Exhibit 2.2
EXECUTION COPY
================================================================================
PURCHASE AND SALE AGREEMENT
by and between
ONEOK, INC.
and
NORTHERN BORDER PARTNERS, L.P.
February 14, 2006
================================================================================
TABLE OF CONTENTS
SECTION 1. PURCHASE AND SALE.............................................. 1
1.1 Interests...................................................... 1
1.2 Consideration and Payment...................................... 1
1.3 The Closing.................................................... 1
1.4 Working Capital Adjustment..................................... 2
SECTION 2. REPRESENTATIONS AND WARRANTIES OF ONEOK........................ 4
2.1 Organization and Authority of ONEOK............................ 4
2.2 Organization, Authority and Qualification of the Entities...... 5
2.3 Capital of Companies; Beneficial Ownership..................... 5
2.4 Subsidiaries................................................... 6
2.5 Financial Statements........................................... 6
2.6 Taxes.......................................................... 7
2.7 Absence of Certain Changes..................................... 8
2.8 Ordinary Course................................................ 9
2.9 Intellectual Property.......................................... 9
2.10 Contracts...................................................... 10
2.11 Compliance..................................................... 11
2.12 Litigation..................................................... 11
2.13 Insurance...................................................... 11
2.14 Related Transactions........................................... 12
2.15 Employee Benefit Matters....................................... 12
2.16 Environmental Matters.......................................... 13
2.17 Regulatory Matters............................................. 13
2.18 Operating Assets............................................... 14
2.19 Brokers' Fees.................................................. 15
2.20 Books and Records.............................................. 15
2.21 Indebtedness................................................... 15
2.22 Disclaimer..................................................... 15
SECTION 3. REPRESENTATIONS AND WARRANTIES OF NORTHERN BORDER.............. 16
3.1 Organization and Authority of Northern Border.................. 16
3.2 Litigation..................................................... 17
3.3 Securities Act................................................. 17
3.4 Brokers' Fees.................................................. 18
3.5 Opinion of Financial Adviser................................... 18
3.6 Disclaimer..................................................... 18
SECTION 4. COVENANTS OF ONEOK............................................. 19
4.1 Conduct of the Entities........................................ 19
4.2 Cash Management................................................ 21
SECTION 5. COVENANTS OF NORTHERN BORDER................................... 21
5.1 Northern Border's Efforts Regarding Financing Arrangements..... 21
5.2 Books and Records.............................................. 21
SECTION 6. COVENANTS OF ONEOK AND NORTHERN BORDER......................... 22
6.1 Access to Information.......................................... 22
6.2 Commercially Reasonable Efforts................................ 23
6.3 Regulatory and Other Authorizations; Notices and Consents...... 23
6.4 Public Announcements........................................... 24
6.5 Notices of Certain Events...................................... 24
6.6 Entity Guarantees.............................................. 24
6.7 Intercompany Accounts.......................................... 25
6.8 Shared Contracts and Drop-Down Contracts....................... 25
6.9 ONEOK Marks.................................................... 26
6.10 Indebtedness for Borrowed Money................................ 26
6.11 Conversion Transactions........................................ 26
6.12 Interim Financial Statements................................... 27
6.13 Cooperation Regarding Audits................................... 27
6.14 Insurance Matters.............................................. 27
SECTION 7. CONDITIONS TO CLOSING.......................................... 27
7.1 Conditions to the Obligations of ONEOK......................... 27
7.2 Conditions to the Obligations of Northern Border............... 29
SECTION 8. TERMINATION OF AGREEMENT; RIGHTS TO PROCEED.................... 31
8.1 Termination.................................................... 31
8.2 Effect of Termination.......................................... 31
SECTION 9. INDEMNIFICATION................................................ 32
9.1 Survival of Representations and Warranties, Etc................ 32
9.2 Indemnification................................................ 32
9.3 Threshold; Cap................................................. 33
9.4 Exclusive Remedy; Sole Recourse................................ 34
9.5 No Contribution................................................ 35
9.6 Setoff......................................................... 35
9.7 Third Party Claims............................................. 35
SECTION 10. TAX MATTERS.................................................... 36
10.1 Retention of Records........................................... 36
10.2 Cooperation.................................................... 36
10.3 Transfer Taxes................................................. 37
10.4 Tax Returns.................................................... 37
10.5 Allocation of Taxes............................................ 38
10.6 Tax Indemnity.................................................. 39
10.7 Contests....................................................... 40
10.8 Amended Tax Returns............................................ 41
10.9 Miscellaneous.................................................. 42
10.10 Allocation of the Purchase Price............................... 42
SECTION 11. MISCELLANEOUS.................................................. 43
11.1 Fees and Expenses.............................................. 43
11.2 Governing Law.................................................. 43
11.3 Notices........................................................ 43
11.4 Entire Agreement............................................... 44
11.5 Assignability; Binding Effect.................................. 44
11.6 Captions and Gender............................................ 45
11.7 Execution in Counterparts...................................... 45
ii
11.8 Amendments..................................................... 45
11.9 Publicity and Disclosures...................................... 45
11.10 Severability................................................... 45
11.11 Waiver of Jury Trial........................................... 45
11.12 Arbitration.................................................... 45
11.13 Time of the Essence............................................ 46
11.14 Remedies Cumulative; Specific Performance...................... 46
11.15 Further Assurances............................................. 46
11.16 Third Party Beneficiaries...................................... 46
11.17 Audit Committee Authority...................................... 46
11.18 Certain Definitions............................................ 47
11.19 Other Defined Terms............................................ 54
Exhibit A - Companies/Company Subsidiaries
Exhibit B - Intentionally Omitted
Exhibit C - ONEOK Guaranty Agreement
Exhibit D - Target Working Capital
Exhibit E - Services Agreement
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.
WITNESSETH
WHEREAS, ONEOK owns all of the issued and outstanding Equity Interests (the
"Shares") of each of the Persons listed on Exhibit A hereto under the heading
"Companies," (the "Companies", and each, individually, a "Company");
WHEREAS, the Companies and their Subsidiaries, all of which are listed on
Exhibit A under the heading "Company Subsidiaries", own and operate natural gas
gathering, processing, fractionating, transportation, storage, pipelines and
natural gas liquids assets located in Kansas, Oklahoma, 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 Xxxxx & Xxxxxxx, 000 X. 0xx Xxxxxx, Xxxxx, XX 00000, 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
2
Working Capital Statement") of the Net Working Capital of the Entities, on a
consolidated basis, 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 /
3
500) to ONEOK and 40% (i.e., 200 / 500) to Northern Border. The term "Final
Closing 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 Xxxxxxxx
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 Xxxx 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
Xxxx Underground Storage Company), (B) that certain Asset Purchase Agreement by
and between Xxxx 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 Xxxx
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
Xxxx Hydrocarbon Management Company, LLC and ONEOK dated May 9, 2005 (relating
to the purchase and sale of a 100% membership interest in Xxxx Xxxxx 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. Xxxxxx 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 vacate or lift any order relating to the
Governmental Approvals that would have the effect of making any of the
transactions contemplated by this Agreement illegal or otherwise prohibiting
their consummation. Notwithstanding any other terms or provisions of this
Agreement, in no event shall Northern Border or its Subsidiaries be deemed to
have any obligation to dispose of any assets or properties (including any assets
or properties of the Entities) or to enter into any agreement with any Person in
order to obtain early termination or expiration of the waiting period under the
HSR Act or to obtain any other Governmental Approvals.
23
(c) Each Party shall promptly notify the other party of any
communication it or any of its Affiliates receives from any Governmental
Authority relating to the matters that are the subject of this Agreement,
including any filing, investigation or inquiry, and, subject to applicable Law,
permit the other Party to review in advance any proposed communication by such
Party to, or filing by such party with, any Governmental Authority. No Party
shall agree to participate in any meeting with any Governmental Authority in
respect of any filings, investigation or other inquiry unless it consults with
the other Party in advance and, to the extent permitted by such Governmental
Authority, affords the other Party the reasonable opportunity to attend and
participate. Each Party will coordinate and cooperate fully with the other Party
in exchanging such information and providing such assistance as such other Party
may reasonably request in connection with the foregoing and in seeking early
termination of any applicable waiting periods under the HSR Act or in connection
with any other Governmental Approvals. Each Party will provide the other Party
with copies of all correspondence, filings or communications between it or any
of its Representatives, on the one hand, and any Governmental Authority, on the
other hand, with respect to this Agreement and the transactions contemplated by
this Agreement, including with respect to the Party hereto making a filing,
providing copies of all such documents to the non-filing Party and its
Representatives prior to filing (except that neither Party hereto shall be under
an obligation of any kind to provide the other Party with documents, material or
other information relating to such Party's valuation of the Business).
(d) Northern Border and ONEOK shall (and shall each cause their
respective Affiliates to) use commercially reasonable efforts to obtain all
consents, authorizations, waivers and approvals of third parties that any of
Northern Border, ONEOK or their respective Affiliates (including the Entities)
are required to obtain in order to consummate the transactions contemplated
hereby.
6.4 PUBLIC ANNOUNCEMENTS. During the Pre-Closing Period, ONEOK and Northern
Border shall consult with each other before issuing any press release or making
any public statement with respect to the transactions contemplated hereby and,
except as may be required by applicable Legal Requirements or stock exchange
rules and regulations, shall not issue any such press release or make any such
public statement unless the text of such statement shall first have been agreed
to by the parties.
6.5 NOTICES OF CERTAIN EVENTS. Each Party hereto shall promptly notify the
other Party hereto (i) following the receipt of any notice of any Legal
Proceeding commenced or, to the Knowledge of ONEOK, or the Knowledge of Northern
Border, as applicable, threatened against it that relates to or seeks to
prohibit the consummation of the transactions contemplated hereby, (ii) upon its
discovery that any of its representations or warranties in this Agreement
contain any inaccuracies or that such Party has breached or otherwise failed to
perform its obligations, covenants and agreements contained herein or (iii) upon
its discovery of any development that is reasonably likely to result in a
failure of a condition to the Closing.
6.6 ENTITY GUARANTEES.
(a) Northern Border and ONEOK shall use commercially reasonable
efforts to obtain from the respective beneficiary, in form and substance
reasonably satisfactory to ONEOK,
24
on or before the Closing, valid and binding written releases of ONEOK and its
Affiliates (other than the Entities), as applicable, from any liability or
obligation, whether arising before, on or after the Closing Date, under any
Entity Guarantees in effect as of the Closing. If any Entity Guarantee has not
been released as of the Closing Date, then Northern Border shall continue to use
commercially reasonable efforts after the Closing to cause each such unreleased
Entity Guarantee to be released promptly. Schedule 6.6(a) to the ONEOK
Disclosure Schedules contains a true, correct and complete list of all of the
Entity Guarantees.
(b) Notwithstanding anything to the contrary herein, the Parties
acknowledge and agree that at any time on or after the Closing Date, any of
ONEOK and its Affiliates may, in its sole discretion, take any action to
terminate, obtain release of or otherwise limit its liability under any and all
outstanding Entity Guarantees.
(c) Northern Border shall indemnify and hold harmless ONEOK and its
Affiliates from and after the Closing Date for any and all Damages arising out
of or relating to any Entity Guarantees.
6.7 INTERCOMPANY ACCOUNTS. Except for amounts related to normal operational
sales and cost of sales and fuel, prior to Closing ONEOK will settle all
Intercompany Accounts and intercompany arrangements between any Entity, on the
one hand, and ONEOK and its Affiliates (other than an Entity), on the other
hand, and the Entities will not have any Liability whatsoever with respect to
such settled intercompany arrangements and Intercompany Accounts. ONEOK shall be
solely liable for any contractual or other Liabilities, express or implied,
arising out of the termination, cancellation and elimination of any of the
foregoing.
