EXHIBIT 3.1
AMENDMENT NO. 1 TO AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP OF
NORTHERN BORDER PARTNERS, L.P.
This Amendment No. 1 to Amended and Restated Agreement of Limited
Partnership of Northern Border Partners, L.P. (this "Amendment"), dated as of
April 6, 2006, is entered into and effectuated by Northern Plains Natural Gas
Company, LLC, a Delaware limited liability company ("Northern Plains"),
Northwest Border Pipeline Company, a Delaware corporation ("Northwest Border"),
and Pan Border Gas Company, LLC, a Delaware limited liability company ("Pan
Border" and, together with Northern Plains and Northwest Border, the "General
Partners"), as the General Partners, pursuant to authority granted in Section
4.2 and Section 15.1 of the Amended and Restated Agreement of Limited
Partnership of Northern Border Partners, L.P., dated as of October 1, 1993 (the
"Partnership Agreement"). Capitalized terms used but not defined herein are used
as defined in the Partnership Agreement.
RECITALS:
WHEREAS, Section 4.2(a) of the Partnership Agreement provides that the
Partnership Policy Committee, without the approval of any Limited Partners, may
issue additional Partnership Securities, or classes or series thereof, for any
Partnership purpose, at any time or from time to time, and may issue such
Partnership Securities for such consideration and on such terms and conditions
as shall be established by the Partnership Policy Committee in its sole
discretion;
WHEREAS, Section 4.2(b) of the Partnership Agreement provides that the
Partnership Securities authorized to be issued by the Partnership pursuant to
Section 4.2(a) may be issued in one more classes, or one or more series of any
such classes, with such designations, preferences and relative, participating,
optional or other special rights, powers and duties (which may be senior to
existing classes and series of Partnership Securities (except as provided in
Section 4.2(c)) as shall be fixed by the Partnership Policy Committee;
WHEREAS, Section 15.1(f) of the Partnership Agreement provides that the
Partnership Policy Committee, without the approval of any Limited Partner or
Assignee (subject to the terms of Section 4.2 of the Partnership Agreement), may
amend any provision of the Partnership Agreement necessary or appropriate in
connection with the authorization for issuance of any class or series of
Partnership Securities pursuant to Section 4.2 of the Partnership Agreement;
WHEREAS, the Partnership has entered into a definitive agreement, dated as
of February 14, 2006, between the Partnership and ONEOK, Inc., an Oklahoma
corporation ("ONEOK") (the "Contribution Agreement");
WHEREAS, as part consideration for the contribution of the Shares to the
Partnership, the Contribution Agreement obligates the Partnership to issue
limited partner interests to be designated as Class B Units having the terms set
forth in this Agreement;
WHEREAS, the Partnership Policy Committee, in consultation with the Audit
Committee, has determined that the issuance of the Class B Units provided for in
this Amendment is permitted by Section 4.2 of the Partnership Agreement; and
1
WHEREAS, Section 15.1(d)(i) of the Partnership Agreement provides that the
Partnership Policy Committee, without the approval of any Limited Partner or
Assignee, may amend any provision of the Partnership Agreement to reflect a
change that the Partnership Policy Committee determines, in its sole discretion,
does not adversely affect the Limited Partners in any material respect;
NOW, THEREFORE, it is hereby agreed as follows:
A. Amendment. The Partnership Agreement is hereby amended as follows:
1) Section 1.1 is hereby amended to add the following
definitions:
"Class B Subordination Period" means the period
commencing upon issuance of the Class B Units and ending
on the earlier of (a) the Conversion Approval Date or
(b) the Conversion Approval Termination Date.
"Class B Unit" means a Unit representing a
fractional part of the Partnership Interests of all
Limited Partners and Assignees and having the rights and
obligations specified with respect to Class B Units in
this Agreement. Except as otherwise provided in this
Agreement, the term "Class B Unit" does not refer to a
Common Unit prior to the conversion of the Class B Unit
into a Common Unit pursuant to the terms hereof.
"Class B Unit Arrearage" means, with respect to
any Class B Unit, and as to any calendar quarter within
the Class B Subordination Period, the excess, if any, of
(a) the Minimum Quarterly Distribution with respect to
such Class B Unit (including any applicable increased
amounts distributable with respect to the Minimum
Quarterly Distribution following the Class B
Distribution Increase Date, the Section 4.11(b)
Distribution Increase Date or the GP Removal Date) over
(b) the sum of all Available Cash distributed with
respect to such Class B Unit in respect of such quarter
pursuant to Section 4.10(b)(ii)(A) (and Section
4.10(b)(ii)(A)(1) following the Class B Distribution
Increase Date and/or GP Removal Date, as applicable).
"Cumulative Class B Unit Arrearage" means, with
respect to any Class B Unit, and as of the end of any
calendar quarter (or on the expiration of the Class B
Subordination Period), the excess, if any, of (a) the
sum resulting from adding together the Class B Unit
Arrearage as to such Class B Unit for each of the
quarters within the Class B Subordination Period over
(b) the sum resulting from adding together (i) any
distributions theretofore made pursuant to Section
4.10(b)(ii)(B) (and Section 4.10(b)(ii)(A)(2) following
the Class B Distribution Increase Date and/or GP
2
Removal Date, as applicable) with respect to such Class
B Unit (including any distributions to be made in
respect of the last of such quarters) and (ii) any
Cumulative Common Unit Arrearage then existing upon
conversion of a Class B Unit into a Common Unit pursuant
to the terms hereof or the occurrence of a Termination
Capital Transaction.
