tax Returns, books, records and work papers of and relating to any Entity, (ii) furnish to Northern Border and its Representatives such financial and operating data and copies of such Tax Returns, books, records, work papers and other documents and information with respect to any Entity, as such Persons may reasonably request, and (iii) instruct their respective Representatives to cooperate with Northern Border in its investigation of the Entities. The Parties agree that any

 

22

information provided, or caused to be provided, by the Entities pursuant to this Section 6.1 shall be kept confidential and not disclosed to any third party, except to the extent required by any Legal Requirement. ONEOK shall cooperate to ensure that the provision of access hereunder to Northern Border and its authorized Representatives shall comply in all respects with the Federal Energy Regulatory Commission’s (“ FERC ”) Standards of Conduct for Transmission Providers set forth in 18 C.F.R. Part 37, et al.

6.2 Commercially Reasonable Efforts . Subject to the terms and conditions of this Agreement and applicable Legal Requirements, each of the Parties hereto shall act in good faith and use its commercially reasonable efforts to take, or cause to be taken, all actions, and to do, or cause to be done, all things necessary, proper or advisable to consummate and make effective the transactions contemplated hereby as soon as practicable, including such actions or things as the other Party may reasonably request in order to cause any of the conditions to such other Party’s obligation to consummate the transactions contemplated by this Agreement to be fully satisfied.

6.3 Regulatory and Other Authorizations; Notices and Consents .

(a) Each of ONEOK and Northern Border shall use commercially reasonable efforts to obtain promptly all authorizations, consents, orders and approvals of all Governmental Authorities (including by making, or causing to be made, all appropriate filings of notifications or reports) necessary for its execution and delivery of, and the performance of its obligations pursuant to, and the consummation of the transactions contemplated by, this Agreement (such authorizations, consents, orders and approvals, “ Governmental Approvals ”). ONEOK and Northern Border shall, and ONEOK shall cause the Entities to, cooperate in promptly seeking to obtain the Governmental Approvals.

(b) Neither ONEOK nor Northern Border shall intentionally take any action that would be reasonably expected to delay, impair or impede the receipt of any Governmental Approvals. ONEOK and Northern Border agree to make, or to cause to be made, all appropriate filings of notifications and reports required to obtain the Governmental Approvals promptly after the date of this Agreement and to supply promptly any additional information and documentary material that may be requested by Governmental Authorities responsible therefor. As defined further below, the parties shall cooperate in making any such filings. ONEOK and Northern Border agree to use their commercially reasonable efforts to avoid or eliminate each and every impediment under any Legal Requirement that may be asserted by any Governmental Authority in connection with the Governmental Approvals so as to enable the Parties to expeditiously close the transactions contemplated by this Agreement. ONEOK and Northern Border agree to use commercially reasonable efforts to vacat