6.8 SHARED CONTRACTS AND DROP-DOWN CONTRACTS.
(a) Schedule 6.8(a) contains a true and complete listing of all Shared
Contracts and Drop-Down Contracts. Commencing on the date hereof, (i) Northern
Border and ONEOK shall use commercially reasonable efforts to cause the Shared
Contracts to be replaced with separate Contracts that provide that each Entity
receive only such rights and obligations under a replacement Contract
substantially and materially similar to those contract rights and obligations
utilized by it in the conduct of its business immediately prior to the date
hereof and (ii) Northern Border and ONEOK shall use commercially reasonable
efforts to cause the Drop-Down Contracts to be assigned to one or more Entities,
as applicable, or, if any such Drop-Down Contracts are not assignable or if
ONEOK is not able to obtain any consent required to so assign such Drop-Down
Contracts, use commercially reasonable efforts to cause such Drop-Down Contracts
to be replaced with separate Contracts that provide that the Entity receives the
rights and obligations under a replacement Contract as are substantially and
materially similar to those contract rights and obligations of ONEOK under such
Drop-Down Contracts immediately prior to the date hereof. The administrative
costs and expenses arising from the separation, replacement or assignment of a
Shared Contract or Drop-Down Contract (excluding any costs incurred under the
payment terms under any such Contract or any replacement Contract) shall be
borne by ONEOK.
(b) If the Parties are not able to effect the separation and
replacement of a Shared Contract or to effect the assignment or replacement of a
Drop-Down Contract prior to the
25
Closing, then, from the Closing until such Contract is separated and replaced
(in the case of a Shared Contract), assigned or replaced (in the case of a
Drop-Down Contract) or expires by its terms, to the extent permissible under any
Legal Requirement and under the terms of such Contract, ONEOK shall, and
Northern Border shall cause each Entity to, (i) assume and perform the
liabilities and obligations under such Contract relating to its respective
business (and shall promptly reimburse the other Party for any expenses relating
thereto incurred by the other Party or its Affiliates), (ii) hold in trust for
the benefit of the other Party, and shall promptly forward to the other Party,
any monies or other benefits received pursuant to such Shared Contract relating
to the business of the other Party (or its Affiliates) and (iii) endeavor to
institute alternative arrangements intended to put the Parties in substantially
the same economic position as if such Contract were separated and replaced (in
the case of a Shared Contract) or assigned or replaced (in the case of a
Drop-Down Contract).
6.9 ONEOK MARKS. Northern Border shall obtain no right, title, interest,
license or any other right whatsoever to use the word "ONEOK" or any Trademarks
containing or comprising the foregoing, or any Trademark confusingly similar
thereto or dilutive thereof (collectively, the "ONEOK Marks"). Notwithstanding
the preceding sentence, effective upon the Closing Date, ONEOK, on behalf of
itself and its Affiliates hereby grants to the Entities and Northern Border a
nonexclusive, nontransferable, royalty-free license, without right to
sublicense, to use, solely in the Entities' businesses as they are presently
conducted, any and all of the ONEOK Marks solely to the extent appearing on
existing advertising materials and property of the Companies (such as signage,
vehicles, and equipment) for a period of 6 months from the Closing Date
("License Period"); provided, however, that with respect to pipeline and gas
storage signage the License Period shall be deemed to be a period of 12 months
from the Closing Date. Northern Border and the Entities may use such existing
inventory, advertising materials and property during the License Period, but
shall not create new inventory, advertising materials or property using the
ONEOK Marks. Northern Border and the Entities shall promptly replace or remove
all ONEOK Marks on inventory, advertising materials and other assets, provided
that all such use shall cease no later than the end of the License Period. As
promptly as practicable and no later than 60 days after the Closing Date,
Northern Border shall change the name of any Entity that contains a reference to
"ONEOK" to a name that does not contain such reference. The Parties agree,
because damages would be an inadequate remedy, that a Party seeking to enforce
this Section 6.9 shall be entitled to seek specific performance and injunctive
relief as remedies for any breach thereof in addition to other remedies
available at law or in equity.
6.10 INDEBTEDNESS FOR BORROWED MONEY. Immediately prior to the Closing, (i)
ONEOK shall repay or otherwise settle any Indebtedness due to the Entities from
ONEOK or its Affiliates (other than the Entities) and (ii) ONEOK shall cause the
repayment or settlement any Indebtedness due from the Entities to ONEOK or its
Affiliates (other than the Entities), in each case, including interest and other
amounts accrued thereon or due in respect thereof, other than any Indebtedness
fully reflected in the Closing Working Capital.
6.11 CONVERSION TRANSACTIONS. ONEOK shall, prior to the Closing Date,
subject to having obtained any and all necessary approvals and consents from
Governmental Authorities, (a) cause each of the Converting Companies to convert
from corporations into an Eligible Person under the laws of the jurisdiction in
which each is organized on the date of this Agreement (the
26
"Conversion Transactions") (and use its best efforts, after consulting with
Northern Border, to form such Eligible Person as instructed by Northern Border)
and (b) cause each of the Companies and Company Subsidiaries that is not on the
date hereof treated as a partnership or an entity disregarded from its owner for
United States federal income tax purposes to be so treated on or before the
Closing Date and (c) cause each such Company and Company Subsidiary described in
(a) or (b) above to be continuously treated as a partnership or a disregarded
entity from its owner for United States federal income tax purposes from the
date it becomes so treated through the Closing Date.
6.12 INTERIM FINANCIAL STATEMENTS. From time to time after the date hereof,
ONEOK will deliver to Northern Border copies of the monthly and quarterly
financial statements (which shall include a balance sheet and a statement of
income) for the Entities for all periods after the Balance Sheet Date through
and including the Closing Date (collectively, the "Interim Financial
Statements"). The Interim Financial Statements will be prepared on the same
basis as the Financial Statements and will present fairly in all material
respects the financial position, results of operations and cash flows of the
Entities as of such dates and for the periods then ended (subject to normal
year-end audit adjustments consistent with prior periods).
6.13 COOPERATION REGARDING AUDITS. ONEOK acknowledges and understands that
Northern Border may be required to obtain certain information relating to the
Entities including, but not limited to, audited or unaudited financial
statements of the Entities, and disclose such information in registration
statements and other documents filed with the Securities and Exchange Commission
under the federal securities laws or in disclosure documents given to investors
in certain securities offerings, including in connection with the third-party
financing required to satisfy Northern Border's obligations under Section 1.2 of
this Agreement. At Northern Border's cost, ONEOK agrees to use commercially
reasonable efforts to cooperate, and shall cause its Affiliates, accountants,
counsel and other agents and representatives to cooperate, with Northern Border
in connection therewith with respect to the Entities for periods prior to the
Closing, including the execution and delivery of any customary audit
representation letters, consents or comfort letters and representation letters
for such periods presented to ONEOK by Northern Border and its auditors for
execution in connection therewith.
SECTION 7. CONDITIONS TO CLOSING
7.1 CONDITIONS TO THE OBLIGATIONS OF ONEOK. The obligation of ONEOK to
consummate this Agreement and the transactions contemplated hereby is subject to
the fulfillment, prior to or at the Closing, of the following conditions
precedent unless waived by ONEOK in its sole discretion:
(a) Accuracy of Representations and Warranties. All representations
and warranties made by Northern Border herein and in any Related Agreement shall
be true and correct when made and on and as of the Closing, except for
representations and warranties that are made as of a specific date or time,
which shall be true and correct only as of such specific date or time, except
for such failures of such representations and warranties to be true and correct
(without giving effect to any limitation or qualification as to Northern Border
Material Adverse Effect or "materiality" (including the word "material") set
forth therein) as would not, individually or in the aggregate, have a material
adverse effect on the ability of Northern Border
27
to perform its obligations hereunder and consummate the transactions
contemplated hereby on the Closing Date.
(b) Compliance with Covenants. Northern Border shall have performed in
all material respects all obligations and agreements, and complied in all
material respects with all covenants, contained in this Agreement and any
Related Agreements to be performed or complied with by it prior to or on the
Closing.
(c) No Material Change. Since the date hereof, there shall not have
occurred any event, development or circumstance that, individually or in the
aggregate, has had or would reasonably be expected to have a Northern Border
Material Adverse Effect.
(d) Certificate from Officers. Northern Border shall have delivered to
ONEOK a certificate of Northern Border's Chief Financial and Accounting Officer
dated as of the Closing to the effect that the statements set forth in
paragraphs (a), (b) and (c) above in this Section 7.1 are true and correct.
(e) No Injunction. At the time of Closing there shall be no effective
injunction, writ or preliminary restraining order or any Governmental Order of
any nature issued by a Governmental Authority of competent jurisdiction to the
effect that the transactions contemplated by this Agreement may not be
consummated as herein provided, and no proceeding or lawsuit shall have been
commenced by any Governmental Authority or other Person for the purpose of
obtaining any such injunction, writ or preliminary restraining order.
(f) Xxxx-Xxxxx-Xxxxxx. All required filings under the HSR Act shall
have been completed and all applicable time limitations under such Act shall
have expired without a request for further information by the relevant
Governmental Authorities under such Act, or in the event of such a request for
further information, the expiration of all applicable time limitations under the
Act shall have occurred without the objection of such federal authorities.
(g) Governmental Approvals. The consent of (i) Kansas Corporation
Commission for transfer of Certificates of Convenience and Necessity and
transfer of tariffs related to Mid-Continent Marketing Center ("KCC Consent")
and (ii) Oklahoma Corporation Commission for the sale of ONEOK Gas
Transportation, L.L.C. ("OCC Consent"), shall have been obtained.
(h) Other Transactions. The transactions contemplated by the
Contribution Agreement by and among ONEOK, Northern Border and NBILP, dated
concurrently with this Agreement (the "Contribution Agreement"), the Purchase
and Sale Agreement between TransCan Northwest Border Ltd and Northern Plains
Natural Gas Company, LLC (the "GP Purchase Agreement") and the Partnership
Interest Purchase and Sale Agreement by and between NBILP and TC PipeLines
Intermediate Limited Partnership, dated February 14, 2006 (the "TransCanada
Agreement" and, together with the Contribution Agreement and the GP Purchase
Agreement, the "Other Transaction Agreements"), shall have been consummated on
the Closing Date (the transactions contemplated by the GP Purchase Agreement
shall be consummated immediately prior to the Closing and ONEOK or its
Affiliates shall, immediately following such consummation, own 100% of the
general partnership interests in Northern
28
Border, the transactions contemplated by the Contribution Agreement shall be
consummated simultaneously with the Closing and the transactions contemplated by
the TransCanada Agreement shall be consummated immediately following the
Closing).
(i) Amendment to Credit Facility. An amendment to each of (A) the
Credit Agreement dated as of September 17, 2004 by and among ONEOK, Bank of
America, N.A., and the financial institutions therein named as Lenders, as
amended, and (B) the Credit Agreement dated June 27, 2005 among ONEOK, Inc., as
Borrower, Citibank, N.A., as Administrative Agent, and the Lenders party
thereto, as amended, shall have been executed and delivered by the parties
thereto in form and substance reasonably satisfactory to ONEOK that permits
ONEOK to enter into and perform its obligations under this Agreement.
(j) Delivery of Deliverables. Each of the deliveries set forth in
Section 1.3(c) shall have been made.
7.2 CONDITIONS TO THE OBLIGATIONS OF NORTHERN BORDER. Northern Border's
obligation to consummate this Agreement and the transactions contemplated hereby
is subject to the fulfillment, prior to or at the Closing, of the following
conditions precedent unless waived by Northern Border in writing in its sole
discretion:
(a) Accuracy of Representations and Warranties. All representations
and warranties made by ONEOK herein and in any Related Agreement shall be true
and correct when made and on and as of the Closing, except for representations
and warranties that are made as of a specific date or time, which shall be true
and correct only as of such specific date or time; except for such failures of
such representations and warranties to be true and correct (without giving
effect to any limitation or qualification as to "materiality" (including the
word "material") or "Material Adverse Effect" set forth therein) as would not,
individually or in the aggregate, have a Material Adverse Effect.
(b) Compliance with Covenants. ONEOK shall have performed in all
material respects all obligations and agreements, and complied in all material
respects with all covenants, contained in this Agreement and any Related
Agreements to be performed or complied with by it prior to or on the Closing.
(c) No Material Change. Since the date hereof, there shall not have
occurred any event, development or circumstance with respect to ONEOK or the
Entities that, individually or in the aggregate, has had or would reasonably be
expected to have a Material Adverse Effect or a material adverse effect on the
ability of ONEOK to perform its obligations hereunder and consummate the
transactions contemplated hereby on the Closing Date.
(d) Certificate from Officers. ONEOK shall have delivered to Northern
Border a certificate of ONEOK's Chief Financial Officer dated as of the Closing
to the effect that the statements set forth in paragraphs (a), (b) and (c) above
in this Section 7.2 are true and correct.