2) Section 1.1 is hereby amended to:
a) add the following sentence to the end of the definition
of "Common Unit":
"Except as otherwise provided in this Agreement,
the term "Common Unit" does not refer to a Class B Unit
prior to the conversion of the Class B Unit into a
Common Unit pursuant to the terms hereof."
b) add the phrase "or within the Class B Subordination
Period" after the phrase "and as to any calendar quarter
within the Subordination Period" in the definition of
"Common Unit Arrearage."
c) add the phrase "or within the Class B Subordination
Period" after the phrase "for each of the quarters
within the Subordination Period ending on or before the
last day of such quarter" in clause (a) of the
definition of "Cumulative Common Unit Arrearage."
d) add the following proviso to the end of the definition
of "Outstanding":
"; provided, further, that, except as provided in
Sections 4.11(a), 4.11(b), 4.12(a) and 4.12(b), none of
the Class B Units shall be deemed to be Outstanding for
purposes of determining if any Class B Units are
entitled to distributions of Available Cash unless such
Class B Units shall have been reflected on the
Partnership's books and records as outstanding during
such calendar quarter and on the Record Date for the
determination of any distribution of Available Cash;"
e) add the following sentence to the end of the definition
of "Unrecovered Initial Unit Price":
"The Unrecovered Initial Unit Price of each Class
B Unit shall equal the Unrecovered Initial Unit Price of
a Common Unit."
3) Article IV is hereby amended to add new Sections 4.10 - 4.13
creating a new class of Units as follows:
SECTION 4.10 ESTABLISHMENT OF CLASS B UNITS.
3
a) General. The Partnership Policy Committee hereby
designates and creates a class of Units to be designed
as "Class B Units" and consisting of a total of
36,494,126 Class B Units, and fixes the designations,
preferences and relative, participating, optional or
other special rights, power and duties of holders of the
Class B Units as set forth in this Section 4.10.
b) Rights Associated with Class B Units. During the period
commencing upon issuance of the Class B Units and ending
upon the conversion of the Class B Units as set forth in
Section 4.10(f) hereof, unless amended pursuant to
Section 4.11 or Section 4.12 hereof:
i) subject to the provisions of Section
5.1(d)(iii)(A), and unless clauses (ii), (iii), or
(iv) below require a different allocation pursuant
to Section 5.1(c)(i) or otherwise, all items of
Partnership income, gain, loss, deduction and
credit shall be allocated to the Class B Units to
the same extent as such items would be so
allocated if such Class B Units were Common Units
that were then Outstanding;
ii) Notwithstanding anything to the contrary in
Section 5.4, with respect to distributions made in
accordance with Section 5.4 for calendar quarters
ending on or prior to the expiration of the Class
B Subordination Period, the Class B Units shall be
deemed Units, but not Common Units, for such
purposes and, in addition, the holders of Class B
Units shall have the right to share in Partnership
quarterly cash distributions in accordance with
Section 5.4 hereof (such distribution to be
prorated for the quarter in which the Class B
Units are issued), provided that following any
distribution pursuant to Section 5.4(c) and prior
to any distribution pursuant to Section 5.4(d),
Available Cash shall be distributed as follows:
(A) 99% to the holders of Class B Units and 1%
to the General Partners, in accordance with
their relative General Partner Percentage
Interests, until there has been distributed
in respect of each Class B Unit Outstanding
as of the last day of such quarter an amount
equal to the Minimum Quarterly Distribution;
and
(B) then, 99% to the holders of Class B Units
and 1% to the General Partners, in
accordance with their relative General
Partner Percentage Interests, until there
has been distributed in respect of each
Class B
4
Unit Outstanding as of the last day of such
quarter an amount equal to the Cumulative
Class B Unit Arrearage, if any, existing
with respect to such quarter.
iii) The holders of Class B Units shall have the right
to share in Partnership quarterly cash
distributions for quarters ending after the
expiration of the Class B Subordination Period in
accordance with Section 5.4 hereof as if such
holders of Class B Units held Common Units and, in
addition, notwithstanding anything to the contrary
set forth in Section 5.4, if a Cumulative Class B
Unit Arrearage exists on the date of the
expiration of the Class B Subordination Period,
prior to any distribution pursuant to Section
5.4(d), irrespective of whether any such Class B
Units are then Outstanding, Available Cash shall
be distributed in accordance with Section
4.10(b)(ii)(B) hereof to each holder of record of
the applicable Class B Units as of the expiration
of the Class B Subordination Period. This
distribution shall not be deemed a distribution on
a Common Unit, but the satisfaction of prior
entitlements of the holders of Class B Units as of
the expiration of the Class B Subordination
Period. For the taxable year in which such
distribution is made, if not previously allocated,
each Person receiving such cash distribution shall
be allocated items of gross income in an amount
equal to such distribution as provided in Section
5.1(d)(iii)(A).
iv) Notwithstanding anything to the contrary in
Section 5.1(c)(i), during the Class B
Subordination Period the Class B Units shall be
treated as Common Units then Outstanding for
purposes of Section 5.1(c)(i), and, in addition,
following any allocation made pursuant to Section
5.1(c)(i)(B) and before an allocation is made
pursuant to Section 5.1(c)(i)(C), any remaining
Net Termination Gain shall be allocated 99% to the
holders of the Class B Units and 1% to the General
Partners, in accordance with their relative
General Partner Percentage Interests, until each
such holder of a Class B Unit has been allocated
Net Termination Gain equal to any then existing
Cumulative Class B Unit Arrearage with respect to
such Class B Unit.
c) Voting Rights. Unless amended pursuant to Section 4.11
or Section 4.12 hereof, (i) during the Class B
Subordination Period, the Class B Units are non-voting
(and solely for all purposes of calculating votes and
determining the presence of a quorum under this
Agreement, none of the Class B Units shall be deemed
Outstanding), except that the Class B Units shall be
entitled to vote
5
as a separate class on any matter that adversely affects
the rights or preferences of the Class B Units in
relation to other classes of Partnership Interests or as
required by law. The approval of a majority of the Class
B Units shall be required to approve any matter for
which the holders of the Class B Units are entitled to
vote as a separate class, and (ii) upon expiration of
the Class B Subordination Period, the Class B Units will
have such voting rights pursuant to the Partnership
Agreement as such Class B Units would have if they were
Common Units that were then Outstanding except that,
with respect to the Conversion Approval or Amendment
Approval, none of the Class B Units shall be deemed
Outstanding as of the record date for such vote or be
entitled to vote. Each Class B Unit will be entitled to
the number of votes equal to the number of Common Units
into which a Class B Unit is convertible at the time of
the record date for the vote or written consent on the
matter.
d) Certificates. The Class B Units will be evidenced by
certificates in such form as the Partnership Policy
Committee may approve and, subject to the satisfaction
of any applicable legal and regulatory requirements, may
be assigned or transferred in a manner identical to the
assignment and transfer of other Units. The Certificates
will include the restrictive legend set forth in Section
2.17 of the Contribution Agreement.
e) Registrar and Transfer Agent. Northern Plains will act
as registrar and transfer agent of the Class B Units.
f) Conversion. Except as provided in this Section 4.10(f),
the Class B Units are not convertible into Common Units.
i) Optional Conversion. The Partnership shall, as
promptly as practicable following the issuance of
any Class B Units, take such actions as may be
necessary or appropriate to submit to a vote or
consent of its securityholders the approval of a
change in the terms of the Class B Units to
provide that each Class B Unit shall be
convertible from time to time, at the option of
the holders thereof, into one Common Unit (subject
to appropriate adjustment in the event of any
split-up, combination or similar event affecting
the Common Units that occurs prior to the
conversion of the Class B Units), effective upon
approval of the issuance of additional Common
Units in accordance with the following sentence
(the "Conversion Approval"). The vote or consent
required for such approval will be the requisite
vote required under the rules or staff
interpretations of the National Securities
Exchange on which the Common Units are listed or
admitted for trading for the listing or addition
to
6
trading of the Common Units that would be issued
upon such conversion, excluding those Units held
by ONEOK and its affiliates. Upon receipt of the
required vote or consent (the date of such
approval, the "Conversion Approval Date"), the
terms of the Class B Units will be changed,
automatically and without further action, so that
each Class B Unit may be converted, at the option
of the holder thereof, into one Common Unit
(subject to appropriate adjustment in the event of
any split-up, combination or similar event
affecting the Common Units that occurs prior to
the conversion of the Class B Units).
ii) Automatic Conversion. The Partnership shall, as
promptly as practicable following the issuance of
any Class B Units, take such actions as may be
necessary or appropriate to submit to a vote or
consent of holders of at least 66 2/3% of the
Outstanding Units (excluding those Units held by
ONEOK and its Affiliates) and otherwise as
required by Section 15.2 of the Partnership
Agreement, the amendments to the Partnership
Agreement described on Annex A (the approval of
such amendment, the "Amendment Approval," and the
date of obtaining the Amendment Approval, the
"Amendment Approval Date"). Subject to Section
4.12, each Class B Unit shall automatically
convert into one Common Unit (subject to
appropriate adjustment in the event of any
split-up, combination or similar event affecting
the Common Units that occurs prior to the
conversion of the Class B Units) upon receipt of:
(A) Conversion Approval as set forth above in
paragraph (i); and
(B) Amendment Approval as set forth above in
this paragraph (ii);
and immediately thereafter, none of the Class B Units
shall be outstanding.
iii) Quarterly Cash Distributions. Each Common Unit
into which a Class B Unit has been converted as
provided in this Section 4.10(f) shall have the
right to share in any Partnership quarterly cash
distributions made in respect of a Common Unit in
accordance with Section 5.4 hereof (including,
without limitation and not withstanding anything
to the contrary contained in the Partnership
Agreement, the right to any distributions of
amounts in
7
respect of Cumulative Common Unit Arrearages in
respect of a Common Unit).