(e) No Injunction. At the time of Closing there shall be no effective
injunction, writ or preliminary restraining order or any Governmental Order of
any nature issued by a Governmental Authority of competent jurisdiction to the
effect that the transactions
29
contemplated by this Agreement may not be consummated as herein provided, and no
proceeding or lawsuit shall have been commenced by any Governmental Authority or
other Person for the purpose of obtaining any such injunction, writ or
preliminary restraining order.
(f) Xxxx-Xxxxx-Xxxxxx. All required filings under the HSR Act shall
have been completed and all applicable time limitations under such Act shall
have expired without a request for further information by the relevant
Governmental Authorities under such Act, or in the event of such a request for
further information, the expiration of all applicable time limitations under the
Act shall have occurred without the objection of such federal authorities.
(g) Governmental Approvals. The KCC Consent and the OCC Consent shall
have been obtained.
(h) Other Transactions. The transactions contemplated by the Other
Transaction Agreements shall have been consummated on the Closing Date (the
transactions contemplated by the GP Purchase Agreement shall be consummated
immediately prior to the Closing and ONEOK or its Affiliates shall, immediately
following such consummation, own 100% of the general partner interests in
Northern Border, the transactions contemplated by the Contribution Agreement
shall be consummated simultaneously with the Closing and the transactions
contemplated by the TransCanada Agreement shall be consummated immediately
following the Closing).
(i) Conversion Transactions. The Conversion Transactions shall have
been completed in form and substance satisfactory to Northern Border.
(j) Funding. Northern Border shall have received the proceeds of the
financing contemplated by the Financing Commitments on substantially the same
terms and subject to the conditions set forth therein.
(k) Amendment of Certain Debt Agreements. Amendments to (i) that
certain Revolving Credit Agreement, dated as of May 16, 2005, by and among
Northern Border, the lenders named therein and Citibank, N.A., and (ii) that
certain Revolving Credit Agreement, dated as of May 16, 2005, by and among
Northern Border Pipeline Company, the lenders named therein, and Citibank N.A.,
(the "Northern Border Credit Agreements") that permit Northern Border to enter
into and consummate the transactions contemplated by the Northern Border
Transaction Agreements without violating the terms of, or causing a default
under, either such credit agreement, in the form attached hereto as Exhibit F
(the "Northern Border Credit Agreement Amendments"), shall have been executed
and delivered by the parties thereto.
(l) Delivery of Deliverables. Each of the deliveries set forth in
Section 1.3(b) shall have been made
(m) Waiver Under Viking Indenture. A waiver by the holders of a
majority of the principal amount of the notes outstanding under the Amended and
Restated Indenture Agreement dated as of November 30, 2004 the ("Viking
Indenture") between Viking Gas Transmission Company and Xxxxx Fargo Bank,
National Association, as Trustee as are reasonably necessary to permit Northern
Border to enter into and consummate the transaction
30
contemplated by the Northern Border Transaction Agreements without violating the
terms thereof or causing a default thereunder shall have been obtained.
SECTION 8. TERMINATION OF AGREEMENT; RIGHTS TO PROCEED
8.1 TERMINATION.
(a) This Agreement may be terminated on or prior to the Closing Date
only as follows:
(i) by mutual written consent of the Parties to this Agreement;
(ii) at the election of either ONEOK or Northern Border, if the
Closing shall not have occurred on or prior to June 30, 2006; provided that no
Party shall be entitled to terminate this Agreement pursuant to this Section
8.1(a)(ii) if such Party's failure to fulfill any obligation under this
Agreement has been the primary cause of the failure of the Closing to occur on
or before such date; and provided further that upon the occurrence of a request
for additional information being received from a Governmental Authority pursuant
to the HSR Act, such date shall be extended to September 30, 2006;
(iii) by either ONEOK or Northern Border, if a Governmental
Authority shall have issued an order, decree or ruling permanently restraining,
enjoining or otherwise prohibiting the transactions contemplated by this
Agreement, and such order, decree or ruling shall have become final and
nonappealable, provided that the terminating Party has satisfied its obligations
under Section 6 in response to actions or requests of such Governmental
Authority;
(iv) by ONEOK, if ONEOK is not in material breach of its
obligations under this Agreement and there has been a breach of any
representation, warranty, covenant, or agreement of Northern Border contained in
this Agreement such that any of the conditions set forth in Section 7.1 would
not be satisfied at or prior to the Closing, and, if such breach is of a
character that it is capable of being cured, such breach has not been cured by
Northern Border within 15 days after written notice thereof from ONEOK; or
(v) by Northern Border, if Northern Border is not in material
breach of its obligations under this Agreement and there has been a breach of
any representation, warranty, covenant, or agreement of ONEOK contained in this
Agreement such that any of the conditions set forth in Section 7.2 would not be
satisfied at or prior to the Closing, and, if such breach is of a character that
it is capable of being cured, such breach has not been cured by ONEOK within 15
days after written notice thereof from Northern Border.
(b) The termination of this Agreement shall be effectuated by the
delivery of a written notice of such termination from the party terminating this
Agreement to the other party.
8.2 EFFECT OF TERMINATION. All obligations of the parties hereunder shall
cease upon any termination pursuant to Section 8.1; provided, however, that (i)
the provisions of this Section 8, Section 6.1 (solely with respect to
confidentiality obligations) and Section 11 hereof shall survive any termination
of this Agreement, and (ii) nothing herein shall relieve any party
31
from any Liability for any intentional breach (including any "efficient breach")
of this Agreement or a failure to comply with any of its covenants, conditions
or agreements contained herein.
SECTION 9. INDEMNIFICATION
9.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES, ETC.
The representations and warranties of ONEOK and Northern Border
contained in this Agreement shall survive the Closing and expire on the second
anniversary of the Closing Date; provided, however, that (i) the representations
and warranties of ONEOK in Sections 2.1 (Organization and Authority of ONEOK),
2.2 (Organization, Authority and Qualification of the Entities), 2.3 (Capital of
Companies; Beneficial Ownership) and 2.4 (Subsidiaries) shall survive
indefinitely, (ii) the representations and warranties of ONEOK in Section 2.16
(Environmental Matters) shall survive the Closing and expire on the fourth
anniversary of the Closing Date, (iii) the representations and warranties of
ONEOK in Section 2.6 (Taxes) shall survive the Closing and expire on the 60th
day following the expiration of the applicable statute of limitations relating
thereto and (iv) the representations and warranties of Northern Border in
Section 3.1 (Organization and Authority of Northern Border) shall survive
indefinitely. No Northern Border Indemnitee shall be entitled to indemnification
for a breach of a representation or warranty under this Section 9 unless it
shall have given ONEOK written notice that it seeks indemnification (which
notice may be, in the case of third-party Claims, notice under Section 9.7) on
or before the expiration of such representation or warranty. No ONEOK Indemnitee
shall be entitled to indemnification for a breach of a representation or
warranty under this Section 9 unless it shall have given the Northern Border
written notice that it seeks indemnification (which notice may be, in the case
of third-party Claims, notice under Section 9.7) on or before the expiration of
such representation or warranty. Each notice delivered under the preceding two
sentences shall include a good faith estimate of the amount claimed and a
detailed description of the circumstances surrounding the Damages in respect of
which indemnification is claimed. The terms of this Agreement that by their
nature are intended to survive the Closing shall survive the Closing
indefinitely (or for their respective terms, if any).
9.2 INDEMNIFICATION.
(a) From and after the Closing, ONEOK shall hold harmless and
indemnify the Northern Border Indemnitees from and against, and shall compensate
and reimburse each of the Northern Border Indemnitees for, (i) any Damages which
are directly or indirectly suffered or incurred by any of the Northern Border
Indemnitees or to which any of the Northern Border Indemnitees may otherwise
become subject (regardless of whether or not such Damages relate to any
third-party Claim) as a result of, caused by or arising out of (including any
allegations by a third party): (A) other than in connection with Section 2.16 of
this Agreement (which is covered under Section 9.2(a)(ii) below), any inaccuracy
in or breach of any representation or warranty of ONEOK set forth in this
Agreement (without giving effect to any limitation or qualification as to
"materiality" (including the word "material" or "Material Adverse Effect")
contained or incorporated directly or indirectly in such representation or
warranty; or (B) any breach of any covenant or obligation of ONEOK under this
Agreement; or (ii) any Damages with respect to any inaccuracy in or breach of
any representation or warranty of ONEOK set forth in Section
32
2.16 of this Agreement (without giving effect to any limitation or qualification
as to "materiality" (including the word "material" or "Material Adverse Effect")
or the "Knowledge of ONEOK" contained or incorporated directly or indirectly in
such representation or warranty), in each case in this subsection (ii) except
for Damages that arise out of matters discovered by or on behalf of Northern
Border or its Subsidiaries as a result of a Phase II, Phase III or similar
environmental subsurface investigation undertaken voluntarily after Closing by
or on behalf of Northern Border or any of its Subsidiaries, including the
Entities, and except for remediation costs and expenses for matters which are
not required to be remediated under applicable law.
(b) From and after the Closing, Northern Border shall hold harmless
and indemnify the ONEOK Indemnitees from and against, and shall compensate and
reimburse each of the ONEOK Indemnitees for, any Damages which are directly or
indirectly suffered or incurred by any of the ONEOK Indemnitees or to which any
of the ONEOK Indemnitees may otherwise become subject (regardless of whether or
not such Damages relate to any third-party Claim) as a result of, caused by or
arising out of: (i) any inaccuracy in or breach of any representation or
warranty of Northern Border set forth in this Agreement (without giving effect
to any limitation or qualification as to "materiality" (including the word
"material" or "Northern Border Material Adverse Effect") contained or
incorporated directly or indirectly in such representation or warranty); or (ii)
any breach of any covenant or obligation of Northern Border under this
Agreement; provided, however, that no ONEOK Indemnitee shall have any claim or
recourse against Northern Border, and Northern Border shall have no obligation
to indemnify any ONEOK Indemnitee under the terms of this Agreement, with
respect to any breach by Northern Border of any representation or warranty of
Northern Border set forth in this Agreement if to the Knowledge of ONEOK,
Northern Border is in breach of any representation or warranty on the date
hereof. For purposes of this Section 9.2(b) only, the term "Knowledge of ONEOK"
shall include the actual knowledge of Xxxxx Xxxx.
(c) To the extent that ONEOK or its Affiliates (other than the
Entities) has the right to seek indemnification from third parties for the
benefit of the Entities or their assets, and the Entities are not entitled to
seek such indemnification on their own accord, ONEOK, upon Northern Border's
written request, shall assign such indemnification rights to Northern Border or,
if such rights cannot be assigned, assert (at Northern Border's cost) a claim
relating to such matter against such third party on behalf of the applicable
Entities, and provide to Northern Border all benefits of such indemnification
as, when and if provided by such third party. Notwithstanding the foregoing,
neither ONEOK nor its Affiliates shall be obligated to make any additional
payments or to take any action that would cause them to incur or be subject to
any additional liabilities or costs with respect to any actions taken under this
Section 9.2(c).
9.3 THRESHOLD; CAP.
(a) ONEOK shall not be required to make any indemnification payment in
respect of any claim or series of substantially related claims made pursuant to
Section 9.2(a) of this Agreement, or pursuant to Section 9.2(a)(i)(A) or (B) or
Section 9.2(a)(ii) of the Contribution Agreement, unless the amount of any
Damages that have been directly or indirectly suffered or incurred by any one or
more of the Northern Border Indemnitees or to which any one or more of the
Northern Border Indemnitees has or have otherwise become subject with respect to
such claim (or such substantially related claims) exceeds $100,000 (the "Minimum
Claim
33
Amount"). In addition, ONEOK shall not be required to make any indemnification
payment pursuant to Section 9.2(a) of this Agreement, or pursuant to Section
9.2(a)(i)(A) or (B) or Section 9.2(a)(ii) of the Contribution Agreement, until
such time as the total amount of all individual claims exceeding the Minimum
Claim Amount (such total amount, the "Aggregate Northern Border Damages")
exceeds $45,000,000 in the aggregate (the "Indemnity Threshold"). If the total
amount of such Aggregate Northern Border Damages exceeds the Indemnity
Threshold, then, subject to Section 9.3(b), the Northern Border Indemnitees
shall be entitled to be indemnified against and compensated and reimbursed for
all Aggregate Northern Border Damages in excess of the Indemnity Threshold.