SECTION 4.11 AMENDMENT OF TERMS OF CLASS B UNITS IF
SECURITYHOLDER APPROVAL IS NOT OBTAINED.
a) If:
i) the Conversion Approval has not been
obtained by the date that is 12 months
following the Closing (as defined under the
Contribution Agreement); and
ii) the Amendment Approval has not been obtained
by the date that is 12 months following the
Closing;
then, unless the provisions of Section 4.12 shall
already be in effect, effective as of the next
succeeding day (the "Class B Distribution Increase
Date") until amended by the provisions of Section
4.12, Sections 4.10(b) and 4.10(c) hereof will be
deemed to be amended in their entirety,
automatically and without further action, as
follows:
"b) Rights Associated with Class B Units. Prior to the
conversion of all of the Class B Units pursuant to
Section 4.10(f) above:
i) subject to the provisions of Section
5.1(d)(iii)(A) and paragraphs (ii) and (iii)
below, all items of Partnership income,
gain, loss, deduction and credit shall be
allocated to the Class B Units to the same
extent such items would be allocated if such
Class B Units were Common Units then
Outstanding, and the allocations to Class B
Units shall have the same order of priority
relative to allocations on the Common Units;
ii)(A) notwithstanding anything to the contrary in
Section 5.4, the Class B Units shall be
deemed Units, but not Common Units, for
purposes of Section 5.4 and the Class B
Units shall have the right to share in
Partnership quarterly cash distributions in
accordance with Section 5.4 hereof based on
115% of the amount of any Partnership
distribution that would be made to each
Common Unit so that the amount of any
Partnership distribution to each Class B
Unit will equal 115% of the amount of such
distribution to each Common Unit (such
additional 15% pro rated for the quarter in
which the Class B Distribution Increase Date
occurs), provided, however, that following
any distribution pursuant to Section 5.4(c)
and prior to any distribution pursuant to
Section 5.4(d), Available Cash shall be
distributed as follows:
8
(1) 99% to the holders of Class B Units
and 1% to the General Partners, in
accordance with their relative General
Partner Percentage Interests, until there
has been distributed in respect of each
Class B Unit Outstanding as of the last
day of such quarter an amount equal to
115% of the Minimum Quarterly
Distribution; and
(2) then, 99% to the holders of Class B
Units and 1% to the General Partners, in
accordance with their relative General
Partner Percentage Interests, until there
has been distributed in respect of each
Class B Unit Outstanding as of the last
day of such quarter an amount equal to
the Cumulative Class B Unit Arrearage, if
any, existing with respect to such
quarter.
(B) notwithstanding anything to the contrary
contained in Section 5.4, if a Cumulative
Class B Unit Arrearage exists on the date of
the expiration of the Class B Subordination
Period, prior to any distribution pursuant
to Section 5.4(d), irrespective of whether
any such Class B Units are then Outstanding,
Available Cash shall be distributed 99% to
the holders of record of the applicable
Class B Units as of the expiration of the
Class B Subordination Period and 1% to the
General Partners, in accordance with their
relative General Partner Percentage
Interests, until there has been distributed
in respect of each Class B Unit an amount
equal to the Cumulative Class B Unit
Arrearage, if any, existing with respect to
such quarter. This distribution shall not be
deemed a distribution on a Common Unit, but
the satisfaction of prior entitlements of
the holders of Class B Units as of the
expiration of the Class B Subordination
Period. For the taxable year in which such
distribution is made, if not previously
allocated, each Person receiving such cash
distribution shall be allocated items of
gross income in an amount equal to such
distribution as provided in Section
5.1(d)(iii)(A); and
iii) the Class B Units shall have rights upon
dissolution and liquidation of the
Partnership, including the right to share in
any liquidating distributions, that are
based on 115% of the liquidating
distributions that would be made to the
Common Units so that the amount of any
liquidating distribution to each Class B
Unit will equal 115% of the amount of such
distribution to each Common Unit, and, in
addition, following any allocation made
pursuant to Section 5.1(c)(i)(B) and before
an allocation is made pursuant to Section
5.1(c)(i)(C), any remaining Net Termination
Gain shall be allocated 99% to
9
the holders of the Class B Units and 1% to
the General Partners, in accordance with
their relative General Partner Percentage
Interests, until each such holder of a Class
B Unit has been allocated Net Termination
Gain equal to any then existing Cumulative
Class B Unit Arrearage with respect to such
Class B Unit, and accordingly,
notwithstanding anything to the contrary in
this Agreement, prior to any distribution
under Section 14.3, the Capital Account of
each Partner shall be adjusted to give
effect to the foregoing liquidation rights.
c) Voting Rights. The Class B Units will have such
voting rights pursuant to the Partnership
Agreement as such Class B Units would have if they
were Common Units that were then Outstanding
except that, with respect to the Conversion
Approval or Amendment Approval, none of the Class
B Units shall be deemed Outstanding as of the
record date for such vote or be entitled to vote.
Each Class B Unit will be entitled to the number
of votes equal to the number of Common Units into
which a Class B Unit is convertible at the time of
the record date for the vote or written consent on
the matter."
(b If:
i) the Conversion Approval has been obtained
by the date that is 12 months following
the Closing (as defined under the
Contribution Agreement); and
ii) the Amendment Approval has not been
obtained by the date that is 12 months
following the Closing;
then, unless the provisions of Section 4.12
shall already be in effect, effective as of
the next succeeding day (the "Section 4.11(b)
Distribution Increase Date") until amended by
the provisions of Section 4.12, Sections
4.10(b) and 4.10(c) hereof will be deemed to
be amended in their entirety, automatically
and without further action, as follows:
"b) Rights Associated with Class B Units. Prior to
the conversion of all of the Class B Units
pursuant to Section 4.10(f) above:
i) subject to the provisions of Section
5.1(d)(iii)(A) and paragraphs (ii) and
(iii) below, all items of Partnership
income, gain, loss, deduction and credit
shall be allocated to the Class B Units to
the same extent such items would be
allocated if such Class B Units were
Common Units then Outstanding, and the
allocations to Class B Units shall have
the same order of priority relative to
allocations on the Common Units;
10
ii) (A) the Class B Units shall have the right
to share in Partnership quarterly cash
distributions based on 115% of the amount
of any Partnership distribution that would
be made to each Common Unit so that the
amount of any Partnership distribution to
each Class B Unit will equal 115% of the
amount of such distribution to each Common
Unit (such additional 15% pro rated for
the quarter in which the Class B
Distribution Increase Date occurs), and
the right of holders of Class B Units to
receive distributions shall have the same
order of priority relative to
distributions on the Common Units; and
(B) notwithstanding anything to the
contrary contained in Section 5.4, if a
Cumulative Class B Unit Arrearage existed
on the date of the expiration of the Class
B Subordination Period, prior to any
distribution pursuant to Section 5.4(d),
irrespective of whether any such Class B
Units are then Outstanding, Available Cash
shall be distributed 99% to the holders of
record of the applicable Class B Units as
of the expiration of the Class B
Subordination Period and 1% to the General
Partners, in accordance with their
relative General Partner Percentage
Interests, until there has been
distributed in respect of each Class B
Unit an amount equal to the Cumulative
Class B Unit Arrearage, if any, existing
with respect to such quarter. This
distribution shall not be deemed a
distribution on a Common Unit, but the
satisfaction of prior entitlements of the
holders of Class B Units as of the
expiration of the Class B Subordination
Period. For the taxable year in which such
distribution is made, if not previously
allocated, each Person receiving such cash
distribution shall be allocated items of
gross income in an amount equal to such
distribution as provided in Section
5.1(d)(iii)(A); and
iii) the Class B Units shall have rights upon
dissolution and liquidation of the
Partnership, including the right to share
in any liquidating distributions, that are
based on 115% of the liquidating
distributions that would be made to the
Common Units so that the amount of any
liquidating distribution to each Class B
Unit will equal 115% of the amount of such
distribution to each Common Unit, and, in
addition, following any allocation made
pursuant to Section 5.1(c)(i)(B) and
before an allocation is made pursuant to
Section 5.1(c)(i)(C), any remaining Net
Termination Gain shall be allocated 99% to
the holders of the Class B Units and 1% to
the General Partners, in accordance with
their relative General Partner Percentage
Interests, until each such holder of a
Class B Unit
11
has been allocated Net Termination Gain
equal to any then existing Cumulative
Class B Unit Arrearage with respect to
such Class B Unit, and accordingly,
notwithstanding anything to the contrary
in this Agreement, prior to any
distribution under Section 14.3, the
Capital Account of each Partner shall be
adjusted to give effect to the foregoing
liquidation rights.
c) Voting Rights. The Class B Units will have such
voting rights pursuant to the Partnership
Agreement as such Class B Units would have if they
were Common Units that were then Outstanding
except that, with respect to the Conversion
Approval or Amendment Approval, none of the Class
B Units shall be deemed Outstanding as of the
record date for such vote or be entitled to vote.
Each Class B Unit will be entitled to the number
of votes equal to the number of Common Units into
which a Class B Unit is convertible."
c) If a Class B Distribution Increase Date or Section
4.11(b) Distribution Increase Date has occurred and the
Partnership's securityholders thereafter either (1)
obtain the Conversion Approval and the Amendment
Approval, or (2) any of the Class B Units are converted
into Common Units pursuant to Section 4.10(f)(i), then,
unless the provisions of Section 4.12 shall already be
in effect, (i) with respect to the matters described in
sub-clause (1) above, as of the later of the Conversion
Approval Date and the Amendment Approval Date, all Class
B Units shall automatically, and without further action
of the holder(s) thereof, be converted into Common Units
in accordance with Section 4.10(f)(ii), and (ii) with
respect to matters described in sub-clauses (1) and (2)
above for the quarter in which such conversion occurs,
concurrently with the distribution made in accordance
with Article V of the Partnership Agreement of Available
Cash, with respect to the quarter in which the
conversion of the Class B Units is effected, a
distribution shall be paid to each holder of record of
the applicable Class B Units as of the effective date of
such conversion, with the amount of such distribution
for each such Class B Unit to be equal to the product of
(a) 15% of the amount to be distributed in respect of
such quarter to each Common Unit times (it being agreed
that each such Common Unit issued upon conversion shall
be entitled to the full distribution payable to the
holder of a Common Unit) and (b) a fraction, of which
(A) the numerator is the number of days in such quarter
up to but excluding the date of such conversion, and (B)
the denominator is the total number of days in such
quarter (the foregoing amount being referred to as an
"Excess Payment"). For the taxable year in which an
Excess Payment is made, each holder of a Class B Unit
shall be allocated items of gross income with respect to
such taxable year in an amount equal to the Excess
Payment distributed to it as provided in Section
5.1(d)(iii)(A).
SECTION 4.12 AMENDMENT OF TERMS OF CLASS B UNITS UPON REMOVAL OF THE
GENERAL PARTNER.