Northern Border shall not be required to make any indemnification payment in
respect of any claim (or series of substantially related claims) made pursuant
to Section 9.2(b) of this Agreement or pursuant to Section 9.2(b) of the
Contribution Agreement unless the amount of any Damages that have been directly
or indirectly suffered or incurred by any one or more of the ONEOK Indemnitees
or to which any one or more of the ONEOK Indemnitees has or have otherwise
become subject with respect to such claim (or such substantially related claims)
exceeds the Minimum Claim Amount. In addition, Northern Border shall not be
required to make any indemnification payment pursuant to Section 9.2(b) of this
Agreement or pursuant to Section 9.2(b) of the Contribution Agreement until such
time as the total amount of all individual claims exceeding the Minimum Claim
Amount (such total amount, the "Aggregate ONEOK Damages") exceeds the Indemnity
Threshold. If the total amount of such Aggregate ONEOK Damages exceeds the
Indemnity Threshold, then, subject to Section 9.3(b), the Northern Border
Indemnitees shall be entitled to be indemnified against and compensated and
reimbursed for all Aggregate ONEOK Damages in excess of the Indemnity Threshold.
(b) The maximum liability of ONEOK under Section 9.2(a) of this
Agreement and under Section 9.2(a)(i)(A) or (B) or Section 9.2(a)(ii) of the of
the Contribution Agreement, taken in the aggregate, shall be $360,000,000 (the
"ONEOK Indemnity Cap"). The maximum liability of Northern Border under Section
9.2(b) of this Agreement and of both NBP and NBILP under Section 9.2(b) of the
Contribution Agreement, taken in the aggregate, shall be $198,000,000 (the
"Northern Border Indemnity Cap").
(c) The limitations set forth in Section 9.3(a) and Section 9.3(b)
shall not apply to any of the matters described in Sections 1.4 (Working Capital
Adjustment), 2.1 (Organization and Authority of ONEOK), 2.2 (Organization,
Authority and Qualification of the Entities), 2.3 (Capital of Companies;
Beneficial Ownership), 2.4 (Subsidiaries) and 3.1 (Organization and Authority of
Northern Border).
9.4 EXCLUSIVE REMEDY; SOLE RECOURSE. With the exception of claims based
upon fraud or intentional misrepresentation, from and after the Closing, the
indemnification provisions set forth in this Section 9 and the Tax
indemnification provisions set forth in Section 10.6 shall be the sole and
exclusive remedy of both the Northern Border Indemnitees and the ONEOK
Indemnitees for Damages under this Agreement (it being understood that nothing
in this Section 9.4 or elsewhere in this Agreement shall affect the Parties'
rights to specific performance or other equitable remedies with respect to the
covenants referred to in this Agreement to be performed after the Closing).
34
9.5 NO CONTRIBUTION. ONEOK shall not have and shall not exercise or assert
(or attempt to exercise or assert), any right of contribution, right of
indemnity or other right or remedy against any Entity in connection with any
indemnification obligation or any other Liability to which it may become subject
under or in connection with this Agreement.
9.6 SETOFF. Notwithstanding anything herein to the contrary, Damages shall
be calculated net of any insurance or indemnification proceeds and Tax Benefits
actually received by an Indemnitee or its Affiliates in connection with the
facts giving rise to the right of indemnification (net of any fees, costs or
expenses incurred in enforcing such Indemnitee's rights to recover such
insurance proceeds).
9.7 THIRD PARTY CLAIMS.
(a) Upon receipt by any Person seeking to be indemnified pursuant to
Section 9.2 (the "Indemnitee") of notice of any third-party claim, (each a
"Claim") against it which has or is expected to give rise to a claim for
Damages, the Indemnitee shall give prompt written notice thereof to the Person
from which it seeks to be indemnified (the "Indemnitor"), indicating the nature
of such Claim and the basis therefor; provided, however, that any delay or
failure by the Indemnitee to give notice to the Indemnitor shall relieve the
Indemnitor of its obligations hereunder only to the extent, if at all, that it
is materially prejudiced by reason of such delay or failure.
(b) The Indemnitor shall have 30 days (or such shorter period as may
be required by applicable Legal Requirements) after receipt of the Indemnitee's
notice to elect, at its option, to assume the defense of, at its own expense and
by its own counsel, any such Claim. If the Indemnitor desires to undertake to
defend any such Claim, it shall promptly notify the Indemnitee of its intention
to do so. Notwithstanding an election by the Indemnitor to assume the defense of
such Claim, (i) the Indemnitee shall have the right to employ separate counsel
and to participate in the defense of such Claim, and the Indemnitor shall bear
the reasonable fees, costs and expenses of such separate counsel if (A) the
Indemnitee shall have determined in good faith that an actual or potential
conflict of interest makes representation by the same counsel or the counsel
selected by the Indemnitor inappropriate, (B) the Indemnitee shall have
determined in good faith that the Damages in respect of such Claim may exceed
the remaining balance of the applicable Indemnity Cap, or (C) the Indemnitor
shall have authorized the Indemnitee to employ separate counsel at the
Indemnitor's expense, and (ii) the Indemnitee shall have the right at any time
after the Indemnitor assumes the defense of such Claim to assume the defense of
such Claim if (y) the Indemnitor subsequently determines that it does not
believe the Claim is one for which the Indemnitee is entitled to
indemnification, compensation or reimbursement under this Section 9.7 and
requests that the Indemnitee assume the defense of such Claim (in which case the
Indemnitee may, but shall not be obligated to, retain the legal counsel
previously retained by the Indemnitor to assist in the defense of such Claim) or
(z) any Damages in respect of such Claim are reasonably likely to exceed the
remaining balance of the applicable Indemnity Cap available to such Indemnitee
(in which case the Indemnitor shall bear the reasonable fees, costs and expenses
of Indemnitee's counsel, subject to the applicable Indemnity Cap, as
applicable). The Indemnitee and Indemnitor and their counsel shall cooperate
fully in the compromise or defense of any Claim subject to this Section 9.7 and
keep one another informed of all developments relating to any such Claims, and
provide copies of all relevant correspondence and
35
documentation relating thereto. If an Indemnitor receiving a notice of Claim
does not elect to defend such Claim within the time period referred to above,
the Indemnitee shall have the right, in addition to any other right or remedy it
may have hereunder, at the Indemnitor's expense, subject to the Indemnity Cap,
as applicable, to defend such Claim. The Indemnitee's defense of, or
participation in the defense of, any such Claim shall not in any way diminish or
lessen the obligations of the Indemnitor under this Section 9.7. In no event may
an Indemnitor or an Indemnitee settle or compromise any Claim without the
consent of the other (which consent will not be unreasonably withheld,
conditioned or delayed); provided, however, that an Indemnitor may settle or
compromise a claim without the consent of the Indemnitee so long as (i) the
relief consists solely of money damages in an amount greater than the Indemnity
Threshold and less than the remaining balance of the applicable Indemnity Cap
with respect to the Indemnitor and includes a provision whereby the plaintiff or
claimant in the matter releases the Indemnitor and the Indemnitee from all
liability with respect thereto, and (ii) such Indemnitor acknowledges the
Indemnitee is entitled to indemnification, compensation and reimbursement under
this Section 9.7). If remediation is required in connection with any Claims for
which the Northern Border Indemnitees are entitled to indemnification under
Section 9.2(a)(ii) above, ONEOK shall have the right to conduct, control and
direct such remediation; provided, however, that any remediation activities
undertaken by ONEOK shall be conducted (i) in compliance with all applicable
Legal Requirements and any health and safety plan or other reasonable plans or
guidelines imposed by Northern Border on Persons entering its properties, and
(ii) in a manner that minimizes any short or long-term interference with
Northern Border's operations. ONEOK shall consult with Northern Border in its
determination of the appropriate remediation standard to which remediation will
be performed, and any institutional controls that ONEOK intends to employ to
meet such remediation standard.
SECTION 10. TAX MATTERS
10.1 RETENTION OF RECORDS. Each of Northern Border and ONEOK shall retain,
and Northern Border shall cause each of the Entities to retain, all Tax Records
in its possession for all open Tax Periods ending on or before or including the
Closing Date, until 6 months following the expiration of the statute of
limitations (and any extensions thereof) of the respective Tax Periods. "Tax
Records" means any Tax Return, Tax Return workpapers, documentation relating to
any Audit, and any other books of account or records (whether on paper, computer
disk or any other medium) required or advisable to be maintained under the
applicable Tax law or under any record retention agreement with any Tax
Authority.
10.2 COOPERATION. Northern Border and ONEOK covenant and agree that
subsequent to the Closing, upon reasonable notice and during normal business
hours, they and their Affiliates will (i) give the other Party and its
Representatives information, books and records (or copies thereof) relevant to
the Entities, to the extent necessary to enable the other Party to prepare its
Tax Returns (and any Tax Returns for which it has preparation or filing
responsibility hereunder) or determine the amount of any refund, credit or other
amount the amount of which the requesting Party may be entitled to receive
pursuant to this Agreement, and (ii) provide the other Party and its
Representatives with such information, books and records (or copies thereof) as
may reasonably be requested in connection with any Tax Return, inquiry,
election, Audit or other examination by any Tax Authority, or judicial or
administrative proceedings relating to liability for Taxes. ONEOK and Northern
Border also shall make
36
available to each other, as reasonably requested, and at the expense of the
requesting Party, knowledgeable employees or advisors of the Party or its
Affiliates of which the request is made and personnel responsible for preparing
and maintaining information, books, records and documents in connection with Tax
filings, Audits, disputes or litigation. Notwithstanding the foregoing or any
other provision in this Agreement, neither Northern Border nor the Entities (or
any Affiliates of either) shall have the right to receive or obtain any
information relating to Taxes of ONEOK, any of its Affiliates, or any of its
predecessors other than information relating solely to or otherwise affecting
the calculation of Taxes of or attributable to the Entities or any of their
subsidiaries. Northern Border and ONEOK each agree, upon request, to use their
reasonable efforts to obtain any certificate or other document from any Tax
Authority or any other Person as may be necessary to mitigate, reduce or
eliminate any Tax that could be imposed with respect to the transactions
contemplated by this Agreement.
10.3 TRANSFER TAXES. All transfer, documentary, recording, notarial, sales,
use, registration, stamp and other similar taxes, fees and expenses (including,
but not limited to, all applicable stock transfer, real estate transfer or gains
Taxes and including any penalties, interest and additions to such tax) incurred
in connection with this Agreement and the transactions contemplated hereby shall
be borne by ONEOK. Northern Border and ONEOK shall cooperate in timely making
and filing all Tax Returns as may be required to comply with the provisions of
laws relating to such Transfer Taxes.
10.4 TAX RETURNS.
(a) ONEOK shall prepare (or cause to be prepared) and timely file all
Tax Returns required to be filed with any Tax Authority with respect to the
Entities for all Tax Periods ending on or before the Closing Date and shall pay
all Taxes (in excess of any applicable accruals therefor included within the
calculation of Final Closing Working Capital) due with respect to such Tax
Returns. Northern Border shall timely pay all Taxes due with respect to such Tax
Returns to the extent of any applicable accruals included within the calculation
of Final Closing Working Capital. ONEOK shall provide Northern Border with
drafts of such Tax Returns at least 10 days prior to the due date for filing
such Tax Returns (taking into account extensions) for Northern Border's review
and comment; provided that in the case of a Tax Return which is a Consolidated
Return, ONEOK shall only be required to provide the portions of such
Consolidated Return relating solely to the income, gain, loss and deduction of
the Entities. The final form of any such Tax Return required to be provided to
Northern Border (and the portion of any such Consolidated Return relating solely
to the Entities), pursuant to the preceding sentence, shall be subject to
Northern Border's prior written consent, which shall not be unreasonably
withheld; provided that Northern Border shall not withhold consent to the filing
of any such Tax Return if such Tax Return (or in the case of a Consolidated
Return the portion thereof relating to the Entities) is prepared in a manner
consistent with Section 10.4(c) of this Agreement and the treatment of any items
that are not covered by past practice would not have an adverse effect on the
Taxes of the Entities for any period beginning on or after the Closing Date or
the portion of any Straddle Period (as defined below) that is Northern Border's
responsibility. In the case of any Tax Return required to be filed by ONEOK
pursuant to this Section 10.4(a) after the Closing Date, Northern Border shall
arrange for the signing of such Tax Returns or shall provide ONEOK with such
powers or attorney or other authorization, in each case as may be necessary to
effect such filings in accordance with applicable Tax Law.