12
a) If prior to the conversion of all Class B Units, a resolution of the
Limited Partners holding the requisite majority of Outstanding Units is
passed approving the removal of any Affiliate of ONEOK as the general
partner of the Partnership (a "GP Removal Event") and the Conversion
Approval has not been obtained, then notwithstanding Section 4.11,
automatically and without further action and, effective as of the next
succeeding day (the "GP Removal Date"), Section 4.10(f)(ii) shall be
deemed to be deleted in its entirety, automatically and without further
action, and Sections 4.10(b) and 4.10(c) hereof will be deemed to be
amended in their entirety, automatically and without further action, as
follows:
"b) Rights Associated with Class B Units. Prior to the
conversion of the Class B Units as set forth in Section
4.10(f) hereof:
i) subject to the provisions of Section 5.1(d)(iii)(A)
and paragraphs (ii) and (iii) below, all of items
Partnership income, gain, loss, deduction and credit
shall be allocated to the Class B Units to the same
extent as such items would be allocated if such
Class B Units were Common Units then Outstanding,
and the allocations to Class B Units shall have the
same order of priority relative to allocations on
the Common Units; and
ii) (A) notwithstanding anything to the contrary in
Section 5.4, the Class B Units shall be deemed
Units, but not Common Units, for purposes of Section
5.4 and the Class B Units shall have the right to
share in Partnership quarterly cash distributions in
accordance with Section 5.4 hereof based on 125% of
the amount of any Partnership distribution that
would be made to each Common Unit so that the amount
of any Partnership distribution to each Class B Unit
will equal 125% of the amount of such distribution
to each Common Unit (such additional 25% pro rated
for the quarter in which the GP Removal Date
occurs), provided, however, that following any
distribution pursuant to Section 5.4(c) and prior to
any distribution pursuant to Section 5.4(d),
Available Cash shall be distributed as follows:
(1) 99% to the holders of Class B Units and 1% to
the General Partners, in accordance with their
relative General Partner Percentage Interests,
until there has been distributed in respect of
each Class B Unit Outstanding as of the last day
of such quarter an amount equal to 125% of the
Minimum Quarterly Distribution; and
(2) then, 99% to the holders of Class B Units and
1% to the General Partners, in accordance with
their relative General Partner Percentage
Interests, until there has been
13
distributed in respect of each Class B Unit
Outstanding as of the last day of such quarter an
amount equal to the Cumulative Class B Unit
Arrearage, if any, existing with respect to such
quarter.
(B)notwithstanding anything to the contrary in Section
5.4, if a Cumulative Class B Unit Arrearage exists on
the date of the expiration of the Class B Subordination
Period, prior to any distribution pursuant to Section
5.4(d), irrespective of whether any such Class B Units
are then Outstanding, Available Cash shall be
distributed 99% to the holders of record of the
applicable Class B Units as of the expiration of the
Class B Subordination Period and 1% to the General
Partners, in accordance with their relative General
Partner Percentage Interests, until there has been
distributed in respect of each Class B Unit an amount
equal to the Cumulative Class B Unit Arrearage, if any,
existing with respect to such quarter. This distribution
shall not be deemed a distribution on a Common Unit, but
the satisfaction of prior entitlements of the holders of
Class B Units as of the expiration of the Class B
Subordination Period. For the taxable year in which such
distribution is made, if not previously allocated, each
Person receiving such cash distribution shall be
allocated items of gross income in an amount equal to
such distribution as provided in Section 5.1(d)(iii)(A);
and
iii) the Class B Units shall have rights upon dissolution and
liquidation of the Partnership, including the right to
share in any liquidating distributions, that are based
on 125% of the liquidating distributions that would be
made to the Common Units so that the amount of any
liquidating distribution to each Class B Unit will equal
125% of the amount of such distribution to each Common
Unit, and, in addition, following any allocation made
pursuant to Section 5.1(c)(i)(B) and before an
allocation is made pursuant to Section 5.1(c)(i)(C), any
remaining Net Termination Gain shall be allocated 99% to
the holders of the Class B Units and 1% to the General
Partners, in accordance with their relative General
Partner Percentage Interests, until each such holder of
a Class B Unit has been allocated Net Termination Gain
equal to any then existing Cumulative Class B Unit
Arrearage with respect to such Class B Unit, and
accordingly, notwithstanding anything to the contrary in
this Agreement, prior to any distribution under Section
14.3, the Capital Account of each Partner shall be
adjusted to give effect to the foregoing liquidation
rights.
14
c) Voting Rights. The Class B Units will have such voting
rights pursuant to the Partnership Agreement as such Class B
Units would have if they were Common Units that were then
Outstanding except that, (i) for the purposes of the
definition of "Outstanding" such Class B Units shall be deemed
to be "Units," but not "Common Units," for all purposes
thereof and (ii) with respect to the Conversion Approval (if
not already obtained), none of the Class B Units shall be
deemed Outstanding as of the record date for such vote or be
entitled to vote . Each Class B Unit will be entitled to one
vote on each matter with respect to which such Class B Unit is
entitled to be voted."
b) If, the Conversion Approval has been obtained and a GP Removal Event
occurs, then notwithstanding Section 4.11, automatically and without
further action and, effective as of the GP Removal Date, Section
4.10(f)(ii) shall be deemed to be deleted in its entirety, automatically
and without further action, and Sections 4.10(b) and 4.10(c) hereof will
be deemed to be amended in their entirety, automatically and without
further action, as follows:
"b) Rights Associated with Class B Units. Prior to the
conversion of the Class B Units as set forth in Section
4.10(f) hereof:
i) subject to the provisions of Section 5.1(d)(iii)(A)
and paragraphs (ii) and (iii) below, all of items
Partnership income, gain, loss, deduction and credit
shall be allocated to the Class B Units to the same
extent as such items would be allocated if such
Class B Units were Common Units then Outstanding,
and the allocations to Class B Units shall have the
same order of priority relative to allocations on
the Common Units; and
ii)(A) the Class B Units shall have the right to share
in Partnership quarterly cash distributions based on
125% of the amount of any Partnership distribution
that would be made to each Common Unit so that the
amount of any Partnership distribution to each Class
B Unit will equal 125% of the amount of such
distribution to each Common Unit (such additional
25% pro rated for the quarter in which the GP
Removal Date occurs), and the right of holders of
Class B Units to receive distributions shall have
the same order of priority relative to distributions
on the Common Units; and,
(B)notwithstanding anything to the contrary in
Section 5.4, if a Cumulative Class B Unit Arrearage
existed on the date of the expiration of the Class B
Subordination Period, prior to any distribution
pursuant to Section 5.4(d), irrespective of whether
any such Class B Units are then Outstanding,
Available Cash shall be distributed 99% to the
15
holders of record of the applicable Class B Units as
of the expiration of the Class B Subordination
Period and 1% to the General Partners, in accordance
with their relative General Partner Percentage
Interests, until there has been distributed in
respect of each Class B Unit an amount equal to the
Cumulative Class B Unit Arrearage, if any, existing
with respect to such quarter. This distribution
shall not be deemed a distribution on a Common Unit,
but the satisfaction of prior entitlements of the
holders of Class B Units as of the expiration of the
Class B Subordination Period. For the taxable year
in which such distribution is made, if not
previously allocated, each Person receiving such
cash distribution shall be allocated items of gross
income in an amount equal to such distribution as
provided in Section 5.1(d)(iii)(A); and
iii) the Class B Units shall have rights upon
dissolution and liquidation of the Partnership,
including the right to share in any liquidating
distributions, that are based on 125% of the
liquidating distributions that would be made to the
Common Units so that the amount of any liquidating
distribution to each Class B Unit will equal 125% of
the amount of such distribution to each Common Unit,
and, in addition, following any allocation made
pursuant to Section 5.1(c)(i)(B) and before an
allocation is made pursuant to Section 5.1(c)(i)(C),
any remaining Net Termination Gain shall be
allocated 99% to the holders of the Class B Units
and 1% to the General Partners, in accordance with
their relative General Partner Percentage Interests,
until each such holder of a Class B Unit has been
allocated Net Termination Gain equal to any then
existing Cumulative Class B Unit Arrearage with
respect to such Class B Unit, and accordingly,
notwithstanding anything to the contrary in this
Agreement, prior to any distribution under Section
14.3, the Capital Account of each Partner shall be
adjusted to give effect to the foregoing liquidation
rights.
c) Voting Rights. The Class B Units will have such voting
rights pursuant to the Partnership Agreement as such Class B
Units would have if they were Common Units that were then
Outstanding except that, for the purposes of the definition of
"Outstanding" such Class B Units shall be deemed to be
"Units", but not "Common Units" for all purposes thereof. Each
Class B Unit will be entitled to one vote on each matter with
respect to which such Class B Unit is entitled to be voted."
c) If a GP Removal Event has occurred and any of the Class B Units
are converted into Common Units pursuant to Section 4.10(f)(i),
then, for the quarter in which such conversion occurs, concurrently
with the distribution made in
16
accordance with Article V of the Partnership Agreement of Available
Cash, with respect to the quarter in which the conversion of the
Class B Units is effected, a distribution shall be paid to each
holder of record of the applicable Class B Units as of the effective
date of such conversion, with the amount of such distribution for
each such Class B Unit to be equal to the product of (a) 25% of the
amount to be distributed in respect of such quarter to each Common
Unit times (it being agreed that each such Common Unit issued upon
conversion shall be entitled to the full dividend payable to the
holder of a Common Unit) (b) a fraction, of which (i) the numerator
is the number of days in such quarter up to but excluding the date
of such conversion, and (ii) the denominator is the total number of
days in such quarter (the foregoing amount being referred to as an
"Excess Payment"). For the taxable year in which an Excess Payment
is made, each holder of a Class B Unit shall be allocated items of
gross income with respect to such taxable year in an amount equal to
the Excess Payment distributed to it as provided in Section
5.1(d)(iii)(A).
SECTION 4.13 CHANGE OF NEW YORK STOCK EXCHANGE RULES OR
INTERPRETATIONS.
If at any time (i) the rules of the National Securities Exchange on
which the Common Units are listed or admitted to trading or the
staff interpretations of such rules are changed, or (ii) facts and
circumstances arise so that the Conversion Approval is no longer
required as a condition to the listing of the Common Units that
would be issued upon any conversion of any Class B Units into Common
Units as provided in Section 4.10(f)(i) hereof as determined by the
Partnership Policy Committee (the date that the Partnership Policy
Committee makes such determination, the "Conversion Approval
Termination Date") and the Amendment Approval has been obtained,
then, unless the provisions of Section 4.12 shall already be in
effect, the terms of such Class B Units will be changed so that each
such Class B Unit is converted (without further action or any vote
of any securityholders of the Partnership) into one Common Unit
(subject to appropriate adjustment in the event of any split-up,
combination or similar event affecting the Common Units).
B. Agreement in Effect. Except as hereby amended, the Partnership
Agreement shall remain in full force and effect.
C. Applicable Law. This Amendment shall be construed in accordance with
and governed by the laws of the State of Delaware.