37
(b) Northern Border shall prepare (or cause to be prepared) and timely
file all Tax Returns for all Tax Periods ending after the Closing Date,
including all Tax Returns for periods which include but do not end on the
Closing Date ("Straddle Periods") (the "Northern Border Returns"). If ONEOK is
responsible under Section 10.5 of this Agreement for any Taxes due with respect
to a Northern Border Return, Northern Border shall provide ONEOK with a
substantially final draft of each such Tax Return at least 10 days prior to the
due date for filing such Tax Returns (taking into account extensions) for
ONEOK's review and comment and the final form for any such Northern Border
Returns shall be subject to ONEOK's prior written consent, which shall not be
unreasonably withheld; provided however, that ONEOK shall not withhold consent
if such Tax Return is prepared in a manner consistent with Section 10.4(c) of
this Agreement and the treatment of any items that are not covered by past
practice would not have a material adverse effect on the Tax liabilities of
ONEOK or the Entities for any Pre-Closing Period. Northern Border shall timely
pay all Taxes due with respect to such Returns and ONEOK shall promptly
reimburse Northern Border for any such Taxes which are its responsibility
pursuant to Section 10.5 of this Agreement.
(c) Except as otherwise agreed by the parties, any Tax Return that
includes any of the Entities' assets or activities for any Pre-Closing Period
shall be prepared in accordance with ONEOK's past Tax accounting practices used
with respect to the Tax Returns in question (unless the party responsible for
preparing the Tax Return determines that the past practices are no longer
permissible under the Code or other applicable Tax law), and to the extent any
items are not covered by past practices (or in the event such past practices are
no longer permissible under the Code or other applicable Tax law), in accordance
with reasonable Tax accounting practices selected by the party responsible for
preparing the Tax Return. In the case of any Tax Return for an Entity for any
Straddle Period, any income, gain, loss and deduction shall be allocated based
on a closing of the books method or such other method as may be agreed upon in
writing by the parties.
(d) As part of the Services Agreement between ONEOK and Northern
Border, ONEOK shall provide certain Tax Return filing assistance and other Tax
assistance relating to the Taxes of the Entities in respect of periods ending
after the Closing Date.
10.5 ALLOCATION OF TAXES.
(a) Allocation of Straddle Period Taxes. Northern Border and ONEOK
shall, to the extent permitted by applicable Tax Law and except as otherwise
provided herein, elect with the relevant Tax Authority to close the Tax Period
of the Entities as of and including the Closing Date. Subject to the preceding
sentence, in the case of Taxes attributable to the Entities that are payable
with respect to any Straddle Period the portion of any such Taxes that are
allocable to the portion of the Straddle Period ending on the Closing Date
shall: (1) in the case of Taxes that are either (A) based upon or related to
income or receipts or (B) imposed in connection with any sale, transfer or
assignment of property (real or personal, tangible or intangible) be deemed
equal to the amount that would be payable if the Tax year ended on and included
the Closing Date and (2) in the case of Taxes (other than those described in
clause (i)) imposed on a period basis with respect to the business or assets of
the Entities or otherwise measured by the level of any item, be deemed to be the
amount of such Taxes for the entire Straddle Period (or, in the case of such
Taxes determined on an arrears basis, the amount of such
38
Taxes for the immediately preceding Tax Period) multiplied by a fraction the
numerator of which is the number of calendar days in the portion of the Straddle
Period ending on and including the Closing Date and the denominator of which is
the number of calendar days in the entire Straddle Period (the "Part-Year
Fraction"). For purposes of clause (1) of the preceding sentence, any exemption,
deduction, credit or other item that is calculated on an annual basis shall be
allocated to the portion of the Straddle Period ending on the Closing Date on a
pro rata basis determined by multiplying the total amount of such item allocated
to the Straddle Period times the Part-Year Fraction. In the case of any Tax
based upon or measured by capital (including net worth or long-term debt) or
intangibles, any amount thereof required to be allocated under this Section
10.5(a) shall be computed by reference to the level of such items on the Closing
Date. ONEOK shall be responsible for and shall pay any Taxes (in excess of any
applicable accruals therefor included within the calculation of Final Closing
Working Capital) allocable to the portion of the Straddle Period ending on the
Closing Date and Northern Border shall be responsible for and shall pay any
Taxes allocable to the portion of the Straddle Period after the Closing Date.
(b) Post-Closing Tax Periods. From and after the Closing Date, for the
portion of any Straddle Period that begins on the day after the Closing Date and
any other Tax Period beginning after the Closing Date, without duplication of
any amount otherwise payable by Northern Border pursuant to this Agreement,
Northern Border shall be responsible and pay, or cause the Entities to pay, to
the appropriate Tax Authority any other Taxes due with respect to the Entities
for any such period.
(c) Ad Valorem Taxes. Notwithstanding the foregoing, all ad valorem
taxes (other than production, severance and similar Taxes measured by the
quantity of or the value of production) related to the 2006 ad valorem tax year
shall be pro-rated based on the number of days during the 2006 ad valorem tax
year falling before and falling on or after the Closing Date. ONEOK will pay to
Northern Border at Closing an amount equal to the portion of the 2006 ad valorem
taxes allocated to it pursuant to this paragraph (to the extent such allocated
amounts exceed any applicable accruals therefor included within the calculation
of Final Closing Working Capital). ONEOK shall not be liable for any ad valorem
taxes for the period following the Closing. Northern Border assumes full
responsibility for filing all ad valorem renditions and tax returns in all
applicable tax jurisdictions due after the Closing Date. ONEOK will, upon
request from Northern Border, provide reasonably requested historical
documentation of prior year filings related to ad valorem taxes to help
facilitate Northern Border's correct filing of ad valorem renditions and tax
returns. ONEOK assumes full responsibility for filing all ad valorem taxes
through the Closing Date.
10.6 TAX INDEMNITY.
(a) ONEOK's Indemnity for Taxes for Pre-Closing Date Periods.
Notwithstanding any of the provisions of Section 9, from and after the Closing
Date, without duplication of any amount otherwise payable by ONEOK pursuant to
this Agreement, ONEOK shall indemnify Northern Border and its respective
Affiliates against:
(i) all Taxes (in excess of any applicable accruals therefor
included within the calculation of Final Closing Working Capital) imposed or
payable by the Entities with
39
respect to Tax Periods ending on or before the Closing Date and the portion of
any Straddle Periods ending on the Closing Date (each such period a "Pre-Closing
Taxable Period");
(ii) all Taxes that are imposed or payable by the Entities that
are attributable to (A) any termination of the Entities under Code Section 708
caused by the transactions contemplated herein, or (B) ONEOK or any member of an
Affiliated, consolidated, combined or unitary Tax group of which the Entities
are or were members prior to the Closing Date (other than any Taxes of the
Entities) that is imposed under Treasury Regulation Section 1.1502-6 (or any
similar provision of state, local or foreign law) by reason of such Entities
being included in any such Affiliated, consolidated, combined or unitary Tax
group; and
(iii) any payments (in excess of any applicable accruals therefor
included within the calculation of Final Closing Working Capital) owed by the
Entities to any third party (other than a Governmental Authority) under a tax
sharing or other contractual agreement with respect to Taxes of the Entity
accruing on or before the Closing Date.
(b) Northern Border Indemnity for Taxes for Post-Closing Tax Periods.
Notwithstanding any of the provisions of Section 9, from and after the Closing
Date, without duplication of any amount otherwise payable by Northern Border
pursuant to this Agreement, Northern Border shall indemnify ONEOK and its
respective Affiliates against all Taxes imposed on or payable by Northern Border
or the Entities relating to any Tax Period or portion thereof that begins after
the Closing Date, including the portion of the Straddle Period beginning
immediately after the Closing Date and including any Taxes accruing after the
Closing Date.
(c) Payments. Payment by the indemnitor of any amount due under this
Section 10.6 shall be made within 10 days following written notice by the
indemnitee that payment of such amounts to the appropriate Tax Authority is due,
such written notice to reasonably demonstrate that the indemnitee is entitled to
such payment under the terms of this Agreement.
(d) Tax Refunds. If Northern Border or any of its Affiliates
(including, for this purpose, the Entities after the Closing Date) receives a
refund of Taxes of the Entities with respect to a Pre-Closing Taxable Period
(including any interest thereon), or in lieu thereof a credit against Taxes,
Northern Border shall pay (or cause the Entities to pay) to ONEOK the amount of
such Tax refund or credit (net of any costs or expenses incurred by Northern
Border or the Entities in obtaining the Tax refund or credit). Such payment
shall be made promptly following the receipt of such Tax refund or credit by
Northern Border or any of its Affiliates. In addition, if the payments made (or
deemed made) by or on behalf of the Entities with respect to the Pre-Closing
Taxable Period portion of the Straddle Period exceed the Taxes due with respect
to such portion of the Straddle Period, Northern Border shall cause the Entities
to pay to ONEOK such excess within 10 days following the filing of the relevant
Tax Return with respect to such Straddle Period. ONEOK shall have the sole
right, at its expense, to pursue any Tax refunds with respect to Tax periods
ending on or before the Closing Date.
10.7 CONTESTS.
40
(a) Notices. After the Closing Date, Northern Border and ONEOK each
shall notify the other in writing within 5 business days of receipt of any
notice of the commencement of any Tax audit or administrative or judicial
proceeding relating to the Taxes of any of the Entities ("Tax Controversy") in
respect to Pre-Closing Taxable Periods or the Straddle Periods, the outcome of
which may affect the Tax liabilities or indemnification obligations under this
Agreement of the other party ("Tax Indemnitor"). Such notice shall include
copies of any notice or other document received from any Tax Authority in
respect of such audit or other proceeding. If either Northern Border or ONEOK
fail to give the other party prompt notice as required under this Agreement,
then (i) if the failure of a party to give such notice precludes the Tax
Indemnitor from contesting an asserted Tax liability in any administrative or
judicial forums, then the Tax Indemnitor shall not have any obligation to
indemnify under this Agreement for any loss or damage arising out of such
asserted Tax liability, and (ii) if the Tax Indemnitor is not so precluded from
contesting an asserted Tax liability, but such failure to give prompt notice
results in a detriment to the Tax Indemnitor, then any amount which the Tax
Indemnitor is otherwise required to pay pursuant to this Agreement with respect
to such liability shall be reduced by the amount of such detriment.
(b) Control of Contests. ONEOK shall control the defense and
settlement of any Tax Controversy involving any asserted liability for Taxes
imposed with respect to the Entities relating to Tax Periods that end on or
before the Closing Date for which ONEOK is responsible pursuant to this Section
10. Northern Border shall control the defense and settlement of any Tax
Controversy involving any asserted liability for Taxes imposed with respect to
the Entities relating to Tax Periods that end after the Closing Date.
(c) Procedures. If the resolution of any Tax Controversy would be
grounds for indemnification under this Agreement (including, for this purpose,
as a result of altering the Tax Period in which items of income, gain, loss,
deduction or credit are reported) by the party not in control of the conduct of
such Tax Controversy (the "Non-Controlling Party") or otherwise adversely affect
the Tax liability of the Non-Controlling Party, (i) the party in control of such
Tax Controversy (the "Controlling Party") shall keep the Non-Controlling Party
fully informed of any proceedings, events, and developments relating to or in
connection with such Tax Controversy; (ii) the Non-Controlling Party shall be
entitled to receive copies of all correspondence and documents relating to such
Tax Controversy; (iii) the Controlling Party shall consult with the
Non-Controlling Party and shall not enter into any settlement with respect to
any such Tax Controversy without the Non-Controlling Party's prior written
consent, such consent not to be unreasonably withheld, conditioned or delayed;
and (iv) at its own cost and expense, the Non-Controlling Party shall have the
right to participate (but not control) the defense of such Tax Controversy;
provided however, that clauses (i) through (iv) shall apply only in respect of
the portion of such Tax Controversy, correspondence and documents that relate
solely to the Entities.
10.8 AMENDED TAX RETURNS. ONEOK shall not, without the prior written
consent of Northern Border (which consent shall not be unreasonably withheld,
conditioned or delayed), file any amended Tax Return or claim for Tax refund
filed or required to be filed hereunder to be filed by ONEOK to the extent such
filing, if accepted, could be reasonably expected to have an adverse effect on
the Tax liability of Northern Border, its Affiliates or any Entity or any of the
41
Entities for any Tax Period after the Closing; provided that no such consent
shall be required for any amended return or claim for Tax refund resulting from
an audit adjustment.
10.9 MISCELLANEOUS.
(a) Character of Payments. Any payment made by ONEOK, Northern Border,
or any of their respective Subsidiaries (including the Entities) under this
Section 10 shall constitute an adjustment to the Purchase Price for all tax
purposes.
(b) Interest on Payments. To the extent any payment obligation under
this Section 10 or Article 9 is not made on a timely basis (as determined by the
relevant provision of this Section 10 or the relevant provision of Article 9),
the amount due and payable shall bear interest at a floating annual rate equal
to the annual prime lending rate of The Chase Manhattan Bank in effect, from
time to time, from the last date such payment would be timely under the relevant
provision of this Section 10 or Article 9, as applicable, to the date of the
payment of such amount.
(c) Survival of Tax Claims. Notwithstanding any other provision of
this Agreement to the contrary, any obligations of the parties pursuant to this
Section 10 shall be unconditional and absolute and shall survive until the
expiration of 6 months after the applicable statute of limitations (taking into
account any applicable extensions or tollings thereof) relating to the Taxes at
issue.
10.10 ALLOCATION OF THE PURCHASE PRICE.
(a) Within one hundred twenty (120) days following the Closing Date,
ONEOK will prepare, or cause to be prepared, and delivered to Northern Border a
statement of the fair market value of the interests in each of the Entities
acquired pursuant to this Agreement, with the aggregate of the Entity fair
market values equaling the fair market value of the consideration provided in
Section 1.2 of this Agreement. In addition, in the case of any Entities which
are taxable as disregarded entities federal income tax, the statement shall also
include a statement of the fair market value of the assets of each of such
Entities (such statement, together with the Entity fair market schedule, the
"FMV Schedules"). The FMV Schedules as so prepared by ONEOK shall be deemed
accepted by Northern Border, unless Northern Border shall send ONEOK a written
objection thereto within thirty (30) days following the Northern Border's
receipt thereof. In the event that Northern Border delivers a timely written
objection as aforesaid and Northern Border and ONEOK are unable to resolve such
objection within twenty (20) business days after Northern Border is notified of
ONEOK's objection, the matters in dispute shall be submitted for final and
binding determination to the Neutral Auditors. The FMV Schedules as proposed by
ONEOK, shall be adjusted to reflect the resolution of any timely objections made
thereto by Northern Border in accordance with this Section 10.9 and the
determinations of the Neutral Auditors, which determinations will be binding
absent manifest error or fraud. Northern Border and ONEOK shall each pay their
own expenses of preparing and analyzing the schedules and resolving objections
thereto; provided that the cost of any appraisals required to prepare the FMV
Schedule shall be borne 50 percent by Northern Border and 50 percent by ONEOK.
The fees and expenses of the Neutral Auditors used to resolve objections to the
schedules will be borne equally by Northern Border and ONEOK.
42
(b) Each party agrees that it shall not take any position that varies
from or is inconsistent with such valuation in any filing made by such party
with the IRS or any other taxing authority, except to the extent an adjustment
is required by the IRS or any other taxing authority.
SECTION 11. MISCELLANEOUS
11.1 FEES AND EXPENSES. Each of the parties will bear its own expenses in
connection with the negotiation and the consummation of the transactions
contemplated by this Agreement.
11.2 GOVERNING LAW. This Agreement shall be construed under and governed by
the internal laws of the State of Delaware without regard to its conflict of
laws provisions.
11.3 NOTICES. All notices and other communications between the Parties
shall be in writing and shall be deemed to have been duly given (i) when
delivered in person or by overnight delivery service, (ii) 3 days after posting
in the United States mail having been sent registered or certified mail return
receipt requested, or (iii) upon receipt when delivered by facsimile
transmission, in each case, to the addresses set forth below (or to such other
address or addresses as the Parties may designate from time to time in writing):
TO ONEOK:
ONEOK, Inc.
000 X. 0xx Xxxxxx, Xxxxx 0000
Xxxxx, XX 00000
Attention: President
Facsimile: (000) 000-0000
with copies to (which shall not constitute notice):
ONEOK, Inc.
000 X. 0xx Xxxxxx, Xxxxx 0000
Xxxxx, XX 00000
Attention: General Counsel
Facsimile: (000) 000-0000
and to:
Xxxxx & Xxxxxxx
000 X. 0xx Xxxxxx, Xxxxx 0000
Xxxxx, XX 00000-0000
Attention: Xxxxxxx X. Lake
Facsimile: (000) 000-0000
43
TO NORTHERN BORDER:
Northern Border Partners, L.P.
00000 XXX Xxxxxxx
Xxxxx, XX 00000-0000
Attention: Chief Executive Officer
Facsimile: (000) 000-0000
with copies to (which shall not constitute notice):
Northern Border Partners, L.P.
00000 XXX Xxxxxxx
Xxxxx, XX 00000-0000
Attention: Xxxxx Place
Facsimile: (000) 000-0000
Xxxxx Liddell & Xxxx LLP
600 Xxxxxx, 0000 XXXxxxxx Xxxxx Xxxxx
Xxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx
Facsimile: (000) 000-0000
and with a copy to (prior to the Closing):
Xxxxx Xxxxx L.L.P.
000 Xxxxxxxxx
Xxxxxxx, Xxxxx 00000-0000
Attention: R. Xxxx Xxxxxxx
Facsimile: (000) 000-0000
Any notice given hereunder may be given on behalf of any party by his
counsel or other authorized representatives.
11.4 ENTIRE AGREEMENT. This Agreement together with the Related Agreements,
including the Schedules and Exhibits referred to herein and therein and the
other writings specifically identified herein and therein (including the
Confidentiality Agreement) or contemplated hereby, is complete, reflects the
entire agreement of the Parties with respect to its subject matter, and
supersedes all previous written or oral negotiations, commitments and writings.
No promises, representations, understandings, warranties and agreements have
been made by any of the Parties hereto except as referred to herein or therein
or in such Schedules and Exhibits or in such other writings and all inducements
to the making of this Agreement relied upon by either Party hereto have been
expressed herein or in such Schedules or Exhibits or in such other writings.
11.5 ASSIGNABILITY; BINDING EFFECT. This Agreement may not be assigned by
ONEOK or Northern Border without the prior written consent of the other parties
to this Agreement. This Agreement shall be binding upon and enforceable by, and
shall inure to the benefit of, the Parties hereto and their respective
successors and permitted assigns.
44
11.6 CAPTIONS AND GENDER. The captions in this Agreement are for
convenience only and shall not affect the construction or interpretation of any
term or provision hereof. The use in this Agreement of the masculine pronoun in
reference to a Party hereto shall be deemed to include the feminine or neuter,
as the context may require.
11.7 EXECUTION IN COUNTERPARTS. For the convenience of the Parties and to
facilitate execution, this Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same document.
11.8 AMENDMENTS. This Agreement may not be amended or modified, nor may
compliance with any condition or covenant set forth herein be waived, except by
a writing duly and validly executed by both Northern Border and ONEOK, or in the
case of a waiver, the Party waiving compliance.
11.9 PUBLICITY AND DISCLOSURES. No press releases or public disclosure,
either written or oral, of the transactions contemplated by this Agreement shall
be made by a Party to this Agreement without the written consent of ONEOK and
Northern Border.
11.10 SEVERABILITY. The Parties agree that, in the event that any provision
of this Agreement or the application of any such provision to any Party is held
by a court of competent jurisdiction to be contrary to law, the provision in
question shall be construed so as to be lawful and the remaining provisions of
this Agreement shall remain in full force and effect.
11.11 WAIVER OF JURY TRIAL. Each of the parties hereto hereby waives to the
fullest extent permitted by applicable law any right it may have to a trial by
jury with respect to any Legal Proceeding directly or indirectly arising out of,
under or in connection with this Agreement or the transactions contemplated by
this Agreement.
11.12 ARBITRATION. All disputes arising out of or in connection with this
Agreement and the transactions contemplated hereby and thereby, which cannot be
resolved through the procedures described herein or therein shall be finally
resolved solely and exclusively by means of arbitration under the then-current
rules for non-administered arbitration of the International Institute for
Conflict Prevention and Resolution ("CPR Rules") to be conducted in English in
the City of Tulsa. The arbitration shall be conducted by a panel of three (3)
arbitrators appointed by agreement of the Parties, or failing such agreement,
under the CPR Rules, provided that any arbitrator selected shall be a retired
federal judge of a court within the jurisdiction of the United States. The
arbitration will proceed in accordance with the CPR Rules. The decision of the
arbitrators shall be final, conclusive, and binding upon the Parties, and a
judgment upon the award may be obtained and entered in any federal or state
court of competent jurisdiction. The Parties agree that any arbitration shall be
kept confidential and any element of such arbitration (including but not limited
to any pleadings, briefs or other documents submitted or exchanged, any
testimony or other oral submissions, and any awards) shall not be disclosed
beyond the arbitral tribunal, the Parties, their counsel and any persons
necessary to conduct the arbitration, except as may be required in recognition
and enforcement proceedings, if any, or in order to satisfy disclosure
obligations imposed by any applicable law. The Parties agree to cooperate in
providing each other with all discovery, including but not limited to the
exchange of documents and depositions of Parties and non-Parties, reasonably
related to the issues in the arbitration. If
45
the Parties are unable to agree on any matter relating to such discovery, any
such difference shall be determined by the arbitrators. The award of the
arbitrators shall be final and binding upon the Parties, and shall not be
subject to any appeal or review. The Parties agree that such award may be
recognized and enforced in any court of competent jurisdiction. The Parties also
agree to submit to the non-exclusive personal jurisdiction of the federal and
state courts sitting in Oklahoma, for the limited purpose of enforcing this
arbitration agreement (including, where appropriate, issuing injunctive relief)
or any award resulting from arbitration pursuant to this Section 11.12. The
Parties agree that except in the case of fraud the arbitration proceeding
described in this Section 11.12 is the sole and exclusive manner in which the
Parties may resolve disputes arising out of or in connection with this
Agreement. The arbitrators have the discretion to grant the prevailing Party in
any arbitration attorneys' fees and costs and make the non-prevailing Party
responsible for all expenses of the arbitration.
11.13 TIME OF THE ESSENCE. Time is of the essence with respect to the
performance of the obligations set forth in this Agreement.
11.14 REMEDIES CUMULATIVE; SPECIFIC PERFORMANCE. The rights and remedies of
the Parties hereto shall be cumulative and not alternative. The Parties hereto
agree that, in the event of any breach or threatened breach by any party to this
Agreement of any covenant, obligation or other provision set forth in this
Agreement for the benefit of any other Party to this Agreement, such other Party
shall be entitled (in addition to any other remedy that may be available to it
and without the requirement of the posting of a bond) to (a) a decree or order
of specific performance or mandamus to enforce the observance and performance of
such covenant, obligation or other provision and (b) an injunction restraining
such breach or threatened breach.
11.15 FURTHER ASSURANCES. From and after the date of this Agreement, upon
the request of either Party, the other Party shall execute and deliver such
instruments, documents or other writings as may be reasonably necessary to carry
out and effectuate fully the intent and purposes of this Agreement.
11.16 THIRD PARTY BENEFICIARIES. Nothing herein expressed or implied is
intended to or shall be construed to confer upon or give any Person, other than
the Parties hereto and their respective successors, permitted assigns and
Affiliates (including, without limitation, the Northern Border Indemnitees and
the ONEOK Indemnitees), any rights or remedies under or by reason of this
Agreement.