D. Invalidity of Provisions. If any provision of this Amendment is or
becomes invalid, illegal or unenforceable in any respect, the validity, legality
and enforceability of the remaining provisions contained herein shall not be
effected thereby.
E. Counterparts. This Amendment may be executed in counterparts, all of
which together shall constitute an agreement binding on all parties thereto,
notwithstanding that all such parties are not signatories to the original or the
same counterpart.
17
General Partners:
Northern Plains Natural Gas Company, LLC
/s/ Xxxxx X. Xxxxxx
--------------------------------------------------
Name: Xxxxx X. Xxxxxx
Title: Vice President, Finance and Treasurer
Northwest Border Pipeline Company
/s/ Xxxxx X. Xxxx
--------------------------------------------------
Name: Xxxxx X. Xxxx
Title: Chairman of the Policy Committee
Pan Border Gas Company, LLC
/s/ Xxxxx X. Xxxxxx
--------------------------------------------------
Name: Xxxxx X. Xxxxxx
Title: Vice President, Finance and Treasurer
Limited Partners:
All Limited Partners now and hereafter admitted as
limited partner of the Partnership, pursuant to
Powers of Attorney now and hereafter executed in
favor of, and granted and delivered to, the
Members of the Partnership Policy Committee.
Chairman of the Partnership Policy Committee, as
attorney-in-fact for all Limited Partners pursuant
to the Powers of Attorney granted in Section 1.4
18
ANNEX A
1. THE FOLLOWING DEFINITIONS SHALL BE DELETED IN THEIR ENTIRETY FROM ARTICLE
II:
"GROSS GENERAL PARTNER PERCENTAGE INTEREST"; AND
"HYPOTHETICAL EQUITY VALUE".
2. SECTION 13.2 SHALL BE AMENDED TO READ IN ITS ENTIRETY AS FOLLOWS:
"Section 13.2 Removal of the General Partner.
The General Partner may be removed if such removal is approved by
the Unitholders holding at least 66 2/3% of the Outstanding Units
(including for purposes of such determination Units held by the General
Partner and its Affiliates) voting as a single class. Any such action by
such holders for removal of the General Partner must also provide for the
election of a successor General Partner by the Unitholders holding a
majority of the outstanding Common Units voting as a class (including for
purposes of such determination Units held by the General Partner and its
Affiliates). Such removal shall be effective immediately following the
admission of a successor General Partner. The removal of the General
Partner shall also automatically constitute the removal of the General
Partner as general partner or managing member, to the extent applicable,
of the Intermediate Partnership and any other Group Members of which the
General Partner is a general partner or managing member. If a Person is
elected as a successor General Partner in accordance with the terms of
this Section 13.2, such Person shall, upon admission pursuant to Article
XII, automatically become a successor general partner or managing member,
to the extent applicable, of the Intermediate Partnership and any other
Group Members of which the General Partner is a general partner of a
managing member. The right of the holders of Outstanding Units to remove
the General Partner shall not exist or be exercised unless the Partnership
has received an opinion opining as to the matters covered by a Withdrawal
Opinion of Counsel. Any successor General Partner elected in accordance
with the terms of this Section 13.2 shall be subject to the provisions of
Section 12.3."
3. THE SECOND PARAGRAPH OF SECTION 13.3(a) SHALL BE AMENDED TO READ IN ITS
ENTIRETY AS FOLLOWS:
"For purposes of this Section 13.3(a), the fair market value of the
Departing Partner's Combined Interest shall be determined by agreement
between the Departing Partner and its successor or, failing agreement
within 30 days after the effective date of such Departing Partner's
departure, by an independent investment banking firm or other independent
expert selected by the Departing Partner and its successor, which, in
turn, may rely on other experts, and the determination of which shall be
conclusive as to such matter. If such parties cannot agree upon one
independent investment banking firm or other independent expert within 45
days after the effective date of such departure, then the Departing
Partner shall designate an independent investment banking firm or other
independent expert, the Departing Partner's successor shall designate an
independent investment banking firm or other independent expert, which
third independent investment banking firm or other independent expert
shall determine the fair market value of the Combined Interest of the
Departing Partner. In making its determination, such third independent
investment banking firm or other independent expert may consider the then
current trading price of Units on any National Securities Exchange on
which Units are then listed or admitted to trading, the value of the
Partnership's assets, the rights and obligations of the Departing Partner
and other factors it may deem relevant."
4. SECTION 13.3(b) SHALL BE AMENDED TO READ IN ITS ENTIRETY AS FOLLOWS:
(b) If the Combined Interest of a Departing Partner is not acquired by one
or more of the remaining General Partners pursuant to Section 11.7(b) or
by a successor in the manner set forth in Section 13.3(a), the Departing
Partner shall become a Limited Partner and the Combined Interest shall be
converted into Common Units based on the fair market value of such
Combined Interest as calculated pursuant to Section 13.3(a) and the
Current Market Price of the Common Units as of the effective date of the
departure of such Departing Partner. Any successor General Partner shall
indemnify the Departing Partner as to all debts and liabilities of the
Partnership arising on or after the date on which the Departing Partner
becomes a Limited Partner. For purposes of this Agreement, conversion of a
General Partner's Partnership Interest as a general partner in the
Partnership to Common Units will be characterized as if such General
Partner contributed its Partnership Interest to the Partnership in
exchange for the newly-issued Common Units.
-20-