11.17 AUDIT COMMITTEE AUTHORITY. At or prior to the Closing, (a) any
action, notice, consent, approval or waiver that is required to be taken or
given or may be taken or given by Northern Border pursuant to Section 1.4
(Working Capital Adjustment), Section 4.1 (Conduct of the Entities), Section 6.4
(Public Announcements), Section 7.2 (Conditions to the Obligations of Northern
Border), and Section 8.1 (Termination), and (b) any amendment of this Agreement
or of any other Northern Border Transaction Agreement shall be made, taken or
given by Northern Border, as the case may be, only with the concurrence, or at
the direction, of the Audit Committee of Northern Border.
46
11.18 CERTAIN DEFINITIONS. (a) For purposes of this Agreement, the term:
"Acquired Entities" means, collectively, the Entities and the "Entities" as
defined in the Contribution Agreement.
"Affiliates" means, with respect to the Person to which it refers, a Person
that directly or indirectly through one or more intermediaries, controls or is
controlled by, or is under common control with, such subject Person.
Notwithstanding the other provisions of this definition and except as otherwise
expressly provided in this Agreement, ONEOK's Affiliates shall be deemed to
exclude Northern Border and its Subsidiaries and Northern Border's Affiliates
shall be deemed to exclude ONEOK and its Subsidiaries (including the Entities).
"Business Facility" includes any pipeline or pipeline easement or
right-of-way, compressor station, hub, delivery point, receipt point,
interconnection, gas storage facility, gas processing facility, fractionator,
storage field, well or other real or personal property that any Entity or any of
its respective organizational predecessors currently owns, leases, manages or
operates in any manner or formerly owned, leased, managed or operated in any
manner, including, without limitation, the Operating Assets.
"CERCLA" shall have the meaning ascribed to it in the definition of
Environmental Laws.
"Code" means the Internal Revenue Code of 1986, as amended.
"Contract" means any written or oral note, instrument, bond, mortgage,
indenture, lease, sublease, contract, subcontract, warranty, agreement,
obligation, understanding, commitment or legally binding commitment or
undertaking of any nature.
"Consolidated Return" means a consolidated United States Income Tax Return
(within the meaning of Section 1501 of the Code and the Treasury Regulations
promulgated pursuant to Section 1502 of the Code) and any other combined, joint,
consolidated or unitary Tax Return required to be filed with any Tax Authority
that includes both (i) any Entity and (ii) ONEOK or any subsidiary of ONEOK that
is not an Entity.
"Converting Companies" means each of Xxxxxxxx Pipeline Holdings, Inc.,
ONEOK Transmission Company and ONEOK Underground Storage Company.
"Copyrights" shall have the meaning ascribed to it in the definition of
Intellectual Property Assets.
"Damages" means any loss, damage, injury, decline in value, lost
opportunity, liability (INCLUDING STRICT LIABILITY), claim, demand, settlement,
judgment, award, fine, penalty, Tax, fee (including reasonable attorneys' fees),
charge, cost or expense of any nature (including costs and expenses of
litigation, administrative proceedings and investigations), whether arising in
tort, contract or otherwise, but excluding any punitive damages except to the
extent such punitive damages are awarded against any Indemnitees in a
third-party Claim; provided, however, notwithstanding any other provision of
this Agreement to the contrary, to avoid double counting as to any matter,
"Damages" shall not include any Liability to the extent
47
that such Liability (or a reserve therefor (to the extent of such reserve)) is
fully reflected as a current liability in the calculation of Final Closing
Working Capital.
"Drop-Down Contracts" means all Contracts (other than Shared Contracts,
intercompany loan or credit agreements that shall be terminated prior to or at
the Closing, confidentiality agreements, benefit plans and employment or
secondment agreements), to which an Entity is not a party and to which ONEOK or
any Affiliate of ONEOK (other than an Entity) is a party and which solely
benefits one or more of the Entities.
"Eligible Person" means a Person treated as a "domestic eligible entity"
under section 301.7701-3(a) of the Treasury regulations promulgated under the
Code.
"Employee Benefit Plan" means (i) each "employee benefit plan," as such
term is defined in Section 3(3) of ERISA, including any multiemployer plan (as
defined in Section 3(40) of ERISA), (ii) each plan that would be an employee
benefit plan if it was subject to ERISA, such as plans for directors, (iii) each
stock bonus, stock ownership, stock option, stock purchase, stock appreciation
rights, phantom stock or other stock plan (whether qualified or nonqualified),
and (iv) each bonus, deferred compensation or incentive compensation plan;
provided, however, that such term shall not include (a) routine employment
policies and procedures developed and applied in the ordinary course of business
and consistent with past practice, including wage, vacation, holiday, and sick
or other leave policies, (b) workers compensation insurance, and (c) directors
and officers liability insurance.
"Environmental Laws" means, without limitation, the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980 ("CERCLA"), 42
U.S.C. Sections 9601 et seq., the Emergency Planning and Community Right-to-Know
Act of 1986, 42 U.S.C. Sections 11001 et seq., the Resource Conservation and
Recovery Act, 42 U.S.C. Sections 6901 et seq., the Toxic Substances Control Act,
15 U.S.C. Sections 2601 et seq., the Clean Air Act, 42 U.S.C. Sections 7401 et
seq., and the Clean Water Act (Federal Water Pollution Control Act), 33 U.S.C.
Sections 1251 et seq., the Occupational Safety and Health Act, 29 U.S.C.
Sections 651 et seq., and all rules and regulations promulgated pursuant to any
of the above statutes, and any federal, state, local, municipal, foreign or
other law, statute, constitution, common law, resolution, ordinance, code,
edict, decree, order, rule, regulation, permit condition, ruling or requirement
issued, enacted, adopted, promulgated, implemented or otherwise put into effect
by or under the authority of any Governmental Authority, in each case relating
to Environmental Matters.
"Environmental Matters" means any matters arising out of or relating to
health and safety, or pollution or protection of the environment or workplace,
including, without limitation, the ambient and indoor air, surface and ground
waters, land and soils, buildings, and indoor workplaces, and any of the
foregoing relating to the use, generation, transport, treatment, storage, or
disposal of any Hazardous Materials.
"Environmental Permit" means all Permits required to comply with any
applicable Environmental Law.
48
"Entity Guarantees" means all guaranties, letters of credit, bonds,
sureties and other credit support or assurances provided by ONEOK or its
Affiliates (other than the Entities) in support of any obligations of the
Entities.
"Equity Interests" means the capital stock, limited liability company
membership interest, partnership interest or similar ownership interests of any
Person.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" means, with respect to any Person, any other Person that
is a member of a group described in Section 414(b), (c), (m) or (o) of the Code
or Section 4001(b)(1) of ERISA that includes the first Person, or that is a
member of the same "controlled group" as the first Person pursuant to Section
4001(a)(14) of ERISA.
"GAAP" means United States generally accepted accounting principles and
practices as in effect from time to time and applied consistently throughout the
periods involved.
"Governmental Authority" means any foreign or domestic federal, state,
local, municipal, or other government or governmental authority of any nature
(including any governmental agency, branch, department, official, or entity and
any court or other tribunal); or any body exercising, or entitled to exercise,
any administrative, executive, judicial, legislative, police, or regulatory or
power of any nature, in each case having jurisdiction over ONEOK, the Entities,
the Business or Northern Border.
"Governmental Order" means any order, ruling, writ, judgment, injunction,
decree, stipulation, determination or award entered by or with any Governmental
Authority.
"Hazardous Material" means any substance, material or waste that is
regulated by any Environmental Law as hazardous, toxic, a pollutant,
contaminant, solid waste or words of similar import, including, without
limitation, petroleum, petroleum derivatives and by-products, asbestos, urea
formaldehyde and polychlorinated biphenyls.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976,
as amended, and the rules and regulations promulgated thereunder.
"Indebtedness" means all outstanding obligations for borrowed money,
including (i) indebtedness evidenced by notes, bonds, debentures or other
instruments (and including all outstanding principal, prepayment premiums, if
any, and accrued interest, fees and expenses related thereto), (ii) any
outstanding obligations under capital leases and purchase money obligations,
(iii) any amounts owed with respect to drawn letters of credit and (iv) any
outstanding guarantees of obligations of the type described in clauses (i)
through (iii) above (and, for the avoidance of doubt, excludes accounts
payable).
"Indemnity Cap" means the ONEOK Indemnity Cap or the Northern Border
Indemnity Cap, as applicable.
"Intellectual Property Assets" means: (A) patents, patent applications,
inventions, discoveries, and invention disclosures (whether or not patented)
(collectively, "Patents"); (B)
49
trade names, trade dress, logos, slogans, internet domain names, registered and
unregistered trademarks and service marks and related registrations,
applications for registration and renewals therefor (collectively,
"Trademarks"); (C) copyrights in both published and unpublished works and all
copyright registrations, applications and renewals therefor, and all
derivatives, translations, adaptations and combinations of the above
(collectively, "Copyrights"); (D) know-how, trade secrets, confidential or
proprietary information, data, processes and strategies, (collectively, "Trade
Secrets"); (E) other intellectual property rights and/or proprietary rights
relating to any of the foregoing; (F) Software; and (G) goodwill, licenses,
permits, consents, approvals, and claims of infringement against third parties.
"Intercompany Accounts" shall mean all balances related to receivables,
payables or other accounts between ONEOK and its Subsidiaries (other than the
Entities) on the one hand, and the Entities, on the other hand (but excluding
all Indebtedness).
"IRS" means the Internal Revenue Service.
"Knowledge of Northern Border" or similar words or phrases means the actual
knowledge of Xxxx Xxxxxx, Xxxxx Xxxxx, Xxxxx Xxxxxx, Xxxx Xxxxxx, Xxxxxx Xxxxxx
and Xxxx Xxxxxxxxx.
"Knowledge of ONEOK" or similar words or phrases means the actual knowledge
of Xxxx Xxxxxx, Xxxxxx Xxxxxx, Xxx XxXxx, Xxxx Xxxxxx, Xxxxx Xxxxxxx, Xxxxx Xxx,
Xxx Xxxxxx and Xxxxxx Xxxxx.
"Legal Proceeding" means any action, suit, litigation, arbitration,
proceeding (including any civil, criminal, administrative, investigate or
appellate proceeding), hearing, inquiry, audit, examination or investigation
commenced, brought, conducted or heard by or before, or otherwise involving, any
court or Governmental Authority or any arbitrator or arbitration panel.
"Legal Requirement" means any federal, state, local, municipal, foreign or
other law, statute, constitution, principle of common law, resolution,
ordinance, code, edict, decree, rule, regulation, ruling, order, judgment or
requirement issued, enacted, adopted, promulgated, implemented or otherwise put
into effect by or under the authority of any Governmental Authority, including,
without limitation, Tax Laws.
"Liabilities" means any and all debts, liabilities and obligations, whether
accrued or fixed, absolute or contingent, matured or unmatured or determined or
determinable, including, without limitation, those arising under any Legal
Requirement and those arising under any contract, agreement, arrangement,
commitment or undertaking.
"Lien" means any claim, restriction on voting, transfer or pledge,
hypothecation, option, right of first refusal, easement, preemptive right,
community property interest, mortgage, lien (including, without limitation,
environmental and tax liens), charge, encumbrance, security interest or other
restriction of any kind, whether imposed by Legal Requirement, agreement,
understanding or otherwise.
"Material Adverse Effect" means with respect to the Entities any event,
change or effect that individually or in the aggregate has or would reasonably
be expected to have a material
50
adverse effect upon the condition (financial or otherwise), business, assets,
liabilities, or results of operations of the Entities, taken as a whole;
excluding any adverse change, event or effect arising from: (i) conditions
generally affecting the United States economy or generally affecting one or more
industries in which the Entities operate; (ii) national or international
political conditions, including terrorism or the engagement by the United States
in hostilities or acts of war; (iii) financial, banking or securities markets
(including any disruption thereof and any decline in the price of any security
or any market index); (iv) changes in GAAP which are not specific to the
Entities; (v) changes in any laws, rules, regulations, orders, or other binding
directives issued by any Governmental Authority generally affecting one or more
industries in which the Entities operate; (vi) the public announcement, pendency
or completion of the transactions contemplated by this Agreement; or (vii)
seasonal reductions in revenues and/or earnings of the entities in the ordinary
course of business. References in this Agreement to dollar amount thresholds
shall not be deemed to be a measure of a Material Adverse Effect or materiality.
"Net Working Capital" means, at any date, the difference between the
consolidated current assets of the Entities and the consolidated current
liabilities of the Entities, in each case determined in accordance with GAAP
applied consistently in the manner applied in the Financial Statements, except
as otherwise provided in the calculation of Target Working Capital as set forth
in Exhibit D, and except as otherwise provided in Schedule 1.4, (but for the
purposes of preparing the Closing Working Capital Statement only, without regard
to any income Tax assets or liabilities).
"Northern Border Indemnitees" means Northern Border, Northern Border's
Affiliates (including, without limitation, the Entities) and their respective
Representatives.
"Northern Border Material Adverse Effect" means with respect to Northern
Border any event, change or effect that individually or in the aggregate has or
would reasonably be expected to have a material adverse effect upon the
condition (financial or otherwise), business, assets, liabilities, or results of
operations of Northern Border, taken as a whole; excluding any adverse change,
event or effect arising from: (i) conditions generally affecting the United
States economy or generally affecting one or more industries in which Northern
Border operates; (ii) national or international political conditions, including
terrorism or the engagement by the United States in hostilities or acts of war;
(iii) financial, banking or securities markets (including any disruption thereof
and any decline in the price of any security or any market index); (iv) changes
in GAAP which are not specific to Northern Border; (v) changes in any laws,
rules, regulations, orders, or other binding directives issued by any
Governmental Authority generally affecting one or more industries in which
Northern Border operates; (vi) the public announcement, pendency or completion
of the transactions contemplated by this Agreement or (vii) seasonal reductions
in revenues and/or earnings of Northern Border in the ordinary course of
business. References in this Agreement to dollar amount thresholds shall not be
deemed to be a measure of a Northern Border Material Adverse Effect or
materiality.
"Northern Border Transaction" means the transactions provided for under the
terms of the Northern Border Transaction Agreements when viewed on a collective
basis.
51
"Northern Border Transaction Agreements" means this Agreement, the
Contribution Agreement, the TransCanada Agreement, the Amendment and each
agreement, instrument, certificate or similar document executed and delivered by
Northern Border pursuant to the terms of this Agreement, the Contribution
Agreement, the TransCanada Agreement and the Amendment.
"ONEOK Indemnitees" means ONEOK, ONEOK's Affiliates and their respective
Representatives.
"Patents" shall have the meaning ascribed to it in the definition of
Intellectual Property Assets.
"Permit" means any license, franchise, permit, consent, permission,
concession, order, approval, authorization, qualification or registration from,
of or with a Governmental Authority.
"Permitted Liens" means such of the following as to which no enforcement,
collection, execution, levy or foreclosure Legal Proceeding shall have been
commenced: (a) Liens for Taxes, assessments and governmental charges or levies
arising in the ordinary course of business and not yet delinquent or Liens that
are solely financial in nature and are accounted for as current liabilities in
the determination of the Net Working Capital Adjustment; (b) Liens imposed by
any applicable Legal Requirement, such as materialmen's, mechanics', carriers',
workmen's and repairmen's liens and other similar liens arising in the ordinary
course of business securing obligations or which are being contested in good
faith by appropriate proceedings and for which appropriate reserves have been
established to the extent they exceed $500,000; (c) pledges or deposits to
secure obligations under workers' compensation laws or similar legislation or to
secure public or statutory obligations; (d) deposits to secure the performance
of bids, trade contracts (other than for borrowed money), leases, statutory
obligations, surety and appeal bonds, performance bonds and other obligations of
a like nature incurred in the ordinary course of business consistent with past
practice; (e) all matters of record, including, without limitation, survey
exceptions, reciprocal easement agreements and other encumbrances on title to
real property, and all special exceptions included in title insurance policies
or title opinions issued to any Entity, in each case that could not result in
future denial of possession and do not unreasonably interfere with the use of
the properties in the Business; (f) all applicable zoning, entitlement,
conservation restrictions and other land use and environmental regulations that
do not unreasonably interfere with the use of the properties in the Business;
(g) all exceptions, restrictions, easements, charges, rights-of-way and other
Liens set forth in any Permits or other state, local or municipal franchise
applicable to any Entity or any of their respective properties that do not
unreasonably interfere with the use of the properties in the Business; (h) any
encumbrances, restrictions, defects in title or other similar Liens that could
not result in future denial of possession and do not unreasonably interfere with
the use of the properties in the Business; (i) the rights of licensors and
licensees under licenses executed in the ordinary course of business that do not
unreasonably interfere with the use of the properties in the Business; and (j)
Liens created by Northern Border or its successors and assigns.
"Person" means any individual, partnership, corporation, limited liability
company, trust, other entity or Governmental Authority.
52
"Related Agreements" means any agreement, instrument, certificate or
similar document executed and delivered pursuant to this Agreement (including,
without limitation, the Other Transaction Agreements and the Amendment).
"Representative" means with respect to a Person, such Person's officers,
directors, managers, partners, employees, agents, attorneys, accountants,
advisors and representatives. With respect to Northern Border, "Representative"
shall include the Chairman of its Audit Committee.
"Securities Act" means the Securities and Exchange Act of 1933, as amended,
and the rules and regulations promulgated thereunder.
"SEC" means the Securities and Exchange Commission.
"Shared Contract" means any Contract (other than Drop-Down Contracts,
Intercompany Accounts, confidentiality agreements, Employee Benefit Plans, and
employment or secondment agreements), to which an Entity is not a party and to
which ONEOK or any Affiliate of ONEOK (other than an Entity) is a party and
which directly benefits both (i) an Entity, and (ii) ONEOK or any Affiliate of
ONEOK (other than an Entity).
"Software" means any and all of the following, other than "shrink wrap"
licenses, that are primarily used by any of the Entities: (i) computer programs,
including any and all software implementations of algorithms, models and
methodologies, whether in source code or object code, (ii) databases and
compilations, including any and all data and collections of data, whether
machine readable or otherwise, (iii) descriptions, flow-charts and other work
product used to design, plan, organize and develop any of the foregoing,
screens, user interfaces, report formats, firmware, development tools,
templates, menus, buttons and icons and (iv) documentation, including user
manuals and other training documentation, related to any of the foregoing.
"Subsidiary" means with respect to any Person, the corporations,
partnerships, limited liability companies, joint ventures, associations and
other entities controlled by such Person directly or indirectly through one or
more intermediaries.
"Target Working Capital" means the amount shown as the Target Working
Capital on Exhibit D.
"Tax" or "Taxes" means all taxes, charges, levies, fees, or other
assessments imposed by any federal, state, local or foreign Tax Authority,
including, but not limited to, any income, gross income, gross receipts,
profits, capital stock, franchise, business, withholding payroll, social
security, workers' compensation, unemployment, disability, property, ad valorem,
stamp, excise, occupation, service, sales, use, license, lease, transfer,
import, export, value added, goods and services, alternative minimum, estimated
or other similar tax (including any fee, assessment, or other charge in the
nature of or in lieu of any tax), and any interest, penalties, additions to tax,
or additional amounts in respect of the foregoing.
"Tax Authority" means, with respect to any Tax, the Governmental Authority
that imposes such Tax and the agency (if any) charged with the collection or
administration of such Tax for such entity.
53
"Tax Benefits" means any refund of Taxes, reduction in liability for Taxes,
or credit against Taxes.
"Tax Law" means the law (including any applicable regulations or any
administrative pronouncement) of any Governmental Authority relating to any Tax.
"Tax Period" means, with respect to any Tax, the period for which the Tax
is reported as provided under the applicable Tax Law.
"Tax Return" means any report of Taxes due, any claims for refund of Taxes
paid, any information return with respect to Taxes or any other similar report,
statement, declaration, or document required to be filed under applicable Tax
Law, including any attachments, exhibits or other materials submitted with any
of the foregoing and including any amendments or supplements to any of the
foregoing.
"Trademarks" shall have the meaning ascribed to it in the definition of
Intellectual Property Assets.
"Trade Secrets" shall have the meaning ascribed to it in the definition of
Intellectual Property Assets.
"Transfer Taxes" means all sales, use, transfer, stock transfer, real
property transfer, documentary, gains, stamp recording and similar Taxes and
fees (including any penalties, interest or additions) incurred in connection
with the transactions contemplated by this Agreement.
11.19 OTHER DEFINED TERMS. For the purpose of this Agreement, the following
terms shall have the meanings given in the indicated Sections of this Agreement:
INDEX
TERM SECTION
---- -------
1935 Act........................................................... 2.17
Aggregate Northern Border Damages.................................. 9.3(a)
Aggregate ONEOK Damages............................................ 9.3(a)
Agreement.......................................................... Preamble
Audits............................................................. 2.6(e)
Balance Sheet...................................................... 2.5(a)
Balance Sheet Date................................................. 2.5(a)
54
Books and Records.................................................. 5.2(b)(i)
Business........................................................... Recitals
Claim.............................................................. 9.7(a)
Closing............................................................ 1.3(a)
Closing Date....................................................... 1.3(a)
Closing Working Capital............................................ 1.4(a)
Closing Working Capital Statement.................................. 1.4(a)
Common Units....................................................... 3.1(e)(v)
Companies.......................................................... Recitals
Company............................................................ Recitals
Company Subsidiary................................................. 2.2
Contribution Agreement............................................. 7.1(h)
Controlling Party.................................................. 10.7(c)
Conversion Transactions............................................ 6.11
CPR Rules.......................................................... 11.12
Entities........................................................... 2.2
Entity............................................................. 2.2
Entity Intellectual Property Assets................................ 2.9
FERC............................................................... 6.1
Final Closing Working Capital...................................... 1.4(c)
Financial Statements............................................... 2.5(a)
FMV Schedules...................................................... 10.10(a)
Governmental Approvals............................................. 6.3(a)
GP Purchase Agreement.............................................. 7.1(h)
Indemnitee......................................................... 9.7(a)
55
Indemnitor......................................................... 9.7(a)
Indemnity Threshold................................................ 9.3(a)
Interim Financial Statements....................................... 6.12
KCC Consent........................................................ 7.1(g)
License Period..................................................... 6.9
Material Contracts................................................. 2.10(a)
Minimum Claim Amount............................................... 9.3(a)
Net Working Capital Adjustment..................................... 1.4(d)(ii)
Neutral Auditors................................................... 1.4(c)
NGA................................................................ 2.17
Non-Controlling Party.............................................. 10.7(c)
Northern Border.................................................... Preamble
Northern Border Credit Agreement Amendments........................ 7.2(k)
Northern Border Credit Agreements.................................. 7.2(k)
Northern Border Disclosure Schedules............................... 3
Northern Border Indemnity Cap...................................... 9.3(b)
Northern Border Returns............................................ 10.4(b)
OCC Consent........................................................ 7.1(g)
ONEOK.............................................................. Preamble
ONEOK Disclosure Schedules......................................... 2
ONEOK Guaranty Agreement........................................... 1.3(b)(ii)
ONEOK Indemnity Cap................................................ 9.3(b)
ONEOK Marks........................................................ 6.9
Operating Assets................................................... 2.18(a)
Other Transaction Agreements....................................... 7.1(h)
56
Parties............................................................ Preamble
Party.............................................................. Preamble
Part-Year Fraction................................................. 10.5(a)
Pre-Closing Period................................................. 4.1
Pre-Closing Taxable Period......................................... 10.6(a)(i)
Purchase Price..................................................... 1.2
Related Party...................................................... 2.14
Resolution Period.................................................. 1.4(b)
Services Agreement................................................. 1.3(b)(ii)
Shares............................................................. Recitals
Straddle Periods................................................... 10.4(b)
Tax Controversy.................................................... 10.7(a)
Tax Indemnitor..................................................... 10.7(a)
Tax Records........................................................ 10.1
TransCanada Agreement.............................................. 7.1(h)
Viking Indenture................................................... 7.2(m)
57
IN WITNESS WHEREOF the parties hereto have caused this Agreement to be
executed as of the date set forth above by their duly authorized
representatives.
ONEOK, INC.
By: /s/ Xxxxx X. Xxxx
------------------------------------
Name Xxxxx X. Xxxx
----------------------------------
Title: Chairman of the Board, President
and Chief Executive Officer
---------------------------------
NORTHERN BORDER PARTNERS, L.P.
By: /s/ Xxxxxxx X. Xxxxxx
------------------------------------
Name: Xxxxxxx X. Xxxxxx
----------------------------------
Title: Chief Executive Officer
---------------------------------
58
